Wisconsin FoodShare fraud crackdown questioned

Hunger Task Force

Sherrie Tussler, executive director of the Hunger Task Force in Milwaukee, thinks the FoodShare fraud crackdown is politically motivated: “Everybody needs a scapegoat and it seems like the poor are the scapegoat in Wisconsin.”

Under Republican Gov. Scott Walker, the state of Wisconsin has seen a nearly 12-fold increase in the number of persons suspended annually from the state’s food stamp program for fraud.

The suspensions for “intentionally violating program rules” are part of a larger get-tough approach to people receiving federally funded nutrition assistance, called FoodShare in Wisconsin. Walker has also introduced new work rules for some FoodShare recipients, and proposes to seek a federal waiver to begin requiring all adult participants of the program to undergo drug testing.

Walker’s administration has long devoted energy and resources to cracking down on recipients of the supplemental food program. The efforts include a new office to fight fraud within the state Department of Health Services, which runs FoodShare, additional systems for citizens to report allegations of abuse, and new strategies to nab would-be freeloaders through stricter screening and income-verification rules.

In 2011, Walker’s first year as governor, 102 people were suspended from the FoodShare program for violating program rules, according to DHS. That number has increased each year, to 1,184 in 2014.

“We’ve shown more intention and intentionality in preventing fraud and abuse,” said Alan White, appointed in 2011 to a newly created position of inspector general within DHS. He cites more workers, better training, and new strategies for finding fraud using social media. Also, “We’ve become more aware of the types of fraud that take place.”

White thinks Wisconsin’s efforts to step up enforcement serves as deterrent to potential cheaters: “They see that we are serious about preventing and detecting fraud.” He notes that federal law requires the state to take action in cases where it believes fraud has occurred.

But advocates for FoodShare recipients say the state is being overly aggressive, punishing needy people who make innocent mistakes.

“There’s a lot of judgment going on by white, middle-class people and a lot of assumptions and disqualifications based on these assumptions,” said Pat DeLessio, an attorney with the Milwaukee office of Legal Action of Wisconsin, a federally funded nonprofit agency. The agency has successfully helped clients fight state efforts to suspend their FoodShare benefits. But in most cases, she said, “people are coming to us too late.”

Sherrie Tussler, executive director of Milwaukee’s Hunger Task Force, a nonprofit community group, blasts the state’s crackdown. “It’s silly, it’s stupid, and it’s a way of manipulating public opinion,” she said. “Everybody needs a scapegoat and it seems like the poor are the scapegoat in Wisconsin.”

A ‘misuse’ of resources

FoodShare is Wisconsin’s incarnation of the federal Supplemental Nutrition Assistance Program (SNAP), run by the U.S. Department of Agriculture.

The average monthly number of FoodShare recipients rose steadily in Wisconsin, from about 350,000 in 2005 to more than 850,000 in 2013, according to DHS. Last year it declined slightly, to 836,000, or 14.5 percent of the state’s population.

Under Walker, the number of FoodShare program fraud investigations has grown dramatically, from 2,098 in federal fiscal year 2010 to 6,403 in fiscal year 2014, which ended last September. These efforts have been aided by DHS’ new Office of the Inspector General and the establishment of a hotline and web portal for citizens to report suspected public assistance program fraud.

The office currently has 107 employees and an annual budget of $12.6 million. Thirty-one employees work on fraud investigation, including eight on recipient fraud. It said its fraud-fighting efforts in Medicaid, FoodShare and the Women, Infants and Children programs cost $1.3 million in the most recent state fiscal year, and generated $22.5 million in program savings, including “stopping future benefits from being fraudulently received.”

In federal fiscal year 2014, the DHS identified nearly $1.1 million in fraud-related FoodShare overpayments and collected $675,448 in overpaid benefits from current or former FoodShare recipients, said Michael McKenzie, chief of the Inspector General’s Fraud Investigation, Recovery and Enforcement Section. The overpayments accounted for 0.1 percent of the program’s total cost.

Tussler, of Hunger Task Force, calls this intense focus on ferreting out a relatively small amount of fraud “a misuse of state resources.” She said the state’s disqualifications of needy people is putting additional pressure on local food pantries.

Kate Golden / Wisconsin Center for Investigative Journalism

Alan White, inspector general of the Wisconsin Department of Health Services, is proud of his office’s record fighting fraud: “Our responsibility is to the taxpayers. Those are our stakeholders.”

How much fraud is there?

About two-thirds of last year’s FoodShare recipients were in families with children. The average monthly benefit was $112 per person and $224 per household. The total cost of the program was $1.1 billion in 2014. All of this money came from the federal government.

Nationally, the error rates for SNAP overpayments (including fraud) fell for the seventh straight year to a low of 2.6 percent in 2013, USDA numbers show. That’s the lowest error rate since the USDA began its current system of measuring in 1981.

Wisconsin’s error rate that year was 2.2 percent. In fact, Wisconsin’s error rate “has been consistently under the national average since 2008,” according to Alan Shannon, spokesman for the USDA’s Food and Nutrition Service office in Chicago.

“Our error rate is low, which is great,” said White of DHS. “We want to keep it low.” His office’s mission is “to protect state and federal money,” he said. “Our responsibility is to the taxpayers. Those are our stakeholders.”

DHS statistics show that fraud accounts for a small share of FoodShare program overpayments. During the past three fiscal years, from 2012 through 2014, 10 percent of the total $13.2 million in overpayments collected by the state were attributed to client fraud. A larger share of this amount, 14 percent, was blamed on agency error. And the vast majority (76 percent) was chalked up to “inadvertent” errors by recipients.

While the state’s incidence of FoodShare fraud may be slight, it remains a major talking point among conservative politicians.

U.S. Rep. Glenn Grothman, R-Wisconsin, recently urged an audience in Oshkosh to keep an eye on people they see using FoodShare at the grocery store, saying “some people are arranging their life to be on FoodShare,” according to the Oshkosh Northwestern.

And Gov. Walker, a likely presidential contender, drew what the Wisconsin State Journal called “some of his biggest applause” at an Iowa summit when he talked about requiring food stamp beneficiaries to be drug-free and seeking employment.

Beginning April 1, all able-bodied adult FoodShare recipients without dependents must work or participate in job training, or both, for at least 80 hours a month, or meet an exemption, to keep getting benefits. It has been estimated that half of the 62,000 recipients in this category could lose benefits.

Walker has also proposed, in his 2015-17 budget, to seek a federal waiver to allow the state to require that FoodShare recipients be tested for drug use, and receive treatment if they test positive. Republicans on the Legislature’s Joint Finance Committee, on a 12-4 party line vote, added a provision to make recipients who report FoodShare cards lost or stolen, as happens about 130,000 times a year, absorb the roughly $3.50 replacement cost.

And lawmakers plan to introduce a bill to seek a federal waiver to require FoodShare recipients to use benefit cards that include their photos. The measure would cost an estimated $2 million a year.

Are rights being protected?

Hal Menendez, an attorney with Legal Action of Wisconsin’s Madison office, said most of the alleged fraud he sees amounts to mistakes on the part of those receiving assistance. “Sometimes people forget to report a change in their income or are late in reporting,” he said. In the past this might be cured simply by having the person pay back any overpayment.

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Hal Menendez, of Legal Action in Wisconsin, says overpayments to FoodShare recipients once treated as error are now often “being looked at as fraud or an intentional program violation.”

“Now, oftentimes overpayments are being looked at as fraud or an intentional program violation,” Menendez said. That makes the recipient subject to benefit suspension: one year for a first violation, two years for a second and permanently for a third.

FoodShare recipients have a right to a hearing before an administrative law judge. But Menendez said many recipients are confused into signing forms sent by the state asking them to waive their right to a hearing. DHS numbers for a recent nearly 10-month period show that nearly a third of the people it sought to disqualify signed the waiver.

DeLessio, also of Legal Action, said she is representing a client with intellectual disabilities who signed the waiver terminating her benefits even though she cannot read. The woman is now without benefits.

Advocates for FoodShare recipients say when recipients contest a disqualification they often win. “The deciding factor may be whether the person appeared to explain the purchases,” DeLessio said.

If the recipient does not sign a waiver, a hearing is held. During the recent period under review, 348 hearings were held, and 311 disqualifications imposed. “We were upheld in 89 percent of the cases,” said White. This includes cases that are not contested, but White said the state still must present evidence.

Records of suspension cases provided by DeLessio show that some FoodShare recipients are targeted because they fall into a category of potential suspicion — for instance, by making unusually large or frequent purchases at a given store or having purchases that end in round numbers, like $20.00.

“We have seen people disqualified for less than $100,” DeLessio said.

White confirmed that his office looks for certain patterns, like large purchases, as “flags” of potential FoodShare fraud. And he acknowledged that “there are improvements that can be made” to the waiver form. He said that process is now under way.

According to White, the administrative law judges have “raised the bar” in terms of what evidence is required to disqualify recipients, “as is appropriate.” DeLessio still sees inconsistencies in how the cases are decided.

“The same evidence can lead to very different results depending on the judge,” DeLessio said.

‘It was very unfair’

In one case that came to hearing in 2013, a judge sustained a fraud finding against an individual who made five purchases over a three-month period from a store that was later disqualified from being a state FoodShare vendor. The purchases totaled $183.54; the store, the judge noted, was “not particularly close to respondent’s residence.” The respondent, who did not attend the hearing, was booted from the program for a year.

After another hearing, in 2014, a different judge rejected DHS’s attempt to disqualify a man for making numerous small purchases from a store that aroused suspicion in part because its owner admitted to allowing FoodShare recipients to use their cards to buy diapers, not an allowable purchase. The man appeared at the hearing and explained that the store was near where his children and their mother lived.

DeLessio represented Walter Triplett, 57, of Milwaukee, who in February 2014 was suspended from the FoodShare program for a year despite having appeared at a hearing to explain purchases that the DHS reviewer found suspicious. She filed a 25-page legal brief challenging this decision, which the state then agreed to vacate. But Triplett, who is disabled, was without Foodshare benefits for several months.

“It was very unfair,” Triplett said of the grounds for his disqualification. He got by by going to church food pantries. Also, “my family members helped me out as much as they could.”

DHS’s budget request for 2015-17 calls for the agency to “expand and improve” its fraud-fighting efforts. It sets a goal of 7,000 fraud investigations for each of the next three years.