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Issue Alert - 06-10-03

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Date:

Oct 01, 2006

Program Area:

Child Day Care (CDC)

Issue Summary:

DHS will begin recouping CDC overissuances resulting from agency errors

Persons Affected:

CDC recipients and Providers

For More Information:

Center for Civil Justice
320 S. Washington, 2nd Floor
Saginaw, MI 48607
(989) 755-3120, (800)724-7441
Fax: (989) 755-3558
E-mail: info@ccj-mi.org

Michigan Poverty Law Program
611 Church Street, Suite 4A
Ann Arbor, MI 48104-3000 (
734) 998-6100 (734) 998-9125


Background

DHS is required to recover or recoup benefits that were issued to clients or providers in excess of the amount for which the client or provider was eligible.  DHS has three separate policies on  recouping overissuances, depending on the type of error that resulted in the overissuance.  The three types are:

 

1)    client error  - an overissuance that occurred because the client gave incorrect or incomplete information to the DHS, or received benefits pending the outcome of a hearing that the client does not win.  (note: It appears that DHS also considers there to be a client error if the client receives Child Development and Care (CDC) to subsidize the cost of employing a day care aide but does not use the money to pay the aide. )

 

          child day care provider error – an overissuance that occurred because the day care provider gave incorrect information when billing DHS. 

 

For an overissuance caused by client or CDC provider error, DHS will only pursue recoupment of funds if the overissuance was $125 or more unless the client already has an active overissuance file or the error was found in a QA review. 

 

1)    agency error – an overissuance that occurred because the agency did not use the correct, reported information; policy was misapplied; agency action was delayed; system errors occurred; or information was not provided by other agencies such as Work First. 

 

DHS will only pursue recoupment of funds from agency errors if the overissuance was $500 or more, unless it is a computer system error, in which case DHS will pursue all overissuances.

 

3)    intentional program violation or welfare fraud – this occurs when a client or CDC provider has received more benefits than they were entitled to AND;

 

·          the client intentionally gave incorrect information or failed to give incorrect information, and

·          the clients reporting duties were explained to them, and

·          the client does not have a physical or mental impairment that would prevent them from understanding their responsibilities.

DHS will take action to recover all overissuances caused by IPVs.

 

For more information regarding DHS overissuances see PAMs 700-720.  DHS’s PPBs and Manuals are available online at http://www.mfia.state.mi.us/olmweb/ex/html/ or by using the “Quick Link” at http://www.mplp.org.

What's Happening?

In the past, DHS did not recoup CDC overissuances if the overissuance was a result of an agency error. 

Starting October 2006, DHS will recoup CDC overissuances caused by agency error, if any part of the overissuance occurred in October 2006 or a later month.   If the overpayment resulted from an agency error, DHS will recoup only if the amount of the overissuance is $500 or over, OR if the error was a computer system error -- in which case DHS will recoup regardless of the amount. 

DHS will continue to recoup CDC overissuances caused by client errors or fraud, described in the Background section above, regardless of when the overissuance occurred.

 

The policy is located in PAM 705.

 

The legality of the policy

The Mich. Admin Code 400.5014 states: 

Reimbursement for benefits received as result of misrepresentation or fraud; ineligibility.

  Rule 14. (1) A person  who  is  determined  to  have  received  child  care benefits as a result of the misrepresentation of his or her circumstances may be required to reimburse the family  independence  agency  for  any  benefits received for which the person was not eligible.

 

  (2) A child day-care provider who bills the agency for more child care than he or  she  actually  provided  may  be  required  to  reimburse  the  family independence agency in cash or from current and future provider payments.

 

  (3) A child day-care provider who establishes a pattern of billing for care that was  not  provided  may  be  determined  ineligible  to  receive  family independence agency child day-care payments for eligible families.

  (4) Child day-care providers who are convicted of fraud  are  not  eligible for family independence payment.

 

The above code limits the types of CDC overissuances that DHS can collect through fraud only.  It does not give DHS authority to issue policy regarding collecting overissuances for agency and client errors.

Thus, the policy appears to be illegal because DHS policy has not been through the rulemaking process as prescribed by the Administrative Procedures Act (the “APA”).   M.C.L. 24.231-24.264.   Unless specifically required or authorized by statute, DHS cannot issue a policy that purports to amend or change administrative rules without going through the rulemaking process first.  See Detroit Base Coalition for the Human Rights of the Handicapped v. Dep’t of Social Services, 431 Mich 172, 428 N.W.2d 335 (1988).  An agency’s failure to follow the appropriate rule making procedures under the APA renders the rule invalid.  Faircloth et al. v. FIA, 232 Mich. App. 391, 404, 591 N.W.2d 314, 320 (1998).

What Should Advocates Do?

Advocates should advise clients who receive notices from the Department of Human Services or the Office of Inspector General regarding a potential overissuance or an intentional program violation to seek legal assistance immediately. They should not sign anything prior to seeking legal advice.

Encourage individuals who are sent letters regarding recouping CDC funds based on an agency overissuance to seek legal help.

What Should Clients Do?

Clients who receive notices from the Department of Human Services or the Office of Inspector General regarding a potential overissuance or an intentional program violation should seek legal assistance immediately. They should not sign anything prior to seeking legal advice.

Finding Help

Most legal aid and legal services offices handle these types of cases, and they do not charge a fee.

You can locate various sources of legal and related services, including the free legal aid office that serves your county, at MichiganLegalAid.org.

You can also look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.