Sen. Kissel: State must ensure its welfare laws are enforced.

November 18, 2013

The following article appeared in the Nov. 16, 2013 Journal Inquirer.

Welfare fraud: Is anyone watching?

When state employee Daphne McKinney was fired for lying to get federal food stamp benefits, she challenged the dismissal.

If the offense was so serious, she asked, why hadn’t she been charged with a crime?
The answer is simple:

Prosecutors in Connecticut rarely pursue cases against welfare recipients accused of lying about their income or family status to get food stamps and other benefits.

Yet the crime is a serious one: Stealing more than $2,000 from a government program is first-degree larceny, punishable by up to 20 years in prison. Stealing less than $2,000 is second-degree larceny, punishable by a maximum of five years in prison.

A Journal Inquirer review of cases that state and federal prosecutors announced in the past year turned up just one in which a social service program recipient was charged. That case involved a scheme to overbill Medicaid for home care services.

The chief state’s attorney’s office and the U.S. attorney’s office for Connecticut couldn’t identify one case in which a welfare recipient was prosecuted for fraud.

And the state Department of Social Services provided four welfare fraud cases in the past year when asked whether its investigations ever lead to arrests. But the department redacted names and refused to provide court docket numbers, so the cases couldn’t be tracked through the court system or independently verified.

Leonard C. Boyle — the deputy chief state’s attorney for operations who’s also a former public safety commissioner, federal prosecutor, and East Hartford police officer — said the lack of prosecutions means prosecutors are weighing their resources and the crimes reported to them.

“There are a number of factors that a prosecutor will look at, including the dollar amount and the nature and scope of the alleged fraud as well as the quality of the evidence against the target,” Boyle said. “Prosecutors bring cases they believe are meritorious and justify the expenditure of state resources.”

No focus on welfare

Questions about the willingness of the state to pursue welfare fraud surfaced after 182 state employees were fired, reprimanded, or retired for lying to get money through the Disaster Supplemental Nutrition Assistance Program, or D-SNAP, after the 2011 hurricane. McKinney is one of those 182 employees, many of whom saw their disciplines overturned by arbiters.

While all of the cases were referred to prosecutors, not one state employee was charged with defrauding the food stamp program.

McKinney claimed she lost $970 in food after losing electricity because of the storm. But the Connecticut Light & Power Co. said she didn’t lose electricity.

She also didn’t list her $97,000-a-year job at the state Department of Transportation, instead saying she worked for Macy’s and earned less than $700 a month.

McKinney further didn’t put on the application that she had about $70,000 in savings. And she acknowledged she made up names and birthdays for people she claimed were living in her home so she could qualify for the money.

Still, she wasn’t charged with a crime.

Boyle wouldn’t discuss specific cases, including that of McKinney. But he did explain how prosecutors generally prioritize their cases.

State law requires prosecutors first to focus on violent crimes, Boyle said. Then they pursue cases that affect the most people and involve the most money.

When it comes to welfare, that means prosecutors target doctors and health care providers charged with defrauding or overbilling Medicaid. Prosecutors also will pursue grocery store owners who trade food stamps for cash.

They also often go after workers compensation and unemployment insurance cases in which recipients were snagged working while they got benefits. Those programs are run by the state Labor Department.

Federal officials pursue Social Security fraud cases, such as a person receiving a check for a dead relative.

But the Department of Social Services, which administers most of the state’s welfare programs, focuses its fraud investigations at higher levels — rather than on the recipients.

The programs the Department of Social Services administers include Medicaid and the Husky health care program for families; food aid including Supplemental Nutrition Assistance Program, formerly known as food stamps; Care 4 Kids, which helps poor families pay for child-care costs; and cash assistance programs.

Altogether, the department controls about one-third of the state’s $20 billion budget and serves about 700,000 residents each year in 450,000 households. The programs are paid for through a mix of state and federal funds.

The thresholds to qualify for aid depend on the program. To qualify for food stamps, or SNAP, recipients must earn less than 185 percent of the federal poverty level, or about $43,500 a year for a family of four.

To qualify for Care 4 Kids child-care subsidies, a family must earn less than 50 percent of the state median income, or about $51,600 for a family of four.

Assistance audits

The Social Services Department pays auditors to review records from nursing homes and other facilities to screen for Medicaid fraud and “inappropriate payments.” It also checks on doctors and posts a list of about 40 doctors and offices barred from making Medicaid claims because of abuse.

A 13-person “fraud early detection” unit at the department blocked about $2.6 million of benefits from being distributed in the second quarter of this year, according to a state report.

David Dearborn, a spokesman for the department, pointed to the case of Gary Anusavice, a dentist who was sentenced in federal court in October to eight years in prison and fined more than $10 million for billing more than $20 million in fraudulent Medicaid claims. That investigation started with a complaint to the state Department of Social Services, he said.

When asked for examples of cases involving the recipients of any of the department’s programs, Dearborn provided four. Only in one did the department forget to redact the recipient’s last name, allowing his case to be verified.

• “Joyce M.” was charged in April with claiming she had received care from her two children, and billed that care to Medicaid under a program for disabled residents living at home. She was in a hospital at the time.

• “Madeline R.” was charged in April with billing for child-care services even though her child-care provider was in prison. She also failed to report that she had gotten a job, and continued to receive food stamps and other benefits.

• “Elena A.” was charged last year with receiving food stamps and other aid but not counting as income the money she was receiving from unemployment insurance. A warrant for the woman’s arrest had been outstanding since 2007 but she wasn’t charged in that larceny case until police arrested her for another reason.

• David Salvati of Wallingford got paid for caring for children whose child-care expenses the state covered, even though he was ineligible because he had an assault conviction. Salvati was sentenced to a year in prison, court records show.

Another case appeared recently in Manchester Superior Court. Carmaleter Gooden-McFarlane of East Hartford was charged with first-degree larceny in October after police say she didn’t include her husband’s income in qualifying for child-care subsidies through the Care 4 Kids program.

An arrest warrant affidavit for Gooden-McFarlane’s arrest was written and signed by a Department of Social Services investigator, who started the investigation because Gooden-McFarlane listed herself as married but didn’t include her husband on the application.

In another recent case, Steveann E. Daesener of Plainville was charged with larceny and insurance fraud. Investigators say Daesener and her personal care assistant filed 27 fraudulent billings through Medicaid, saying the assistant worked more than twice as many hours as he had.

The assistant, Brian Borry, was charged in July.

Tough talk

When Gov. Dannel P. Malloy called a rare Sunday news conference in 2011 to announce he was investigating state employees who wrongly received food stamps, the governor indicated the employees could be prosecuted.

“I will not tolerate abuse of public programs by state employees. If warranted by a thorough investigation, individuals will lose their jobs and may face criminal prosecution,” Malloy, a Democrat and former New York prosecutor, said.

Malloy, asked recently whether prosecutors should have taken up the cases involving state employees, wouldn’t give his opinion.

“With respect to whether a prosecutor wants to bring that case, that’s ultimately up to them,” the governor said. “I don’t get to dictate to them how this gets done.”

Malloy also said he was “proud” of the state’s response in trying to fire the employees. “We determined what we thought were appropriate punishments,” he said. “I think what we’ve done is demonstrated that we don’t find this behavior acceptable.”

The state determined that 182 of its employees lied to qualify for D-SNAP in September 2011. Of those, 97 were fired and 85 were disciplined, retired, or resigned when faced with the allegations.

Many appealed and got their jobs back. Arbiters imposed suspensions in 80 cases and awarded full back pay in one. Four cases are pending, state records show, including two in Hartford Superior Court.

Sen. John A. Kissel, R-Enfield and the top Republican on the legislature’s Judiciary Committee, said the state must ensure its welfare laws are enforced.

“For whatever reason over the last few years, it seems like government has not decided to prosecute any of these cases. And I think that’s bad public policy,” Kissel said. “If there’s sufficient facts to form a case, then those cases should be brought.”

Kissel, a lawyer, added that there is a “deterrent effect” in bringing cases against people who steal. He said in Enfield, police were alerted to a problem of people stealing sneakers from a store in the mall. They cracked down hard.

“The idea is you have to nip it in the bud. You have to send the message that there’s zero tolerance for theft,” Kissel said. “A strong signal is sent so people who are considering committing a crime don’t do it.”

Unemployment fraud

While the Department of Social Services focuses its fraud detection and enforcement efforts larger-scale fraud, the Department of Labor has cracked down on specific cases of unemployment compensation fraud.

The Labor Department in May bought new computer programs to help it track unemployment claims and compare them with Social Security data, labor Commissioner Sharon Palmer said recently. “Since then, we estimate that we’ve stopped approximately $100,000 a week in attempted unemployment compensation fraud,” Palmer told the governor.

The Labor Department also partnered with state prosecutors to crack down on people who slip through the system.

The Unemployment Compensation Fraud Unit has helped in 18 arrests since June, including one of an employer. That employer is accused of bilking the state of more than $400,000, Palmer said.
As for McKinney, an independent arbiter awarded her $97,000-a-year job back, through she lost about eight months of pay. A Superior Court judge this month upheld that decision.

Without criminal charges and a conviction, state officials couldn’t fire her for breaking the law, McKinney contended. She also argued the offense wasn’t bad enough to merit firing her.

The attorney general’s office says it hasn’t decided whether to appeal.