Monday, January 01, 2007

Employees, former employees of Cabinet committing welfare fraud

Welfare fraud called rife in Ky.
Jury says 10 cases 'tip of the iceberg'
Loftus, Tom. Louisville Courier-Journal, Sept. 30, 2006, pg. A1.

FRANKFORT, Ky. — Welfare fraud likely is rampant across Kentucky and costs taxpayers millions of dollars, according to a grand jury report released yesterday.

"The evidence we have heard over the past five months concerning the welfare system in Kentucky leads us to suspect that the indicted cases of fraud — both the ones we returned and those brought elsewhere — are the 'tip of the iceberg,'" the special Franklin County grand jury said in an 11-page report.

This year the jury indicted 10 people on a total of 136 felony counts of fraud of public assistance programs, forgery and perjury. Eight of the 10 were employees or former employees of the Cabinet for Health and Family Services or companies that contracted to do work for the cabinet.

The jury is the same one that has been investigating the hiring practices of the Fletcher administration since June 2005. The jury's final report on hiring is expected to be returned next month.

In its welfare report, the jury made 11 recommendations to fight fraud, primarily by hiring more caseworkers to reduce caseloads.

The grand jury found that some state workers whose job was to provide welfare to poor people had taken money intended for benefits. And other state workers had helped recipients of welfare collect more than they deserved.

Some people found ways to collect welfare payments of people who had died, the report said.

Betty Shaw, who oversees caseworkers for the cabinet in the Paducah region and is a former caseworker, disagreed that fraud is widespread. She said she's aware of no employee indicted in her region during the 29 years she's worked there.

"We have seen clients indicted for fraud — that will always be with it," Shaw said. "But I would hesitate to say it is rampant. I think most of our clients are very truthful ."

But she said caseloads are too high and lower caseloads would allow workers to catch more fraudulent applications. "We would have more time to interview more thoroughly, more time to focus if our caseloads were lower," Shaw said.

Cabinet Secretary Mark Birdwhistell said in a statement that he welcomes the recommendations but that his cabinet already had addressed some of the problems identified.

"On September 16, the agency successfully rolled out a statewide reorganization aimed at lowering caseloads and creating greater consistency in services," Birdwhistell said.

"The Department for Community Based Services continually updates me on their ability to detect and deter fraud," he said.

The grand jury report resurrected a clash between the cabinet and Attorney General Greg Stumbo, whose staff presented evidence to the jury.

Who should investigate?
The cabinet decided in the middle of last year to terminate its $1.3 million annual contract with the attorney general to investigate welfare fraud.

The jury recommended the cabinet consider reinstituting the contract.

Stumbo said in a news release that the cabinet shouldn't be primarily responsible for investigating its own employees. "This is a perfect example of the fox guarding the henhouse," he said .

Birdwhistell said the decision not to renew the contract with Stumbo's office was in the state's "best interest."

He and Stumbo each released starkly different numbers to support their claims.

Birdwhistell said that between July 1, 2004, and July 1, 2005, the attorney general's office investigated 210 fraud cases, referring 80 to prosecutors at a cost of $15,000 per case.

By comparison, between July 1, 2005, and July 1, 2006, the cabinet's inspector general investigated 436 cases, referring 188 cases to prosecutors at a cost of $3,670 per case, Birdwhistell said.

Stumbo disputed those numbers.

He said his office concluded 217 cases in the last year it held the contract with court judgments requiring repayment of more than $2.2 million. Stumbo said the cabinet in the year since won court judgments totaling $317,397.

In its primary recommendation, the grand jury said that caseload reduction for workers should be the cabinet's priority. Each handles an average of 800 cases at any given time.

"The caseload assigned to front-line workers in the local offices of the Department for Community Based Services is alarmingly high," the report said.

The also report recommended a system be developed to immediately alert Community Based Services of deaths so that payments to those recipients are stopped.

The state auditor reported this year that about 7,400 payments were made in 2004 and 2005 to Food Stamp recipients who had died. And the report recommended that all physically able food-stamp recipients be required to apply for benefits in person rather than continuing to be allowed to apply by phone .

Debra Miller, director of public policy for Kentucky Youth Advocates, a group that advocates the needs of children, said that recommendation would lead to some deserving applicants never getting food stamps.

"We want people who are hungry to have food, and we know that the food s tamp program now reaches less than the federal government's estimate of who might be eligible," Miller said.

The special Franklin County grand jury investigating welfare fraud reported yesterday:
--It had indicted 10 people on 136 felony counts of fraud of public-assistance programs, forgery and perjury.
--Eight of the 10 persons were employees of the state Cabinet for Health and Family Services or an employee of a company under contract to work for the cabinet.
--The 10 cases represented only the "tip of the iceberg" of the extent of welfare fraud occurring in the state.
--The cabinet should cut caseloads of about 800 cases per state caseworker as the first step to cutting fraud.
--The cabinet needs to take steps to be informed immediately of deaths of welfare recipients to stop their checks.


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