10A NCAC 71W .0606 CLIENT FRAUD AND INTENTIONAL PROGRAM VIOLATIONS

(a) In order to prevent fraud, county department of social services shall be responsible for fraud prevention as follows:

(1) Develop an operational program for fraud prevention, detection, and investigation. Requirements shall be based on the following:

(A) the number of recipients;

(B) the effectiveness of the fraud prevention program;

(D) the resources available to the agency.

(2) Designate staff to be responsible for fraud prevention, detection, and investigation.

(3) The recipient shall be notified of the county's intent to recover the payment no less frequently than at each eligibility review of his or her obligation to report within 10 days, all changes in income, resources, or other changes which may affect the amount of payment. Failure to do so within that time may constitute a willful withholding of such information, and permit the county department of social services to recover the overpayment.

(b) In order to detect and investigate fraud, county department of social services shall be responsible for detection and investigation as follows:

(1) Investigate any information which indicates that a recipient may be receiving Work First to which the recipient is not entitled.

(2) In the investigation the staff designated for fraud shall:

(A) verify that all responsibilities have been fulfilled as set forth in the rules governing the Work First program;

(B) determine whether further investigation should be undertaken to support the belief that fraud is suspected;

(D) determine the amount of the erroneous payment.

(3) When there is reason to suspect fraud, the county department of social services director must ensure that the agency has explained to the recipient responsibilities for reporting any change in their circumstances to the agency. The director shall determine whether the agency should investigate further and shall present the case and fraud summary to the county board of social services for action unless the board has delegated this responsibility to the Director.

(4) The fraud summary shall include:

(A) identifying information;

(B) a description of the fraudulent act;

(D) evidence to substantiate the amount of ineligible assistance received; and

(E) information concerning the recipient's competency, educational background, ability to know right from wrong, any statement volunteered by the recipient in response to the accusation and any other information which may help explain the recipient's current situation.

(1) The county board of social services, or its designee, shall determine whether there is a basis for the belief that misrepresentation may have been committed by a person.

(2) The county board, or its designee, shall determine if the person:

(A) willfully and knowingly misstated, provided incorrect or misleading information in response to either oral or written questions;

(B) willfully and knowingly failed to report changes which might have affected the amount of payment; or

(C) willfully and knowingly failed to report the receipt of benefits which the person knew they were not entitled to receive.

(3) There must be physical evidence to substantiate a determination that fraud was the reason for the overpayment.

(4) If the board, or its designee, determines fraud is suspected, it shall instruct the agency to pursue one or more, of the following actions:

(A) Seek administrative recoupment which is defined as:

(i) involuntary reduction of Work First grant may be collected from all income and assets of the assistance unit. The assistance unit shall retain an amount not less than 90 percent of the assistance payment received by a family of similar composition with no other income;

(ii) a voluntary grant reduction. There is no limitation on the amount of the reduction;

(iii) voluntary recipient refund. There is no limitation on the amount of the refund;

(iv) NC Debt Setoff Collection. NC Debt Set-off (Tax Intercept) is the process by which the North Carolina Department of Health and Human Services (DHHS) intercepts income tax refunds through the North Carolina Department of Revenue (DOR) to repay Intentional Program Violation (IPV) and Inadvertent Household Error (IHE) Claims of current/former Work First recipients.

(B) An administrative disqualification hearing or referral for prosecution shall be initiated by the county department of social services.

(i) The county department of social services shall initiate a hearing as follows:

(I) Evidence indicates that an individual has intentionally violated a program rule in order to receive cash assistance for which the individual is not eligible. The hearing shall be held and any administrative action initiated within 90 days of the date the individual is notified in writing that the hearing has been scheduled. No hearing shall be held when the amount of the overpayment is less than one hundred dollars ($100.00).

(II) The county board of social services shall designate the county director or their impartial county employee to act as the hearings officer. Duties are to: provide written notification of the hearing date, time, and location to the individual at least 30 days in advance of the date of the hearing. Written notification of the hearing shall include the individual's right to have legal representation, a witness or witnesses, or waive the hearing; conduct the hearing to collect all evidence and testimony; render a written decision to the individual and DSS within 15 days as to whether an intentional program violation has occurred. Written notification that the hearing decision will be mailed by Certified Mail Return Receipt Requested. The notice shall inform the individual of the right to further appeal to the State (or higher local authority) and the procedures for such appeal. When an intentional program violation is found, the notification will inform the individual of the length of the sanction and that individual remains a part of the Work First case and subject to program requirements. When no intentional program violation is found, the notification shall inform the individual that the overpayment shall be collected pursuant to this Subchapter.

(ii) The county department of social services shall sanction.

(I) Apply disqualification sanctions as follows: 12 months of ineligibility for the first offense; 24 months for the second offense; and permanently disqualified for the third offense.

(II) The sanction shall be applied by reducing Work First cash assistance payment by the disqualified person's share of the payment for the period of sanction. The disqualified person remains a part of the Work First case.

(iii) The county department of social services will follow procedures pursuant to Part (c)(4)(A) of this Rule in the collection of overpayments.

(D) criminal court action.

(d) The county board of social services shall follow up with the State Division of Social Services as follows:

(1) If the board, or its designee, suspects fraud, the department's findings and actions shall be reported to the State Division of Social Services. The county department of social services director shall keep the county board of social services and State Division of Social Services informed on all cases referred for court and repayment action.

(2) The county department of social services shall support the local prosecutor by accomplishing interviews in accordance with the prosecutor's requirements, recommending possible witnesses, providing investigative reports, and taking other action deemed necessary by legal authorities.

(3) Regardless of what action is taken by the board or the court, the county shall continue to work with the individual and shall notify the individual of the action taken in their case.

(4) The county shall maintain records on the number of cases referred for investigation, the number of suspected fraud referrals, action taken to recover the overpayment and amounts recovered.

(e) In fraud cases, if a county fails to act promptly on indications of ineligibility, federal and state financial participation shall not be available.

History Note: Authority G.S. 108A-27; 108A‑39; 108A-79; 143B‑153; 45 C.F.R. 235.110;

Eff. February 1, 1984;

Amended Eff. June 1, 1990; February 1, 1986;

Temporary Amendment Eff. June 17, 1998;

Amended Eff. April 1, 1999;

Readopted Eff. October 1, 2021.