Business & Economy

Auditor targets DCF’s response to benefits fraud

A new report from the state auditor casts a spotlight on how fraud is addressed in some of the state’s key benefits programs.

The latest report from Auditor Doug Hoffer’s office zeroes in on four programs managed by the Economic Services Division of the Department for Children and Families.

Doug Hoffer
State Auditor Doug Hoffer. File photo by Roger Crowley/VTDigger

Though the division does have a process for investigating benefits fraud, the report finds that over a span of more than three years, overpayments were found in only two of the four programs.

The report also raises concerns over the effectiveness of the department’s efforts to recoup payment from benefits recipients who commit fraud.

Through the period spanning Jan. 1, 2013, to April 21, 2016, the unit found 1,036 cases where benefits were overpaid through fraud or error, worth a total of $1.8 million.

All of those claims were in two programs: 3SquaresVT, which is the state’s branch of the federal supplemental nutrition program formerly known as food stamps, and Reach Up, a cash benefit program for families with children.

There were no overpaid claims found in the seasonal fuel assistance program, which helps families pay for heating their homes, or in general assistance, a program that helps individuals and families pay for a variety of expenses.

The state’s current technology system is incapable of tracking the heating fuel program, according to the report. DCF staff told auditors the risk of fraud in the general assistance program is minimal because eligibility is reviewed frequently.

According to the audit, even if an investigator found that someone had provided incorrect eligibility information for benefits through 3SquaresVT or Reach Up, they did not check to see if seasonal fuel or general assistance benefits had been paid out based upon the same incorrect eligibility information.

When someone was found to have defrauded 3SquaresVT, that recipient was disqualified from receiving further benefits from that program, but that was not true of the other three programs.

The report also said the division fell short when it came to collecting money owed by clients who had provided false eligibility information. Repayment agreements expected people to repay the money they owed over a period of one to 75 years — which the report said was “an unrealistic period of time to expect the debt to be fully paid.”

The department didn’t send out regular bills after people defaulted on their debt, nor did it use the Tax Department to help collect the debts, the audit found.

Sean Brown, Hal Cohen
Sean Brown, right, is deputy commissioner of the Department for Children and Families. With him is Hal Cohen, secretary of the Agency of Human Services. File photo by Erin Mansfield/VTDigger

The report made 13 recommendations, including suggestions to improve the system for tracking allegations and to change rules so people who lied about their eligibility can face sanctions.

DCF responded in a letter that the department had begun undertaking some of the recommendations in the audit, including making more prominent the hotline where members of the public can report fraud.

However, some of the recommendations relating to technology are a challenge. The current IT system is outdated, and DCF anticipates moving to a newer system that will serve much of the Agency of Human Services within a couple of years, according to DCF Deputy Commissioner Sean Brown, who heads the Economic Services Division.

Brown said that in many cases of fraud, there are children in the family who could be at risk if benefits are docked.

“Those children are still from a low-income and vulnerable family, and they still have a need,” Brown said.

The department needs to find a way to use “whatever remedies are available to us to make sure the health and safety of children is taken care of,” he said.

Hoffer was sympathetic to DCF’s concern about ensuring that people who need services can access them. However, he said there is a need for the system to deter fraud.

“Clearly you don’t want the children in this circumstance to be unnecessarily harmed,” Hoffer said. “But if you don’t have a disincentive to defraud the state, then why wouldn’t they defraud the state?”

Brown also emphasized that the number of fraudulent payments identified and investigated during the period of the audit is a small fraction in the scope of the Economic Services Division’s work.

According to DCF, during the 40-month period covered in the report, the division delivered $632 million in benefits. The $1.8 million worth of improper payments that the fraud unit substantiated is just 0.28 percent of the total amount paid out, “which is extremely low,” Brown said.

Hoffer said that based on the audit report, it’s difficult to know exactly how widespread fraud is in the benefits programs managed by DCF. It does not appear to be a “significant” number of Vermonters who receive assistance, he said, though he believes “it’s enough for (the division) to pay attention.”

“Whatever the percentage or the numbers are, they have an obligation to protect the integrity of the program,” he said.




If you read us, please support us.

Comment Policy

VTDigger.org requires that all commenters identify themselves by their authentic first and last names. Initials, pseudonyms or screen names are not permissible.

No personal harrassment, abuse, or hate speech is permitted. Comments should be 1000 characters or fewer.

We moderate every comment. Please go to our FAQ for the full policy.

Privacy policy
Elizabeth Hewitt

Recent Stories

  • Thank you Mr. Hoffer,
    I am a little confused by the math as Mr. Brown presents it. He makes light of the $1.8 mil and says no big deal because that is only .28 percent of all of the money we hand out? Really, barely 3/10 of 1% ?
    Brown touts classic liberal mantra “what about the children?”, Mr. Brown if the tax payers money isn’t covering what it should maybe you should redesign the matrix for qualifications rather than covering for the fraudsters.
    When ever we increase the giving of taxpayers money to others, it always seems to grow , when we decide to feed children in schools do we take public assistance away from the families because those are meals they don’t need to pay for and are not served at home?
    If Mr. Brown was interested in the people paying his salary and those handouts he could use that $1.8 million to hire many investigators that would be more than tripled the fraud investigation returns.

    Private sector would say “YOURE FIRED Mr Brown”

    • Thomas H. Taber

      In the private sector, they wouldn’t be using antiquated systems like we do in the state. However, we have people that are upset about a fraud rate of .28% (which IS pretty low), so god forbid our government spend any money on “unnecessary” IT upgrades.

  • Another amazing report by State Auditor Doug Hoffer. If it wasn’t for Mr. Hoffer’s work Gov. Peter Shumlin might be able to leave town without such a disgrace! The law that will likely be used to recover these public funds or others involving Medicaid programs is the Vermont False Claims Act (H.120 2015) which become law mid May last year. Until last year, a citizen could not sue to recover the State of Vermont losses from fraud and recover a Relator (whistleblower) percentage of the recovery (though a varying chunk goes to your attorneys).

    State Auditor Doug Hoffer deserves credit for helping to put the Vermont False Claims Act on the map by recommending to state leadership in early 2015 the need for a state law.. Both Mr. Hoffer and I have met many times over the course of the last few years and his support including his critical testimony before the House and Senate Judiciary Committees were an integral part of the legislature passing this law with “retroactive” enforcement.

  • Tom Pelham

    The above audit results are not surprising. During my tenure as Tax Commissioner it was noticed that only two of the eight AHS District Offices utilized the Tax Dept’s Off-Set Program to collect money owed AHS. The Off-Set Program captures such owed amounts from Tax Dept. distributions. Millions annually are collected on behalf of the Defender General, the Judiciary, the Office of Child Support, and others from income tax refunds, lottery winnings and other state payments.

    Thinking it a good idea that all District Offices utilize the Off-Set program, AHS’s Central Office was contacted to expand the system to the remaining six District Offices. Similar to the response to the above audit, the Central Office informed the Tax Dept. that the two District Offices using the Off-Set program would discontinue their participation. As the Auditor notes, if AHS beneficiaries “don’t have a disincentive to defraud the state, then why wouldn’t they defraud the state?”

  • It’s very easy for Mr. Brown to belittle the loss of $1,800,000.
    What would Mr. Brown do if this was his personal money ?

  • William Geller

    This is a very important investigation. The amount of fraud and mistakes made in all government programs is a huge concern for all taxpayers. We are always reading reports of fraudulent exposes and wonder how much money is just plain stolen from these programs, reading this report that these services are being audited on a constant basis and finding that this is being addressed and corrected helps all of us have confidence that fraud is starting to be under control .

  • Mary Daly

    Fraud is fraud no matter how much. By not paying attention and following up on payments, you only perpetuate the problem. 1.8 million is till a lot of money in most peoples minds. Thank you Auditor Hoffer for your work and exposure of improper spending.

  • Tom Koch

    Sean Brown’s responses are totally unsatisfactory and indicate that nothing is going to change.

    It’s only a small percentage of the cases. If we seek repayment, we’ll hurt the innocent children. Our computer system is too old.

    Baloney! Fix the problems!

  • Theresa R. Lefebvre

    It’s easy for people to say “fix the problems.” The problems are not easily fixed when the administration has a “not on my watch” attitude about spending money to up-grade IT systems and hiring investigators. I agree that $1.8M is a lot of money; but a .28% error rate is not a high number. Looking at this in perspective, the DCF staff do a fantastic job with too few employees and an antiquated IT system. They should be applauded, not criticized. Mr. Hoffer continues to do an excellent job as auditor. He’s finding problems that need to be corrected. The rank-and-file DCF workers are not the ones at fault here.

    • Patricia Goodrich

      Theresa R. Lefebvre You are correct. For any job to be performed well, you need good tools. You don’t dig ditches with a spoon. You can’t do your job efficiently without updated equipment and good internet servers. The State Police don’t use 1930’s model cars. Why do we expect that state employees can keep up with their work when they can only work as quickly as the tools they have to work with? Common sense tells us they can’t.

    • It does not appear to be a “significant” number of Vermonters who receive assistance, he said, though he believes “it’s enough for (the division) to pay attention.”

      “Whatever the percentage or the numbers are, they have an obligation to protect the integrity of the program,” he said.

      That says it all. The State Employees have an obligation to care for every single tax dollar that they hand out. Only $1,800.000.00? Multiply that by all the State Agencies and Departments.

    • Chris Laden

      So DCF needs more money for employees and computers??? That is your story??

  • I want Doug Hoffer to run for governor.

  • The fact that a .28% fraud loss equals a whopping $1,800,000.00 indicates we’re giving away a lot of Taxpayers money

  • Ed fisher

    How is it that the entire working populace that I know understands and witness’ the constant fraud of welfare system for one , and two , that NEVER are those who are on the SSI benefit system ever audited . There is more fraud in both of these systems than even the Mafia could have been capable of perpetrating ?

    • Dennis Works

      Ed Fisher: It always amazes me when people such as yourself decry the fraud they claim “everyone sees” but the government. Let me ask you, exactly what types of fraud have you personally become aware of? And once you answer that, how many of those times did you report that fraud to the proper authorities so it could be investigated? I bet the answer by most people is – ZERO.

  • Mary Reed

    A better response from DCF might have been concern for program integrity, not sending public messages that imply fraud is not a significant problem and can’t be addressed due to technology issues, and a plan to develop accountability measures. Problems exist, but there are steps that could be taken with current resources. Once fraud is determined, there should be immediate entry into the tax offset program and a plan established with the adult recipient(s) for manageable benefits reductions that will, eventually, repay the monies. If it is clear that a recipient won’t or can’t manage the reductions in a way that minor children (or other vulnerable beneficiaries) are not put at risk, then an internal report to the appropriate protective services division should be generated, and that division needs to be responsible for an in-person, face-to-face follow-up and monitoring of that report. Knowing that a worker will show up to address risk to beneficiaries due to fraud is a deterrent.