2/01/95

The three types of overpayment claim referrals are inadvertent household error, administrative error, and intentional program violation.

An explanation of each type of claim follows:

Inadvertent Household Error – An overpayment caused by a misunderstanding or an error on the part of the household. An inadvertent household error that results in an overpayment includes, but is not limited to, situations where:

• The household unintentionally failed to provide the county office with correct information;
• The household unintentionally failed to report to the county office changes in household circumstances; or
• The household unintentionally received an overissuance of food stamp benefits due to a continuation of benefits pending an administrative hearing decision.

Administrative Error – An overpayment caused by the agency or by the agency's failure to take action. An administrative error results in an overpayment when:

• The county office failed to take timely action on a change reported by the household;
• The agency incorrectly computed household income or deductions or otherwise assigned an incorrect benefit amount;
• A household was overpaid food stamp benefits due to a worker or system error;
• The household continued to receive food stamp benefits after the certification period expired without a reapplication determination; or
• The county office failed to reduce a household's food stamp benefits after the TEA (AFDC prior to 7-1-97) grant increased.

An overpayment will not be prepared when the county office failed to insure that the household signed the application form.

Intentional Program Violation (IPV) – An overpayment caused by an individual household member when the member intentionally:

• Made false or misleading statements (for example, the household falsified statements on the application);
• Misrepresented, concealed or withheld facts (for example, the household did not report a change in a timely manner although the household was aware of the reporting requirements); or
• Violated the Food Stamp Act, the Federal Regulations, or State Statutes relating to the Food Stamp Program. (See [FSC 16600] for a full explanation of an Intentional Program Violation.)

An IPV and the individual guilty of the IPV must be determined through:

• An Administrative Disqualification Hearing;
• A Court of Law with appropriate jurisdiction; or
• The accused individual signing a Waiver of the Disqualification Hearing (DCO-257).

Until one of the above actions occurs, suspected IPVs will be handled as inadvertent household errors.

The individual found guilty of committing the violation will be disqualified from participating in the Food Stamp Program. The period of disqualification depends on the sanction in effect at the time the violation began.

For any violation that began prior to March 1979, no disqualification will be imposed. For any violation that began during the period from March 1979 to September 1983, the disqualification will be three months. (A three-month disqualification will be applied regardless of the number of offenses.) For any violation that began during the period from October 1983 to September 1996, the disqualification will be six months for the first offense, twelve months for the second offense, and permanent for the third offense. For any violation that began during the period beginning October 1996 and continuing to the present, the disqualification will be one year for the first offense, two years for the second offense, and permanent for the third offense. See [FSC 15531] for additional instructions.

2/01/95

07/01/02

The county office worker will prepare the Benefit Overpayment Report (DHS-199) on all overpayments classified as administrative errors regardless of the amount of the overpayment. This includes overpayments where:

• The county office failed to take timely action on a change reported by the household.
• The agency incorrectly computed household income or deductions or otherwise calculated an incorrect benefit amount.
• The household was overpaid due to a worker or system error.
• The household did not complete the recertification process but continued to receive food stamp benefits after the certification period expired.
• The county office failed to reduce a household’s food stamp benefit amount after a household member’s TEA cash assistance increased.

The county office worker will prepare the Benefit Overpayment Report (DHS-199) on an overpayment classified as an inadvertent household error if:

• The overpayment occurred when a household requested continuation of benefits and the hearing decision was in favor of the agency’s action.
• The overpayment amount is $125 or less.

If an IPV is suspected and the total overpayment is estimated to be more than $125, the worker will submit a Suspected Fraud Report (DHS-1700) to the Fraud Unit. If the case is accepted, the Fraud Unit will conduct an investigation, obtain the needed verification and prepare the overpayment documents.

If the case is not accepted for investigation, the county will be notified so a county office worker can be complete a DHS-199.

An overpayment claim must be submitted to the Overpayment Unit within 60 days of the date of discovery.  The date of discovery is the date that the county office worker establishes through documentary evidence that an overpayment exists.

A Suspected Fraud Report (DHS-1700) must be submitted to the Fraud Unit within 10 days of the date the worker becomes aware that an overpayment that is a suspected intentional program violation may exist.

3/01/97

NOTE: When a DHS County office becomes aware of an overpayment as the result of a Quality Assurance (QA) review, the household must follow the procedures in this section of policy. A QA reviewer will determine only the amount of overpayment for the review month. Also, the verification provided to QA by an agency or an employer may not cover the entire overpayment period.

The following actions will be completed to determine the total amount of the overpayment:

Step 1 Determine the Initial Month of Overissuance

The initial month of overissuance is the first month in the overpayment period.  If the overissuance resulted from the household giving incorrect or incomplete information at the time of application (initial or recertification), the initial month of overissuance is the first month of the certification period assigned at application approval.

Example - A household submitted an application on September 12. The husband's earnings were reported on the application, but the wife's earnings were not reported. The application was approved on October 21 based only on the husband's earnings. Retroactive prorated benefits were authorized for September. At the time of the wage match for the quarter ending September, it was discovered that the wife was employed at the time the application was submitted and had been working for several months. The initial month of overissuance will be September.

For Occasional Reporters, as defined in [FSC 11350], if the household fails to timely report one of the changes specified in [FSC 11200], the initial month of overissuance will be established by determining the effective date of the change and adding 20 days. For example, if the effective date of change is established as June 6th, the caseworker will begin with June 7th and count 20 days. The 20th day falls before the end of June (June 26th) so the initial month of overissuance is July. (No overpayment will be prepared if the overissuance resulted from a change other than those listed in [FSC 11200].) If there is more than one unreported change during the overpayment period, the effective date of each change will be established in the same manner.

The effective date of the change is defined as the day upon which an identifiable change actually occurred. Some examples of the effective day of change are given below.

SITUATION	EFFECTIVE DATE
Went to work	First day of employment.
Change in household composition	Date member actually entered or left household.
Received entitlement check	Date 1st check issued to household as verified by issuing agency.
Received unemployment	Date first check issued to household as verified by WESD screen.

Example - A household failed to report that the wife went to work in September until the household's recertification interview in December. The caseworker established that the wife's first day of employment was September 11. The 20th day is October 1. The initial month of overissuance will be November.

For Limited Reporters as defined in [FSC 11340], the two changes that limited reporting households are required to report must be reported within 10 days of the end of the calendar month in which the change occurred. If the limited reporting household is subject to semi-annual reporting, all other changes must be reported on the semi-annual report. For changes that limited reporting households are required to report independent of the semi-annual report, the initial month of overissuance will be the second month following the calendar month in which the change occurred. For changes that limited reporting households are required to report on the semi-annual report, the initial month of the overissuance will be the first month following the submission of the semi-annual report on which the change should have been reported.

Step 2 - Exclude Any Months More Than 72 Months (or 12 months for administrative errors) Prior to the Month in Which the Overissuance was Discovered

Step 3 - Determine the Household's Correct Food Stamp Benefit Amount for Each Month of the Overpayment Period

The household's correct benefit amount will be calculated using the household's exact income, resources, expenses, household composition, etc. for each month in the overpayment period. It may be necessary to calculate a different budget for each month in the overpayment period in order to capture variation in circumstances. Weekly and bi-weekly income and/or expenses will not be converted when a budget is calculated.  See [FSC 7512-7740] for instructions on preparing a budget.

If verification of the monthly income is not available, the best source of information may be used to prepare the overpayment. For example, the quarterly wages appearing on the wage match may be used to prepare an overpayment if the individual's employment is verified, but verification of monthly wages cannot be obtained.  Documentation of all verification obtained must appear in the case record. If actual monthly income cannot be established, documentation of all attempts to obtain verification of the actual monthly income must appear.

The standards (e.g. - utility standard, standard deduction, earned income deduction) and issuance charts in effect during the overpayment period must be used to prepare the overpayment. If a standard changed during the overpayment period, the overpayment budgets must reflect this change. The tapes or forms used to prepare the overpayment budgets must be clearly labeled and must remain in the case record as documentation.

Step 4 If Necessary, Complete a Second Series of Budgets With no Earned Income Deduction

 allowed on any earned income that a household failed to report timely.  The overpayment budget will be prepared in the same manner as any other budget except that the earned income deduction will not be allowed for that portion of the earned income which the household failed to report. 

Example: A household reported the husband's income but failed to report the wife's income.  The earned income deduction will be allowed for the husband's earnings but not for the wife's.

The earned income disallowance will be effective for any months in the overpayment period when the county was not aware of the earnings. For example, a county becomes aware of a household's earned income in July but does not adjust the case to include the earnings until December. The earned income disallowance will cease in July. The earned income deduction will be allowed when the overpayment budgets for the months August through December are prepared.

Step 5 - Complete a DHS-199, Benefit Overpayment Report.

NOTE: Should the household become entitled to restored benefits while the overpayment is being prepared, the amount to be restored will be offset. See [FSC 13320] for instructions.

Step 6 Enter the Overpayment in the Overpayment Record in the County Office

Any record must contain the following information.

• Name

• Case Number

• Date overpayment was discovered

• Month, day and year overpayment started

• Date referred to the Overpayment Unit

• Suspected claim type

Other information may be added if desired by the county office. Records may be manual or maintained on a personal computer (PC) based system.

10/01/97

When an overpayment occurs on a case in which a member participated in workfare during the overpayment period, the worker must determine if the household is entitled to an offset on the overpayment.  See [FSC 15402].

10/01/97

10/01/97

Step 1 - Determine the household's correct food stamp benefit amount for each month of the overpayment period. Use [FSC 15400]. Enter the corrected benefit amount on the DHS-199.

Step 2 - Determine the household's correct obligation by dividing the household's correct monthly benefit amount by the current federal minimum wage. For workfare households, see [FSC 3730] for the maximum obligation.

Step 3 Determine the number of hours actually participated. The workfare sponsor must furnish this information.

Step 4  Subtract the household's corrected obligation from the number of hours the household actually worked if additional hours were worked due to the overissuances. The result will be the extra hours worked.

Step 5 Determine the offset amount by multiplying the extra hours worked by the current federal minimum wage. Enter the offset amount.

When cases are referred in a non-fraud status, the offset will be allowed when the total overpayment amount is entered. When the case is referred in a pending-fraud determination status, the offset must appear on the form but will not be reflected in the overpayment. The offset amount will be used by the Overpayments Unit to adjust the overpayment if there is no finding of an intentional program violation through a court of law or an administrative disqualification hearing.

10/01/97

Before 12-01-99, the definition of a categorically eligible household was:  A household where every household member received either TEA (AFDC) or SSI benefits.

Beginning 12-01-99, the definition of a categorically eligible household is:  A household where at least one member receives one of the TEA benefits specified in [FSC 1920] OR a household where every member receives SSI benefits.

Categorical eligibility cannot be rescinded retroactively.  This means that a household's status as a categorically eligible food stamp household will not be changed after the fact even if AFDC (TEA) or SSI eligibility is subsequently determined improper.

No overpayment will be prepared when excess household resources caused the household to be subsequently found ineligible for AFDC (TEA) or SSI benefits. However, an overpayment will be prepared if the AFDC (TEA) or SSI eligibility was improper due to unreported income or changes in household size and an overissuance of food stamp benefits occurred.

For example, a food stamp household is made up of a TEA recipient and her children, all of whom are included in the TEA grant. She goes to work but does not report this income. To determine the food stamp overpayment, the worker will include both the TEA grant received by the household and the unreported earned income.

11/01/97

15430 Review and Submission of the Overpayment Report

11/01/97

The Overpayment Unit has the following responsibilities:

1. Reviewing the Benefit Overpayment Report (DHS-199) to determine if the information needed to substantiate an overpayment claim is contained in the documents.
2. Documenting the circumstances that resulted in the overpayment and the procedures and methods used to calculate the overpayment.
3. Requesting additional information if needed to substantiate the overpayment claim.
4. Activating the account in ROAS.
5. Sending a Demand Letter and Repayment Notice.
6. Monitoring claim payments and attempting to collect payments that are in arrears.

Within 120 days of the date of receipt of an overpayment claim, the Overpayments Unit will have entered all substantiated overpayment claims into the automated Recipient Overpayment Accounting System (ROAS) as an active account.

The Accounting Section receives, processes, and records all payments and maintains ROAS.  The Accounting Section documents and maintains records on the amount of money and food stamp benefits collected in payment of an overpayment and how much was submitted to Food and Nutrition Service.  At the end of each month, the Overpayment Unit receives a printout of all transactions occurring during that month.

11/01/97

The Overpayment Unit reviews the Benefit Overpayment Report (DHS-199) to determine if all the information necessary to process an overpayment claim is contained in the documents. If the claim report is accurate and all information and calculations are correct, the Overpayment Unit substantiates the claim by:

1. Activating the account in the ROAS.
2. Sending a Demand Letter and Repayment Notice to the debtor with a copy to the initiating DHS county office.

If additional information is required to complete the overpayment claim, the initiating county office will be requested to provide the additional necessary information within 30 days. If the requested information is not received within 30 days, a second request will be submitted to the initiating county office.

If the requested information is not received from the initiating county office, the claim will be reviewed to determine if there is sufficient information available to establish any portion of the overpayment and one of the following actions will be taken:

• If sufficient information is available, a claim will be processed for the period and amount that can be substantiated with the available information. The initiating county office will be notified that a partial claim has been established and advised that the claim will be adjusted if the requested information is received in Overpayment Unit at a later date.

• If the information is insufficient to verify and establish an overpayment claim for any time period or amount, the claim report will be administratively closed. The initiating county office will be notified and advised that if the requested information is received in the Overpayment Unit, the claim will be re-opened and processed.

The Overpayment Unit is responsible for the collection of the overpayment. Overpayments may be repaid through:

1. Cash payment.
2. Offset of EBT food stamp benefits.
3. Reduction of the household's food stamp benefits prior to issuance (recoupment).
4. Offset of state income tax refunds, federal income tax refunds, federal salaries due federal employees owing delinquent food stamp debts, and other monies payable by the federal government to individuals owing a delinquent food stamp debt.

11/01/97

15531 Initiating Collection

11/01/97

07/01/00

There are two different payment schedules. They are:

1. A payment schedule for recoupment of food stamp benefits (see [FSC 15700]); or
2. A payment schedule for direct payment in the form of cash, check, or money order.

The payment schedule for direct payments, which is based upon the amount of the overpayment, appears below:

The payment schedule will remain in effect until changed by the Overpayment Unit. The household may contact the Overpayment Unit and request a change in the repayment schedule at any time. If the Overpayment Unit determines there is sufficient reason or that there is a legitimate financial hardship for the household, the repayment schedule may be changed.

11/01/97

If an overpayment claim is determined to be uncollectable, collection activity will be suspended and the claim will be processed for abatement in accordance with Arkansas Law. Abated claims will be held for three years before they are scheduled for destruction. During this period a claim may be offset by food stamp benefits in accordance with food stamp policy. 

11/01/97

Efforts to collect an overpayment may be suspended under any of the following circumstances:

• All household members die.
• The claim balance is less than $5.00 or the combined amount of all open claims is less than $20.00 and the claim or claims have been delinquent for 90 days or more and the debtor is not currently receiving food stamp benefits.
• The claim has been delinquent at least 3 years and 1) there has been no payment activity (including state intercept and treasury offset) for 5 years and 2) the claim cannot be pursued through legal action because the claim balance is less than $500 and 3) there are no resources to pursue.
• The household cannot be located.
• It is not cost effective to pursue the debt.
• The household/debtor has filed for bankruptcy and the bankruptcy court has discharged the debt unless there are other responsible household members who did not file for bankruptcy protection or the client has signed a criminal fraud waiver admitting guilt.
• The claim debt has been overturned by an administrative hearing decision or by court action.

Claims suspended for three years will be reviewed to determine if they can be collected. If the claim is determined to be uncollectable, it will be processed for abatement.

A DHS-1700 will be sent to the Fraud Unit when food stamp overpayment appears to be in excess of $125 and is classified as a non-fraud pending fraud determination. Administrative errors will not be referred to the Fraud Unit. Overpayments that occur when a household requested an administrative hearing and continuation of benefits will not be referred to the Fraud Unit. No overpayment, regardless of classification, will be referred to the Fraud Unit if the total overpayment is $125 or less. In these situations, the county must prepare the Benefit Overpayment Report (DHS-199) and submit it to the Overpayment Unit.

The Fraud Unit makes any necessary investigation. If an overpayment is discovered and the overpayment appears to be classified as an intentional program violation, the Fraud Unit will prepare the overpayments documents and determine whether the case is to be referred for prosecution. The Overpayment Unit will be provided with a list of the cases referred for prosecution.

Unless the household signs a Waiver of Hearing and Consent to Disqualification, the Fraud Unit will return overpayments not referred for prosecution to the Overpayments Unit for a referral to the Appeals and Hearings Section for an administrative disqualification hearing. The purpose of the hearing is to determine if the overpayment should be classified as an IPV. The Overpayments Unit immediately begins collection on all cases returned by the Fraud Unit when the Fraud Unit has prepared the overpayment documents..

The cases referred for prosecution are handled as specified below.

1. Recommended for Prosecution

When the Fraud Unit recommends a case for prosecution, the overpayment will remain with the Fraud Unit. A memorandum will be sent to the Overpayment Unit (copy to the county) indicating the action being taken on the case. The Overpayment Unit will take no further action until final disposition of the case. Upon completion of prosecution, the overpayment will be returned to the Overpayment Unit with a memorandum (copy to the county) indicating the decision of the court.

2. Declined Prosecution

If the Fraud Unit recommends a case for prosecution but the Prosecuting Attorney declines prosecution, or if the Fraud Unit determines that the waiting time for a court hearing is prohibitive, the overpayment will be returned to the Overpayment Unit. Upon receipt of a case upon which prosecution was declined, the Overpayment Unit will review the overpayment to determine if there is sufficient evidence to request a disqualification hearing. If so, the case will be sent to the Appeals and Hearings Unit within thirty days of the date the case is returned to the Overpayment Unit.

The Fraud Unit will be responsible for collection action on court adjudicated cases. 

Overpayments to be established as intentional program violations (IPV) by an administrative disqualification hearing or by the signing of a Waiver of the Administrative Disqualification Hearing (DHHS-257) will be returned to the Overpayment Unit.  The Overpayment Unit will prepare a DHHS-11 notifying the Accounting Section that the claim has been changed to IPV status.  

The Overpayment Unit will monitor repayment of the claim until it is paid in full, suspended, or the payments cease.  If the household fails to repay the amount due, the Overpayment Unit will identify the claim as a delinquent account and take action to recover the full amount due.

A household's food stamp benefit amount may be reduced prior to issuance to recover an overpayment. Such action is called "recoupment". A food stamp recoupment can only be applied to a food stamp overpayment.

Recoupment will be initiated against each new overpayment claim processed by the Overpayment Unit if an adult member of the household, against which the claim was established, is currently certified for food stamp benefits. Recoupment will be initiated against the household in which the individual, in whose name the overpayment was reported and established, is included as a household member.

Inadvertent household and administrative (agency) error claims will be recouped at the rate of ten percent (10%) of the household's monthly benefit amount or ten dollars ($10.00) whichever is greater. Intentional program violation (IPV) claims will be recouped at the rate of twenty percent (20%) of the household's monthly benefit amount or ten dollars ($20.00) whichever is greater

One and two person households may not receive the minimum benefit amount of $10.00 specified in [FSC 8630] after recoupment is initiated.

01/01/07

When too many food stamp benefits are authorized due to a county office error or a computer error, the benefits may be cancelled if the error is discovered prior to the date that benefits are made available to the household.  The county office must contact the Food Stamp Section to request cancellation of food stamp benefits.  See FSC 14350 for full instructions. The county office worker will be responsible for issuing a corrected approval notice to the household.  Client caused overpayments will not be canceled. An advance notice of adverse action must be issued to the household when the case is corrected. 

When an overpayment, either client-caused or agency caused, is discovered after the availability date, an overpayment must be prepared.  The household is permitted to return benefits from the electronic benefits transfer (EBT) account to repay such overpayments.  See FSC 15800 for instructions.

The Debt Collection Act of 1982 and the Debt Collection Improvement Act (DCIA) of 1996 authorizes the Department of the Treasury to be the primary Federal collection agent for the collection of delinquent food stamp debts.  As such, the Department of the Treasury now has the responsibility for operating the Federal Tax Refund Offset Program (FTROP), the Federal Salary Offset Program (FSOP), and the Program for Administrative Offset.  The certification of a delinquent debt for any of the three actions will be made through the Treasury Offset Program (TOP). 

Federal Tax Refund Offset is the reduction (offset) of a delinquent food stamp debtor's federal income tax refund by the amount of the delinquent food stamp debt and applying such amount reduced (offset) against the delinquent food stamp debt.

Federal Salary Offset is the reduction in salary of a federal employee who owes, and is delinquent in repayment of, a food stamp overpayment debt and crediting such amount to the delinquent debt. 

Administrative Offset is the withholding of funds payable by the federal government to an individual owing a delinquent food stamp debt and crediting such funds withheld to the delinquent debt.  This process is called the Treasury Offset Program or TOP.  The Arkansas Department of Health & Human Services has signed a letter of agreement with USDA, Food and Nutrition Service (FNS), to participate in TOP.  The Accounts Receivable Overpayment Unit of the Division of Fiscal Management certifies delinquent debts to FNS so that monies owed by food stamp debtors may be offset through TOP.

The Overpayment Unit will notify the debtor of its intent to refer a claim for intercept through TOP.  The notice will give the debtor 60 days to present evidence that all or part of the claim is not past due or legally enforceable.

The 60 day notice must state:

1. The debtor's social security number.
2. The amount of the claim.
3. That the debtor has previously been notified of the claim and prior collection efforts have been made.
4. That the debt is past due and legally enforceable.
5. That unless the claim is paid within 60 days of the date of the letter or other repayment arrangements acceptable to the Overpayment Unit are made, the claim will be referred for intercept.

The notice must also provide:

• The instructions for paying the claim.
• The specifics of the appeal process as described in FSC 15960.
• The name, address and telephone number of an individual in the Overpayment Unit who can discuss the claim and the intended intercept with the debtor and who can assist the debtor in filing an appeal.

11/01/97

11/01/97

Upon receipt of an appeal of a state agency decision, FNS will request documentation from the Overpayment Unit and will take one of two actions:

1. Time permitting, FNS will complete the review and notify the debtor and the Overpayment Unit.
2. If not, FNS will notify the Overpayment Unit that it has not completed its review and the claim must be deleted from the final files certified to FNS for intercept.

If during its review FNS determines that the debt is past due and legally enforceable, the debtor will be so notified and advised that he or she has the right to appeal this decision through the courts. If FNS determines that the claim is not past due or legally enforceable, the Overpayment Unit must take appropriate corrective action. The Overpayment Unit will be notified of FNS's decision in either event.