10A NCAC 71P .0508. FRAUD

(a)  Definition:  Fraud vs. Misrepresentation.

(1)           Fraud is a crime against society which can only be determined in a criminal court.  It is the willful and intentional act that creates the crime, rather than the resulting overpayment.  An applicant or recipient is suspected of fraud when he willfully and knowingly with the intent to deceive:

(A)          makes a false statement or misrepresentation; or

(B)          fails to disclose a material fact; or

(C)          does not report changes in income or other eligibility factors that affect the amount of payment; and as a result obtains or continues to receive assistance.

(2)           Misrepresentation causes monetary loss as a result of a recipient's action or inaction.  Misrepresentation can be intentional or unintentional:

(A)          Intentional Misrepresentation.  The applicant or recipient gives incorrect or misleading information in response to either oral or written questions.  The information is provided with the knowledge that it is incorrect, misleading, or incomplete.  This may or may not be fraud but that must be decided by a court of law.

(B)          Unintentional Misrepresentation.  There is no proof that the recipient acted willfully and intentionally to obtain more benefits than those to which he was entitled.  The recipient gives incomplete, incorrect or misleading information because he does not understand the eligibility requirements or his responsibilities to provide the agency with required information.

(b)  Prevention.

(1)           Interviews.  In an effort to prevent fraud, the eligibility worker shall do the following at applications and reviews:

(A)          obtain correct social security numbers for budget unit members;

(B)          explain his obligation to report all changes in situation within five days after they occur;

(C)          inform him of the consequences of failure to report changes, stressing the penalties for fraud and misrepresentation;

(D)          give him a copy of the fraud pamphlet and explain to him the meaning of fraud;

(E)           question the applicant or recipient regarding unreported income when it appears living standards of a spouse at home or CD applicant or recipient exceed income;

(F)           tell him how to report changes; and

(G)          ask the recipient about any changes since his application or last review.

(2)           Documentation and Verification.  The worker shall verify and document in detail the information given during the interview.

(c)  Detection.  The worker shall check SDX and BENDEX listings at applications and reviews.  If lead information is received from other agencies, providers, other recipients or private citizens, the county departments shall investigate.

(d)  Investigation.  County department responsibilities.

(1)           As soon as there is an indication that a recipient obtained benefits to which he was not entitled or an overpayment exists, the worker shall assess whether the agency determined eligibility and documented information obtained according to regulations, substantiate the intent to defraud, and obtain and document all of the evidence necessary to substantiate whether the overpayment is due to intentional or unintentional misrepresentation.

(2)           The director, or his designee, shall review each case after the eligibility staff's evaluation.  If there is sufficient evidence to suspect fraud, the director shall refer the case for a decision to the board of social services, or make the decision if the board has designated that he do so.

(3)           If the director determines that the case should go before the board of social services, a summary shall be prepared which contains:

(A)          identifying information,

(B)          description of the suspected fraudulent act,

(C)          description of the evidence to substantiate the applicant's or recipient's intent to defraud,

(D)          description of evidence to substantiate the amount of the overpayment, and

(E)           background information such as the applicant's or recipient's current situation, educational background and competency.

(e)  County Board of Social Services Responsibilities.  The county board of social services or its designee shall review the suspected fraud case to determine if there is a basis for suspected fraud and determine the appropriate course of action to take. While fraud may be suspected, the board may decide that the recipient's circumstances preclude prosecution and/or repayment.  The board must determine if the applicant or recipient:

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

(2)           willfully and knowingly failed to report changes affecting the amount of payment; or

(3)           willfully and knowingly failed to report the receipt of benefits to which he knew he was not entitled.

If the board determines that willful misrepresentation occurred and therefore fraud is suspected, it shall direct the agency to pursue one or more of the following:

(4)           Administrative action:

(A)          involuntary grant reduction up to 10 percent of the payment;

(B)          voluntary grant reduction;

(C)          voluntary recipient refund;

(5)           Civil court action;

(6)           Criminal court action;

(7)           Take no action for unusual or hardship cases.

(f)  County Department Follow‑Up.

(1)           Administration action:

(A)          Involuntary grant reduction.  If a Certain Disabled recipient has no resources, an involuntary grant reduction shall not exceed 10 percent of the payment.  In domiciliary care cases, grant reduction shall be required only if the recipient has disregarded earned income or excess reserve.  The amount of reduction shall not exceed the amount available as disregarded earned income or excess reserve.  If the recipient has no resources, the board may direct the agency to require him to sign a statement that he will repay the overpayment if he acquires resources in the future.

(B)          Voluntary grant reduction and voluntary recipient refund.  The county department shall ensure that the recipient who agrees to a voluntary grant reduction or refund is not treated any more harshly than the applicant or recipient who has an involuntary grant reduction.

(2)           Criminal court action.  The county department shall assist the prosecutor by:

(A)          providing a clear and concise summary of the suspected fraud case;

(B)          compiling any information gathered during the investigation;

(C)          making the prosecutor aware of the specific eligibility factors involved in the case;

(D)          explaining exactly how the overpayment amount was computed, the time restraints on social services actions (advance notice, 5‑day reporting requirements);

(E)           if necessary, appearing as a witness.

(3)           Regardless of what the board or its designee decides or what action is taken by the court, the agency shall continue to work with the applicant or recipient.  The applicant or recipient shall be promptly notified of any action taken in the case.  If the applicant or recipient remains eligible, the case shall not be terminated just because fraud is suspected.

(4)           If the board, or its designee, suspects fraud, the department's findings and action shall be reported immediately to the Adult and Family Services Section.

(5)           The county department shall keep all documentation, evidence, or summaries for future reference.

 

History Note:        Authority G.S. 143B‑153;

Eff. January 1, 1983;

Amended Eff. June 1, 1990.