Department of Human Services

Food Stamp Online  Policy Manual

Overissuances and Claims

Revised: 

39.7

COLLECTING CLAIMS AGAINST HOUSEHOLDS

Food Stamp Table of Contents

1240-1-20-.07

(1)   Criteria for Initiating Collection Action.

 

(a)   Inadvertent Household and Administrative Error Claims

 

The Department shall initiate collection action against the household on all inadvertent household or administrative error claims unless the claim is collected through offset or one of the following conditions applies:

 

1.      The total amount of the claim is less than $35, and the claim cannot be recovered through allotment reduction. (Collection action will be initiated at such time that multiple claims of under $35 total $35 or more.)

2.      The Department has documentation, which shows that the household cannot be located.

3.      An inadvertent household error claim is being referred for possible prosecution or for administrative disqualification, and the Department determines that collection action will prejudice the case.  In these instances, collection action may be postponed.

 

(b)   Intentional Program Violation Claims

 

If a household member is found to have committed intentional program violation (by an administrative disqualification hearing official or a court of appropriate jurisdiction) or has signed a waiver of right to an administrative disqualification hearing, or an administrative consent agreement, the Department shall initiate collection action against the individual/household, unless one of the following conditions applies:

 

1.      The household has repaid the overissuance already,

2.      The Department has documentation which shows the household cannot be located,

3.      The Department determines that collection action will prejudice the case against a household member who has been referred for prosecution.

 

(2)   Initiating Collection on Claims

 

The Department shall initiate collection action by providing the household a written demand letter containing the following information:

 

(a)     The amount owed by the household,

(b)    The reason for the claim,

(c)     The period of time the claim covers,

(d)    Any offsetting that was done to reduce the claim.

(e)     How the household may pay the claim,

(f)     The household's right to a fair hearing if the household disagrees with the amount of the claim, unless the household has already had a fair hearing on the amount of the claim as a result of consolidation of the administrative disqualification hearing with the fair hearing.

(g)     Information regarding free legal representation, if there is an individual or organization available that provides free legal representation.

(h)    For inadvertent household error and intentional program violation claims, the household shall be informed of:

 

1.      The length of time the household has to decide which method of repayment it will choose and inform the Department of its decision,

2.      The fact that the household's allotment will be reduced if the household fails to agree to make restitution.

 

(i)      For administrative error claims, the household shall be informed of:

 

1.      The availability of allotment reduction as a repayment method if the household prefers to use this method and

2.      Being able to request consideration to waive or reduce their repayment on their agency error claim.

 

(3)   Action Against Households Which Fail to Respond to Collection Action

 

(a)   If the household against which collection action has been initiated for repayment of an inadvertent household error or intentional program violation claim is currently participating in the program and does not respond to the written demand letter within twenty (20) days of the date the notice is mailed for an intentional program violation, the Department will reduce the household's food stamp allotment as soon as is administratively feasible.

 

(b)   If any nonparticipating household against which collection action has been initiated for repayment of a claim does not respond to the first demand letter, additional demand letters shall be sent at reasonable intervals, such as 30 days until the household has responded by paying or agreeing to pay the claim, until the criteria for suspending collection action, as specified in section 1240-1-20-.07 (4), have been met, or until the Department initiates other collection actions.

 

(c)    The Department may also pursue other collection action, as appropriate, to obtain restitution of a claim against any household which fails to respond to a written demand letter for repayment of any inadvertent household error, administrative error, or intentional program violation claim.

 

(4)   Suspending Collection of Claims

 

(a)   Inadvertent Household and Administrative Error Claims

 

An inadvertent household or administrative error claim may be suspended if no collection action was initiated because of conditions specified in paragraph (1)(a) of this section.  Collection action of an inadvertent household error claim against a nonparticipating household or of any administrative error claim may be suspended when:

 

1.      The household cannot be located; or

2.      The cost of further collection action is likely to exceed the amount that can be recovered.

 

(b)   Intentional Program Violation Claims

 

The Department may suspend collection action on intentional program violation claims when:

 

1.            The Department has documentation that the household cannot be located, or

2.            For nonparticipating households the Department has sent at least one demand letter for claims under $100; at least two demand letters for claims between $100 and $400; and the cost of further collection action is likely to exceed the amount that can be recovered.

 

(5)   Terminating Collection of Claims

 

A claim may be determined uncollectible after it is held in suspense for 3 years.  The Department may use a suspended or terminated claim to offset benefits in accordance with rule 1240-1-20-.09.

 

(6)   Collection Action When the Household Composition Changes

 

When the membership of a household with an overissuance claim changes, collection action will be initiated as follows:

 

(a)   Inadvertent Household and Administrative Error Claims

 

 The Department shall initiate collection from the household containing the head of the household at the time the overissuance occurred. 

 

If repayment cannot be obtained from such a household, the Department shall initiate collection from any household containing an adult who was a member of the household in which the overissuance occurred.

 

(b)   Intentional Program Violation Claims 

 

The Department shall initiate collection action against the household which committed an intentional program violation and which received the overissuance for which the claim was established. 

 

If repayment cannot be obtained from the person who committed the intentional program violation the Department shall initiate collection action against the household containing the individual who was head of the household at the time the act(s) of intentional Program violation occurred. 

 

If repayment cannot be obtained from such household, the Department shall initiate collection against any household containing an adult who was a member of the household in which the overissuance occurred.

 

(7)   Method of Collecting Payments

 

The Department shall collect payments for claims against households as follows:

 

(a)   Lump Sum

 

The household may repay a claim by lump sum:

 

1.  If the household is financially able to pay the claim at one time, the Department shall collect a lump sum cash payment.  However, the household shall not be required to liquidate all of its resources to make this one lump sum payment.

2.  If the household is financially unable to pay the entire amount of claim at one time and prefers to make a lump sum cash payment as partial payment of the claim, or

3.      If the household chooses to make a lump sum payment of food stamp benefits as full or partial payment of the claims. (See page 45, CLAIMS REPAYMENT, of the Benefit Issuance Manual for instructions.)

 

(b)   Installments

 

1.      The Department shall negotiate a payment schedule of regular installments with the household for repayment of any amounts of the claim not repaid through a lump sum payment.  The household may use food stamp benefits as full or partial payment of any installment. 

 

If the full claim or remaining amount of the claim cannot be liquidated in 3 years, the Department may compromise the claim by reducing it to an amount that will allow the household to pay the claim in 3 years (click here for more information).  The Department may use the full amount of the claim (including any amount compromised) to offset benefits.

 

2.      If the household fails to make a payment in accordance with the established repayment schedule (either a lesser amount or no payment), the Department shall send the household a notice explaining that no payment or an insufficient payment was received. 

 

The notice shall inform the household that it may contact the Department to discuss re-negotiation of the payment schedule.  The notice shall also inform the household that unless the overdue payments are made or the Department is contacted to discuss re-negotiation of the payment schedule, the allotment of a currently participating household against which an inadvertent household error or intentional Program violation claim has been established may be reduced without a notice of adverse action.

 

3.      If the household responds to the notice, the Department shall take one of the following actions as appropriate.

 

(i) If the household makes the overdue payment and wishes to continue payments based on the previous schedule, permit the household to do so;

 

(ii)If the household requests re-negotiation, and if the Department concurs with the request, negotiate a new payment schedule;

 

(iii) If the household requests re-negotiation of the amount of its repayment schedule but the Department believes that the household's economic circumstances have not changed enough to warrant the requested settlement, the Department may continue re-negotiation until a settlement can be reached. 

 

The Department shall have the option to invoke allotment reduction against a currently participating household for repayment of an inadvertent household error or intentional Program violation claim if a settlement cannot be reached.

 

4.      If a currently participating household against which an inadvertent household error or intentional program violation claim has been established fails to respond to the notice, the Department shall invoke allotment reduction. 

 

The Department may also invoke allotment reduction if such a household responds by requesting re-negotiation, but the Department believes that the household's economic circumstances have not changed enough to warrant the requested settlement.  If allotment reduction is involved, no notice of adverse action is required.

 

5.      In cases where the household is currently participating in the program and a payment schedule is negotiated for repayment of an inadvertent household error or intentional Program violation claim, the Department shall ensure that the negotiable amount to be repaid each month through installment payments is not less than the amount which could be recovered through allotment reduction.

 

6.      Once negotiated, the amount to be repaid each month through installment payments shall remain unchanged regardless of subsequent changes in the household's monthly allotment.  However, both the Department and the household shall have the option to initiate re-negotiation of the payment schedule if they believe that the household's economic circumstances have changed enough to warrant such action.

 

(c)    Allotment Reduction.

 

1.      The Department shall collect payments for administrative error claims, inadvertent household error claims, and intentional program violation claims from households currently participating in the program by reducing the household's food stamp allotments.

 

2.      Prior to reduction, the Department shall inform the household of the appropriate formula for determining the amount of food stamps to be recovered each month and the effect of that formula on the household's allotment, and of the availability of other methods of repayment.  If the household asks to make a lump sum cash and/or food stamp benefit payment as full or partial payment of the claim, the Department shall accept this method of payment.

 

3.      The Department shall reduce the household's allotment to recover any amount of an administrative error, inadvertent household error, or intentional program violation claim not repaid through a lump sum cash and/or food stamp benefit payment unless a payment schedule has been negotiated with the household.  The provision for a $10 minimum benefit level for households with one and two members only shall apply to the allotment prior to reduction.

 

4.      If the full or remaining amount of the claim cannot be liquidated in 3 years, the Department may compromise the claim by reducing it to an amount that will allow the household to make restitution within 3 years.

 

5.      The Department may use the full amount of the claim (including any amount compromised) to offset benefits.

 

6.      The amount of food stamps to be recovered each month through allotment reduction shall be determined as follows:

 

(i) Administrative Error and Inadvertent Household Error Claims.  For these claims, the amount of food stamps shall be the greater of 10 percent of the household's monthly allotment or $10 per month.

 

(ii)    Intentional Program Violation Claims.  For intentional program violations claims, the amount of food stamps shall be the greater of 20 percent of the household's monthly entitlement or $20 per month.

 

(8)   Overpaid Claims

 

If a household has overpaid a claim, the Department shall pay the household any amounts overpaid as soon as possible after the overpayment becomes known.

 

(9)   Interstate Claims Collection

 

When a household moves to another state, the Department shall initiate or continue collection action against the household for any overissuance to the household which occurred while it was under the Department's jurisdiction.

 

Glossary of Terms

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