Welfare Fraud is Rampant, DSHS Employees Charge – While Agency Points to Sterling Record

Article by Erik Smith. Published on Thursday, December 10, 2010 EST.

Senate ‘Suggestion Box’ Stuffed With Anonymous Complaints From Front-Line Employees – They Say Agency Goes After Big Fish While Leaving Small Fry Alone


Department of Social and Health Services headquarters in Olympia.

SEE ALSO: Former DSHS social worker William Larson offers comment on the complaints from front-line workers.

By Erik Smith

Staff writer/ Washington State Wire


OLYMPIA, Dec. 9.—While the state Department of Social and Health Services says it has an outstanding record in combating welfare fraud, you can say there are plenty of front-line employees who haven’t gotten the message.

            They’ve been stuffing an on-line legislative suggestion box with allegations that the agency pays out welfare benefits willy-nilly, does a slap-dash job of checking qualifications, and gets the heebie-jeebies whenever anyone suggests going after small-time welfare cheats.

They say welfare fraud is rampant and upper-level managers just don’t care. They say the agency downplays fraud to make its fraud-prevention record look better.

Apparently the subject has prompted much internal debate at the agency, on an internal employee website that is off-limits to outsiders. The furor has surfaced because of a call from the state Senate for suggestions from state employees for cutting spending. It has led one state senator to call for creation of an independent office to investigate allegations of welfare fraud. In today’s tough economic climate, any misspent taxpayer dollar is a dollar too much, says state Sen. Joe Zarelli, R-Ridgefield.

            And while the agency points to kudos from the feds for its welfare-fraud efforts, the allegations from the workers make an interesting argument about the agency’s fraud investigations. They say the agency seems to be putting its emphasis on the big fish – the providers who bilk taxpayers out of tens of thousands and even millions of dollars. But the little guys – the ones whose grifts might run from the few hundreds to the few thousands – aren’t such a high priority.


            Avalanche of Complaints


            Zarelli says welfare fraud at DSHS has been one of the biggest complaints since the Senate opened its suggestion box in September. Three months ago Zarelli, the top Republican budget-writer, partnered up with state Sen. Margarita Prentice, D-Seattle, the chairwoman of the Senate Ways and Means Committee. With tough decisions about the state’s $5.7 billion shortfall just around the corner, they launched a website calling for suggestions to lop the state budget, and sent an email to more than 50,000 state employees inviting them to participate.

            The key thing about the program is that it offered anonymity. Meaning that employees could criticize agency managers without fear of retribution. What followed was an avalanche – 3,000 responses in the first day alone, and a total of more than 7,500.


            Anonymity Appeals to DSHS Workers


The Senate Ways and Means Committee is due to release a report soon, and meanwhile Zarelli has been pumping out weekly videos on a Senate Republican website that offer cost-cutting suggestions. Some of his suggestions are GOP evergreens. A few refer to the employee suggestions.

            But his welfare-fraud piece, released last month, was the only one that came with a big batch of the employee comments in full. In their own words, employees told of huge frustration with the way agency managers have dealt with welfare fraud.

Zarelli says he thinks he’s tapped into something.


            Must be Something to It


            “I’ve been getting emails and phone calls from DSHS workers who say thank God somebody’s going to take this on,” Zarelli said. “DSHS says it has one of the best welfare fraud investigative units in the country, but it doesn’t mesh with what I’m hearing. The workers are saying that the department blows it all off and doesn’t follow up on things. My thinking is kind of coming to the impression that there must be something to it.

            “I’ve got to believe they are being honest. We wouldn’t be getting this kind of response if there wasn’t a problem.”

            Zarelli said the problem sounds so serious that the state ought to launch a separate office to review allegations of welfare fraud. The matter ought to be taken out of the hands of DSHS managers, he said.


            Agency Downplays Fraud, Employees Say


            But the best way to tell the story is to let the employees tell it themselves. Here are a few excerpts from the often-lengthy comments the Senate received. None of them have names attached, mind you – and where they contained identifying information, Senate staff struck it out.


n      “DSHS has a welfare fraud department that is hardly ever recognized even by the secretary. They try to do a job DSHS management does not want them to do, because, as it was explained to us line workers, DSHS’s job is to give out money, not give it back. The criminal investigators get money back for the state, yet they’re told to stop certain investigations if it makes DSHS look bad.”


n      “We had to lower our percentage of fraud to keep federal funding but we couldn’t. So we simply quit investigating to manipulate the statistics. Fraud is still rampant. Roughly 21 years ago Washington state got in trouble with the feds because we were finding too much welfare fraud. So we decimated our investigation department, riffed many of the employees and of course the amount of fraud the reduced force found plummeted.”


n      “Did you know that one of the criminal investigators sent over $750,000 in fraud cases in one year to prosecutors and the feds, yet never received any thank you from upper management in DSHS, nothing from the governor, nothing at all? In fact, mostly what the welfare fraud people do is basically covered up and not even acknowledged by upper management, and that’s where the fraud is. DSHS management claims that only 4 percent of all welfare clients commit fraud. You talk to line workers and to the investigators and we will tell you and show you that’s over 60 percent and getting worse, especially with identity theft, duplicate grants, etc. We are paying for people’s benefits who aren’t even living in this state.”


n      “I personally know one of the fraud investigators who works closely with law enforcement and she gets calls all the time of drug dealers being picked up with several EBT [Electronic Benefit Transfer] cards on them. Of course the cards belong to several clients, yet the investigator can take no action against the client even if the client or drug dealer admit that the EBT card was used to buy drugs. DSHS will never admit that this is a problem and totally ignores it. In the meantime, children are going without food because of mommy and daddy’s drug habit.”


n      “Hello, I work for the Division of Child Support. As I am working on my cases I come across a lot of welfare fraud. What is even more frustrating is the lack of follow up on the welfare side once the information is reported to them by me. There is a complete lack of verification, or if they do provide verification, it’s from a neighbor who could be a relative for all they know, confirming info asked. It is incredibly easy to get benefits in this state. Someone could fraudulently receive welfare for a few months before getting caught, or in the case of one woman in the news, years. Trust me, she is a drop in the bucket.”


n      “[The] Community Services Division recently admitted that the acceptable rate of fraud in the Workfirst/TANF [Temporary Assistance to Needy Families] program is 3.8 percent = $46 million a year. The only acceptable rate is $0.0 and anything else deserves attention and the taxpayers deserve a goal of $0.0 a year.”


            Not Much Cross-Checking


The employees complain that they are given little time to verify welfare recipient eligibility – just a few minutes over the phone. They say there is little cross-checking to make sure that, for instance, benefits stop when a client goes to prison or moves out of state. And there is no sharing of information between state agencies. So if an investigation by the Department of Labor and Industries turns up a case of fraud, it doesn’t raise a red flag at DSHS, or vice versa. “Most DSHS clients are not afraid to fraud other agencies, because even they know the agencies don’t talk to each other,” wrote one employee.

Employee complaints about the fraud program burbled over onto the internal DSHS website, workers reported. “Management tried to argue fraud investigators are not that important while the rank and file employees responded with real-life story after real-life story of terrible abuses of services,” said another worker. “Whether those abuses are the actual recipient of the funds (for example a TANF or food stamp recipient) or a vendor (i.e., a “day care provider” collecting for many children when they are not actually providing care) those abuses are out there and costing many millions of dollars a year.”


A Caring Management


Of course DSHS cares about welfare fraud, says communications manager Thomas Shapley. Why on earth wouldn’t it? “There is no advantage to us in not ferreting out fraud and waste where we can find it,” he said.

In the 2009 fiscal year, the agency’s fraud investigations recovered some $48.7 million paid out to clients and recipients. Another $381 million in Medicaid payments was saved by identifying third-party insurance responsible for medical bills. And $20.6 million was recovered through audits of providers.

Just three months ago the state received federal performance bonuses totaling $6 million – in part because of the accuracy of its benefits programs.

The agency also operates a hotline whereby people can report suspicions of welfare fraud – 1-800-562-6906.

It’s true that much of the agency’s fraud-prevention emphasis goes to the providers, rather than the recipients, Shapley said. That only makes sense. You have to consider where you get the biggest bang for the buck – a vendor who takes in thousands of dollars in state payments, or a client who gets a few hundred bucks a month?

“We’ve got to make sure we have a return on investment,” he said. “But even in small cases where the amount of loss isn’t great, we still want to pursue things because we need to maintain program integrity.”

For agency management, maybe the most frustrating thing about the employee complaints is the fact that they are anonymous. It’s hard to respond to something when there are no names attached and specific complaints can’t be checked. What they really amount to is an anecdotal argument, Shapley said – hardly a case for the creation of a new bureaucracy.

           “I don’t see in this a case made for that,” he said. “Sen. Zarelli, I respect the work he is doing here, but where is the case where the lack of independent authority is the problem? Fourteen anonymous emails is not a lot to build a major policy decision on.”