Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Colorado Department
of Human Services
Docket No. A-95-149
Decision No. QC87
DATE: September 19, 1995
DECISION
The Colorado Department of Human Services (Colorado)
appealed the May 18,
1995 quality control (QC) review
determination of the Regional Administrator
of the
Administration for Children and Families (ACF) that an
Aid to
Families with Dependent Children (AFDC) assistance
unit received a $280
payment for which it was ineligible
during the review month of January 1994
(State QC Review
No. 940622).
The essential facts are undisputed. The AFDC assistance
unit
consisted of the recipient and her minor child. The
recipient had
unreported employment income which rendered
the assistance unit ineligible
for the assistance payment
in the review month. Colorado did not
discover the
employment income and awarded a $280 assistance payment
for
the review month. When Colorado conducted its QC
review it accessed
data from its Income and Eligibility
Verification System (IEVS), on February
24, 1994, and
found no indication of the recipient's employment.
Federal QC reviewers subsequently found evidence of the
unreported
employment when they checked the IEVS as part
of their re-review.
As discussed below, we sustain ACF's error determination.
Legal Background
Title IV-A of the Social Security Act (Act) provides for
payments to
needy families with dependent children.
Section 406(b) of the Act
defines "aid to families with
dependent children" as money payments with
respect to a
dependent child, including payments to meet the needs of
the relative with whom any dependent child is living.
Section 408 of the Act established the AFDC QC system to
improve the
accuracy of AFDC payments. The Act requires
each state to review a
sample of cases in which AFDC
payments were made during the review period in
order to
determine the level of erroneous payments. The Secretary
of the Department of Health and Human Services
(Department) then reviews
a subsample of the cases
reviewed by the state, and notifies the state of
any case
in the subsample found to involve erroneous payments.
See
Section 408(b)(1)(A) of the Act.
Analysis
Colorado argued that it should not be charged with a QC
error in this
case because it complied with all
applicable requirements in the AFDC QC
Manual (QCM) for
verifying income, and because the recipient's employment
had not been listed in the IEVS at the time Colorado
conducted its QC
review. In particular, Colorado cited
the Panel's holding in Alabama
Dept. of Human Resources,
DAB No. QC44-R (1992) (a reconsideration of
Alabama Dept.
of Human Resources, DAB No. QC13 (1992)) that the state
did not commit a QC error where it fully complied with
the QCM's
requirements for investigating income, and
where the information on the
recipients' unreported
employment had not become available on the IEVS at
the
time that the state conducted its QC review.
In Alabama, we held that the provisions of the QCM then
in effect created
an implied exception to the error rate
computation for an erroneous payment
which was determined
by a state QC review to be correct pursuant to IEVS
data
that was current as of the time the state conducted its
QC
review. The present case, however, is governed by
different QCM
provisions than those in effect when we
decided Alabama. As we
recognized in Missouri Dept. of
Social Services, QC59, (1994), those
different provisions
compel a different result than the result in
Alabama.
Both our initial decision and the decision on
reconsideration in Alabama
recognized that ACF was free
to modify or remove the implied exception for
errors
committed in reliance on IEVS data by promulgating
regulations or
by amending the QCM. Between the Alabama
and Missouri decisions, ACF
amended the applicable QCM
language in a manner which, in our view,
forecloses
Colorado from asserting an exception based on reliance on
IEVS data.
Prior to October 1992, the QCM advised states to verify a
recipient's
allegation of no income by reviewing the
listed wage records and matching
sources (e.g., IEVS).
Section 3553 B of the QCM stated:
If these records do not indicate employment
within the past year,
and there is no
information to the contrary, no further
verification is
required.
(Emphasis added).
Based on this language, the Panel concluded in Alabama
that states could
rely on a negative IEVS report in
conducting their QC reviews as long as
there was no
evidence that the recipient had worked during the
previous
year. Therefore, the Panel held that the QCM
had created an implied
exception for undiscovered errors
in a state's QC review because of a
state's reliance on
IEVS reports that were current as of the state's QC
review.
On October 27, 1992, subsequent to the Alabama decisions,
ACF published
and distributed changes to the QCM. Among
the changes effected by that
transmittal was the revision
of section 3552 B. ACF deleted the
above language and
replaced it as follows:
Where information from any source (e.g., State
wage records,
Federal wage matching sources, or
any other lead information which surfaces
during the review process) indicates employment
within the past year,
check with the recipient
and past employers to verify the employment
situation for the review month. The
primary/secondary evidence
listed below are
examples of leads used to confirm or to
contradict the
recipient's negative
allegations; if this information or any other
information reveals that the recipient is in
fact working, all earnings
for the review month
must be considered.
Additionally, in the initial portion of section 3552, ACF
wrote:
Verification procedures will differ depending
on whether the
individual acknowledges or
denies receipt of earnings. This,
notwithstanding, all information or evidence
gathered during the review
process, which
affects the eligibility or payment status of
the case,
must be used in determining the
accuracy of the review month's payment.
Finally, in its "Summary of Revisions/Clarifications to
Quality Control
Manual, Section 3", ACF expressly stated
that the amendment of section
3552
[c]larifies that all information or evidence
gathered during the QC
case review process which
affects the AU's eligibility or amount of payment
must be used in determining the accuracy of the
review month's
payment.
As the Panel recognized in Missouri, the current version
of section 3552
can no longer reasonably be read to
contain an implied exception for state
QC review reliance
on IEVS reports. The QCM is clear that if
information
from any source during the QC review process indicates
that
the recipient was working during the review month,
all earnings must be
counted. In Missouri, the Panel
observed that the quoted language does
not contain any
time limitations on when the information must become
available. Therefore, earnings information which is
reported on a
subsequent IEVS report during the federal
QC review can be used to compute a
QC payment error.
Colorado has not presented any arguments as to why the
Panel's
conclusions in Missouri about the effect of the
October 1992 amendment to
section 3552 of the QCM is
incorrect. Therefore, we decline to modify
our
construction of that section.
Furthermore, as ACF noted, the regulations governing the
QC system were
amended subsequent to the review month in
Alabama to provide that QC payment
errors resulting from
reliance on incorrect factual information will be
excused
only if the incorrect information is supplied by this
Department. The preamble to the regulations shows that
payment
errors cannot be excused because correct IEVS
information was not available
at the time the payment was
authorized.
The QC regulations provide that the following errors will
not be counted
in determining a state's error rate:
Payment errors which result solely from a
State's reliance on, and
correct use of,
incorrect written factual information provided
by the
Department about matters of fact or from
incorrect written statements of
Federal policy
by Department officials. "Written factual
information" means hard copy documentation,
such as a signed statement,
a computer printout
or data tape, and reports of specific data
provided
by the Department about a given
individual (e.g., social security data). . .
.
45 C.F.R. � 205.42(d)(2)(ii).
In response to comments that reliance on incorrect IEVS
information
should be included in this provision, the
preamble to the regulations noted
that:
The exemption of payment errors as a result of
incorrect written
factual information is
applicable only to the extent that such
information is maintained and provided by the
Secretary [of Health and
Human Services]. . . .
Even though there is a Federal mandate for
States
to use IEVS, the Secretary does not have
administrative oversight over each
of the data
files used in the IEVS matching.
* * * *
Therefore, based on the above discussion, we
decline to reference
IEVS . . . in the final
regulations as [a] potential data source[] from
which incorrect information could have been
provided.
57 Fed. Reg. at 46,792 (October 13, 1992).
The preamble and the regulations thus establish that
payment errors made
where correct employment information
was not available to the state through
IEVS are still
considered erroneous payments for the purposes of the QC
system. In light of these provisions, a state should not
be
excused from responsibility for the erroneous payment
simply because its
IEVS information was not correct as of
the time of the QC review.
Conclusion
For the reasons stated, we conclude that ACF was correct
in determining
that the payment at issue was erroneous
because it was made to an individual who was ineligible
for assistance
because of excess income which she failed
to report.
Sara Anderson
Leslie A. Weyn
Jeffrey A. Sacks
(..continued)