DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: New York State Department DATE: July 31, 1989 of Social
Services Docket
No. 88-196 Audit Control No.
02-62600 Decision No. 1079
DECISION
The New York State Department of Social Services (New York/State)
appealed part of a determination by the Family Support Administration
(FSA/Agency) disallowing $1,935,595 in federal financial participation
(FFP) claimed by the State under the Refugee Resettlement Program (RRP)
for the period October 1, 1982 through September 30, 1983. The
disallowance was comprised of two parts: $1,650,566 representing the
federal share of payments for individuals allegedly ineligible for the
RRP, and $285,029 which FSA attributed to a clerical error which
overstated New York's claim for FFP.
New York conceded the $285,029 disallowed due to the clerical error.
However, New York challenged that part of the disallowance attributable
to RRP payments to the allegedly ineligible individuals.
The disallowance for ineligible individual cases was based on the
estimate from a statistical sample of cases for the period in issue.
The $1.6 million currently at issue resulted from the Agency's finding
that 111 of the 406 sampled cases were ineligible for FFP. Since FSA
issued the disallowance, the parties have engaged in extensive
negotiations. FSA has withdrawn the disallowance regarding some cases,
while New York has conceded the accuracy of the Agency's findings in
others. Only eighteen (18) cases are left for our consideration here.
Based on the following analysis, we sustain the Agency's findings in
those 18 cases. The amount of FFP at issue will be affected by the
change in the number of individual claims which have been disallowed.
Therefore, the Agency should recalculate the disallowance, consistent
with the parties' agreement and our findings below.
Background
I. The Refugee Act
The Refugee Act, Public Law No. 96-212 (1980), was enacted to provide
assistance and services to refugees. Federal financial participation is
available for 100 percent of a state's assistance to refugees for an 18
or 36 month period. The term of FFP is dependent on the category of the
refugee and whether or not a state has a general assistance program. In
every state, funding is available from the Office of Refugee
Resettlement (ORR) (the administrative agency for the RRP, and part of
FSA) for 36 months for refugees eligible for federal assistance
programs. For those refugees not eligible for federal assistance
programs, funding is available for 18 months. In those states with
general assistance programs, RRP coverage for refugees not eligible for
federal assistance is extended for another 18 months. New York has a
general assistance program, Home Relief. Thus, the State received RRP
funding for 36 months for all categories of refugees. New York Exhibit
(Ex.) 1, Audit Report (November 6, 1985), Audit Control No. 02-62600, p.
1.
The Refugee Act is found at 8 U.S.C. 1521 et seq. The implementing
regulations are found at 45 C.F.R. Part 400. Generally, section
1522(e)(2)(A) conditions cash assistance to a refugee on the refugee's
registration with an employment agency or a state or local employment
service; the refugee's participation in local job or language training;
and acceptance of appropriate offers of employment. Otherwise
ineligible refugees may be subject to an exemption to those conditions
as set out in program guidelines. See, e.g., Action Transmittals
SRS-AT-75-27 (June 9, 1975); and ORR-AT-82-3 (May 20, 1982). Some
examples of exemptions would be: an individual under age 16, or under
age 18 and attending school full time, or over age 19 and attending
school or training as approved by the welfare agency (i.e., having an
approved employability plan); a person certified as ill, incapacitated,
or over age 65; a person required to remain at home to care for an
incapacitated household member; or a mother who is caretaker for a
child. New York Br., pp. 5-6.
The issues remaining in this appeal do not involve questions of
statutory or regulatory interpretation per se. Rather, there is a
general assertion by the State regarding the adequacy of the
documentation for these cases, contested by FSA, and a subsidiary
question regarding the manner in which three of the disallowed cases fit
into the larger disallowance calculation.
II. Facts
Agency auditors reviewed a sample of 406 cash assistance payments made
by the State under the RRP for the period October 1, 1982 through
September 30, 1983. The auditors initially alleged that 134 of the
sampled payments were unallowable. However, the auditors later accepted
New York's documentation for 23 cases reducing the number of disallowed
cases to 111. The Agency calculated the disallowance based on the
extrapolation of those 111 cases to the universe of RRP claims. See New
York Ex. 1, Audit Report, p. 4; New York Br., p. 3. Since the this
disallowance was issued, the parties have exchanged documentation
relevant to the disallowed cases. FSA accepted the State's
documentation and withdrew its disallowance in 26 cases, while New York
conceded the accuracy of the Agency's findings in 67 cases. Eighteen
cases remain in dispute.
Analysis
Most of the cases were disallowed based on the auditors' finding that
the refugees' eligibility for the RRP was not properly documented. FSA
Br., pp. 4-5.
A few of the cases were disallowed because refugees who were eligible
for federal assistance programs instead were registered under State
assistance programs. It is undisputed that, under 45 C.F.R. 400.203, if
a refugee is eligible for federal funds under, for example, the Aid to
Families with Dependent Children Program (AFDC) then RRP funding would
be available only to the extent of such assistance that would otherwise
be covered with non-federal funds. The Agency noted that where a
refugee is not eligible for a federal program, then under 45 C.F.R.
400.203(b), federal funding is available for a state's "expenditures for
the refugee's cash or general assistance" for 18 months starting with
the refugee's first month in the United States. Thus, for example, if a
refugee is legitimately enrolled in New York's Home Relief Program and
not eligible for AFDC, the RRP would be providing 100 percent
reimbursement for New York's expenditures for cash or general assistance
payments for that refugee. In the cases under discussion here, the
auditors determined that the refugees were AFDC-eligible (in one case
eligible for Supplemental Security Income) but were misclassified as
Home Relief-eligible only. FSA disallowed the RRP payments in cases
where it determined that AFDC eligible refugees were enrolled in New
York's Home Relief Program. Id. at 5-6.
The State's case for reversal of the disallowance consisted of
submitting documentation for FSA's review which allegedly supported each
disputed case. In its initial brief, New York submitted documentation
for 21 cases. As we noted earlier, FSA reviewed this documentation and,
in its brief, explained why it was not accepting the documentation in 18
of those 21 cases. The Appendix to this decision reflects the Agency's
rationale for each remaining disallowed case.
The State's reply brief did not provide any additional evidence in
response to the Agency's rationale for disallowing these cases, and only
a one-sentence conclusory argument. New York merely said that "the
allowability of these payments has been established by the documentation
submitted . . . with . . . [New York's] initial brief." New York Reply
Br., p. 2.
It is well-established that a grantee bears the burden of documenting
the allowability of its claims for federal funding. See Seminole Nation
of Oklahoma, DAB No. 951 (1988); see also 45 C.F.R. 74.61, and 45 C.F.R.
400.28. We have reviewed the State's evidence and the Agency's reasoning
regarding the disputed cases. Based on that review, which is summarized
in the Appendix, we conclude that the Agency's findings are correct.
Accordingly, the disallowance must be sustained.
New York's reply brief did question how FSA's findings in three specific
cases would affect the amount of the disallowance. Below we discuss New
York's concerns in each of those cases. FSA's treatment of the
substantive issues in each of these cases is set out in the Appendix.
I. Case No. 41947461 (New York)
New York asserted that its review of the audit workpapers revealed that
this case was not part of the statistical sample upon which the
disallowance was based. New York asked that the Board direct FSA to
determine if this case was part of the sample and, if not, to order FSA
to reduce the disallowance accordingly. New York Reply Br., pp. 3-4;
New York Ex. 11.
This question was presented to FSA for the first time in New York's
reply brief. Obviously, FSA did not have an opportunity to address this
issue in its brief. However, in a May 16, 1989 call to the Board,
counsel for the Agency indicated that the State's concerns would be
addressed when the auditors recalculated the disallowance.
It is well-established in Board and court precedent that sound
statistical sampling methodology can be used to reliably determine the
amount of costs properly charged to HHS programs. Typically, sampling
is used when a claim for federal funds is based on the sum of numerous
cost items (each subject to proof of allowability), because it is
impossible, or at least costly and impractical, to examine each item.
Thus, the reviewing authority will take a random sample of cost items,
examine them, and extrapolate the findings to the whole group. If done
in accordance with accepted rules and conventions, the extrapolated
finding has a high degree of probability of being close to the finding
which would have resulted from consideration of all the cost items. The
sampling result may even be more accurate, since clerical and other
errors can reduce the accuracy of a 100 percent review. See California
Dept. of Social Services, DAB No. 816 (1986), pp. 4-5, and cases cited
therein.
New York did not specifically contest the basis of the disallowance in
this case. This case is not eligible for FFP. However, the auditors
used scientific sampling techniques to arrive at the general
disallowance for ineligible RRP cases. New York Ex. 1, p. 4. Thus, if
this specific case was not part of the scientifically selected
statistical sample, it cannot serve as a basis for estimating the larger
disallowance. FSA should determine if Case No. 41947461 was part of the
statistical sample. If not, the Agency may disallow the funding for
this particular case, but it could not use this case as a basis for
estimating the larger disallowance.
II. Cases No. 40978251 (New York) and No. 41948061 (New York)
Again, New York did not contest the specific bases for the auditors'
findings in these cases. Rather, the State asserted that the amount of
the disallowance had not been adjusted to reflect that portion of the
payments which would be eligible for RRP funding.
As FSA noted, 45 C.F.R. 400.203(a)(1) provides that if a refugee is
eligible for AFDC, RRP funding is available only for what would
otherwise be the non-federal share of such assistance. FSA Br., p. 5.
The Agency determined that payments made in these cases were for
individuals enrolled in the State's Home Relief Program who were
eligible to receive AFDC benefits. FSA Br., pp. 10-12. New York
alleged that the Agency disallowed the full 100 percent of RRP payments
claimed in these cases. New York noted that, under 8 U.S.C. 1522(e)(4),
RRP funding is available to program participants to the extent of the
non-federal share of AFDC payments. Consequently, New York indicated
that it was entitled to receive 50 percent of the RRP payments for these
individuals. New York Reply Br., pp. 4-5.
As with the question of whether Case No. 41947461 was part of the
statistical sample, FSA has not had an opportunity to address this issue
in its brief. Although the Board offered FSA an opportunity to respond
to the State's assertion that these two cases would be eligible for at
least some RRP funding, FSA chose not to reply. Rather, the Agency
indicated that it would address the State's concerns when the auditors
recalculated the disallowance. Since FSA may not dispute the State's
position with respect to these two cases, we do not need to address it
here.
Conclusion
We sustain the Agency's disallowance of RRP funding for the 18 cases
discussed above and in the Appendix to this decision. FSA should
recalculate the disallowance to reflect the parties' agreements and our
findings here. Additionally, the recalculation should address the
State's and the Board's concerns with regard to Cases No. 41947461, No.
40978251, and No. 41948061. If the State disagrees with FSA's
determination, it may return to the Board for our assistance on the
calculation issues only, within 30 days after receiving FSA's
determination.
Judith A. Ballard
Donald F. Garrett
Norval D. (John) Settle Presiding Board Member
APPENDIX
CASE NUMBER
H 5630 New York initially alleged that this individual was unemployable
and exempt from the employment registration requirements of 8 U.S.C.
1522(e)(2)(A), so that it was unnecessary to show the individual had
registered. In response, FSA said that this individual was 20 years old
(18 was generally the maximum age for an exemption eligibility).
Further, FSA asserted that the individual did not have an approved
employability plan, so that a special exemption for individuals over 19
enrolled in training as specified by an approved employability plan
would not apply. New York offered no substantive argument to the
contrary, and we find no evidence in the record to support New York's
allegation. See FSA Br., pp. 6-7; FSA Ex. 4, p. 1; New York Br., p. 7;
New York Ex. 4. 143410 Initially, New York claimed that this individual
was unemployable and exempt from the registration requirements of 8
U.S.C. 1522(e)(2)(A), based on a disability. FSA noted that the State
provided no medical documentation whatsoever regarding the individual's
alleged physical incapacity. New York offered nothing further in reply.
See FSA Br., p. 7; FSA Ex. 4, pp. 1-2; New York Br., p. 7; New York Ex.
5. 41036371 The State claimed that this individual was exempt from the
employment registration requirements because he was physically incapable
of working. Federal auditors had found this individual incapable of
work on July 21, 1981. This determination was to remain in effect until
June 1982, at which time the individual should have been reevaluated.
The reevaluation was not performed until November 1982, at which time
the individual was found employable. Costs were questioned for the
audit period (from October 1982) since New York did not evaluate or
register this refugee for employment from July - November 1982 and the
refugee was employable in November 1982. FSA asserted that as of July
1983 this person was employable and still not registered. New York
offered nothing in reply. See FSA Br., p. 7; FSA Ex. 4, p. 2; New York
Br., p. 7; New York Ex. 6. 41402531 New York asserted that this person
was unemployable and exempt from registration requirements because he
was classified as disabled. FSA responded that New York's documentation
showed this person had been denied Social Security benefits in September
1982 because he was not disabled. There is no evidence that his
condition changed thereafter. New York offered nothing in reply. See
FSA Br., p. 8; FSA Ex. 4, pp. 2-3; New York Br., p. 7; New York Ex. 7.
0359015 The State alleged that this individual was in full time
vocational training during the period under review, so that he was
exempt from the registration requirements. FSA found that the State's
documentation did not support that assertion. The record shows only
that he was registered in an English language program at one point. FSA
also alleged, and we note, the absence of an approved employability plan
(which would support an exemption). New York offered nothing in reply.
See FSA Br., p. 8; FSA Ex. 4, p. 3; New York Br. p. 7; New York Ex. 8.
New York alleged that the following cases had not previously been
addressed by the auditors. New York's documentation for these claims
was submitted as New York Exhibit 3, with unnumbered pages. New York's
briefing did not address the specific allowability of any of these
claims.
509146 (Erie) FSA found that this individual was not registered for
employment. FSA noted that, although New York submitted documentation
to support its claims for RRP funding, the State's documentation was
dated February 1985, and thus was not relevant to the period in issue.
New York offered nothing in reply. See FSA Br., p. 9; FSA Ex. 4, p. 4;
New York Ex. 3. 509352 (Erie) FSA found that this person was not
registered for employment. Documentation submitted by the State for
this individual was largly incomplete. The documentation identified the
refugee and her caseworker but contained no information relative to the
refugee's past or current employment history. FSA found that this
information was insufficient to justify RRP funding. New York offered
nothing in reply. See FSA Br., pp. 9-10; FSA Ex. 4, p. 4; New York Ex.
3. 40500321 FSA found that this refugee was not (New York)
registered for employment. The documentation offered by the State shows
nothing to the contrary and no restrictions on this person's
employability. FSA noted that the State did not provide an approved
employability plan which would exempt this individual from the
registration requirement. New York offered no reply. See FSA Br., p.
10; FSA Ex. 4, p. 4; New York Ex. 3.
408180441 FSA alleged that the documentation for (New York)
this individual simply was insufficient to justify RRP funding. New
York's documentation for this refugee consisted of an unsigned note
stating that this individual was "a Cuban refugee." New York offered
nothing further in reply. See FSA Br. p. 10; FSA Ex. 4, p. 4; New York
Ex. 3. 40978251 (New York) FSA found that the payment in this case
was improper since the refugee was enrolled in a State assistance
program although eligible for a federal program. See 8 U.S.C.
1522(e)(4) and 45 C.F.R. 400.203. The individual received RRP funding
as a participant in New York's Home Relief Program when she would have
been eligible for AFDC. Consequently, FSA denied the State's claim for
funding. See FSA Br., pp. 10-11; FSA Ex. 4, p. 5; New York Ex. 3. As
we note in the body of the decision, New York did not reply to the
substantive basis of FSA's finding. Rather, the State questioned how
the finding would affect the amount of the disallowance. See New York
Reply Br., pp. 4-5. We discuss this on page 5 of the decision; FSA will
reexamine this matter in recalculating the disallowance. 41663111 (New
York) FSA found that this individual was not registered for employment.
FSA speculated that the State was asserting that by virtue of this
person's age (23) and participation in a full time training program he
was exempt from employment registration requirements. FSA noted that an
exemption for an individual over 21 was available only when that person
had an approved employability plan. FSA found no approved employability
plan, and we find none in the record. New York offered nothing in
reply. Further, the State's documentation shows no restriction on this
person's employability. See FSA Br., p. 11; FSA Ex. 4, p.5; New York
Ex. 3. 41731241 (New York) 41926281 (New York) 41946351 (New
York) FSA found these individuals were not registered for employment.
FSA asserted that New York did not provide relevant documentation for
these cases. New York offered nothing in reply. Our review reveals
that New York's documentation for these cases contains no evidence of
registration for employment or exemption from that requirement. In
fact, the documentation is arguably not even relevant, consisting of
such items as a photocopy of a Social Security card and part of a case
history note. See FSA Br. p. 11; FSA Ex. 4, p. 5; New York Ex. 3.
41947461 (New York) FSA found that the minors covered by this claim were
registered under New York's Home Relief when they were eligible for
Supplemental Security Income. See 8 U.S.C. 1522(e)(4) and 45 C.F.R.
400.203. See FSA Br. p. 11-12; FSA Ex. 4, p. 5; New York Ex. 3.
Consequently, FSA determined that their RRP payment was improper. As we
note in the decision, New York did not challenge the substantive basis
of FSA's determination, but questioned whether this case was part of the
auditor's statistical sample. New York Reply Br., pp. 3-4. 41948061
(New York) FSA found that payment for this case had been made on the
basis of the refugees' participation in New York's Home Relief Program
rather than their eligibility for AFDC. See FSA Br., p. 12; FSA Ex. 4,
p. 5. As we note in the decision New York did not contest the
substantive basis of FSA's finding, but questioned how the Agency's
determination would affect the amount of the disallowance. See New York
Reply Br., pp. 4-5. 4202720 (New York) FSA found that payment in this
case was improper since the client continued receiving assistance for
three months after starting employment. New York offered nothing in
reply. The evidence shows that the claimant requested that his RRP
assistance be stopped on "10/28/82" because he was employed. There
are
pay stubs in the record showing that he was employed at least as early
as August 27, 1982, which support FSA's determination. See FSA Br., p.
12; FSA Ex. 4, p. 6; New York Ex. 3. 41191781 FSA asserted that New
York provided no documentation at all for this claim. New York offered
nothing in reply. Our review of the record confirms FSA's finding
regarding the absence of any documentation. See FSA Br., p. 12; FSA Ex.
4, p.