GAB Decision 649
May 23, 1985
West Virginia Department of Human Services;
Ford, Cecilia Sparks; Settle, Norval D. (John) Garrett, Donald F.
Docket No. 84-250; Audit Control No. 03-45072
The West Virginia Department of Human Services (State) appealed a
disallowance of $47,672 by the Office of Family Assistance (OFA), Social
Security Administration, of funds awarded to the State for its fiscal
year 1981 Low Income Energy Assistance Program (LIEAP). Pursuant to Pub.
L. 96-223, grants were made to states and Indian tribes to provide
assistance to low-income households in meeting home energy costs. Of
the amount disallowed, $47,461 represented overpayments made to 1,140
households of two or more persons. The remaining $211 represented a
payment which was not supported by an application for assistance. For
the reasons discussed below, we uphold the disallowance. Overpayments
The State's LIEAP was conducted pursuant to an approved State plan. The
plan included a payment schedule showing benefit levels which depended
on household size, household income, and region of the State. (State's
appeal file, Attachment 1) A few weeks after the beginning of the fiscal
year, but before the State plan was formally submitted, the State
revised its payment schedule to increase the gross monthly income at
which a one-person household was eligible for the maximum benefit from
$0 - $359 to $0 - $394. Notice of this revision was transmitted by the
State to all State area administrators via computer on October 20, 1980,
(State's appeal file, Attachment 2), and the revision was incorporated
in the fiscal year 1981 State plan submitted on November 5, 1980.
(State's appeal file, Attachment 3) At the time the schedule was
revised, the State indicated that the revision was made based on
"clarification from H.H.S." (State's appeal file, Attachment 2) The
State later asserted specifically that the regional office of OFA
instructed it to make the change. (See disallowance letter dated
October 31, 1984, p. 1; State's brief dated February 4, 1985, p. 1) The
overpayments in question here arose when two or more person households
with a gross monthly income from $359-$ 394 were paid the maximum
benefit. For two or more person households, the payment schedule
specified the maximum benefit only for a gross monthly income between $0
and $359. Thus, the change in the gross monthly income for one-person
households was incorrectly applied to two or more person households.
(Agency's appeal file, Attachment 7) The Agency disallowed the
overpayments on the ground that they were payments in excess of the
amounts allowed by the approved State plan. (Letter from Associate
Commissioner for Family Assistance to Commissioner, West Virginia
Department of Human Services, dated October 31, 1984, p. 1) The
regulations in effect during the time in question provided that --
The following expenditures are not subject to Federal reimbursement
and must not be claimed --
Any portion of an energy assistance payment which exceeds the amount
set forth in the State plan. . . . 45 CFR Part 260, Appendix B, C. 3.,
(45 Fed. Reg. 36,810, 36,836 (May 30, 1980)) On appeal, the State argued
that the overpayments should be allowed because federal officials from
the regional office had visited the State and participated in the
development of the State plan and the payment schedule. * We see no
merit in this argument. Neither the payment schedule as originally
established nor as revised allowed payment of the maximum benefit to two
or more person households with a gross monthly income of $359-$394.
Thus, the overpayments were in fact made in contravention of even the
original schedule in the State plan. Morevoer, once the State adopted
the payment schedule as part of its State plan, it was responsible for
implementing it regardless of who developed the schedule.
The State also argued that the change in the income level for one-person
households was made after staff training sessions had been conducted,
and that since the change came at the beginning of the program year,
"(m)uch confusion resulted from the changes and errors were made in
assigning the correct income level with the benefit amount." (State's
letter dated February 4, 1985, p. 1) The Agency responded that no
payments were made during the early stages of program implementation,
and that the State therefore had opportunities to eliminate the alleged
confusion before any payments occurred. (Agency's brief dated March 29,
1985, p. 2, n. 2) We conclude that any confusion generated by the change
is not a basis for reimbursing erroneous payments under the regulation.
By holding states responsible for payment errors, the regulation
recognizes that states are in the best position to see that the program
is carried out in accordance with the State plan. Moreover, we agree
with the Agency that the State did not demonstrate that the alleged
confusion was unavoidable. When it notified State employees of the
change relating to one-person households, the State could have
emphasized that no changes had been made in the payment schedule for two
or more person households. It is clear from the record that State
program officials understood the nature of the change in income level.
Both the October 20, 1980 message from a State official to area
administrators, referred to earlier, and a subsequent memorandum from
the Director, Projects Unit, Division of Economic Services, Department
of Welfare, to area administrators, dated November 5, 1980, clearly
stated the nature of the change, and noted that "Current Gross Monthly
allowable income for households with two (2) or more persons and their
benefit levels will not be affected by this revision." (State's appeal
file, Attachment 2; Agency's appeal file, Attachment 8) Thus, the State
itself could have taken action to assure that the change was properly
implemented and that safeguards to prevent errors were adopted if
necessary. The State did not dispute the Agency's assertion that there
was ample time before any payments were made in which to eliminate any
confusion caused by the change. Finally, the State argued on appeal that
the income level for one-person households originally established by the
State was permissible under the program regulations, and that the State
should therefore not have been required to change it. Even assuming
that a change in the income level for one-person households was not
required, however, that would not excuse the overpayments here which
were made solely to households with two or more persons. Moreover, the
fact that confusion about the payment schedule may arguably have been
caused by an unnecessary change in that schedule should not affect the
result in this case since, as discussed above, the State was responsible
for administering its program in accordance with its State plan.
Undocumented Payment The Agency disallowed a payment in the amount of
$211 on the ground that it was not supported by an application for
assistance as required by the State plan. (Agency's disallowance letter
dated October 31, 1985, p. 2) The State plan, at F. 3., requires that an
application be filed to establish eligibility for energy assistance.
(State's brief dated February 4, 1985, Attachment 5) Any expenditures
not in accordance with the State plan are unallowable. 45 CFR Part 260,
Appendix B, C.8. The Agency also stated that the payment was
unallowable since it was not documented as required by applicable
regulations. The Agency cited in this respect 45 CFR Part 260, Appendix
B, A.4., which requires that the single State agency designated to
administer the State's low income energy assistance program "maintain
adequate records supporting the eligibility decisions. . . ." The State
did not dispute that the payment was not supported by an application nor
did it contend that any other documentation existed to establish the
eligibility of the recipient of the payment. Accordingly, we find that
the Agency properly disallowed the payment. Conclusion For the reasons
stated above, we deny the appeal and sustain the disallowance in the
amount of $47,672. //* The Agency neither admitted nor denied the
State's assertion that the regional office of OFA instructed it
to revise its payment schedule. (Agency's brief dated March 29, 1985,
pp. 5, 6)
JULY 18, 1985