Department of Health and Human
Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Nebraska Department of
Social Services
Docket No. A-93-21
Decision No. QC40
DATE: April 5, 1993
DECISION
The Nebraska Department of Social Services (State)
appealed a quality
control (QC) review determination
issued on October 2, 1992 by the Regional
Administrator
of the Administration for Children and Families (ACF) in
State QC review number 39716. The State QC reviewers
found that
the case was correctly paid. However, ACF
determined that the case
should have been dropped from
the QC review process because the State did
not obtain
all the information necessary to ascertain whether the
recipient was eligible to receive a grant under the Aid
to Families with
Dependent Children (AFDC) program and
whether the amount of the payment was
correct.
Specifically, information was not available to verify the
recipient's banking activity during the review month.
Factual Background
The recipient received an AFDC payment of $364 for the
review month of
March 1992. She had two bank accounts:
one at the National Bank of
Commerce and one at the
Health Care Federal Credit Union. As of March
1, 1992
(according to records obtained by the State and federal
reviewers), the National Bank of Commerce account had a
balance of $3.97
and the credit union account had a
balance of $80.00. The April 1992
statement for the
National Bank of Commerce account showed no deposits
during March except 5 cents in interest, a single
withdrawal for a
service charge, and a closing balance of
$1.02. State reviewers did
not obtain information
regarding transactions on the credit union account
during
March. On the basis of this information, the State
concluded that the recipient was not ineligible based on
resources and
was correctly paid.
However, ACF determined that the State failed to
adequately support its
conclusion because the State
reviewers had not obtained information on
activity in the
credit union account. ACF wrote to the credit union
seeking the required information on three occasions and
received no
response. Therefore, ACF took the position
that the case must be
dropped from the QC review sample.
Relevant Legal Authority
Section 408 of the Social Security Act (Act) established
the QC review
process to improve the accuracy of AFDC
payments made to needy families with
dependent children
based on their income and resources. See section
402(a)(7) of the Act. The QC review process provides for
review of
a sample of AFDC cases by each state, and re-
review of a sub-sample of these
cases by federal
reviewers. The AFDC QC review panel resolves
"difference" cases, defined as disagreements between
state and federal
review findings that affect a state’s
official AFDC payment error rate,
including federal
findings that a case should be dropped from the QC review
process. See 45 C.F.R. § 205.42(i), amended by 57 Fed.
Reg. 46,804
(October 13, 1992). ACF has issued policies
and procedures governing
the QC review process in the
Quality Control Manual (QCM) under which the
states are
required to operate. 45 C.F.R. §
205.40(b)(1).
The QCM provides at section 3200 that whenever a
reviewer
cannot complete a case review because of circumstances
which
make it impossible to obtain enough information to
render an eligibility
and/or payment determination, then
“the case must be dropped from the
sample." The same
section later explains that, unless an eligibility
error
has already been identified, a "finding of correctly
paid,
overpaid or underpaid cannot be made unless all
elements can be verified
because the effect of unverified
elements on the sample month’s payment is
unknown.”
As one element, the QCM requires reviewers to verify Bank
Accounts or
Cash on Hand. To do so, the reviewer must:
Obtain enough information to make a determination as
to whether any
member of the AU [Assistance Unit]
had available to him/her, as of the
review month,
resources from a financial instrument.
* * *
Bank contact(s) must cover the period of time
necessary to
determine eligibility and payment, and
whether any error is PAL [payment
adjustment lag] or
regular. . . . . Use PSP [permissible state
practice]
to determine the amount of money in a bank
account that must be considered
toward the resource
limit for each month. Absent a PSP, the amount of
resources available for a month is determined by (a)
obtaining the bank
balance as of the first day of
the month and adding to it any deposits made
to the
account during that month that represent a resource
or, (b)
adding all deposits in a month to the amount
of resources carried-over from
the previous month,
subtracting from this, all deposits that represent
part or all of the recipient's assistance check paid
for this month as
well as any other income.
* * *
If a bank account is reported by the recipient or
discovered by the
reviewer, the type of account,
account number, type of ownership, banking
activity,
as needed and balance for the review month and
previous
months, as required, must also be
documented.
Be alert to deposits to bank accounts as an
indication of the
receipt of income, including
interest on the account (See QCM 3558 and
3570). If
it appears that any deposits to a bank account could
have a material effect on eligibility or payment,
then document the
deposits made during the review
period in order to determine whether such
deposits
should have affected eligibility or payment.
Section 3543 of the QCM (highlighting added; see
discussion below).
Analysis
The central issue in this case is whether section 3544 of
the QCM
required the State to obtain information on
banking activity in the
recipient's credit union account
beyond her balance as of the first day of
the review
month. The State argued that the QCM did not impose a
blanket requirement to obtain information on banking
activity during the
review period unless a deposit during
the review period could have a
material effect on
eligibility. State Reply Brief (Br.) at 3.
The State
highlighted the language appearing in bold in the
quotation of
section 3544 above, and pointed out that ACF
had omitted it in quoting the
same section. Id. at 2-3;
see ACF Br. at 3. The State asserted
that this language
demonstrated that no such information was needed in this
case because there were no deposits into the credit union
account that
had any effect on eligibility or payment.
State Reply Br. at 3.
We find, however, that the inclusion of the highlighted
material does not
alter the meaning of the section or
support the State's position. The
section as a whole
requires that investigation of the recipient's banking
activity be pursued unless the information to be obtained
would have no
effect on eligibility or payment. The
State has not substantiated its
assertions that what
would have been found in such an investigation would
have
had no effect on eligibility or payment. Here, neither
the
State nor the federal reviewers were able to
determine what deposits, if
any, were made during the
review period. It is, therefore, impossible
to say
whether deposits were made which were significant enough
to
affect the accuracy of eligibility or payment
determinations.
1/ This situation falls squarely
within the QCM requirement for
dropping a case from the
sample whenever necessary information cannot be
obtained
"because the effect of the unverified elements on the
sample
month's payment is unknown." QCM § 3200.
The QC Review Panel previously found reasonable ACF’s
interpretation of
section 3544 requiring verification of
income and resources during the
entire review month,
including banking activity. Missouri Dept. of
Social
Services, DAB QC36 (1993). The Panel reasoned that:
[r]eliance on an account balance on only the first
day
of a review period could lead to a distorted
picture of an AU’s financial condition.
Requiring a QC review to
monitor banking activity
throughout the review period should produce
more
accurate assessments of the AU’s eligibility and
payments.
Id. at 5.
Similarly, in Missouri Dept. of Social Services, DAB
QC35, at 4 (1993),
the Panel reviewed section 3544 and
concluded that the "QCM contemplates
that the financial
eligibility and payment determinations, and the review of
those determinations, will be based on income and
resources during the
entire review month." Accordingly,
we find here that obtaining
information on beginning
balances is not sufficient.
The State also argued that ACF was unreasonable in
requiring banking
activity data for preceding months,
because Nebraska is a prospective
budgeting state. ACF
contended that earlier data would be needed if
resource
ineligibility existed (even in a prospective budgeting
state),
in order to determine whether the error was PAL
or regular. In this
case, the absence of the banking
data from the review month makes it
impossible to
determine whether resource ineligibility existed.
However, we need not decide whether data should have been
collected for
the preceding months, since on the basis of
our conclusions above, the case
must be dropped from the
sample because of the lack of banking activity data
for
the review month.
Conclusion
For the reasons discussed above, we conclude that the
State's QC review
failed to obtain the required
information about the recipient's banking
activity to
determine whether the recipients's eligibility and
payment
were correct for the review month. Thus, we
sustain ACF's finding that
the sample case should be
dropped from the QC review.
_________________________
Joseph T. Gatewood
___________________________
Maxine M. Winerman
__________________________
Leslie A. Sussan
* * * Footnotes * * *
1. By contrast, for example, if the case
were found
ineligible for some unrelated reason or if the entire payment
made
were already determined to be in error due to other income
identified, then a further investigation of banking activity might
be
unnecessary, since the results could not affect eligibility or
payment. We need not decide which situations might fall under
this
exception, since we have found that the State has not
presented a basis upon
which to conclude that verifying the
recipient’s banking activity would not
have affected her
eligibility or payment.