Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Colorado Department
of Human Services
Docket No. A-95-195
Decision No. QC92
DATE: December 7, 1995
DECISION
The Colorado Department of Human Services (Colorado)
appealed the May 18,
1995 quality control (QC) review
determination of the Assistant Regional
Administrator of
the Administration for Children and Families (ACF).
The
Assistant Regional Administrator determined the
assistance unit (AU)
in the sample case (State QC Review
No. 940075; Federal QC Review No. 33)
received an
overpayment of $160 in Aid to Families with Dependent
Children (AFDC) during the review month of October 1993.
Colorado agreed that the AU was overpaid but argued the
overpayment should not be counted as an error because
Colorado had
complied with all required QC procedures for
determining whether a recipient
had unreported earned
income.
The AFDC Quality Control Review Panel addressed the issue
presented by
this case in Missouri Dept. of Social
Services, Decision No. QC59 (1994) and
Colorado Dept. of
Human Services, Decision No. QC87 (1995). In those
cases, the Panel concluded that the fact that a state's
Income
Eligibility Verification System (IEVS) information
was not correct at the
time of the state QC review did
not shield a state from a finding of an
erroneous
payment. Colorado has presented no new arguments
concerning why Colorado, QC87, was incorrect or not
controlling in this
case. Therefore, we sustain ACF's
error determination.
Below we explain the facts of this case and then restate
our prior
holding on this issue.
Factual Background
The AU consisted of a mother (referred to as the
recipient) and her
child. The AU's assistance payment
for the review month was based on
the local agency's
determination that the AU had no earned income.
However,
in the course of the QC review, it was determined that
the
recipient received wages from two jobs during the
review month.
In conducting the state review, the state QC reviewer
obtained a wage
inquiry on the recipient from Colorado's
IEVS on December 2, 1993. The
IEVS data indicated that
the recipient had been employed at Job 1 during the
third
quarter of 1993. The recipient's wages from Job 2 did
not
show up in the IEVS report. The state QC reviewer
sent a letter to Job
1 to verify employment for the
review month. Colorado represented that
Job 1 responded
and reported that the recipient had not worked there
since 1982. This information was incorrect and
contradicted the
IEVS information.
Subsequently, the federal QC reviewer obtained a wage
inquiry from IEVS
because, at the time of the federal re-
review, the casefile contained
information about
employment for the recipient. That wage inquiry
listed
wages from both Job 1 and Job 2. The federal QC reviewer
contacted both employers, and verified that the recipient
received
income from Job 1 from August through October
1993 and from Job 2 in October
1993. These wages
resulted in a $160 overpayment for the review
month.
Colorado did not dispute that the recipient received
earned income during
the review month or that her
earnings resulted in a $160 overpayment.
Rather, it
disputed whether this overpayment should be counted as an
erroneous payment.
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 establishes the AFDC QC system to
improve the
accuracy of AFDC payments. The Act requires
each state to review a
sample of AFDC cases each month 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
an erroneous payment.
See Section 408(b) of the Act.
The Secretary has issued regulations for the operation of
the federal and
state AFDC QC systems. 45 C.F.R. ��
205.40 through 205.43. Those
regulations provide that a
state agency must operate its QC system in
accordance
with the applicable regulations and the policies and
procedures prescribed in the Quality Control Manual (QCM)
issued by the
Department. 45 C.F.R. � 205.40(d)(1).
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 for
verifying income. In particular, Colorado cited the
Panel's holding in Alabama Dept. of Human Resources,
Decision No. QC44-R
(1992) (a reconsideration of Alabama
Dept. of Human Resources, Decision No.
QC13 (1992)) that
a state did not commit a QC error where it fully complied
with the QCM's requirements for investigating income, and
where the
information on a recipient's 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, Decision No. 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, whether that information
was obtained in the state or federal
review process.
Further, Colorado offered no arguments as to why this
analysis should not apply to erroneous information
supplied by an
employer to the state QC reviewer and
subsequently corrected by the federal
QC reviewer.
Therefore, earnings information which is reported on a
subsequent IEVS report or verified with an employer
during the federal
QC review can be used to compute a QC
payment error.
Furthermore, as ACF noted, the regulations governing the
QC system were
amended subsequent to the initial decision
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
the
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
nevertheless 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 state QC review.
Before the Assistant Regional Administrator, Colorado
also argued that
the income from Job 2 should have
resulted in a payment adjustment lag error
rather than a
regular error. Colorado did not raise that argument in
its appeal before the Panel so we do not consider it.
Conclusion
For the reasons stated, we conclude that ACF was correct
in determining
that the AU received an overpayment of
$160 and that this overpayment should be considered in
determining
Colorado's error rate.
Sara Anderson
Leslie A. Weyn
Jeffrey A. Sacks
(..continued)