63-801 OI Establishment and Collection

An OI is any amount of CalFresh benefits the household (HH) received in excess that they were not entitled to receive. OIs are caused by either the agency or the HH. A Recovery Account (RA) is established to collect the OI.

Establishment of CalFresh OIs

CalFresh regulations mandate that all “Adult” HH members must be jointly or individually liable for the value of any OI of benefits to the HH. An OI must be established against any HH that received more CalFresh benefits than it was entitled to receive. This provision also applies to any sponsor of a non-citizen and the non-citizen directly if either party provided inaccurate or untimely information that may cause an OI of benefits.

Note: At the time OI occurred, any HH member aged 18 years old or over is considered an “Adult” and must be jointly or individually liable for the value of any OI of benefits to the HH. If an “adult child” begins to receive CalFresh on their own case, the County can collect repayments from this person’s benefits.

Expedited CalFresh Benefits and OIs

CalFresh benefits received under the “Expedited Services” policy cannot be considered an OI even if the CalFresh benefits were overissued. However, an OI can be established when a HH is proven to provide or withhold information to defraud the County willfully.

Supplemental Nutrition Benefits (SNB) and/or Transitional Nutrition Benefits (TNB) Programs

There is no recoupment of OI under the SNB/TNB Programs unless the SNB/TNB results in total ineligibility of the program. Additionally, the SNB/TNB benefits must not be used for regular CalFresh recoupment.

Note: An adult Supplemental Security Income (SSI) recipient is not responsible for an OI that occurred before they were included in the HH based on implementing the CalFresh Expansion to SSI Recipient policy.

Lomeli vs. Saenz Lawsuit

Effective March 1, 2000, the following policies must be followed for the collection of OIs on active cases caused by an AE:

o Monthly maximum recoupment of 5% of the monthly benefit amount or $10, whichever is greater; and

o A maximum of 36 consecutive calendar months for collection. The 36-month period begins from the first month of recoupment. At the end of the
36 months, any remaining uncollected balance is to be forgiven or compromised and may not be collected by any other means. The 36-month period means 36 consecutive months from the first month of recoupment. If the case is discontinued the balance can be collected following existing TTC process. However, if the HH re-applies during the 36 months and is approved, the recoupment will continue until the initial 36-month period ends.

Please reference the “36-Month Collection Time Limit for AE RAs” example.

Intentional Program Violation (IPV) Error

An OI is to be considered an IPV error only when it results from the following:

1) An Administrative Disqualification Hearing (ADH) finding that fraud has occurred, or a court of appropriate jurisdiction has determined that a HH member or the sponsor has committed an IPV or criminal prosecution; or

2) The individual accused of an IPV has signed either a Disqualification Consent Agreement or an Administrative Disqualification Hearing Waiver.

Before determining IPV, the OI against the HH must be established and handled as an Inadvertent HH Error (IHE) OI.

Once the OI is considered to have been caused by an IPV, the maximum monthly amount that can be collected is 20% of the CalFresh benefit amount or $20, whichever is greater.

Differences between AE, IHE, and IPV OIs

The following table summarizes the three types of OIs and the policy on establishment and collection for each type:

Type of OI	Maximum Monthly Amount to be Collected	Minimum Amount of OI	Maximum Time Allowed for Collection
Administrative Error (AE)	5% of the monthly CalFresh benefit amount or $10, whichever is greater	Over $35 for Active Cases and over $400 for discontinued cases	36 consecutive calendar months
Inadvertent HH Error (IHE)	10% of the monthly CalFresh benefit amount or $10, whichever is greater	Over $35 for Active Cases and over $400 for discontinued cases	Until the OI is paid in full
Intentional Program Violation (IPV)	20% of the monthly CalFresh benefit amount or $20, whichever is greater	Over $35	Until the OI is paid in full

OI Establishment Threshold for Discontinued CalFresh Cases

Effective June 1, 2019, the OI claim establishment threshold for closed cases resulting from AE and IHE increased from $125 to $400. Thus, an OI must be established if it is over $400. AE and IHE OI claims established before June 1, 2019, are not to be altered or interrupted.

Note: The new OI establishment threshold does not apply to OIs arising from an IPV or Quality Control (QC) review. Staff must continue establishing claims for an OI discovered in a QC review or resulting from an IPV.

Note: This does not apply to Quality Assurance (QA) OI establishments and collections.

AE and IHE

The amount to be collected depends on the type of OI. For each month that a HH received an OI due to IHE or AE, eligibility staff must determine the correct amount of CalFresh benefits the HH was entitled to receive.

The start date of AE OI will be the first month that eligibility staff must have acted on the timely reported information.

Under the restoration policy for AE and IHE OIs, benefit reduction will resume for the remaining balance, if applicable.

For IHE OIs, close attention must be paid to the start date of such OIs as follows:

· HH that failed to report mandated information which caused the OI, the first month in which the change would take effect (had it been reported or reported timely) will be the first month in which the OI will be established.

· HHs are not given the 20% earned income deduction on the portion of the income that the HH failed to report when determining the overissued amount.

AE and IHE for Discontinued Cases

The minimum amount to establish an AE and/or IHE OIs for discontinued CalFresh HHs is over $400. Therefore, no OI will be collected for CalFresh HHs that are no longer receiving CalFresh benefits if the total AE or IHE OI is $400 or less. If an inactive CalFresh HH has more than one AE or IHE OI due to different County inactions, each AE and IHE OI will be treated separately from the other(s). For instance, if the HH has two separate AE or IHE OIs of $225 each from different County inactions, the two separate OIs cannot be combined into a single $450 OI to meet the threshold of over $400. In this case, the claim(s) may be established for record-keeping purposes, but no AE or IHE OIs will be collected.

If a case is discontinued after an OI RA has already been established, and the remaining balance is $400 or less, this is considered uncollectable, and no further collection action will be necessary.

If an AE and/or IHE OI of $400 or less is discovered for a discontinued case or an active case set to discontinue, staff must establish a RA for that AE and/or IHE OI. The overnight batch will set the RA to “Discharged” based on the threshold amount. If the HH’s eligibility is rescinded/restored in the month following the discontinuance, the previously discovered AE or IHE OI must be established as the case is now active.

Determining What Threshold Applies to an OI

The CalFresh status of Active or Discontinued on the date an OI is discovered must be considered. The date of discovery is the date the OI is calculated. The corresponding Active (over $35) or Discontinued (over $400) OI threshold must be applied on the date of discovery.

Scenario: CalFresh is active in the month of June. On June 15 the Eligibility Worker (EW) was updating the case record and discovered an OI of $102 (AE or IHE). The case may be discontinued at the end of June for Semi Annual Report (SAR 7) not received. Since CalFresh is active on the date of discovery, a RA of $102 must be established as the OI threshold of over $35 for active cases is applied. There may be a need to conduct a further assessment when the status of the CalFresh case changes after the date of discovery.

See below examples for further guidance:

Example 1: If CalFresh is erroneously discontinued on the date of discovery and later rescinded with no break in aid, the OI must be considered as discovered on an active CalFresh case. Therefore, the OI threshold of over $35 for active CalFresh cases is applied and the RA must be established (based on the above scenario).

Example 2: If CalFresh is discontinued on the date of discovery (RA is created and system “Discharged”) and a new application is approved with a break in aid, then the “Discharged” RA must not be activated/established as the OI threshold of $400 or less for discontinued CalFresh cases was applied correctly when the OI was discovered (based on the above scenario).

IPV Error

For each month that a HH received an OI due to an act of IPV, Welfare Fraud Prevention and Investigations (WFP&I) will determine the correct amount of CalFresh benefits the HH was entitled to receive if any. The OI is to be calculated back to the month the IPV first occurred, regardless of the length of time that elapsed, until the determination of IPV was made or the date the Waiver of Right to an Administrative Disqualification Hearing or Disqualification Consent Agreement was signed. Additionally, HH’s are not given the 20% earned income deduction on the portion of the income which the HH intentionally did not report.

Once the amount of the IPV OI is established, eligibility staff are to offset the OI against any amount of lost benefits that have not been restored to the HH as lost benefits.

Note: The Lopez v. Glickman Court Order prohibits the offsetting of AE OI claim against an under issuance which has not yet been restored to the HH. Even if the HH has signed a voluntary repayment plan on an AE OI, the supplemental payments may NOT be used to offset the AE OI.

CalFresh Benefits Trafficking-Related OIs

OIs arising from CalFresh benefits trafficking-related offenses (i.e., buying, selling, stealing, or trading) will be the value of the trafficked benefits as follows:

· Self-admission by the individual;

· A formal judgment; or

· Documentation that is the basis for the trafficking determination.

Nonrecurring Lump-Sum Rule for Non-Modified Categorically Eligible (MCE) HH:

Any HH that is not conferred MCE must meet the CalFresh resource limit.

If a non-MCE conferred HH receives a nonrecurring lump-sum payment and does not report the information on the periodic report or Renewal (RE), the HH may be subject to OI if the payment received exceeds the resource limit.

OIs Collection

OIs are collected in the following order when there are multiple types of OI on an active case:

1) IPV;

2) IHE; and

3) AE.

If there is an ongoing collection activity on a previously established OI, the collection on this OI must be finished before collection on the second OI starts. The hierarchy above will be used to determine which OI (if multiple) will be collected first. Only one OI can be collected at a time. Eligibility staff will initiate collection action against all aided adult HH member(s) or the sponsor (if applicable) at the time OI occurred for all AE and IHE OIs unless:

· The total OI amount is $35 or less. This threshold applies to the single OI even if it extends to multiple months;

· Eligibility staff has documentation that shows that the HH or the sponsor of a non-citizen HH cannot be located; and

· The cost of further collection action is likely to exceed the amount that can be recovered.

For IPV Error OIs:

For a validated IPV error OI, eligibility staff must initiate collective action against the adult HH member(s) or the sponsor of the non-citizen HH member. The collection must be initiated unless:

· The HH has already paid the OI in full;

· Eligibility staff has documentation that shows that the HH or the sponsor of a non-citizen HH cannot be located;

· The cost of further collection action is likely to exceed the amount that can be recovered; or

· When an IHE is confirmed to be an IPV by WFP&I, collection action on the OI that was either unpaid or partially paid must be initiated.

Note: Collection action on OIs may be suspended in cases where an OI is being referred for possible legal prosecution or administrative disqualification, and WFP&I staff determines that collection action will harm the case.

For active cases, the HH will be issued a CF 377.7C, CalFresh Repayment Agreement for Inadvertent Household Errors Only and allowed to select the type of repayment agreement they wish to establish. The options are as follows:

• Lump-sum payment;

• Benefits reduction; or

• Installment payment plan.

The HH will be given 30 calendar days to return the CF 377.7C notice. If the HH fails to comply, eligibility staff will initiate benefits reduction from the current allotment at 20% or $20, whichever is greater.

For inactive cases, the HH will have the following options:

• Lump-sum payment; or

• Installment payment plan.

The HH must be given a due date to return the CF 377.7C notice, within 30 calendar days. If the HH fails to comply, the County will seek additional ways to collect.

Other Collection Actions for Discontinued Cases

There are other collection methods to collect OIs when the HH fails to respond to the repayment agreement notices. These methods include, but are not limited to, referrals to the collection and/or similar private and public-sector agencies,
Los Angeles County Treasury Tax Collector (TTC), lottery offsets, wage garnishments, property liens, and small RAs court.

Voiding of OIs RAs

The Appeals and State Hearings (ASH) Section has the authority to determine the validity and accuracy of OIs per State regulations 22-073.23.231(a) and 22-073.3.35. ASH also has the authority to recommend the voiding and reimbursement of unsubstantiated OI RAs. ASH has the right to make agreements which also include adjusting balances/amounts and RA periods.

Timeframe for Establishing OIs

AE and IHE OIs

Effective July 25, 2022, eligibility staff cannot act on AE or IHE OIs where more than 24 months had elapsed between the month when the OI occurred and the month the County establishes the OI. Therefore, eligibility staff can calculate only up to a total of 24 months before the OI establishment’s date for any single OI occurrence, as appropriate. Reference “Two Year Limit for RA Establishment” in the example section for further information.

IPV OIs

There is no timeframe on establishing an IPV OI. In other words, the 24-month limit for establishing the OI does not apply to IPV related OIs.

Background

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Definitions

Term	Description
Overissuance	An OI is any amount of CalFresh benefits received in excess by the HH that they were not entitled to receive.
Types of OIs	An AE error is caused by the County and includes a system error. This type of OI happens due to incorrect or untimely action or inaction by eligibility staff; and An IHE is an unintentional error on the part of the HH or the sponsor of a non-citizen’s HH. An IHE OI can occur when the HH did not report or reported a late change in HH circumstances. An IPV is an intentional mistake by the HH. This error type is only used by the WFP&I Section after an investigation shows the OI is caused by the HH intentionally.
Date of Discovery	The date that the Eligibility Determination Benefit Calculation (EDBC) budget is computed showing the OI occurred, or OI was calculated manually.
Date Claim Established	The date an adequate demand Notice of Action (NOA) and Repayment Agreement Notice is issued to the HH.
RA	A discovered OI that is active or pending authorization.
Benefit Reduction	When a HH’s CalFresh benefits are reduced for the amount owed because of an OI.
Installments	Monthly payments for an OI in the form of cash or CalFresh benefits.
Offset	Occurs when a CalFresh benefit amount is reduced or intercepted to pay off a delinquent OI.
Ordered Repayment	When a court or an Administrative Law Judge orders a HH to pay an OI. These repayment terms cannot be changed by the County or the HH.
Lump-Sum Payment	When an OI is paid back in full at one time with either cash and/or CalFresh benefits.
Underissuance	The difference in allotment when a HH received fewer benefits than it was entitled to receive.
Voiding RAs	RAs are voided when they are determined to be invalid. This will post a void transaction to zero out the balance of the RA and update the account status to void.
Terminating RAs	RAs are terminated once the collection period has expired.
Adult	CalFresh regulations mandate that all “Adult” HH members must be jointly or individually liable for the value of any OI of benefits to the HH. This provision also applies to non-citizens and their sponsors. Note: At the time OI occurred, any HH member aged 18 years old or over is considered an “Adult” and must be jointly or individually liable for the value of any OI of benefits to the HH. If the 18-year-old begins to receive CalFresh on their own case, the County can collect repayments from this person’s benefits.

Requirements

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Verification Documents

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