.Purpose

Policy

Background

Release Date:

8/4/2022

Definitions

Requirements

Verification Docs

·          

On July 26, 2022, the system will generate a one-time listing/report of non-fraudulent CalWORKs Recovery Accounts that were created on or after August 1, 2021, that include benefit months from April 1, 2020 through June 30, 2022, with a Participant Error Cause code.  Staff will need to run Eligibility Determination Benefit Calculation (EDBC) on these Recovery Accounts to change the Cause code from Participant Error to Administrative Error.

Note:  The system is not programed to prevent users from creating Participant Error OPs that include a month from April 1, 2020 through June 30, 2022, nor does it include a soft validation message as a reminder to users. As such, staff must ensure that any of OPs established during the aforementioned period that are a result of Participant Error must be established as Administrative Error. 

·          

On July 26, 2022, the system will be programed to display a “soft warning” message when a non-fraudulent valid OP is established and the OP includes any OP months that exceed the 24-month timeframe, which includes the month of discovery. The message serves as a reminder to staff to ensure the Recovery Account does not include a month that exceeds the 24-month timeframe before authorizing the Recovery Account.  

Policy Effective Date

Policy

January 1, 2017

Establishment Policy:  An OP must not be established for a month that includes one of the following circumstances when a ten-day benefit reduction or case discontinuance Notice of Action (NOA) cannot be provided:

1.    A timely mandatory report of income over the Income Reporting Threshold (IRT) for Semi-Annual Reporting (SAR) and Annual Reporting/Child Only (AR/CO) cases; or

2.    Household (HH) composition change (for AR/CO cases). 

July 1, 2019

Collection Threshold Limit for Closed Cases:  CalWORKs non-fraudulent OPs less than $250 are automatically suspended, by the system upon case closure and will not be referred to the Treasury and Tax Collector (TTC) for collection efforts. 

The Recovery Account is suspended so that when the participant reapplies for CalWORKs, these claims will be subject to benefit recoupment.  

Note:  There is no collection threshold limit for open/approved cases.  

August 1, 2021

Note: 

This policy is only for a specific OP period. 

COVID-19 Pandemic Policy Flexibility for Non-Fraudulent OPs: All non-fraudulent OPs established August 1, 2021 onward, that includes a benefit month from April 1, 2020 through June 30, 2022, must be designated as an “Administrative Error” regardless of the cause of the OP. 

1.    A fraudulent OP is when there is an IPV designation. As a result, a non-fraudulent OP is anything other than an IPV designation. 

2.    Although an OP is established as Administrative Error, OPs are still required to be referred for an investigation when fraud is suspected. 

3.    These OP claims can include an overpaid month that falls outside the pandemic emergency period. 

Note:  Effective July 26, 2022, programing will take place to update the Recovery Account Cause code, from Participant Error to Administrative Error, for non-fraudulent Recovery Accounts.

July 25, 2022

Establishment Policy Period Limit: When a CalWORKs non-fraudulent OP is established, it can only include 24 months, that includes the month of discovery.

Non-fraudulent is any type of OP that is not considered an IPV designation.

Note:  The 24-month limit policy is not applicable to Recovery Accounts established before July 25, 2022.

Term

Description

OP

Any amount of any aid payment an AU received to which it was not eligible. An OP may be all or a portion of an aid payment including, but not limited to, an Immediate Need payment, a Special Need payment, or Aid Paid Pending (APP) a State Hearing.

OP Types

For CalWORKs, OP types are identified as caused by one of the following:

1.    Administrative Error

2.    Participant Error

3.    IPV

The OP type will determine the Cause code that staff should select when creating the Recovery Account. The Cause code designation would determine the grant reduction percentage that would be applied to OPs being recouped via grant reduction, as follows: 

OP Type

Cause Code

Grant Reduction %

Administrative Error

Cash – Admin Caused

5%

Participant Error

Cash – Customer Caused

10%

IPV

Cash – IPV

20%

Note: Cash – IPV is only used by Welfare Fraud Prevention & Investigation (WFP&I) Section staff.

Administrative Error OP

An OP caused by a County error when the County possessed all information necessary to make a correct aid payment determination but failed to act on the information or was unable to issue the correct grant due to the ten-day notice requirement.

Example:  SAR 7, Semi-Annual Eligibility Status Report, with increased income received timely, but not processed on time.

An Administrative Error may occur when the agency (district office) or the system fails to:

OPs caused by an Administrative Error (Cash – Admin Caused) are recouped at five percent of the monthly Maximum Aid Payment (MAP) benefit amount for the AU.

Participant Error OP

Participants are notified of their reporting responsibilities and the need to meet the eligibility conditions. These types of OPs are caused by the AU’s failure to report or meet conditions of eligibility which includes APP OPs established due to a State Hearing request.

OP caused by a Participant Error (Cash – Customer Caused) is recouped at ten percent of the monthly MAP benefit amount for the AU.

Fraudulent OP

A fraudulent OP is a claim determined to have been caused by an IPV. An IPV can only be substantiated by: 

1.    An Administrative Disqualification Hearing (ADH);

2.    A signed ADH waiver or Disqualification Consent Agreement; or

3.    Criminal court conviction.

OPs caused by an IPV, which are subject to grant adjustment, would be recouped at 20 percent of the monthly MAP benefit amount for the AU. 

Note: Per CalWORKs policy, an OP is only considered fraudulent when an IPV has been substantiated. Once an IPV designation has been substantiated, the OP may be established past the 24-month timeframe.

Non-Fraudulent OP

OPs are considered non-fraudulent unless they were caused by a substantiated IPV.

When an OP is first established as non-fraudulent and is later determined to be fraudulent, the OP must be reclassified and a new NOA must be sent reflecting the updated cause of the OP (IPV).

OPs that were referred to the WFP&I Section for suspected fraud would also be considered non-fraudulent if:

1.    Fraud was not found during an investigation; or

2.    A fraud investigation is ongoing. 

24-Month Establishment Limit

Effective July 25, 2022 onward, a non-fraudulent OP can only include OP months that fall within a 24-month timeframe, which includes the month of discovery. 

Refer to Procedures for additional guidance on fraudulent OPs.

Potential Intentional Program Violation (PIPV)

OP

This type of OP is identified only by the WFP&I Section after an investigation shows that the OP was caused by the participant due to: 

1.    Falsifying or concealing information pertaining to their eligibility or benefits; and/or

2.    Obtaining aid payments that the participant knows exceed their current grant, as stated on the most current NOA sent to them, by making false or misleading statements or committing any act to mislead, misrepresent, conceal, or withhold facts.

WFP&I Section staff will select Cash – PIPV as the Cause code when creating a Recovery Account to identify Participant Error OPs involving a PIPV.

1.    When the OP is determined to be PIPV, the OP can only include months that are within a 24-month timeframe, which includes the month of discovery. 

If the IPV is substantiated via the prosecution or ADH process, then:

1.    The PIPV OP must be reclassified as fraudulent;

2.    The Cause code would be changed to Cash – IPV;

3.    The OP may be established beyond the 24-month timeframe, if applicable; and

4.    A new NOA must be issued.

Note:  OPs designated by the WFP&I Section as Cash-PIPV can only be changed to Cash – IPV after an IPV is substantiated.

PIPV OP claims are recouped at ten percent of the monthly MAP benefit amount for the AU. 

Note:  The PIPV OP category is not a recognized State category. 

Aid Payment

The amount of CalWORKs cash aid issued to the AU.

Discovery Date

The date the County has all the information necessary to establish and create the OP.

Note: The OP is considered established as of the date of the initial demand letter or written notification, which should be sent once the Recovery Account is activated. If the OP is non-fraudulent, the OP must be established within a 24-month timeframe, which includes the month of discovery. 

Month of Discovery

The month the County obtained, or could have obtained by taking prompt action, information sufficient to support a determination that an OP occurred and the amount of such OP. This is not necessarily the month the OP amount is calculated.

Recovery

The method of recouping the OP. 

Recovery Account

The system account is set up to recover a CalWORKs OP or CalFresh Overissuance (OI).

Internal Recovery Account

Created by the system when users are in a recalculated EDBC with an identified OP. A recalculated EDBC means that EDBC has been rerun for a benefit month or period based on a change in eligibility to a program or program person.

Note:  The system will display a “soft warning” message when an OP month is more than 24 months, which includes the month of discovery, and is not a fraudulent claim. 

External Recovery Account

Created manually by the Eligibility Worker (EW) when an OP has been discovered and the benefit issuance was made outside of the system.

Note:  The system will display a “soft warning” message if the Benefit/Service Month is more than 24 months, which includes the month of discovery, and is not a fraudulent claim.  

Activated Recovery Account

Primarily refers to a Recovery Account that has been changed from a “Pending” to “Active” status in the system and is collectible. 

However, a Recovery Account that has been updated from an uncollectible status (e.g., Terminated) could subsequently be updated to “Active” if required by policy.

Grant Adjustment

The recovery of an OP by reducing the aid payment to a currently eligible AU.

Referred to as Benefit Reduction in the system.

Offsetting (Known as Offset in the system)

The recovery of all or a portion of an OP by applying it against a payable underpayment.

Note:   This does not apply to supplemental payment for current month.

Voluntary Cash Recovery

A voluntary cash repayment made to the County by a participant who has incurred an OP.

Demand for Repayment

The notification to a participant or former participant that an OP occurred and must be repaid.

Responsible Party

The AU member(s) considered responsible to repay the OP, which may include:  

1.    The adult(s) aided at the time of the OP.

2.    The minor parent head of HH.

Note:  In a two-parent AU, both aided and unaided parents are responsible parties when the CalWORKs case is open. Once the case is closed, collection activity can only be sought after aided parents. 

Uncollectible OP

OPs for which recovery will not be pursued and can be the result of, but are not limited to:

1.    State Hearing Decision (e.g., Equitable Estoppel).

The Status field in the Recovery Account Detail page should not be updated to “Uncollectible” by staff. 

1.    The system is programed to update the Status field to “Suspended” for OPs considered uncollectible due to the threshold limit. 

2.    For guidance on statuses used following a State Hearing Decision, reference Procedures for Appeals and State Hearings (ASH).

Note:  An uncollectible OP is not to be confused with an Uncollectible Recovery Account Status.

OP Threshold Limit

Effective July 1, 2019, the OP threshold limit increased from $35 to $250. 

The threshold limit is only applicable when:

1.    The OP is non-fraudulent; and

2.    The case is discontinued.

OPs subject to the threshold limit would not be referred to TTC for collection.

If the responsible individual comes back on aid, then the system would initiate recoupment via grant adjustment.

Note:  There is no threshold limit for active cases. This means that an OP can be established for any amount of aid issued to the AU that they were not entitled to receive (e.g., $11).

COVID-19 Economic Assistance

The CARES Act authorized economic assistance in response to the COVID-19 pandemic. The economic assistance includes individual and family rebates, and the following types of assistance payments:

1.    Pandemic Unemployment Compensation (PUC);

2.    Pandemic Unemployment Assistance (PUA);

3.    Pandemic Emergency Unemployment Compensation (PEUC);

4.    Lost Wages Assistance (LWA) Program;

5.    Mixed Earner Unemployment Compensation (MEUC); and

6.    Federal-State Extended Duration (FED-ED). 

The Consolidated Appropriations Act, 2021, authorized the following assistance payments as of March 1, 2021:

1.    FED-ED; and

2.    MEUC.

Since many of these payments are exempt, the income cannot be used to establish an OP.

Refer to Requirements for impacts to OPs. 

Supplemental Payment

A supplemental payment is issued to a participant for the current month when the CalWORKs benefits have been recalculated as a result of a change in circumstances and determined that the participant is eligible for a larger benefit amount than what was previously issued for the given month.

Note:  Supplemental payments are not considered underpayments and cannot be used to offset OPs.

Underpayment

An underpayment occurs when the participant receives less than the amount to which they are entitled in a given month or months.

Note:  Underpayments can be used to offset OPs.

Unlocatable

Means either of the following:

Requirement

Limit/Condition

Recovery Methods

OPs may be recovered via the following methods:

Voluntary Repayment Requests

The CW 2217, CalWORKs Request for Voluntary Repayment, is required for:

No substitute forms may be used for the CW 2217.

Refer to CW 2217 CalWORKs Request for Voluntary Repayment for details.

Late Reporting

“Late Reporting” applies to the timing of mandatory mid-period/year reports, as well as the timing of the submission of the SAR 7/Annual Renewal (RE).

A late report does not automatically indicate an OP.  The EW will identify an OP when the participant received a grant amount to which they were not entitled under SAR/AR/CO rules.

Reasonably Anticipated Income

No OP or underpayment will be established when the actual income received during a SAR or AR/CO Payment Period differs from the amount of income reasonably anticipated, as long as:

Timely Mandatory Report

Effective January 1, 2017, an OP must not be assessed for the month after the change when a ten-day benefit reduction or case discontinuance NOA cannot be provided to the family following a timely mandatory report of:

24-Month Establishment Timeframe

Effective July 25, 2022, staff may only establish a CalWORKs non-fraudulent OP if all or a portion occurred within the 24-month timeframe which includes the month of discovery as part of the 24-month timeframe.

When the OP is determined to be PIPV, the OP must be established within a 24-month timeframe as well as a PIPV designation equates to Participant Error.  If IPV has been substantiated, the OP may be established past the 24-month timeframe. 

Immediate Need

The Immediate Need payment is not an OP, as long as the participant was apparently eligible when the Immediate Need payment was issued.

However, when an AU receives any amount of aid payment to which it was not eligible, the amount must be processed as an OP. This includes, but is not limited to, an Immediate Need payment.

Refer to Administrative Release (AR) 40-129 Immediate Need for additional guidance.

OPs During the COVID-19 Pandemic

AB 135 – COVID-19 Pandemic Policy – Administrative Error OPs

Effective August 1, 2021, any non-fraudulent OP must be classified as an Administrative Error when the following apply:

1.    The OP is established on or after August 1, 2021; and

2.    The OP period includes the benefit months of April 2020 through June 2022.

Designating the OP as Administrative Error, regardless of case circumstances (i.e., caused by Participant Error), will allow OP recoupment via grant adjustment at the lower rate of five percent of the MAP. Although classified as an Administrative Error under AB 135, staff must still refer the case to the WFP&I Section when fraud is suspected.

Refer to Procedures for further guidance on this policy, including how to designate an OP caused by Participant Error as an Administrative Error.

CARES Act & Consolidated Appropriations Act, 2021

The following table displays how the various types of income payments received as part of the CARES Act must be treated. 

Note:  Payments that are exempt are excluded when calculating OPs. Payments that are not excluded are to be used when evaluating for an OP. 

Assistance Payment Type

Exempt (Y/N)

LWA

Yes 

PUC

Yes

·      Exempt for CalWORKs recipients.

·      Effective March 1, 2021, PUC benefits are exempt for CalWORKs applicants. Prior to March 2021, PUC benefits for CalWORKs applicants were not exempt. 

PUA & PEUC

No - Treated as unearned income when calculating OPs.

FED-ED and MEUC

No - Treated as unearned income when calculating OPs.

Executive Order (EO) N-29-20 – Eligibility Redeterminations

The requirement to submit a SAR 7/RE to redetermine CalWORKs eligibility for the months of March, April, and May 2020 was suspended as a result of this EO. 

While participants were not required to complete a SAR 7/RE for those months, an OP may be assessed if the AU did not make mandatory mid-period reports during that period (e.g., Income over IRT).

COVID-19 Good Cause Time Limit Exemption

From March 4, 2020 through April 30, 2022, the following EOs and ABs waived any month or partial month from counting towards the CalWORKs Time Limit for aided CalWORKs adults who were under the 48-Month CalWORKs Time Limit and had not exceeded the Temporary Aid for Needy Families (TANF) 60-Month Time Limit: 

·        EO N-29-20;

·        EO N-69-20;

·        EO N-75-20; and

·        AB 128.

If a CalWORKs adult was granted the exemption in error, an OP may be assessed.

Refer to AR 42-300 Time Limit Requirements for additional guidance.