LAS CRUCES—A year-old scandal involving alleged systemic fraud with the state’s management of federal food aid benefits was the elephant in the federal courtroom Thursday.

Both Kenneth Gonzales, a federal district judge, and Lawrence Parker, a court-appointed “special master” who is tasked with guiding the New Mexico Human Service Department (HSD) in its federal compliance with Medicaid and Supplemental Nutrition Assistance Program benefits, alluded to the scandal at the hearing.

“What nobody wants to see, and you especially, is a culture that allows this to happen,” Gonzales told HSD Secretary Brent Earnest.

Parker emphasized that “many of those same people” who were alleged in 2016 to have instructed HSD employees to falsify SNAP applications to meet federal quotas “are still in place” at the department.[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]No ads. No clickbait. Just news.

[/perfectpullquote]Parker raised the question of why the department’s management has largely remained the same since the shocking allegations of fraud came to light last year.

More than once, Parker recommended a staff shakeup.

“The cabinet secretary needs to take a serious look at his management team,” Parker told Gonzales.

Read all of our award-winning coverage of the HSD food benefits scandal

Later, Parker repeated the call for changes in HSD’s management in order for the department to succeed in complying with  a consent decree that resulted from an earlier lawsuit and a corrective action plan the agency is working on under federal government oversight. Parker added that he’s spoken with Earnest about changing management and Earnest appears to be “taking some consideration of the recommendations.”

At the end of the hearing, Gonzales said he “had reasons to be encouraged” about HSD’s progress in fixing its benefits processing, specifically citing the department’s gains in reducing its SNAP backlog. But he also cited “obvious reasons to be concerned.”

Gonzales then pledged to soon visit two HSD field offices to get a sense of the issues for himself. He expressed concern that the department may not be federally compliant by next year, when Parker’s tenure is up. If that’s the case, the court would likely appoint a federal receiver with much broader authority to intervene.

“It’s with January 2018 in mind that I wanted to visit with you,” Gonzales told Earnest and his legal team. “It’s a special master this year, and I don’t think anyone wants to see a receiver.”

Also present at the courtroom Thursday was Paul Kennedy, Gov. Susana Martinez’s high-powered contract lawyer. Kennedy, who is representing HSD, didn’t say much during the hearing. Federal Magistrate Judge Carmen Garza, who was the judge that heard most of last year’s testimony of the allegations, attended most of the hearing as a spectator as well.

After the court hearing, Earnest told NM Political Report that Gonzales’ upcoming visits to field office would be “a good learning experience for him.”

Earnest added that his department is “always” reviewing its management positions.

“We do it all the time,” he said.

Despite his reassurances, two of the administrators who pleaded their Fifth Amendment rights dozens of times in the same federal courthouse last year remain on HSD’s payroll. Earnest noted that former ISD Director Marilyn Martinez was demoted and that Laura Galindo, a former field officer who also pleaded the fifth, no longer works in the Income Support Division, which manages both Medicaid and SNAP benefits.

Earlier this week, the New Mexico Center on Law and Poverty revealed an April email directive instructing state employees to cease interviews and communications with Medicaid and SNAP recipients and applicants every day at 3:30 p.m. The email also instructed employees to lie to the clients and their office superiors about the interview limits.

The Center is challenging HSD on its compliance with federal law in its benefits processing.

Related: State makes ‘shockingly little progress’ in mending SNAP scandal

At the Thursday hearing, HSD Secretary Brent Earnest said the email directive “on its face” was “wrong.”

Gonzales cited the email and the SNAP scandal when he addressed Earnest.

“I think the first word is ‘disappointed,’” Earnest said, when asked by Gonzales about the email. Earnest added that he addressed the email as soon as he became aware of it.

But Sovereign Hager, a staff attorney with the Center, told the court the email was indicative of serious problems within the department, and specifically of communication problems.

“We’re the ones getting calls from [department] offices to inform the secretary,” she said. “Obviously, the flow of communication is a big issue.”

Ongoing problems with benefits

The SNAP scandal flooded headlines last summer after nine HSD employees alleged in sworn court testimony a longstanding, unwritten rule within the department to add fake resources to emergency applications for emergency SNAP benefits, the federal food aid program formerly known as food stamps. The fake resources, they said, would move the applicants’ statuses away from emergency and give the department an extra few weeks to process their applications.

The scheme prevented many emergency SNAP applications in New Mexico from going overdue, which hypothetically looks good in the eyes of the federal government. In the meantime, the state’s most vulnerable had to wait to receive food aid, or in some cases not get any help at all.

Shortly after the employees made the allegations, three HSD administrators refused to answer questions in court about their involvement in the alleged fraud by pleading their Fifth Amendment rights.

Parker gave a mixed review of the work HSD has done since he began his role as special master in January. He applauded the department for dropping its backlog of SNAP cases this year from more than 30,000 cases in February to just a few hundred as of now.

But the drop in the SNAP logjam came as the number of delayed Medicaid renewals ballooned from 24,000 in January to 53,000 in early June. As of June 21, that number dropped back down to 38,000, according to the state’s numbers.

Gonzales raised concerns that HSD’s recent focus on cutting into the number of Medicaid renewal delays could come at the cost of cutting SNAP backlogs. Earnest called the concern “misplaced” because many Medicaid recipients seeking renewals are still, in the meantime, receiving their health benefits throughout the process.

But Parker noted that the same staff that worked to bring the SNAP numbers down are now working to bring the Medicaid renewal delays down.

Parker praised the department for recently hiring a new ISD director, whom he said will help bring it into compliance with federal law.

In addition to recommending a change in management, Parker also recommended the department start an evaluation plan for its employees.

Earnest, for his part, told the judge that his department has been making significant strides toward meeting the consent decree by reducing the SNAP backlog and providing federal benefits to more people than any other time “in state history.”

Earnest mentioned securing roughly $8 million more in federal funding for his department for  2017 over last year and taking steps to exempt HSD from a statewide hiring freeze instituted by Gov. Susana Martinez. Earnest also argued that he’s been able to secure more money and hire additional staff at a time when most other state agencies are faced with cuts.

But Hager painted a much bleaker picture.

“It seems like we take steps forward, and then steps are taken back,” she said.

She accused the department of not responding to the Center’s requests for information—an allegation backed up by Parker—and of deleting notice of regulations such as one that instructs HSD employees when they are allowed to call federal immigration authorities when they’re dealing with immigrants seeking benefits.

Hager also reiterated problems that the Center detailed in writing this week about the poor response rate at HSD’s customer service center. In all, the department’s own numbers show that it answers customer service calls just 35 percent of the time for English-language speakers and 19 percent of the time for Spanish-language speakers.

At one point, Gonzales lamented the differences between Earnest and Hager’s presentation of the state of affairs. He cited this as the main reason he and Garza appointed Parker as a special master last fall to try to mitigate the issue.

“The pictures we’ve received from the defendant and plaintiff were so opposite,” Gonzales said. “I believe both of you believe what you’re saying.”

But Gonzales also noted that both Parker and the Center took issues with some of the data HSD presented at the hearing. Specifically, Parker cited Medicaid data “that doesn’t make much sense” provided by HSD.

This prompted Gonzales to tell Earnest that “there’s a trust issue” and a “validity issue” that he must correct by the fall, when all parties are set to need again.

“How can you bring confidence when you come back in November that the numbers you present are valid?” Gonzales asked in a rhetorical manner. “There has to be steps that you take.”