May 27, 2016

New allegations say food benefits falsification escalated in recent years

This month’s federal court hearing regarding ongoing claims by Human Services Department employees of widespread fraud within the department was notable for another reason besides three high state officials invoking their Fifth Amendment rights nearly 100 times.

One former employee testified the department’s practice of adding fake assets to emergency food stamp applications in order to fix the department’s backlog of late applications for the Supplemental Nutrition Assistance Program came directly from the department’s top brass.

Shar Lynne Louis, a former employee at HSD’s Income Support Division (ISD) in Gallup who retired last summer, was one of nine current and former employees who gave testimony in the case over two hearings.

Louis said she often reviewed the state’s policies and procedures and could never find anything in them justify adding fake assets. So she asked her superiors.

“The only answer that I got was it’s coming from Santa Fe,” Louis said before court, referring to the state’s capital city where the department is headquartered.

She also maintained that the fake asset practice has been going on since at least 2003, the year she was first hired with ISD. This echoed testimony by Veronica Arciero, a case processor in Silver City who has been working for ISD for 10 years.

“It’s existed ever since I came in, even before that,” Arciero said in court.

While adding fake assets may go back years, even decades, Center on Law and Poverty attorney Sovereign Hager insists that the evidence points to HSD really institutionalizing the practice among its department within the past three years.

According to data from the federal U.S. Department of Agriculture, which administers SNAP, New Mexico wrongly disqualified 1.8 percent of its emergency, or expedited SNAP applications in 2013. By the next year, that rate of error jumped to 9.8 percent, exceeding the national error average of 6.5 percent.

This number could be much higher.

Hager notes that this data doesn’t capture fraudulent assets added into case notes as a “client statement”—making it appear as if the applicant wrote the fake assets themselves—which she said is “impossible to track” and “wouldn’t show up as an error.”

‘You will be reprimanded’

At the May court hearing, attorneys for HSD referred to a directive Secretary Brent Earnest sent to employees telling them to follow federal law and not add fake assets to cases. The directive came after the allegations of department-wide fraud first surfaced in federal court in April.

The department has also launched an internal investigation into the allegations, the results of which must be presented to federal court on June 28. HSD has been avoiding phone calls and emails from NM Political Report on the issue, and others, for weeks.

In a state legislative interim committee meeting held earlier this week, Earnest told lawmakers that employees with information should feel comfortable cooperating with the department’s investigation.

“That was extremely troubling to me as a secretary and to the department,” Earnest said of the allegations, “because I would say that violates our very ethos of what we do.”

Employee testimonies in court, however, painted a much different picture of the department’s handling of the matter.

Human Services Department Secretary Brent Earnest

Human Services Department Secretary Brent Earnest

The allegations came as part of ongoing litigation by the Center on Law and Poverty, which asks a judge to appoint an independent monitor to direct HSD’s SNAP and Medicaid processing. At the latest hearing, Hager asked an employee in court this month whether Earnest’s new directive represented a change in department policy.

“Yes, because this came after the [April] hearing,” Jeanette Roybal, a case processor in Las Cruces, responded. “Before, they were having us send [cases] to the supervisors or telling us to enter assets.”

If the employees sent overdue emergency SNAP cases to their supervisors, those supervisors would add fake assets and send them back, according to the several testimonies.

Hager said these testimonies are reflected in previous directives from ISD. One of those directives, in 2015, instructed employees to send all late emergency applications to their line manager before their final approval.

“Each and every time a case shows up untimely, I have to justify this to the Director’s office,” Cynthia Diaz, the East Doña Ana County Director for the department’s Income Support Division (ISD), wrote in an email to employees in February 2015. “That means that each of you that processes an untimely expedite will have to reply to me and I will submit your response to the Director. This is also part of you [sic] performance evaluation.”

ISD Grant and Hidalgo County Director Mark Shephard was more candid when he emailed the same directive to employees in November 2015.

“If you process an untimely expedite you are directed to provide me with a short written response that describes your error, why you made the error, and how you will prevent from making such an error in the future,” Shephard wrote in the email, underlining and bolding the text to add emphasis.

Any employee that doesn’t follow the directives, Shephard wrote, would be “referred to HR for disciplinary action and can lead to dismissal.”

“If you do not follow the below directives,” Shephard again wrote in bold text, “you will be reprimanded.”

Both the directives from Diaz and Shephard, in different counties and parts of the state, included the same wording for the following guideline: “If you determine it is correct to expedite this case late, you must route it to a manager before you CERTIFY the case. If your manager is not in, you must take case to your back up manager the same day. DO NOT CERTIFY.”

Big backlogs

Federal law requires emergency, or expedited SNAP applications to be processed within seven days.

That’s because they’re for the poorest of the poor. To qualify, applicants must meet one of three conditions: their monthly income and bank savings must equal to less than their monthly living expenses, their monthly income is less than $100 and their bank savings are less than $150 or they are migrant workers and their savings add up to less than $100.

Though all states are required to process the benefits within seven days, the United States Department of Agriculture, which funds SNAP through its Food and Nutrition Services, considers states that process 95 percent of expedited SNAP applications on time acceptable.

States that do not meet the 95 percent timeliness threshold on processing emergency applications must go on performance action plans to meet that minimum. In rare cases, USDA will cut off federal SNAP money for states that are really bad actors.

A USDA spokesperson told NM Political Report that the federal department is providing technical assistance in New Mexico “to make sure the state is in compliance with all applicable federal statutes and regulations.”

In April 2014—one year before ISD issued the strict directives against processing overdue expedited SNAP cases—the USDA spent a week reviewing procedures in New Mexico at offices in San Juan and McKinley counties. Between both offices, the feds found 17 violations of federal policy in processing benefit applications, including that they failed to “meet the national tolerance level of 95%,” according to the USDA report.

The federal report attributed the problems with timeliness with the implementation of the federal Affordable Care Act, which helped lead to a 5 percent increase in New Mexico’s SNAP recipients, as well as HSD’s 2013 change to a new computer system to process the applications known as ASPEN.

“Due to the influx of applications, the timeliness rate has suffered statewide,” the USDA report read.

It continued: “The State is finding it difficult to quantify the magnitude of the processing delays and backlog of cases specific to SNAP.”

In the May court hearing, Silver City case processor Veronica Arciero said testified that avoiding the processing of late expedited translated to “mak[ing] up the resources, whatever the case is, whatever the situation is.”

Miles Conway, a spokesman for the American Federation of State, County and Municipal Employees Council 18, which represents ISD caseworkers, said he doesn’t know why HSD would resort to such a drastic alleged practice to skirt a federal regulation.

“I’m not sure what the upside is to obscuring the challenges New Mexico is facing in poverty,” Conway said.

But he argues that not properly funding state agencies may have something to do with it.

“For them to say, ‘Ah, we need more resources to run our agencies more effectively’—that doesn’t fit into the narrative coming from the Fourth Floor,” Conway said, referring to the governor’s office.

Read USDA’s 2014 findings on HSD below:

PAR-04-2014- by New Mexico Political Report

Read HSD’s 2015 directives to employees about late expedites:

Exhibit Vv by New Mexico Political Report

Exhibit U by New Mexico Political Report