Wisconsin Slapped With $7mm Fine For Falsifying Food Stamp Claims

Ever wonder why the number of registered food stamp recipients has seemed to steadily grow ever since the tech bubble collapsed in 2000, irrespective of the economic cycle?  Ever question why it was possible that anyone with a pulse could afford a $500,000 house in 2006 even though the number of people who apparently couldn't manage to cover basic food necessities continued to surge?



Well, perhaps it has something to do with the fact that there are armies of state employees all around the country whose sole purpose in life is to recruit new participants to sign up for taxpayer subsidized programs so they can extract as much funding from federal coffers as possible.  And when they run out of new recruits, these same state employees just 'fudge' the data to make sure the funds from Uncle Sam keep rolling in...which is exactly what just earned the State of Wisconsin a $7mm fine courtesy of the U.S. Department of Justice.

The Wisconsin Department of Health Services (WDHS) has agreed to pay the United States $6,991,905 to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP), the Department of Justice announced today. Until 2008, SNAP was known as the Food Stamp Program.


"This settlement reflects the Justice Department’s commitment to ensuring that taxpayer funds are spent appropriately so that the public can have confidence in the integrity of programs like SNAP,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.


Although the federal government funds SNAP benefits, it relies on the states to determine whether applicants are eligible for benefits, to administer those benefits, and to perform quality control to ensure that eligibility decisions are accurate. USDA requires that the states’ quality control processes ensure that benefits are correctly awarded, are free from bias, and accurately report states’ error rates in making eligibility decisions. The USDA reimburses states for a portion of their administrative expenses in administering SNAP, including expenses for providing quality control. The USDA also pays performance bonuses to states that report the lowest and the most improved error rates each year, and can impose monetary sanctions on states with high error rates that do not show improvement.

And, per the above, while the federal government may rely on the States to "perform quality control," unfortunately such measures tend to directly conflict with goals  to extract every penny worth of federal subsidies possible....which results in this:

As part of the settlement, WDHS admitted that, beginning in 2008, it utilized the services of Julie Osnes Consulting, a quality control consultant, to review the error cases identified by WDHS quality control workers. WDHS further admitted that based on instructions from Julie Osnes Consulting it implemented several improper and biased quality control practices, including:

  1. Finding a basis for dropping error cases from the review by discouraging beneficiaries from cooperating with information requests and pursuing unnecessary information;
  2. Selectively applying requirements and policies to overturn and reduce errors;
  3. Asking beneficiaries leading questions to obtain desired answers to eliminate error potential;
  4. Arbitrating any and all differences with USDA;
  5. Subjecting error cases to additional scrutiny and quality control casework with the goal of overturning an error or dropping a case; and
  6. Omitting verifying information in documents made available to USDA. These practices improperly decreased WDHS’s reported error rate, and as a result, WDHS earned performance bonuses for 2009, 2010, and 2011 to which it was not entitled.

Luckily, as we pointed out before, at least all that food stamp money is going to fund 'nutritious' diets...

Per the study, nearly $360mm, or 5.4% of the $6.6BN of food expenditures made by SNAP recipients, is spent on soft drinks alone.  In fact, soft drinks represent the single largest "commodity" purchased by SNAP participants with $100mm more spent on sodas than milk and $150mm more than beef.


Soft drinks were the top commodity bought by food stamp recipients shopping at outlets run by a single U.S. grocery retailer.


That is according to a new study released by the Food and Nutrition Service, the federal agency responsible for running the Supplemental Nutrition Assistance Program (SNAP), commonly known as the food stamp program.


By contrast, milk was the top commodity bought from the same retailer by customers not on food stamps.


In calendar year 2011, according to the study, food stamp recipients spent approximately $357,700,000 buying soft drinks from an enterprise the study reveals only as “a leading U.S. grocery retailer.”


That was more than they spent on any other “food” commodity—including milk ($253,700,000), ground beef ($201,000,000), “bag snacks” ($199,300,000) or “candy-packaged” ($96,200,000), which also ranked among the top purchases.


Even worse, when we added up all of the commodities that would typically be considered "junk food" (i.e. soft drinks, candy, cakes, energy drinks, etc.), we found that roughly $950mm, or just over 14% of the aggregate $6.6BN of food expenditures made by SNAP recipients, is spent on unnecessary, unhealthy products.



Of course, we don't suspect these types of abuses to end anytime in the near future as taxpayers don't really have rights...only entitlement beneficiaries have those.