SRS cracking down on fraud

08/14/2011 12:00 AM

08/14/2011 12:09 AM

Losing your Kansas Vision card once, even twice, won't necessarily get you in trouble.

But losing it a third time will now raise red flags in Topeka, initiating an investigation by the state's Department of Social and Rehabilitation Services.

SRS Secretary Rob Siedlecki said he wants to crack down on fraud involving any form of SRS benefits, regardless of the amount.

"Three strikes and you're out," he said.

In the past, he said, the state's six SRS regions applied differing standards for how many times a person could lose a Vision card before an investigation was triggered.

Vision cards, which replaced the old food stamp system, are used by people who meet low-income guidelines to get monthly food and cash benefits. The cards are sometimes reported as lost when they are illegally sold.

"In these difficult economic times, those who are eligible for benefits — those who are most vulnerable — should be getting them," said Siedlecki, who joined Gov. Sam Brownback's Republican administration in January. "They shouldn't go to those who are gaming the system."

While acknowledging SRS fraud exists, some Democratic legislators say they fear that overly aggressive investigations will be used to deny people who have a legitimate need of the benefits.

Siedlecki said he is rebuilding an SRS fraud investigation unit that has dwindled in manpower since 2006. He's also creating a more centralized SRS by reducing the number of local and regional offices to bring uniform enforcement, making sure fraud warnings are clearly spelled out on all benefit forms and offering to assist local prosecutors.

In the past, Siedlecki said, "SRS just looked the other way, just tried to get the benefits out."

Don Jordan, who headed the SRS from December 2006 until shortly after Brownback took office, said his office didn't ignore fraud.

"I don't want to get into an argument with him," Jordan said. "They need to show what they accomplish."

Rep. Dave Crum, R-Augusta, chairman of the House Social Services Budget Committee, said he didn't think it was fair to say that SRS previously looked the other way.

"They weren't condoning fraud. I don't know that they were as aggressive on potential fraud."

Siedlecki's plan

Siedlecki recently hired Ken Thompson, a Neodesha native who has been an attorney for the SRS's southeast regional office in Chanute, to be director of fraud investigations. The position had been vacant since 2006. Thompson's annual salary is $75,000.

Since 2006, the number of fraud investigators has dropped from 17 to nine, Siedlecki said.

He added he wants to give Thompson a chance to evaluate the needs before determining how many fraud investigators will be added.

"My goal is to get as close to 17 as possible," said Siedlecki, a Cornell University law school graduate who previously worked as chief of staff with the Florida Health Department. "Obviously it will take time because we have to deal with budget realities."

The Legislature required SRS to cut $1 million in costs this year.

Siedlecki said the added positions will pay for themselves because investigations will reduce fraud and result in collecting money stolen from the system.

There is one fraud investigator in the western regional office that covers 47 counties. There isn't a fraud investigator in the Wichita regional office, which handles only Sedgwick County.

"That's crazy for the largest city in the state not to have any fraud investigators," Siedlecki said.

Jean Hogan was regional director of the Wichita office for six years. She was fired by Siedlecki in May, one of four regional directors out of six to be replaced this year by the new administration.

She said the Wichita region had two to three fraud investigators for the past few years before it dropped to zero in 2011 because of budget cuts.

"We put an emphasis on resources for staff doing direct services," she said.

Hogan said that over time, as fraud investigators left, she was denied permission to fill the spots.

"We still did fraud investigations with the staff we had available," she said. "We did what we could to prevent fraud."

As for lost Vision cards, Siedlecki said it would take 10 lost cards before the Topeka office would investigate, and Wichita's office had no limit on lost cards.

But Hogan said that's not entirely true.

"It doesn't mean new money was put on a lost Vision card," she said. "After a certain number of times someone came back for a new card, they had to talk to our staff.

"But, no, we didn't have the investigators to send out to see what happened."

She also noted that many who receive SRS benefits have difficulty keeping track of their belongings.

"That doesn't mean they're out there selling their Vision cards," Hogan said.

When Jordan oversaw the SRS, he said, he had an established process to determine whether someone should get a new card. He said SRS staff was expected to look into any suspicious reasons for losing a card.

Siedlecki is in the process of consolidating the number of SRS offices, cutting out two of the six regional offices and eight of the 37 local ones. He said that will not only reduce costs but help in applying the regulations consistently.

"We'll have one uniform policy across the state," he said. "Fraud will be the same in Wichita as it is in Garden City, Topeka and Overland Park."

Jordan said he largely followed a decentralized system, preferring to allow local and regional offices to handle issues.

Hogan said that approach worked well when the resources were available.

"You can make a decision on how to collaborate and work with your community," she said.

How large is the problem?

It's hard to determine the dollar amount of SRS fraud because it has been under-investigated, Siedlecki said.

In fiscal year 2002, he said, 131,000 Kansans received food stamps and 1,309 were determined by investigators to be fraud cases.

In fiscal year 2011, which ended June 30, there were 296,000 people using Vision cards — more than twice the number— but only 942 cases were determined to be fraud, he said.

The value of the fraud was $1.2 million in 2002 and $1.9 million in 2011.

"But here's the problem," Siedlecki said. "That's not our total fraud number."

He isn't sure what percentage of SRS's $1.9 billion budget is fraud. "But let's say it's 5 to 10 percent. We're talking tens of millions of dollars," he said.

News about SRS fraud in the Wichita area has been in the forefront recently.

Last November's bust of a fraud scheme involving use of Vision cards at two Wichita grocery stores resulted from an investigation by federal agents and Wichita police.

Owners of the stores were charged with collecting more than $580,000 in illegal benefits. Undercover officers traded cash for Vision benefits at the two stores, Alnoor Grocery, 5220 E. 21st, and Kansas Food Market, 2600 N. Arkansas.

One of the 13 people indicted in the case has been convicted so far, and he will be sentenced this month.

In another case last month, a Butler County judge sentenced Valerie and Doug Herrman to prison after they were convicted of taking $15,488 in adoption subsidy payments over a two-year period after their adopted son, Adam Herrman, mysteriously disappeared from their Towanda home in 1999.

The Herrmans said he ran away after a spanking and they never reported him missing. What happened to Adam is still unknown.

Although those were large fraud cases, Siedlecki said the dollar amount won't drive SRS's investigations.

"If you steal $200 or a half million, we'll go after you," he said. "We will not look the other way or say, 'It's below $1,000, so we're not going to look into it.' "

Siedlecki said he will go after all types of fraud involving the SRS, except for the Medicaid programs the department oversees. The attorney general's office will continue to handle Medicaid fraud.

'We have shifted our priorities'

Rep. Jim Ward, D-Wichita, said he's all for pursuing fraud.

"Not one penny of taxpayer dollars should be misspent," he said.

"But on the other hand, I don't want them to use this whole idea of investigating fraud to deny people benefits or to make it harder for people who are legitimately eligible for benefits to get them."

Rep. Nile Dillmore, D-Wichita, said there's a tendency to overplay the significance of fraud over other things in budgeting priorities.

"A huge fraud emphasis helps to distract from the fact we have shifted our priorities," he said.

Crum, the legislator from Augusta, said it's possible for Siedlecki to attack fraud without hurting those who need the help.

"If you can have a more aggressive approach in discovering fraud," he said, "it will free up dollars to provide more services."

Part of Siedlecki's driving force to reduce fraud is to build trust, he said.

"If people don't have trust in how we're spending their money, that we're just shoveling out benefits independent of need," he said, "we're really going to have a black eye with the public."

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