Plan to end welfare fraud on hold

INDIANAPOLIS (WISH) - I Team 8 has uncovered new evidence that a proposed crack down on alleged welfare fraud in Indiana isn't happening. But, those behind it say they haven’t given up on the plan yet.

Last year, a four-month I Team 8 investigation found welfare recipients withdrawing your tax dollars illegally. As I Team 8 first reported in May, the money comes from a federally funded program called TANF (Temporary Assistance for Needy Families). It’s loaded onto debit cards each month and can be withdrawn as cash from any ATM.

The money is intended to help low income families get back on their feet. In Indiana, approximately 12,000 families are enrolled.

But, I Team 8 also uncovered thousands of cases where that money was allegedly used illegally — withdrawn in places like casinos, bars and liquor stores. In Indiana, it is a Class C Misdemeanor to withdraw TANF funding at those locations. Violators could face up to 60 days in prison and a $500 fine.

Six months after first uncovering thousands of illegal welfare transactions, I Team 8's repeated questions finally prompted action at the Statehouse , as lawmakers called for more to be done to stop fraudulent transactions.

Senator Patricia Miller (R-Indianapolis) filed SB 413 to force ATM vendors to electronically block those transactions.

But, in the months since, her plan has been put on hold.

“The bill I filed did not move, and they didn't hear it,” Miller told I Team 8.

That happened despite the fact that Miller serves as chairwoman of the committee the bill was eventually assigned to: the Senate’s Health and Provider Services Committee.

“It's just been a number of issues that came up,” Miller said, when asked why the bill didn’t get a committee hearing. “Amendments didn't get filed timely or something wasn't taken care of. But, it's still on my agenda.”

That’s because Miller says she’s merged her bill with another one.

“The language is still eligible to go into another bill. And, I'm still trying to do that. I've been trying to work with Senator [Brandt] Hershman, and we were going to amend it into a bill he has on Medicaid fraud. That's, I think, an appropriate place for it. And, he's open to doing that,” Miller said.

Miller was added as a co-sponsor of SB 559 two weeks ago, and says the language to add illegal TANF withdrawals is now written.

But, she expects a fight once it’s heard.

“I believe there is a way to block it. But, the financial institutions feel that's something they do not want to do. I think there will be testimony in opposition to it,” Miller said.

An analysis by the non-partisan Legislative Services Agency, called the role of the state’s Family and Social Services Agency’s Division of Family Resources “unclear” under the bill.

“FSSA reports that they are not aware of technology changes that would allow for the DFR to disable access only to electronic cash assistance benefits at prohibited locations,” the LSA’s fiscal impact statement on the bill reads. “FSSA reported that they have started tracking illegal withdrawals.”

But, I-Team 8 again confirmed that in the nine months since our initial report, potentially illegal cases of TANF fraud or misuse still are not being referred on by the agency for prosecution.

“Very frankly, it doesn't appear to me that they are doing anything,” said Sen. Jean Leising (R-Oldenburg), who filed her own bill on illegal TANF use, SB 533. “I don't think it's being enforced currently.”

Leising’s bill would make TANF recipients whose children have more than 10 unexcused absences during a single school year ineligible for TANF assistance until the next semester where they comply with the law.

“We don't have a statewide definition currently of unexcused absences,” Leising said. “So, that’s been a concern of Senator [Ron] Alting, the committee’s chairman. Ironically, there is another bill that has moved out of the Senate that is dealing with creating a definition statewide. So, I think Sen. Alting's concern is that we could have a school corporation saying a child had missed 10 unexcused days, and another meaning something different, and that it wouldn't be fair. I assume my bill is dead for this session, but I'm very anxious to see if we can get a definition for unexcused statewide so we can get the issue back.”

“I think that's part of the issue,” Miller agreed. “But, to me, the bigger issue is: why have there been no prosecutions?”

A spokesperson for FSSA declined an on-camera interview with I Team 8, but said added enforcement steps did begin, as promised, in January.

“21 letters were sent to TANF clients indicating they withdrew TANF funds from a prohibited location during the month of January,” the agency wrote.

The letters are supposed to come in pairs.

“In working with local prosecutors, we have determined that cases will only be sent to the prosecutor when we have established two offenses,” the agency wrote in its response to I Team 8.

The first letter warns recipients that they've broken the law, and that any further illegal TANF withdrawals “may be referred to the county prosecutor for legal action.”

A second letter would warn recipients that the County Prosecutor “has been provided with your name and transaction history involved in this case.”

No one has gotten a second letter, the agency said.

While 21 letters were sent in January, I Team 8’s analysis uncovered nearly three times as many suspected cases of illegal TANF withdrawals during an average month in 2011, the last set of complete data provided to I Team 8. I Team 8 has requested updated welfare transactions to see if the number of fraud cases has dropped in recent months.