State makes inroads to catch welfare cheats, recover millions in overpayments

The state is doubling down on its efforts to crack down on welfare cheats, or people who get more than their fair share of the benefits meant to help those in need.

It’s a problem Always Investigating has looked into for years, and now we’re following up on what’s changing.

State agencies and authorities have gotten tougher and more methodical in recent years, going after tens of millions of dollars in welfare overpayments. They’re using everything from technology to people power to make sure those truly in need get help.

The state’s Department of Human Services has a budget in the billions to distribute your federal and local tax dollars to help struggling families, whether it’s food, shelter, medical, child care, or general cash assistance.

We asked, of all the people who get benefits, are all of them double-checked for their eligibility or just a sampling?

“Everybody is double-checked,” said Department of Human Services director Pankaj Bhanot.

Yet somehow a fraction slip through, who the state later figures out cheated the system and not really qualified to take what was given. They under-report income or over-report household size. Agency errors can miscalculate eligibility or benefit amounts.

Whatever isn’t caught and fixed right away becomes a money chase later.

“We believe that we are the trustees of public funds and public trust,” Bhanot said, “and we must do everything to avoid fraud, abuse, and waste.”

The fraud adds up to a balance of welfare overpayments topping $50 million. Many of those debts go back decades and are uncollectible due to death, disappearance, or statute of limitations.

“I want to really figure out how much is really recoverable out of this large amount, because some of these debts go back 44 years,” Bhanot said, pointing out about $9 million falls in that stale category, and likely more unrecoverable still. “The overpayments that are actually increasing, it’s very miniscule.”


DHS has been making concerted efforts to stop overpayments before they start and get back more recent ones that sneaked through. Here’s how they’re preventing new overpayments:

First, they’re re-engineering the processing of applications, which used to be handled by one worker. Now, it’s a centralized pool for many hands.

“We know at all times what the status of the case is, who touches the case,” Bhanot said, “so collusion with clients or even employees themselves, if they have any idea they want to do something funny with these things, they won’t be able to do it because someone will always be able to see what’s going on in that case.”

Second, everything is being entered online or hard copies scanned for databases. Third, all of it can be automatically cross-checked.

“We go directly into databases and get that information so there is no human-entry error,” Bhanot said, “and it would not matter what client is providing, we can check it with various local or federal databases.”

One next big step is another technology platform out for bid right now to create a benefits system that would tie into the Kolea Medicaid eligibility system. That could be in place by the end of 2018 and mostly paid for with federal Affordable Care Act funds under the way the law currently stands.

As for getting back more from past welfare cheats, after our stories on the problem a few years ago, the Legislature funded investigator positions slashed in the recession and DHS got them hired up.

“Eight positions were restored, and that has made a tremendous difference to our outreach and our work, no doubt about it,” Bhanot said. “That’s why the last three years, you’re seeing those increases in recoveries.”

Millions of dollars a year are being paid back to the state and taxpayers, a sum that is notching upward. Some of it takes some law enforcement muscle too, and DHS has been working with the Attorney General’s office to prosecute more of the most serious cases.

“I think we’re being more aggressive in those cases, which we should be, because we’re dealing with public funds,” said Kevin Takata, who heads the Criminal Justice Division for the Hawaii Office of the Attorney General. “They’re reducing the resources that are needed by needy families, and we are going to prosecute those cases.”

The AG’s civil collections staff works on the bulk of the nearly 200 cases, armed with nearly 50 criminal judgments worth more than $8 million.

“We’re working a lot closer with DHS in identifying cases, and cases that are going to be productive in making the referrals to us,” said Michael Vincent of the Civil Recoveries Division of the AG’s office. “Last year we were able to collect more than $450,000 from the cases we’ve got. We’re finding a lot of them are working, so we’re garnishing their wages now, so it’s coming in steadily.”

DHS and the AG’s office say they plan to continue to make steady gains against the tide of overpayments.

“Is it foolproof? No. Are we doing everything we can, perhaps can we do more? Yes,” Bhanot said. “But given the totality of resources and what’s at stake I think we are continuing to make a tremendous difference.”

DHS relies heavily on the public’s eyes and ears to track down cheaters, including through its fraud hotline: (808) 587-8444.

Last year they got 1,200 reports statewide of suspected welfare fraud, leading to disqualifications, adjustments, voluntary repayments, and criminal cases.

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