Family and Children's Medicaid MA-3535 RECIPIENT FRAUD AND ABUSE POLICY AND PROCEDURES

XII. Administrative Collection Procedures

If the County Board of Social Services or its designee chooses not to refer the case for prosecution, the following options are available:

A. Voluntary Repayment Agreement

1. The recipient must indicate willingness to repay and will be given the opportunity to repay the overpayment in a lump sum payment or a specified amount on a monthly basis. Use the DMA-7060, Voluntary Repayment Agreement (VRA).

2. Always have the VRA notarized and keep a copy in the file. Send copies to Medicaid and Work First for their files.

3. When an individual misses the first payment of a VRA send a reminder letter. If a payment is not received within 30 days, take action to establish personal and/or telephone contact with the individual.

a. If the individual continues to refuse to repay, consider small claims court, civil court action or the set-off debt collection process.

b. In the case of the death of an individual with an outstanding debt, the county dss must file a claim against the deceased's estate for restitution.

c. If the word “Seal” appears next to the recipient’s signature, this will guarantee the investigator a longer period of collection. The civil statute of limitations for enforcement of collection is ten years from the date the VRA was signed. However, make sure the word “Seal” has been circled by the client. If further information is needed, contact your county attorney.

B. Voluntary Wage Withholding

1. Complete the DMA-7061, Voluntary Wage Withholding Agreement. Ensure that the wage withholding form has the word "Voluntary" on it and that all copies are notarized. Copies of the voluntary wage withholding form should be distributed as follows:

a. Send the employer a copy via certified mail.

b. Give the client a copy.

c. Keep a copy in your file.

d. Send copies to Medicaid, and WF and FS for their files.

NOTE: Always have the client sign a VRA as well as the Voluntary Wage Withholding agreement. Then, if the client quits a job, even though the voluntary wage withholding form is no longer valid, the agency still has the VRA.

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(XII.C.)

C. Civil Court

1. Civil Court procedures are used solely for repayment. If the recipient is found liable, the court may enter a judgment against the recipient for the amount owed to DMA. Civil Court procedures may also be used when a recipient has failed to uphold a previously signed Voluntary Repayment Agreement.

Consider the following factors:

a. Proof of the overpayment amount

b. Failure to repay the overpayment if a Voluntary Agreement was previously executed

c. Court costs

d. The likelihood of satisfying a judgment against the recipient given the allowable exemptions

2. Information is available through each county Clerk of Court on procedures to follow for this type of action. It is recommended that this source be used.

Civil Court procedures should also be initiated in cases in which criminal prosecution failed to yield restitution in full for overpayments.

Example: A recipient found guilty of felonious fraudulent misrepresentation by the Superior Court is ordered to pay $1,385, is given a suspended sentence of 4 years in prison, and is placed on 4 years probation. Payments received during the probationary period did not repay the entire amount owed and contact by the county dss with the probation office produced no results. When the order terminating probation was established, it was ordered that the arrearage be remitted. In this situation, civil action could be pursued to recover the amount owed. The county attorney may have to consult with the Attorney General's office, if needed.

D. Delinquent Accounts

Court Ordered Restitution - Upon notification of delinquent accounts, take the following actions:

1. Probation Office: For individuals who fail to comply with the terms of court ordered restitution and are on probation, contact the probation office to determine appropriate follow-up action, such as tax intercept or wage garnishment. If they are complying with the court order, make sure their taxes are not intercepted.

2. Clerk of Court (COC): For individuals who fail to comply with the terms of court ordered restitution and are not on probation, contact the Clerk of Court (COC) to determine appropriate follow-up action, such as tax intercept, wage

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garnishment or non- compliance order. In some cases the COC may issue an order for arrest for non-compliance.

NOTE: Investigators are encouraged to seek permission from the Clerk of Court to issue non-compliance orders.

E. Estate Recovery for Deceased Debtors

1. A Medicaid overpayment can be recovered from a deceased debtor’s estate when a recipient owes DMA for claims paid by Medicaid on the decedent's behalf, but for which he was ineligible. This is separate from Third Party Recovery claims on LTC cases.

2. If an overpayment is involved for a deceased debtor, the county dss should collect the overpayment amount first, as the county receives a greater incentive for overpayment collections, than for regular Third Party Estate recovery.

3. It is very possible to discover the overpayment upon the death of the recipient through verification with the Clerk of Court regarding the existence of assets of which the county dss was unaware. At the point the investigator verifies resources that created ineligibility for Medicaid a claim should be established in EPICS.

4. Request a Recipient Profile via the DMA-7063 for the overpayment dates involved. Refer to section XVII, below, for instructions on how to determine the amount of ineligible claims that have been paid.

5. It is vital to complete the formal letter, “Notice and Presentation of Claim Against Estate.” This letter must be completed and presented to the Clerk of Court and to the executor of the estate stating the amount of the overpayment. This establishes a claim against the estate on behalf of the county dss. Contact your local county Clerk of Court to obtain the letter.

F. Wage Garnishment

1. General Overview

Wage Garnishment is a legal summons to withhold wages to satisfy a debt resulting from fraudulently receiving benefits from the Medicaid Program. North Carolina General Statute 108A.25.3 allows the garnishment of wages to recoup fraudulent public assistance benefits. This law applies to civil actions filed on or after December 1, 1997, regardless of the date the claim was established. A judge or jury in Criminal Court must determine the act of fraud.

The garnishment process cannot be initiated to collect delinquent NCHC overpayments.

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(XII.F.2.)

2. Wage Garnishment Criteria:

a. The garnishment process cannot be initiated until all administrative collection methods are exhausted. The county must attempt to establish a cash repayment agreement. If the individual fails to meet the terms of the agreement, garnishment proceedings cannot be initiated until the account

is 60 days delinquent. If the client makes a payment after the garnishment process begins, the garnishment procedure will continue.

b. Garnishment is not an option if an individual is required to pay restitution for fraudulently receiving Medicaid benefits pursuant to a criminal court order. However, if the individual does not pay in accordance with the

court order a separate civil action can be filed. This needs to be coordinated with the probation officer.

c. The garnishment cannot exceed 20% of the monthly disposable income. Disposable income is defined as net income (wages, salary, commission, bonus, or other), or that which remains after any legally withheld deductions are made. (Legally withheld deductions are those deductions required and not an option. These include Federal and State taxes, as well as Social Security. Retirement is also a required deduction with some employment).

d. A civil judgment must be obtained against the individual prior to completing an order for garnishment. The amount due is the amount of the fraudulent benefits and any applicable court costs.

e. The order for garnishment may be entered 10 calendar days after the judgment is filed with the Clerk of Court.

f. An order for garnishment may not be entered if the court finds that the order jeopardizes the individual's ability to become or remain financially self-sufficient, resulting in the likelihood of increased or recurring dependency on public assistance, or an inability to secure basic necessities.

g. The investigator will need to complete necessary budgets to determine if the garnishment would jeopardize the individual's ability to remain self-sufficient.

h. Once the fraudulent benefits and the costs of court are paid in full, it is the responsibility of the county agency to have to judgment removed at the

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(XII.F.2.h.)

Clerk of Court. The county must remove the judgment within 30 days of full repayment of the fraudulent benefits and the costs of court.

Note: Counties should obtain the North Carolina Rules of Civil Procedures from the Clerk of Court's Office if they do not already have one available.

3. Wage Garnishment Procedures

A judgment may be obtained after the civil court hearing is held or by default of the hearing. Default of the hearing occurs when the individual fails to appear for the hearing, or fails to make a plea regarding the matter. Once a judgment is entered, the county Department of Social Services may petition the district court for an order of garnishment. The “Petition for Order of Garnishment”, must include the following:

a. Indication that the person is a former/current recipient.

b. An explanation of which public assistance programs are involved.

c. The amount of the fraudulent overpayment.

d. Circumstances surrounding the fraudulent benefit, and why it is fraudulent.

e. Information that all administrative means to collect the benefits have been exhausted unsuccessfully.

f. Verification that county DSS has obtained a judgment. A copy must be attached to the petition.

g. The name and address of the garnishee.

h. The individual's verified monthly disposable income. (Attempt to verify this through the employer or client. If this is not available, use Employment Security Commission information as last resort).

i. Verification that the proposed garnishment does not exceed 20% of the individual's monthly disposable income.

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j. The Petition for an Order of Garnishment must be served on the individual, and on the garnishee (usually the current employer of the individual).

4. Instructions for Completing Petition for Order of Garnishment

Note: Contact your local county Clerk of Court Office to obtain the “Petition for Order of Garnishment”. Instructions are listed according to paragraph numbers in the Petition.

a. The petition may be brought by the County Department of Social Services

b. A district court judge in the county where the individual resides or is found, or in the county where the overpayment occurred may enter an Order for Garnishment. One of these situations must be alleged in the petition.

c. Orders for Garnishment may be obtained against individuals of public assistance. The petition must allege that the defendant is a past or current recipient. The allegation should explain what program of public assistance is involved (for these purposes, Medicaid).

d. The petition must allege the amount of the fraudulent benefit(s).

e. The petition must provide the court with facts and circumstances surrounding the fraudulent benefit. The petition must allege how the benefit(s) is fraudulent.

f. The County DSS is required to exhaust all administrative remedies prior to pursuing garnishment. The petition should state that all administrative means have been exhausted unsuccessfully.

g. The petition must indicate that the County DSS has obtained a judgment for a sum certain against the individual. A copy of the judgment should be attached to the petition.

h. The Garnishee must be identified, and the garnishee’s address must be given.

i. The petition must give the individual’s monthly disposable income.

j. No more than twenty percent (20%) of the individual’s monthly disposable income can be withheld. If the fraudulent benefit cannot be recovered in one payment, the petition must state the amount the County

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DSS wishes to be withheld from the individual’s monthly disposable income.

5. Time Restrictions for the Order of Garnishment

The service must be in accordance with Rule 4 of the North Carolina Rules of Civil Procedure, which states that upon the filing of the complaint, a summons shall be issued within 5 days.

a. The summons shall run in the name of the State and be dated and signed by the Clerk, Assistant Clerk, or Deputy Clerk in the county in which the action is commenced.

b. The complaint and summons shall be delivered to the sheriff of the county where service is to be made or to some other person duly authorized by law to serve summons.

c. Service must be made within 30 days after the issuance of the summons, and returned immediately to the issuing clerk who issued it with notation of service.

d. The individual and the garnishee have 30 days from the date of service to respond to the petition in accordance with Rule 12 of the Rules of Civil Procedure. A hearing date is set regarding the petition and is heard before a district court judge. Following the hearing the judge may or may not enter an Order for Garnishment.

e. The Order for Garnishment may be entered in the county where the individual resides, or is found, or in the county where the overpayment occurred.

f. If an order is entered, a copy must be served on the individual, as well as the garnishee. The order must be served personally or by certified mail, with return receipt requested.

g. The order must include sufficient findings of facts to support the action by the court and the amount to be garnished each pay period.

h. The amount to be garnished is based on the individual's verified monthly disposable income. The amount garnished each pay period may be increased by an additional $1.00, which is a processing fee, and retained

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(XII.F.5.)

by the garnishee (employer) for each payment under the order. The $1.00 processing fee is the responsibility of the garnishee.

i. The order shall be subject to review for modification and dissolution upon filing of a motion in the cause.

j. A certified letter is also mailed to the garnishee advising him of his responsibilities regarding the Order of Garnishment.

k. Upon receipt of the order of garnishment, the garnishee transmits without delay to the Clerk of Superior Court the amount ordered by the court to be garnished. The funds are disbursed to the county department of social services to recoup fraudulent benefits subject to the order of garnishment.

l. A garnishee that violates the terms of an order of garnishment shall be subject to punishment for contempt.

H. Liens and Recoveries

The county dss may place a lien against an individual's property, both personal and real, because of claims paid or to be paid on behalf of that individual following a court judgment which determined the benefits were incorrectly paid for that individual.