88. The fraud hearing
A fraud hearing is similar to a fair hearing, but the food stamp office will hold a fraud hearing without the person asking for it. It is called an “administrative disqualification hearing.” In California, the rules state that the hearing is held when the local prosecutor declines to file criminal charges against a person, or works out a plea. [MPP § 20-300.22, 300.23.] Unfortunately, in California, many counties go straight to court or have recipients sign a disqualification consent agreement rather than using an administrative hearing to prove an intentional program violation (IPV).
The individual has the same fair hearing rights to be represented by someone else, to see their file, to get copies of papers, to ask questions of witnesses and other people from the food stamp office and to present any evidence and arguments. [7 C.F.R.§ 273.16(e)(2)(ii); MPP§ 22-210.] (For related information, see the sections of this guide about authorized representatives and requesting a fair hearing.)
The food stamp office must provide 30-day notice of the hearing. [7 C.F.R. § 273.16(e)(3)(i); MPP § 22-202.51.] (Arguably, all members of the household should be given separate notice and a right to appear at a fraud disqualification hearing since they all may lose food stamps if the accused recipient is disqualified and his or her income or resources are still counted against them.) A person always has the right to put off a fraud hearing for up to 30 days. [7 C.F.R. § 273.16(e)(2)(iv); MPP § 22-201.2.] The food stamp office does not have to put off the hearing if the person asks for the continuance less than ten days in advance of the scheduled hearing. [7 C.F.R. § 273.16(e)(21)(iv); MPP § 22-210.2.] The Office of the Administrative Law Judge (ALJ) has the power to limit postponements to just one, unless there is good cause. [MPP § 22-210.21.]
A fraud hearing is different from a fair hearing because at a fraud hearing the food stamp office must prove its case with “clear and convincing” evidence. Clear and convincing evidence is a higher standard of proof than in regular food stamp fair hearings. In California, the hearing maybe held at the state level or at the local level. [MPP § 22-215.3.] If it is held locally, the decision can be appealed to the state in which case, a de novo hearing is held by a administrative law judge (ALJ). [7 C.F.R.§ 273.16(e)(6); MPP § 22-202.3.]
A person does not have to testify or answer any questions at a fraud hearing. [7 C.F.R. § 273.16(e)(2)(iii); MPP § 22-210.11. See, e.g., Rush v. Smith, 573 F.2d 110 (2d Cir. 1978).] The notice about the hearing should explain this right. In fact, the person should be careful about what is said at a fraud disqualification hearing because anything could be used later to prosecute the person for criminal fraud in court. [See Laurel Blankinship, Handling Potential Fraud Cases at the Civil Level, Clearinghouse Review, September/October 2003, at 357; see also, 7 C.F.R. § 273.16(e)(2)(iii), (e)(3)(ii)(H).]
The person does not even have to show up at the hearing. [See preamble to the proposed regulations creating fraud disqualification hearings, 43 Fed.Reg. 18873, 18899 (May 2, 1978) ("hearing official cannot draw any negative inference because the household member was not present or represented").] That said, if the person does not come and does not have a good reason why, the food stamp office will hold the hearing without them. [7 C.F.R. § 273.16(e)(4); MPP § 22-210.411.] If a person misses the hearing and does not have a good reason for rescheduling it, the person will most likely lose the hearing. However, a recipient not appearing at an intentional program violation disqualification hearing can challenge the adequacy of the evidence produced in a later appeal. [Smith v. Department of Health and Rehab. Servs., 522 So. 2d 956 (Fla.App. 1988).]
Advocates (and participants) must carefully prepare for a disqualification hearing, including asking for the food stamp office’s evidence, case records including the names of witnesses who will testify at the hearing. In a fraud case, find out what information they think the person hid or lied about. The file may show that the person did tell them this information. The food stamp office may have improperly thrown away (or “purged”) some of its records so there is no proof that the person did not report the information. It may be that the person was not required to report the information at all, because of the rules on what changes must be reported, or because the income or resources were excluded. (For related information, see the sections of this guide about the definitions for income and resources; the obligations related to quarterly reporting and reporting changes; as well as the consequences of failing to fill out the Quarterly Report form and send it in.)
The person may also want to think about ways of showing that she did not intend to break the Food Stamp Program rules, such as evidence of domestic violence in their life, mental health or mental retardation issues, or literacy or language problems. The person might also look for evidence of her own history of reporting changes to the food stamp office, and evidence of how good a job the caseworker did in explaining the rules to them.
In a trafficking case, the person may want to testify at the hearing to explain the transactions that the food stamp office thinks involved trafficking. But even if the person chooses not to testify, he may still win the hearing. The food stamp office must prove: (1) the benefits were trafficked, (2) the person himself did the trafficking or gave permission to someone else to traffic the benefits; and (3) the person knew they were breaking the rules. The food stamp office may not be able to prove all these things. Its evidence of the suspicious food stamp transactions is probably hearsay, and the person may be able to exclude that evidence by objecting to it. (For example, advocate’s can argue that there are many possible explanations for the transactions that do not involve trafficking, such as unusual food purchases or payment for food previously bought on credit.)
The food stamp office may not assume that the head of household committed the trafficking just because he or she is the head of the household. For example, someone else may have taken the person’s benefits and trafficked them using a manual voucher or the person’s PIN, or by keying in the EBT card number into the EBT machine.
This issue was addressed by FNS in its policy directive, Revisiting Policy Regarding Head of Household as Individual Responsible for Intentional Program Violations (IPV) (June 4, 2001). This memorandum states: “[T]he head of household may not be held ‘automatically’ responsible for trafficking the household’s benefits if there is no direct evidence identifying him/her as the guilty party. However, OGC [Office of General Counsel] was also supportive of holding the head of household responsible when there was sufficient circumstantial evidence to show his/her complicity in the violative act. Complicity in this case means that even though the head of household may not have actually conducted the transaction, upon questioning there is convincing evidence that he/she was aware of it, may have benefited from it, and took no actions to correct it. Circumstances vary, of course, but complicity may be shown by the State establishing a clear pattern of misuse over time with the head of household not providing a reasonable explanation and never reporting a loss/theft of the EBT card or benefits.”
The hearing decision must be sent within 90 days of the notice of hearing. [MPP § 22-230.1.] If the person loses the hearing, he will receive a notice of administrative disqualification. [MPP § 20-300.25.]