89. What happens if the person loses the fraud hearing or signs a hearing “waiver” or “disqualification consent agreement”?
Two things will happen if a person loses a fraud hearing or signs a disqualification consent agreement: (1) the person is excluded from the food stamp program for a period of time; and (2) an overissuance is assessed against the entire household. The person will be sent a notice of disqualification. [MPP § 20-300.25.] The notice must inform the household of the decision, the reason for it, the penalty, and the effective date of the disqualification. [Id.]
The person found guilty of fraud will stop receiving food stamps a month after the notice is sent or within 45 days of an agreement or a court order. The Food Stamp Act requires that the period of disqualification begins “immediately upon the rendering of” a decision against the recipient in a disqualification hearing. [7 U.S.C. § 2015(b)(1).] This is true regardless of whether the household is currently participating in the Food Stamp Program. [See Garcia v. Concannon, 67 F.3rd 256 (9th Cir. 1995).] The federal regulations, however, require postponement of disqualification for persons who are not participating in the program at the time a finding of intentional program violation (IPV) is made. [7 C.F.R. § 273.16(e)(8)(iii), (g)(2)(ii), (h)(2)(ii); MPP §§ 20-300.4, 230, 300.4. 7 C.F.R. § 273.16(e)(8); MPP § 20-300.4.] Only the person found guilty of fraud is disqualified. [7 C.F.R. § 273.16(b)(1), 273.16(e)(8)(i); MPP § 20-300.31, 300.32.] The rest of the household can keep getting food stamps. [Id.]
When the person is found to have an intentional program violation (IPV) — i.e., after having been found guilty of fraud by a court or hearing, or signs the disqualification consent agreement — the person is barred from getting food stamps for:
- one year — first time. (There are even harsher penalties for some trafficking and false identity offenses. [See MPP § 20-300.313-.315.])
- two years — second time.
- forever disqualified — third time.
[MPP § 20-300.311.]
Calculating benefits after an intentional program violation: While the person found guilty of fraud is disqualified from food stamps, the food stamp office will count all of his or her income and resources when it decides if the rest of the household can get food stamps. [7 C.F.R. § 273.11(c)(1)(i); MPP § 63-503.441(a).] But the food stamp office will not count the person disqualified for fraud when counting how many people are in the household to decide how many food stamps the rest of the household can get. [7 C.F.R. § 273.11(c)(1)(ii); MPP § 63-503.441(b).]
Overissuance collection after an intentional program violation: The second thing that will happen when a person has an IPV is that the food stamp office will ask the entire household to pay back the food stamps that the household got by fraud. [MPP § 20-300.25.] The overissuance is collected at the rate of the greater of 20% or $20.00 per month, rather than the usual rate of 5 or 10%. [7 C.F.R. §§ 273.16(b)(12), 273.18(g)(1)(ii); MPP § 20-300.25, § 63-801.736(b).]
The demand notice will include information on the amount of the overissuance and payment options. [MPP § 20-300.25, § 63-801.43.] (For related information, see the sections about the overissuance “Demand Letter/Notice of Action” and how overpaid benefits are collected). If the disqualification hearing notice or the waiver form did not spell out the amount of the overpayment and the household did not have an opportunity to challenge the food stamp office’s calculations, the household should get a separate notice and opportunity to challenge the amount they have to pay back.
Households must pay this money back in cash or by having the household’s food stamps reduced until all of the overissued benefits related to the intentional program violation are paid back. [7 C.F.R. §§ 273.16(b)(12), 273.18(g); MPP §§ 20-300.25, 63-801.7.] If the household agrees to pay back the overissuance in cash, the household can do it all at once, or in installment payments. Other collection methods such as tax intercepts may also be used by the county to collect the IPV. (See the section about how the food stamp office collects overpaid benefits for more details.)