Mississippi to pay $5 million to settle allegations of submitting false food stamp data

The Mississippi Department of Human Services has agreed to pay the federal government $5 million to resolve allegations that it submitted false data about  a program that allows low-income Mississippians to buy food.

The Department of Justice announced the settlement Monday. The program involved, once called food stamps, is the Supplemental Nutrition Assistance Program, or SNAP, allocated through the U.S. Department of Agriculture.

The DOJ alleges that beginning in 2012, MDHS contracted with a consultant, Julie Osnes Consulting, to provide advice and recommendations designed to lower its SNAP quality-control error rate. The recommendations implemented by MDHS injected bias into the quality-control process and resulted in MDHS submitting false quality-control data and information to USDA, for which it received undeserved performance bonuses for fiscal years 2012 and 2013.

Mississippi received at least $5.9 million in bonuses while using the consultant’s services, according to The Clarion Ledger.

Under John Davis, the agency’s director at the time, some $94 million was funneled out of another aid program, TANF, or Temporary Assistance to Needy Families, in a massive embezzlement scheme revealed earlier this year.

“Although it is appalling that these actions occurred within a state agency entrusted with assisting vulnerable and needy residents, I am heartened that MDHS has resolved its liability and cooperated with our investigation,” said U.S. Attorney William D. Hyslop for the Eastern District of Washington in a statement. “Together with our partners in the Justice Department’s Civil Division and the USDA, we will continue to investigate and hold accountable those who misuse and wrongfully obtain SNAP funding.”

“We worked together to address the concerns of employees of multiple states and others who alleged that the integrity of the SNAP quality-control process was weakened by third-party consultants. said Special Agent in Charge Bethanne M. Dinkins of the USDA Office of Inspector General. “These concerned individuals reported that cases were not being treated in a consistent manner, and that certain advice from consultants resulted in identified errors being diminished rather than used to improve eligibility determinations. The settlements reached to date send a strong message regarding the government’s commitment to work across agency lines to protect the integrity of SNAP.”

Since 2010, SNAP has served on average more than 45 million Americans per month and provided more than $71 billion annually. On average, about 455,000 individuals received SNAP benefits in Mississippi last year, about 15% of the state’s residents. The average monthly benefit in Mississippi is $120 per person. The state has the second-highest poverty rate in the nation at about 19%.

Although the federal government funds SNAP benefits, it relies on the states to determine whether applicants are eligible for benefits, to administer those benefits, and to perform quality control to ensure that eligibility decisions are accurate. The USDA requires that the states’ quality control processes ensure that benefits are correctly awarded, are free from bias and accurately report states’ error rates in making eligibility decisions.

The USDA reimburses states for a portion of their administrative expenses in administering SNAP, including expenses for providing quality control. It also pays performance bonuses to states that report the lowest and the most improved error rates each year and can impose monetary sanctions on states with high error rates that do not show improvement.

This is the seventh settlement in this matter, and the sixth settlement with a state agency for manipulating its SNAP quality control findings. The United States has reached previous settlements with state agencies in Virginia, Wisconsin, Texas, Louisiana and Alaska, as well as with Osnes Consulting and its owner, Julie Osnes. Including this settlement, the United States has now recovered over $41 million in connection with this investigation.