The Texas Health and Human Services Commission has agreed to pay the federal government $15.3 million to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP). SNAP was known as the Food Stamp program until 2008.
Under SNAP, the US Department of Agriculture provides eligible low-income individuals and families with financial assistance to buy nutritious food. Although the federal government funds the benefits, it relies on the states to determine whether applicants are eligible and to administer the scheme.
Furthermore states are required to perform quality control to ensure that eligibility decisions are accurate. The federal government also pay performance bonuses to those states that report the lowest error rate and the most improved error rate. The state of Texas contracted with Julie Osnes Consulting LLC (based in South Dakota) to provide advice and recommendations designed to lower its quality control error rate. The federal government alleged that the recommendations injected bias into the quality control process, resulting in the state receiving performance bonuses in 2010, 2013 and 2014 for which it was not entitled.
This is the fourth state that the Federal government has settled with. All hired Osnes Consulting. The other states are Virginia ($7 million), Wisconsin ($7 million) and Alaska ($2.5 million). The government has also settled with Julie Osnes herself ($0.8 million). The state of Mississippi is also under investigation.
Although the details concerning the Texas program have not been released, from reporting in other states, it is alleged that the consulting firm would pressure state employees to either reclassify errors as correct or omit them from the sample. The states would select a quality control sample and the federal government would audit a subset of the state’s sample.