Human services span a very wide range of programs, including the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), child protective services, spousal abuse programs, behavioral health services, child support enforcement, counseling and social work.
The most common types of fraud encountered here include eligibility fraud and program provider fraud.
- Eligibility fraud involves those who receive benefits to which they are not entitled. Recipients may underreport income, overstate dependents, fail to report cohabitation arrangements, etc.
- Governments often engage contract providers to furnish services. These providers may overstate costs, overstate beneficiary counts, bill for services not provided, etc.
- In the Child Support Enforcement Program, non-custodial parents who hide assets to lower their child support payments are committing fraud.
Beneficiaries: False Eligibility Claims
Mismatch of records. Changes/errors involving dependents.
Does an applicant or recipient really live with whom he or she claims to live? Does someone really support the person he or she claims as a dependent? One way to determine this is to require that the beneficiary of certain social services provide proof. This proof could include school records, library cards, utility bills, doctor's bills, etc. All should be required of applicants and all should be reviewed for inconsistencies.
Is someone really disabled? Perhaps a visit to the person's neighborhood is warranted.
Is someone really unemployed? Each year, the recipient should be required to produce, among other documents, copies of his or her tax returns.
Charges for Goods/Services Not Provided
Costs continually higher than those experienced with similar providers coupled with complaints about services.
Verify that the government is getting what it paid for by conducting unannounced spot checks to see whether the government got what it ordered and paid for.
Charges for Goods/Services Provided of Lesser Quality than Purchased
Complaints from consumers, extraordinarily high breakage or maintenance costs.
When food of one quality is ordered and paid for, but food of a lower quality is provided, consumers will complain. If these complaints are frequent, the actual quality of goods / services should be physically sampled. Likewise, when higher-than-normal breakage or maintenance costs are experiences, the goods should be inspected and the service levels questioned.
External Conflicts of Interest
Awards continually made to same subcontractor (particularly in spite of higher costs, complaints about service, etc.).
External conflicts of interest involve parties outside of the government…a contractor and its suppliers or subcontractors. Often, the contractor has an interest in the supplier or subcontractor and always steers business its way. To reduce exposure to these types of frauds, all contracts should allow the government to examine the records of contractors, subcontractors, and suppliers. Representation letters disclosing all conflicts of interest should be required of all contractors / subcontractors / suppliers.
Higher per-facility or per-staff count than similar providers
In some programs, such as school lunch programs, after-school programs and child care, the government sponsor is charged per consumer/participant per day. One way to mitigate losses from inflated headcount fraud is conduct frequent, unannounced visits and perform a physical count of the consumers/participants. Any unexplained deviations in headcount from that generally reported is a cause for concern and possible cancellation of the underlying contract.
Inflated Subcontrator Costs
On cost-plus contracts, higher subcontractor costs than similar providers.
Some human services involve the use of subcontractors/suppliers. These subcontractor/supplier costs and an agreed-upon profit percentage are then passed along to the sponsoring government agency. However, the contractor may defraud the government by claiming its subcontractor/provider costs are higher than those actually incurred. This can be somewhat overcome by adopting some preventive, detective and corrective practices. First, one of the conditions of any contract should be the government's authority to audit, on short or no notice, the contractor's accounting records; the government should take advantage of this authority regulary. Second, another condition of any contract should be that the contractor agrees to engage only those subcontractors/suppliers granting the same audit right to the sponsoring agency.In additon to periodically auditing the contractor's records, subcontractor/supplier accounting records should also be audited and reconciled to the contractor's records. Finally, other frauds listed under the "Business Process" target tab should be considered.
Internal Conflicts of Interest
Awards continually made to same contractor (particularly in spite of higher costs, complaints about service, etc.).
Internal conflicts of interest involve one party on the purchaser's side of the transaction. These generally involve some form of collusion between procurement, purchasing, contract management or payment personnel and a supplier, contractor, subcontractor, etc. The inside person is, in some way, benefitting from directing business toward the outsider. Review bidding procedures; rotate contract management and other personnel; and inquire about the situation.
Continual complaints about services.
Frequent complaints might mean trouble. Investigate.