The IPV fraud hearing

A fraud hearing is similar to a fair hearing, but the CalFresh office will hold a fraud hearing without the person asking for it. It is called an “administrative disqualification hearing.”  Counties investigate cases of alleged Intentional Program Violation (IPV).  If the case meets the definition of an IPV, the case must be pursued either through administrative or criminal proceedings.  [ACL 17-118 (November 21, 2018).] If local prosecutor declines to file criminal charges against a person following a referral or fails to act on the case, the county must withdraw the referral and proceed with an administrative disqualification hearing. [MPP §§ 20-300.22, 20-300.23, ACL 17-118.] Unfortunately, many counties in California go straight to court or have recipients sign a disqualification consent agreement rather than using an administrative hearing to prove an IPV.

The individual has basic 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 CalFresh office and to present any evidence and arguments. [7 C.F.R. § 273.16(e)(2)(ii); MPP § 22-085.] (For related information, see the sections of about authorized representatives and requesting a fair hearing.)

The CalFresh office must provide 30-day notice of the hearing. [7 C.F.R. § 273.16(e)(3)(i); MPP § 22-202.51; see ACL 18-116 (September 20, 2018) (transmitting form notices and disqualification consent agreement).]  The notice of hearing must be either personally served or mailed by first class mail at least 30 days before the hearing.  If the respondent no longer receives benefits, the county must verify the respondent’s mailing address prior to mailing the IPV notice.  If the hearing notice is returned as undeliverable, the hearing will be postponed to allow the county to verify or obtain a valid mailing address.  If the hearing notice continues to be returned as undeliverable, a hearing will not be scheduled until the county obtains another verified address.  [ACL 17-118.]

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 § 22-210.2.] The CalFresh 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 CalFresh office must prove its case with “clear and convincing” evidence.  [ACL 17-118.]  Clear and convincing evidence is a higher standard of proof than in regular CalFresh 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 an Administrative Law Judge (ALJ). [7 C.F.R. § 273.16(e)(6); MPP § 22-215.5.]

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.] 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 CalFresh 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 county must still prove its case that an intentional program violation occurred but will do so without the person present. However, a recipient not appearing at an administrative disqualification hearing about an alleged intentional program violation can challenge the adequacy of the evidence produced at that hearing in a later appeal. [Smith v. Department of Health and Rehab. Servs., 522 So.2d 956 (Fla.App. 1988).]

The CalFresh office is required to document its decisions and keep its cases files for three years. [See 7 C.F.R. § 272.1(e), (f).] One must carefully prepare for a fraud disqualification hearing, including asking for copies of all the documentary evidence upon which the state is relying, its case records, and a complete list of the names of the witnesses who will testify at the hearing.

(For related information, see the sections of this Guide about the definition of “income” and the definition of “resources”; the obligations related to semi-annual reporting and change reporting households; and the consequences of failing to fill out or submit the Semi-Annual Report form.)

In a “trafficking” case, the person may want to testify at the hearing to explain the transactions that the CalFresh office thinks involved trafficking. But even if the person chooses not to testify, he may still win the hearing. The CalFresh office must prove:

  • The benefits were trafficked;
  • The person himself did the trafficking or gave permission to someone else to traffic the benefits; and
  • The person knew they were breaking the rules.

The CalFresh office may not be able to prove all these things. Its evidence of the suspicious CalFresh transactions may be nothing more than hearsay, and the person may be able to exclude that evidence by objecting to it. For example, advocates 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 CalFresh office may not assume that the head of household committed the trafficking just because he 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 in FNS policy directive, Revisiting Policy Regarding Head of Household as Individual Responsible for Intentional Program Violations (IPV) . 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 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 the 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.]