N.J. Admin. Code § 10:87-11.20

Current through Register Vol. 56, No. 11, June 3, 2024

Section 10:87-11.20 - Claims against households

(a) A recipient claim is an amount owed because of benefits that are over paid or benefits that are trafficked.

(b) Recipient claims are Federal debts subject to 7 CFR 273.18 and other regulations governing Federal debts. The CWA shall establish and collect any claim by following the rules of this subchapter.

(c) The CWA shall have procedures for establishing and collecting claims that provide orderly claims processing and result in claims collections similar to recent national rates of collection. If the CWA does not meet State standards, it must take corrective action to correct any deficiencies in its procedures.

(d) The following are responsible for paying a claim:

1. Each person who was an adult member of the household when the overpayment or trafficking occurred;

2. A sponsor of an alien household member if the sponsor is at fault; or

3. A person connected to the household, such as an authorized representative, who actually trafficks or otherwise causes an overpayment or trafficking.

(e) There are three types of claims:

1. An IPV claim is any claim for an overpayment or trafficking resulting from an individual committing an IPV. An IPV is defined at 10:87-11.3.

2. An Inadvertent Household Error (IHE) claim is any claim for an overpayment resulting from a misunderstanding or unintended error on the part of the household.

3. An Agency Error (AE) claim is any claim for an overpayment caused by an action or failure to take action by the CWA.

(f) The process for calculating the claim amount on the following types of claims is as follows:

1. Claims not related to trafficking are as follows:

i. The CWA shall calculate a claim back to at least 12 months prior to when it becomes aware of the overpayment. For an IPV claim, the claim shall be calculated back to the month the act of IPV first occurred. For all claims, do not include any amounts that occurred more than six years before the CWA became aware of the overpayment.

ii. The actual steps for calculating a claim are as follows:

(1) The CWA shall determine the correct amount of benefits for each month that a household received an overpayment.

(2) Do not apply the earned income deduction to that part of any earned income that the household failed to report in a timely manner when this act is the basis for the claim. However, if the claim is an AE claim, the earned income deduction is applied.

(3) Subtract the correct amount of benefits from the benefits actually received. The answer is the amount of the overpayment. Unless this answer is zero or negative, dispose of the claim referral.

(4) Reduce the overpayment amount by any Electronic Benefit Transfer (EBT) benefits expunged from the household's EBT account. The difference is the amount of the claim. Unless there are expunged benefits that the CWA is not aware of, the amount of the overpayment calculated at (f)1ii(3) above is the amount of the claim.

2. Claims related to trafficking are as follows:

i. Claims arising from trafficking related offenses will be the value of the trafficked benefits as determined by:

(1) The individual's admission;

(2) Adjudication; or

(3) The documentation that forms the basis for the trafficking determination.

(g) The CWA shall establish a claim before the last day of the quarter following the quarter in which the overpayment or trafficking incident was discovered. The CWA shall ensure that no less than 90 percent of all claim referrals are either established or disposed of according to this timeframe.

1. The CWA shall establish a claim even if the claim cannot be established within the timeframe outlined in this subsection.

(h) Rules on initiating collection action and claims are as follows:

1. The CWA shall begin collection action on all claims unless the conditions at (h)2i below apply.

2. The CWA shall not pursue an overpayment that is not cost effective. The following procedure shall be used in determining cost effectiveness.

i. The CWA shall not establish any claim if it determines that the claim referral is $ 125.00 or less. However, if the household is currently participating in the program, or the CWA already established the claim or discovered the overpayment in a quality control review, the $ 125.00 limit does not apply.

(i) Rules on notification of a claim are as follows:

1. The CWA shall mail or otherwise deliver to the household written notification, using the applicable Important Notice to Repay Overissued NJ SNAP benefits form, to begin collection action on any claim.

2. The claim shall be considered established for tracking purposes as of the date the initial demand letter or written notification has been mailed or delivered.

3. If the claim or the amount of the claim was not established at a hearing, the CWA shall provide the household with a one-time notice of adverse action. The notice of adverse action may either be sent separately or as part of the demand letter.

4. The initial demand letter or notice of adverse action shall include language stating:

i. The amount of the claim;

ii. The intent to collect from all adults in the household when the overpayment occurred;

iii. The type (IPV, IHE, AE or similar language) and reason for the claim;

iv. The time period associated with the claim;

v. How the claim was calculated;

vi. Phone number to call for more information about the claim;

vii. That, if the claim is not paid, it shall be sent to other collection agencies who will use various collection methods to collect the claim;

viii. The opportunity to inspect and copy records related to the claim;

ix. Unless the amount of the claim was established at a hearing, the opportunity for a fair hearing on the decision related to the claim. The household shall have 90 days to request a fair hearing;

x. That, if not paid, the claim shall be referred to the Federal government for Federal collection action;

xi. That the household can make a written agreement to repay the amount of the claim prior to it being referred for Federal collection action;

xii. That, if the claim becomes delinquent, the household may be subject to additional processing charges;

xiii. That the CWA may reduce any part of the claim if the agency believes that the household is not able to repay the claim;

xiv. A due date or time frame to either repay or make arrangements to repay the claim, unless the CWA is to impose allotment reduction; and

xv. If allotment reduction is to be imposed, a due date or timeframe to either repay, or make arrangements to repay, the claim in the event that the household stops receiving benefits.

5. The due date or time frame for repayment shall be not later than 30 days after the date of the initial written notification or demand letter.

6. Subsequent demand letters or notices shall be sent in accordance with 10:87-11.21(a)1.

(j) Rules on repayment agreements are as follows:

1. Any repayment agreement for any claim shall contain due dates or time frames for the periodic submission of payments.

2. The agreement shall specify that the household shall be subject to involuntary collection action(s) if payment is not received by the due date and the claim becomes delinquent.

(k) Rules on determining delinquency are as follows:

1. Unless specified at (k)4 below, a claim must be considered delinquent if:

i. The claim has not been paid by the due date and a satisfactory payment arrangement has not been made; or

ii. A payment arrangement has been established and a scheduled payment has not been made by the due date.

2. The date of delinquency for a claim covered at (k)1i above is the due date on the initial written notification/demand letter. The claim shall remain delinquent until payment is received in full, a satisfactory payment agreement is negotiated, or allotment reduction is invoked.

3. The date of delinquency for a claim covered at (k)1ii above is the due date of the missed installment payment, unless the claim was delinquent prior to entering into a repayment agreement, in which case the due date will be the due date on the initial notification/demand letter. The claim shall remain delinquent until payment is received in full, allotment reduction is invoked, or if the CWA determines to either resume or renegotiate the payment schedule.

4. A claim shall not be considered delinquent if another claim for the same household is currently being paid either through an installment agreement or allotment reduction and the CWA expects to begin collection on the claim once the prior claim(s) is settled.

5. A claim is not subject to the requirements for delinquent debts if the CWA is unable to determine delinquency status because collection is coordinated through the court system.

(l) Rules concerning fair hearings and claims are as follows:

1. A claim awaiting a fair hearing decision shall not be considered delinquent.

2. If the final hearing decision, affirmed by the DFD Director, finds that a claim does, in fact, exist against the household, the household shall be re-notified of the claim. The demand for payment may be combined with the notice of the hearing decision. Delinquency shall be based on the due date of the subsequent notice and not on the initial prehearing demand letter sent to the household.

3. If the final hearing decision, affirmed by the DFD Director, finds that a claim does not exist, the claim is disposed of in accordance with (n) below.

(m) Rules on compromising claims are as follows:

1. The CWA may compromise a claim or any portion of a claim if it can be reasonably determined that a household's economic circumstances dictate that the claim will not be paid in three years.

2. The CWA may use the full amount of the claim (including any amount compromised) to offset benefits in accordance with 10:87-11.15(d) and (p)3 below.

3. The CWA shall reinstate any compromised portion of a claim if the claim becomes delinquent.

(n) Rules on terminating and writing-off claims are as follows:

1. A terminated claim is a claim in which all collection action has ceased. A written-off claim is no longer considered a receivable subject to continued Federal, State and county collection and reporting requirements.

2. The claim termination procedures are as follows:

i. If the CWA finds that the claim is invalid, the CWA shall discharge the claim and reflect the event as a balance adjustment rather than a termination. However, if it is appropriate to pursue the overpayment as a different type of claim (for example, as an IHE rather than an IPV claim), the CWA shall not discharge the claim.

ii. If all adult household members die, the CWA shall terminate and write-off the claim. The CWA may, however, take action to pursue the claim against the estate.

iii. If the claim balance is $ 25.00 or less and the claim has been delinquent for 90 days or more, the CWA shall terminate and write-off the claim. However, if other claims exist against this household resulting in an aggregate claim total of greater than $ 25.00, the claim shall not be written off.

iv. If the claim is delinquent for three years or more, the CWA shall terminate and write-off the claim. The CWA may, however, continue to pursue the claim through the Treasury Offset Program (TOP).

v. If the CWA cannot locate the household, the CWA shall terminate and write-off the claim.

vi. If, after a claim has been terminated and written-off, a new collection method or a specific event occurs (such as winning the lottery) that substantially increases the likelihood of further collections, the CWA shall reinstate the claim.

(o) Acceptable forms of payment on claims are as follows:

1. The CWA may collect a claim by:

i. Reducing benefits prior to issuance. This includes allotment reduction and offsets to restored benefits. However, the CWA shall follow the instructions and limits found at (p)1 and 3 below;

ii. Reducing benefits after issuance. These are benefits from EBT accounts. However, the CWA shall follow the instructions and limits found at (p)2 below;

iii. Accepting cash or any of its generally accepted equivalents. These equivalents include check, money order, and credit or debit cards. However, the CWA does not have to accept credit or debit cards if it does not have the capability to accept these payments;

iv. Conducting own offsets and intercepts. This includes but is not limited to wage garnishments and intercepts of various State payments. These collections are considered "cash" for claim accounting and reporting purposes. However, the CWA shall follow any limits that may apply at (p) below;

v. Requiring the household to perform public service. However, this form of payment shall be ordered by a court and specifically be in lieu of paying any claim; or

vi. Participating in the Treasury collection programs. However, the CWA shall follow the procedures found at 10:87-11.21.

(p) Collection methods for claims are as follows:

1. Rules on allotment reduction are as follows:

i. The CWA shall automatically collect payments for any claim by reducing the amount of monthly benefits that a household receives. Unless, the claim is being collected at regular intervals at a higher amount or another household is already having its allotment reduced for the same claim (see (p)1vi below).

ii. The CWA shall, for an IPV claim, limit the amount reduced to the greater of $ 20.00 per month or 20 percent of the household's monthly allotment or entitlement, unless, the household agrees to a higher amount.

iii. The CWA shall, for an IHE or AE claim, limit the amount reduced to the greater of $ 10.00 per month or 10 percent of the household's monthly allotment, unless, the household agrees to a higher amount.

iv. The CWA shall not reduce the initial allotment when the household is first certified, unless, the household agrees to this reduction.

v. The CWA shall not use additional involuntary collection methods against individuals in a household that is already having its benefits reduced, unless, the additional payment is voluntary; or the source of the payment is irregular or unexpected, such as a State tax refund or lottery winnings offset.

vi. The CWA may collect, using allotment reduction, from two separate households for the same claim. However, the CWA is not required to perform this simultaneous reduction.

vii. The CWA may continue to use any other collection method against any individual who is not a current member of the household that is undergoing allotment reduction.

2. Rules on collecting benefits from EBT accounts are as follows:

i. The CWA shall allow a household to pay its claim using benefits from its EBT account in accordance with N.J.A.C. 10:88-6.2. The CWA shall comply with the following EBT claims collection and adjustment requirements:

(1) For collecting from active EBT benefits, the CWA needs written permission, which may be obtained in advance and done in accordance with (p)2iii below; or oral permission for one time reductions with the CWA sending the household a receipt of the transaction within 10 days. The retention rates described at (v) below apply to this collection.

(2) For collecting from expunged EBT benefits, the CWA shall mail or otherwise deliver to the household, written notification that expunged benefits will be applied to any outstanding claim. The retention rates described at (v) below apply to this collection.

(3) For making an adjustment with expunged EBT benefits the CWA shall adjust the amount of any claim by subtracting any expunged amount from the EBT benefit account which the CWA becomes aware of. This adjustment can be done at any time. The retention rates described at (v) below do not apply to this balance adjustment.

ii. A collection from an EBT account shall be non-settling against the benefit drawdown account.

iii. At a minimum, any written agreement with the household to collect the claim using active EBT benefits shall include:

(1) A statement that this collection activity is strictly voluntary;

(2) The amount of the payment;

(3) The frequency of the payments (that is, whether monthly or one time only);

(4) The length (if any) of the agreement; and

(5) A statement that the household may revoke this agreement at any time.

3. The CWA shall reduce any restored benefits owed to a household by the amount of any outstanding claim. This is called offsetting a claim and may be done at any time during the claim establishment and collection process.

4. The CWA shall accept any payment for a claim whether it represents full or partial payment. The payment may be in any of the acceptable forms described at (o) above.

5. The CWA may accept installment payments made for a claim as part of a negotiated repayment agreement. If the household fails to submit a payment in accordance with the terms of the negotiated repayment schedule, the claim becomes delinquent and it shall be subject to additional collection actions.

6. Contingent upon agreements established between DFD and the Department of Labor and Workforce Development, for inactive cases, the CWA may intercept an individual's unemployment compensation benefits (UIB) by obtaining a court order. The CWA shall report any intercept of UIB as "cash" payments to USDA.

7. If authorized by a court, the value of a claim may be paid by the household performing public service.

8. The CWA may employ any other collection actions to collect claims. These actions include but are not limited to, referrals to collection and or other similar private and public sector agencies, State tax refund and lottery offsets, wage garnishments, property liens and small claims court.

9. Rules on unspecified joint collections are as follows:

i. When a CWA receives an unspecified joint collection in which the NJ SNAP claim has been combined with one or more other program claims, the CWA shall allocate the repayment to reflect the proportionate share of monies recovered for each program. Unspecified collections for more than one program are not to be assigned solely to the non-NJ SNAP program.

ii. The proportionate share is determined by what percentage is owed to each program (TANF, NJ SNAP and Medicaid). For example, where the client owes $ 1,000 to Medicaid, $ 500.00 to TANF and $ 500.00 to NJ SNAP, the shares are to reflect one-half of the monies returned to Medicaid, and one-quarter each respectively to TANF and the NJ SNAP program.

(q) No interest or court fees are to be applied to claims established due to the over issuance of or ineligibility for NJ SNAP benefits.

(r) Rules on refunds for overpaid claims are as follows:

1. If a household overpays a claim, the CWA shall provide a refund for the overpaid amount as soon as possible after it finds out about the overpayment. The household shall be paid by whatever method the CWA deems appropriate considering the circumstances.

2. The household is not entitled to a refund if the overpayment amount is attributed to an expunged EBT benefit.

(s) Policy on interstate claims collection is as follows:

1. Unless a transfer occurs as outlined at (s)2 and (t) below, the CWA is responsible for initiating and continuing collection action on any NJ SNAP recipient claim regardless of whether the household remains in New Jersey.

2. The CWA shall accept a claim from another state agency if the household with the claim moves into New Jersey. Once the CWA accepts this responsibility, the claim is the CWA's for future collection and reporting. CWAs shall report interstate transfers in accordance with instructions provided by USDA/FNS.

(t) If a recipient moves from one county of residence to another county of residence within the State of New Jersey, the collection of an outstanding claim can be transferred to the new county upon mutual agreement.

(u) The CWA shall act on behalf of, and as, USDA/FNS in any bankruptcy proceeding against any bankrupt households owing NJ SNAP claims. The CWA shall possess rights, priorities, interests, liens or privileges, and shall participate in any distributions of assets, to the same extent as USDA/FNS. Acting as USDA/FNS, the CWA shall have the power and authority to file objections to discharge, proofs of claims, exceptions to discharge, petitions for revocation of discharge and any other documents, motions or objections that USDA/FNS might have filed. Any amounts collected under this authority shall be transmitted to the DFD as provided at (w) below.

(v) Retention rates for CWA use are as provided in (v)1 through 4 below:

1. If the CWA collects an IPV claim, the retention rate is 35 percent;

2. If the CWA collects an IHE claim, the retention rate is 20 percent;

3. If the CWA collects an IHE claim by reducing a person's unemployment compensation benefit, the retention rate is 35 percent;

4. If the CWA collects an AE claim, the retention rate is zero; and

5. Retention rates do not apply to:

i. Any reduction in benefits when a household member is disqualified for an IPV;

ii. The value of court-ordered public services performed in lieu of the payment of a claim; or

iii. Payments made to a court that are not subsequently forwarded as payment of an established claim.

(w) Receipt and transmittal of collections are as follows:

1. The CWA shall instruct the household to submit checks or money orders payable to the respective CWA.

i. The CWA shall issue a lawful receipt for any repayment which is accepted. Payments received shall be deposited in the CWA Clearing Account and a record of the receipt of the payment maintained on a separate section of the Clearing Account Subsidiary Ledger.

ii. The collections received during the reporting quarter must be submitted to DFD by issuing a check, payable to "Treasurer, State of NJ" either monthly or quarterly.

(1) For purposes of recordkeeping, each CWA shall maintain a schedule of collections received during the quarter indicating the case number, household's name, amount of claim, current payment, amount paid to date and balance due.

(x) Accounting procedures are as follows:

1. The CWA shall be responsible for maintaining an accounting system for monitoring claims against households. The accounting system shall be designed to accomplish the following:

i. Document the circumstances which resulted in a claim, the procedures used to calculate the claim, the methods used to collect the claim and, if applicable, the circumstances which resulted in suspension or termination of collection action.

ii. Identify those situations in which an amount not yet restored to a household can be used to offset a claim owed by the household.

iii. Identify those households that have failed to make installment payments on their claims.

iv. Document how much money was collected and how much was submitted to DFD.

2. At a minimum, the accounting system shall document the following for each claim:

i. The date of discovery;

ii. The reason for the claim;

iii. The calculation of the claim;

iv. The date the claim was established;

v. The methods used to collect the claim;

vi. The amount and incidence of any claim processing charges;

vii. The reason for the final disposition of the claim;

viii. Any collections made on the claim; and

ix. Any correspondence, including follow-up letters, sent to the household.

3. At a minimum, the accounting or certification system shall also identify the following for each claim:

i. Those households whose claims have become delinquent;

ii. Those situations in which an amount not yet restored to a household can be used to offset a claim owed by the household; and

iii. Those households with outstanding claims that are applying for benefits.

4. When requested and at intervals determined by USDA/FNS, the accounting system shall also produce:

i. Accurate and supported outstanding balances and collections for established claims; and

ii. Summary reports of the funds collected, the amount submitted to DFD, the claims established and terminated, any delinquent claims processing charges, the uncollected balance and the delinquency of the unpaid debt.

5. On a quarterly basis, unless otherwise directed by DFD, the accounting system shall reconcile summary balances reported to individual supporting records.

(y) Trafficking, as used in this section, shall mean:

1. The buying, selling, stealing, or otherwise affecting an exchange of SNAP benefits issued and accessed via Families First cards, card numbers, and personal identification numbers (PINs), or by manual voucher and signature, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone;

2. Pursuant to 7 CFR 271.2, the exchange of firearms, ammunition, explosives, or controlled substances, as defined in 21 U.S.C. § 802, for SNAP benefits;

3. Purchasing a product with SNAP benefits with the intent of obtaining cash by discarding the product and returning the container for the deposit amount, intentionally discarding the product, and intentionally returning the container for the deposit amount;

4. Purchasing a product with SNAP benefits with the intent of obtaining cash or consideration other than eligible food by reselling the product, and subsequently intentionally reselling the product purchased with SNAP benefits in exchange for cash or consideration other than eligible food;

5. Intentionally purchasing products originally purchased with SNAP benefits in exchange for cash or consideration other than eligible food; or

6. Attempting to buy, sell, steal, or otherwise affect an exchange of SNAP benefits issued and accessed via Electronic Benefit Transfer (EBT) cards, card numbers, and personal identification numbers (PINs), or by manual voucher and signatures, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone.

N.J. Admin. Code § 10:87-11.20

Amended by 49 N.J.R. 267(a), effective 2/6/2017

Amended by 55 N.J.R. 1335(a), effective 7/3/2023