County of San Diego Health and Human Services Agency HHSACalWORKs Program Guide Overpayment Recovery Number Page 44350G 1 of 6 Revision Date January 24 2020 Background An overpayment is any amount of any aid payment received by an Assistance Unit AU that they were not entitled to receive An overpayment may be all or a portion of the payment This includes payments issued for regular aid payment Immediate Need Homeless Assistance Aid Paid Pending for a state hearing or Employment Services ES Purpose The purpose of this material revision is to incorporate additional SB 726 and SB 80 regulations which increase the threshold for which overpayment recovery is pursued and implement an overpayment discharge process Policy Amount That Can Be Recovered Refer to CPG 44350A for the amount that can be recovered State Income Tax Refund Intercept Program State tax returns are intercepted diverted to the California Department of Social Services CDSS and applied as payments against outstanding overpayments Customers with questions regarding the Tax Refund Intercept Program are to be referred to the Office Revenue and Recovery ORR Multiple Overpayments When a case contains multiple overpayments the oldest fraudulent overpayment is adjusted first Once the overpayment is fully recouped the next oldest fraudulent overpayment is adjusted When there are no fraudulent overpayments the oldest nonfraudulent overpayment is adjusted first When a nonfraudulent overpayment is being recouped and a fraudulent overpayment occurs recoupment of the nonfraudulent overpayment must be ceased and collection of the new fraudulent overpayment must be started Notes When a new overpayment occurs another NOA must be completed and mailed to the liable individuals All overpayments must be collected prior to collecting any Employment Services supportive services overpayments CPG 44350L Priority of Recovery Overpayments are to be recovered in the following priority Aided Caretaker Relative Liable Individual When the caretaker relative the liable individual was a member of the AU at the time of the overpayment the county will first seek recoupment from the liable individual The county will o Continue to seek overpayment recovery from the liable individuals even when they move to another AU or are no longer on aid o Initiate recovery of the overpayment from the other members of the overpaid AU after all efforts to collect from the liable individual have been exhausted and when the liable individual County of San Diego Health and Human Services Agency HHSACalWORKs Program Guide Overpayment Recovery Number Page 44350G 2 of 6 Dies and the county cannot collect the entire unpaid balance of the overpayment from the liable individuals estate Is unlocatable Note After review and interview with the liable individual and the overpayment has been referred to ORR for collection Eligibility Workers can contact ORR to determine if the person is unlocatable Has the overpayment discharged in bankruptcy Is no longer on aid the overpayment is less than 250 and there are other members of the overpaid AU who remain on aid Is no longer on aid and the county has determined that it is not cost effective to collect the overpayment from the caretaker relative Unaided Caretaker Relative When the caretaker relative was not a member of the AU at the time of the overpayment the county will seek recovery from the other members of the overpaid AU Recovery from AU Members There will be no priority order in seeking collection of the overpayment from members of the overpaid AU who were not the caretaker relative Collection may occur in sequence against any one member at a time or concurrently from any of the members when in separate AUs or when not receiving aid Child Only Cases Overpayments cannot be collected from unaided adults if the adult was not aided at the time the overpayment was established This includes adults who are excluded from the AU because they are a sanctioned individual fleeing felon undocumented noncitizen or nonneedy caretaker relative However recoupment on overpayments from active childonly cases can occur via grant adjustment while the case is active Once the case is discontinued recoupment from the previously unaided adult or the child cannot occur Minors In Overpaid Assistance Units Hartley v Lightbourne Effective January 6 2012 the county will not collect overpayments from adults emancipated minors or head of households who were minors in an overpaid AU at the time the overpayment was incurred by any means including but not limited to Grant adjustment Tax intercept Administrative or civil action Voluntary repayment agreement Also the county will no longer recoup overpayments from any minor who becomes a member of a new AU if the overpayment occurred while the minor was a member of the previous AU In other words if a child in an overpaid AU moves to a different AU and the responsible relative in the first overpaid AU cannot be located the overpayment will not follow the child to the new AU and the county may not grant adjust or otherwise recoup the overpayment that occurred in a previous AU from that new AU County of San Diego Health and Human Services Agency HHSACalWORKs Program Guide Overpayment Recovery Number Page 44350G 3 of 6 The county will also ensure that in accordance with these instructions a minor will not be listed as a responsible party for the overpayment that occurred when they were a minor in an AU regardless of whether the minor enters a new AU becomes an aided adult or remains unaided Grant Adjustments and Amounts Collected in Error after January 6 2012 The county is required to refund the AU as underpayments any grant adjustments deducted from grants on or after February 1 2012 in order to collect overpayments from this population In addition the county is required to send NOA message M44340C underpayment adjustment to the AU If the county recouped an overpayment from a member of this population via any other method eg voluntary cash repayment tax intercept etc after January 6 2012 the county is required to provide the individual andor AU a refund of the repaid amount For nongrant adjustment methods of collection the county will refund those amounts to the individual as soon as possible but no later than 90 days after the county identifies or is provided with information regarding the collection that is being stopped and will issue an informing notice informing him or her of the amount of the refund Notice of Actions NOAs M44350J Notifies customers that an overpayment recoupment that was previously being collected from his or her AU will stop M44340C Notifies customers of an underpayment of aid for any months on or after February 2012 in which the AUs grant was reduced for an overpayment collection against one of the types of individuals Reminders Once a minor becomes an adult or minor head of household or is emancipated that individual will be responsible for repayment of any overpayments that are established in their own separate AU in accordance with standard overpayment collection regulations The worker will continue collection of overpayments from the responsible relative in the original overpaid AU via all appropriate collection methods described in CPG 44350E Method Of Recovery The worker will first collect overpayments from the caretaker relative who was a member of the AU at the time the overpayment was established Recoupment should be through grant adjustment if the AU is receiving CalWORKs cash aid and via postaid recovery efforts if the AU is no longer aided The worker will also continue collecting overpayments via grant adjustment when the children who were in the overpaid AU are receiving aid in the same AU in which the overpayment was established See CPG 45000C Hartley v Lightbourne QA section for additional information County of San Diego Health and Human Services Agency HHSACalWORKs Program Guide Overpayment Recovery Number Page 44350G 4 of 6 InterCounty Transfers ICT With Overpayments When an ICT is initiated overpayments are subject to recoupment by the receiving county After the ICT has been accepted any money recouped by the receiving county is retained by that county and the sending county is to make no further attempts to collect the overpayment All of the following overpayment information must be included in the ICT packet Type of overpayment ie administrative failure to report etc Balance owing Customers liquid resources Information regarding when and how the overpayment occurred A copy of the informing NOA sent to the customer if available When the receiving county accepts responsibility for recouping the overpayment the sending county will no longer be responsible for the collection of the overpayment and will remove the claim from the record The worker will document the transfer of the overpayment to another county in the case comments The receiving county will be responsible for collection of the overpayment until it is fully repaid or the AU moves to another county When an incoming ICT is received with documentation of an overpayment the appropriate overpayment and recoupment information is to be entered into the CalWIN NonSystem Determined Claim NSDC window The worker will manually generate the appropriate overpayment NOAs and provide timely notification to the liable individuals of the grant reduction due to recoupment for the established claim Appropriate case comments will be made and any overpayment documentation will be imaged under the 16139 Benefit Recovery template Bankruptcy Proceedings Dischargeable Overpayments Overpayments which are not the result of misrepresentation or fraud can be discharged through bankruptcy proceedings Willful failure to report or fraud overpayments are not dischargeable under bankruptcy law Pending Bankruptcy Proceedings When a customer reports that they have filed for bankruptcy and have requested discharge of an outstanding overpayment Family Resource Center FRC management will notify Eligibility Operations EO CalWORKs Program Manager Information provided must include The case name and number The original amount of the overpayments and the outstanding balances The date the overpayments waswere discovered The period of the overpayments Information regarding the parties if any responsible for the overpayment Any information provided by the customer regarding the pending bankruptcy proceedings The CalWORKs Program Manager will refer the information as appropriate to County Counsel Grant reduction is to be continued pending the outcome of the court proceedings County of San Diego Health and Human Services Agency HHSACalWORKs Program Guide Overpayment Recovery Number Page 44350G 5 of 6 Overpayments Discharged by Bankruptcy When a customer reports that their overpayment has been discharged by bankruptcy proceedings the worker will request verification Acceptable evidence of a discharged overpayment would be a copy of the Order Granting Discharge issued by the bankruptcy court Interim orders may also be issued by the court which can require a suspension of collection efforts including grant adjustment andor balancing against underpayment When a customer verifies that an overpayment has been discharged the worker will discontinue collection efforts accordingly Specific case questions that arise are to be directed to EO for referral to County Counsel Dissolution of Marriage A Dissolution of Marriage decree may identify the responsible party of the overpayment The terms of the dissolution may be honored if these terms were made between ORR and the court The worker must contact ORR through the FRC liaison and confirm the arrangements Examples of these arrangements include The debt is determined to be a community debt and each party is ordered to pay half of the debt It is determined that the debt belongs to one party and that party has been ordered to pay Documentation of the arrangement is required and is to be imaged together with the overpayment documentation Informing NOAs Should immediate recoupment not be possible once an overpayment has been identified and computed ie another overpayment is currently being collected through grant reduction the worker must send the client the appropriate NOA informing the customer of the overpayment at the time the overpayment is computed Court Ordered Restitution Grant adjustment normally is not affected by court ordered restitution However an overpayment cannot be collected through grant adjustment when the court order Specifically precludes grant adjustment Substitutes another activity community service for cash restitution Dismisses the overpayment If a court order sets a total restitution amount lower than the overpayment amount determined by the worker or Overpayment Specialist Unit QESD and grant adjustment is not ruled out by one or more of the above cited reasons the overpayment amount previously determined by the worker or QESD will be recouped See Example 1 Example 1 WorkerQESD determines an overpayment of 2000 The court order sets restitution at 1500 The worker will recoup 2000 by grant adjustment If the case closes before the 2000 is fully recouped the worker will refer the remainder to ORR for collection County of San Diego Health and Human Services Agency HHSACalWORKs Program Guide Overpayment Recovery Number Page 44350G 6 of 6 If a court order does not rule out collection by grant adjustment and additionally orders a customer to pay an amount of restitution directly to ORR the worker will recoup by grant adjustment at the same time See Example 2 Example 2 The workerQESD determines that the customer has been overpaid 1000 The customer is courtordered to pay 25 restitution monthly to ORR The worker determines the monthly adjustment amount and recoups by grant reduction during the same period that ORR collects on its courtordered account The determination that the overpayment amount is not revised by the court order can however be overturned in a fair hearing Procedure None Impacts None References EAS 44351 44352 ACL No 19102 Sunset Date This policy will be reviewed for continuance by January 31 2023 Approval for Release Rick Wanne Director Eligibility Operations