States Take on Welfare Fraud – with Huge Returns


With unemployment still sky-high and states reeling from reduced revenues, they’re getting more insistent – and oftentimes smarter – about cracking down on welfare fraud.

In San Diego County, investigators are visiting homes of welfare recipients to verify eligibility – saving a total of $4.5 million in 2009. In Michigan, college students abusing the food stamp program to purchase drugs or alcohol are raising the ire of lawmakers, with calls for random drug testing, pictures on food cards (Should have done this ten years ago.) and even sting operations. One Minnesota County is going so far as DNA testing.

Based on the numbers, it appears that the most effective tactic for fraud detection highlighted in the article was that employed by the Pennsylvania Department of Public Welfare, which used anti-fraud and abuse detection software to analyze 27 million medical assistance claims across 14 databases to save taxpayers $75 million. Their success is largely due to the size and scope of the databases which searched out-of-state employment as well as federal deceased-persons records. (Deceased records? You mean someone is submitting under a deceased individuals name and social? Unfortunately, not a big surprise.) Pennsylvania’s Department of Public Welfare used software to analyze the claims rather than expending time and resources for costly DNA testing visits to each recipient’s home. What is the lesson for cash-strapped state and local governments? There’s money in fraud – and it can be recouped through efficient tactics for fraud detection. And many ways to get it.

Source: Today’s ”Fraud of the Day” is based on an article entitled, “Crackdowns target welfare cheats,” by Judy Keen, published by USA Today, September 16, 2010.

States and localities across the nation are taking novel steps to crack down on suspected welfare cheats, including mandatory home visits, sophisticated database searches and even DNA tests.

Some people suspected of welfare fraud in Minnesota’s Anoka County are being ordered to be swabbed for DNA samples. The county has prosecuted eight criminal cases in the past three years after using DNA to identify a supposedly absent parent. To get illegal benefits, applicants for public aid lied about whether their children’s father lived in the home. Only single-parent families are eligible for some aid.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.