OIG Investigators with Guns

The Michigan legislature is considering a law that would give investigators with the Office of the Inspector General in Michigan Department of Human Services authority to carry guns and to arrest suspected welfare cheats without a warrant. This is a lamer idea than decaffeinated 5-Hour Energy. As a former welfare supervisor, I have had extensive experience with welfare fraud. Arming OIG investigators and giving them arrest powers is unnecessary and will result in the arrest of many well-meaning, but mistaken welfare applicants and recipients. Furthermore, this law is wrongfully aimed at the “retail” sector of the welfare industry, not the “distribution end.”

The retail sector of the welfare industry is comprised of the welfare applicants and recipients, as opposed to the distribution end: the bodegas, check-cashing shops, grocers and party stores that negotiate the recipients’ benefits and the health-care providers that accept Medicare and Medicaid for the services they provide. Welfare recipients generally get small amounts of aid that may be augmented by failing to report income, by misrepresenting their living arrangements, or by illegally selling their prescription drugs. They are nonviolent and usually do not reap much by fraud. They do not present a flight risk, since they generally live their entire lives within a few miles of their birthplace. One of the biggest-ticket items is Medicaid for nursing-home residents, but there the usual cause of benefit overissuance is confusion about the rules, not what the Department of Human Services calls “intentional program violation” or IPV.

On the distribution side are the storefronts where food benefits, prescriptions and stolen cash assistance cards are negotiated for cash. The distribution side also includes doctors and other health-care providers who bill Medicaid and Medicare for fictitious services and write unnecessary prescriptions for cash payments. These crooks walk away with millions, but still are generally nonviolent and will obey a grand jury summons or order to appear (usually with highly-paid counsel).

Investigators from OIG do not need to be armed to deal with welfare cheats, nor do they need to arrest suspects on the spot. The threat of prosecution for a felony is an extremely heavy hammer to hold over a citizen with a clean record who is living paycheck-to-paycheck. Giving investigators arrest powers will let them steam-roll those who are totally innocent or who receive overissuances by mistake.

There are thousands of Michigan citizens who are committing welfare fraud but have no idea they are doing so. For example, assume that Harvey Milquetoast’s mother, Maudie, is in a nursing home and he applies for Medicaid for her. Many circumstances could make Maudie technically ineligible, particularly concerning her home. Maudie might have signed a quit claim deed or put her home in a trust that could present a problem from a Medicaid standpoint. Harvey might not know about the deed or trust, or might not know that the deed or trust creates a problem. The Medicaid application asks whether Maudie owns her home, but does not go into detail, so Harvey just checks the “yes” box and thinks no more about it – even though the house was deeded into a trust. If Harvey was helped in the application by someone in the nursing home administration, there might be very little scrutiny of the application and it could go through without a hitch – despite the fact that Harvey never had any contact with anyone at DHS! After Maudie’s death, when Harvey fills out the estate recovery questionnaire, he could find himself in big trouble.

A son of a deceased Medicaid recipient received a letter from an OIG investigator giving him 10 days to agree to repay Medicaid a high five-figure amount or face prosecution

Don't tell me you don't know what a trust is!
Don’t tell me you don’t know what a trust is!

for felony welfare fraud. The investigator was under the impression that the mother’s house had been in a trust and accused the son of IPV. Using a wildly inaccurate value from the tax assessment rolls, the investigator assumed that there had been substantial equity in the house. The son was able to consult an attorney and it turned out that the house was not in a trust. Furthermore, there had been no equity because the mortgage had exceeded the actual value. However, without legal help the son might have been forced to sign a repayment agreement that would have put him debt for the rest of his life. The investigator was very aggressive and was only interested in extracting a repayment agreement.

How would this case have turned out under the proposed law? The investigator would not have mailed the son a letter, he would have gone to his house and arrested him. In jail, the son would not have ready access to counsel and he would very likely sign a repayment agreement, whether justified or not.

Is a regime where welfare fraud investigators are armed and allowed to arrest suspects without a warrant a good idea? Only if the state wants to force its citizens to pay huge penalties without regard to whether they are justified or not.

The proposed set of laws is unwarranted because the penny-ante welfare recipients who will be summarily arrested are almost uniformly nonviolent and unlikely to flee the jurisdiction. More importantly, the package is misguided. The funds that would go into training and arming OIG investigators would be better spent investigating the big-money perpetrators who are dealing in food assistance, cash benefit cards and Medicaid claims in bulk — and whose repayment obligations would be much bigger.


John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2014 John B. Payne, Attorney

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