1995 US Code
Title 42 - THE PUBLIC HEALTH AND WELFARE
CHAPTER 6 - THE CHILDREN'S BUREAU
SUBCHAPTER IV_2 - SUBCHAPTER IV-GRANTS TO STATES FOR AID AND SERVICES TO NEEDY FAMILIES WITH CHILDREN AND FOR CHILD-WELFARE SERVICES
Part A - Aid to Families With Dependent Children
Sec. 608 - AFDC quality control system

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§608. AFDC quality control system (a) In general

In order to improve the accuracy of payments of aid to families with dependent children, the Secretary shall establish and operate a quality control system under which the Secretary shall determine, with respect to each State, the amount (if any) of the disallowance required to be repaid to the Secretary due to erroneous payments made by the State in carrying out the State plan approved under this part.

(b) Review of cases (1) State review (A) In general

Each State with a plan approved under this part shall for each fiscal year, in accordance with the time schedule and methodology prescribed in regulations issued under paragraphs (1) and (2) of subsection (h) of this section—

(i) review a sample of cases in the State with respect to which a payment has been made under such plan during the fiscal year; and

(ii) determine the level of erroneous payments for the State for the fiscal year.

(B) Effects of failure to complete review in a timely manner (i) Secretary conducts review

If a State fails to conduct and complete, on a timely basis, a review required by subparagraph (A), or otherwise fails to cooperate with the Secretary in implementing this subsection, the Secretary, directly or through contractual or such other arrangements as the Secretary may find appropriate, shall conduct the review and establish the error rate for the State for the fiscal year on the basis of the best data reasonably available to the Secretary, in accordance with the statistical methods that would apply if the review were conducted by the State.

(ii) State incurs costs of review

The amount that would otherwise be payable under this part to a State for which the Secretary conducts a review under clause (i) shall be reduced by the costs incurred by the Secretary in conducting the review.

(2) Review by the Secretary

The Secretary shall review a subsample of the cases reviewed by the State, or by the Secretary with respect to the State, under paragraph (1).

(3) Notification of difference cases

Upon completion of the review under paragraph (2), the Secretary shall notify the State of any case in the subsample which the Secretary finds involves erroneous payments, and which the State's review determined to be correct (in this section referred to as a “difference case”).

(4) Establishment of Quality Control Review Panel

The Secretary shall by regulation establish a Quality Control Review Panel to review difference cases.

(5) Resolution of difference cases (A) In general

The State may seek review by the Panel of any difference case, within the time period prescribed in regulations issued under subsection (h)(3) of this section.

(B) Procedural rules

The State and the Secretary may submit such documentation to the Panel as the State or the Secretary finds appropriate to substantiate its position. The findings of the Panel shall be made on the record, within the time period prescribed in regulations issued under subsection (h)(4) of this section.

(C) Status of decisions of the Quality Control Review Panel

The decisions of the Panel shall constitute the decisions of the Secretary for purposes of establishing the State's error rate for the fiscal year.

(D) Appealability of decisions of the Quality Control Review Panel

The decisions of the Panel shall not be appealable, except as provided in subsection (k) of this section.

(c) Identification of erroneous payments (1) Apply provisions of State plan

Except as provided in paragraph (2), in determining whether a payment is an erroneous payment, the State and the Secretary shall apply all relevant provisions of the State plan approved under this part.

(2) Treatment of provisions of State plan that are inconsistent with Federal law (A) In general

If a provision of a State plan approved under this part is inconsistent with a provision of Federal law or regulations, and the Secretary has notified the State of the inconsistency, the provision of Federal law or regulations shall control.

(B) Exception

Subparagraph (A) shall not apply with respect to a payment of the State if—

(i) it is necessary for the State to enact a law in order to remove an inconsistency described in subparagraph (A), the Secretary has advised the State that the State will be allowed a reasonable period in which to enact such a law, and the payment was made during such period; or

(ii) the State agency made the payment in compliance with a court order.

(3) Certain payments not considered erroneous

For purposes of this section, a payment by a State shall not be considered an erroneous payment if the payment is in error solely by reason of—

(A) the State's failure to implement properly changes in Federal statute within 6 months after the effective date of such changes or, if later, 6 months after the issuance of final regulations (including regulations in interim final form) if such regulations are reasonably necessary to construe or apply the Federal statutory change;

(B) the State's reliance upon and correct use of erroneous information provided by the Secretary about matters of fact;

(C) the State's reliance upon and correct use of written statements of Federal policy provided to the State by the Secretary;

(D) the occurrence of an event in the State that—

(i) results in the declaration by the President or the Governor of the State of a state of emergency or major disaster; and

(ii) directly affects the State agency's ability to make correct payments under the State plan approved under this part; or

(E) the failure of a family to submit monthly reports to the State pursuant to section 602(a)(14) of this title, if the failure did not affect the amount of the payment.

(4) Certain payments considered erroneous

Notwithstanding any other provision of this section, a payment shall be considered an erroneous payment if the payment is made to a family—

(A) which has failed without good cause to assign support rights as required by section 602(a)(26) of this title; or

(B) any member of which is a recipient of aid under a State plan approved under this part and does not have a social security account number (unless an application for a social security account number for the family member has been filed within 30 days after the date of application for such aid).

(d) Determination of error rates (1) In general

The Secretary shall, in accordance with this subsection, determine an error rate for each State for the fiscal year involved, based on the reviews under paragraphs (1) and (2) of subsection (b) of this section and the decisions of the Quality Control Review Panel under subsection (b)(5) of this section.

(2) Error rate formula

Except as provided in paragraph (3), the State's error rate for a fiscal year is—

(A) the ratio of—

(i) the erroneous payments of the State for the fiscal year; to

(ii) the total payments of aid under the State plan approved under this part for the fiscal year; reduced by

(B) the amount by which—

(i) the national average underpayment rate for the fiscal year; exceeds

(ii) the underpayment rate of the State for the fiscal year.

(3) Application of reduction to subsequent fiscal year

At the request of a State, the Secretary shall apply the reduction described in paragraph (2)(B) in determining the State's error rate for either of the 2 following fiscal years instead of in determining the State's error rate for the fiscal year to which the reduction would otherwise apply.

(e) Notification to States of error rates

The Secretary shall notify each State of the error rate of the State determined under subsection (d) of this section, within the time period prescribed in regulations issued under subsection (h)(5) of this section.

(f) Imposition of disallowances

If a State's error rate for a fiscal year exceeds the national average error rate for the fiscal year, the Secretary shall impose a disallowance on the State for the fiscal year in an amount equal to—

(1) the product of—

(A) the State's total payments of aid to families with dependent children for the fiscal year;

(B) the Federal medical assistance percentage applicable to the State for purposes of section 1318 of this title;

(C) the lesser of—

(i) the ratio of—

(I) the amount by which the State's error rate for the fiscal year exceeds the national average error rate for the fiscal year; to

(II) the national average error rate for the fiscal year; or

(ii) 1; and

(D) the amount by which the State's error rate for the fiscal year exceeds the national average error rate for the fiscal year;

reduced by

(2) the product of—

(A) the ratio of—

(i) the amount by which the State's error rate for the fiscal year exceeds the national average error rate for the fiscal year; and

(ii) the State's error rate for the fiscal year;

(B) the overpayments recovered by the State in the fiscal year; and

(C) the Federal medical assistance percentage applicable to the State for purposes of section 1318 of this title;

and further reduced by

(3) the product of—

(A) the calculation described in paragraphs (1) and (2); and

(B) the percentage by which—

(i) the State's rate of child support collections for the fiscal year; exceeds

(ii) the lesser of—

(I) the national average rate of child support collections for the fiscal year; or

(II) the average of the State's child support collection rates for each of the 3 fiscal years preceding the fiscal year.

(g) Notification to States of amounts of disallowances

The Secretary shall notify each State on which the Secretary imposes a disallowance the amount of the disallowance, within the time period prescribed in regulations issued under subsection (h)(6) of this section.

(h) Regulations

The Secretary, after consultation with the chief executives of the States, shall by regulation prescribe—

(1) the periods within which—

(A) the reviews required by paragraphs (1) and (2) of subsection (b) of this section are to begin and be completed; and

(B) the results of the review required by subsection (b)(1) of this section are to be reported to the Secretary;

(2) matters relating to the selection and size of the samples to be reviewed under paragraphs (1) and (2) of subsection (b) of this section, and the methodology for making statistically valid estimates of each State's error rate;

(3) the period within which a State may seek review by the Quality Control Review Panel of a difference case;

(4) the period within which a difference case appealed by a State is to be resolved by the Quality Control Review Panel;

(5) the period, after the completion of the reviews required by paragraphs (1) and (2) of subsection (b) of this section and the resolution by the Quality Control Review Panel of any difference cases appealed by a State, within which the Secretary is to notify the State of the error rate of the State for the fiscal year involved; and

(6) the period within which the Secretary is to notify a State of any disallowance.

(i) Payment of disallowances (1) Payment options

Within 45 days after the date a State is notified of a disallowance pursuant to subsection (g) of this section, the State shall, at the option of the State—

(A) pay the Secretary the amount of the disallowance; or

(B) enter into an agreement with the Secretary under which the State will make quarterly payments to the Secretary over a period not to exceed 30 months beginning not later than the first quarter beginning after the date the State receives the notice, in amounts sufficient to repay the disallowance with interest by the end of such period.

(2) Authority to adjust State matching payments

If a State fails to pay the amount of a disallowance imposed on the State, in the manner required by the applicable subparagraph of paragraph (1), the Secretary shall reduce the amount to be paid to the State under section 603(a) of this title by amounts sufficient to recover the amount of the disallowance with interest.

(3) Interest on unpaid disallowances (A) Rate of interest

Interest on the unpaid amount of a disallowance shall accrue at the overpayment rate established under section 6621(a)(1) of the Internal Revenue Code of 1986.

(B) Accrual of interest (i) In general

Except as provided in clause (ii), interest on the unpaid amount of a State's disallowance shall accrue beginning 45 days after the date the State receives notice of the disallowance.

(ii) Exception

If the State appeals the imposition of a disallowance under this section to the Departmental Appeals Board and the Board does not decide the appeal within 90 days after the date of the State's notice of appeal, interest shall not accrue on the unpaid amount of the disallowance during the period beginning on such 90th day and ending on the date of the Board's final decision on the appeal, except to the extent that the Board finds that the State caused or requested the delay.

(j) Administrative review of disallowances (1) In general

Within 60 days after the date a State receives notice of a disallowance imposed under this section, the State may appeal the imposition of the disallowance, in whole or in part, to the Departmental Appeals Board established in the Department of Health and Human Services, by filing an appeal with the Board.

(2) Procedural rules

The Board shall consider a State's appeal on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold a disallowance or any portion thereof, the Board shall conduct a thorough review of the issues and take into account all relevant evidence. In rendering its final decision, the Board shall incorporate by reference any findings of the Quality Control Review Panel that were made in connection with the determination of the error rate and the amount of the disallowance, and such findings shall not be reviewable by the Board.

(k) Judicial review of disallowances (1) In general

Within 90 days after the date of a final decision by the Departmental Appeals Board with respect to the imposition of a disallowance on a State under this section, the State may obtain judicial review of the final decision (and the findings of the Quality Control Review Panel incorporated into the final decision) by filing an action in—

(A) the district court of the United States for the judicial district in which the principal or headquarters office of the State agency is located; or

(B) the United States District Court for the District of Columbia.

(2) Procedural rules

The district court in which an action is filed shall review the final decision of the Board on the record established in the administrative proceeding, in accordance with the standards of review prescribed by subparagraphs (A) through (E) of section 706(2) of title 5. The review shall be on the basis of the documents and supporting data submitted to the Board (or to the Quality Control Review Panel, in the case of any finding by the Panel which is at issue in the appeal).

(l) Refund of disallowances imposed in error

If the Secretary, directly or indirectly, receives from a State part or all of the amount of a disallowance imposed on the State under this section, and part or all of the disallowance is finally determined to have been imposed in error, the Secretary shall refund to the State the amount received by reason of the error, with interest which shall accrue from the date of receipt at the rate described in subsection (i)(3)(A) of this section.

(m) Definitions

As used in this section:

(1) National average error rate

The term “national average error rate” for a fiscal year means the greater of—

(A) the ratio of—

(i) the total amount of erroneous payments made by all States for the fiscal year; to

(ii) the total amount of aid paid by all the States for the fiscal year under plans approved under this part; or

(B) 4 percent.

(2) Underpayment rate

The term “underpayment rate”, with respect to a State for a fiscal year, means the ratio of—

(A) the total amounts of aid that should have been but were erroneously not paid for the fiscal year to recipients of aid under the State plan approved under this part; to

(B) the total amount of aid paid under such plan for the fiscal year.

(3) National average underpayment rate

The term “national average underpayment rate” for a fiscal year means the ratio of—

(A) the total amounts of aid that should have been but were erroneously not paid for a fiscal year to all recipients of aid under State plans approved under this part; to

(B) the total amount of aid paid for the fiscal year under all State plans approved under this part.

(4) Child support collection rate

The term “child support collection rate”, with respect to a State for a fiscal year, means the ratio of—

(A) the sum of the number of cases reported by the agency administering the State plan approved under part D of this subchapter for each quarter in the fiscal year for which—

(i) an assignment was made under section 602(a)(26) of this title; and

(ii) a collection was made under the State's plan approved under part D of this subchapter; to

(B) the sum of the number of cases reported by such agency for each quarter in the fiscal year under which an assignment was made under section 602(a)(26) of this title.

(5) National child support collection rate

The term “national child support collection rate” for a fiscal year means the ratio of—

(A) the sum of the number of cases described in paragraph (4)(A) reported by all States for quarters in the fiscal year; to

(B) the sum of the number of cases described in paragraph (4)(B) reported by all States for quarters in the fiscal year.

(6) Erroneous payments

The term “erroneous payments” means the sum of overpayments to eligible families and payments to ineligible families made in carrying out a plan approved under this part.

(Aug. 14, 1935, ch. 531, title IV, §408, as added Dec. 19, 1989, Pub. L. 101–239, title VIII, §8004(a), 103 Stat. 2454; amended Oct. 31, 1994, Pub. L. 103–432, title II, §265(a), 108 Stat. 4469.)

References in Text

Section 6621(a)(1) of the Internal Revenue Code of 1986, referred to in subsec. (i)(3)(A), is classified to section 6621(a)(1) of Title 26, Internal Revenue Code.

Part D of this subchapter, referred to in subsec. (m)(4)(A), is classified to section 651 et seq. of this title.

Prior Provisions

A prior section 608, act Aug. 14, 1935, ch. 531, title IV, §408, as added May 8, 1961, Pub. L. 87–31, §2, 75 Stat. 76; amended July 25, 1962, Pub. L. 87–543, title I, §§101(b)(2)(D), 104(a)(3)(F), (G), 131(b), 135(a)–(d), 155(a), 76 Stat. 180, 185, 193, 196, 197, 207; Jan. 2, 1968, Pub. L. 90–248, title II, §§201(e)(4), 205(c), 81 Stat. 880, 892; June 17, 1980, Pub. L. 96–272, title I, §§101(a)(5)(A), 102(b), 94 Stat. 513, 515, related to payment to States for foster home care of dependent children, prior to repeal by Pub. L. 96–272, title I, §101(a)(2), June 17, 1980, 94 Stat. 512, effective, with certain exceptions, to expenditures made after Sept. 30, 1980.

Amendments

1994—Subsec. (m)(2)(A). Pub. L. 103–432 substituted “the fiscal” for “a fiscal”.

Effective Date of 1994 Amendment

Section 265(d) of Pub. L. 103–432 provided that: “Each amendment made by this section [amending this section and sections 673 and 675 of this title] shall take effect as if the amendment had been included in the provision of OBRA–1989 [Pub. L. 101–239] to which the amendment relates, at the time the provision became law.”

Effective Date

Section 8004(c) of Pub. L. 101–239 provided that: “The amendment made by subsection (a) [enacting this section] shall apply to erroneous payments made in any fiscal year after fiscal year 1990.”

Implementation of Amendment by Pub. L. 101–239

Section 8004(e) of Pub. L. 101–239 provided that: “The Secretary of Health and Human Services shall take all actions necessary to assure that adequate numbers of staff are available to perform the functions required by the amendments made by this section [enacting this section and amending section 603 of this title].”

Annual Reports to Congress

Section 8004(f) of Pub. L. 101–239 provided that: “The Secretary of Health and Human Services shall annually submit to the Committee on Finance of the Senate, and to the Committee on Ways and Means of the House of Representatives a report on whether the time periods contained in the regulations prescribed pursuant to section 408 of the Social Security Act [this section] (as added by subsection (a)) have been or will be met. The first such report shall be submitted not later than January 1, 1992.”

Study of Negative Case Actions

Section 8004(g) of Pub. L. 101–239 directed Secretary of Health and Human Services, not later than Oct. 1, 1992, to report and make recommendations to Congress on results of a study of negative case actions under the program of aid to families with dependent children under State plans approved under part A of title IV of the Social Security Act (this part).