Overpayment Policy
E060-0530 | Issued Date: 1/28/2022

Overview

This policy provides instructions and guidelines for the Overpayment Unit including the revision of all sections regarding state regulations applicable to Aid to Families of Dependent Children – Foster Care (AFDC-FC) identification and collection of overpayments from the Foster Care (FC), Kinship Guardianship Assistance Payment (Kin-GAP), Approved Relative Caregiver (ARC) and Adoption Assistance (AAP) programs.    This policy is applicable to all new as well as existing referrals and cases in which AFDC-FC overpayments were or have been discovered on or after 07/01/2021 regarding foster care providers.

Table of Contents

Version Summary

This policy guide was updated from the 10/24/2012 version to align with the implementation of the California Statewide Automated Welfare System (CalSAWS) replacing the Integrated Financial System (IFS), and the Automated Provider Payment System (APPS) to complete the functions of the Overpayment Collection Unit Eligibility Workers (EW).

POLICY

Policy/Background Statement

The Department continues to focus on minimizing the occurrences of uncollectable overpayments while ensuring that collectible overpayments are assessed and collected in a manner consistent with state law, regulations and state instructional guidance.

Overpayment

An overpayment is any amount of aid paid to an Out-of-Home Care (OHC) provider, which was received on behalf of a child to which the provider was not entitled. The provider is not entitled to aid where the provider did not care for the child in their home for the period of time for which they were paid.

Overpayment Collections

Overpayments may be collected from OHC providers, as follows:

Agency OHC Provider Collections

The Welfare and Institution Code (WIC) Section 11466.24 instructs counties to collect an overpayment discovered on or after January 1st, 1999 made to an OHC provider. Collection activities for agencies are to align with contract language in the agency agreement and allow the option to place an agency on “Do not Refer” status for noncompliance. Collection for overpayments shall be requested from the following agency OHC providers:

  • Foster Family Agency (FFA) Resource Family Homes (RFH)
    • This does not include non-agency (non-FFA) RFH
  • Group homes
  • Short Term Residential Therapeutic Program (STRTP)
  • Intensive Treatment Foster Care/Intensive Services Foster Care (ITFC/ISFC) Community Treatment Facilities (CTF)
  • Transitional Housing Program-Plus Foster Care (THPP+FC)
    • Transitional housing placement providers operating the THP-FC are not included.

For overpayments, the agency shall submit payment after exhaustion of due process in favor of the county, and which results in identification of the overpayment. The agency shall submit re-payment in conformity with the priority of repayment, including lump sum repayment, voluntary repayment terms or involuntary repayment terms, including referenced directions on methods of voluntary repayment agreement and involuntary collection. Further, the county may employ and implement contract actions.

If the agency’s contract expires and overpayment collection attempts have not resulted in re-payments by the agency, the County shall refer the agency to the Treasury and Tax Collector (TTC).

Exclusions for Agency overpayment requests

  1. The child was temporarily removed from the home and payment was owed to the provider to maintain the child’s placement, or the child was temporarily absent from the provider’s home, or on runaway (i.e., AWOL) status and subsequently returned, and payment was made to the provider to meet the child’s needs.
    • If an AFDC FC eligible child is temporarily absent from an eligible facility, a bed hold may be made by the Children’s Social Worker (CSW) for no more than seven (7) days for school, work or training related occurrences, and no more than thirty (30) days for hospitalizations, visiting, vacationing, or any emergency circumstance. The County may make payments to the eligible facility in order to continue to meet the child’s needs for the extent of the bed hold.
  1. Discrepancies on placement stop dates; the agency is to provide supportive documentation to corroborate that the child/youth was still in placement, and to be able to exclude the overpayment.

Non-agency Collectible Overpayments Collection

Non-agency OHC providers are, as follows:

  • Non-FFA Resource Family Homes (RFH)
  • Relative Homes
  • Non-Related Extended Family Members (NREFM)
  • Non-Related Legal Guardians (NRLG)
  • Kinship-Guardianship Assistance Payment (KIN-GAP) guardians
  • Non-Minor Dependents (NMDs) residing in a SILP setting.

Overpayment collections from a non-agency OHC provider shall only be made in instances of fraudulent activity. The determination of fraud, including supporting evidence, as well as the overpayment collection method shall be documented.

Overpayments from non-agency providers that exceed six (6) months of collection attempts are to be referred to the TTC.

Exclusions for Non-agency overpayment requests

The county shall not demand collection of overpayments made to any type of Non-agency OHC, where any of the following conditions exist:

  1. The overpayment was the result of a county administrative error.
    1. Overpayment may arise for non-agency OHC providers under the following OHC programs:
      1. Foster Care (FC)
      2. Adoption Assistance Program (AAP)
      3. Kinship Guardianship Assistance Payment Program (Kin-GAP)
      4. Approve Relative Caregiver (ARC)
    2. Except for ARC Funding Only cases with associated Aid Codes of 2P and 2R, ARC overpayment cases are to be administered by DPSS, consistent with the procedures set forth in ACL 15-96. For ARC cases with 2P and 2R Aid Codes, the Department shall follow the procedures herein this policy.
  1. Neither the county nor the provider was aware of the information that would establish the child’s ineligibility for foster care benefits in that provider’s home.
  2. The provider did not have knowledge of, and did not contribute to the cause of the overpayment. Even though the county cannot collect the above listed overpayments, the county must send the non-agency OHC provider the Overpayment Notification Letter, which informs the provider that they have no legal or other obligation to return the overpayment, and that failure to return the overpayment will not result in any adverse action against the provider and any child living in the home. If the non-agency OHC provider contacts the county seeking to make full or partial repayment of the overpayment, the script protocol is to be recited by Department staff for further instructions and clarification to the non-agency OHC provider. If the non-agency OHC provider still requests to voluntarily repay all or a part of the overpayment after being advised of their legal rights not to do so per the script protocol, the Repayment Confirmation Agreement Letter is to be sent to the OHC provider and arrangements may then be made to receive whatever amount of the overpayment that the non-agency OHC provider wishes to return to the county.

    The department must not take any further action against the non-agency OHC provider if they do not respond to the Overpayment Notification Letter. 

  3. The county shall not pursue collection of overpayments made to a non-agency OHC provider where the cost of the collection exceeds the amount of the overpayment.
    • The cost which the county shall consider when determining the cost effectiveness to collect are total administrative and personnel cost, legal filing fees, investigative costs, and any other costs which are applicable.

The county shall have a written debt write-off approved by the County Welfare Director (Director’s Write Off) covering situations including, but not limited to:

  1. Where the debtor cannot be located.
  2. Where the debtor is unable to pay.
  3. Where the costs of further overpayment recovery actions will exceed estimated recovery amounts.
  4. The written policy may include a provision permitting write off of an amount not to exceed $100.00.

Director’s Write Off of Non-Title IV-E

The elimination of the entire balance of the asset to offset the overpayment approved by the County Welfare Director as listed on the Title IV Management Directive 11-03.

The director’s write off for Non-Title IV-E overpayments includes the following situations:

  1. The county shall not pursue collection of collectible overpayments made to an overpaid foster care provider where the cost of the collection exceeds the amount of the overpayment. The cost which the county shall consider when determining the cost effectiveness to collect is total administrative costs, and any other costs which are applicable.
  2. This option should be considered after the overpayment has been identified as collectible and the following activities have occurred.
    1. A Notice of Action has been issued to the provider to allow for a formal and/or formal state fair hearing and the foster care provider either failed to make a request for the two available hearings, exhausting, due process or determinations in hearings were in favor of DCFS.
    2. If under $100.00 DCFS can request a Director’s Write-Off attaching all necessary documentation such as:
      • CalSAWS Overpayment Report
      • Description or reason of write-off.
    3. If over $100.00 the overpayment shall be sent to the Treasurer Tax Collector (TTC) for collection processing.
      • The process of collection shall be followed by DCFS with updates from TTC on progress or inability to collect.
  3. Depending on the information received from TTC regarding attempts to collect, the handling overpayment staff shall review and determine if the inability to collect will meet the criteria for a Director’s Write-Off.
    1. The cost of further recovery actions exceeds the estimated recovery amount of the overpayment.
    2. The debtor involved with this overpayment cannot be located.
    3. The debtor is unable to pay.

Notice of Action (NA)/Appeals

When it is determined that a collectable overpayment has occurred and is collectible, an invoice and a NA are sent to OHC providers.

NA forms are placement type-specific, as follows:

  • NA 1261: Agency OHC providers
  • NA 1261A: Non-agency OHC providers with the exception of KIN-GAP guardians.
    • For fraudulent activity collections only.
  • NA 1261B: KIN-GAP guardians.
    • For fraudulent activity collections only.
  • NA 791: AAP Notice of Action and Identification of Overpayment.
    • For fraudulent activity collections only.
  • NA 1277: ARC Notice of Action for ARC Overpayment
    • For fraudulent activity collections only.
    • Except for ARC Funding Only cases with associated Aid Codes of 2P and 2R, ARC overpayment cases are to be administered by DPSS, consistent with the procedures set forth in ACL 15-96. For ARC cases with 2P and 2R Aid Codes, the Department shall follow the procedures herein this policy.
PROCEDURE

Potential Overpayment Identified by the CalSAWS

Overpayment Collection Eligibility Worker (EW) Responsibilities

  1. Receive and review the newly detected potential overpayment assignment from CalSAWS.
  2. Research CalSAWS, CWS/CMS and any other applicable systems such as, eCAPS, manual budget issuance, etc.
  3. As needed, contact the CSW, Redetermination EW, Intake EW, EW/TA, agency and/or caregiver to obtain additional information and supporting documentation to determine the collectability of the overpayment.

When an Overpayment is Determined to be Collectible

The following actions are to be taken when an overpayment is determined to be collectible. 

Agency OHC Provider Collections 
Based on the Statue of Limitations for agency OHC providers Master Contract for Agency; the County is able to collect up to five (5) years after the agency OHC provider has lost their license. There is no time limitation if the OHC provider is still licensed.

Non-Agency OHC Provider Collections
The County shall not initiate overpayment recovery after one (1) year from the date the County discovers the overpayment. When the overpayment recovery was initiated within one year of the date the County discovered the overpayment, the County shall continue to recover the overpayment until fully recovered or written off pursuant under the County’s write off policy.

Overpayment Collection Eligibility Worker (EW) Responsibilities

  1. Generate an invoice and two (2) NOAs. Send the invoice along with one (1) copy of the NOA to the OHC provider requesting repayment.  File one (1) copy of the NOA.
    • NOAs for Non Agency OHC are to be sent only for fraudulent overpayment cases.
    • The OHC provider has thirty (30) calendar days to respond by providing payment to the County. If the OHC provider wishes to dispute the overpayment, the OHC provider has thirty (30) calendar days to request an informal hearing held by the County, or by following the appeals process indicated on the NOA within ninety (90) calendar days, or by undertaking both the informal hearing and appeals processes within their respective timelines.
      1. Payments submitted to the County are mailed by the OHC provider directly to the Overpayment Department and a copy will be provided to the Overpayment Collection EW.
      2. If an overpayment is paid in full, a copy of the payment and invoice shall be filed for auditing purposes.
      3. If an overpayment is not paid in full, follow up with the OHC provider as the County does not accept partial payments
        1. The OHC provider shall be advised via telephone and or email that full payment is due. Also, a copy of the invoice shall be re-submitted to the OHC provider.
        2. The OHC provider shall be given and additional thirty (30) calendar days to provide payment and, instances whereby full payment is not made, at the end of the additional thirty (30) calendar days, place a “Do Not Refer’ in CWS/CMS.
  2. Log in the information from the invoiced overpayment regarding the NA 1261 into the SB 84 control log in the shared drive,
  3. If unable to contact and/or collect from the agency OHC provider, consult with the Overpayment Collection Eligibility Supervisor (ES).
  4. If the OHC provider disputes the collectability of the overpayment and contacts the Overpayment Collection EW for review, review FCSS for start and stop dates of the placement in FCSS and in the CWS/CMS.
    1. If the start and stop dates are the same, document the findings in the CALSAWS case notes and provide a copy of the invoice to the Overpayment Collection ES to verify the findings and void the invoice.
    2. If the start and stop dates are not the same, advise the OHC provider of the results and determine if the OHC provider wants to dispute the collectability of the overpayment through an informal County hearing or through the State Fair Hearing process indicated on the NOA.

Overpayment Collection Eligibility Supervisor (ES) Responsibilities

  1. Discuss any concerns regarding communication and collection from the agency OHC provider with EW
    1. Contact the agency OHC provider after sixty (60) calendar days if no response has been received from agency after collection process has been initiated.
    2. If, after one (1) business week, contact with OHC provider has not been established, contact the Contracts section for assistance.
    3. The Contracts Compliance section may be able to provide additional contact information for the OHC provider or establish direct contact to address the overpayment collection.
  2. Assign and re-assign agencies and RFH (that will only receive overpayment notice letter) to the overpayment collection EWs.

When an Overpayment is Determined to be Uncollectable

The following actions are to be taken when an overpayment is determined to be uncollectable as stated in the Management Directive 11-03.

Overpayment Collection EW Responsibilities

  1. If the overpayment is uncollectable, take corrective budget actions to completely eliminate the recovery account by:
    • Updating comments in CalSAWS.
    • Submit supporting documentation to the Overpayment Collection ES for review to verify that the overpayment is uncollectable and to void the recovery account, if the uncollectable overpayment determination is confirmed.
  2. If the overpayment is uncollectable due to a County administrative error, or due to exclusions for non-agency overpayment request numerals 2 or 3 described above, send the Department Approved Overpayment Notification Letter to the non-agency OHC provider which informs the provider that they have no legal or other obligation to return the overpayment, and that failure to return the overpayment will not result in any adverse action against the provider and any child living in the home. If the non-agency OHC provider contacts the county seeking to make full or partial repayment of the overpayment, the Script Protocol is to be recited by Department staff for further instructions and clarification to the non-agency OHC provider. If the non-agency OHC provider still requests to voluntarily repay all or a part of the overpayment after being advised of their legal rights not to do so per the script protocol, the Repayment Confirmation Agreement Letter is to be sent to the OHC provider and arrangements may then be made to receive whatever amount of the overpayment that the non-agency OHC provider wishes to return to the county.
    • This does not apply to agency OHC providers.
    • The department must not take any further action against the non-agency OHC provider if they do not respond to the Overpayment Notification Letter.

Overpayment Collection ES Responsibilities

  1. Upon receipt of an uncollectable overpayment determination, complete the following:
    1. Review the supporting documentation.
    2. Change the recovery account status code from New to Void
    3. Return the voided recovery account documentation to the Overpayment Collection EW for filing.

Determining If the Overpayment Is Uncollectible from a Non-Agency OHC Provider

Overpayment Collection EW Responsibilities

  1. If the overpayment has been determined to be uncollectible the Notice of Action (NOA) form is not to be sent to the caregiver.
    1. The EW will ensure that the documentation required is reviewed and prepared to be able to void the recovery account in CALSAWS (Management Directive to 11-03).

 

OHC Provider Responds to an Overpayment Notice with Cash, Check or Money Order

Overpayment Collection Clerk Responsibilities

DCFS has collections accounts that provide timely deposits of collected revenue and eliminates the risk of loss of funds. This is an interdepartmental collaboration with the TTC and DCFS.  The accounts are known as the Sweep Accounts for Overpayment Collections.

Payments are received in the following manner:

  1. Cash
    1. If cash is received, ensure that a non-vested designee witnesses the amount and receipt.
      1. All cash transactions will be witnessed and verified by staff with non-vested interest (It is illegal to photocopy cash).
    2. The cash and a copy of the receipt are sent to the Deposit Unit to continue with deposit process.
  2. If paid by check or money order, confirm the following:
      1. The amount indicated is the same in the written section and the dollar amount section.
      2. Confirm that it is signed.
      3. Checks/money orders should be made payable to DCFS and/or County of Los Angeles.
        • If check/money order are delivered in person by the OHC provider, a receipt with the paid amount is to be issued.
      4. Verify the amount of the check/money order matches the amount of the recovery account in CALSAWS.
        • If the amount doesn’t match or a case number for the overpayment is unknown, consult with the EW assigned to the agency to provide the correct information. 
  3. Initial the check or money order when the information is verified. 
  4. Complete the payment check log by annotating the following: 
    1. Date received 
    2. Payee 
    3. Recovery Account 
    4. Check date 
    5. Amount submitted
  5. Endorse, by stamping all checks and money orders ‘for deposit only” immediately.
  6. Photocopy and print two (2) copies of the check or money order and stamp them with the date received, attach any documentation received from the OHC provider.
  7. Deliver the two (2) photocopies to the Collection Posting Clerk for further process.
  8. Submit the endorsed checks to the Administrative Assistant to prepare for deposit.

Overpayment Collection Posting Clerk Responsibilities

  1. The posting clerk is to input the following information in CALSAWS:
    1. Recovery account number
    2. Recovery amount
    3. Vendor Number
    4. Select the responsible party in the recovery account.
  2. Return the posted check(s)/money order(s) to the Overpayment Collection Clerk. 
  3. Enter/post payments to the Automated Overpayment Collection System. 
  4. Forward the copy of the check(s)/money order(s) to the appropriate Overpayment Collection EW. 

Administrative Assistant Responsibilities

  1. Verify the payment control log with the cash, check(s) and/or money order(s) received.
  2. Prepares the cash deposit forms
  3. Deliver the cash, checks, and deposit forms to the Finance Deposit Unit. 

Reconciliation

Staff Responsibilities

  1. Print the Cash Receipt Log from the Cash Management System (CMS).
  2. Reconciles the CMS report to the Cash deposit log.
  3. Overpayment ES receives and reviews the following documents:
    1. The Cash Deposit Form.
    2. The Payment Check Log
    3. The Cash Management System (CMS) Log. 
  4. Overpayment ES signs and dates the documentation to submit to the ASM for final approval.
    • If any discrepancies are found, the Overpayment ES returns the documentation to the AA for corrections.

OHC Provider Responds to a Collectable Overpayment Notice with a Written Repayment Plan

Overpayment Collection EW Responsibilities

  1. When the County and caregiver reach a mutually agreed upon repayment plan solely related to overpayments of aid when the child was not in the home:
    1. Access CalSAWS and review the specific ledger and statement.
    2. Enter the status and comments. 
  2. Complete and sign the Voluntary Repayment Agreement. Ensure the provider reviews and signs the voluntary agreement.
  3. Set a reminder to track the receipt of all agreed upon monthly payments.
    • There are no State Appeals Hearing rights regarding overpayments made to foster care providers, including GHs, STRTPs and FFAs where the claimant entered into a voluntary repayment agreement.

OHC Provider Responds to a Collectable Overpayment Notice with a Written Request for an Informal Hearing and or State Fair Hearing