Tennessee Department of Human Services Agrees to Pay $6.8 Million to Resolve False Claims Act Liability in Connection with SNAP Quality Control

The Tennessee Department of Human Services (TDHS) has agreed to pay the United States $6,854,416 to resolve allegations that it violated the False Claims Act in its administration of the U.S. Department of Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP). Until 2008, SNAP was known as the Food Stamp Program. 

“The money allocated by Congress for the SNAP program funds critical USDA efforts to help families in need,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The Justice Department will continue to protect public funds to ensure that they are used for their intended purposes.”

“It is shocking that Tennessee’s Department of Human Services, and so many other states’ agencies entrusted with feeding and caring for vulnerable and needy residents, would manipulate SNAP quality control data for their financial benefit,” said Acting U.S. Attorney Joseph H. Harrington for the Eastern District of Washington. “I am gratified, however, that Tennessee has stepped up, corrected its conduct, cooperated with our investigation and resolved its liability. I want to especially commend the outstanding work by the USDA’s Office of Inspector General’s special agents and auditors who enabled the United States to recover over $67 million in wrongfully obtained funds. This nationwide investigation and series of settlements demonstrate our office’s commitment to working with our law enforcement partners to ensure that that those who abuse SNAP and other critical government programs will be held fully accountable.” 

“We appreciate the commitment and investigative assistance provided by our partners at the Department of Justice’s Civil Division and the U.S. Attorney’s Office throughout this long-term, multi-state investigation,” said Special Agent-in-Charge Bethanne M. Dinkins of the USDA Office of Inspector General (OIG). “We also wish to note the technical assistance provided by our colleagues in the Office of Audit at OIG. During the investigation, conducted by OIG’s Northeast Regional Office, we worked together to address the concerns of employees of multiple states and others who alleged that the integrity of the SNAP quality control process was weakened by third-party consultants. These concerned individuals reported that cases were not being treated in a consistent manner, and that certain advice from consultants resulted in identified errors being diminished rather than used to improve eligibility determinations. The settlements reached to date send a strong message regarding the government’s commitment to work across agency lines to protect the integrity of SNAP.”

Under SNAP, USDA provides eligible low-income individuals and families with financial assistance to buy nutritious food. Since 2010, SNAP has served on average more than 45 million Americans per month and provided more than $71 billion annually. 

Although the federal government funds SNAP benefits, it relies on the states to determine whether applicants are eligible for benefits, to administer those benefits and to perform quality control to ensure that eligibility decisions are accurate. The USDA requires that the states’ quality control processes ensure that benefits are correctly awarded, are free from bias and accurately report states’ error rates in making eligibility decisions. 

The USDA reimburses states for a portion of their administrative expenses in administering SNAP, including expenses for providing quality control. It also pays performance bonuses to states that report the lowest and the most improved error rates each year, and can impose monetary sanctions on states with high error rates that do not show improvement. 

The settlement resolves allegations that beginning in 2012, TDHS contracted with a consultant known as Julie Osnes Consulting LLC (Osnes Consulting) to provide advice and recommendations designed to lower its SNAP quality control error rate. The United States alleged that Osnes Consulting’s recommendations, as implemented by TDHS, injected bias into TDHS’s quality control process and resulted in TDHS submitting false quality control data and information to USDA, for which it received performance bonuses for fiscal years 2013 and 2014 to which it was not entitled.   

This is the ninth settlement in this matter, and the eighth settlement with a state agency for manipulating its SNAP quality control findings. The United States has reached previous settlements with state agencies in Virginia, Wisconsin, Texas, Louisiana, Alaska, Florida and Mississippi, as well as with Osnes Consulting and its owner, Julie Osnes. Including this settlement, the United States has now recovered over $67 million in connection with this investigation.  

The settlement was a result of a joint investigation conducted by the USDA, Office of Inspector General, Investigations; the Civil Division’s Commercial Litigation Branch; and the U.S. Attorney’s Office for the Eastern District of Washington, with the assistance of USDA-OIG-Audit based on the results of its nationwide audit of SNAP quality control processes.

The matter was handled by Senior Trial Counsel Don Williamson of the Civil Division and Assistant U.S. Attorneys Dan Fruchter and Tyler Tornabene of the Eastern District of Washington.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

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