10.2 Fraud Investigation, Payment Recovery, and Sanctions

Lead Agencies must have the necessary controls to identify fraud and other program violations to ensure program integrity. Program violations can include both intentional and unintentional client and/or provider violations, as defined by the Lead Agency. These violations and errors, identified through the error-rate review process and other review processes, may result in payment or nonpayment (administrative) errors and may or may not be the result of fraud, based on the Lead Agency definition. 10.2.1 Strategies used to identify and prevent program violations Check the activities the Lead Agency employs to ensure program integrity, and for each checked activity, identify what type of program violations the activity addresses, describe the activity and the results of these activities based on the most recent analysis. a. [x] Share/match data from other programs (e.g., TANF program, Child and Adult Care Food Program, Food and Nutrition Service (FNS), Medicaid) or other databases (e.g., State Directory of New Hires, Social Security Administration, Public Assistance Reporting Information System (PARIS)). i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: An Intentional Program Violation (IPV) is where a customer submits fraudulent or altered documents, falsifies information on applications or records, falsifies Maryland residency, fails to report all requested information or submitting other documents that enable a customer to receive benefits or monetary gains in which they are ineligible to receive. An IPVs results of a customer obtaining benefits or monetary gain to which they are not entitled and results in overpayment in child care benefits. Likewise, an IPV may result in an Administrative Disqualification Hearing, the initiation of a repayment agreement, or even criminal prosecution. The identification of IPVs informs Maryland of procedures that may need to be modified or enforced differently to reduce or identify similar violations moving forward. The Lead Agency uses monthly random record reviews to identify Intentional program violations and based on a recent analysis, 501 cases were reviewed, and 0 intentional program violations were noted. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: An Unintentional Program Violation (UPV) is any violation submitted based on human error and where case review eliminates intentional misconduct. UPVs can be committed by a customer or a case manager. UPVs that result in a customer obtaining benefits or monetary gain to which they are not entitled and result in an overpayment in child care benefits will be collected from the customer. The identification of UPVs informs Maryland of the need to examine practices to determine if changes in procedures could reduce similar violations or errors moving forward. The Lead Agency uses monthly random record reviews to identify unintentional program violations and based on a recent analysis, 501 cases were reviewed, and 0 unintentional violations were noted. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice:: Agency errors normally result from misinterpretation or mis-implementation of policy. If an agency error results in an overpayment or underpayment, the payment is made to address the underpayment and the overpayment is collected. Identification of agency errors is used to inform training or the implementation of procedures to identify and reduce similar errors more easily. The Lead Agency uses monthly random record reviews to identify Intentional program violations and based on a recent analysis, 501 cases were reviewed, and 9 agency errors were noted and flagged to correct and/or to provide technical assistance to the case manager. b. [x] Run system reports that flag errors (include types). i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Maryland does not have a report that flags intentional, unintentional, or program errors but uses a combination of Child Care Administrative Tracking System (CCATS) and Salesforce system reports to identify the specified error types. As a result of the system reviews, if any error is noted, funds are collected or paid, or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland if procedure modifications are needed and what type of guidance needs to be provided to staff or the vendor. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Maryland does not have a report that flags intentional, unintentional, or program errors but uses a combination of Child Care Administrative Tracking System (CCATS) and Salesforce system reports to identify the specified error types. As a result of the system reviews, if any error is noted, funds are collected or paid, or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland if procedure modifications are needed and what type of guidance needs to be provided to staff or the vendor. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Maryland does not have a report that flags intentional, unintentional, or program errors but uses a combination of Child Care Administrative Tracking System (CCATS) and Salesforce system reports to identify the specified error types. As a result of the system reviews, if any error is noted, funds are collected or paid, or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland if procedure modifications are needed and what type of guidance needs to be provided to staff or the vendor. c. [x] Review enrollment documents and attendance or billing records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Scholarship enrollment is completed through the child care family and provider portals. The childcare provider portal will only allow one provider to be selected for each child care scholarship enrollment. As a part of Maryland's two-step attendance verification, parents must approve the attendance through the child care family portal. Any intentional errors that result in a dispute with attendance or where a customer does not respond, the invoice is selected for a program integrity audit. Providers with identified violations are required to upload their sign-in and sign-out sheets to validate the child’s attendance; any discrepancies will result in an overpayment that will need to be repaid by the childcare provider. If it is suspected that the violation is intentional or a possible fraud violation, the case will be referred to the Child Care Scholarship (CCS) Investigator. The outcome of the case could result in the child care provider or customer being removed from participation in the Child Care Scholarship Program Having a two-step authentication process informs better practices by encouraging both parents and providers to carefully document attendance invoices submitted as part of their billing records. The Lead Agency uses monthly random record reviews to identify intentional program violations and based on a recent analysis, 501 cases were reviewed, and 0 intentional program violations were noted. The activities described inform better practices by enabling the Lead Agency to address potential fraud more timely and to determine if other programmatic procedures need to be put in place to reduce or identify similar events in the future. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The child care providers submit their invoices through the child care provider portal. Scholarship enrollment is completed through the child care family and provider portals. The system will only allow one provider to be selected for each child care scholarship enrollment. As a part of Maryland's two-step attendance verification, parents must approve the attendance through the child care family portal. Any intentional errors that result in a dispute with attendance or where a customer does not respond, the invoice is selected for a program integrity audit. Providers with identified violations are required to upload their sign-in and sign-out sheets to validate the child’s attendance; any discrepancies will result in an overpayment that will need to be repaid by the childcare provider. If the case review indicates an unintentional program violation, the Child Care Scholarship (CCS) Program will collect the overpayment and will determine if modifications to program procedures are needed to reduce similar errors in the future. Having a two-step authentication process informs better practices by encouraging both parents and providers to carefully document attendance invoices submitted as part of their billing records. . The Lead Agency uses monthly random record reviews to identify unintentional program violations and based on a recent analysis, 501 cases were reviewed, and 0 unintentional program violations were noted. The activities described inform better practices by enabling the Lead Agency to more timely address the technical assistance needs of the CCS vendor and to determine if other programmatic procedures need to be put in place to reduce or identify similar events in the future. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: MSDE audits the service level agreement that the vendor must meet to be compliant with the contract. These service-level agreements look at thousands of transactions for program accuracy. In addition, MSDE conducts Comprehensive Program Reviews (CPRS) where a random selection of cases approved for Child Care Scholarship (CCS) benefits are audited. Any agency-identified errors during both reviews must be corrected, and/or the overpayment must be addressed to collect monetary damages. Identified errors are used to inform what technical guidance is needed to reduce errors similar errors moving forward. The Lead Agency uses monthly random record reviews to identify unintentional program violations and based on a recent analysis, 501 cases were reviewed, and 9 agency errors were noted. The activities described inform better practices by enabling the Lead Agency to more timely address the technical assistance needs of the CCS vendor, correct the error if applicable and to determine if other programmatic procedures need to be put in place to reduce or identify similar events in the future. d. [x] Conduct supervisory staff reviews or quality assurance reviews. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Maryland State Department of Education (MSDE) conducts supervisory staff reviews or quality assurance reviews of the work authorized by the vendor to identify intentional program violations. The vendor is required to complete a first-level review on all child care scholarship applications and a random selection of cases to have a second-level supervisory review completed. MSDE completes a supervisory review of a random selection of cases authorized by the vendor. As a result of the supervisory and quality assurance reviews, if any error is noted: the error is corrected; funds are collected or paid, if applicable; or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland if procedure modifications are needed and what type of guidance needs to be provided to staff or the vendor. The Lead Agency uses CCS supervisory reviews to identify intentional program violations and case manager errors. In reviewing 1,118 cases during a monthly case review, 0 intentional program violations were noted. The activities described inform better practices by enabling the Lead Agency to more timely address the technical assistance needs of the CCS vendor, correct errors if applicable and to determine if other programmatic procedures need to be put in place to reduce or identify similar events in the future. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Maryland State Department of Education conducts supervisory staff reviews or quality assurance reviews of the work authorized by the vendor to identify unintentional program violations. The vendor is required to complete a first-level review on all child care scholarship applications and a random selection of cases to have a second-level supervisory review completed. Maryland State Department of Education (MSDE) completes a supervisory review of a random selection of cases authorized by the vendor. As a result of the supervisory and quality assurance reviews, if any error is noted: the error is corrected; funds are collected or paid, if applicable; or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland. The Lead Agency uses CCS supervisory reviews to identify unintentional program violations and case manager errors. In reviewing 1,118 cases during a monthly case review, 0 unintentional program violations were noted. The activities described inform better practices by enabling the Lead Agency to more timely address the technical assistance needs of the CCS vendor, correct errors if applicable and to determine if other programmatic procedures need to be put in place to reduce or identify similar events in the future. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Maryland State Department of Education (MSDE) conducts supervisory staff reviews or quality assurance reviews of the work authorized by the vendor to identify agency. The vendor is required to complete a first-level review on all child care scholarship applications and a random selection of cases to have a second-level supervisory review completed. MSDE completes a supervisory review of a random selection of cases authorized by the vendor. As a result of the supervisory and quality assurance reviews, if any error is noted: the error is corrected; funds are collected or paid, if applicable; or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland. The Lead Agency uses CCS supervisory reviews to identify intentional program violations and case manager errors. In reviewing 1,118 cases during a monthly case review, 38 program errors were noted. The activities described inform better practices by enabling the Lead Agency to more timely address the technical assistance needs of the CCS vendor, correct errors if applicable and to determine if other programmatic procedures need to be put in place to reduce or identify similar events in the future. e. [x] Audit provider records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Maryland State Department of Education (MSDE) performs the program attendance audit, which selects a random number of all invoices submitted bi-weekly. If the system automation indicates a conflict in the attendance reported by the parent and the provider, the child care provider is required to submit sign-in and sign-out sheets to validate the provider records. As a result of auditing the provider record, if an intentional program violation or any error is noted: the error is corrected; funds are collected or paid, if applicable; or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland. The CCS vendor completes a 25% review of paid invoices and reviews the child care provider sign-in and sign-out sheets to determine intentional program violations, during the review of the analysis of a 25% Invoice audit, the findings were as follows: 944 invoices were selected, 818 invoices passed the audit, 135 failed the audit (intentional/unintentional), 0 agency errors were noted, and the amount of the repayment due to audit failure was $208,247.94. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Maryland State Department of Education (MSDE) performs the program attendance audit, which selects a random number of all invoices submitted bi-weekly. If the system automation indicates a conflict in the attendance reported by the parent and the provider, the child care provider is required to submit sign-in and sign-out sheets to validate the provider records. As a result of auditing the provider record, if an unintentional program violation or any error is noted: the error is corrected; funds are collected or paid, if applicable; or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland. The CCS vendor completes a 25% review of paid invoices and reviews the child care provider sign-in and sign-out sheets to determine intentional program violations, during the review of the analysis of a 25% Invoice audit, the findings were as follows: 944 invoices were selected, 818 invoices passed the audit, 135 failed the audit (intentional/unintentional), 0 agency errors were noted, and the amount of the repayment due to audit failure was $208,247.94. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Maryland State Department of Education performs (MSDE) the program attendance audit, which selects a random number of all invoices submitted bi-weekly. If the system automation indicates a conflict in the attendance reported by the parent and the provider, the child care provider is required to submit sign-in and sign-out sheets to validate the provider records. As a result of auditing the provider record, if a program violation or any error is noted: the error is corrected; funds are collected or paid, if applicable; or the case is referred to the Child Care Scholarship (CCS) Program investigator for review. All identified program errors inform Maryland. The CCS vendor completes a 25% review of paid invoices and reviews the child care provider sign-in and sign-out sheets to determine intentional program violations, during the review of the analysis of a 25% Invoice audit, the findings were as follows: 944 invoices were selected, 818 invoices passed the audit, 135 failed the audit (intentional/unintentional), 0 agency errors were noted, and the amount of the repayment due to audit failure was $208,247.94. f. [x] Train staff on policy and/or audits. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Staff are trained in how to look for the implementation of policy when auditing a record for accuracy. Staff are trained to use a combination of methods to audit case records. Such as, Service Level Agreement (SLA) case audits, record review (Comprehensive Program Reporting Systems) and how to use system generated reports (Child Care Administrative Tracking System and Salesforce Reporting) to identify intentional audit, unintentional and policy errors. If any error is noted during a case audit, the case is to be addressed through the appropriate over/underpayment processes and corrected based upon policy. If policy violation appears to be an Intentional Program Violation or possible fraud, the case is referred to the Child Care Scholarship (CCS) Program Investigator for review. All identified audit and policy errors inform the CCS Program of the need for procedure modifications or additional training needed by the staff or vendor. For example, monthly, the Lead Agency randomly reviews a sample of data for thousands of customer transactions completed by the CCS vendor to determine if the provision of customer service, case management, and payment processing was done timely and correctly. The CCS Vendor is responsible for completing transactions at a certain percentage of accuracy or an assessment penalty is made for each transaction not in compliance and the CCS vendor’s invoice is reduced by the penalty amount. During a recent analysis of 25 service level agreements, 0 intentional program violations were noted. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Staff are trained in how to look for the implementation of policy when auditing a record for accuracy. Staff are trained to use a combination of methods to audit case records. Such as, Service Level Agreement case audits, record review (Comprehensive Program Reporting Systems) and how to use system generated reports (Child Care Administrative Tracking System and Salesforce Reporting) to identify intentional audit, unintentional and policy errors. If any error is noted during a case audit, the case is to be addressed through the appropriate over/underpayment processes and corrected based upon policy. If policy violation appears to be an Intentional Program Violation or possible fraud, the case is referred to the Child Care Scholarship Program Investigator for review. All identified audit and policy errors inform the Child Care Scholarship Program of the need for procedure modifications or additional training needed by the staff or vendor. For example, monthly, the Lead Agency randomly reviews a sample of data for thousands of customer transactions completed by the CCS vendor to determine if the provision of customer service, case management, and payment processing was done timely and correctly. The CCS Vendor is responsible for completing transactions at a certain percentage of accuracy or an assessment penalty is made for each transaction not in compliance and the CCS vendor’s invoice is reduced by the penalty amount. During a recent analysis of 25 service level agreements, 0 unintentional program violations were noted. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Staff are trained in how to look for the implementation of policy when auditing a record for accuracy. Staff are trained to use a combination of methods to audit case records. Such as, Service Level Agreement (SLA) case audits, record review (Comprehensive Program Reporting Systems) and how to use system generated reports (Child Care Administrative Tracking System and Salesforce Reporting) to identify intentional audit, unintentional and policy errors. If any error is noted during a case audit, the case is to be addressed through the appropriate over/underpayment processes and corrected based upon policy. If policy violation appears to be an Intentional Program Violation or possible fraud, the case is referred to the Child Care Scholarship Program Investigator for review. All identified audit and policy errors inform the Child Care Scholarship (CCS) Program of the need for procedure modifications or additional training needed by the staff or vendor. For example, each month the Lead Agency randomly reviews a sample of data for thousands of transactions completed by the CCS vendor to determine if the provision of customer service, case management, and payment processing was done timely, correctly and in accordance with the Task Order Contract. The CCS Vendor is responsible for completing transactions at a certain percentage of accuracy or an assessment penalty is made for each transaction not in compliance and the CCS vendor’s invoice is reduced by the penalty amount. During a recent analysis of 25 service level agreements, the following program errors were noted: timely processing of CCS application requires a 98% accuracy rate of 100% of the cases reviewed, the CCS vendor processed 677 cases timely and 26 cases untimely, resulting in a 96.16% service level agreement compliance rate; timely issuance of scholarships requires a 98% accuracy rate of 10% of the cases reviewed, the sample size resulted in 111 scholarships being processed timely and 26 scholarships being processed late, resulting in a 76.58% service level agreement compliance rate; timely approval or denial of a customer requesting to become an informal child care provider requires a 100% accuracy rate of 100% of the cases reviewed, the CCS vendor processed 24 cases timely and 2 cases untimely, resulting in a 91.67% service level agreement compliance rate. Based on the CCS vendor not complying with 3 of the 25 Service Level Agreement categories, the total amount of the service level agreement penalty assessment was $56,250. Thus, the CCS vendor’s invoice was reduced by $56,250. g. [ ] Other. Describe the activity(ies): i. [ ] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: ii. [ ] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: iii. [ ] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: 10.2.2 Identification and recovery of misspent funds Lead Agencies must identify and recover misspent funds that are a result of fraud, and they have the option to recover any misspent funds that are a result of unintentional program violations or agency errors. a. Identify which agency is responsible for pursuing fraud and overpayments (e.g., State Office of the Inspector General, State Attorney): The Office of the Inspector General (OIG), State Attorney’s Office, and the Office of Administrative Hearing (OAH). b. Check and describe all activities, including the results of such activity, that the Lead Agency uses to investigate and recover improper payments due to fraud. Consider in your response potential fraud committed by providers, clients, staff, vendors, and contractors. Include in the description how each activity assists in the investigation and recovery of improper payment due to fraud or intentional program violations. Activities can include, but are not limited to, the following: i. [ ] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: ii. [x] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: The Maryland Department of Education (MSDE) coordinates to resolve any alleged allegations received from outside agencies. Maryland investigates the allegations to determine if there is reasonable suspicion and violation of program policies. If required, works with other agencies to resolve all findings. Recent analysis of a case where the Lead Agency coordinated with the OAG Fraud Unit resulted in a plea deal with a customer that operated a theft scheme involving multiple child care programs between 2015 and 2024. The customer will receive 3 years in prison and be ordered to pay restitution to MSDE of $2,670,987.76. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Once misspent funds are discovered, recoveries are made as a result of the individual(s) signing a repayment agreement or through court ordered restitutions. Recent analysis of a case where the Lead Agency coordinated with the OAG Fraud Unit resulted in a plea deal with a customer that operated a theft scheme involving multiple child care programs between 2015 and 2024. The customer will receive 3 years in prison and be ordered to pay restitution to MSDE of $2,670,987.76. iv. [ ] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: v. [x] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: Once misspent funds are identified, the customer can enter a repayment agreement. If a customer fails to repay the funds, the lead agency refers individuals for collections through the Maryland State Central Collection Unit (CCU), which recovers monies by way of tax intercepts. Recent analysis did not result in tax intercept due to fraud. vi. [x] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: If the identification of misspent funds is reported by child care providers, customers, staff, licensing specialist, the customer service hotline, system or data reporting/review or the vendor, the case is reviewed by Child Care Scholarship (CCS) Program staff or referred to the Child Care Scholarship Program Investigator. The CCS Program will complete actions required to collect the misspent funds via restitution orders through the court, repayment agreements, or through the State Central Collection Unit (CCU). The data or documentation used to approve or pay for services assists with the investigation and the recovery of funds by enabling the CCS investigator to substantiate the alleged findings. Recent analysis of 25% of monthly invoices submitted to the CCS vendor resulted in 135 invoices of the 944 reviewed failing the audit test and resulting in repayment agreements totaling $208,247.94 being sent to the child care providers that failed the Invoice Audit. vii. [x] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: The Child Care Scholarship (CCS) Investigator will coordinate with the quality assurance team or other staff to investigate allegations and will refer substantiated cases for payment recoupment or the court. Based on a previous analysis completed by the CCS Investigator resulted in an overpayment discovery of $71,839.90. viii. [ ] Other. Describe the activities and the results of these activities: c. Does the Lead Agency investigate and recover improper payments due to unintentional program violations? [ ] No. [x] Yes. If yes, check and describe below any activities that the Lead Agency will use to investigate and recover improper payments due to unintentional program violations. Include in the description how each activity assists in the investigation and recovery of improper payments due to unintentional program violations. Include a description of the results of such activity. i. [ ] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: ii. [ ] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Identified misspent funds are recovered because of the individual(s) signing a repayment agreement. Customers that do not sign the repayment agreement will have the funds collected through the court system or tax intercept. Recent analysis resulted in a child care program receiving payment beyond the dates in which the child was enrolled. As a result, the child care provider was sent a Repayment Agreement in the amount of $2,610.83. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Misspent funds resulting from an unintentional program violation can be recouped through the True-Up process. The True-Up process reduces future child care payments. Funds can also be recouped through a repayment agreement. Recent analysis resulted in a provider being paid 1,304.88 for services not rendered to three children that stopped attending after the Advance Payment was made. During the Advance Payment reconciliation process (True-Up), the provider’s subsequent invoice was reduced to collect the amount owed and a Repayment Agreement was sent to cover the balance that could not be collected due to an insufficient payment amount. v. [x] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: Misspent funds not collected through future payments, or a repayment agreement, will be referred for collections through the Maryland State Central Collection Unit (CCU) which recovers monies by way of tax intercepts. Recent analysis resulted in 136 child care providers that will have $208,247.94 collected through tax intercept, if they do not enter into a repayment agreement within 90 days after being sent the repayment amount. vi. [ ] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [x] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: Identifying improper payment may result from record reviews completed by the vendor, or the Maryland State Department of Education (MSDE) and/or investigations completed by the Child Care Scholarship (CCS) Program Investigator. All parties work together as a quality assurance unit. The identification of misspent funds will require the completion of a repayment agreement or system updates to reduce future provider payments. Based on a previous analysis completed by the CCS Investigator resulted in an overpayment discovery of $71,839.90. viii. [ ] Other. Describe the activities and the results of these activities: d. Does the Lead Agency investigate and recover improper payments due to agency errors? [ ] No. [x] Yes. If yes, check and describe all activities that the Lead Agency will use to investigate and recover improper payments due to agency errors. Include in the description how each activity assists in the investigation and recovery of improper payments due to administrative errors. Include a description of the results of such activity. i. [ ] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: ii. [ ] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: If the results of a Comprehensive Program Reporting System (CPRS) review or any other type of quality assurance audit indicates an overpayment, the child care provider has the right to enter into a repayment agreement (unless the funds will be automatically reduced through subsequent payments.) Recent analysis of CPRS and other quality assurance reviews did not result in the recovery of funds by establishing repayment plans. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: If the results of a Comprehensive Program Reporting System (CPRS) review or any other type of quality assurance audit indicate an overpayment, some overpayments are automatically reduced through future payments. The provider will be notified in writing if the payment is to be recouped through a repayment agreement. A recent analysis of CPRS and other quality assurance reviews did not result in the reduction of subsequent provider payments. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [ ]Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [ ] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: viii. [ ] Other. Describe the activities and the results of these activities: e. What type of sanction will the Lead Agency place on clients and providers to help reduce improper payments due to intentional program violations or fraud? Check and describe all that apply: i. [x] Disqualify the client. Describe this process, including a description of the appeal process for clients who are disqualified. Describe the activities and the results of these activities based on the most recent analysis: The process to disqualify a customer begins with notice of intentional program violation disqualification located on the Child Care Scholarship (CCS) Program Application. If the vendor receives information that a customer or a provider may have committed an intentional program violation, the vendor will: refer the information to the CCS Investigator. The investigator may conduct an investigation of the suspected intentional program violators, prepare a report on the completed investigation showing the methods used to obtain information, make the report available to the Division or refer the customer or the provider to the local State’s Attorney, if the alleged facts in the case meet the guidelines established by the State’s Attorney for prosecution. A Supervisory Review is completed before providing advanced written notification that a customer or a provider may waive the customer’s or provider’s right to an administrative disqualification hearing. The vendor shall ensure that a supervisor: reviews the evidence against the customer or the provider; and determines whether the evidence warrants scheduling of a disqualification hearing. The vendor shall allow a customer or a provider to waive the customer’s or the provider’s right to an administrative disqualification hearing; or refer the customer or the provider, as applicable, to the Office of Administrative Hearings (OAH) for an administrative disqualification hearing. A Waiver Hearing is completed when the vendor decides to allow a customer or a provider to waive the customer’s or the provider’s right to an administrative disqualification hearing, the vendor shall notify the customer or the provider in writing. The notice shall include: a summary of the charge against the customer or the provider and the evidence to support it; information regarding the administrative disqualification hearing including: a statement that the customer or the provider may waive the right to an administrative disqualification hearing; the date the vendor will refer the case to the OAH for a hearing if the vendor has not received the signed waiver, which is not later than 20 calendar days after the mailing of the notice; the requirement that the customer or the provider shall sign the waiver; a statement that the customer or the provider has the right to remain silent and that anything the individual says or signs concerning the charge may be used in future administrative or judicial proceedings; and a statement that signing the waiver will result in disqualification and reduce or terminate services for the customer or the provider; an opportunity for the customer or the provider to admit to the facts presented by the CCS Branch; a statement that the disqualified customer or provider is responsible for repayment of any overpayment received; a statement that a hearing does not preclude the State or federal government from prosecuting the customer or the provider for the intentional program violation in a civil or criminal court; and the name and telephone number of the person to contact for additional information. If the local State’s Attorney decides that a case does not warrant prosecution, the vendor shall refer the case to the OAH for an administrative disqualification hearing. If the local State’s Attorney does not act on a referred case within 30 calendar days, the referral shall be withdrawn, and the case shall be referred to the OAH for an administrative disqualification hearing. The vendor may not initiate an administrative disqualification hearing: against a customer or a provider whose case is being referred by the State’s Attorney for prosecution; or after the State’s Attorney or a court of appropriate jurisdiction has taken any action against the customer or the provider in a case arising out of the same or related circumstance. Imposition of Disqualification Penalties is implemented if the vendor receives a signed waiver of the right to an administrative disqualification hearing. The vendor shall apply the disqualification penalty at the beginning of the next service period. If the vendor does not receive a signed waiver of the right to an administrative disqualification hearing within 20 calendar days of providing advance notification, the vendor shall refer the individual to the OAH for a hearing. The referral shall include identifying case information; a summary of the alleged intentional program violation; copies of the vendor’s supporting documentation; and documentation that the customer or the provider has been previously disqualified for an intentional program violation; or convicted by a court of fraud involving the Child Care Scholarship (CCS) Program. A pending disqualification hearing does not affect the customer’s or the provider’s right to be certified and participate in the program. The vendor shall terminate or reduce the services if: the customer or the provider returns the signed waiver to the vendor; the customer or the provider fails to request a hearing and continuation of benefits after notice of termination or reduction; the decision of the vendor is upheld upon disposition of an intentional program violation hearing; and the State’s Attorney Office’s final disposition of a referred proceeding is received. A customer or a provider who has waived the right to an administrative disqualification hearing or was found to have committed an intentional CCS Program violation is ineligible to participate in the Child Care Scholarship Program as follows: for the first violation, the customer or the provider may not receive any CCS Program payments for 6 months from the date payment was denied or until the customer or provider makes full restitution to the CCS Program, whichever is earlier; for the second violation, the customer or the provider may not receive any CCS Program payments for 12 months from the date the payment was denied or until the customer or the provider makes full restitution to the CCS Program, whichever is earlier; for the third violation, the customer or the provider shall be permanently barred from receiving Child Care Scholarship Program payments and shall pay restitution to the CCS Program; and for a determination of an intentional program violation based on a customer’s or a provider’s conviction in a federal or state court on charges that the person misrepresented the location of his or her residence in order to obtain services from two or more states, the customer or the provider is not eligible to receive CCS Program services or payments for 10 years from the finding. The disqualification period begins with the service period after which the customer or the provider is sent written notification of the disqualification: upon disposition of an intentional program violation hearing if the decision of the vendor is upheld; when a waiver is signed; or upon final disposition of any proceeding referred to the local State’s Attorney Office. Once a disqualification penalty has been imposed, the period of disqualification continues uninterrupted until the earlier of full repayment of the benefit; or completion of the time period. Before imposing the sanction, the CCS Branch shall provide written notice to the customer or the provider of the effective disqualification date, the reason for imposing the sanction, the payment that the applicant, customer, or provider was receiving, and the date on which the customer may reapply, or the provider may begin offering service because the disqualification period has expired. If a customer or the provider has been disqualified, the vendor shall send the customer or the provider a demand letter for restitution, which shall include the amount owed, the reason for the claim, and the period of time A customer may request an appeal if the vendor denies, suspends, reduces, or terminates assistance; fails to act with reasonable promptness on a period of time a request for adjustment of assistance; imposes sanctions on a recipient; or recovers an overpayment in assistance. Vendor: The vendor shall send written notice of any adverse action in writing: to the customer and a provider denied payment for committing an intentional program violation. Notice of any adverse action shall include the: decision; basis for the decision; specific regulation supporting the decision; right to request an appeal; method by which an appeal may be requested; right to be represented in an appeal by a lawyer, relative, friend, or other individual; and availability of any free legal services. Based on a previous analysis completed by the CCS Investigator that resulted in the discovery of fraud, the customer will not be permitted to participate in the CCS Program until the overpayment discovery of $71,839.90 is settled. ii. [x]Disqualify the provider. Describe this process, including a description of the appeal process for providers who are disqualified. Describe the activities and the results of these activities based on the most recent analysis: The process to disqualify a child care provider begins with the Child Care Scholarship (CCS) terms of agreements completed by a provider when a child is enrolled for CCS Program. If the vendor receives information that a customer or a provider may have committed an intentional program violation, the vendor may: refer the information to the CCS Program Investigator. The investigator may conduct an investigation of the suspected intentional program violators; prepare a report on the completed investigation showing the methods used to obtain information; make the report available to the Division; or refer the customer or the provider to the local State’s Attorney if the alleged facts in the case meet the guidelines established by the State’s Attorney for prosecution. The vendor shall allow a customer or a provider to waive the customer’s or the provider’s right to an administrative disqualification hearing; or refer the customer or the provider, as applicable, to the Office of Administrative Hearings (OAH) for an administrative disqualification hearing. A Supervisory Review is completed before providing advanced written notification that a customer or a provider may waive the customer’s or provider’s right to an administrative disqualification hearing, the vendor shall ensure that a supervisor: reviews the evidence against the customer or the provider; and determines whether the evidence warrants scheduling of a disqualification hearing. A Waiver Hearing is completed when the vendor decides to allow a customer or a provider to waive the customer’s or the provider’s right to an administrative disqualification hearing, the vendor shall notify the customer or the provider in writing. The notice shall include: a summary of the charge against the customer or the provider and the evidence to support it; information regarding the administrative disqualification hearing including: a statement that the customer or the provider may waive the right to an administrative disqualification hearing; the date the vendor will refer the case to the OAH for a hearing if the vendor has not received the signed waiver, which is not later than 20 calendar days after the mailing of the notice; the requirement that the customer or the provider shall sign the waiver; a statement that the customer or the provider has the right to remain silent and that anything the individual says or signs concerning the charge may be used in future administrative or judicial proceedings; and a statement that signing the waiver will result in disqualification and reduce or terminate services for the customer or the provider; an opportunity for the customer or the provider to admit to the facts presented by the CCS Branch; a statement that the disqualified customer or provider is responsible for repayment of any overpayment received; a statement that a hearing does not preclude the State or federal government from prosecuting the customer or the provider for the intentional program violation in a civil or criminal court; and the name and telephone number of the person to contact for additional information. If the local State’s Attorney decides that a case does not warrant prosecution, the vendor shall refer the case to the OAH for an administrative disqualification hearing. If the local State’s Attorney does not act on a referred case within 30 calendar days, the referral shall be withdrawn, and the case shall be referred to the OAH for an administrative disqualification hearing. The vendor may not initiate an administrative disqualification hearing: against a customer or a provider whose case is being referred by the State’s Attorney for prosecution; or after the State’s Attorney or a court of appropriate jurisdiction has taken any action against the customer or the provider in a case arising out of the same or related circumstance. Imposition of Disqualification Penalties is implemented if the vendor receives a signed waiver of the right to an administrative disqualification hearing. The vendor shall apply the disqualification penalty at the beginning of the next service period. If the vendor does not receive a signed waiver of the right to an administrative disqualification hearing within 20 calendar days of providing advance notification, the vendor shall refer the individual to the OAH for a hearing. The referral shall include identifying case information; a summary of the alleged intentional program violation; copies of the vendor’s supporting documentation; and documentation that the customer or the provider has been previously disqualified for an intentional program violation; or convicted by a court of fraud involving the CCS Program. A pending disqualification hearing does not affect the customer’s or the provider’s right to be certified and participate in the program. The vendor shall terminate or reduce the services if: the customer or the provider returns the signed waiver to the vendor; the customer or the provider fails to request a hearing and continuation of benefits after notice of termination or reduction; the decision of the vendor is upheld upon disposition of an intentional program violation hearing; and the State’s Attorney Office’s final disposition of a referred proceeding is received. A customer or a provider who has waived the right to an administrative disqualification hearing or was found to have committed an intentional CCS Program violation is ineligible to participate in the CCS Program as follows: for the first violation, the customer or the provider may not receive any CCS Program payments for 6 months from the date payment was denied or until the customer or provider makes full restitution to the CCS Program, whichever is earlier; for the second violation, the customer or the provider may not receive any CCS Program payments for 12 months from the date the payment was denied or until the customer or the provider makes full restitution to the CCS Program, whichever is earlier; for the third violation, the customer or the provider shall be permanently barred from receiving CCS Program payments and shall pay restitution to the Child Care Scholarship Program; and for a determination of an intentional program violation based on a customer’s or a provider’s conviction in a federal or state court on charges that the person misrepresented the location of his or her residence in order to obtain services from two or more states, the customer or the provider is not eligible to receive Child Care Scholarship (CCS) Program services or payments for 10 years from the finding. The disqualification period begins with the service period after which the customer or the provider is sent written notification of the disqualification: upon disposition of an intentional program violation hearing if the decision of the vendor is upheld; when a waiver is signed; or upon final disposition of any proceeding referred to the local State’s Attorney Office. Once a disqualification penalty has been imposed, the period of disqualification continues uninterrupted until the earlier of full repayment of the benefit; or completion of the time period. Before imposing the sanction, the CCS Branch shall provide written notice to the customer or the provider of the: effective disqualification date; reason for imposing the sanction; payment that the applicant, customer, or provider was receiving; and date on which the customer may reapply, or the provider may begin offering service because the disqualification period has expired. If a customer or the provider has been disqualified, the vendor shall send the customer or the provider a demand letter for restitution, which shall include: the amount owed; the reason for the claim; and the period of time covered by the claim. A customer may request an appeal if the vendor denies, suspends, reduces, or terminates assistance; fails to act with reasonable promptness on an application for, or a request for adjustment of assistance; imposes sanctions on a recipient; or recovers an overpayment in assistance. The vendor shall send written notice of any adverse action in writing: to the customer; and to a provider who is denied payment for committing an intentional program violation. Notice of any adverse action shall include the: decision; basis for the decision; specific regulation supporting the decision; right to request an appeal; method by which an appeal may be requested; right to be represented in an appeal by a lawyer, relative, friend, or other individual; and availability of any free legal services. Recent analysis did not result in any parents or providers being disqualified to receive CCDF funds. iii. [x] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: If a decision is made on a case to refer it for criminal prosecution to any state or federal agency, the case will be sent to the prosecutor's office in which the offense was committed (except if the case sent to a federal agency) for judicial review. If the local jurisdiction or federal agency accepts the case for prosecution, the office of childcare will forward any documentation that the prosecutor or federal agency may require. If the local jurisdiction or federal agency declines to prosecute the case, then the Intentional Program Violation (IPV)/Administrative Disqualification Hearing process will move forward. If a person is found guilty or pleads guilty in a court of law, a restitution order will be filed by the judge, and this restitution order can be used in lieu of an IPV to sanction the individual. If the individual is found not guilty or the court or the prosecutor decides to stop any further prosecution of the case, the IPV/Administrative Disqualification process can move forward. The Administrative Disqualification Hearing is held by an administrative law judge of the Office of Administrative Hearings to determine if an IPV has occurred for which disqualification is a sanction or criminal prosecution. A customer or a provider who has waived the right to an administrative disqualification hearing or was found to have committed an intentional Child Care Scholarship Program (CCS) violation is ineligible to participate in the CCS Program as follows: for the first violation, the customer or the provider may not receive any CCS Program payments for 6 months from the date payment was denied or until the customer or provider makes full restitution to the CCS Program, whichever is earlier; for the second violation, the customer or the provider may not receive any CCS Program payments for 12 months from the date the payment was denied or until the customer or the provider makes full restitution to the CCS Program, whichever is earlier; for the third violation, the customer or the provider shall be permanently barred from receiving CCS Program payments and shall pay restitution to the CCS Program; and for a determination of an intentional program violation based on a customer’s or a provider’s conviction in a federal or state court on charges that the person misrepresented the location of his or her residence in order to obtain services from two or more states, the customer or the provider is not eligible to receive CCS Program services or payments for 10 years from the finding. The disqualification period begins with the service period after which the customer or the provider is sent written notification of the disqualification: Upon disposition of an intentional program violation hearing if the decision of the contractor is upheld; When a waiver is signed; or upon final disposition of any proceeding referred to the local State’s Attorney Office. Once a disqualification penalty has been imposed, the period of disqualification continues uninterrupted until the earlier of full repayment of the benefit or completion of the time period. Before imposing the sanction, the Child Care Scholarship Branch shall provide written notice to the customer or the provider of the: effective disqualification date; reason for imposing the sanction; payment that the applicant, customer, or provider was receiving; an date on which the customer may reapply or the provider may begin offering service because the disqualification period has expired. If a customer or the provider has been disqualified pursuant to this regulation, the contractor shall send the customer or the provider a demand letter for restitution, which shall include: the amount owed; the reason for the claim; the period of time covered by the claim; the procedure for paying the claim; the right to request renegotiation of any repayment schedule if the customer’s or the provider’s economic circumstances change; and (6) The requirement to: sign the repayment notice to indicate agreement to make restitution; select the method of payment; and return the repayment notice within 30 calendar days of the date of the notice. The customer or the provider may request a hearing before the OAH if the individual disagrees with the amount of the overpayment or the method of repayment. Recent analysis of a case where the Lead Agency coordinated with the OAG Fraud Unit resulted in a plea deal with a customer that operated a theft scheme involving multiple child care programs between 2015 and 2024. The customer will receive 3 years in prison and be ordered to pay restitution to MSDE of $2,670,987.76. iv. [ ] Other. Describe the activities and the results of these activities based on the most recent analysis: Appendix 1: Lead Agency Implementation Plan The Appendix will be available for Lead Agencies to use in CARS after the Plan approval letter is issued. For each non-compliance, Lead Agencies must describe the following: • Action Steps: List the action steps needed to correct the finding (e.g., update policy manual, legislative approval, IT system changes, etc.). For each action step list the: o Responsible Entity: Indicate the entity (e.g., agency, team, etc.) responsible for completing the action step. o Expected Completion Date: List the expected completion date for the action step. • Overall Target Date for Compliance: List date Lead Agency anticipates completing implementation, achieving full compliance with all aspects of the findings. (Note: Compliance will not be determined until the FFY 2025-2027 CCDF Plan is amended and approved). Appendix 1: Form [Plan question with non-compliance and associated provision will pre-populate based on preliminary notice of non-compliance] A. Action Steps for Implementation B. Responsible Entity(ies) C. Expected Completion Date Step 1: Step 2 (as necessary): [Additional steps added as necessary] Overall Target Date for Compliance: