84-000719 Department Of Labor And Employment Security vs. Hernando-Sumter Community Action Agency Status: Closed Recommended Order on Wednesday, June 13, 1984.

Summary: Aid agency which failed to properly document costs must repay amounts improperly spent.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF LABOR AND )

EMPLOYMENT SECURITY , )

)

Petitioner , )

)

vs. ) CASE NO. 84-0719

)

HERNANDO-SUMTER COMMUNITY )

ACTION AGENCY , )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Consistent with the Order granting a continuance filed by the undersigned

on April 17, 1984, a hearing was held in this case before Arnold H. Pollock, a

Hearing Officer with the Division of Administrative Hearings, in Tallahassee,

Florida on May 14, 1984. The issue for consideration here was whether the

Respondent should reimburse the Petitioner for sums allegedly paid out

improperly by the Respondent.

APPEARANCES

For Petitioner : Chad J. Motes, Esquire

Department of Labor & Employment Security

Montgomery Building, Suite 131

2562 Executive Center Circle East

Tallahassee, Florida 32301

For Respondent : Ms. Gladys Brown

Training Director, H-S CAA

Post Office Box 896

Brooksville, Florida 33512

BACKGROUND INFORMATION

By letter dated January 30, 1984, Petitioner's Chief of Bureau of Job

Training notified Respondent of the agency's final determination of liability in

the total amount of $1,253 for disallowed costs arising out of the audit of two

CETA accounts administered by Respondent. Thereafter, by letter dated February

10, 1984, Respondent requested a formal hearing.

At the hearing, neither party presented the testimony of witnesses, but

introduced Joint Exhibits 1 and 2. The parties entered into an oral stipulation

regarding the circumstances leading up to the audit determinations, submitting

the issue of adequacy of Respondent's actions to the Hearing Officer.

FINDINGS OF FACT

1. The State of Florida is the recipient of financial assistance through a

grant from the United States Department of Labor under the terms of the

Comprehensive Employment and Training Act (CETA) for the provision of job

training and employment opportunities to a certain category of persons.

Petitioner here, Department of Labor and Employment Security, for the State,

disburses these funds to various subgrantees, such as Petitioner here, Hernando-

Sumter Community Action Agencies (H-S CAA), with the requirement that the

subgrantee expend the money in accordance with applicable regulations.

2. Petitioner is also responsible for insuring compliance with these

regulations through audits of the subgrantee's operations. If the audit reveals

a discrepancy, a Final Determination is made by Petitioner relating to allowable

and nonallowable costs. These Final Determinations are appealable.

3. In the instant case, Petitioner and Respondent entered into Subgrant

Nos. 2-37-120-079, Title IV (Richard Kiefer); and 3-11-054-079, Title IIB (Karen

Check). Audits of these two subgrants during the period October 1, 1981 - June

30, 1983, revealed discrepancies in the accounts. The audit reports on inter

alia, these two accounts were furnished to Respondent on October 5, 1983. After

communication back and forth between the parties, Petitioner's final

determination of liability was furnished Respondent, as was stated above, on

January 30, 1984. Reimbursement was requested by Petitioner based on the

applicable regulations and, it is stipulated between the parties, an agreement

that Petitioner would delegate responsibility for determining eligibility to

Respondent. Along with that responsibility went the collateral responsibility

for whether reimbursement of costs of Respondent was wrong either deliberately

or through negligence.

4. Subgrant No. 2-37-120-79 concerns payments of wages and benefits paid

to Richard Kiefer. In order to properly participate in this program, the

participant was required to establish his eligibility by, among other things,

the amount of his family income. On the basis of the facts stipulated by the

parties, when he entered the program in December, 1981, Mr. Kiefer failed to

disclose his full family income by failing to report his sister's income. Mr.

Kiefer was paid $335 per hour for approximately 12 paychecks for a total of

$1,186.00.

5. Respondent contends that the information on family income, as provided

by Mr. Kiefer and his mother, failed to list the sister as an in-home family

member and to include her income, which was verified as far as possible without

discovery of the sister's presence in the home. Discovery efforts were not

outlined by Respondent, nor was the lack thereof shown by Petitioner. However,

during a subsequent interview with Mr. Kiefer in his home by a representative of

H-S CAA, it was discovered that the sister was actually living in the home and,

when her income was included, the client was not eligible for participation. An

attempt was made to try and determine how long the sister lived in the home and

how much of her income should be included, but Petitioner cannot show for how

long the overpayment actually took place. In any case, as soon as Respondent's

counselor determined that Mr. Kiefer was not eligible, his participation was

immediately terminated.

6. Subgrant No. 3-11-054-079 (Karen Check) is a case where the recipient

was receiving one type of allowance when, in fact, she should have been

receiving a different type. She was, based on erroneous information furnished

by her, receiving a "basic" allowance for participation when, because of her

participation in the Aid to Dependent Children (AFDC) program which precludes a

recipient from receiving a "basic" allowance, she should have been receiving an

"incentive" allowance. The "basic" allowance is larger than the "incentive"

allowance.

7. Respondent's own personnel again, here, discovered the error which, at

the time of discovery had resulted in an overpayment of $250.00. Ms. Check was

immediately switched over to the correct program and, upon doing so, in order to

recoup the overpayment, began deducting a sum from the correct payment.

However, before the entire overpayment could be collected, Ms. Check left the

payment with the sum of $67.00 uncollected.

CONCLUSIONS OF LAW

8. The Division of Administrative Hearings has jurisdiction over the

parties and the subject matter of the proceeding.

9. Pursuant to various provisions of Chapter 17, United States Code, the

State of Florida has received grants from the U.S. Department of Labor for the

purpose of establishing programs to provide comprehensive employment and

training services for "economically disadvantaged persons."

10. Subsection 450.55(2), Florida Statutes, places on Petitioner the

responsibility for carrying out the duties and responsibilities assigned to the

State of Florida under CETA. These duties include entering into contracts on

behalf of the State with program operators to locally administer the program.

Respondent was such an operator here.

11. It is incumbent upon Petitioner to take a full and complete

application from an applicant to establish his or her eligibility for enrollment

in the program [20 CFR 676.75-3(b)(1)]. The application is to be reviewed no

later than 30 days after enrollment by an individual other than the intake

official to determine, inter alia, that the application is complete [20 CFR

676.75-3(2)( i)]. In addition, the Federal Rules make it incumbent upon the

subgrantee to take proper stops to verify an applicant's prior income.

12. In the Kiefer case, it appears Mr. Kiefer and his mother both

submitted fictitious information regarding family income. Respondent claims

this submittal was verified as far as possible and no evidence to contradict

that contention was presented by Petitioner. Here, there is a showing that at

some time subsequent to enrollment, it was learned that Kiefer's sister (with

income) was living in the home and, immediately upon that discovery being made,

Mr. Kiefer was terminated. Petitioner failed to show how long before

termination the situation of ineligibility existed and, absent a showing of the

amount of overpayment , 1/ Petitioner cannot successfully claim reimbursement

for all monies paid out. Had Petitioner established the exact amount of time

that Mr. Kiefer's ineligibility existed, Respondent could not rely on the fact

that it was given incorrect information by him to escape liability. See 20 CFR

675.57(a); 20 CFR 676.75(3)(b)(2)(B).

13. This is the case in the other situation in controversy here where

Karen Check was placed in the improper category because of misinformation she

provided. Fairness and the practicalities of the situation dictate that

Respondent should not be faulted for having to initially rely on incorrect

information given by an applicant. As was stated above, however, lack of

negligence and a showing of good faith do not overcome the requirements in the

Federal Rules for verification.

RECOMMENDATION

Based on the foregoing, it is, therefore:

Recommended that Respondent repay $67.20 for Audit #3-11-054-079 as was

recommended for disallowance in Petitioner's Final Determination dated January

30, 1984, but that it not repay the $1,186 for Audit #2-37-120-079.

Recommended this 13th day of June, 1984, in Tallahassee, Florida.

___________________________________

ARNOLD H. POLLOCK, Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 13th day of June, 1984.

ENDNOTE

1/ The only evidence of indebtedness was a secondhand reference in Ms. Batey's

January 30, 1984, letter to the results of the audit.

COPIES FURNISHED:

Chad Motes, Esquire

Department of Labor & Employment

Security

Montgomery Building, Suite 131

2562 Executive Center Circle East

Tallahassee, Fl. 32301

Ms. Gladys Brown

Training Director, H-S CAA

P.O. Box 896

Brooksville , Fl. 33512

Wallace Orr

Secretary

Department of Labor &

Employment Security

Suite 206, Berkeley Building

2590 Executive Center Circle East

Tallahassee, Fl. 32301