Ezel / AG Opinions / ME
ME AG Letter 2014-02-14 2014-02-14

What is Maine's record on prosecuting EBT card misuse, public benefits fraud, and provider fraud, and how does the AG balance high-visibility recipient cases against lower-visibility provider cases?

Short answer: AG Mills described an active prosecution program. In the three years before the letter, her office had prosecuted 37 DHHS fraud cases with significant jail time and $489,954 in restitution; obtained civil and criminal judgments of nearly $1.1 million for tax evasion and fraud; secured jail and restitution orders over $730,000 for financial fraud (including a legislator who stole Clean Election Funds); and the HealthCare Crimes Unit had recovered more than $55 million from pharmaceutical companies and major providers, including Maine's $2.8 million share of a $2.2 billion Johnson & Johnson settlement. The letter responded to a January 9, 2014 letter from legislative leadership urging vigorous prosecution of EBT misuse and used the occasion to compare the dollar scale of recipient fraud with provider fraud and to ask that both be prosecuted under the same rule-of-law standard.
Currency note: this opinion is from 2014
Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: This is an official Maine Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Maine attorney for advice on your specific situation.

Plain-English summary

This is a public letter from AG Mills to Senate President Alfond and Speaker Eves responding to their January 9, 2014 letter urging vigorous prosecution of EBT card misuse and public benefits fraud. It is policy commentary rather than a formal AG opinion, but the AG's office published it alongside her formal opinions.

Mills agreed that EBT misuse, TANF, SNAP, and MaineCare fraud all warrant serious prosecution. She described how her office had hired a dedicated prosecutor in 2010 to work with DHHS investigators on benefits fraud, leading to 37 successful prosecutions, significant jail time, and $489,954 in restitution.

Mills then expanded the frame. The 2012 federal mandate had required states to bar TANF EBT use in liquor stores, casinos, and adult venues. Maine's implementing law took effect August 30, 2012, with rules promulgated mid-2013. Recipients had only recently been informed of the prohibition. When EBT funds are withdrawn from an ATM in one of these establishments, the actual use of those funds cannot be presumed, especially because TANF and SSI dollars on EBT are not use-restricted the way SNAP dollars are.

Mills described other public-funds misconduct that received less media attention but was equally or more concerning by dollar amount: nearly $1.1 million in tax fraud judgments, more than $730,000 in financial-fraud restitution (including a legislator who stole Clean Election Funds and a grocery store owner who let customers buy liquor and cigarettes with the food stamp portion of EBT), and the HealthCare Crimes Unit's recovery of more than $55 million in state and federal funds from pharmaceutical companies and major providers. Notable cases included Maine's $2.8 million share of a $2.2 billion Johnson & Johnson off-label marketing settlement and a Norway businesswoman who went to prison for $4 million in fraudulent claims for services to autistic and disabled children.

The closing argument was about even-handed application of the rule of law: prosecute small fish and big fish alike, and do not let election-year talk about welfare fraud crowd out the larger and equally important provider-fraud and tax-fraud caseloads.

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The dollar figures in the letter are 2011-2013 totals and are no longer current. The TANF EBT use restrictions in 22 M.R.S. § 3104 have been amended, and the federal Personal Responsibility and Work Opportunity Reconciliation Act framework around state and local benefits has continued to evolve.

Historical summary

For state prosecutors (at the time): The letter is a useful snapshot of the AG's prosecution priorities and the dollar scale of different fraud streams. The HealthCare Crimes Unit's federal funding and provider-side focus produced an order-of-magnitude greater recovery than the recipient-side cases.

For program integrity staff (at the time): The letter notes the staggered implementation of the 2012 EBT venue restrictions, with recipient notice only beginning in 2013. That timeline matters for any prosecution that turns on the recipient's knowledge of the prohibition.

For state legislators (at the time): The letter responded to legislative pressure on EBT misuse with an evidence-based reframing toward the higher-dollar streams the AG was already prioritizing. It is a model of how an AG can decline a narrow prosecutorial mandate while still affirming shared anti-fraud goals.

Citations and references

The letter does not cite specific statutes or cases. It references administrative rules promulgated by DHHS and federal restrictions on TANF EBT use enacted by Congress in 2012.

Source

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

STATE OF MAINE
OFFICE OF THE ATTORNEY GENERAL
6 STATE HOUSE STATION
AUGUSTA, MAINE 04333-0006
JANET T. MILLS, ATTORNEY GENERAL

February 14, 2014

Honorable Justin L. Alfond
President of the Senate
2 State House Station
Augusta, Maine 04333

Honorable Mark W. Eves
Speaker of the House
2 State House Station
Augusta, Maine 04333

President Alfond and Speaker Eves:

Thank you for your letter of January 9, 2014, urging vigorous prosecution of public benefits fraud, with emphasis on new reports of misuse of EBT cards.

This Office wholeheartedly agrees that the protection of the public purse and the public trust requires us to take very seriously the misuse of taxpayer dollars, particularly when entities or individuals steal from programs such as TANF and SNAP, which are intended to help the very poor, and MaineCare which is intended keep people working and in good health.

In 2010, concerned about widespread reports of eligibility and recipient fraud, I hired a new prosecutor to work with the Department of Health and Human Services to ferret out and pursue the theft of public benefits. This attorney and the other prosecutors in my office beefed up the training of investigators at DHHS to make sure the cases we take to court are meritorious and appropriately investigated. In the past three years this Office has successfully prosecuted 37 cases of DHHS fraud, obtaining significant jail sentences and restitution orders totaling $489,954.

These cases include the prosecution of a DHHS employee who stole $1,428.93 in Food Stamp benefits by issuing money to fictitious accounts. These cases sometimes involve the transferring of an EBT card without authority, made a crime in 2012, along with theft and other offenses.

In 2012 Congress required states to enact measures to prevent TANF benefits on EBT cards from being used in liquor stores, casinos and adult venues. Following that federal mandate, Maine and 19 other states enacted such prohibitions. Maine's law disallowing the use of certain public benefits in gambling facilities, strip clubs and liquor stores took effect August 30, 2012. Rules implementing the law were not promulgated until mid-2013. Administrative enforcement of this provision by DHHS therefore is also very recent and recipients were not informed of the prohibition until very recently. We have advised DHHS to send notices to recipients and they are doing so. Of course, when an individual uses an EBT card in an ATM in one of these establishments, it is simply not possible to presume what the individual did with the funds withdrawn, keeping in mind that TANF and SSI funds deposited to EBT cards are not restricted in their use the way SNAP funds are, for instance.

Whether anybody has ever used EBT funds withdrawn from an ATM in any bank, store or other facility to purchase a pint of coffee brandy is beyond my direct knowledge, although I would not be surprised if this has occurred. Such behavior, of course, is socially unacceptable and fiscally irresponsible. However, there are other antisocial behaviors involving misuse of public funds which cause me equal or greater concern.

For instance—

— The civil judgments and criminal penalties against dozens of individuals and business entities for tax evasion and tax fraud which our Office has obtained over the past three years totaling nearly $1.1 million.

— The financial fraud cases which our prosecutors have pursued in recent years, resulting in jail sentences and restitution orders of more than $730,000. Just last month the financial crimes division obtained the conviction of a businessman for deliberately failing to provide worker's compensation insurance for his employees; he will pay nearly $20,000 in fines and restitution. Other successful prosecutions include the convictions of: a DOT employee for stealing equipment and materials from work sites; a legislator for stealing Clean Election Funds; the owner of a grocery store for letting customers use the food stamp portion of their EBT cards to buy liquor and cigarettes; and many others.

— The major fraud prosecutions brought by the HealthCare Crimes Unit in our Office. This small unit, funded with federal dollars, goes after pharmaceutical companies and service providers who inappropriately bill DHHS for prescription drugs and services. These cases are significant for their dollar value, for the scale of the misconduct involved and for the pattern of deliberate disdain for Maine taxpayers.

These cases include a $2.2 billion national settlement with Johnson & Johnson for off-label marketing of three antipsychotic drugs in which Maine received $2.8 million in restitution and the 2010 case of a Norway businesswoman who went to prison for submitting more than $4 million in fraudulent claims to the MaineCare program, falsely claiming she was providing services to autistic and disabled children.

While we are taking action against eligibility and recipient fraud which is more visible to the public and more talked about, provider fraud is also a very high priority for us. These providers steal millions of dollars from the public purse and seriously undermine the public trust in our MaineCare program. Over the last three years the HealthCare Crimes Unit has recovered more than $55 Million in state and federal funds as a result of fraudulent practices by pharmaceutical companies and major providers.

There is a great deal of talk this election year about welfare fraud. I hope that we put this issue in perspective, that we make sure we apply the rule of law fairly and uniformly, that we go after big fish as well as small, and that we not elevate one over the other. Both the public purse and the public trust depend on it.

Thank you.

Yours very truly,

Janet T. Mills
Attorney General