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Health and Family Services Cabinet
Cabinet Requests State Auditor Launch Investigation of Attorney General Contract

Press Release Date:  Wednesday, October 12, 2005  
Contact Information:  Gwenda Bond or Vikki Franklin (502)564-6786  


Cabinet Requests State Auditor Launch Investigation of Attorney General Contract
Previous System for Investigating Welfare Fraud “Deeply Flawed”

FRANKFORT, Ky. (Oct. 12, 2005) The Cabinet for Health and Family Services (CHFS) today officially requested that the state Auditor of Public Accounts conduct an audit of a $1.4 million annual contract with the state Attorney General’s Office to investigate welfare fraud.


 “We are confident that a full review by an impartial third party will reveal that the previous system -- under which the Cabinet referred cases of fraud to the Attorney General for investigation -- was deeply flawed,” said CHFS Secretary James W. Holsinger Jr., M.D. “This was a bad business deal for the people of Kentucky. We may never know how many cases of fraud were left unprosecuted because the Attorney General’s Office failed to complete the investigations that taxpayers’ money paid them thousands of dollars over cost per case to conduct.”


Under the contract, the Attorney General’s Office chose just 210 cases per year from hundreds that the CHFS Office of Inspector General (OIG) had investigated. The Attorney General’s Office also established a minimum of $5,000 for cases to be taken to prosecution. In the last six months of the contract, only five cases were referred on to prosecutors. Approximately 130 cases that have already been paid for from the last year of the contract currently remain unresolved at the Attorney General’s Office. The office is also sixty days past due with a contractually-obligated report to CHFS evaluating the effectiveness of the fraud investigation program over the last year.


CHFS chose not to renew the decades-old contract beyond June 30, after successfully piloting a more efficient, comprehensive system to crack down on welfare fraud. Under the new system, OIG investigators conduct investigations on all cases of fraud and refer cases directly to local prosecutors, who bring them to trial at no additional cost to the state. Since July the OIG has added nine investigators to its staff for this effort and more will be coming on board in the next few months  If additional investigators are needed, Kentucky State Police detectives will assist CHFS during off-duty hours at cost. While the new system has only been in place for 90 days, initial results indicate that more cases will be forwarded to prosecutors than under the previous contract.

In addition, the OIG has created a new Determining Eligibility through Extensive Review (DETER) unit. Through DETER, investigators examine questionable public assistance applications before benefits are ever approved. The OIG has also hired an internal affairs officer to focus on and lead investigations into employee fraud.


 “This new system removes arbitrary limits on fighting welfare fraud set by the Attorney General and previous administrations concerning the number of cases that could be worked per year and how much someone could defraud the system before it merited prosecution,” said Robert J. Benvenuti, III, inspector general. “The Cabinet is pursuing welfare fraud more aggressively than ever before. We are putting people who think they can get away with welfare fraud on notice: Welfare fraud, no matter what amount, is no longer being tolerated in Kentucky.”

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Last Updated 10/12/2005