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Press Release

Alaska Department of Health and Social Services to Pay Nearly $2.5 Million to Resolve Alleged False Claims for SNAP Funds

For Immediate Release
Office of Public Affairs

The Alaska Department of Health and Social Services (ADHSS) has agreed to pay the United States $2,489,999 to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP), the Department of Justice announced today. Until 2008, SNAP was known as the Food Stamp Program.


Under SNAP, the U.S. Department of Agriculture (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.


This settlement reflects the Justice Department’s commitment to ensuring that taxpayer funds are spent appropriately so that the public can have confidence in the integrity of programs like SNAP,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.


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. 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. The USDA 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 ADHSS, beginning in late 2009, 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 ADHSS, injected bias into ADHSS’s quality control process and resulted in ADHSS submitting inaccurate quality control data and information to USDA and receiving performance bonuses for fiscal years 2010, 2011, 2012, and 2013, that it should not have received.


This is the third settlement with a state agency resolving allegations that implementation of recommendations by Osnes Consulting resulted in states submitting inaccurate SNAP quality control findings, and claiming performance bonuses they had not earned. Through these settlements, the United States will recover over $16.5 million. On April 7, the Virginia Department of Social Services agreed to pay over $7 million to resolve its liability associated with the use of Julie Osnes Consulting to improperly reduce its reported error rate. On April 12, the Wisconsin Department of Health Services agreed to pay nearly $7 million to resolve its liability associated with its use of Julie Osnes Consulting for quality control.


“While I am deeply troubled that these actions happened within a state agency entrusted with assisting vulnerable and needy residents, I am heartened that ADHSS has resolved its liability and cooperated with our investigation,” said Acting U.S. Attorney Joseph H. Harrington for the Eastern District of Washington. “Together with our partners in the Civil Division and the USDA, we will continue to investigate and hold accountable entities, including government entities, that misuse and wrongfully obtain SNAP funding.”


“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 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.”


The settlement was the 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 their nationwide audit of SNAP QC processes.

Updated September 18, 2017

False Claims Act
Press Release Number: 17-1017