Vol. 33 Iss. 24 - July 24, 2017

Chapter 325
Final Regulation

Title of Regulation: 22VAC40-325. Fraud Reduction/Elimination Effort (amending 22VAC40-325-20).

Statutory Authority: §§ 63.2-217 and 63.2-526 of the Code of Virginia.

Effective Date: August 24, 2017.

Agency Contact: Toni Blue Washington, Department of Social Services, 801 East Main Street, Richmond, VA 23219, telephone (804) 726-7662, FAX (804) 726-7669, or email


The amendments update the regulation and incorporate the specific funding methodology used to allocate funds to local departments of social services for fraud prevention, detection, and investigation activities.

Summary of Public Comments and Agency's Response: No public comments were received by the promulgating agency.

22VAC40-325-20. The Fraud Reduction/Elimination Effort.

A. In compliance with § 63.2-526 of the Code of Virginia, the department shall establish a statewide fraud prevention, detection, and investigation program to be named the Fraud Reduction/Elimination Effort (FREE).

1. The department shall develop and implement policies and procedures for the FREE program.

2. The department shall provide a detailed local reimbursement procedure, on an annual basis, to assist in the formulation of the local department's FREE program operation plan. The department's procedure shall project the available funding and the number of local fraud investigators for each local department that the FREE program will support. The number of investigators shall be based on an evaluation of the available funding and appropriate criteria from one or more of the following: a local department's average TANF and Food Stamp caseload size, average number of monthly applications for food stamps and TANF, number of local department workers, geographic location, number of fraud investigations, program compliance, collections, and performance expectations.

3. The department shall develop, implement, and monitor local FREE units performance expectations.

B. Each local department shall aggressively pursue fraud prevention, detection, and investigations.

1. Each local department shall conduct fraud prevention, detection, and investigation activities consistent with the requirements of federal regulations, the Code of Virginia, the regulations contained herein this chapter, and the department's FREE program policy.

2. Each local department shall submit to the department, for annual approval, a program operation plan, formatted by the department, which shall include a description of the local department's prevention, detection, and investigative process,; an agreement with the Commonwealth's attorney,; identification of staff charged with oversight or supervisory responsibility of the FREE program,; a performance expectation monitoring process,; a signed commitment to adhere to specified responsibilities identified in the Statement of Assurance section of the program operation plan,; and, if requested, a proposed annual budget to include the identification of the FREE program investigators, their salary, fringe benefit amounts, supporting operating costs, hours worked per week, and time dedicated to the FREE program.

3. Upon request, each local department shall provide the department with an accounting of FREE program expenditures.

C. Funding for the FREE program shall be comprised of balances in the Fraud Recovery Special Fund, general funds appropriated for this activity, and any federal funds available for this purpose.

1. In order to receive reimbursement of direct costs and supporting costs of operation, a local department must:

a. Comply with all pertinent law, regulation, and policy;

b. In accordance with the law, each local department shall establish and maintain a FREE prevention, detection, and investigation unit; and

c. Recover fraud-related and nonfraud-related overpayments of designated federal assistance programs. Reimbursement An allocation to localities shall be made in accordance with the following methodology for the allocation of funds to localities as developed by the work group convened by the commissioner, consisting of local department representatives and senior department managers: 40% based on each agency's Temporary Assistance for Needy Families, food stamp, energy assistance, and child care caseload; 20% based on the number of investigations completed; 20% based on the number of established claims; and 20% based on the actual collections from established claims. Each local department's level of reimbursement of direct and support operation costs is paid from available federal funds, general funds and state retained portion of collections department is reimbursed for fraud-related expenses through funds appropriated for local social services staff and operations.

2. Local departments may contract with other local departments to share a fraud prevention, detection, and investigation unit and may contract with private entities to perform fraud investigations. Any private entity performing fraud investigations shall comply with the requirements of § 30-138 of the Code of Virginia and the restrictions of § 63.2-526 of the Code of Virginia.

VA.R. Doc. No. R16-4195; Filed June 30, 2017, 2:28 p.m.