What Happens During a Welfare Fraud Investigation?

By Christopher Coble, Esq. on September 20, 2017 | Last updated on March 21, 2019

Ever since the 'Welfare Queen' craze in the early '80s, the specter of fraud has hung over any public assistance program, from Medicaid to food stamps. And, to be sure, that fraud exists, from a recently dubbed "Food Stamp Millionaire" to single cases of misreporting income and insurance payouts to sweeping dragnets uncovering over 70 food stamp fraudsters. In fact, according to the Pew Charitable Trusts, assistance program fraud cost federal and state governments around $136.7 billion in 2015 alone.

So it's only natural that states and the feds want to crack down on welfare fraud. But those crackdown efforts and the criminal investigations that result can vary. Here's a look.

Private Eyes

Many states are outsourcing their fraud investigations. Pew has the story of Illinois, which started tightening the screws on Medicaid recipients in 2012:

To catch up, the state hired a private contractor to identify people who might not be eligible for the low-income health program and to make recommendations for whose benefits should be canceled. Within about a year, Illinois had canceled benefits for nearly 150,000 people whose eligibility could not be verified -- and saved an estimated $70 million.

Hiring private companies to investigate public assistance fraud is not unique to Illinois. Mississippi, Missouri, and Wyoming recently passed laws requiring the state to hire a private contractor to track the eligibility of people participating in state public assistance programs, and Ohio and Oklahoma are considering similar legislation. So in many cases, private companies will simply alert the state that a person is ineligible for welfare, and the person's benefits will be discontinued.

Public Investigations

On top of that, fraud generally and welfare fraud specifically, is illegal under many state criminal statutes. In fact, that woman who lied about the insurance payment? She is facing charges of perjury, theft, welfare fraud, insurance fraud, and fraud on a financial institution. And criminal charges and investigations often result in criminal penalties: fines and jail time.

If you've been charged with welfare fraud, contact an experienced criminal defense attorney as soon as possible.

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