BILL REQ. #:  S-4452.2 

READ FIRST TIME 02/03/12.   

     AN ACT Relating to fraud in state assistance programs; amending RCW 74.08.580, 74.04.014, 9.91.140, and 9.91.142; adding a new section to chapter 74.08 RCW; creating new sections; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that fraud associated with public assistance programs is a significant problem in the state of Washington. Therefore, the legislature encourages the office of fraud and accountability with the department of social and health services to coordinate with the office of the state auditor and the department of early learning to improve the prevention, detection, and prosecution of fraudulent activity taking place in public assistance programs. It is the purpose of this act to significantly reduce fraud and to ensure that public assistance dollars reach the intended populations in need.

Sec. 2   RCW 74.08.580 and 2011 1st sp.s. c 42 s 14 are each amended to read as follows:
     (1) Any person receiving public assistance is prohibited from using electronic benefit cards or cash obtained with electronic benefit cards:
     (a) For the purpose of participating in any of the activities authorized under chapter 9.46 RCW;
     (b) For the purpose of parimutuel wagering authorized under chapter 67.16 RCW;
     (c) To purchase lottery tickets or shares authorized under chapter 67.70 RCW;
     (d) For the purpose of participating in or purchasing any activities located in a tattoo, body piercing, or body art shop licensed under chapter 18.300 RCW;
     (e) To purchase cigarettes as defined in RCW 82.24.010 or tobacco products as defined in RCW 82.26.010;
     (f) To purchase any items regulated under Title 66 RCW; or
     (g) For the purpose of purchasing or participating in any activities in any location listed in subsection (2) of this section.
     (2) On or before January 1, 2012, the businesses listed in this subsection must disable the ability of ATM and point-of-sale machines located on their business premises to accept the electronic benefit card. The following businesses are required to comply with this mandate:
     (a) Taverns licensed under RCW 66.24.330;
     (b) Beer/wine specialty stores licensed under RCW 66.24.371;
     (c) Nightclubs licensed under RCW 66.24.600;
     (d) Contract liquor stores defined under RCW 66.04.010;
     (e) Bail bond agencies regulated under chapter 18.185 RCW;
     (f) Gambling establishments licensed under chapter 9.46 RCW;
     (g) Tattoo, body piercing, or body art shops regulated under chapter 18.300 RCW;
     (h) Adult entertainment venues with performances that contain erotic material where minors under the age of eighteen are prohibited under RCW 9.68A.150; and
     (i) Any establishments where persons under the age of eighteen are not permitted.
     (3) The department must notify the licensing authority of any business listed in subsection (2) of this section that such business has continued to allow the use of the electronic benefit card in violation of subsection (2) of this section.
     (4) Only the recipient, an eligible member of the household, or the recipient's authorized representative may use an electronic benefit card or the benefit and such use shall only be for the respective benefit program purposes. Unless a recipient's family member is an eligible member of the household, the recipient's authorized representative, an alternative cardholder, or has been assigned as a protective payee, no family member may use the benefit card. The recipient shall not sell, or attempt to sell, exchange, or donate an electronic benefit card or any benefits to any other person or entity.
     (5) The first violation of subsection (1) ((or (4))) of this section by a recipient constitutes a class 4 civil infraction under RCW 7.80.120. Second and subsequent violations of subsection (1) ((or (4))) of this section constitute a class 3 civil infraction under RCW 7.80.120.
     (a) The department shall notify, in writing, all recipients of electronic benefit cards that any violation of subsection (1) or (4) of this section could result in legal proceedings and forfeiture of all cash public assistance.
     (b) Whenever the department receives notice that a person has violated subsection (1) ((or (4))) of this section, the department shall notify the person in writing that the violation could result in legal proceedings and forfeiture of all cash public assistance.
     (c) The department shall assign a protective payee to the person receiving public assistance who violates subsection (1) ((or (4))) of this section two or more times.
     (6) In assigning a personal identification number to an electronic benefit card, the department shall not use any sequence of numbers that appear on the card.

NEW SECTION.  Sec. 3   A new section is added to chapter 74.08 RCW to read as follows:
     A person who has in his or her possession or under his or her control electronic benefit cards issued in the names of two or more persons and who is not authorized to have any of the cards in his or her possession is guilty of a misdemeanor.

Sec. 4   RCW 74.04.014 and 2011 1st sp.s. c 42 s 24 are each amended to read as follows:
     (1) In carrying out the provisions of this chapter, the office of fraud and accountability shall have prompt access to all individuals, records, electronic data, reports, audits, reviews, documents, and other materials available to the department of revenue, department of labor and industries, department of early learning, employment security department, department of licensing, and any other government entity that can be used to help facilitate investigations of fraud or abuse as determined necessary by the director of the office of fraud and accountability.
     (2) The investigator shall have access to all child care records maintained by licensed and unlicensed child care providers with the consent of the provider or with a court order or valid search warrant.
     (3) Information gathered by the department, the office, or the fraud ombudsman shall be safeguarded and remain confidential as required by applicable state or federal law. Whenever information or assistance requested under subsection (1) or (2) of this section is, in the judgment of the director, unreasonably refused or not provided, the director of the office of fraud and accountability must report the circumstances to the secretary immediately.

Sec. 5   RCW 9.91.140 and 2003 c 53 s 49 are each amended to read as follows:
     A person who sells, attempts to sell, or exchanges food stamps obtained through the program established under RCW 74.04.500 or food stamp benefits transferred electronically, or food purchased therewith, is guilty of the following:
     (1) A gross misdemeanor if the value of the stamps, benefits, or food transferred exceeds one hundred dollars; or
     (2) A misdemeanor if the value of the stamps, benefits, or food transferred is one hundred dollars or less.

Sec. 6   RCW 9.91.142 and 2003 c 53 s 50 are each amended to read as follows:
     A person who purchases, or who otherwise acquires and sells, or who traffics in, or knowingly initiates, organizes, plans, finances, directs, manages, or supervises the theft for sales to others of food stamps as defined by the federal food stamp act, as amended, 7 U.S.C. Sec. 2011 et seq., or food stamp benefits transferred electronically, is guilty of the following:
     (1) A class C felony punishable according to chapter 9A.20 RCW if the face value of the stamps or benefits exceeds one hundred dollars; or
     (2) A gross misdemeanor if the face value of the stamps or benefits is one hundred dollars or less.

NEW SECTION.  Sec. 7   No later than January 1, 2013, the office of fraud and accountability within the department of social and health services, along with the state auditor's office and the department of early learning, shall collaborate in an effort to identify, review, and provide the legislature with recommendations for integrated monitoring and detection systems to prevent overpayments of public assistance from occurring.