BILL REQ. #:  S-3961.1 

Read first time 01/19/12.   Referred to Committee on Human Services & Corrections.

     AN ACT Relating to fraud in state assistance programs; amending RCW 74.08.580, 74.04.014, and 43.215.135; adding a new section to chapter 74.08 RCW; creating a new section; 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, costing the state's citizens millions of dollars each year. 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 across the state of Washington. 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 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)) misdemeanor.
     (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 or section 3 of this act two or more times.
     (6) In assigning a personal identification number to an electronic benefit card, the department shall not use any numbers that appear on the card. All personal identification numbers shall be randomly assigned to the electronic benefit card.
     (7) The department shall include the recipient's photograph on a replacement electronic benefit card issued to any recipient who has lost his or her electronic benefit card more than once in a calendar year.

NEW SECTION.  Sec. 3   A new section is added to chapter 74.08 RCW to read as follows:
     (1) A person who purchases and uses public assistance benefits transferred electronically, or electronic benefit cards, to which the person is not authorized, is guilty of a gross misdemeanor.
     (2) A person who knowingly initiates, organizes, plans, finances, directs, manages, or supervises the theft of public assistance benefits transferred electronically, or electronic benefit cards, for sale to others, or who knowingly traffics in stolen electronic benefits cards is guilty of a felony.
     (3) A person who is found in possession of more than one electronic benefit card 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 immediate access to all child care records maintained by licensed and unlicensed child care providers upon the investigator's request.
     (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 43.215.135 and 2011 1st sp.s. c 42 s 11 are each amended to read as follows:
     (1) The department shall establish and implement policies in the working connections child care program to promote stability and quality of care for children from low-income households. Policies for the expenditure of funds constituting the working connections child care program must be consistent with the outcome measures defined in RCW 74.08A.410 and the standards established in this section intended to promote continuity of care for children.
     (2) As a condition of receiving a child care subsidy or a working connections child care subsidy, the applicant or recipient must: (a) Seek child support enforcement services from the department of social and health services, division of child support, unless the department finds that the applicant or recipient has good cause not to cooperate; (b) obtain a statement from the provider stating that the provider will seek payment only for children who are receiving child care services when the provider indicates the children will be present; and (c) obtain a signed waiver from the provider allowing access to the child care premises and child care records upon a request by an investigator employed by the office of fraud and accountability at the department of social and health services.
     (3) Except as provided in subsection (4) of this section, an applicant or recipient of a child care subsidy or a working connections child care subsidy is eligible to receive that subsidy for six months before having to recertify his or her income eligibility. The six-month certification provision applies only if enrollments in the child care subsidy or working connections child care program are capped.
     (4) Beginning in fiscal year 2011, for families with children enrolled in an early childhood education and assistance program, a head start program, or an early head start program, authorizations for the working connections child care subsidy shall be effective for twelve months unless a change in circumstances necessitates reauthorization sooner than twelve months.
     (5) The department, in consultation with the department of social and health services, shall report to the legislature by September 1, 2011, with:
     (a) An analysis of the impact of the twelve-month authorization period on the stability of child care, program costs, and administrative savings; and
     (b) Recommendations for expanding the application of the twelve- month authorization period to additional populations of children in care.