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entitled 'Low-Income Home Energy Assistance Program: Greater Fraud 
Prevention Controls Are Needed' which was released on July 2, 2010. 

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Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

June 2010: 

Low-Income Home Energy Assistance Program: 

Greater Fraud Prevention Controls Are Needed: 

GAO-10-621: 

GAO Highlights: 

Highlights of GAO-10-621, a report to congressional requesters. 

Why GAO Did This Study: 

Federally funded at about $5 billion a year, the Low-Income Home 
Energy Assistance Program (LIHEAP) provides financial assistance to 
low-income households for heating and cooling costs. The Department of 
Health and Human Services (HHS) awards LIHEAP funds based on low-
income populations and other factors. Grantees—states, the District of 
Columbia, territories, and Indian tribes and tribal organizations—then 
provide energy assistance payments to low-income households. 
GAO was asked to audit (1) the risk of fraud and abuse in LIHEAP in 
selected states; (2) case studies of fraudulent, improper, and abusive 
LIHEAP activity; and (3) key weaknesses in the design of LIHEAP’s 
internal controls framework. To meet these objectives, GAO analyzed 
LIHEAP data from seven states for fraud indicators, interviewed 
federal and state officials, performed investigations, and conducted 
proactive testing in two states using a bogus company, individuals, 
addresses, and documents. The seven states were primarily selected 
based on size of LIHEAP grant and availability of centralized database. 

What GAO Found: 

LIHEAP is at risk of fraud and improper payments in all seven of our 
selected states. About 9 percent of households receiving benefits—
totaling $116 million—in the selected states contained invalid 
identity information, such as Social Security numbers, names, or dates 
of birth. Although some of these cases are likely due to simple errors 
such as typos or incomplete data, thousands of other cases show strong 
indications of fraud and improper benefits. For example, the 
identities of over 11,000 deceased individuals were used as applicants 
or household members for LIHEAP benefits. Hundreds of individuals were 
used as applicants or household members even though they were 
incarcerated in state prisons, making them ineligible. Finally, we 
identified over a thousand federal employees whose federal salary 
exceeded the maximum income threshold when they applied. We 
nonrepresentatively selected and investigated 20 cases that either 
validated the potential fraudulent activity noted above or illustrated 
other improper activities. 

Table: Examples of Fraudulent or Improper Activity in LIHEAP: 

Nature of activity: Deceased individuals; 
State: IL; 
Case details: Illinois provided $540 in energy assistance to an 
applicant who fraudulently used the identities of two deceased family 
members to qualify for LIHEAP.  

Nature of activity: Federal employee salary over maximum income 
threshold; 
State: IL; 
Case details: Illinois provided $840 in energy assistance to a U.S. 
Postal Service employee who fraudulently reported zero income to 
qualify for LIHEAP. Despite earning about $80,000 per year, the 
employee stated that she saw “long lines” of individuals applying for 
LIHEAP benefits and wanted the “free money.” 

Nature of activity: Residential facilities; 
State: NJ; 
Case details: New Jersey provided $3,200 in energy assistance to a 
nursing home facility whose director claimed to represent eight 
patients residing in the facility. These patients had their nursing 
home care paid by Medicaid. 

Nature of activity: GAO’s proactive testing; 
State: WV and MD; 
Case details: Posing as low-income residents, landlords, and an energy 
company, GAO used bogus addresses and fabricated energy bills, pay 
stubs, and other documents to apply for energy assistance. All 
fraudulent claims were processed and the energy assistance payments 
were issued to our bogus landlords and company. 

Source: GAO analysis of state, public, and other records. 

[End of table] 

Although states are primarily responsible for preventing fraud, 
LIHEAP’s internal controls framework has several key weaknesses. HHS 
has not provided specific guidance to states, instead issuing only 
broad regulations for states to establish appropriate systems and 
procedures to prevent fraud. The selected states do not have an 
effective design for a comprehensive fraud prevention framework. In 
fact, the states lack key efforts in all three crucial elements of a 
well-designed fraud prevention system: preventive controls, detection 
and monitoring, and investigations and prosecutions. Specifically, 
states lack essential preventive controls by not verifying identities 
or income. Some states automatically enroll certain individuals based 
on their eligibility for other programs. Although efficient in 
reaching similarly targeted recipients, this practice is dependent on 
the accuracy of the initiating program’s eligibility determination. 
Finally, several state officials stated that they generally did not 
pursue investigations and prosecutions. The reason is that the benefit 
amounts are relatively small. 

What GAO Recommends: 

GAO makes six recommendations to HHS to issue guidance to states to 
better prevent fraud in LIHEAP. HHS agreed with the six 
recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-10-621] or key 
components. For more information, contact Greg Kutz at (202) 512-6722 
or kutzg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

LIHEAP Is at Risk for Fraud and Improper Benefits in Selected States: 

The Federal Government and Selected States Lack an Effective Fraud 
Prevention Framework for LIHEAP: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Health and Human 
Services' Administration for Children and Families: 

Appendix III: Comments from the Social Security Administration: 

Appendix IV: Comments from State of Illinois Department of Commerce 
and Economic Opportunity: 

Appendix V: Comments from State of Michigan Department of Human 
Services: 

Appendix VI: Comments from State of New Jersey Department of Community 
Affairs: 

Appendix VII: Comments from State of New York Office of Temporary and 
Disability Assistance: 

Appendix VIII: Comments from State of Ohio Department of Development: 

Appendix IX: Comments from Commonwealth of Virginia Department of 
Social Services: 

Appendix X: Comments from State of West Virginia Department of Health 
and Human Resources: 

Appendix XI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Cases of Fraudulent and/or Improper LIHEAP Activity in 
Selected States: 

Table 2: LIHEAP Fraud Prevention Control Measures: Selected States: 

Figures: 

Figure 1: LIHEAP Checks Provided to GAO Based on Bogus Applications: 

Figure 2: GAO's Fraud Prevention Model: 

Abbreviations: 

HHS: Department of Health and Human Services: 

LIHEAP: Low-Income Home Energy Assistance Program: 

SNAP: Supplemental Nutrition Assistance Program: 

SSA: Social Security Administration: 

SSI: Supplemental Security Income: 

TANF: Temporary Assistance for Needy Families: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

June 18, 2010: 

The Honorable Joe Barton: 
Ranking Member: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Michael Burgess: 
Ranking Member: 
Subcommittee on Oversight and Investigations: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Greg Walden: 
House of Representatives: 

In fiscal year 2009, Congress appropriated about $5 billion for the 
Low-Income Home Energy Assistance Program (LIHEAP). This program 
provides energy assistance to about 8.3 million low-income households 
through payments to household members, home energy companies, or 
landlords to help cover home heating and cooling costs.[Footnote 1] To 
be eligible, households must fall under income thresholds, which 
typically rise with the number of household members, set by states and 
the federal government. 

Managed by the Department of Health and Human Services (HHS), LIHEAP 
is a federally funded block grant program in which each state is 
funded according to a formula based on its weather and low-income 
population.[Footnote 2] Because block grant programs generally give 
states a great deal of flexibility in administering their programs, 
states must have strong internal controls to prevent fraud and abuse. 
However, a 2007 investigation by Pennsylvania's state auditor found 
weak internal controls--inadequate policies, procedures, supervision, 
and oversight--in the state's program, exposing the program to fraud. 
For example, 429 applicants received more than $162,000 in LIHEAP 
benefits using the Social Security numbers of deceased people. 

Because of the magnitude of fraud that was found in Pennsylvania's 
LIHEAP, you asked us to determine whether fraud and abuse exist in 
other state programs. Specifically, this report discusses (1) the risk 
of fraud and abuse in LIHEAP in selected states; (2) case studies of 
fraudulent, improper, and abusive LIHEAP activity; and (3) key 
weaknesses in the design of LIHEAP's internal controls framework. 

To identify the risk of fraud and abuse in LIHEAP, we obtained and 
analyzed benefit files for the latest year available for seven 
selected states: Illinois, Maryland, Michigan, New Jersey, New York, 
Ohio, and Virginia.[Footnote 3] These states were selected primarily 
based on the magnitude of total LIHEAP funding and the availability of 
a centralized database of applicants and benefits. These states 
covered about one third of all LIHEAP funding in fiscal year 2009. Our 
criteria for identifying the risk of fraud focused on LIHEAP 
applications that were made using invalid identity information, such 
as invalid Social Security numbers, or the identities of individuals 
who were deceased or incarcerated. We compared LIHEAP data to data 
from the Social Security Administration (SSA) and state prisoner 
records. We also used federal salary data from the U.S. Department of 
Treasury, the U.S. Postal Service, and the Defense Finance and 
Accounting Service[Footnote 4] to determine whether civilian federal 
employees receiving LIHEAP benefits earned incomes above program 
thresholds. Our findings from our analysis only apply to these seven 
states and cannot be projected to the states not covered in our review. 

For our case studies, we identified 13 cases that represent and 
validate the types of fraudulent and improper activity we found in our 
analysis above. We identified an additional 7 cases from our analysis 
of duplicate LIHEAP benefits and a comparison of LIHEAP data with 
residency data regarding Medicaid long-term care facilities.[Footnote 
5] In addition, we conducted proactive testing of LIHEAP controls in 
Maryland and West Virginia. We selected these two states to conduct 
our proactive testing because of their proximity to Washington, D.C. 
We applied for benefits using bogus addresses and fabricated energy 
bills and other supporting documents, and created a nonexistent energy 
provider and landlords to receive the benefits on behalf of our 
fictitious applicants. To apply for benefits, we obtained publicly 
available data and used publicly available hardware, software, and 
materials to counterfeit documents. To determine whether there are 
weaknesses in the design of key aspects of LIHEAP's internal controls 
framework, we interviewed LIHEAP officials from the selected states 
and HHS on the extent to which the program had controls contained in 
GAO's fraud prevention model. We did not systematically test the 
effectiveness of LIHEAP's controls (e.g., we did not test the 
implementation of those controls). A more detailed description of our 
scope and methodology is provided in appendix I. 

We conducted this forensic audit[Footnote 6] from June 2009 to June 
2010 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain, sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. We 
conducted our related investigative work in accordance with standards 
prescribed by the Council of the Inspectors General on Integrity and 
Efficiency. 

Background: 

Title XXVI of the Omnibus Budget Reconciliation Act of 1981[Footnote 
7] established LIHEAP to assist low-income households, particularly 
those with the lowest incomes that pay a high proportion of household 
income for home energy, in meeting their immediate home energy needs. 
States, territories, Indian tribes, and tribal organizations that wish 
to assist low-income households in meeting the costs of home energy 
may apply for a LIHEAP block grant. These grantees operate their 
LIHEAP programs by paying qualified households or energy service 
providers for a range of covered home heating and cooling services. 
LIHEAP benefits are provided to eligible beneficiaries up to the 
maximum eligible payment for that beneficiary as determined by the 
grantee. Grant funds are distributed in this manner until the annual 
grant has been entirely expended or the program year has ended. 
Although LIHEAP is 100 percent federally funded with no required state 
match,[Footnote 8] states and other entities may contribute 
supplemental funds. 

While the federal government establishes overall guidelines, each 
grantee operates its own program.[Footnote 9] For example, federal law 
provides that an eligible household's income must not exceed the 
greater of 150 percent of the poverty level or 60 percent of the state 
median income (75 percent in fiscal years 2009 and 2010). Grantees may 
not set their maximum income threshold below 110 percent of the 
poverty level, but they may give priority to those households with the 
highest home energy costs or needs in relation to income. Under the 
law, LIHEAP grantees have the flexibility of serving households having 
at least one member who also receives assistance under any of the 
following federal programs: Temporary Assistance for Needy Families 
(TANF), Supplemental Security Income (SSI), Supplemental Nutrition 
Assistance Program (SNAP), and certain needs-tested Veteran Benefits. 
LIHEAP grantees may also set additional LIHEAP eligibility criteria, 
such as passing an assets test; living in nonsubsidized housing; 
having a household member who is elderly, disabled, or a young child; 
or having received a utility disconnection notice. 

LIHEAP Is at Risk for Fraud and Improper Benefits in Selected States: 

Our analysis of LIHEAP data revealed that the program is at risk of 
fraud and providing improper benefits in all seven of our selected 
states. About 260,000 applications--9 percent of households receiving 
benefits in the selected states--contained invalid identity 
information, such as Social Security numbers, names, or dates of 
birth.[Footnote 10] Many applications may have inaccuracies due to 
simple errors such as typos or incomplete sections, making it 
impossible to determine whether these cases involve fraud. For 
example, about a third of the applications had Social Security numbers 
that were blank or obviously invalid (e.g., all zeros). Nonetheless, 
these applications pose a higher risk of fraud because there is no 
complete electronic record of beneficiaries' identities. These 
benefits totaled some $116 million for the year we reviewed. Our 
previous work, such as our audit of the Federal Emergency Management 
Agency's management of the Individuals and Households Program for 
hurricanes Katrina and Rita, found that limited or nonexistent use of 
a third-party validation process left assistance programs vulnerable 
to substantial fraud.[Footnote 11] As we will discuss later, LIHEAP 
generally does not have this third-party validation process for the 
seven selected states that we reviewed. 

As described in the bullets below, thousands of cases show strong 
indications of fraud and improper benefits. But because of the invalid 
identity information noted above--a lack of a valid Social Security 
number makes it impossible to fully investigate such cases--these 
numbers are understated. 

* Deceased individuals. The identities of over 11,000 deceased 
individuals were used as applicants or household members for LIHEAP 
benefits. Our analysis matching LIHEAP data to the SSA's death master 
file found these individuals were deceased before the LIHEAP 
application date. Benefits involved with these applications totaled 
about $3.9 million for the year we reviewed. 

* Incarcerated individuals. For the four states that provided reliable 
incarceration data, we found 725 instances where the identities of 
individuals incarcerated in state prisons were used as applicants or 
household members. These identities were associated with about 
$370,000 of LIHEAP benefits even though these individuals were in 
prison at the time of the application and thus ineligible for benefits. 

* Federal employees exceeding income thresholds. Matching LIHEAP data 
with federal civilian payroll records, we identified about 1,100 
federal employees whose federal salary exceeded the maximum income 
threshold at the time of their application. The benefit payments 
associated with those applications totaled $671,000. 

Because LIHEAP is a block grant program, the potential fraudulent and 
improper activities associated with these thousands of cases have an 
adverse effect on the program. Specifically, these fraudulent and 
improper activities will either reduce the amount of energy assistance 
provided to recipients or prevent legitimate recipients from receiving 
the energy assistance because the funds have been used. 

Cases of Fraudulent or Improper Activity Expose Problems in LIHEAP: 

We identified and further investigated 20 cases that demonstrate how 
fraudulent or improper activity was perpetrated. Thirteen cases 
concern applications with invalid identity information, deceased 
individuals, incarcerated individuals, or federal employees receiving 
LIHEAP benefits. Seven cases are examples of other types of improper 
and potentially fraudulent activity, including individuals in 
residential facilities being used to improperly receive benefits and 
households receiving duplicate LIHEAP benefits. We are referring all 
20 cases to the HHS Office of Inspector General (OIG) for further 
investigation. See table 1 for case details. 

Table 1: Cases of Fraudulent and/or Improper LIHEAP Activity in 
Selected States: 

Case: 1; 
Location: Cleveland, OH area; 
Nature of case: Deceased; 
Case details: 
* Ohio provided $400 in benefits to an applicant using the identity of 
a deceased individual; 
* The applicant did not apply in person but instead mailed the 
application. The application file did not show that the applicant's 
identity was validated; 
* The applicant obviously doctored an SSA benefit letter using the 
identity of the deceased individual. Specifically, the font sizes on 
the date and amount were significantly different from the rest of the 
letter; 
* A death certificate showed that the name used in the application 
belonged to an individual who had died 4 years before the application 
was made. 

Case: 2; 
Location: Southwest NJ; 
Nature of case: Deceased; 
Case details: 
* New Jersey provided $500 in benefits to an applicant using the 
identity of a deceased individual; 
* The applicant was in a public assistance program and thus the LIHEAP 
benefits were automatically approved; 
* A death certificate showed that the name used in the application 
belonged to an individual who had died before benefits were approved. 

Case: 3; 
Location: Chicago, IL area; 
Nature of case: Deceased; 
Case details: 
* Illinois provided $540 in benefits to an applicant using the 
identities of two deceased individuals; 
* The applicant's income would have exceeded the maximum income 
threshold without the additional household members; 
* The applicant stated that she had been denied the previous 3 years 
for not having enough household members with her income. She stated 
that she added her dead mother and brother when she remembered she had 
their Social Security cards and numbers; 
* Death certificates confirm that the dates of death were more than 4 
years before the application date. 

Case: 4; 
Location: Cleveland OH area; 
Nature of case: Incarcerated; 
Case details: 
* Ohio provided $400 in benefits to an applicant using the identity of 
an incarcerated individual; 
* The applicant did not apply in person but instead mailed the 
application. The application file did not show that the applicant's 
identity was validated; 
* Prison records show that the incarcerated individual had been in 
prison for 2 years and was still incarcerated. 

Case: 5; 
Location: South NJ; 
Nature of case: Residential facilities; 
Case details: 
* New Jersey provided $3,200 in benefits to a nursing home facility 
whose director claimed to represent eight patients residing in a 
nursing home. These patients had their nursing home care paid by 
Medicaid; 
* The nursing home director submitted the LIHEAP applications, stating 
that these funds were to offset heating and cooling costs for the 
eight patients; 
* New Jersey LIHEAP officials stated that individuals living in a 
nursing home are not eligible to receive LIHEAP benefits. 

Case: 6; 
Location: Northwestern MD; 
Nature of case: Residential facilities; 
Case details: 
* Maryland provided $3,600 in benefits. The applicant was residing in 
a nursing home at the time of the application according to Medicaid 
records. The address on the application for the benefits was not the 
nursing home, but instead a house owned by another individual. That 
same individual signed the LIHEAP application on behalf of the nursing 
home resident; 
* Maryland LIHEAP officials stated that individuals living in a 
nursing home are not eligible to receive LIHEAP benefits. 

Case: 7; 
Location: Cleveland, OH; 
Nature of case: Federal employee; 
Case details: 
* Ohio provided $300 in benefits to a Department of Veterans Affairs 
(VA) employee whose $58,000 salary exceeded the maximum income 
threshold of $18,200; 
* The VA employee did not state in the application that she worked for 
the federal government. The applicant provided documentation that 
purported to show about $500 in monthly income. 

Case: 8; 
Location: Cleveland, OH; 
Nature of case: Federal employee; 
Case details: 
* Ohio provided $300 in benefits to a VA employee whose $38,000 salary 
exceeded the maximum income threshold of $18,200; 
* The VA employee did not state in the application that he worked for 
the federal government. The applicant provided documentation that 
purported to show about $750 in monthly income. 

Case: 9; 
Location: Trenton, NJ area; 
Nature of case: Federal employee; 
Case details: 
* New Jersey provided $1,500 in benefits to a U.S. Postal Service 
employee whose $54,000 salary exceeded the maximum income threshold of 
$31,500; 
* The employee claimed that she earned half her actual monthly salary. 
To substantiate the income, she included a pay stub that covered 2 
weeks but claimed it covered a month. 

Case: 10; 
Location: Chicago, IL; 
Nature of case: Federal employee; 
Case details: 
* Illinois provided $700 in benefits to the wife of a U.S. Postal 
Service employee whose $84,000 salary exceeded the maximum income 
threshold of $37,200; 
* The applicant signed a waiver stating that the employee had zero 
income; 
* The employee claimed he did not know that his wife applied for and 
received LIHEAP benefits. The LIHEAP application only required 
signature of the applicant and not household members. 

Case: 11; 
Location: Chicago, IL; 
Nature of case: Federal employee; 
Case details: 
* Illinois provided $840 in benefits to a U.S. Postal Service employee 
whose $80,000 salary exceeded the maximum income threshold of $31,800; 
* The applicant signed a waiver stating that the employee had zero 
income; 
* The employee admitted to our investigators that she was not entitled 
to benefits. She stated that "Times are tough and I needed the money." 
She saw "long lines" of applicants and wanted the "free money.". 

Case: 12; 
Location: Detroit, MI area; 
Nature of case: Federal employee; 
Case details: 
* Michigan provided $3,900 in benefits to a U.S. Postal Service 
employee whose $50,000 salary exceeded the maximum income threshold of 
$43,560; 
* The employee told our investigators that she was not employed when 
she applied. U.S. Postal Service salary records demonstrated and the 
U.S. Postal Service OIG confirmed that she was employed at that time. 

Case: 13; 
Location: Chicago, IL; 
Nature of case: Invalid identity information; 
Case details: 
* Illinois provided $1,000 in benefits to a household whose 
application contained invalid identity information; 
* The identities for 7 of the 14 household members claimed on the 
application could not be validated with SSA's Enumeration Verification 
System. Six of these 7 identities had incorrect birthdates so that the 
household members would appear to be minor children and thus would not 
have to report income; 
* The applicant's income would have exceeded the maximum income 
threshold without the additional household members who had invalid 
identity information; 
* The applicant admitted to our investigators that she forged her 
husband's signature on the application. She claimed that the invalid 
identity information was the state's fault even though she signed the 
application with the invalid information. She also claimed that all 14 
household members lived at the address at the time of the application. 
However, her husband stated in a separate interview that 4 of the 
listed household members did not live there at the time of the 
application. 

Case: 14; 
Location: MI; 
Nature of case: Duplicate LIHEAP benefits; 
Case details: 
* Michigan provided $2,200 in benefits, above the $1,100 maximum 
benefit limit; 
* The household automatically received duplicate benefits for being 
enrolled in Medicaid and SNAP. 

Case: 15; 
Location: MD; 
Nature of case: Duplicate LIHEAP benefits; 
Case details: 
* Maryland provided $1,400 in benefits to a household that submitted 
two separate applications for the same time period for the same 
address; 
* One application was signed by the grandmother and included her 
daughter and her grandchildren as household members. The other 
application was signed by the daughter and only included her children. 

Case: 16; 
Location: Richmond, VA area; 
Nature of case: Duplicate LIHEAP benefits; 
Case details: 
* Virginia provided three payments totaling $2,400 to three separate 
applicants at the same address; 
* One of the LIHEAP applications was automatically approved because 
the applicant was enrolled in SNAP. Another application was submitted 
by a son who listed his mother as a household member. The third 
application was submitted by his mother with no other household 
members listed on the application. All three applications had the same 
last name. 

Case: 17; 
Location: Albany, NY; 
Nature of case: Incarcerated; 
Case details: 
* New York provided $700 in benefits to a household that claimed two 
incarcerated family members as household members; 
* The applicant, a VA purchasing agent, needed the additional two 
household members to qualify for benefits based on her salary of about 
$50,000. 

Case: 18; 
Location: MD & VA; 
Nature of case: Duplicate benefits; 
Case details: 
* Maryland and Virginia provided $1,100 in benefits to one applicant 
claiming two separate households at once; 
* The residences are 280 miles apart; 
* The signatures on the two applications were distinctly different; 
* The applicant was convicted of fraud in 1999 and 2003. 

Case: 19; 
Location: VA; 
Nature of case: Incarcerated; 
Case details: 
* Virginia provided $430 in benefits to an individual using the 
identity of an incarcerated person; 
* Prison records indicate that the individual was imprisoned during 
the time of the LIHEAP application date and had been in jail for more 
than 15 years; 
* The LIHEAP application file did not contain any proof of identity 
(i.e., driver's license or social security number). 

Case: 20; 
Location: VA; 
Nature of case: Residential facility; 
Case details: 
* Virginia provided $570 in benefits to an applicant claiming a 
household member who, according to Medicaid records, resided in a long-
term facility. 

Source: States' LIHEAP, states' Medicaid Programs, states' 
incarceration records, SSA, U.S. Postal Service, and Department of 
Veterans Affairs. 

[End of table] 

Further, we identified several instances of LIHEAP program funds being 
disbursed to individuals who may have met the income threshold but had 
significant assets. Specifically, we identified several beneficiaries 
living in million-plus dollar houses in Potomac, Maryland, and the 
Chicago suburbs. Because neither state considers the amount of a 
household's assets in determining whether to provide energy 
assistance, owning high-dollar assets cannot be considered fraud or 
improper activity of the program in those states. Without access to 
bank and tax records, our investigations could not determine whether 
these individuals met the LIHEAP maximum income threshold. However, in 
one case, a beneficiary conducted her counseling service from her 
residence, according to an insurance company Web site. She lives in a 
$2 million home in a wealthy Chicago suburb and owns a late 2000s 
Mercedes. She also won a multimillion dollar settlement in the mid 
2000s that is currently under appeal. The applicant refused to speak 
with our investigators or the local police about her LIHEAP 
application. 

Finally, our proactive testing further demonstrated LIHEAP's 
vulnerability to fraud. Posing as low-income residents, we used bogus 
addresses and fabricated energy bills, pay stubs, and other supporting 
documents to apply for energy assistance in West Virginia and 
Maryland. For three of the five cases, the LIHEAP payments were made 
to our fictitious energy company to pay the low-income resident's 
energy bills. Our investigators created this energy-related company to 
receive the energy assistance payments. For the other two cases, the 
low-income residents "lived" in a rental house where the landlord paid 
the energy assistance benefits as a part of the rent. For these two 
cases, the investigators created fictitious landlords who received the 
energy assistance payments. All five claims were processed and the 
energy assistance payments issued and mailed to our fake company and 
landlords (see figure 1). 

Figure 1: LIHEAP Checks Provided to GAO Based on Bogus Applications: 

[Refer to PDF for image: illustration] 

Source: GAO. 

[End of figure] 

The Federal Government and Selected States Lack an Effective Fraud 
Prevention Framework for LIHEAP: 

LIHEAP's internal controls framework has several key weaknesses at 
both the federal and state levels, as shown by GAO's fraud prevention 
model. At the federal level, HHS has not provided specific guidance to 
states and other grantees for preventing fraud and abuse of LIHEAP. 
While grantees are primarily responsible for preventing fraud in 
LIHEAP, the LIHEAP statute establishes a number of oversight and 
enforcement responsibilities for HHS to ensure that grantees are 
properly applying the funds, including requiring the issuance of 
regulations to prevent waste, fraud, and abuse in LIHEAP.[Footnote 12] 
HHS has issued regulations that require grantees to establish 
appropriate systems and procedures to prevent, detect, and correct 
waste, fraud, and abuse by clients, vendors, and administering 
agencies, but it has not provided any additional detailed guidance to 
the states or other grantees on how to develop an effective fraud 
prevention system.[Footnote 13] 

In addition, the selected states do not have an effective design for a 
comprehensive fraud prevention framework. In fact, the states are 
lacking key efforts in all three crucial elements of a well-designed 
fraud prevention system: preventive controls, detection and 
monitoring, and investigations and prosecutions. 

Figure 2: GAO's Fraud Prevention Model: 

[Refer to PDF for image: illustration] 

Potential fraud, waste, and abuse: 

Implementation of Prevention controls: leads to: 

Smaller amount of Potential fraud, waste, and abuse: 

Implementation of detection and monitoring (lessons learned influence 
future use of prevention controls): leads to: 

Smaller amount of Potential fraud, waste, and abuse: 

Implementation of investigations and prosecutions (lessons learned 
influence future use of prevention controls). 

Source: GAO. 

[End of figure] 

Preventive controls. States lack essential preventive controls, which 
are the most efficient and effective means to minimize fraud, waste, 
and abuse. Social Security numbers are a key element in the 
identification of a person's identity. Our analysis of 1 year of 
LIHEAP data found that for the selected states about 100,000 
individuals' records contained a blank or obviously invalid Social 
Security number. HHS's prior interpretation of the Privacy Act 
prohibited states from requiring recipients to provide Social Security 
numbers in applying for LIHEAP benefits.[Footnote 14] However, 42 
U.S.C. § 405 allows states to require that individuals disclose their 
Social Security numbers for "the administration of any tax, general 
public assistance, driver's license, or motor vehicle registration law 
within its jurisdiction." We believe that LIHEAP falls within the 
scope of this statute. In response to our draft report, HHS revised 
its interpretation, and strongly suggested that states require Social 
Security numbers. Under HHS' prior interpretation, the states were not 
be able to validate individuals' identities and, without this basic 
control, we believe it cannot have an effective fraud prevention 
program. 

The selected states do not have other measures that we believe are key 
to preventing fraud, as we discovered from our discussions with state 
officials (table 2). We believe that these are key preventive control 
measures that states should integrate in their application processes 
as long as the costs of these controls do not outweigh the benefits. 

Table 2: LIHEAP Fraud Prevention Control Measures: Selected States: 

Control measure: Validate applicant and household member information 
with SSA; 
Illinois: [Empty]; 
Maryland: [Empty]; 
Michigan: [Check]; 
New Jersey: [Empty]; 
New York: [Check]; 
Ohio: [Empty]; 
Virginia: [Empty]. 

Control measure: Check death record files; 
Illinois: [Empty]; 
Maryland: [Empty]; 
Michigan: [Empty]; 
New Jersey: [Empty]; 
New York: [Empty]; 
Ohio: [Empty]; 
Virginia: [Empty]. 

Control measure: Check for incarcerated individuals; 
Illinois: [Empty]; 
Maryland: [Empty]; 
Michigan: [Empty]; 
New Jersey: [Empty]; 
New York: [Empty]; 
Ohio: [Empty]; 
Virginia: [Empty]. 

Control measure: Verify reported income using outside source (e.g., 
New Hire Database); 
Illinois: [Empty]; 
Maryland: [Empty]; 
Michigan: [Empty]; 
New Jersey: [Check]; 
New York: [Empty]; 
Ohio: [Empty]; 
Virginia: [Empty]. 

Control measure: Check for long-term care patients; 
Illinois: [Empty]; 
Maryland: [Empty]; 
Michigan: [Check]; 
New Jersey: [Empty]; 
New York: [Empty]; 
Ohio: [Empty]; 
Virginia: [Empty]. 

Control measure: Check data to prevent applicants and household 
members from receiving duplicate benefits; 
Illinois: [Check]; 
Maryland: [Check]; 
Michigan: [Check]; 
New Jersey: [Check]; 
New York: [Check]; 
Ohio: [Check]; 
Virginia: [Check]. 

Source: Selected state officials. 

Note: [Check] denotes fraud prevention control measures to screen all 
or certain segments of LIHEAP applications according to statements 
made by state officials. We did not test whether the states actually 
had these measures in place or whether these measures were effective. 

[End of table] 

* Officials from five of the states said they did not validate 
applicant and household member information with SSA, which can verify 
a person's Social Security number, name, and date of birth against its 
records. 

* Officials from all seven states stated that they did not compare 
applicant and household information against death records prior to 
payment. Officials from these states stated that they did not check 
death records from SSA or their state's Vital Statistics Office to 
determine if applicants or household members were deceased. 

* Officials from all seven states said that they did not check LIHEAP 
applicants and household members against a listing of incarcerated 
individuals in state prisons. 

* Six states generally did not verify self-reported income of LIHEAP 
applicants and household members with employment and wage databases 
(e.g., State Directory of New Hires). After our inquiries, officials 
from only one state said that they recently had begun to perform such 
a comparison, and only for those individuals who claimed zero income. 

* Six states did not verify household member residency through 
checking long-term care facility records, according to officials. To 
be eligible for LIHEAP, an individual must be a member of a household 
that is eligible for the benefits and responsible for energy costs 
either directly or through their rent. As such, an individual residing 
over an extended period of time in a long-term care facility (e.g., 
nursing home) that is paid by Medicaid does not meet this requirement. 

* System edit checks can be added to a grantee's electronic database 
of LIHEAP beneficiaries to check for repeated use of a name, Social 
Security number, utility account number, or other identifying fields. 
Officials from all seven states said that they have some form of edit 
checks to prevent duplicate benefits. However, the edit checks 
performed varied by the state and are not comprehensive in certain 
states. 

Detection and monitoring. To be efficient in reaching similarly 
targeted recipients, certain states automatically enroll LIHEAP 
recipients based on the applicant or household member receiving 
benefits for certain federal programs (e.g., TANF or SNAP). Thus, 
LIHEAP relies on the preventive controls for these programs to ensure 
that only eligible applicants and/or household members are receiving 
the benefits. As a result, the LIHEAP's preventive controls will only 
be as effective as the preventive controls for the federal program 
(e.g., TANF or SNAP) from which the recipient originally received 
benefits. Monitoring and detection within a fraud prevention program 
involves data mining for fraudulent and suspicious applicants and 
evaluating vendors and employees to provide reasonable assurance that 
they continue to meet program requirements and follow program 
protocols. The selected states generally do not match their 
beneficiary files to third-party databases, such as State Directory of 
New Hires, to determine continued eligibility, nor do they ensure that 
applicants are not acting as their own vendor. 

Investigation and prosecution. Several state officials stated that 
they generally did not pursue investigations and prosecutions 
involving LIHEAP. The aggressive investigation and prosecution of 
individuals who defraud the government is the final component of an 
effective fraud prevention model. Schemes identified through 
investigations and prosecution can also be used to improve the fraud 
prevention program. However, pursuing recipients who commit fraud can 
be costly and time-consuming. The amounts of energy assistance 
benefits to individuals are relatively small, which may deter 
prosecution of the cases by federal or state prosecutors. Because of 
this, it is important to have strong controls to prevent the 
occurrence of fraud. 

Conclusions: 

Without an adequate fraud prevention framework, LIHEAP in the seven 
states is vulnerable to individuals willing to commit fraudulent and 
improper activities to receive energy assistance benefits. Given that 
the states are responsible for administering LIHEAP and establishing 
the proper controls, each state needs an effective fraud prevention 
framework to provide reasonable assurance of the integrity of its 
program. Without these proper controls, energy assistance benefits 
will continue to be provided to ineligible individuals, which limits 
the help that can be provided to those individuals who meet program 
requirements. However, the responsibility for actively partnering with 
and providing such guidance to the states rests with HHS. 

Recommendations for Executive Action: 

To establish an effective fraud prevention system for the LIHEAP 
program in the seven states, the Secretary of HHS should evaluate our 
findings and consider issuing guidance to the states addressing the 
following six recommendations: 

* Require applicants and household members to provide Social Security 
numbers for themselves and all members of the household in order to 
receive energy assistance benefits. 

* Evaluate the feasibility (including consideration of any costs and 
operational and system modifications) of validating applicant and 
household member identity information with SSA. 

* Develop prepayment edit checks to prevent individuals from receiving 
duplicate benefits. 

* Evaluate the feasibility of using SSA's or states' vital record 
death data to prevent individuals using deceased identities from 
receiving benefits. 

* Evaluate the feasibility of preventing incarcerated individuals from 
improperly receiving benefits, for example, by verifying Social 
Security numbers with state's prisoner information. 

* Evaluate the feasibility of using third-party sources (e.g., State 
Directory of New Hires) at a minimum on a random or risk basis, to 
provide assurance that individuals do not exceed maximum income 
thresholds. 

Agency Comments and Our Evaluation: 

HHS and SSA provided written responses to our request for comments. 
Seven of the eight states covered in our report also provided written 
responses. Letters with comments from HHS, SSA, Illinois, Michigan, 
New Jersey, New York, Ohio, Virginia, and West Virginia are reprinted 
and discussed in further detail, when applicable, in the appendices. 
Maryland stated that it did not have any comments on the report. HHS 
and certain states also provided technical comments, which we 
incorporated as appropriate. Responses from HHS, SSA, and the states 
are reprinted in appendixes II-X. 

HHS agreed with all our recommendations, stating that it had begun to 
take action on some of them since reviewing a draft of this report. 
While the agency stated that the Privacy Act prevents it from forcing 
states to require Social Security numbers, it issued a memorandum 
encouraging states to do so, as well as implement our other 
recommendations. HHS also stated that it planned to take additional 
steps to deter ineligible payments and prevent fraud, waste, and abuse 
in the program, including requesting that states address key elements 
of fraud prevention systems in their "LIHEAP Program Integrity Plan" 
and reviewing those systems. We strongly support these additional 
steps and encourage HHS to follow through on these additional actions. 

In its written comments, SSA did not agree with our recommendation 
that the Secretary of HHS evaluate the feasibility of validating 
applicant and household member identity information with SSA. SSA 
stated that it could validate applicants for LIHEAP, but not other 
household members, because "the compatibility requirement of the 
Privacy Act, 5 U.S.C. § 552a(b)(3), only permits us to disclose and 
verify information to determine an applicant's entitlement to an 
income maintenance program." Section 552a(b)(3) of the act allows 
disclosure of information for a routine use published by the agency in 
the Federal Register. However, the actual language of the routine use 
that SSA published allows disclosure "to Federal, State, or local 
agencies (or agents on their behalf) for the purpose of validating 
SSNs those agencies use to administer cash or non-cash income 
maintenance programs or health maintenance programs" as a routine use 
in which disclosure is allowable.[Footnote 15] We believe that this 
language is broad enough to include validation of household members 
who are beneficiaries of LIHEAP assistance. 

Illinois, New Jersey, New York, Ohio, and West Virginia expressed 
difficulty in obtaining access to SSA records to validate Social 
Security numbers and verify income. We support any initiatives, such 
as EVS and State OnLine Query, that are allowed by federal law to 
provide the states the necessary information from SSA. Lack of 
validation of identity and income information were two of the major 
problems that we identified in our investigation of LIHEAP. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the date of this letter. We will then send copies of this report 
to other interested congressional committees, the Secretary of HHS, 
the administrator of SSA, and the LIHEAP program offices of Illinois, 
Michigan, New Jersey, New York, Ohio, Virginia, and West Virginia. The 
report also is available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-6722 or kutzg@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. 

Signed by: 

Gregory D. Kutz: 
Managing Director Forensic Audits and Special Investigations: 

[End of section] 

Appendix I: Scope and Methodology: 

To identify indications of fraud and abuse in the Low Income Home 
Energy Assistance Program (LIHEAP),[Footnote 16] we obtained and 
analyzed benefit files for the latest year available for seven 
selected states: Illinois, Maryland, Michigan, New Jersey, New York, 
Ohio, and Virginia.[Footnote 17] These states were selected primarily 
based on the magnitude of total LIHEAP funding and the availability of 
a centralized database of applicants and benefits. These states 
comprised about a third of all LIHEAP spending in federal fiscal year 
2009. Our analysis focused on LIHEAP applications that were made using 
invalid identity information--such as invalid Social Security numbers, 
names, or dates of birth--or the identities of individuals who were 
deceased or incarcerated. We compared LIHEAP data to data from the 
Social Security Administration (SSA) and state prisoner records. 
[Footnote 18] We also used federal salary data from the U.S. 
Department of Treasury, the U.S. Postal Service, and the Defense 
Finance and Accounting Service to determine whether civilian federal 
employees receiving LIHEAP benefits earned incomes above program 
thresholds. 

To illustrate cases of fraudulent, improper, and abusive activity in 
LIHEAP, we identified 20 cases for detailed audit and investigation. 
The 20 cases were chosen using a nonrepresentative selection approach 
based on our judgment, data mining, and a number of other criteria 
that provided indications of fraud and abuse. For example, to identify 
case study examples of applicants or household members living in a 
long-term care facility at the time of application, we compared the 
LIHEAP data to the Medicaid long-term care claims files for the 
selected states. We requested or obtained the application for LIHEAP 
benefits from the states for each case and performed additional 
searches of criminal, financial, and public records and obtained 
documentation (e.g., death certificates) to substantiate cases of 
fraud and abuse. We also interviewed several LIHEAP beneficiaries. In 
addition, we conducted proactive testing of LIHEAP controls in 
Maryland and West Virginia. We applied for LIHEAP benefits using bogus 
addresses and fabricated energy bills, pay stubs, and other supporting 
documents, which included a Social Security number of a deceased 
individual. In addition, we created an energy provider and landlords 
using phony documents to receive LIHEAP benefits on behalf of our 
fictitious applicants. 

To identify potential weaknesses in the design of key aspects of 
LIHEAP's internal controls framework, we interviewed LIHEAP officials 
from the selected states and HHS. In addition, we obtained and 
reviewed the selected states' LIHEAP policies and procedures. We used 
GAO's fraud prevention model as criteria for an effective fraud 
prevention program, but did not test the effectiveness of LIHEAP's 
controls. 

Data Reliability: 

To determine the reliability of the seven state LIHEAP applications 
and benefit payment databases, we interviewed state officials 
responsible for the quality of those databases. In addition, we 
compared the total number of households served by each state for 1 
year against reports each state provided to HHS. Finally, we performed 
electronic testing to determine the reasonableness of specific data 
elements in the databases that we used to perform our work.[Footnote 
19] Based on our discussions with agency officials responsible for the 
quality of the databases, reconciliation to independent reported 
information, and our own electronic testing, we concluded that the 
data elements used for this report were sufficiently reliable for our 
purposes. 

We performed our work from June 2009 through June 2010 in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings 
and conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. We conducted our related 
investigative work in accordance with standards prescribed by the 
Council of the Inspectors General on Integrity and Efficiency. 

[End of section] 

Appendix II: Comments from the Department of Health and Human 
Services' Administration for Children and Families: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

Department Of Health & Human Services: 
Office of the Assistant Secretary for Legislation: 			
Washington, D.C. 20201: 

May 11, 2010: 

Greg Kutz: 
Managing Director: 
Forensic Audits and Special Investigations: 
U.S. Government Accountability Office: 
441 G Street N.W. 
Washington, DC 20548: 

Dear Mr. Kutz: 

Enclosed are comments on the U.S. Government Accountability Office's 
(GAO) report entitled: "Low Income Home Energy Assistance Program: 
Greater Fraud Prevention Controls Are Needed" (GA0-10-621).
The Department appreciates the opportunity to review this report 
before its publication. 

Sincerely, 

Signed by: 

Andrea Palm: 
Acting Assistant Secretary for Legislation: 

Enclosure: 

[End of letter] 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Low Income Home Energy Assistance Program: Greater Fraud Prevention 
Controls Are Needed (GAO-19-621): 

The Department appreciates the opportunity to comment on the 
Government Accountability Office (GAO) draft report. 

GAO Recommendations: 

To establish an effective fraud prevention system for the LIHEAP 
program in the seven states, the Secretary of HI-IS should evaluate 
our findings and consider issuing guidance to the states addressing 
the following six recommendations: 

* Require applicants and household members to provide Social Security 
numbers for themselves and all members of the household in order to 
receive energy assistance benefits; 

* Evaluate the feasibility (including consideration of any costs, 
operational and systems modifications) of validating applicant and 
household member identity information with SSA; 

* Develop prepayment edit checks to prevent individuals from receiving 
duplicate benefits; 

* Evaluate the feasibility of using the SSA's or state vital record's 
death data to prevent individuals using deceased identities from 
receiving benefits; 

* Evaluate the feasibility of preventing incarcerated individuals from 
improperly receiving benefits, for example, by verifying Social 
Security numbers with state's prisoner information; and; 

* Evaluate the feasibility of using third-party sources (e.g., State 
Directory of New Hires) at a minimum on a random or risk basis, to 
provide assurance that individuals do not exceed maximum income 
thresholds. 

HHS Comments: 

HHS has no tolerance for fraud or improper payments in the programs we 
administer. While as GAO notes, under the structure of the block 
grant, States, Tribes and Territories have broad discretion in 
designing their program integrity systems in administering the 
program, HHS has a responsibility as the Federal agency to ensure that 
appropriate procedures are in place to prevent, detect and correct 
waste, fraud and abuse. HITS agrees with and takes very seriously the 
recommendations in the GAO study on LIHEAP, and intends to use this 
report to work with the States to strengthen controls in the 
implementation of this vital program that assists millions of low-
income families in meeting their home heating and cooling needs. 

HHS has initiated steps to address many of the findings and 
recommendations in the GAO report and ensure that effective preventive 
controls, fraud detection, monitoring, and prosecution
systems exist at all responsible levels of the LIHEAP program's 
administration to deter ineligible payments and prevent fraud, waste 
or abuse in the program. Below, we identify the actions undertaken to 
date, and the long-term strategies to ensure program integrity. 

Social Security Numbers: 

HHS recognizes the complexity of the existing Federal authorities that 
govern Social Security Numbers (SSNs). We want to assist States and 
work with them to ensure that the critical resources of the LIHEAP 
program are provided appropriately to the households that most need 
them. As such, we have conducted an analysis of current policy and 
applicable federal provisions. While HHS remains bound by the Privacy 
Act provisions (Section 7 of the Privacy Act of 1974 [5 USC 552a 
note]) and cannot compel States to require Social Security Numbers for 
LIHEAP without the specific Federal statutory authority to do so, we 
have concluded that States have discretionary authority to require 
SSNs in the administration of their LIHEAP programs. 

Pursuant to that review and conclusion, HHS recently issued an 
Information Memorandum (LIHEAP-IM-2010-06 issued on May 5, 2010) that 
strongly encourages State LIHEAP administrators to require SSNs of 
LIHEAP applicants in order to validate that individuals and households 
receiving benefits are eligible and in need of these vital services. 
Our specific guidance provides that: 

* States may require that any individual applying for LIHEAP disclose 
his/her Social Security Number, as part of the application, to 
validate identity and as a condition for the receipt of benefits; 

* States may require the Social Security Numbers of all household 
members reported in the LIHEAP application in order to qualify the 
household for any LIHEAP benefit; and; 

* States may deny assistance to individuals and households upon a 
refusal to provide Social Security Numbers. 

HHS also strongly encourages States to establish and implement 
policies and procedures governing individual program application 
requirements to be used in requiring Social Security Numbers for 
recipients in LIHEAP, including the accessibility to verification 
tools by local administering agencies that administer LIHEAP benefits. 
States are to ensure that adequate procedures are in place for the 
safeguarding of such information in the administration of the program. 

Access to Governmental Systems: 

As part of this Information Memorandum, we also instructed States, 
within Federal and State authorities, to use existing government and 
other benefit systems to crosscheck SSNs and validate eligible 
applicants. States are instructed to take measures to ensure that 
payments are made on behalf of eligible households, including programs 
that are administered by. State or local government agencies, and non-
profit organizations operating on behalf of the State program. We 
urged States to explore using SSNs to access the following: 

* The Social Security Administration's Enumeration Verification System 
to confirm identity of applicants and household members; 

* State directories of new hires or similar systems to confirm income 
eligibility; 

* Prisoner databases to ensure that applicants and individuals listed 
as household members are eligible recipients; and; 

* Other databases that may be used to confirm applicant and household 
eligibility, such as State vital records registries. 

Under the LIHEAP statute, States have the flexibility to serve 
households that have at least one member who receives assistance under 
the Temporary Assistance to Needy Families (TANF) program, the 
Supplemental Nutritional Assistance Program (SNAP), Supplemental 
Security Income (SSI), and certain needs-tested Veteran's benefits. 
For households where LIHEAP eligibility is contingent upon this 
"categorical eligibility," we advised States to establish procedures 
to ensure that such eligibility provides sufficient verification of an 
applicant's or household member's identity, income status, and other 
eligibility criteria that may be established by the State. 

FY 2011 LIHEAP Plan Supplement: 

States have always been required to have systems in place to prevent 
fraud, but we intend to require significantly expanded detail from 
States on these efforts in FY 2011. We plan to issue an Action 
Transmittal to States, to obtain information on their systems for 
ensuring program integrity as a supplement to their FY 2011 State 
Plans.(due to HHS on September 1, 2010). 

HHS plans to request that each State provide their "LIHEAP Program 
Integrity Plan" to specifically address a number of key elements to an 
effective fraud prevention system. In response to the findings in the 
GAO report and other purposes, HHS will develop a framework and 
checklist, based in part on this GAO report, which States may use to 
provide this information. LIHEAP grantees will be strongly advised to 
examine their current procedures for LIHEAP program integrity and will 
be asked to describe and/or enhance the measures for preventing and 
detecting vulnerabilities in the administration of their programs. HHS 
will look for descriptions in the Grantee's Plan Supplement that 
clearly address the key elements of a sound integrity plan and provide 
technical assistance as necessary, with particular respect to: 

* Applicant and household verification measures for identity 
(including the use of Social Security Numbers in applications) and 
income employed by the State and its local administering agency; 

* Controls exist that all recorded transactions actually occurred, are 
valid in relation to the applicant household, and were properly 
approved in accordance with the State's eligibility and authorization 
policy; 

* Energy vendor authenticity measures are employed by the State and 
its local administering agency; and; 

* Policies and procedures are in place by the responsible State agency 
and local administering agencies that identify, assess and deter 
improper payments, including via the prosecution of cases of improper 
payments made due to fraud or abuse. 

Strategic Plan for Further Actions: 

HHS will initiate additional efforts on program integrity in the 
months ahead. Some of these steps will be immediate, while others will 
be implemented on an ongoing basis: 

State Notification and Collaboration: 
After the GAO report is released, ACF will issue a link to a copy of 
the report on the LIHEAP website. We will direct States to the Report, 
emphasize the seriousness of the findings, and provide details on the 
Office of Community Services (OCS) plan to respond to the 
recommendations, in order to assist States and gain their input on 
proposed activities. 

Meet with Grantees to Discuss Program Integrity: 
ACF will present a strong message on LIHEAP program integrity at the 
National Energy and Utility Affordability Conference (NEUAC) in June, 
at two federal sessions attended by LIHEAP Grantees (States, 
Territories, and Tribes and Tribal organizations) and others. We will 
also discuss program integrity at conferences attended by LIHEAP 
grantees in June and August. 

Direct States to Take Immediate Corrective Actions: 
ACF will work with the HHS Office of Inspector General to provide any 
information or support necessary to review and pursue the 20 cases 
referred for disallowance or other actions. In addition, we will work 
with the 7 States that were part of the GAO study to determine 
corrective actions and report that progress on the LIHEAP website. 

Regular Engagement with Grantees on Program Integrity: 

ACF will conduct quarterly conference calls and/or webinars with 
LIHEAP grantees to discuss fraud prevention. The agency will establish 
a work group or task force devoted to how States can more effectively 
prevent fraud and abuse under State LIHEAP programs. We will also 
begin gathering and analyzing the information obtained from the State 
Plan Supplements and identifying "best practices" that will 
subsequently be shared and circulated with all States. 

Determining Compliance with Program Integrity Measures: 
ACF will develop a set of detailed questions on program integrity that 
will be integrated into the LIHEAP monitoring tool that will be used 
by the review team during the course of an on-site compliance review. 
The reviews will place a renewed emphasis, looking at
states' systems for fraud prevention, and ensuring that proper 
controls are in place in accordance with the LIHEAP Plan Supplement. 

Conclusion: 

HHS has initiated a thorough examination of the steps that can be 
taken to ensure program integrity. We are using the GAO study and 
recommendations to identify and address specific challenges in program 
integrity as it relates to improper payments, detection, monitoring 
and prosecution. Where there is insufficient authority for Federal 
direction, we will recommend opportunities for statutory change. 

Number of Applications and Percent of Households: 
As a technical matter, we arc not clear about the households 
represented by the 260,000 applications that contained invalid 
identity information in "9 percent of households" in the seven States, 
as identified in the draft report and Statement of Facts provided to 
HHS. The report is not clear on the total number of cases reviewed. 
These figures also do not match up with the number of fraud cases 
reported for deceased individuals (11,000), prisoners (700), and 
federal employees (1,100), and the number of individuals (one-third of 
260,000) that did not supply SSNs that GAO enumerates in the draft 
report. It would be helpful to HHS to receive specificity on the 
numbers cited in the draft report to better understand the breakout of 
the 260,000 applications, so that we can better respond to the issues 
and assist the seven States in question more effectively going forward. 

Use of Assets Tests: [See comment 1] 
The report cites individuals in two States having significant assets 
(million dollar homes and expensive cars), though GAO acknowledges 
these individuals may have met the income threshold in order to 
receive LIHEAP benefits. GAO cites the lack of an assets test 
requirement in both States as part of the eligibility determination 
process, which may have led to improper activity in these particular 
cases, though no further details are provided. 

HHS does not have explicit authority to require States to implement 
asset tests for LIHEAP applicants; however, as noted in the report, 
States have the discretion to implement assets tests as part of their 
eligibility requirements. Federal law governing LIHEAP benefits limits 
eligibility based only on participation in other specified Federal 
means-tested benefits or income level, as opposed to asset level. HHS 
would need to seek legal authority to require LIHEAP applicants to 
meet a certain asset test to be considered eligible for services. We 
would like to know whether GAO is recommending that HHS be given 
statutory authority to require asset tests in State L1HEAP programs. 
HI-IS also asks that GAO consider removing this section in the draft 
report, unless there is a specific recommendation to be made with 
regard to assets tests. 

Types of Fraud: 
In its discussion of payments to fabricated energy companies, the 
draft report is unclear whether these cases involved fraud committed 
by individuals, fraud committed by unregulated vendors (and regulated 
vendors, if applicable), or both. The report cites erroneous 
information contained in LIHEAP applications, but it would be helpful 
to our response efforts to know the extent to which applications were 
falsified by the applicants themselves, or misrepresented by energy 
vendors to include deceased or incarcerated individuals, or other 
fraudulent client information. 

The following are GAO's comments on the Department of Health and Human 
Services' Administration for Children and Families' letter dated May 
11, 2010. 

GAO Comments: 

1. States may set an asset test for determination of LIHEAP 
eligibility criteria. In the report, we state that Illinois and 
Maryland did not have this requirement. As such, owning high-dollar 
assets cannot be considered fraud or improper activity of the program. 
We are not making a recommendation on whether HHS should seek legal 
authority to require asset tests in State LIHEAP programs. 

[End of section] 

Appendix III: Comments from the Social Security Administration: 

Social Security: 
The Commissioner: 
Social Security Administration: 
Baltimore, MD 21235-0001: 

May 10, 2010: 

Mr. Gregory Kutz: 
Managing Director: 
Forensic Audits and Special Investigations: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, D.C. 20548: 

Dear Mr. Kutz: 

Thank you for the opportunity to review and comment on the Government 
Accountability Office (GAO) draft report, "Low Income Home Energy 
Assistance Program: Greater Fraud Prevention Controls are Needed" (GAO-
10-621). Although you focused your recommendations on the Department 
of Health and Human Services, we have several comments for your 
consideration. Our comments on the report are enclosed. 

If you have any questions, please contact me or have your staff 
contact Candace Skumik, Director, Audit Management and Liaison Staff, 
at (410) 965-4636. 

Sincerely, 

Signed by: 

Michael J. Astrue: 

Enclosure: 

[End of letter] 

Comments On The Government Accountability Office (GAO) Draft Report, 
"Low Income Home Energy Assistance Program: Greater Fraud Prevention 
Controls Are Needed" (GAO-10-621): 

While this study relates to a program that is administered by the 
Department of Health and Human Services (HHS), the Social Security 
Administration (SSA) is mentioned prominently in the report. We offer 
the following comments. 

General Comments: 

In the report you recommend that HHS provide guidance to States 
requiring them to verify Low Income Home Energy Assistance Program 
(LIHEAP) applicants' Social Security number (SSN) information with our 
agency. We note that many States already do so. In the study you 
examined activity for seven States: Illinois, Maryland, Michigan, New 
Jersey, New York, Ohio, and Virginia. We currently have formal 
information exchange agreements in place with five of those States 
(all but Illinois and New Jersey) specifically for the purpose of 
verifying SSNs for LIHEAP activity. We signed every one of these 
agreements with the respective States during the last year, and they 
were negotiated under the terms of the Computer Matching and Privacy 
Protection Act (CMPPA) of 1988, 5 U.S.C. § 552a(o) et seq, which 
amended the Privacy Act. Thus, many States already have the capability 
to verify SSNs during the LIHEAP application process. In addition, the 
verification provides a death indicator. 

The CMPPA provides certain protections to persons applying for, or 
receiving, Federal benefits. Specifically, applicants and 
beneficiaries must be notified that their information is subject to 
matching, and persons retain certain due process rights before 
suspending, terminating, or denying their benefits. 

Comments on Recommendations: 

Recommendation 2: 

Evaluate the feasibility (including consideration of any costs, 
operational, and system modifications) of validating applicant and 
household member identity information with SSA. 

Comment: 

We disagree. As noted above, we already have matching agreements in 
place for five of the seven States GAO reviewed. Under the Privacy 
Act, however, we can only verify SSNs of applicants, and not household 
members. The compatibility requirement of the Privacy Act, 5 U.S.0 § 
552a(b)(3), only permits us to disclose and verify information to 
determine an applicant's entitlement to an income maintenance program. 
Verifying the SSNs of other household members would require their 
consent. The LIHEAP is not administered under the Social Security Act 
and thus we may have to establish a reimbursable agreement to provide 
the requested data. 

Recommendation 4: 

Evaluate the feasibility of using SSA's or State vital record's death 
data to prevent individuals using deceased identities from receiving 
benefits. 

Comment: 

We agree. To the extent we have death data reported to us, our SSN 
verification routine includes a death indicator. Some of our death 
data is reported directly by States and may be disclosed as permitted 
by section 205(r) of the Social Security Act, 42 U.S.C. § 405(r). 

[End of section] 

Appendix IV: Comments from State of Illinois Department of Commerce 
and Economic Opportunity: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

Illinois Department of Commerce and Economic Opportunity
Pal Quinn, Governor: 
Warren Ribley, Director: 
James R. Thompson Center
100 West Randolph Street, Suite 3-100: 
Chicago, Illinois 60601-3219: 
[hyperlink, http://www.commerce.state.il.us] 

May 10, 2010: 

Matthew Valenta: 
Assistant Director: 
United States Government Accountability Office: 
1999 Bryan Street, Suite 2200: 
Dallas, Texas 75201: 

Dear Mr. Valenta: 

The United States Government Accountability Office (GAO) Forensic 
Audits and Special Investigations Team was asked to audit the Low 
Income Home Energy Assistance Program (LIHEAP) for indications of 
fraud, waste, and abuse. The State of Illinois is one of the seven 
states that was selected for the review. A draft report with the GAO's 
recommendations was provided to the Department of Health and Human 
Services (HHS) and the seven states involved in the investigation for 
review and comments. 

The State of Illinois respectfully submits the following comments for 
your review and consideration: 

The report identified 20 cases of fraudulent and/or improper LIHEAP 
activity found in the selected states. Four cases were identified in 
the State of Illinois concerning applications with deceased 
individuals, federal employees receiving LIHEAP benefits and, invalid 
identity information. As part of the requirements for eligibility 
determination, Illinois policy states that all applicants over the age 
of one must provide a valid Social Security Number (SSN) in addition 
to income documentation. Hard copy proof must be obtained and may
include a copy of the social security card itself, a letter or print 
out from Social Security Administration, or any other form of 
government-issued identification that shows both the name and Social 
Security number. This requirement has allowed the State to improve the 
verification of the program recipients' social security numbers. 

The investigation also found cases involving federal employees 
receiving LIHEAP benefits, even though they exceeded the LIHEAP income 
threshold. According to the report, these recipients claimed zero 
income. The Illinois Policy states that households claiming zero
income must provide documentation (for each member claiming zero 
income) and the applicant will be required to complete and sign the 
Zero Income Affidavit form for households members age 18 or older. 
LIHEAP Local Agencies are strongly encouraged to request the following 
documentation in documenting a zero income client: denial letter for 
social security benefits, denial letter for unemployment compensation 
benefits, denial letter for worker's compensation benefits, and proof 
of application for Food Stamps, TANF and, AABD. 

Despite the State's efforts to verify social security numbers and 
income, it has been difficult for the State to verify the accuracy of 
the social security cards and income information (especially in zero 
income households) without having access to the State OnLine Query 
(SOLO) provided by the Social Security Administration (SSA). We 
suggest that HHS work with the SSA to obtain SSA's approval to allow 
states and their sub-grantees to use the SOLO database to help in 
ensuring the accuracy of LIHEAP recipients' income and social security 
numbers. [See comment 1] 

Our understanding is that states would be able to use SOLO for LIHEAP 
if the Commissioner of the Social Security Administration were to 
agree to make this database system available for this purpose. 
Enabling states to use an available federal database system would be 
invaluable in eligibility determination for federally funded programs 
like LIHEAP. Access to this system would be a tremendous tool for 
states to prevent potential fraud and abuse in the LIHEAP. The State 
of Illinois pursued access to SOLO with the Illinois SSA office a few 
years ago for this purpose, but the request was denied. The State of 
Illinois will be pursuing access to external databases that will 
assist in the validation of applicant data such as State directories 
of new hires to confirm income eligibility, prisoner databases to 
ensure that applicants and individuals listed as household members are 
eligible recipients and, other databases that may be available to 
confirm applicant and household eligibility. The success of the 
verification will rely on whether these databases will be available to 
our local agencies since LIHEAP applications are taken in real-time by 
the State's database system. 

Illinois utilizes a database system called LIHEAP.net for LIHEAP 
application entry, benefit calculation and payment. Illinois is 
currently assessing the possibility of interfacing LIHEAP.net and the 
SOLO database system so that we and our sub-grantees may prevent fraud 
and abuse at the time of the application intake. 

The report also identified a case involving a woman who lives in a $2 
million dollar home in Illinois who received LIHEAP benefits during 
the last program year. The case relates to the issue of LIHEAP funds 
being disbursed to individuals that may have met the income threshold 
but had significant assets. As indicated in the report, the State of 
Illinois does not consider the amount of the household's assets in 
determining eligibility for LIHEAP. Instead, Illinois bases 
eligibility determination on the last 30 days of household income. We 
request that GAO provide us with the identity of the household in this 
case for further review by Illinois LIHEAP staff. [See comment 2] 

The State conducts regular programmatic and fiscal monitoring reviews 
of all the State's sub-grantees. If potential fraud/abuse is 
identified by staff, an internal investigation is conducted and 
corrective actions are identified and requested from the sub-grantee. 
If staff suspect fraud or abuse, the facts are documented and provided 
to the Department's Legal Bureau for referral to the proper 
authorities for potential prosecution. 

The Department recently implemented a Fraud Risk Assessment Policy in 
which LIHEAP assesses potential fraud risks each year and undertakes 
corrective action when an internal control deficiency is identified or 
if the residual fraud risk is higher than an acceptable level.
The State of Illinois is committed to improving the verification 
system utilized in the Illinois LIHEAP program. We pride ourselves on 
innovation and are open to considering GAO recommendations and best 
practices identified in other states by both the GAO and HHS. We look 
forward to enhancing our partnership with HHS and working on an 
improved fraud prevention system for the LIHEAP. 

Please do not hesitate to contact Maria Gallardo or me with any 
questions or further need for information. 

Sincerely, 

Signed by: 

Larry Dawson: 
Deputy Director: 

Cc: Yolanda J. Butler: 
Nick St. Angelo: 
Warren Ribley: 
Scott Harry: 
Maria Gallardo: 

The following are GAO's comments on the State of Illinois Department 
of Commerce and Economic Opportunity's letter dated May 10, 2010: 

GAO Comments: 

1. See our discussion in the "Agency Comments and Our Evaluation" 
section. 

2. States may set an asset test for determination of LIHEAP 
eligibility criteria. In the report, we state that Illinois did not 
have this requirement. As such, owning high-dollar assets cannot be 
considered fraud or improper activity of the program. Without access 
to bank and tax records, our investigation could not determine whether 
these individuals met the LIHEAP maximum income threshold. As 
requested, we will be referring this case to the State of Illinois 
Department of Commerce and Economic Equality for further investigation. 

[End of section] 

Appendix V: Comments from State of Michigan Department of Human 
Services: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

State Of Michigan: 
Department Of Human Services: 
Jennifer M. Granholm, Governor: 
Ismael Ahmed, Director: 
235 South Grand Avenue: 
P.O. Box 30037: 
Lansing, Michigan 48909: 
[hyperlink, http://www.michigan.gov] 
(517) 373-2035: 

May 5, 2010: 

Matthew Valenta, Assistant Director: 
Financial Management and Assurance: 
General Accountability Office-Dallas: 
1999 Bryan Street, Suite 2200: 
Dallas, Texas 75201: 

Dear Mr. Valenta: 

Thank you for the opportunity to comment on the draft Low Income Home 
Energy Assistance Program: Greater Fraud Prevention Controls Are 
Needed report. This was compiled as a result of a recent audit of the 
LIHEAP program by the Government Accountability Office (GAO). This 
audit was conducted in seven states, including Michigan. The purpose 
of the audit was to assess the risk of fraud and improper payments in 
LIHEAP. The report contains observations as well as recommendations. 
The following comments are Michigan's view of the results and may not 
reflect the views of the other states involved in the audit. 

In the course of the audit, 16 Michigan cases were reviewed by the 
auditor(s). Two of the cases were cited as showing fraudulent and/or 
improper LIHEAP activity. [See comment 1] 

* One case was cited because the applicant stated she was not employed 
at the time of application. The auditors subsequently discovered the 
applicant was an employee of the U.S. Postal Service. This was 
discovered through federal salary data from the U.S. Postal Service. 
This is not a resource available to our state at this time. We feel 
the caseworker acted properly based on the information available, but 
agree it is appropriate to pursue a fraud referral on this client. 

* The second case for which we were cited was due to a client 
receiving the maximum benefits available on two different cases. In 
our previous Legacy computer system, this could occur if the client 
was issued more than one case number for different types of 
assistance. For example, a client might have one case number for 
his/her food assistance benefits and another case number for his/her 
medical assistance. Our Legacy system tracked payments by case number 
which is why this overpayment was able to occur—maximum benefits were 
issued on each case number and the system didn't catch it was the same 
client. However, we would like it noted our new BRIDGES computer 
system now tracks by recipient identification number for all members, 
rather than by case number. Therefore, we believe this particular 
issue is resolved. 

In general, I believe Michigan makes every effort to ensure the 
integrity of the LIHEAP program. We are one of the states that 
currently validate applicant and household member information with the 
Social Security Administration (SSA). In addition, Michigan does 
pursue investigations and prosecutions when instances of fraud are 
discovered, regardless of the amount. If a provider is involved in 
fraudulent activity, that provider is disenrolled from our system and 
we pursue a refund of any expended funds. If the fraud involves a 
client, we pursue recoupment from the client. 

We look forward to receiving additional guidance from the Department 
of Health and Human Services on the concerns raised in the report. 
Again, Michigan appreciates the opportunity to comment on this audit 
and will continue to do all in our power to safeguard the taxpayer's 
funds. 

Sincerely, 

Signed by: 

Ismael Ahmed: 

c: Nick St. Angelo via email: 
Susan Kangas via email: 
Barbara Anders via email: 

The following are GAO's comments on the State of Michigan Department 
of Human Services' letter dated May 5, 2010. 

GAO Comments: 

1. In our report we cite 2 cases from Michigan. Based on our data 
mining, all 16 Michigan cases reviewed in our audit had indications of 
fraud or improper benefits. However, because we did not investigate in 
detail the other 14 cases, we cannot conclude whether fraudulent or 
improper activities were associated with those cases. 

[End of section] 

Appendix VI: Comments from State of New Jersey Department of Community 
Affairs: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

State Of New Jersey: 
Department Of Community Affairs:	
Lori Grifa, Acting Commissioner: 
Chris Christie, Governor: 
Kim Guadagno, Lt. Governor: 
101 South Broad Street	
Po Box 800	
Trenton, NJ 08625-0800: 

May 7, 2010: 

Mr. Matthew Valenta, Assistant Director: 
US Government Accountability Office: 
Forensic Audits & Special Investigations: 

Dear Mr. Valenta, 

The New Jersey Department of Community Affairs (NJDCA) would like to 
thank you for the opportunity to provide comments on the draft report 
(GAO-10-621) titled "LIHEAP — Greater Fraud Prevention Controls Are 
Needed" and tentatively scheduled for issuance during June 2010. 
Comments are provided below on the Recommendations for Executive 
Action section of the report, as well as NJDCA efforts and actions 
with regard to enhancing our Fraud Prevention Framework for the 
program. 

Recommendations for Executive Action: 

* Require applicants and household members to provide Social Security 
numbers for themselves and all members of the household in order to 
receive energy assistance benefits. 

Comment: This is a requirement of the NJ LIHEAP program. Specific 
guidance issued by US-PIHS (LIHEAP Information Memorandum 2010-6) on 
May 5, 2010 will also be reviewed to ensure that controls and program 
requirements in NJ are consistent with the directives outlined in this 
document. 

* Evaluate the feasibility of validating applicant and household 
member Social Security numbers with the SSA. 

Comment: We support having the SSA provide the NJ LIHEAP program with 
access through the SSAIEVS system or other similar information 
exchange processes to enhance controls and reduce the risk of fraud 
within this program. An informational exchange agreement between the 
SSA and New Jersey could provide the ability to validate applicant and 
household member social security numbers through routine or periodic 
data file comparisons between the state and federal systems prior to 
benefit payments or check runs being processed. NJDCA will implement 
this recommendation as soon as access can be obtained from SSA. [See 
comment 1] 

* Develop pre-payment edit checks to prevent individuals from 
receiving duplicate benefits. 

Comment: The data system developed and administered for LIHEAP by the 
NJ Office of Information Technology already includes this function as 
noted on page 14 of the GAO report. 

* Evaluate the feasibility of using the SSA's or state vital record's 
death data to prevent individuals using deceased identities from 
receiving benefits. 

Comment: We support obtaining this access from the SSA in conjunction 
with the SS# validation process previously described as it would be 
more efficient to handle both validity checks from one source. In the 
alternative or if an informational exchange agreement with SSA is not 
feasible, the Department will begin discussion with the New Jersey 
Department of Health and Senior Services -Bureau of Vital Statistics 
and Registration to determine the feasibility of running validity 
checks on LIHEAP data against their vital statistic data. NJDCA will 
implement this recommendation as soon as access can be obtained from 
SSA. 

* Evaluate the feasibility of preventing incarcerated individuals from 
improperly receiving benefits, for example, by verifying Social 
Security numbers with state prisoner information. 

Comment: The Department will evaluate and develop a procedure for 
cross-referencing State prisoner information with LIHEAP application 
data. 

* Evaluate the feasibility of using third party sources (e.g. State 
Directory of New Hires) at a minimum on a random or risk basis, to 
provide assurance that individuals do not exceed maximum income 
thresholds. 

Comment: The NJDCA currently has a Memorandum of Agreement with the 
New Jersey Department of Labor and Workforce Development to verify 
income for non-Federal employees working in New Jersey. In addition, 
an Income Integrity Unit has also been recently created to randomly 
review applications to ensure compliance with all programmatic 
guidelines as related to income and documentation for LIHEAP and other 
benefit-type programs administered by NJDCA. 

Fraud Prevention Framework Enhancements: 

NJDCA hopes to expand its current requirement of collecting Social 
Security numbers through a mutual data and informational exchange 
agreement with SSA that will provide checks and balances with regard 
to the validity of applicant and household member information. The 
specific guidance recently issued on May 5, 2010 by US-1MS for the 
LIHEAP program will also help to strengthen controls to prevent fraud, 
waste and abuse. 

The recently created Income Integrity Unit will also assist this 
process through ongoing detection and monitoring activities to ensure 
that applicant and household information supplied is valid and that it 
is checked against various 3rd party sources of information.
NJDCA will also continue to refer suspected or reported cases of fraud 
to the NJ Division of Criminal Justice. Should the collaborative 
efforts previously described between NJDCA, SSA, and other state 
and/or federal agencies be effectuated it may provide the LIHEAP 
program with better resources and more opportunities to reduce fraud, 
seek prosecutions of offenders, and deter the commission of such 
offenses in the future. 

Sincerely, 

Signed by: 

Paul G. Stridick, Director: 
NJ Department of Community Affairs: 
Division of Housing and Community Resources: 

Cc: Lori Grifa, NJDCA Commissioner: 
Brian Phillips, Director, NJDCA Office of Auditing: 
Yolanda J. Butler, Ph.D., Acting Director, USHHS-ACF/OCS: 

The following are GAO's comments on the New Jersey Department of 
Community Affairs' letter dated May 7, 2010. 

GAO Comments: 

1. See our discussion in the "Agency Comments and Our Evaluation" 
section. 

[End of section] 

Appendix VII: Comments from State of New York Office of Temporary and 
Disability Assistance: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

New York State: 
Office Of Temporary And Disability Assistance: 
40 North Pearl Street: 
Albany, New York 12243-0001: 
David A. Paterson, Governor: 

May 10, 2010: 

Mr. Matthew Valenta: 
Assistant Director: 
Forensic Audits and Special Investigations: 
U.S. Government Accountability Office: 
1999 Bryan Street, Suite 2200: 
Dallas, Texas 75201: 

Dear Mr. Valenta: 

This is in response to Mr. Greg Kunz's e-mail of April 15, 2010 
requesting New York State's comments on GAO's draft report entitled 
"Low Income Home Energy Assistance Program: Greater Fraud Prevention 
Controls are Needed." 

New York State is committed to operating an efficient and effective 
LIHEAP program that we and our local social services districts operate 
with the utmost integrity. During the 200809 LIHEAP season, New York 
State issued over 1.5 million LIHEAP benefits totaling over $400 
million. These funds were critical in enabling low-income households 
struggling with the effect of the recession and volatile home energy 
prices to avoid potentially life-threatening loss of heat. This large 
volume of LIHEAP funds is distributed within a constrained time period 
(usually between November and May), and our local districts and their 
alternate certifiers do an exemplary job in determining eligibility 
and authorizing benefits with a high degree of accuracy within 
constrained timeframes. 

As we explained during the course of the GAO review, the New York 
Office of Temporary and Disability Assistance (OTDA) and the New York 
City Human Resources Administration (BRA) have numerous measures 
currently in place to prevent and uncover fraud and abuse in New York 
State's LIHEAP program. Because individuals applying for Safety Net 
Assistance, Family Assistance, Code A "living alone" Supplemental 
Security Income and/or Supplemental Nutrition Assistance Program 
benefits are required to provide their Social Security Number (SSN) at 
the time of application for one or more of these programs, individuals 
who are categorically income eligible for LIHEAP based upon their 
receipt of one or more of these program benefits have an SSN that has 
been validated by the Social Security Administration (SSA) prior to 
the issuance of a LIHEAP benefit. In addition, New York State asks 
household members applying only for LIHEAP to provide their SSN, and 
New York's upstate Welfare Management System verifies such SSNs with 
SSA for validity. 

New York State's upstate Welfare Management System application 
clearance process detects duplicate records in LIHEAP application 
fields, and New York City's LIHEAP system checks for duplicate names 
and addresses. New York City conducts a match against SSA data to 
identify deceased individuals before LIHEAP benefits are sent for 
payment, and single-person LIHEAP cases on the upstate Welfare 
Management System were added to the monthly SSA death match beginning 
in June 2009. New York State conducts a monthly prison match to detect 
individuals who are prisoners who are applying for or are 
categorically income eligible for LIHEAP and are also in receipt of 
Safety Net Assistance, Family Assistance and/or Supplemental Nutrition 
Assistance Program benefits. 

The GAO review found that there are areas where we could do more to 
improve our ability to prevent fraud and abuse in the LIHEAP program, 
and we welcome your suggestions. We will consider these 
recommendations within the context of the limitations on the amount of 
federal funding available for such efforts. The federal LIHEAP statute 
limits the amount of funds that states may use for administration to 
10 percent of our total federal LIHEAP allocation. Ten percent is one 
of the lowest administrative percentages of all federal block grants; 
for example, TANF has a 15 percent allowable administrative rate. The 
way in which New York State operates our LIHEAP program is directly 
related to the limited funding for administration that is available to 
us, as New York State is limited in our ability to make state funding 
available for such purposes. We will assess the feasibility of 
implementing GAO's recommendations; however, such implementation may 
be contingent upon receipt of additional federal administrative 
funding that is guaranteed at a sufficient level on an annual basis. 

Of equal importance is ensuring that the imposition of additional 
fraud and abuse measures not impede the ability of states to provide 
timely heating assistance to vulnerable households, and to resolve 
energy crises within federal statutorily mandated timeframes.
Because states operate LIHEAP benefit programs that require large 
volumes of applications to be processed and paid annually within a 
tight time period within constrained funding, choices have to be made 
about what fraud prevention measures can be put in place both from a 
practical perspective as well as from a resource perspective. As GAO's 
report states on page 3, federal LIHEAP funds are provided to assist 
households "in meeting their immediate home energy needs." 
Accordingly, additional fraud and abuse prevention measures must take 
into account the need for states to be responsive to the immediate 
needs of eligible applicants, particularly in light of the federal 
statutory requirement to resolve household energy crises within 18 to 
48 hours. 

With regard to the specifics of the report itself, we offer the 
following two comments: 

* Footnote 3 on page 2 and footnote 16 on page 17 incorrectly state 
that the LIHEAP benefit files provided to GAO by New York State 
covered the July 2007 through June 2008 period. The files we provided 
were actually for the October 1, 2007 through September 30, 2008 
period. [See comment 1] 

* We have confirmed that the finding in case 17 in Table 1 on page 10 
is correct. A $240 regular 2007-08 HEAP benefit and a $425 emergency 
2007-08 HEAP benefit were provided to an Albany County applicant who 
included two incarcerated individuals as members of her household on 
her application. The household would not have been income eligible for 
a LIHEAP crisis benefit without the inclusion of two household members 
who were incarcerated at the time of application. We have instructed 
Albany County to take action to recover the erroneously issued 
benefit. New York State's LIHEAP application clearly asks the 
applicant to list only those people living in the same house or 
apartment. When an applicant lists adult children without income, our 
procedures (as described in our LIHEAP Manual) direct the certifier to 
require the applicant to provide a signed statement for any adult 
household member with zero income stating the adult has no income. 
This procedure was not followed in this case. 

We would like to take this opportunity to offer a simple suggestion 
that could be easily implemented through FIRS and SSA collaboration 
that would be of tremendous value to states in combating fraud and 
abuse in the LIHEAP program. SSA does not allow states to use the 
State OnLine Query (SOLQ) system to determine initial and ongoing 
eligibility for LIHEAP. Elderly and disabled applicants often leave 
their Social Security or SSI/SSDI benefit amount blank on their LIHEAP 
application. If SOLQ were to be available for LIHEAP, the certifier 
would be able to find out the correct income amount via SOLQ, thus 
expediting the processing of the LIHEAP application as well as 
ensuring the accuracy of the applicant's income as well as the 
accuracy of their Social Security number. Moreover, SOLQ would also 
enable the certifier to determine how the applicant's Medicare 
premiums are being paid, which would facilitate a correct 
determination as to whether the applicant was income eligible for 
LIHEAP. [See comment 2] 

While local social services districts have alternative ways of 
verifying income and SSNs (via SSA batched data that is used to update 
our Welfare Management System), this data is not real-time and the WMS 
system is not available to alternate certifiers. Our understanding is 
that states would be able to use SOLQ for LIHEAP if the Commissioner 
of the Social Security Administration were to agree to make this 
system available for this purpose, and to allow the system to be used 
by both county and contracted LIHEAP alternate certifier staff. It 
seems to us to be a logical extension to enable states to use an 
available federal system to assist in correctly determining 
eligibility for a 100% federally funded program such as LIHEAP. 

We appreciate the opportunity to provide comments on the draft report. 
Please feel free to contact Phyllis Morris at 518-473-0332 if you have 
any questions or require additional information. 

Sincerely, 

Signed by: 

Russell Sykes: 
Deputy Commissioner: 
Center for Employment and Economic Supports: 

John Meglino: 
Director: 
Audit and Quality Improvement: 

cc:: OTDA Executive Deputy Director Elizabeth Berlin: 
Cecile Noel, NYC BRA: 
Michael Normile: 
Eileen Stack: 
Elizabeth Segal: 
Robin White: 
Christine Unson: 
Carolyn Karins: 
Alicia Sullivan: 
Phyllis Morris: 
Paula Cook: 

The following are GAO's comments on the State of New York Office of 
Temporary and Disability Assistance's letter dated May 10, 2010. 

GAO Comments: 

1. We revised the report to reflect the dates of the data provided by 
New York. 

2.See our discussion in the "Agency Comments and Our Evaluation" 
section. 

[End of section] 

Appendix VIII: Comments from State of Ohio Department of Development: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

Ohio Department of Development: 
Ted Strickland, Governor: 
Lee Fisher, Lt. Governor: 
Lisa Pact-McDaniel, Director: 
77 South High Street: 
PO. Box 1001: 
Columbus, Ohio 43216-1001: 
[hyperlink, http://www.development.ohio.gov] 

May 11, 2010: 

Government Accountability Office: 
Attn: Matthew Valenta: 
Assistant Director: 
valenta@gao.gov: 

Re: Draft Report — Low Income Home Energy Assistance Program: 

Ladies and Gentlemen: 

The Ohio Department of Development (Development), through its Office 
of Community Services (OCS), administers the Low Income Home Energy 
Assistance Program (LIHEAP) program in the State of Ohio. OCS 
cooperated with the Government Accountability Office (GAO) to provide 
information for its review of fraud in the LIHEAP program. 

Summary: 

Development believes that appropriate measures should be taken to 
minimize fraudulent applications for LIHEAP benefits. Guidance from 
the U.S. Department of Health and Human Services (HHS) and 
standardized procedures aimed at reducing fraud risk could be helpful 
to the states in administering the LIHEAP program. The cost of 
activities aimed at reducing fraud risk must be considered in relation 
to the benefit amount provided to individual households as well as the 
cap on expenses of administration. In Ohio, the average LIHEAP benefit 
in 2009 was $320. 

The GAO's draft report, "Low Income Home Energy Assistance Program: 
Greater Fraud Prevention Controls are Needed," (the Draft Report) 
discusses state rules and procedures in a summary fashion that does 
not completely describe any state's application, monitoring, or 
enforcement procedures. As a result, the Draft Report could lead some 
to conclude that fraud in Ohio is widespread even though the GAO 
identifies only four Ohio cases involving aggregate benefit payments 
of $1400. We believe the Draft Report would be more useful to the 
Congress, HHS and the states if it provided additional detail about 
the specific procedures followed by the states reviewed by the GAO so 
that both best practices and gaps could be more readily identified and 
considered. 

More specific comments about the Draft Report as it relates to the 
administration of the LIHEAP program in Ohio follow. 

Ohio's Current Efforts at Fraud Prevention: 

In administering LIHEAP, Development establishes eligibility 
guidelines as well as procedures to verify household eligibility. 
Development leverages Ohio's network of community action agencies 
(CAA) to interact with potentially eligible households. Development 
accepts applications for LIHEAP both directly (in person and by mail) 
and through Ohio's fifty-two CAA's, which serve as local LIHEAP intake 
agencies. 

Centralized Applicant Database. Development has made a substantial 
investment over a number of years to establish and implement a 
centralized, web-based information system known as the Ohio Community 
and Energy Assistance Network (OCEAN), to determine household 
eligibility and to authorize and track LIHEAP benefits. All 
applications for LIHEAP, whether received by Development or initiated 
at a CAA, are entered in and processed through OCEAN. The centralized 
database and automated review features of OCEAN provide a strong 
foundation for fraud prevention. 

Social Security Numbers. The Draft Report emphasizes use of Social 
Security numbers for applicant identification. Ohio generally requires 
LIHEAP applicants to provide Social Security numbers for all household 
members over the age of two. Development uses the Social Security 
numbers to assist with the verification of household income under 
limited circumstances. Social Security numbers are also used, as 
described further below, as part of Development's screen for duplicate 
applications. 

Development does not currently have direct access to information from 
the Social Security Administration (SSA). Development accesses 
information from the SSA-administered State Verification and Exchange 
System (SVES) through an interagency arrangement with the Ohio 
Department of Job and Family Services (JFS). As a condition for 
accessing SVES data, Development was required to enter into an 
Information Exchange Agreement (IEA) with SSA. (A copy of the lEA is 
attached for reference, excluding the security procedures and other 
Attachments identified in the lEA, and the arrangement for 
transmitting SVES data to the state is described on page 3 of the EA.) 
JFS, in turn, provides Development a special interface to its 
information system known as CRIS-E. Using CRIS-E, Development can 
verify certain household and income information about individuals who 
receive public assistance benefits administered by JFS. The JFS system 
includes data elements from SVES as well as data elements JFS obtains 
directly from individuals program beneficiaries. Development cannot 
specifically identify the source of individual data elements in 
beneficiary records through the JFS interface. [See comment 1] 

Development checks applicant Social Security numbers against the JFS 
database, CRIS-E, when an application omits Social Security numbers 
for household members or when the application omits income 
verification documentation. In those cases, Development may be able to 
confirm identity and/or income by reference to the CRIS-E database if 
the household receives public assistance benefits. If identity or 
income cannot be verified through CRIS-E, a follow-up letter is sent 
to the applicant for the missing information, and LIHEAP benefits are 
not approved until missing identify and/or income information is 
provided by the applicant. 

Development does not check all LIHEAP applicants' Social Security 
numbers against the SVES. Without direct access to SVES, such 
verification would not be practical. CRIS-E records are accessed 
manually one application at a time. Direct access to SVES might 
accommodate batch verification review of applicants' Social Security 
numbers against SSA-administered data. Also, Development does not have 
access to all databases SSA administers. Note, for example, in the lEA 
that access to and use of tax return data is restricted to programs 
that do not include LIHEAP. 

Applicants must answer citizenship/resident alien status questions, 
and applicants must submit documentation to verify 
citizenship/resident alien status. Applicants who are not citizens of 
the United States or who do not have resident alien status are not 
permitted to apply for LIHEAP benefits. 

Income Verification. Except under the limited circumstances described 
above, Development does not rely on government-compiled databases to 
verify income eligibility. LIHEAP applicants must provide documentary 
evidence of income for each household member. If an applicant lists no 
countable[Footnote 1] household income, the applicant must sign a self 
declaration statement explaining how the household is able to meet its 
living expenses. 

Control for Duplicate Applications. Ohio currently uses five different 
methods to determine if duplicate applications have been submitted or 
to check for duplicate household members. OCEAN is set up to check for 
duplicate Social Security numbers in the database of Ohio 
beneficiaries when applications are entered. OCEAN is also programmed 
to allow only Social Security numbers within the range of numbers that 
have been deemed valid by SSA. Further, duplication checks include 
manual case review if duplicate names in the same county or addresses 
in the same city are detected, as well as when partial fields of 
addresses match or the same utility or fuel vendor account numbers are 
detected. 

Audit of Application Files. Development's current quality control 
procedures include staff dedicated to reviewing samples of 
applications processed. All incomplete applications are reviewed by 
designated staff members for follow-up. In addition, randomly-selected 
application files are reviewed for accuracy and compliance with 
program procedures. Approximately seven percent of application files 
are reviewed as part of the quality control monitoring. Any errors or 
omissions found must be corrected before benefits are determined. OCS 
field monitors sample and review files at the local community action 
agencies (intake centers) for accuracy in processing and verification 
that proper documentation has been submitted. 

No Categorical Eligibility. Ohio does not currently provide LIHEAP 
benefits based upon eligibility for other public assistance programs, 
i.e., categorical eligibility. Therefore, fraud risk is not influenced 
by the rules or procedures for administration of other public 
assistance programs. 

Practical Limitations. Development does not use an asset test in the 
LIHEAP application process. The benefit amount does not support the 
administrative cost of an asset test. LIHEAP benefits are issued only 
once per heating season. In 2009, the average benefit amount per 
household was $320. Administrative costs for LIHEAP are capped at 10%. 
Development does not believe additional income verification through a 
labor intensive assets testing process is warranted in light of other 
measures taken to verify eligibility. Furthermore, an asset test is 
not necessarily consistent with the emergency nature of LIHEAP 
benefits. An applicant may own substantial assets, e.g., a residence, 
but experience temporary income loss or other economic crisis that 
requires immediate assistance. In many cases, liquidating assets is 
neither practicable nor consistent with longer-term goals of 
maintaining residents in their homes through the heating season. 

Access to Additional Databases to Verify Applicant Information: 

Development welcomes guidance from GAO and HHS about additional 
database information that may be available to verify applicant 
information. In light of the fraud risks highlighted in the Draft 
Report, Development will explore with other Ohio agencies access to 
records with which it may avoid claims in the name of deceased, 
incarcerated or residents of long-term care facilities. Development 
currently does not have access to databases of death records, prison 
populations, or residents of long-term care facilities. Development 
obtains information about the status of household members as 
incarcerated or residents of long-term care facilities only through 
its application questions. Until such time as additional data sources 
can be obtained to verify applicant eligibility, Development will 
consider whether its LIHEAP application can be modified to reduce the 
risk of fraudulent claims. 

With respect to verification against additional data sources, 
Development foresees certain challenges to implementation that will 
require time and additional resources. First, Development would have 
to obtain access to databases which may be protected by federal and/or 
state privacy laws. A clear mandate from HHS support the use by 
Development of databases that may assist in identifying eligible 
applicants for LIHEAP could be useful in the process of obtaining on-
going access to such databases. In addition, a reasonable time should 
be allowed for the states to determine how data sources might be 
accessed, to assess the cost of measures to implement additional 
verification, and to plan for, secure funding, and implement system 
and process changes. 

Response to Ohio Cases Purported to Reflect Fraudulent or Improper 
Activity: 

On pages five to eight of the Draft Report, GAO summarizes four Ohio 
cases purportedly involving fraudulent conduct by applicants. 

Deceased Applicant Receiving a LIHEAP Benefit. OCS was able to 
identify the application questioned and is currently investigating the 
claim involving an apparently "doctored" SSA benefit letter attached 
to the application. OCS has attempted to contact the benefit 
recipient, but the telephone number listed is temporarily 
disconnected. OCS does not currently have access to vital statistics 
data to cross-check applicants against death records. 

Incarcerated Applicant. At this time, Development has not identified 
the application described in the Draft Report. Ohio does not have 
access to incarceration records. If an application identifies a 
household member as incarcerated, Development's current practice is to 
follow-up with the applicant to determine the original date of 
incarceration and the length of time the individual is expected to be 
in prison. If a household member is to be incarcerated for fewer than 
six months during the program year, that individual is included in the 
household; if the household member is expected to be incarcerated for 
more than six months, individual is excluded. 

Federal Employees. Development reviewed the two files identified and 
determined that in both cases, the application files did not include 
Veterans Administration employment records. Therefore, calculation of 
household income for determining LIHEAP eligibility did not include VA 
income. OCS does not currently have access to federal salary data from 
the U.S. Department of Treasury to verify income documentation 
submitted with the LIHEAP application. Development's current practice 
is to follow-up with the applicant to request additional income 
documentation, such as tax records, in cases where fraudulent activity 
is suspected. Both VA employee applications were processed at a local 
LIHEAP intake agency. OCS will consider whether additional training 
can be provided for intake staff to recognize potentially fraudulent 
applications. 

Conclusion: 

Development takes the risk of fraudulent activity very seriously. In 
addition to controls in place to verify eligibility in the application 
process, Development has responded to fraud risks identified by 
tightening internal controls and investigating and taking appropriate 
administrative and legal action when warranted. Development also 
actively monitors administration of the LIHEAP program to identify and 
address improper or substandard performance by employees of OCS and 
community action agencies in processing applications. 

Thank you for your consideration of our comments on the Draft Report. 
If you have any questions about the comments or information provided 
in this letter, please contact Janet Cesner, Assistant Office Chief, 
Office of Community Services, by phone at (614)644-6637 or by e-mail 
at Janet.Casner@development.ohio.gov. 

Sincerely, 

Signed by: 

Nick Sunday: 
Chief, Office of Community Services: 

Enclosure: 

cc:: Lisa Patt-McDaniel, Director, Ohio Department of Development: 

Footnote: 

[1] Various program benefits and resources are mandated to be excluded 
from income when determining eligibility for LIHEAP assistance. See U 
S. Department of Health and Human Services Low-Income Home Energy 
Assistance Information Memorandum Transmittal No. LIHEAP-IM-2010-7 
dated May 6, 2010, for the most recent guidance on income exclusions. 

The following are GAO's comments on the State of Ohio Department of 
Development's letter dated May 11, 2010. 

GAO Comments: 

1. See our discussion in the "Agency Comments and Our Evaluation" 
section. 

[End of section] 

Appendix IX: Comments from Commonwealth of Virginia Department of 
Social Services: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

Commonwealth Of Virginia: 
Department Of Social Services: 
801 E. Main Street: 
Richmond, VA, 23219-3301: 
[hyperlink, http://www.dss.state.va.us] 

May 10, 2010: 

Mr. Matthew Valenta: 
Assistant Director: 
U.S. Government Accountability Office: 
1999 Bryan Street, Suite 2200: 
Dallas, Texas 75201: 

Dear Mr. Valenta: 

The Commonwealth of Virginia appreciates the opportunity to 
participate in the Government Accountability Office's (GAO) review of 
Low Income Home Energy Assistance Program (LIHEAP.) Program integrity 
is a priority of the Department of Social Services; as such we are 
always interested in exploring ways to improve program operation and 
administration. As highlighted in the report, while there are ways to 
improve fraud prevention in the LIHEAP, primarily through significant 
data matches with various sources, to date Virginia has not pursued 
data matches primarily due to the interpretation of the Department of 
Health and Human Services that requiring social security numbers (SSN) 
is not a condition of eligibility. This interpretation has recently 
been modified to allow, but not require, states to ask for SSNs. 
Virginia does utilize various control measures in to attempt to 
prevent fraud; the state engages in significant sub-recipient 
monitoring including local case reading reviews. 

You cite in the report the practice of enrolling individuals in LIHEAP 
based on their eligibility for another federal programs as a practice 
that avails itself to fraud; you specifically reference TANF and SNAP. 
Specifically, the report states that "...LIHEAP's preventative 
controls will only be as effective as the preventative controls for 
the federal program (e.g., TANF or SNAP) that the recipient originally 
received benefits." However, both the TANF and SNAP programs require 
SSNs for all household members which are subsequently verified through 
the Social Security Administration. Additionally, both programs 
require periodic reviews of eligibility. As a result, the preventative 
measures for TANF and SNAP are inherently better than those currently 
required for LIHEAP. Therefore, while some federal programs may not 
use the preventative measures utilized in TANF and SNAP, we do not 
agree that qualifying individuals for LIHEAP based on their TANF or 
SNAP eligibility is prone to excessive fraudulent activity. [See 
comment 1] 

We would also be interested in receiving specific information about 
the four Virginia cases being referred to the Office of the Inspector 
General (OIG). We do not want to delay any action to pursue 
prosecution and/or overpayment recovery pending the final 
determination of the OIG. [See comment 2] 

Thank you for the opportunity to comment on the draft report. Please 
feel free to contact Ms. Andrea Gregg, Energy Assistance Program 
Manager at (804)726-7368 or andrea.gregg@dss.virginia.gov if you have 
questions or need additional information. 

Sincerely, 

Signed by: 

Thomas J. Steinhauser, Director: 
Division of Benefit Programs: 

The following are GAO's comments on the Commonwealth of Virginia 
Department of Social Services' letter dated May 10, 2010. 

GAO Comments: 

1. In the report, we state that LIHEAP's preventive controls will only 
be as effective as the preventive controls for the federal program for 
which the recipient originally received benefits. We did not determine 
that qualifying LIHEAP recipients based on their eligibility for such 
programs is prone to excessive fraudulent activity. 

2. We will be referring the four Virginia Cases to the Department of 
Health and Human Services (HHS) Office of the Inspector General (OIG) 
for further investigation. To ensure that any actions conducted by the 
Commonwealth of Virginia do not impede the HHS OIG investigation, we 
believe that the Department of Social Services should coordinate its 
efforts with the HHS OIG. 

[End of section] 

Appendix X: Comments from State of West Virginia Department of Health 
and Human Resources: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 

State Of West Virginia: 
Department Of Health And Human Resources: 
Joe Manchin III, Governor: 
Patsy A. Hardy, FACHE, MSN, MBA, Cabinet Secretary: 
Bureau for Children and Families: 
Office of Children and Family Policy: 
350 Capitol Street, Room 730: 
Charleston, West Virginia 25301-3711: 
Telephone: (304) 558-4069 Fax: (304) 558-4623: 

May 7, 2010: 

Mr. Greg Kutz, Managing Director: 
Forensic Audits and Special Investigations: 
United States Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Mr. Kutz: 

This letter is in response to your electronic message dated April 15, 
2010 regarding the recent United States Government Accountability 
Office's (GAO) review of the Low Income Home Energy Assistance Program 
(LIHEAP) which West Virginia was a participant. Upon reviewing the 
draft of the GAP 10-621 Report, we are pleased to report that some of 
these controls are already in place. Additionally, the recommendations 
in whole are definitely being taken under consideration and will be 
incorporated into WV's LIHEAP program wherever possible. The report 
contained the following recommendations: 

* Require applicants and household members to provide Social Security 
numbers for themselves and all members of the household in order to 
receive energy assistance benefits; 

* Evaluate the feasibility (including consideration of any costs, 
operational and system modifications) of validating applicant and 
household member identity information with the SSA; 

* Develop prepayment edit checks to prevent individuals from receiving 
duplicate benefits; 

* Evaluate the feasibility of using the Social Security 
Administration's (SSA) or state vital record's death data to prevent 
individuals using deceased identities from receiving benefits; 

* Evaluate the feasibility of preventing incarcerated individuals from 
improperly receiving benefits, for example, by verifying Social 
Security numbers with state's prisoner information; and; 

* Evaluate the feasibility of using third-party sources (e.g. State 
Directory of New Hires) at a minimum on a random risk basis, to 
provide assurance that individuals do not exceed maximum income 
thresholds. 

Also, West Virginia further recommends that the Health and Human 
Services (HHS) be directed to work with the SSA to allow states to use 
the State On-line Query (SOLO) system to determine initial and ongoing 
eligibility for LIHEAP. Elderly and disabled applicants sometime omit 
their Social Security income or numbers on their LIHEAP application. 
If SOLO were to be available for LIHEAP, our case managers would be 
able to find out the correct income amount from SOLO, which would 
verify the recipient's income and Social Security number. [See comment 
1] 

West Virginia appreciates the opportunity to participate in this 
worthwhile study and certainly plans to work on making its' LIHEAP 
program more accurate and efficient in the future. We appreciate the 
professional and helpful manner in which your staff has worked and 
communicated with our staff. Please do not hesitate to let me know if 
you have any questions. 

Sincerely, 

Signed by: 

Charles R. Young: 
Assistant Commissioner: 

cc: John J. Najamulski: 
Sue Ellen Buster: 
Dan Hartwell: 

The following are GAO's comments on the State of West Virginia 
Department of Health and Human Resources' letter dated May 7, 2010. 

GAO Comments: 

1. See our discussion in the "Agency Comments and Our Evaluation" 
section. 

[End of section] 

Appendix XI: GAO Contact and Staff Acknowledgments: 

GAO contact: 

Greg Kutz, (202) 512-6722: 

Acknowledgments: 

In addition to the contact named above, the following individuals made 
major contributions to this report: Erika Axelson, Assistant Director; 
Matthew Harris, Assistant Director; Matthew Valenta, Assistant 
Director; Randall Cole; Erica Estrada; Grant Fleming; Deanna Lee; 
Barbara Lewis; Olivia Lopez; Jeff McDermott; Vanessa Taylor; and Tim 
Walker. 

[End of section] 

Footnotes: 

[1] To be eligible for LIHEAP, individuals must meet the LIHEAP 
statute's definition of an eligible household and must be responsible 
for energy costs either directly or through their rent. LIHEAP also 
provides weatherization assistance, which states can provide up to 15 
percent of its LIHEAP funds. Because many of the states combine 
LIHEAP's weatherization with the Department of Energy's weatherization 
program, we did not investigate this component of LIHEAP for this 
review. 

[2] LIHEAP block grants are also provided to the District of Columbia, 
U.S. territories, Indian tribes, and tribal organizations. 

[3] The files cover July 2008 through June 2009 for Illinois, 
Maryland, Michigan, New Jersey, Ohio, and Virginia, and October 2007 
through September 2008 for New York. 

[4] The Department of Treasury is the central disbursing agency for 
most federal agency payroll centers. For example, federal salary 
payments that are processed by the Department of Agriculture's 
National Finance Center are paid through the Department of Treasury. 
The U.S. Postal Service processes payments for postal employees. DFAS 
processes payments for Department of Defense employees and employees 
of certain other federal agencies. 

[5] The cases were chosen using a nonrepresentative selection approach 
based on type of fraud and improper benefit, location of the 
application, availability of documentation, and other criteria that 
provided indications of fraud and abuse. 

[6] Forensic audit is the application of methods for tracking and 
collecting evidence for investigation and prosecution of criminal 
acts, such as fraud. 

[7] Pub. Law No. 97-35 (Aug. 13, 1981). 

[8] Grantees can use up to 10 percent of the block grant for 
administrative costs of the program. 

[9] Each state has flexibility in the acceptance of application and 
approval of eligibility. For certain states, the application is 
processed and approved by nonprofits or local governments. In other 
states, the application is processed and approved by state employees. 

[10] Approximately 299,000 individuals (LIHEAP applicants and 
household members) could not be validated by SSA for the 260,000 
applications. Certain applications had more than 1 individual whose 
identity could not be validated by the Social Security Administration 
(SSA). We used SSA's Enumeration Verification System (EVS) to 
determine the validity of the application information contained in the 
LIHEAP databases. EVS provides Social Security number validations to 
companies and agencies, including states' benefits-paying agencies. 

[11] GAO, Hurricanes Katrina and Rita Disaster Relief: Prevention Is 
the Key to Minimizing Fraud, Waste, and Abuse in Recovery Efforts, 
[hyperlink, http://www.gao.gov/products/GAO-07-418T] (Washington, 
D.C.: Jan. 29, 2007) and GAO, Hurricanes Katrina and Rita Disaster 
Relief: Improper and Potentially Fraudulent Individual Assistance 
Payments Estimated to Be Between $600 Million and $1.4 Billion, 
[hyperlink, http://www.gao.gov/products/GAO-06-844T] (Washington, 
D.C.: June 14, 2006). 

[12] 42 U.S.C. § 8624(b). 

[13] 45 C.F.R. § 96.84(c). 

[14] According to HHS, Section 7 of the Privacy Act of 1974 (5 U.S.C. 
§552a note) prohibits states from denying an individual a benefit 
because of the individual's refusal to disclose his or her social 
security number (SSN), unless disclosure is required by federal 
statute. HHS states that because there is nothing in the LIHEAP 
statute requiring individuals to provide their SSN, states should not 
require that LIHEAP applicants provide it. A state may request that an 
applicant voluntarily provide an SSN, but if they do this, they must 
inform the person whether the disclosure is mandatory or voluntary, by 
what statutory or other authority such number is solicited, and what 
uses will be made of it. 

[15] 74 Fed. Reg. 62866 (Dec. 1, 2009). 

[16] The weatherization portion of the LIHEAP program was beyond the 
scope of our investigation and therefore not included in our analysis. 

[17] The files cover July 2008 through June 2009 for Illinois, 
Maryland, Michigan, New Jersey, Ohio, and Virginia, and October 2007 
through September 2008 for New York. 

[18] One of the states did not provide the identities of all household 
members; thus, the overall magnitude of identity-related fraud is 
understated in our analysis. 

[19] Data validation edits include (1) tests to see if numeric fields 
contain nonnumeric data and (2) tests on a value to see if it falls 
within the range established for the data element. 

[End of section] 

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