C41/2002 Notification and Handling of Overpayment Cases - Suspected Fraud

Purpose

The purpose of this Departmental Instruction is:

• to remind State Office staff of the approved Office procedures where the examination of overpayment cases reveals the possibility of fraud; and

• to provide advice regarding the identification, and notification to National Office, of cases which are likely to attract adverse media attention (“media-sensitive” cases).

Fraud control

- a key corporate activity

A key result area in the Department's Corporate Plan for 2002 – 2003 is that of prudent financial and risk management.  An important measure of performance in this area is the strategic management of fraud control.

The Department's Fraud Control Plan (2001 – 2003) establishes the framework for identifying and dealing with cases of suspected fraud.  This Plan, together with CEI 8.1 (Fraud Control and Reporting), provides guidance for staff on the measures to combat potential fraud within the Department, and the procedures for handling actual or suspected fraud cases.

Fraud control

- a key corporate activity, continued

Staff involved in the assessment, payment and review of client entitlements are the first line of defence against potential or actual fraud.  Efforts to strategically manage, control and prosecute fraud against the Department will not succeed unless staff remain aware of the risk of fraud, and bring suspected instances of fraud to the attention of their supervisor when they become aware of it.

What is fraud?

Fraud is defined for the purposes of the Commonwealth Fraud Control Guidelines as “dishonestly obtaining a benefit by deception or other means”.

The key questions to be answered in deciding if a case is a suspected fraud are:

• was the person in a position to have sufficient knowledge to know that the statements and actions being made were unlawful, misleading or deceitful?;

• were things done by the person to try to get DVA to believe the claim, eg false statements?;

• did the person deliberately withhold information which should have been presented to DVA?; and

• did DVA make a payment or provide a benefit to the person, or would it have done so if the suspected fraud had not been detected?

If any of the above circumstances apply then fraud should be suspected and dealt with appropriately.

Reporting of suspected fraud cases

The importance of the role played by line area staff in identifying cases of fraud is recognised by paragraph 4.5 of CEI 8.1 (Fraud Control and Reporting).  This paragraph affirms that all employees have an obligation to be constantly aware of the risk of fraud, and to bring suspected cases to the attention of management.

CEI 8.1 provides that staff can report fraud either (i) directly to their supervisor, (ii) to the Director of the National Fraud Control Unit, or (iii) by use of the whistleblower policy.  Individual line managers are also required to report fraud investigations to their local State Case Management Committee as soon as possible.

Overpayments to veteran clients

Where a veteran has been overpaid a pension or benefit, and there is evidence (or some likelihood) that the overpayment arose through fraud, it is important to note that staff do not have the discretion to continue to process the case as a standard overpayment recovery.  Where fraud is suspected, the procedures in the Overpayment Management Manual should be followed.  These procedures are set out in Chapter 11.1 (Overview) and provide that:

• before undertaking any client interview in relation to an overpayment, staff should ensure that there is no possibility of prosecution action;

• responsibility for determining whether there is no possibility of prosecution lies solely with the Commonwealth Director of Public Prosecutions (Prosecution Policy of the Commonwealth refers);

• if the suspicion of fraud or a prosecutable offence arises during the interview, the interview should be stopped and the client cautioned that an offence may have occurred.  The client should be advised that they are not required to say anything further, and anything they do say could be used in evidence.  The client should be asked to wait while guidance is sought from the State Case Management Committee.  The interview should not continue without further advice being sought, as this may jeopardise future prosecution activity; and

• if guidance cannot be obtained at the time, or if the client is unwilling to wait, they should be advised that the overpayment interview will not be continued but that they may be required to attend a further interview at a later date.

Instances of fraud in pension/benefit overpayment cases can include the falsification or intentional withholding of information, a failure to advise of a change in circumstances which may affect a pension or benefit, or the claiming of benefits from both DVA and Centrelink at the same time (double-dipping).

Referral of media-sensitive cases to National Office

Income support cases which are likely to attract adverse media attention (“media-sensitive” cases) should be notified to the Branch Head, Income Support.

Cases likely to attract media scrutiny would include those involving sizeable overpayment recovery action, or where a veteran's eligibility to receive payment of a pension or benefit has not been found to be sustainable, eg. 'false veterans'.

Referral of these cases to National Office will allow the circumstances of the case to be examined in anticipation of public or media interest, and for the Minister's Office to be informed about the case.

The information to be provided to National Office should include a brief summary of the circumstances of the case.  This would include –

• the cause or origin of any overpayment, or the reason for the veteran's lack of eligibility for a pension or benefit;

• any evidence which is suggestive of fraud;

• any written advice from the Commonwealth Director of Public Prosecutions as to the likelihood of prosecution;

• a copy of any related correspondence to the veteran, and any responses provided by the veteran;

• whether the veteran has, or intends seeking, legal advice or the support of an ex-service organisation; and

• contact officer details.

Criteria for assessment of media-sensitive cases

The assessment of whether an income support overpayment case, or a

non-eligibility case, are sufficiently sensitive to warrant referral to National Office should include, but not be limited to, the following factors:

• the age and the health of the veteran;

• the monetary amount of the overpayment and the length of time over which it accrued.  Overpayments which exceed $10,000 or which have accrued over a period of several years should be very carefully assessed.  It is expected that overpayments in this category would be referred, unless there are other known factors that diminish the sensitivity of the case.  These might include any existing communication, or agreement, with the veteran regarding the cause of, and repayment, of the overpaid amount;

• the cause of the overpayment, and the strength of any evidence which suggests that the overpayment arose through fraudulent behaviour;

• where the reason(s) for determining that a veteran is not eligible for a pension or benefit have been disputed by the veteran, or where the evidence for the decision is unclear or is open to different interpretation; and

• w — hether the veteran has contacted any external party in relation to his/her case.  External parties would include any media group, an ex-service organisation, a legal representative, or a Member of Parliament.

The assessment of whether cases are of sufficient sensitivity to be referred to National Office will require a considered judgment of all the relevant factors of the case.  In this regard, staff should have regard to the Department's Risk Management Policy, which acknowledges that all judgments involve some degree of risk.  A balance should be sought, between the risks associated with not taking action against possible fraudulent behaviour, against the costs of investigating and referring non-sensitive or marginal cases where the evidence of fraud is not persuasive.

Offer of counselling to veterans

Staff involved in overpayment recovery or fraud investigation should consider whether the apparent health status of the veteran warrants suggesting counselling to the veteran.

The Vietnam Veterans Counselling Service (VVCS) is a departmental resource available to veterans experiencing trauma, stress, alcohol abuse, relationship difficulty or mental health disorder.

The VVCS does not provide medico-legal reports, but the service offers assessment, counselling, referrals, group work and a variety of educational and lifestyle management programs.

Staff considering suggesting counselling to a veteran in a fraud or overpayment situation should be mindful, however, that there should be no connection between the suggestion of counselling and the continuation, or otherwise, of fraud action or overpayment recovery.  The role of the VVCS does not encompass the provision of advice or written reports to explain or to mitigate possible fraudulent activity.

Contact Officers

The contact officers in the Income Support Branch in respect of any enquiries in these matters are:

Jeanette Ricketts           Director                    02 6289 6085

Brian Butler                  Assistant Director    02 6289 6564