Nebraska agency slow to collect millions in overpayments to recipients, state audit shows

The Nebraska Department of Health and Human Services hasn't tried to collect potentially millions of dollars in overpayments made to recipients of food stamps and other public benefits, according to a routine state audit.

A letter from the state auditor's office sent Friday to department CEO Courtney Phillips described a backlog of more than 12,000 possible cases of overpayments that department workers reported via email to the department's "overpayment mailbox," established in November 2011. Auditors found nearly 21,000 referral emails as of May 4, but 60 percent hadn't been worked on. With a sample overpayment average of $543, that amounts to more than $6.7 million the state has not tried to recover.

The delays lessen the chances the department will be paid back, the auditors said.

The department also often failed to follow its own collection process, which the auditors said could affect a substantial number of the $10.7 million worth of cases for which collection work had begun.

Department leaders said they are addressing those and other problems with the department's business practices. The department recently created a new chief financial officer position, which "underscores the importance our new leadership is placing on our financial side," said spokeswoman Kathie Osterman.

"Although the issues and concerns did not accumulate overnight, the department will take the necessary steps and time to correct this and move in the right direction," said Pat Weber, the department's new CFO.

"This is (a) management issue which started under previous leadership, and one that the department is taking steps to address," said Taylor Gage, a spokesman for Gov. Pete Ricketts.

The audit covered the fiscal year that ended June 30.

In addition to the mailbox issues, auditors sampled 42 cases of confirmed overpayments and found the department didn't follow its own policy for handling 35 of them.

For example, in 27 cases the department didn't follow procedure when an account reached 90 days overdue, either by failing to take legal action or failing to turn over the account to a collections agency or waiting too long to do so.