STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF WAKE 04 DHR 0441

JOHNNY STREET, )

Petitioner, )

)

v. )

) DECISION

N.C. DEPARTMENT OF HEALTH AND )

HUMAN SERVICES, )

Respondent. )

This matter came on for hearing before the undersigned administrative law judge on August 24, 2004, in Raleigh, North Carolina. Petitioner, Johnny Street, appeared pro se. Assistant Attorney General, Donna D. Smith, represented the Respondent. The Petitioner testified on his own behalf and presented one witness. The Respondent presented three witnesses and introduced 32 exhibits.

ISSUE

Whether the Respondent properly intercepted Petitioner’s North Carolina state income tax refund on or about March 3, 2004, in the amount of $491.58, for the recovery of $13,530 in over issued food stamp benefits.

Based on the evidence presented by the parties, including sworn testimony of witnesses, documentary evidence, and stipulations, the undersigned makes the following:

STIPULATIONS

The parties stipulate that the amount of over issued food stamp benefits is $13,530.

FINDINGS OF FACT

1. Petitioner, Johnny Ray Street, has been married to Brenda Carter Street since November 18, 1994.

2. Brenda Carter Street was receiving food stamps through the Wake County Department of Human Services from December, 1994 through February, 1999.

3. Lynette Kozar is an investigator with the Wake County Department of Human Services Program Integrity Office. She has been an investigator for approximately eight years. Ms. Kozar investigates allegations of overpayments and welfare fraud for public assistance programs, including the Food Stamp Program. Ms. Kozar has conducted over 700 investigations during her eight years as an investigator.

4. Ms. Kozar conducted an investigation of the food stamp benefits issued to the household of Brenda Carter Street from December, 1994, through February, 1999.

5. This investigation was prompted by a referral from a case manager who had received information that Brenda Carter Street was living with the Petitioner, but had failed to report this to the Food Stamp Program.

6. Ms. Kozar requested, received, and reviewed information that is available to her in her duties as a welfare fraud investigator. The sources and types of information relied upon by Ms. Kozar are those customarily relied upon by investigators conducting welfare fraud investigations.

7. Ms. Kozar reviewed food stamp applications and related forms submitted by Brenda Carter Street during the relevant time period. Food stamp applications and Separate Household Verification forms from December, 1994, through December, 1996, listed Petitioner as living in the household with Brenda Carter Street, but purchasing food and preparing meals separately from Brenda Carter Street. These documents identified Petitioner as a friend of Brenda Carter Street. The home address on these applications for Petitioner and Brenda Carter Street was 713 S. Wakefield Street, Zebulon, North Carolina.

8. Ms. Kozar conducted a search of the Department of Motor Vehicles (“DMV”) database that is available to investigators such as herself and found that at all relevant times Petitioner and Brenda Carter Street listed their address with DMV as 713 S. Wakefield Street, Zebulon, North Carolina.

9. Ms. Kozar searched child protective services records and found that Petitioner and Brenda Carter Street were reported as living together in October, 1997.

10. A food stamp application submitted by Brenda Carter Street’s son dated August 4, 1998, listed Petitioner and Ms. Street as living in the household at 713 S. Wakefield Street, Zebulon, North Carolina.

11. In January, 1999, the Postmasters of Zebulon and Wendell verified with Ms. Kozar that mail was delivered to Petitioner and Brenda Carter Street at 713 S. Wakefield Street, Zebulon, North Carolina.

12. In February and May of 1999, Petitioner’s employers also verified with Ms. Kozar that Petitioner’s last known address was 713 S. Wakefield Street, Zebulon, North Carolina.

13. In January, 1999, Ms. Kozar questioned a resident at 711 S. Wakefield Street, Zebulon, North Carolina and was informed that Petitioner and Brenda Carter Street lived at 713 S. Wakefield Street, Zebulon, North Carolina.

14. Brenda Carter Street testified that sometimes Petitioner drank and became abusive. When this occurred, she and her grandchildren went to her sister’s house located at 7725 Roberts Road, Wendell, North Carolina. Ms. Street testified that the longest she remained away from the 713 S. Wakefield Street address was three to four weeks.

15. In January, 1999, Ms. Kozar questioned a resident at 7728 Roberts Road, Wendell, North Carolina and was informed that no one lived at the 7725 Roberts Road address.

16. Upon questioning the Petitioner and Brenda Carter Street about their marital status in January, 1999, Petitioner represented to Ms. Kozar that he and Brenda Carter Street had only been married one to two weeks. Brenda Carter Street informed Ms. Kozar that she and Petitioner were not legally married, but presented themselves as husband and wife to the community.

17. At an investigative interview in February, 2000, Brenda Carter Street admitted to Ms. Kozar that she and Petitioner were in fact married in 1994. Petitioner’s marriage license shows that Petitioner and Ms. Street were married on November 18, 1994, in Emporia, Virginia.

18. Upon completion of her investigation, Ms. Kozar determined that Brenda Carter Street had been overpaid $13,530 in food stamp benefits because of her failure to report that she and Petitioner were married and living together during the period of over issuance. Because of Ms. Street’s false representations regarding her household composition, Ms. Kozar recommended that the case be referred to the Wake County District Attorney for prosecution.

19. On February 6, 2001, Petitioner’s wife, Brenda Carter Street, pled no contest to food stamp fraud in the amount of $13,530 for over issued benefits based on her falsely reporting that she was not married when in fact she was married and living with her husband, the Petitioner, who was employed.

20. Petitioner was notified by Letter of Over issuance dated March 30, 2001, that as an adult household member when the overpayment occurred, he was equally responsible for repayment of the over issued benefits. The letter informed Petitioner that failure to pay the claim could result in the intercept of federal and state tax refunds. The letter also informed Petitioner that he could request a fair hearing by contacting the county food stamp office within 90 days of the letter, which Petitioner did not do.

21. Petitioner was notified by letter dated August 1, 2001, that his debt would be submitted to the U. S. Department of Treasury for offset collection because payment had not been received on the debt. The letter also informed Petitioner that he could request a review with the county food stamp office within 60 days of the letter if he believed the debt was not owed. Petitioner did not request a review.

22. Petitioner's federal tax refunds were intercepted on April 1, 2002, February 14, 2003, August 8, 2003, and March 5, 2004.

23. Pursuant to Chapter 105A of the North Carolina General Statutes, Petitioner's state tax refunds were intercepted on February 21, 2002, February 20, 2003, and March 3, 2004. Respondent notified Petitioner on each of these dates that his North Carolina income tax refund had been intercepted to offset the debt owed for over issued food stamp benefits. Each notice advised Petitioner that he could contest the intercept by filing a petition with the Office of Administrative Hearings within 30 days of the notice. Petitioner did not file a petition with the Office of Administrative Hearings following the February 21, 2002 and February 20, 2003 intercepts.

24. When Respondent intercepted Petitioner's state tax refund of $491.58 on or about March 3, 2004, there was a remaining balance of $6,894.04 on the food stamp debt.

25. Following the March 3, 2004 intercept of Petitioner's state tax refund, Petitioner filed a petition with the Office of Administrative Hearings on March 18, 2004, contesting all of the intercepts of his federal and state tax refunds.

26. Respondent filed on June 23, 2004, a motion to dismiss for lack of subject matter jurisdiction over the federal tax intercepts and the February 21, 2002 and February 20, 2003 state tax intercepts. The motion was denied on July 6, 2004.

27. Respondent renewed its motion at the hearing on August 24, 2004, which was granted after taking sworn testimony of witnesses and documentary evidence.

CONCLUSIONS OF LAW

1. The Office of Administrative Hearings lacks subject matter jurisdiction under Chapter 150B of the North Carolina General Statutes over the federal intercepts of Petitioner's federal tax refunds on April 1, 2002, February 14, 2003, August 8, 2003, and March 5, 2004, because federal agency action is not within the purview of the North Carolina Administrative Procedure Act. See N.C. Gen. Stat. § 150B-2 (1a) and (2).

2. The Office of Administrative Hearings lacks subject matter jurisdiction over the February 21, 2002 and February 20, 2003 state intercepts of Petitioner's state tax refunds because Petitioner failed to timely appeal these intercepts pursuant to N.C. Gen. Stat. § 105A-8.

3. The parties are properly before the Office of Administrative Hearings ("OAH") and OAH has jurisdiction over the March 3, 2004 intercept of Petitioner's state tax refund.

4. The Respondent is authorized to establish and supervise the Food Stamp Program pursuant to Chapter 108A, Article 2, Parts 1 and 5 of the North Carolina General Statutes.

5. Ms. Kozar is qualified as an expert in welfare fraud investigations in accordance with Rule 702 of the North Carolina Rules of Evidence.

6. Pursuant to 7 C.F.R. § 273.18, the Respondent must collect claims for over issued food stamp benefits.

7. Pursuant to 7 C.F.R. §§ 273.1(b)(1)(i) and 273.18(a)(4)(i), Petitioner was an adult member of the household of Brenda Carter Street during the over issuance of $13,530 in food stamp benefits and is responsible for repayment of the over issued benefits.

8. In accordance with Chapter 105A of the North Carolina General Statutes, Respondent properly intercepted Petitioner’s North Carolina state income tax refund on or about March 3, 2004, in the amount of $491.58 to apply towards the debt of $13,530 in over issued food stamp benefits.

9. The Respondent did not act in an arbitrary and capricious manner in administering the Food Stamp Program rules, regulations and law, did not fail to act as required by law or rule, did not fail to use proper procedure, did not act erroneously, nor did it exceed its authority or jurisdiction.

DECISION

Based on the foregoing Findings of Fact and Conclusions of Law, the undersigned hereby determines that Petitioner is a responsible party for the repayment of $13,530 in over issued food stamp benefits to the household of Brenda Carter Street and Respondent's intercept of Petitioner's state income tax refund of $491.58 on or about March 3, 2004, was proper.

ORDER

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative Hearings, 6714 Mail Service Center , Raleigh, NC 27699-6714, in accordance with G.S. § 150B-36(b3).

NOTICE

The parties have the right to file exceptions and to present written arguments to the agency making the final decision. G.S. § 150B-36(a). The agency making the final decision in this contested case is the North Carolina Department of Health and Human Services, Division of Social Services. The agency is required to serve a copy of the final decision upon each party and to furnish a copy to each party’s attorney of record and the Office of Administrative Hearings. G.S. § 150B-36(b3).

This the 19th day of October, 2004.

______

Beryl E. Wade

Administrative Law Judge