Lakewood Welfare Amnesty Deals Allow Cheats to Keep $2.6 Million
Authorities cut deals with welfare cheats in Ocean County that allowed them to repay half of what they owed even though authorities last year said that the amnesty program would spare criminal prosecutions only for people who paid back all their ill-gotten gains from Medicaid.
A report from the Office of the State Comptroller, which oversaw the amnesty program, contradicts what Comptroller Philip Degnan and other officials said when they advertised the unprecedented plan last year.
The report was issued a day after the Asbury Park Press reported that a Lakewood school board member was among those accepted into the amnesty program and who was given a deal to pay back half of what he owed.
That official, Moshe Newhouse, applied to the amnesty program 11 days after signing a deal to buy a $500,000 home, the Press reported.
Newhouse was not the only one who got a deal. Degnan admitted Friday that the state agreed to forgo $2.6 million in payments from amnesty participants, collecting just $2.25 million. Degnan's office threatened to sue the Press if they published their news story. His report makes no mention of the article.
Degnan declined to comment Thursday on the Press report because his office intended to release a report Friday on the Ocean County Recipient Voluntary Disclosure Program.
The program was announced last year after federal and Ocean County prosecutors charged 26 Lakewood residents with cheating public assistance programs out of more than $2.4 million.
The program gave anybody in Ocean County who had not already been charged with defrauding Medicaid 90 days to voluntarily disclose that they had received funds that they were not entitled to, whether accidentally or intentionally. In exchange, the state agreed not to refer them to the county prosecutor for criminal prosecution if they agreed to repay what they owed within six months.
Authorities bristled at calling the program "amnesty" because the people could still be prosecuted by state and federal tax authorities, and they are barred from seeking Medicaid benefits for a year.
The report released Friday defends the program, saying it has recovered $2.25 million and kicked 159 people off Medicaid.
Degnan acknowledged, however, that one of his agents "engaged in negotiations with counsel for applicants that resulted in settlements for less than the full damages amount." He said he learned of this three days before the end of the program.
Degnan added that this was "contrary to the published terms of the program and to my public statements" about the program.
The report argues that even though the state will not collect more than $2.6 million, that was money the state probably would not be able to recover anyway.
"It is likely that the negotiated-for settlements led to increased participation and removals from the Medicaid program and possibly to increased recoveries as well," the 13-page report argues.
The report says that the agency, which is in charge of auditing state government and recovering improper Medicaid payments, had previously referred 73 fraud cases to prosecutors since 2011, which resulted in just two convictions with just single-day jail sentences and $500,000 recovered. The amnesty program was more successful in recovering damages, officials said.
The program — which was endorsed by then-Gov. Chris Christie — was criticized by people who saw it as rewarding law breakers and members of a particular religious community active in Lakewood government.
Degnan's Friday report said that his office met with the Orthodox Jewish leaders of Lakewood to advertise the program because the religious council known as the Vaad requested it.
Although he would have met with any group that had requested an audience, Degnan said his agency "does acknowledge, however, with the benefit of hindsight that we could have and should have done more to bring other community stakeholders into the discussion."
Degnan, who has been nominated by Gov. Phil Murphy to be a judge, says his office "acknowledges the importance of holding individuals accountable for their criminal conduct" but says "the realities of the criminal justice system" means that the "likelihood of a successful prosecution for this type of Medicaid fraud affecting meaningful change within the Medicaid system is low."
Many of the 26 Lakewood residents busted last year have been allowed to enter pre-trial intervention programs, which spares them prison sentences and a conviction record if they stay out of trouble.
The state did not name the people who applied to the program. The Asbury Park Press learned of Newhouse's participation because reporters obtained copies official records from confidential sources.