* From the Washington Post…

Five Democratic-led states are suing the Trump administration for freezing their share of federal food, housing and child care assistance dollars, saying officials failed to justify the sweeping actions that could strip billions in aid from needy families.

New York, along with California, Colorado, Illinois and Minnesota, asked for a temporary restraining order that would allow them to continue receiving the funds, in a lawsuit filed Thursday evening with the United States District Court for the Southern District of New York.

The states argued that the Administration for Children and Families, which is within the Department of Health and Human Services, provided no evidence of fraud and acted illegally by enacting sanctions within the three welfare programs without following processes laid out by law. The administration wrote to the states earlier this week that the freeze was necessary to prevent “potential” fraud but didn’t detail what it meant, according to letters viewed by The Washington Post.

* Tribune…

Gov. JB Pritzker’s office, however, has said that the federal government has not provided the state with details or information about any alleged fraud.

Illinois stands to lose about $1 billion, according to the governor’s office.

* HHS General Counsel Mike Stuart…

It’s unfortunate that these Attorney Generals from these Democrat-led states are less focused on reducing fraud and more focused on partisan political stunts.

HHS stands by its decision to take this action to defend American taxpayers. We identified serious concerns in these states that warranted immediate review and action.

These same officials were complicit in this perpetuation of this fraud and allowing it to happen. Waste, fraud, and abuse will not be tolerated in the Trump administration.

* AG Raoul press release…

The [federal government] letters demand that – within two weeks – Illinois turn over “the entire universe” of documents related to the use of these funds, including the personally identifying information of millions of residents, to potentially stop the freeze. Raoul’s lawsuit asserts that this is an impossible task on an impossible timeline and that the administration is fully aware of that. The complaint argues that the administration is engaging in a fishing expedition to attempt to find a rationale for withholding the funds after the fact, when the real motivation is targeting the president’s perceived political enemies.

* From the lawsuit…

CCDF statutes and regulations prescribe a number of ways in which [the US Administration for Children & Families] monitors States’ compliance with program requirements, including potential fraud, and the manner in which data and records can be provided from States to ACF in furtherance of its compliance efforts. For example, Congress has specified that each State must undergo regular audits; must report certain data to ACF regularly; and must undergo a quality control process through which ACF calculates the rate of improper payments. See 42 U.S.C. § 9858i; 45 C.F.R. §§ 98.65, 98.100

ACF likewise did not acknowledge any of these oversight mechanisms in implementing the ACF Funding Freeze as to CCDF.

The TANF statute provides the specific and exclusive circumstances under which ACF may implement a penalty against a State for noncompliance in the TANF program, including a State’s failure to submit required reports, failure to comply with child support enforcement obligations, and a “[g]eneral penalty” for when a State’s statutorily-required audit finds that a State’s funds have been used in violation of the law. 42 U.S.C. § 609(a); 45 C.F.R. § 263.10; see also 42 U.S.C. § 617 (“No officer or employee of the Federal Government may regulate the conduct of States under” the TANF program “except to the extent expressly provided in this part.”).

ACF must follow specific procedures to implement these penalties.

First, ACF must notify a State of the violation. 42 U.S.C. § 609(c)(1)(A). This notification must be in writing; must specify which penalty will be imposed and the reasons for the penalty; specify the sources of information ACF relied on and the reasons for its decision; and invite the State to present its arguments if it believes that the information or method that ACF used were in error or were insufficient. 45 C.F.R. § 262.4(a).

Then, ACF must allow the State a sixty-day period to submit a corrective compliance plan that outlines how the State will correct or discontinue the violation and how the State will ensure continuing compliance. 42 U.S.C. § 609(c)(1)(A)-(B).

Then, ACF has a sixty-day period to accept or reject the State’s proposed compliance plan. 42 U.S.C. § 609(c)(1)(D).

Only if ACF rejects the State’s proposed compliance plan within 60 days can ACF impose penalties on the State. 42 U.S.C. §§ 609(c)(1)(D), (c)(2). See also 42 U.S.C. § 609(c)(3).

Then, if ACF takes any adverse action against a State—which may include the imposition of a penalty as described above, but may also include an adverse action on the State’s TANF plan—ACF must notify the State within five days. 42 U.S.C. § 610(a). This notification must include “the factual and legal basis for taking the penalty in sufficient detail for the State to be able to respond in an appeal.” 45 C.F.R. § 262.7(a)(2).

Then, ACF must provide a sixty-day period for the State to appeal. 42 U.S.C. §610(b)(1).

Upon a final decision, the penalty for the State is a reduction in future payments to the state in the amount that was unlawfully spent. 42 U.S.C. § 609(a)(1)(A). ACF can impose an additional 5% reduction upon a finding that the State’s violation was intentional. 42 U.S.C. § 609(a)(1)(B).

ACF is prohibited from reducing the quarterly payment to any State by more than 25%. 42 U.S.C. § 609(d)(1). If this limitation results in unrecovered penalties, the balance is carried forward and assessed the following year. 42 U.S.C. § 609(d)(2).

Discuss.