[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR275.12]

[Page 837-844]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 275_PERFORMANCE REPORTING SYSTEM--Table of Contents
 
                 Subpart C_Quality Control (QC) Reviews
 
Sec.  275.12  Review of active cases.

    (a) General. A sample of households which were certified prior to, 
or during, the sample month and issued food stamp benefits for the 
sample month shall be selected for quality control review. These active 
cases shall be reviewed to determine if the household is eligible and, 
if eligible, whether the household is receiving the correct allotment. 
The determination of a household's eligibility shall be based on an 
examination and verification of all elements of eligibility (i.e., basic 
program requirements, resources, income, and deductions). The elements 
of eligibility are specified in Sec. Sec.  273.1 and 273.3 through 
273.9. The verified circumstances and the resulting benefit level 
determined by the quality control review shall be compared to the 
benefits authorized by the State agency as of the review date. When 
changes in household circumstances occur, the reviewer shall determine 
whether the changes were reported by the participant and handled by the 
agency in accordance with the rules set forth in Sec. Sec.  273.12, 
273.13 and 273.21, as appropriate. For active cases, the review date 
shall always fall within the sample month, either the first day of a 
calendar or fiscal month or the day of certification, whichever is 
later. The review of active cases shall include: a household case record 
review; a field investigation, except as provided in paragraph (b) of 
this section; the identification of any variances; an error analysis; 
and the reporting of review findings.
    (b) Household case record review. The reviewer shall examine the 
household case record to identify the specific

[[Page 838]]

facts relating to the household's eligibility and basis of issuance. If 
the reviewer is unable to locate the household case record, the reviewer 
shall identify as many of the pertinent facts as possible from the 
household issuance record. The case record review shall include all 
information applicable to the case as of the review month, including the 
application and worksheet in effect as of the review date. Documentation 
contained in the case record can be used as verification if it is not 
subject to change and applies to the sample month. If during the case 
record review the reviewer can determine and verify the household's 
ineligibility the review can be terminated at that point, provided that 
if the determination is based on information not obtained from the 
household then the correctness of that information must be confirmed as 
provided in paragraph (c)(2) of this section. The reviewer shall utilize 
information obtained through the case record review to complete column 
(2) of the Integrated Worksheet, Form FNS-380, and to tentatively plan 
the content of the field investigation.
    (c) Field investigation. A full field investigation shall be 
conducted for all active cases selected in the sample month except as 
provided in paragraph (b) of this section. A full field investigation 
shall include a review of any information pertinent to a particular case 
which is available through the State Income and Eligibility Verification 
System (IEVS) as specified in Sec.  272.8. If during the field 
investigation the reviewer determines and verifies the household's 
ineligibility, the review can be terminated at that point, provided that 
if the determination is based on information not obtained from the 
household then the correctness of that information must be confirmed as 
provided in paragraph (c)(2) of this section. In Alaska an exception to 
this requirement can be made in those isolated areas not reachable by 
regularly scheduled commercial air service, automobile, or other public 
transportation provided one fully documented attempt to contact the 
household has been made. Such cases may be completed through casefile 
review and collateral contact. The field investigation will include 
interviews with the head of household, spouse, or authorized 
representative; contact with collateral sources of information; and any 
other materials and activity pertinent to the review of the case. The 
scope of the review shall not extend beyond the examination of household 
circumstances which directly relate to the determination of household 
eligibility and basis of issuance status. The reviewer shall utilize 
information obtained through the field investigation to complete column 
(3) of the Integrated Worksheet, Form FNS-380.
    (1) Personal interviews. Personal interviews shall be conducted in a 
manner that respects the rights, privacy, and dignity of the 
participants. Prior to conducting the personal interview, the reviewer 
shall notify the household that it has been selected, as part of an 
ongoing review process, for review by quality control, and that a 
personal face-to-face interview will be conducted in the future. The 
method of notifying the household and the specificity of the 
notification shall be determined by the State agency, in accordance with 
applicable State and Federal laws. The personal interview may take place 
at the participant's home, at an appropriate State agency certification 
office, or at a mutually agreed upon alternative location. The State 
agency shall determine the best location for the interview to take 
place, but would be subject to the same provisions as those regarding 
certification interviews at Sec.  273.2(e)(2) of this chapter. Those 
regulations provide that an office interview must be waived under 
certain hardship conditions. Under such hardship conditions the quality 
control reviewer shall either conduct the personal interview with the 
participant's authorized representative, if one has been appointed by 
the household, or with the participant in the participant's home. Except 
in Alaska, when an exception to the field investigation is made in 
accordance with this section, the interview with the participant may not 
be conducted by phone. During the personal interview with the 
participant, the reviewer shall:
    (i) Explore with the head of the household, spouse, authorized 
representative, or any other responsible

[[Page 839]]

household member, household circumstances as they affect each factor of 
eligibility and basis of issuance;
    (ii) Establish the composition of the household;
    (iii) Review the documentary evidence in the household's possession 
and secure information about collateral sources of verification; and
    (iv) Elicit from the participant names of collateral contacts. The 
reviewer shall use, but not be limited to, these designated collateral 
contacts. If required by the State, the reviewer shall obtain consent 
from the head of the household to secure collateral information. If the 
participant refuses to sign the release of information form, the 
reviewer shall explain fully the consequences of this refusal to 
cooperate (as contained in paragraph (g)(1)(ii) of this section), and 
continue the review to the fullest extent possible.
    (2) Collateral contacts. The reviewer shall obtain verification from 
collateral contacts in all instances when adequate documentation was not 
available from the participant. This second party verification shall 
cover each element of eligibility as it affects the household's 
eligibility and coupon allotment. The reviewer shall make every effort 
to use the most reliable second party verification available (for 
example, banks, payroll listings, etc.), in accordance with FNS 
guidelines, and shall thoroughly document all verification obtained. If 
any information obtained by the QC reviewer differs from that given by 
the participant, then the reviewer shall resolve the differences to 
determine which information is correct before an error determination is 
made. The manner in which the conflicting information is resolved shall 
include recontacting the participant unless the participant cannot be 
reached. When resolving conflicting information reviewers shall use 
their best judgement based on the most reliable data available and shall 
document how the differences were resolved.
    (d) Variance identification. The reviewer shall identify any element 
of a basic program requirement or the basis of issuance which varies 
(i.e., information from review findings which indicates that policy was 
applied incorrectly and/or information verified as of the review date 
that differs from that used at the most recent certification action). 
For each element that varies, the reviewer shall determine whether the 
variance was State agency or participant caused. The results of these 
determinations shall be coded and recorded in column (5) of the 
Integrated Worksheet, Form FNS-380.
    (1) Variances included in error analysis. Except for those variances 
in an element resulting from one of the situations described in 
paragraph (d)(2) of this section, any variance involving an element of 
eligibility or basis of issuance shall be included in the error 
analysis. Such variances shall include but not be limited to those 
resulting from a State agency's failure to take the disqualification 
action related to SSN's specified in Sec.  273.6(c), and related to work 
requirements, specified in Sec.  273.7(f).
    (2) Variances excluded from error analysis. The following variances 
shall be excluded from the determination of a household's eligibility 
and basis of issuance for the sample month:
    (i) Any variance resulting from the nonverified portion of a 
household's gross nonexempt income where there is conclusive 
documentation (a listing of what attempts were made to verify and why 
they were unsuccessful) that such income could not be verified at the 
time of certification because the source of income would not cooperate 
in providing verification and no other sources of verification were 
available. If there is no conclusive documentation as explained above, 
then the reviewer shall not exclude any resulting variance from the 
error determination. This follows certification policy outlined in Sec.  
273.2(f)(1)(i).
    (ii) Any variance in cases certified under expedited certification 
procedures resulting from postponed verification of an element of 
eligibility as allowed under Sec.  273.2(i)(4)(i). Verification of gross 
income, deductions, resources, household composition, alien status, or 
tax dependency may be postponed for cases eligible for expedited 
certification. However, if a case certified under expedited procedures 
contains a variance as a result of a residency deficiency, a mistake in 
the basis of issuance computation, a

[[Page 840]]

mistake in participant identification, or incorrect expedited income 
accounting, the variance shall be included in the error determination. 
This exclusion shall only apply to those cases which are selected for QC 
review in the first month of participation under expedited 
certification.
    (iii) Any variance subsequent to certification in an element of 
eligibility or basis of issuance which was not reported and was not 
required to have been reported as of the review date. The elements 
participants are required to report and the time requirements for 
reporting are specified in Sec. Sec.  273.12(a) and 273.21(h) and (i), 
as appropriate. If, however, a change in any element is reported, and 
the State agency fails to act in accordance with Sec. Sec.  273.12(c) 
and 273.21(j), as appropriate, any resulting variance shall be included 
in the error determination.
    (iv) Any variance in deductible expenses which was not provided for 
in determining a household's benefit level in accordance with Sec.  
273.2(f)(3)(i)(B). This provision allows households to have their 
benefit level determined without providing for a claimed expense when 
the expense is questionable and obtaining verification may delay 
certification. If such a household subsequently provides the needed 
verification for the claimed expense and the State agency does not 
redetermine the household's benefits in accordance with Sec.  273.12(c), 
any resulting variance shall be included in the error determination.
    (v) Any variance resulting from use by the State agency of 
information concerning households or individuals from an appropriate 
Federal source, provided that such information is correctly processed by 
the State agency. An appropriate Federal source is one which verifies: 
Income that it provides directly to the household; deductible expenses 
for which it directly bills the household; or other household 
circumstances which it is responsible for defining or establishing. To 
meet the provisions for correct processing, the eligibility worker must 
have appropriately acted on timely information. In order to be timely, 
information must be the most current that was available to the State 
agency at the time of the eligibility worker's action.
    (vi) Two variances relating to the Immigration and Naturalization 
Service's (INS) Systematic Alien Verification for Entitlements (SAVE) 
Program.
    (A) A variance based on a verification of alien documentation by 
INS. The reviewer shall exclude such variance only if the State agency 
properly used SAVE and the State agency provides the reviewer with:
    (1) The alien's name;
    (2) The alien's status; and
    (3) Either the Alien Status Verification Index (ASVI) Query 
Verification Number or the INS Form G-845, as annotated by INS.
    (B) A variance based on the State agency's wait for the response of 
INS to the State agency's request for official verification of the 
alien's documentation. The reviewer shall exclude such variance only if 
the State agency properly used SAVE and the State agency provides the 
reviewer with either:
    (1) The date of request, if the State agency was waiting for an 
automated response; or
    (2) A copy of the completed Form G-845, if the State agency was 
waiting for secondary verification from INS.
    (vii) Subject to the limitations provided in paragraphs 
(d)(2)(vii)(A) through (d)(2)(vii)(F) of this section any variance 
resulting from application of a new Program regulation or implementing 
memorandum (if one is sent to advise State agencies of a change in 
Federal law, in lieu of regulations during the first 120 days from the 
required implementation date.
    (A) When a regulation allows a State agency an option to implement 
prior to the required implementation date, the date on which the State 
agency chooses to implement may, at the option of the State, be 
considered to be the required implementation date for purposes of this 
provision. The exclusion period would be adjusted to begin with this 
date and end on the 120th day that follows. States choosing to implement 
prior to the required implementation date must notify the appropriate 
FNS Regional Office, in writing, prior to implementation that they wish 
the 120 day variance exclusion to commence

[[Page 841]]

with actual implementation. Absent such notification, the exclusionary 
period will commence with the required implementation date.
    (B) A State agency shall not exclude variances which occur prior to 
the States implementation.
    (C) A State agency which did not implement until after the exclusion 
period shall not exclude variances under this provision.
    (D) Regardless of when the State agency actually implemented the 
regulation, the variance exclusion period shall end on the 120th day 
following the required implementation date, including the required 
implementation date defined in paragraph (d)(2)(vii)(A) of this section.
    (E) For purposes of this provision, implementation occurs on the 
effective date of State agency's written statewide notification to its 
eligibility workers.
    (F) This variance exclusion applies to changes occasioned by final 
regulations or interim regulations. In the case of a final regulation 
issued following an interim regulation, the exclusion applies only to 
significant changes made to the earlier interim regulation. A 
significant change is one which the final regulation requires the State 
agency to implement on or after publication of a final rule.
    (viii) Any variance resulting from incorrect written policy that a 
State agency acts on that is provided by a Departmental employee 
authorized to issue Food Stamp Program policy and that the State agency 
correctly applies. For purposes of this provision, written Federal 
policy is that which is issued in regulations, notices, handbooks, 
category three and four Policy Memoranda under the Policy Interpretation 
Response System, and regional policy memoranda issued pursuant to these. 
Written Federal policy is also a letter from the Food and Nutrition 
Service to a State agency which contains comments on the State agency's 
food stamp manual or instructions.
    (ix) Any variance in a child support deduction which was the result 
of an unreported change subsequent to the most recent certification 
action shall be excluded from the error determination.
    (3) Other findings. Findings other than variances made during the 
review which are pertinent to the food stamp household or the case 
record may be acted on at the discretion of the State agency. Examples 
of such findings are: an incorrect age of a household member which is 
unrelated to an element of eligibility; an overdue subsequent 
certification; no current application on file; insufficient 
documentation; incorrect application of the verification requirements 
specified in part 273; and deficiencies in work registration procedural 
requirements. Such deficiencies include: inadequate documentation of 
each household member's exempt status; work registration form for each 
nonexempt household member not completed at the time of application and 
every six months thereafter; and the household not advised of its 
responsibility to report any changes in the exempt status of any 
household member.
    (e) Error analysis. The reviewer shall analyze all appropriate 
variances in completed cases, in accordance with paragraph (d) of this 
section, which are based upon verified information and determine whether 
such cases are either eligible, eligible with a basis of issuance error, 
or ineligible. The review of an active case determined ineligible shall 
be considered completed at the point of the ineligibility determination. 
For households determined eligible, the review shall be completed to the 
point where the correctness of the basis of issuance is determined, 
except in the situations outlined in paragraph (g) of this section. In 
the event that a review is conducted of a household which is receiving 
restored or retroactive benefits for the sample month, the portion of 
the allotment which is the restored or retroactive benefit shall be 
excluded from the determination of the household's eligibility and/or 
basis of issuance. A food stamp case in which a household member(s) 
receives public assistance shall be reviewed in the same manner as all 
other food stamp cases, using income as received. The determination of a 
household's eligibility and the correctness of the basis of issuance 
shall be determined based on data entered on the

[[Page 842]]

computation sheet as well as other information documented on other 
portions of the Integrated Worksheet, Form FNS-380, as appropriate.
    (f) Reporting of review findings. All information verified to be 
incorrect during the review of an active case shall be reported to the 
State agency for appropriate action on an individual case basis. This 
includes information on all variances in elements of eligibility and 
basis of issuance in both error and nonerror cases. In addition, the 
reviewer shall report the review findings on the Integrated Review 
Schedule, Form FNS-380-1, in accordance with the following procedures:
    (1) Eligibility errors. If the reviewer determines that a case is 
ineligible, the occurrence and the total allotment issued in the sample 
month shall be coded and reported. Whenever a case contains a variance 
in an element which results in an ineligibility determination and there 
are also variances in elements which would cause a basis of issuance 
error, the case shall be treated as an eligibility error. The reviewer 
shall also code and report any variances that directly contributed to 
the error determination. In addition, if the State agency has chosen to 
report information on all variances in elements of eligibility and basis 
of issuance, the reviewer shall code and report any other such variances 
which were discovered and verified during the course of the review.
    (2) Basis of issuance errors. If the reviewer determines that food 
stamp allotments were either overissued or underissued to eligible 
households in the sample month, in an amount exceeding $25.00, the 
occurrence and the amount of the error shall be coded and reported. The 
reviewer shall also code and report any variances that directly 
contributed to the error determination. In addition, if the State agency 
has chosen to report information on all variances in elements of 
eligibility and basis of issuance, the reviewer shall code and report 
any other such variances which were discovered and verified during the 
course of the review.
    (3) Automated Federal Information Exchange System Errors. Variances 
resulting from the use by the State agency of information received from 
automated Federal information exchange systems, which are excluded in 
accordance with Sec.  275.12(d)(2)(v), shall be coded and reported as 
variances. They shall not, however, be used in determining a State's 
error rates.
    (g) Disposition of case reviews. Each case selected in the sample of 
active cases must be accounted for by classifying it as completed, not 
completed, or not subject to review. These case dispositions shall be 
coded and recorded on the Integrated Review Schedule, Form FNS-380-1.
    (1) Cases reported as not complete. Active cases shall be reported 
as not completed if the household case record cannot be located and the 
household itself is not subsequently located; if the household case 
record is located but the household cannot be located unless the 
reviewer attempts to locate the household as specified in this 
paragraph; or if the household refuses to cooperate, as discussed in 
this paragraph. All cases reported as not complete shall be reported to 
the State agency for appropriate action on an individual case basis. 
Without FNS approval, no active case shall be reported as not completed 
solely because the State agency was unable to process the case review in 
time for it to be reported in accordance with the timeframes specified 
in Sec.  275.21(b)(2).
    (i) If the reviewer is unable to locate the participant either at 
the address indicated in the case record or in the issuance record and 
the State agency is not otherwise aware of the participant's current 
address, the reviewer shall attempt to locate the household by 
contacting at least two sources which the State agency determines are 
most likely to be able to inform the reviewer of the household's current 
address. Such sources include but are not limited to:
    (A) The local office of the U.S. Postal Service;
    (B) The State Motor Vehicle Department;
    (C) The owner or property manager of the residence at the address in 
the case record; and
    (D) Any other appropriate sources based on information contained in 
the

[[Page 843]]

case record, such as public utility companies, telephone company, 
employers, or relatives. Once the reviewer has attempted to locate the 
household and has documented the response of each source contacted, if 
the household still cannot be located and the State agency has 
documented evidence that the household did actually exist, the State 
agency shall report the active case as not subject to review. In these 
situations documented evidence shall be considered adequate if it either 
documents two different elements of eligibility or basis of issuance, 
such as a copy of a birth certificate for age and pay status for income; 
or documents the statement of a collateral contact indicating that the 
household did exist. FNS Regional Offices will monitor the results of 
the contacts which State agencies make in attempting to locate 
households.
    (ii) If a household refuses to cooperate with the quality control 
reviewer and the State agency has taken other administrative steps to 
obtain that cooperation without obtaining it, the household shall be 
notified of the penalities for refusing to cooperate with respect to 
termination and reapplication, and of the possibility that its case will 
be referred for investigation for willful misrepresentation. If a 
household refuses to cooperate after such notice, the reviewer may 
attempt to complete the case and shall report the household's refusal to 
the State agency for termination of its participation without regard for 
the outcome of that attempt. For a determination of refusal to be made, 
the household must be able to cooperate, but clearly demonstrate that it 
will not take actions that it can take and that are required to complete 
the quality control review process. In certain circumstances, the 
household may demonstrate that it is unwilling to cooperate by not 
taking actions after having been given every reasonable opportunity to 
do so, even though the household or its members do not state that the 
household refuses to cooperate. Instances where the household's 
unwillingness to cooperate in completing a quality control review has 
the effect of a refusal to cooperate shall include the following:
    (A) The household does not respond to a letter from the reviewer 
sent Certified Mail-Return Receipt Requested within 30 days of the date 
of receipt;
    (B) The household does not attend an agreed upon interview with the 
reviewer and then does not contact the reviewer within 10 days of the 
date of the scheduled interview to reschedule the interview; or
    (C) The household does not return a signed release of information 
statement to the reviewer within 10 days of either agreeing to do so or 
receiving a request from the reviewer sent Certified Mail-Return Receipt 
Requested. However, in these and other situations, if there is any 
question as to whether the household has merely failed to cooperate, as 
opposed to refused to cooperate, the household shall not be reported to 
the State agency for termination.
    (2) Cases not subject to review. Active cases which are not subject 
to review, if they have not been eliminated in the sampling process, 
shall be eliminated in the review process. In addition to cases listed 
in Sec.  275.11(f)(1), these shall include:
    (i) Death of all members of a household if they died before the 
review could be undertaken or completed;
    (ii) The household moved out of State before the review could be 
undertaken or completed;
    (iii) The household, at the time of the review, is under active 
investigation for intentional Food Stamp Program violation, including a 
household with a pending administrative disqualification hearing;
    (iv) A household receiving restored benefits in accordance with 
Sec.  273.17 but not participating based upon an approved application 
for the sample month;
    (v) A household dropped as a result of correction for oversampling;
    (vi) A household participating under disaster certification 
authorized by FNS for a natural disaster;
    (vii) A case incorrectly listed in the active frame;
    (viii) A household appealing an adverse action when the review date 
falls within the time period covered by continued participation pending 
the hearing;

[[Page 844]]

    (ix) A household that did not receive benefits for the sample month; 
or
    (x) A household that still cannot be located after the reviewer has 
attempted to locate it in accordance with paragraph (g)(1)(i) of this 
section.
    (h) Demonstration projects/SSA processing. Households correctly 
classified for participation under the rules of a demonstration project 
which establishes new FNS-authorized eligibility criteria or modifies 
the rules for determining households' eligibility or allotment level 
shall be reviewed following standard procedures provided that FNS does 
not modify these procedures to reflect modifications in the treatment of 
elements of eligibility or basis of issuance in the case of a 
demonstration project. If FNS determines that information obtained from 
these cases would not be useful, then they may be excluded from review. 
A household whose most recent application for participation was 
processed by Social Security Administration personnel shall be reviewed 
following standard procedures. This includes applications for 
recertification, provided such an application is processed by the SSA as 
allowed in Sec.  273.2(k)(2)(ii).

[Amdt. 260, 49 FR 6306, Feb. 17, 1984; 49 FR 14495, Apr. 12, 1984, as 
amended by Amdt. 264, 51 FR 7207, Feb. 28, 1986; Amdt. 295, 52 FR 29658, 
Aug. 11, 1987; 53 FR 39443, Oct. 7, 1988; 53 FR 44172, Nov. 2, 1988; 
Amdt. 324, 55 FR 48834, Nov. 23, 1990; Amdt. 362, 61 FR 54292, Oct. 17, 
1996; Amdt. 366, 62 FR 29659, June 2, 1997; Amdt. 373, 64 FR 38296, July 
16, 1999; 67 FR 41619, June 19, 2002]