July 8, 2012
To the Honorable Senate and House of Representatives:
Pursuant to Article LVI, as amended by Article XC, Section 3 of the Amendments to the Constitution, I am returning to you for amendment Sections 52, 53, 54, 173, 174, 175, 176, and 228 (the “EBT sections”) of House Bill No. 4200, “An Act Making Appropriations for the Fiscal Year 2013 for the Maintenance of the Departments, Boards, Commissions, Institutions and Certain Activities of the Commonwealth, for Interest, Sinking Fund and Serial Bond Requirements and for Certain Permanent Improvements.”
The electronic benefit transfer (EBT) program promotes self-sufficiency and personal responsibility for those in need as they transition to independence. I strongly support the program and therefore efforts to assure that EBT cards are not used fraudulently or inappropriately. Because certain sections seek to serve those objectives, I am supporting the EBT sections that seek to identify fraud and misuse, such as section 175, which directs the Inspector General to conduct a data match survey involving cash assistance recipients’ case records; and section 54, which establishes criminal penalties for SNAP trafficking. I am also supporting section 176, which directs the MBTA and RTAs to ensure that EBT cards can be used for payment of public transportation at electronic vending machines.
The remaining EBT sections, however, need additional refinements. Last year, the Legislature established a commission specifically charged to study and report on the use of EBT cards in Chapter 219 of the Acts of 2011, An Act Establishing a Special Commission to Study Electronic Benefit Transfers. The EBT Commission was comprised of representatives from the Administration and Legislature, as well as retailers and benefit recipients. In its final report dated April 1, 2012, the Commission made thoughtful and specific recommendations as to what changes would be both appropriate and feasible, and proposed legislation. Some of the EBT sections before me now include provisions specifically rejected by the EBT Commission. Specifically, the extensive prohibitions on the purchase of items or services was carefully considered by the EBT Commission, and ultimately rejected for reasons of feasibility, enforceability, cost and undue harm to households enrolled in cash assistance programs. The Commission instead concluded that prohibitions on usage in particular establishments, rather than prohibitions on particular items, were appropriate and feasible. I see no reason, other than political grandstanding, to deviate from that basic conclusion.
Additionally, the Commission considered the issues related to a cashless payment system for DTA cash assistance programs, and ultimately recommended further study on the feasibility of such a system. I am therefore amending the language in section 174 to make it clear that any study should look at multiple potential solutions including but not limited to whether a cashless system is feasible before considering how a cashless system should be implemented.
Finally, DTA currently has existing regulations regarding the power to require vendor payments if the Department finds misuse. However, current practice does not require the Department to do multiple screenings for each household. The Department does not have the resources to conduct screenings at each certification and recertification, as would be required by section 173.
For these reasons, I recommend striking sections 52, 53, 54, 173, 174, 175, 176 and 228 and replacing them with the following language:
SECTION 1. Paragraph (B) of section 2 of chapter 18 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out clause (i) and inserting in place thereof the following 2 clauses:-
(i) charge a fee up to the maximum amount permissible under federal law for any electronic benefit transfer card it issues as a replacement for an electronic benefit transfer card that has been lost, mutilated, stolen or destroyed, except if such loss or destruction occurs during the mailing of an original electronic benefit transfer card to a recipient, if the card ceases to work through no fault of the recipient or if the department issues replacement cards on its own initiative to classes of recipients; provided that the fee shall not be less than $5; and provided further that all fees for replacement cards shall be deducted directly from the recipient’s benefits.
(j) send a notice to any benefit recipient who requests more than 3 replacement electronic benefit transfer cards in a calendar year and monitor future requests for replacement cards; provided that the notice shall state that the department has noted an unusual number of requests for replacement electronic benefit cards and will be monitoring all future requests for replacement cards.
SECTION 2. Chapter 18 of the General Laws is hereby amended by striking out sections 5I and 5J, inserted by chapter 84 of the acts of 2011, and inserting in place thereof the following 2 sections:-
Section 5I. (a) As used in sections 5I and 5J the following terms shall, unless the context clearly requires otherwise, have the following meanings:-
“Access device”, a card, code or other means of access that can be used, alone or in conjunction with another access device, to obtain payments, allotments, benefits, money, goods or other things of value, or that can be used to initiate a transfer of funds under the federal Food and Nutrition Act of 2008, 7 U.S.C. § 2011 et seq., or regulations issued pursuant to the federal Food and Nutrition Act of 2008.
“Direct cash assistance”, any manner of cash assistance provided by the department of transitional assistance including, but not limited to, temporary aid to families with dependent children, wherein the assistance is provided directly to the recipient, rather than a vendor.
“Electronic benefit transfer card”, a card that provides benefits through an electronic benefit transfer.
“Electronic benefit transfer transaction”, the use of a credit or debit card service, automated teller machine, point-of-sale terminal or access to an online system for the withdrawal of funds or the processing of a payment for merchandise or a service.
(b) No person shall knowingly use or accept direct cash assistance funds held on electronic benefit transfer cards or access devices for the purchase or sale of the following services or products: alcoholic beverages as defined in section 1 of chapter 138; lottery tickets; tobacco products as defined in section 1 of chapter 64C.
(c) A recipient of direct cash assistance who makes a purchase in violation of this section shall be subject to disqualification under department intentional program violation regulations and shall reimburse the department for such purchase.
Section 5J. (a) The department shall maintain policies and practices as necessary to prevent cash assistance provided under this chapter from being used in any electronic benefit transfer transaction at: liquor stores; casinos or gambling casinos or gaming establishments, any retail establishments which provide adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment, as defined in Section 408(a) of the Social Security Act, as amended; adult bookstores or adult paraphernalia stores; firearms dealers and ammunitions dealers; tattoo parlors; spas; bars and drinking establishments; and cruise ships. Such establishments shall not accept electronic benefit transfer cards. A store owner who knowingly allows a prohibited electronic benefit transfer transaction in violation of this section or subsection (b) of section 5I shall be punished by a fine of not more than $500 for a first offense, by a fine of not less than $500 nor more than $2,500 for a second offense and by a fine of not less than $2,500 for a third or subsequent offense.
(b) A store owner who knowingly violates this section and who also possesses a license to sell alcoholic beverages under section 12 of chapter 138 shall be referred to the appropriate licensing authority for possible disciplinary action pursuant to section 64 of said chapter 138.
(c) A store owner who knowingly violates this section and who also possesses a license to sell lottery tickets under sections 26 and 27 of chapter 10 shall be referred to the director of the state lottery for possible disciplinary action.
(d) A recipient of direct cash assistance who makes a purchase in violation of this section shall be subject to disqualification under department intentional program violation regulations and shall reimburse the department for such purchase.
SECTION 3. Said chapter 18 is hereby further amended by inserting after section 5K the following 3 sections:-
Section 5L. (a) As used this section and section 5M, “food stamp benefits” shall mean benefits issued pursuant to the federal Food and Nutrition Act of 2008, 7 U.S.C. §§ 2011 to 2029, inclusive, as amended, including such benefits contained on an electronic benefit transfer card.
(b) An individual commits the offense of food stamp benefits trafficking if the individual knowingly:
(1) presents for payment or redemption or transfers food stamp benefits in any form, including transfers to another, who does not, or does not intend to, use the food stamp benefits for the benefit of the household for whom the benefits were intended, as defined in the regulations of the department; or
(2) possesses, buys, sells, uses, alters, accepts or transfers food stamp benefits in any manner not authorized by the Food and Nutrition Act of 2008, 7 U.S.C. § 2011, as amended.
(1) if the food stamp benefits are of a value of less than $250 or if the item used, transferred, acquired, altered or possessed has a value of less than $250, be punished by imprisonment in a jail or house of correction for not more than 1 year or by a fine of not more than $1,000, or both such fine and imprisonment; or
(2) if the food stamp benefits are of a value of $250 or more or the item used, transferred, acquired, altered or possessed has a value of $250 or more, be punished by imprisonment in a jail or house of correction for not more than 2 years or by imprisonment in a state prison for not more than 5 years or by a fine of not more than $5,000, or both fine and imprisonment.
(d) If a person is alleged to have committed the offense of trafficking in food stamp benefits 2 or more times within a 6-month period, those offenses may be aggregated and charged in a single count and the offenses so aggregated and charged shall constitute a single offense; provided, however, that, if the aggregate value of the food stamp benefits alleged to be trafficked is $250 or more, the person shall be subject to the penalties prescribed in clause (2) of subsection (c).
(e) Crimes under this section may be prosecuted and punished in any county where a defendant used, transferred, acquired or possessed food stamp benefits or in the county in which the state agency responsible for administering food stamp benefits is headquartered.
Section 5M. (a) As used in this section, “organization” shall mean a corporation for profit or not-for-profit, partnership, limited partnership, joint venture, unincorporated association, estate, trust or other commercial or legal entity; provided, however, that “organization” shall not include an entity organized as or by a governmental agency for the execution of a governmental program.
(b) An organization commits the offense of organizational food stamp benefits trafficking if the organization knowingly; (i) uses, sells, transfers, acquires, alters or possesses food stamp benefits or electronic benefit transfer cards in any manner not authorized by the Food and Nutrition Act of 2008, 7 U.S.C. § 2011, as amended, or the regulations of the department; or (2) presents for payment or redemption food stamp benefits that have been received, transferred, altered or used in violation of this section shall be guilty of organizational food stamp benefits trafficking.
(c) If an organization is alleged to have committed the offense of organizational food stamp benefits trafficking 2 or more times within a 6-month period, any of those offenses may be aggregated and charged in a single count and the offenses so aggregated and charged shall constitute a single offense.
(d) An organization that commits food stamp benefits trafficking as described in subsection (c) shall:
(1) if it is the organization’s first offense under this section, be punished by a fine of not less than $5,000;
(2) if it is the organization’s second offense under this section, be punished by a fine of not less than $10,000; or
(3) if it is the organization’s third or subsequent offense under this section, be punished by a fine of not less than $50,000.
(e) A retail or wholesale organization owner who is convicted of organizational food stamp benefits trafficking and who also possesses a license to sell alcoholic beverages under section 12 of chapter 138 shall be referred to the appropriate licensing authority for possible disciplinary action pursuant to section 64 of said chapter 138.
(f) A retail or wholesale organization owner who is convicted of organizational food stamp benefits trafficking and who also possesses a license to sell lottery tickets under sections 26 and 27 of chapter 10 shall be referred to the director of the state lottery for possible disciplinary action.
(g) Crimes under this section may be prosecuted and punished in any county where a defendant used, transferred, acquired or possessed food stamp benefits, or the county in which the state agency responsible for administering food stamp benefits is headquartered.
Section 5N. The department shall develop and make available on its website for download a sign specifying the department’s fraud hotline. Business associations may also maintain a downloadable form of the sign on the business associations’ websites. Such sign shall be posted in a conspicuous area in any business accepting electronic benefits transfer cards as a form of payment. Any business accepting electronic benefit transfer cards as a form of payment shall maintain a list of categories of prohibited products under section 5I at each cash register.
SECTION 4. Notwithstanding any general or special law to the contrary, there shall be an independent commission to examine options that may result in improvements to the cash assistance delivery system, including but not limited to a cashless benefit delivery model. The commission shall consist of: the commissioner of transitional assistance, or a designee, who shall serve as chair; the inspector general, or a designee; the state auditor, or a designee; 2 members of the house of representatives, 1 of whom shall be appointed by the minority leader; 2 members of the senate, 1 of whom shall be appointed by the minority leader; and 2 persons representing eligible recipients to be appointed by the governor. The commission shall research, assess, and develop appropriate recommendations. The report shall include, but not be limited to, the costs associated with, and any technological improvements necessary to implement commission recommendations and the time frame required for such implementation. The commission shall submit a final report of its findings and recommendations by filing the same with the clerks of the senate and house on or before March 31, 2013.
SECTION 5. Notwithstanding any general or special law to the contrary, the inspector general shall conduct a data match survey involving the case records for households receiving cash assistance benefits under chapter 18 of the General Laws for the purposes of uncovering information that is inconsistent with or contradictory to information provided by the cash assistance benefit recipients. The inspector general shall submit a report that shall include the results of a further investigation on a statistically valid sample of the cases for which inconsistent or contradictory information has been found to determine if the household is receiving benefits for which it is not eligible, and if so, whether the error is due to administrative error, unintentional program violation or intentional program violation with the house and senate committees on ways and means on or before December 31, 2012; provided, however, that 60 days before filing the report the inspector general shall provide a draft of the report to the department of transitional assistance for review and comment and the inspector general shall include the department’s comments with the report when it is made public and filed.
SECTION 6. Notwithstanding any general or special law to the contrary, the department of transitional assistance shall coordinate with the Massachusetts Bay Transportation Authority and each of the regional transit authorities to ensure that by June 30, 2013, cash assistance funds held on electronic benefit transfer cards are accepted for payment of public transportation fares at electronic fare vending machines.
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