The Maine Department of Health and Human Services plans to appeal a demand by the federal government that the state repay nearly $5 million in erroneous food assistance benefits.

DHHS in late July notified about a third of the Mainers who rely on the Supplemental Nutrition Assistance Program, commonly known as food stamps, that their benefits would be reduced to recoup the overpayments.

The U.S. Department of Agriculture, which oversees and pays for the program, in a letter this week prohibited DHHS from collecting the overpayments from about 70,000 recipients and billed the state for the full amount of $4,861,920.

“I am very disappointed and dismayed at [USDA’s] inconsistent approach to the program, and we will be appealing this recent decision,” DHHS Commissioner Mary Mayhew said Thursday.

Mayhew cited an earlier letter sent March 30 by the USDA that she said instructed DHHS to pursue collection of the overpayments. The letter encouraged the state to consider repayments case by case and gave DHHS the green light to waive or lower repayments for recipients who would suffer hardship or were unlikely to return benefits within three years based on their economic circumstances.

DHHS sought to recover a total of up to $80 from each affected household. While beneficiaries were notified that their benefits would be reduced, those deductions have not been made, Mayhew said.

Between April and July 2011, the program paid out more than federal regulations allowed. The overpayments went out after the federal government decided to cut back the portion of benefits that helps recipients pay their utility bills. The USDA had previously boosted those benefits temporarily when oil prices rose to record levels last year, so the reduction was a readjustment.

Maine law prevented DHHS, which administers the program, from reducing benefits until a formal rule change in the program was made, according to the department. In June, DHHS restored benefits for a several-month period to comply with state requirements, according to the Sept. 24 letter to Mayhew from James Arena-DeRosa, northeast regional administrator for the USDA’s Food and Nutrition Service.

Arena-DeRosa wrote that the overpayments were “the result of a systemic state error.”

“It is unfortunate that Maine did not pursue a consultation with FNS,” the letter states. “This would have afforded FNS the opportunity to properly advise the state of their legal responsibilities and options, and likely would have prevented the establishment of these claims.”

Mayhew said DHHS was in contact with USDA about the overpayments, including before the March 30 letter.

DHHS “certainly would have preferred to have our changes in state policy immediately coincide with the changes that needed to occur to be consistent with the federal requirement,” she said. “We do not see that as a systemic error.”

The feds are asking Maine to pay back about $2.8 million of the $4.8 million that’s owed. USDA deducted from the total about $2 million in bonus awards that the state was eligible for in fiscal year 2011.

Mayhew said it was “troubling” that USDA cited systemic problems in Maine’s oversight of the food assistance program while in the same letter acknowledged bonus payments for DHHS’ performance in accurately providing benefits and access to the program.

Congresswoman Chellie Pingree, D-Maine, said many families complained about having their benefits cut to make up for DHHS’ error.

“We heard from dozens of food stamp beneficiaries who suddenly, out of the blue, were informed that they owed the state $80,” she said in a statement issued Thursday. “For people struggling to put food on the table, that represents a big hit to their budget. These families didn’t do anything wrong; the overpayment was due to an administrative mistake, and there was no way they could have possibly known they were getting a few dollars more a month than they should have.”

Mayhew categorized the request for repayment as an attempt by the feds to unfairly shift the financial burden from recipients to Maine taxpayers. Senate Democrats issued an opposing statement saying DHHS should take responsibility rather than shift the costs to Maine families.

“The administration’s ongoing neglect of the law and mismanagement is costing Maine taxpayers,” Assistant Democratic Leader Sen. Justin Alfond of Portland said in the statement. “As seen here, the administration’s arrogant approach is harmful to Maine families and now it’s costing all of us.”

Republican Sen. Richard Rosen of Bucksport, co-chairman of the Legislature’s budget committee, dismissed Democrats’ claim that the food assistance error was part of a pattern of behavior by the LePage administration.

“That sounds like campaign rhetoric a few weeks before the election,” he said. “That doesn’t line up with the historic reality.”

Lawmakers should let DHHS’ appeal run its course through the federal review process, Rosen said.

The USDA didn’t state in this week’s letter when it expects payment from DHHS, but indicated it would consider allowing the state to repay the debt over multiple fiscal years.

DHHS has 10 days to file its appeal.

Jackie Farwell

I'm the health editor for the Bangor Daily News, a Bangor native, a UMaine grad, and a weekend crossword warrior. I never get sick of writing about Maine people, geeking out over health care data, and...