Former South Dakota Food Stamp Admin Implicated in Wisconsin, Virginia SNAP Abuse

Hey, Kristi! You know all those fears you like to fan about fraud in food stamps? Well, the feds have found fourteen million dollars’ worth of food stamp fraud… committed not by food stamp recipients but by corrupt state officials in Virginia and Wisconsin following the direction of a former South Dakota official turned consultant. Here’s the Department of Justice’s statement on the “improper and biased quality control practices” that it says Julie Osnes instructed the Virginia Department of Social Services to use to falsely claim $7.1 million in food stamp administration bonuses:

As part of the settlement, VDSS admitted that, beginning in 2010, it retained Julie Osnes Consulting, a quality control consultant, to reduce its SNAP benefits determination error rate by training VDSS quality control workers to “use whatever means necessary” to find a benefits decision “correct” rather than finding an error. VDSS also admitted that if its quality control staff “could not find a way to make a benefits decision correct,” they were instructed to “find a reason to ‘drop’ the case, or eliminate it from the sample.” VDSS acknowledged that this outcome-driven method, as implemented by VDSS between 2010 and 2015, “injected bias into the case review process” because it was designed to lower VDSS’s reported error rate by falsely reporting errors as “correct” or eliminating them from the sample. Through its use of these biased methods, VDSS was improperly awarded USDA performance bonuses for 2011, 2012, and 2013.

VDSS further admitted that VDSS quality control workers did not want to use the methods proposed by Julie Osnes Consulting because they believed the methods lacked integrity, injected bias into the quality control process, and violated USDA requirements, and that they communicated these concerns to their supervisors. VDSS admitted that the former VDSS quality control manager pressured and intimidated these employees to force them to adopt these methods, including, according to these employees, threatening termination, providing negative performance reviews, taking away teleworking and flexible scheduling privileges, and engaging in other forms of harassment and retaliation.

As part of the settlement, VDSS and the United States also agreed that VDSS had taken certain corrective actions beginning in 2015, including terminating its use of the improper quality controls methods devised by Julie Osnes Consulting [“Virginia Department of Social Services Agrees to Pay $7.1 Million to Resolve Alleged False Claims for SNAP Funds,” U.S. Department of Justice, 2017.04.10].

DOJ offers a similar account of Osnes-guided food stamp monkeyshines in the Wisconsin Department of Health Services:

As part of the settlement, WDHS admitted that, beginning in 2008, it utilized the services of Julie Osnes Consulting, a quality control consultant, to review the error cases identified by WDHS quality control workers. WDHS further admitted that based on instructions from Julie Osnes Consulting it implemented several improper and biased quality control practices, including: (1) finding a basis for dropping error cases from the review by discouraging beneficiaries from cooperating with information requests and pursuing unnecessary information; (2) selectively applying requirements and policies to overturn and reduce errors; (3) asking beneficiaries leading questions to obtain desired answers to eliminate error potential; (4) arbitrating any and all differences with USDA; (5) subjecting error cases to additional scrutiny and quality control casework with the goal of overturning an error or dropping a case; and (6) omitting verifying information in documents made available to USDA. These practices improperly decreased WDHS’s reported error rate, and as a result, WDHS earned performance bonuses for 2009, 2010, and 2011 to which it was not entitled [“Wisconsin Department of Health Services Agrees to Pay Nearly $7 Million to Resolve Alleged False Claims for SNAP Funds,” U.S. Department of Justice, 2017.04.13].

Julie Osnes? Who’s that? We could try to find out from her consulting firm website… but KELO’s Angela Kennecke called her yesterday and prompted her to scrub her online content. You can read that bio on the Internet Archive; here’s a similar bio Osnes put up online under another business venture of hers, RightManual.com:

Julie Osnes
Julie Osnes

Julie Osnes is the CEO of RightManual.  The company was founded after identifying a need to create effective manuals that policy workers were able to use to assist in carrying out their duties in a cost effective manner.  Julie previously founded Julie Osnes Consulting, LLC in October 2007 after selling her interests in The Rushmore Group, LLC. Osnes retained SNAP QC consulting services at the time of separation. Ms. Osnes was a Member in Rushmore for 7 years (May 2000-October 2007) following over twenty years of state experience administering the SNAP Program for the South Dakota Department of Social Services. During this time, the South Dakota Food Stamp Program consistently maintained a high accuracy rate (exceeding 95 percent) that led to 16 consecutive years of enhanced funding from the federal government. Her considerable benefit delivery knowledge and management skills led Governor William Janklow to appoint her to lead his welfare reform initiative in 1996. This experience required her to form discussion committees, schedule focus groups, and ultimately develop and deliver the State’s TANF program to the legislature – a project of major scope and importance. In recognition of her national leadership role for the Food Stamp Program, Ms. Osnes was the recipient of the 2000 Leadership Award presented by the American Public Human Services Association (APHSA). Ms. Osnes was president of the American Association of Food Stamp Directors for five years and served on APHSA’s Board of Directors for four years. Her efforts providing QC consulting services with documented results is reason enough to apply her methods and experiences to QC issues facing other states. Julie Osnes is now sole proprietor of Julie Osnes Consulting, LLC, a company established to provide SNAP QC consulting services [jturincs, “Julie,” RightManual.com, 2016.12.11].

The Milwaukee Journal Sentinel notes that Wisconsin Governor Scott Walker stopped the shady practices in 2011. However, Osnes appears to have kept her contract with the state of Wisconsin:

Julie Osnes Consulting was paid $429,000 for its work in 2009, records show. That was 15% of the total performance bonus for low error rates awarded that year to the agency, according to [WDHS spokeswoman Julie] Lund.

The consultant was paid $100,004 in subsequent years. The contract was terminated in 2015, Lund said [Don Behm, “Wisconsin Pays $7 Million Penalty to Federal Government for False Food Share Claims,” Milwaukee Journal Sentinel, 2017.04.13].

Osnes contracted with the state of Virginia from 2010 to 2012. There’s no published word on whether Wisconsin and Virginia will try to make Osnes pay back her cut of the improper bonuses those states earned.

States where Julie Osnes Consulting held contracts for food stamp work, archived from JulieOsnesConsulting.com 2015.02.20.
States where Julie Osnes Consulting held contracts for food stamp work, archived from JulieOsnesConsulting.com 2015.02.20.

Osnes’s website used to list the following states where her services had secured high performance bonuses for food stamp programs:

FY 2013 Food Stamp High Performance Bonus

96% of the total 2013 bonus pool of thirty million dollars went to the following states that currently partner or have partnered with Julie Osnes::

  • Alaska – Lowest Payment Error Rate& Lowest CAPER – $482,032
  • New Jersey – Lowest Payment Error Rate – $1,637,797
  • Virginia – Lowest Payment Error Rate – $1,723,956
  • Florida – Lowest Payment Error Rate – $7,015,422
  • Mississippi – Lowest Payment Error Rate – $1,185,054
  • South Carolina – Most Improved CAPER – $1,687,834
  • Iowa – Lowest CAPER – $856,340
  • Missouri – Most Improved Payment Error Rate – $1,656,202
  • Texas – Lowest Payment Error Rate – $6,056,493
  • Tennessee – Lowest Payment Error Rate & Most Improved CAPER – $5,078,969
  • Louisiana – Lowest Payment Error Rate – $1,614,241

FY 2012 Food Stamp High Performance Bonus

75% of the total 2012 bonus pool of thirty million dollars went to the following states that currently partner or have partnered with Julie Osnes:

  • Alaska – Lowest Payment Error Rate & Lowest Case & Procedural Error Rate – $ 710,531
  • Alabama – Lowest Payment Error Rate – $1,897,845
  • Wisconsin – Lowest Payment Error Rate – $1,842,047
  • Florida – Lowest Payment Error Rate – $8,072,238
  • Virginia – Lowest Payment Error Rate – $2,020,886
  • South Carolina – Lowest Payment Error Rate – $1,892,369
  • Mississippi – Lowest Case & Procedural Error Rate – $2,793,953
  • Maine – Lowest Case & Procedural Error Rate – $ 1,291,604
  • Louisiana – Lowest Payment Error Rate – $1,945,592

FY 2011 Food Stamp High Performance Bonus

71% of the total 2011 bonus pool of thirty million dollars went to the following states that currently partner or have partnered with Julie Osnes:

  • Alaska – Top 7 Positive Error Rate & Lowest Negative Error Rate – $ 562,113
  • Delaware – Top 7 Positive Error Rate – $435,208
  • Georgia – Most improved Negative Error Rate – $3,975,869
  • Wisconsin – Top 7 Positive Error Rate – $2,106,427
  • Florida – Top 7 Positive Error Rate – $9,087,687
  • Virginia – Top 7 Positive Error Rate – $2,303,828
  • South Carolina – Top 7 Positive Error Rate – $2,217,828
  • Maine – Lowest Negative Error Rate – $719,248

FY 2010 Food Stamp High Performance Bonus

77% of the total 2010 bonus pool of thirty million dollars went to the following states that currently partner or have partnered with Julie Osnes:

  • District of Columbia – Most improved Negative Error Rate – $347,086
  • Michigan – Most improved Negative Error Rate – $3, 338,653
  • Nebraska – Top Negative Error Rate – $363,960
  • Delaware – Top 7 Positive Error Rate – $320,503
  • Alaska – Top 7 Positive Error Rate – $232,898
  • Indiana – Top 7 (& most improved) Positive Error Rate – $1,618,569
  • Georgia – Top 7 Positive Error Rate – $3,076,511
  • Wisconsin – Top 7 Positive Error Rate – $1,484,019
  • Florida – Top 7 Positive Error Rate – $6,083,577

FY 2009 Food Stamp High Performance Bonus

71% of the total 2009 bonus pool of thirty million dollars went to the following states that currently partner or have partnered with Julie Osnes:

  • Maine – Top 7 Positive and Top 4 Negative Error Rates – $1,328,261
  • Delaware – Top 7 Positive Error Rate – $407,494
  • Georgia – Top 7 Positive Error Rate – $4,187,866
  • Wisconsin – Top 7 Positive and Most Improved Negative Error Rates – $2,861,791
  • Nebraska – Top 7 Positive and Top Negative Error Rates – $850,986
  • Florida – Top Positive and Most Improved Negative Error Rates – $11,552,247

FY 2008 SNAP Program High Performance Bonuses

48% of the total 2008 bonus pool of thirty million dollars went to the following states that currently partner or have partnered with Julie Osnes:

  • Delaware – Most Improved Positive – $408,606
  • Florida – Highest Accuracy Positive – $7,179,612
  • Georgia – Highest Accuracy Positive – $4,062,236
  • Colorado – Most Improved Negative – $1,454,277
  • Nebraska – Highest Accuracy in both Positive and Negatives – $1,339,060

FY 2007 Food Stamp Program High Performance Bonuses

  • Nebraska – Top 7 for Positive and Top 4 for Negative error rates – $1,023,369
  • Pennsylvania – Top 7 Positive – $4,644,234
  • Missouri – Top 7 Positive – $2,662,498
  • Florida – Most Improved Positive – $5,481,910
  • Alabama – Top 4 negative – $1,715,161

FY 2006 Food Stamp Program High Performance Bonuses

  • Missouri – Top 7 Positive Error Rate – $3,234,784
  • Nebraska – Top 4 Negative Error Rate- $466,639
  • Pennsylvania – Top 4 Negative Error Rate – $3,651,458

FY 2005 Food Stamp Program High Performance Bonuses

  • Alabama – Top 7 Positive Error Rate – $4,336,006
  • Nebraska – Top 4 Negative Error Rate – $1,063,944

FY 2004 Food Stamp Program High Performance Bonuses

  • Utah – Top 7 Positive Error Rate – $561,367
  • Pennsylvania – Top 7 Error Rate – $5,010,200
  • Colorado – Most Improved Positive Error Rate – $1,202,150

FY 2003 Food Stamp Program High Performance Bonuses

  • California – Most Improved Positive Error Rate – $6,819,955
    • QC services were partnered with counties and not the state. Counties included Los Angeles, San Bernardino, Fresno, Sacramento, Santa Clara, Contra Costa, San Joaquin, Tulare & Orange [from JulieOsnesConsulting.com, archived 2015.02.20].

There’s no word on whether DOJ has found evidence of improper food stamp performance bonuses in any of these other states where Osnes’s firm provided services.

Osnes’s lawyer, Jamie Damon of Pierre, tells KELO-TV (and anyone else who will listen that the DOJ is “slandering” his sterling-souled client to cover up the feds’ own failings:

JOC is a well-respected company and with a great reputation.  FNS and DOJ have set out to destroy this reputation by civil proceedings which I, as JOC counsel believes were meant to shield USDA & FNS from further embarrassment as the result of the 10/15 OIG Report.

JOC offers advice.  States are free to use JOC’s advice in any manner they see fit and JOC does not sign off on completed cases.  The only thing JOC can be certain of is that instructions were not given that would have resulted in a State going outside of USDA established standards & procedures.

As an aside I have known Julie Osnes for many, many years.  She is a person of the highest integrity.  Her business dealings reflect that.   She does not advocate “taking any means necessary” but rather consistently advises states to follow federal regulations and not step beyond them.  JOC cannot speak for state management practices since her work never dealt with a state’s employee performance.  JOC dealt with interpretation of federal regulations and how to apply them to cases under review [Jamie Damon, statement to KELO-TV, 2017.04.17].

If the DOJ settlements against Wisconsin and Virginia do redound to the detriment of Osnes’s consulting business, she and her husband Douglas can fall back on farming. They just filed new farm incorporation papers this winter for their 160 acres north of Pierre. If the DOJ’s characterization of her consulting is true, Julie Osnes may find growing food a healthy change from helping government agencies treat federal food assistance as a cash crop.

Related Reading: Todd Epp views Osnes’s alleged participation in this state government food stamp scam as part of a pattern of South Dakota officials using their government experience to improperly cash in (think EB-5 and GEAR UP). “South Dakotans are no better than anyone else,” writes an angry Epp. “We are also subject to the Seven Deadly sins, with greed being chief among them, particularly if you are an alumni of the state’s Republican one party rule.”


17 Responses to Former South Dakota Food Stamp Admin Implicated in Wisconsin, Virginia SNAP Abuse

  1. mike from iowa

    Don’t tell, let me guess-if there is an investigation in South Dakota it would be led by “I can’t find my butt with either hand” Jackley.

    Now there’s a name that should strike severe cases of giggles in crooks.

  2. Roger Cornelius

    The idea of the federal government paying performance bonuses for work that various departments and agencies should be doing anyway has always left a bad taste in my mouth.
    It doesn’t matter which agency or department is involved, performance bonuses will sooner or later encourage fraud.
    If trump truly wants to drain the swamp he will end this practice of performance bonuses and honor those that do outstanding work with a piece of paper.

  3. Roger: Fair point. I just don’t seem to recall your criticism of all the bonuses the Obama Administration paid to the IRS.

    Regarding Todd Epp’s stupid and offensive comment: This person was a program administrator. Do you realize how far down the totem pole this is? It is a career service position. Further, to taint her as somehow part of some larger corruption is a disparagement of literally hundreds if not thousands of state employees who every day get up and do good work for the people.

    Whether it be a former government worker, former accountant, former purchasing manager, former teacher, former church worker, white-collar criminals ALWAYS figure out holes in the system in which they work and exploit it. What is significant is that 99% of former government workers, accountants, purchasing managers, teachers, church workers DO NOT become white-collar criminals and these 99% don’t deserve to be lumped in with the 1% of the dishonest.

  4. Roger Cornelius

    Troy,
    Had a similar issue happened during President Obama’s administration I would have criticized it.
    Remember Troy, President Obama wasn’t on a drain the swamp campaign that trump has locked onto.

  5. mike from iowa

    Want to see performance bonuses, wait until wingnuts get their way and hand out block grants for foodstamps and Medicaid. All the money will got to this person, that person and everyone higher up and if anything is left over it will pay the top guys a salary. Red states are already salivating at all that bogus bonus money to be had at blue states expense.

  6. bearcreekbat

    Wow, if it is true that her cut was almost a half of million dollars in 2009 alone from the bonus money Wisconsin made following her methods, this seems to suggest something more than a “low on the totem pole” bureaucrat.

  7. Epp stupid and offensive? To whom, Troy? People who want to maintain the fiction that South Dakotans and especially servants of the Republican regime are uniquely virtuous?

    Bear, if that 15% cut applies to all of her work, then her firm’s cut in FY 2013 would have been over $4.3 million. Take a public service job and turn it into a lucrative private consulting gig where you now get to put government money in your own pocket—I could use a gig like that!

  8. Of course when Osnes’s lawyer Jamie Damon vouches for her client’s integrity, it needs to be said that Ms. Damon once had a court-appointed criminal case in which she billed for over 24 hours of work in one 24 hour period. Did she really work the entire day from 12:00 am – 11:59 pm and then still do more work in the same day?

  9. Offensive to the literally thousands of state employees who get up and do the people’s business every day without regard to whether the Governor and their bosses (several levels up) are Republican or Democrat.

    I get you want to make every single infraction a piece of a larger puzzle to serve your political agenda but impugning so many good people who have chosen to make public service their career is despicable.

    I have no allusions that every person in any profession or place of employment is virtuous. In fact, I am fully cognizant of the imperfection of humanity. Thus, I’m not surprised when there examples of nefarious conduct. But, such examples are exceptions when you consider the literally thousands of state employees.

  10. Troy, I don’t think Epp’s comments were offensive at all. It’s the way a lot of South Dakotans feel. You really don’t think your SD state govt has a corrupt history do you? What will it take for soldier abiding republicans like you to ever realize that there has been very real corruption that has taken place.

  11. Troy has a point.

  12. When I worked at the Pierre hospital there would be State Medicaid employees come in and lower the medical diagnoses on newborn charts so the state wouldn’t have to pay out as much. I call that corrupt.
    They would do this by sending a query form to the dr and asking them to change a diagnosis to a less severe one. Keep in mind that the diagnoses that were already on the newborn charts were correct because of the doctor’s documentation. The doctors weren’t trying to get more money from the state, they were just taking care of sick babies that had more severe diagnoses, and so these more complicated diagnoses paid out more.
    The state just did not want to pay out more money to the Medicaid babies.

    The doctors would just go ahead and sign their signature on the form to not cause a hassle with the state.
    I always wondered why St Mary’s Healthcare Center Pierre just let this go on. I was upset to see it happen.
    If this isn’t corruption then what would you call it, Troy?

  13. George Cummings

    None of this is news to those of us who worked in the Food Stamp Quality Control (now SNAP) part of the program. It had been common knowledge for years. When the Office of Inspector General report came out in 2015 those of us from the non-Osnes states shared the same sentiment. “It’s about time!” It is noted that the Osnes website was taken down a few days ago. That website was benign sterilized version of what was there before the OIG report was released. The article shows how extensive this cancer has been. There should be far more to come if people are willing to speak up.

  14. George, do you know of audits going on in other “Osnes states”? Is DOJ looking for signs of improper payments in other states? And is that OIG 2015 report online?

  15. COYOTE-ANOTHER scandal emerging in the state GOP. “Why am I not surprised?” hahaha

    SCRUB THE WEBSITE AND THEN scream “fake news”

  16. George Cummings

    Cory. Just Google FNS QC Process for SNAP Error Rate Audit Report 27601-00002-41.

  17. Troy, given the nature of public service, I would say Todd Epp didn’t do the insult. If she engaged in the shady behavior that DOJ describes, Julie Osnes did the insult. Those of us who work in public service take on the burden of maintaining the public trust. When one public servant violates the public trust, that public servant casts all of her colleagues in a bad light.

    78 pages?! Thanks, George! I now have my reading for the weekend. :-)