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 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.

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.”