A new law requires DHS to cross-check the Michigan Lottery’s list of winners of $1,000 or more with public assistance recipients.
Lawmakers imposed the requirement last year after two high-profile cases of million-dollar lottery winners who continued to receive food stamps months after hitting a jackpot.
DHS Director Maura Corrigan said Monday her department could only remove 565 of the lottery winners — or 16 percent — from the welfare rolls because of “loopholes” and “glitches” in federal asset-testing requirements and rules for cutting off assistance for individuals on public health care programs.
Corrigan is recommending lawmakers adopt a New York law allowing the state to “intercept” lottery winnings from welfare recipients to repay taxpayers.
“To me, that’s an area that would be worthy for the Michigan Legislature to pursue,” Corrigan told The Detroit News.
In recent years, the Republican-controlled Legislature imposed requirements denying food aid for individuals with savings and other above a certain threshold and passed a law letting the state capture lottery winnings from an individual receiving unemployment, she said.
A DHS report released Monday laid out scenarios in which lottery winners continued to receive taxpayer assistance.
In one, a pregnant woman who won $300,000 remained on Medicaid until after the child was born.
In another, a man living with his two adult children lost his food assistance after winning $125,000 in the lottery but both of his children continued to collect $400 each month in food stamps.
“They’re contending they’re making their own meals and not eating with the people they live with,” Corrigan said.
Ending the “loophole” would require a change in federal law, Corrigan said.
DHS said it found 19 individuals on welfare programs who won more than $100,000 and five others living in a household with someone on public assistance.
The 3,544 lottery winners receiving public assistance or living with someone who does represented 14 percent of all winners, according to the report. They won a total of $24,101,074 between April and December 2012, the agency said.
DHS said 791 individuals won between $1,000 and $2,000, and 2,951 — or 83 percent — won less than $5,000. Of the 565 kicked off welfare programs, 364 won less than $5,000, according to the department.
Rep. Rashida Tlaib, D-Detroit, said the department’s actions appeared “punitive.”
“I just think Director Corrigan is more passionate about kicking people off the system than preventing fraud,” Tlaib said.
Supporters of the new law said the report justifies additional asset-testing to weed out misuse of the programs.
“While our efforts have been largely successful in identifying lottery winners who are taking advantage of the system, there is still work to be done to ensure that public assistance only goes to those who truly need it,” state Sen. John Moolenaar, R-Midland, said Monday in a statement.