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Whistleblower accuses Dept. of Public Welfare of fraud, waste

Reported by: Chris Papst 

HARRISBURG -- The welfare system is designed to help people who have fallen on hard times, But weve all heard stories of people cheating the system, with thefts amounting to tens of millions of dollars every year in waste and abuse.

Now a whistleblower has come forward to say the state is at fault for creating a decades-old culture of fraud. 

It is deeply flawed, the whistleblower told CBS 21 News when she sat down for an interview. Its a circus.

For the past five years, she has seen the inner workings of Pennsylvanias highest-funded department, the Department of Public Welfare. As a case worker, it was her job to issue benefits based on eligibility. Because of that, she cant be identified.  

Oh my goodness, yes, from day one, she said when CBS 21 News asked if she was told never to talk to the media. They just don't want the details of what goes on getting out."

Details like the ones she told CBS 21 News.

"The people who have worked there forever will tell you things like, 'Close your eyes and authorize' and 'When in doubt, give it out,' she recalled.

After college, the Pennsylvania native wanted to give back by helping people get back on their feet, but she quickly got frustrated by a deep-rooted culture she didnt expect. 

Programs are supposed to create self-sufficiency, she said, but the way everything is set up it enables the exact opposite.

Now, shes had enough. She quit her job and is blowing the whistle, saying whats really happening to your tax dollars.

There's only so much of this you can take, she said.

At $11 billion a year, Pennsylvania spends 40 percent of its budget just on public welfare, but the benefits are not simply given out. The state does have requirements, like job training.

The whistleblower who talked to CBS 21 News said the rules are not enforced and information is not checked for truth.

"I would always joke you could have the family dog write the statement and stamp his paw on it and we would accept it," she said.

But what might surprise you most is how the system handles fraud. This woman says she was encouraged to look the other way. She remembered a time when she caught a client lying and her supervisor reprimanded her, saying that it wasn't her job to catch fraud.

"That supervisor wrote on my first EPR (employee performance review) that '[she] needs to work more on finding more people eligible instead of not eligible,' she said.

When CBS 21 News took this whistleblower's information to the governor's office, it was met with incredulity. 

"Governor Corbett, he would be appalled at the stories youre telling me. I'm appalled at the stories youre telling me, Beverly Mackereth, state Secretary of Public Welfare, said. This is not the way its supposed to be.

When Mackereth took over DPW in February, she knew there were cultural and systemic issues, but not like this. 

CBS 21 News asked Mackereth why the department doesn't know where every dollar goes since it is taxpayer money.

She responded, We dont look at every case. We cant look at every case. We look at trends.

Its not hard to see why. At 17,000 employees, DPW is larger than many Fortune 500 companies. It distributes assistance to 2.8 million Pennsylvanians -- 16 states dont even have that many people total. Mackereth says with numbers that large, waste, fraud, and abuse oftentimes go undetected.

Not at all [does this surprise me], said Nathan Benefield with the Commonwealth Foundation, a government watchdog group.

For a long time that has been the culture of the Department of Public Welfare of trying to add more people to the rolls and celebrating that fact, Benefield said.

Benefield pointed to a 2010 study by the Auditor General that found Medicaid waste alone amounts to a whopping $1 billion annually. The AG found 15 percent of all payments are made in error. 

You have to change the culture there of waste, fraud and abuse because that is taking money out of the pockets of taxpayers and even risking the social safety net for those who truly need it, stated Benefield. 

"We want our staff to ensure that the people who are entitled to the benefits get them and the people who aren't don't, period, Mackereth said.

But for the DPW whistleblower, thats not the message she received.  
Its just authorize and be done with it. Get them in and get them out. Its about managing the numbers, she said. 

"Thats unacceptable, Mackereth said when CBS 21 News told her what the whistleblower had said. But unless I know who that is, I can't do anything.

Tell her she needs to contact me.  We've got to fix it. We've got to fix it. But people can't be afraid to come forward or we'll never know."

What the secretary means by coming forward is reporting welfare fraud. Last year, the Office of the Inspector General, which investigates welfare fraud, saved taxpayers $128 million in payment and restitution.

Also, CBS 21 News can report the manager at the County Office where the whistleblower who contacted the station worked is no longer there, and the Operations Director who manages all 93 County Offices in the state was replaced earlier this year.  

CBS 21 News gave the whistleblower Mackereths phone number and they have connected and are actively working together to deal with the issues highlighted in this story.

We will keep you updated, but we can report now there are changes coming.
To report welfare fraud call 717-772-2644 or toll free at 877-888-7927 or online by clicking HERE.
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