Overpayment Classifications

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  • #22831
    JamesPickering
    Participant

    We are an SX3 site and we also have the priviledge of having the Auditors in this week. They have come across a couple of instances regarding subsidy classifications which have confused me slightly.

    For example:

    Claimant is paid HB until the 09 Oct 05.
    Notifies us of a change on 11 Oct 05 which decreases HB wef 03 Oct 05 (wage increase 26 Sep 05).
    Payment issued for period 09 Oct 05 to 06 Nov 05 on 04 Nov 05.
    We action change 08 Nov 05.

    Subsidy classifications says:
    Claimant error 03 Oct 05 – 09 Oct 05
    LA error from 10 Oct 05 to 06 Nov 05

    I was expecting it to say the LA error would start from the 17 Oct 05 (Monday following receipt of notification) but am now doubting myself as the system seems to be adjusting the subsidy to LA error from the claimants paid to date prior to us being notified of the change in all the cases.

    The Auditors have convinced themselves that the system is right.

    Any opinions much appreciated,

    James

    #9749
    Anonymous
    Guest

    If the payment for the period 10 October to 6 November was issued before you actioned the change (on 8 November), then I am afraid I would have to agree with your auditors.

    #9750
    JamesPickering
    Participant

    So because the whole payment was wrong does that override the bit about the Monday following receipt of the notification or would the LA error have kicked in a week later if we had punched the change before the payment from the 10.10.06 to 06.11.06 was produced.

    That seems makes sense.

    The HB/CTB overpayments Guide isn’t particularly clear on the whole thing either that or I can’t read.

    Thanks

    J

    #9751
    Anonymous
    Guest

    Yes.

    Provided you had actioned the change before the next payment was issued, your LA error would only have been from the Monday following the date of notification.

    #9752
    JamesPickering
    Participant

    Sorry to drag this up again, but this matter is still ongoing with our Auditors who are now doubting that the period of the 10 Oct – 06 Nov should be LA Error.

    This is because as other LA’s they are Auditing have software which is saying that only the period of the 17 Oct to 06 Nov.

    This is only a week I appreciate but we have some covering more than 4 weeks.

    I have total faith in our system and andy_u_i but my job is based on our level of LA Errors so just want to double check.

    If anyone has any guidance to where I can get confirmation it would be more than helpful (give me something to read in the line at the JC+ maybe!!)

    J

    #9753
    chris harvey
    Participant

    I agree with the original auditor decision and I have seen something from the DWP in the recent past, might have been a post on this board, that summarises it quite simply. Any payments that are made after you are notified of a COC that leads to an overpayment will be LA error.
    The thinking is quite logical in that if the change was actioned straight away then any overpayment would be claimant error, but any payment issued afterwards that includes an element of overpaid benefit will be down to LA error.
    How this works in practice can be confusing because it depends upon the paid to point of the claim. In the example if the change had been actioned immediately then there would have been only one weeks overpayment from 3/10/05 to 9/10/05 and this is attibutable to claimant error. By not actioning that change until after the next payment run, the overpayment continues from 10/10/05 to 6/11/05 and this part of it is due to the LA not actioning the change promptly.
    There are far more complex scenarios particularly for claims paid 2 weeks in advance and 2 weeks in arrears. the claimant may notify promptly but because benefit has been paid in advance there may still be an overpayment for the future 2 weeks that has already been paid. This will not be down to claimant error (because he has notified you immediately the change occurred) and neither will it be LA error. This is correctly classified for subsidy as other error (and qualifies for 40% subsidy).
    The subsidy guru in your authority will most likely have an understanding of these technical issues, but so should a decent auditor.

    #9754
    Anonymous
    Guest

    I agree with Chris. The payment made at the beginning of November should not have gone out, but it did. Whose fault was that? I’m afraid it was yours – you knew by that stage that the claimant was not entitled to the money, but you still paid it. The cause of the overpayment was not claimant error anymore. The claimant was guilty of an error in not notifying you quickly enough, but his error did not cause any benefit to be overpaid after 10 October. Cause and effect are the key to classification

    #9755
    Kevin D
    Participant

    This earlier thread may be of interest:

    new.hbinfo.org.com/forum/viewtopic.php?t=7895

    #9756
    Stalbansbenefits
    Participant

    Yep, your auditors are correct and having just gone through our audit I have to say Northgate is pretty good on allocating the correct subsidy codes for overpayments (as long as you enter the correct dates in the information received fields).

    However, some of our claimant error was actually reclassified as local authority error when the auditors pointed out that we could have physically stopped a cheque from leaving the building around 24 hours after the payment had been generated by Northgate.

    #9757
    JamesPickering
    Participant

    Thank you to all for confirmation.

    On another point our Auditor now says he has done Acadmey sites that are not doing it this way…I do not know any further details.

    James

    #9758
    jerikaz
    Participant

    Just to throw my bit in from an Academy site. I can confirm that I have definitely seen overpayments classfiyed as LA error in the circumstances you have described. Perhaps your auditors are getting mixed up! Well don’t we all! I’ve worked in benefits for 12 years and I still get confused!

    #9759
    seanosul
    Participant

    Just to simplify – there is no Monday after rule with regard to the subsidy allocation of LA Error. For convenience systems allocate subsidy on CTB in this way to the date of processing when the overpayment becomes technical but private payments are easy to stop and therefore you can prevent an overpayment.

    In effect because of payment in arrears it means you may have anything from the same day to 28 days to process a change of circumstances and not be penalised, depending of course where you are on your payment cycle. This was confirmed years ago in a very long discussion with Jane Autherson on this forum.

    I agree with a previous posting from Peter De La Mothe about allocation of LA Error subsidy and the DWP ignoring the law but this argument has continued for years with no resolution. In the mean time if a change comes in at 5 minutes to 5 on a Friday and you do not action it before the next subsidy week (the following Monday) for CTB or before the next payment is made then your authority takes the hit.

    (A little tip on this – some LAs seem to believe that suspending CTB cases does nothing and do not bother until they process the change. This is incorrect. No posting will be made but you will not continue accruing LA Error).

    #9760
    JamesPickering
    Participant

    I think this area needs some serious attention, this is an email we have received from our external Auditors. What chance do LA’s stand…

    [quote:1ba8b87dc6]Attached is an extract from some guidance that one of our other Authorities has received direct from the DWP. This is completely the reverse of how we think that Northgate is processing the overpayments and contradicts the e-mail they sent to you. The e-mail reads –

    “The Audit Commission is definitely not correct in this matter. In fact you are penalising yourself more than you should be doing.

    An overpayment must be classified as a local authority (LA) official error from the Monday following receipt of all the information needed to process the change, if the LA does not process that change by the claimant’s next payday.

    So if you paid a month’s HB after the claimant had reported a change, only the overpayment from the Monday after the claimant had reported the change must be classified as an LA official error, not the full month’s payment.

    I will give you an example, which may explain it better.

    A claimant reports a change on 06/12/06. The change occurred on 07/11/06.

    The claimant is paid 4 weeks HB in arrears on 11/12/06, which covers
    13/11/06 to 10/12/06 and then again on 08/01/07, which covers 11/12/06 to 07/01/07.

    The LA processes the change on 17/01/07.

    The overpayment would be classified as follows:

    13/11/06 to 10/12/06 – Claimant error
    11/12/06 to 07/01/07 – LA official error

    The claimant has contributed to the overpayment up to 06/12/06 by not reporting the change timeously, and so any overpayment up to the end of that week should be classified as Claimant error.

    At the moment, there is a great deal of controversy over the classification of LA official error, due to a delay in processing. This is due to several Commissioners’ decisions, which have contradicted each other. We are in the process of looking at options for the way forward.
    The above is the guidance that should be followed at the present time.
    Things may change in the future, but you would not be required to reclassify overpayments retrospectively, if the guidance was amended.”

    Your comments would be appreciated

    Thanks
    [/quote:1ba8b87dc6]

    #9761
    Kevin D
    Participant

    It needs a strong, but detailed, communication urgently inviting the DWP to clarify the LEGAL position.

    ALL of the arguments / discrepancies between CDs and guidance and law need to be put to the DWP and, given that they view these forums, they should be well aware by now that something needs to be POSITIVELY done. Such as, dare I say, appropriate legislation relating to subsidy and / or the main regs making it clear what delays, if any, are/are not official error.

    Until that happens, or until an LA takes on the DWP, the same old arguments will continue. With the same ppl holding the same conclusions.

    Regards

    #9762
    seanosul
    Participant

    [quote:74fc4f691e=”JamesPickering”]I think this area needs some serious attention, this is an email we have received from our external Auditors. What chance do LA’s stand…

    [quote:74fc4f691e]Attached is an extract from some guidance that one of our other Authorities has received direct from the DWP. This is completely the reverse of how we think that Northgate is processing the overpayments and contradicts the e-mail they sent to you. The e-mail reads –

    “The Audit Commission is definitely not correct in this matter. In fact you are penalising yourself more than you should be doing.

    An overpayment must be classified as a local authority (LA) official error from the Monday following receipt of all the information needed to process the change, if the LA does not process that change by the claimant’s next payday.

    So if you paid a month’s HB after the claimant had reported a change, only the overpayment from the Monday after the claimant had reported the change must be classified as an LA official error, not the full month’s payment.

    I will give you an example, which may explain it better.

    A claimant reports a change on 06/12/06. The change occurred on 07/11/06.

    The claimant is paid 4 weeks HB in arrears on 11/12/06, which covers
    13/11/06 to 10/12/06 and then again on 08/01/07, which covers 11/12/06 to 07/01/07.

    The LA processes the change on 17/01/07.

    The overpayment would be classified as follows:

    13/11/06 to 10/12/06 – Claimant error
    11/12/06 to 07/01/07 – LA official error

    The claimant has contributed to the overpayment up to 06/12/06 by not reporting the change timeously, and so any overpayment up to the end of that week should be classified as Claimant error.

    At the moment, there is a great deal of controversy over the classification of LA official error, due to a delay in processing. This is due to several Commissioners’ decisions, which have contradicted each other. We are in the process of looking at options for the way forward.
    The above is the guidance that should be followed at the present time.
    Things may change in the future, but you would not be required to reclassify overpayments retrospectively, if the guidance was amended.”

    Your comments would be appreciated

    Thanks
    [/quote:74fc4f691e]
    [/quote:74fc4f691e]
    I cannot see the DWP agreeing to classify a payment that the LA could have prevented going out being classed as anything other than LA Error. I do however like your auditors though!

    The first paragraph appears to be no different to how Northgate and how the DWP classify LA Error currently. However in the example given, the LA could have prevented the overpayment and Northgate would have classified that as LA Error. (HBIS would have classified it as LA Error from the Monday after date as its method of calculation I had assumed was basic – but this suggests maybe not!.)

    I have however criticised Northgate for their method of subsidy calculation and at one very large authority I got them to record that the subsidy suite was running with critical errors due to the method of calculation. The Northgate position, I somewhat understand although obviously do not agree with, is that until clear legislation can be identified then they will not change the method of calculation. This was also the position of their subsidy team when they were owned by SX3.

    The problem is not just our relationship between the DWP and LAs but the relationship between Auditors and LAs. Auditors often have very little understanding of benefits and I someties question their ability with regard to Local Government Finance. I would suggest that LA Members would be surcharged if they had that little understanding of the finances of a Local Authority.

    The DWP will only communicate with Auditors about whether the correct level of subsidy is claimed. Where I am at the moment this has led to the DWP asking for a calculation of how much we paid incorrectly because we paid calendar monthly(???), and qualifying us for following legislation on changes of circumstance / extended payments. All down to the Auditor not undertsanding legislation and not believing the Local Authority.

    Far worse is this not large authority faces a £2.5 million penalty because auditors could not find (and did not ask to find) 9 claims out of 50 tested.

    I agree with Kevin on this. The demands for clear subsidy legislation have been heard on here many many times. I do somethimes think that the DWP like the current position as I still say – despite the protestations of the DWP on a much earlier post – that it leads to underclaims from LAs.

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