1. DIRECT PAYMENT FRAUD By Claire Cunningham, Corporate Fraud Investigator and Jason Hevingham, Corporate Fraud Investigator (TMBC)

2. Background….. Direct Payments were set up with the Community Care (Direct Payments) Act (1996) which came into force in April 1997. Payments made to service users to organise care services themselves. Some choose to employ carers from an agency others choose to employ their own. The decision to award a Direct Payment is made following an assessment of the individual. The assessment is carried out by Social Workers within Adult Services or Children’s Services. Following an assessment a Care Plan and Support Plan is devised and the hours of care the service user has been assessed as requiring is calculated. Allows people to have choice, flexibility, control and independence. Works well when used correctly!

3. Direct Payments in Tameside Tameside MBC have 376 Direct Payment cases for Adults and 74 Direct Payment cases for Children. Tameside MBC pay out on average £3.7 million in Direct Payments each year. A new Direct Payment Agreement/Contract was introduced in 2013, however only Adults at present have adopted this to date, Children’s Services are yet to introduce the new contract. Further amendments are currently being made to make the contract even more robust than it already is. 3

4. Which type of Direct Payment (DP) Account? Managed Account – DP client uses a third party i.e. a payroll company to pay the carers direct into their bank account, send payments to HMRC and issue payslips direct to carers. Non Managed Account – Payroll company is still used, however, the DP client or appointee has responsibility for paying the carers, sending payments to HMRC and issuing the payslips. There may be a small number of clients that do not use a payroll company and do all the paperwork themselves i.e. producing and issuing payslips, calculating Tax and National Insurance contributions, paying carers their wages by either bank transfer or cheque. Carers should NEVER be paid cash. Fraud can be committed on ALL types of account. 4

5. Examples of Fraud on Accounts: Managed DP account : Fictitious carers are set up with the payroll company used by the DP client. The bank account details on the carers new starter forms is in fact the bank account number of the DP client or an associate. Non Managed DP account : Fictitious carers set up Exaggerated hours for carers are phoned through to the payroll company in which case the DP client or appointee will take a top slice of the wage. Payslips may reconcile against cheques debiting the bank account, however, those cheques may have been addressed to someone else, payee ‘cash’ or used for purchases/funding lifestyle. Neither a Managed or Non Managed Account Fictitious carers can be set up. Payslips tend to be handwritten often not completing all the necessary information so difficult to establish when doing an audit if the carers are actually real people. For example payslips on one of my cases only contained initials and surnames of the carers, month and year and amounts paid. It did not have a full names and addresses or National Insurance Numbers. 5

6. Continued….. A Direct Payment client is also likely to be in receipt of Disability Living Allowance, Employment Support Allowance, Housing and Council Tax Support and also have a motability vehicle and may have also submitted a false housing application to obtain a property. A person does not need to be in receipt of any of the above benefits to receive Direct Payments. However, in all of my cases one of the above benefits was or is in payment. If a person is falsely claiming Direct Payments then likely to be falsely claiming one or more of the above. 6

7. The Assessment Process Adult Services and Children’s Services are there to provide a duty of care. Is your assessment process for Direct Payments robust enough? Should we be asking for further evidence to substantiate their claim that they require help with their day to day living? Social Workers and Assessors need to be aware of the clients surroundings and looking for signs they may be more able bodied than purporting to be. 7

8. Types of Direct Payment Fraud Doubtful Disability – The DP client has exaggerated their care needs or does not require any care and has falsely claimed Direct Payments from the outset (this has been the most common scenario with my investigations) Counterfeit Documentation – counterfeit bank statements and payslips are produced and sent to the LA for the DP audit. Fictitious Carers – are set up on the Direct Payment account, identities of real people are used. Carers hours are exaggerated – The hours the carer works are exaggerated and the person managing the DP finances takes a top slice. Misappropriation of DP Funds – Money from the DP bank account is moved to another bank account of the DP client, the appointee, associate or relative and/or spent on lifestyle rather than care. An investigation can include one or more of the above. 8

9. Investigation Checks Has the DP client signed a Direct Payment Agreement/Contract with Adult Services? Is the DP client in receipt of any other benefits? Do the DP client have capacity or do they have an appointee, if so who is the appointee? Who are the carers? – Are they related – Where do they live – Is it a reasonable distance to travel to work – Are they also in receipt of any benefits 9

10. Investigation Checks cont’d… What type of account does the DP client have? Is the DP client also in receipt of ILF (Independent Living Fund) payments? – this is something I will explain further shortly. Have the DP Audits been carried out on a regular basis? Does the DP client live in rented accommodation owned by a Housing Association/LA? Data Protection Act Intelligence Request to the Police – is person known to them and why? Do a credit check on the DP client to see who they are associated with and who else is linked to the property. Credit checks can be obtained via NAFN (National Anti Fraud Network), most Authorities are members. 10

11. Investigation Checks cont’d….. Does the DP client have a motability vehicle? Does the DP client have a blue badge? Do we suspect there are safeguarding concerns? If so this should be reported immediately to the relevant person. 11

12. Who Can Report DP Fraud? Social Worker/Assessment Officer Carer Adult Finance Team Public DWP – they may be investigating DLA fraud and establish DP are also in payment. Third party payroll company. All of the above sources have reported cases which have resulted in a full investigation. 12

13. Independent Living Fund (ILF) ILF payments were intended to work the same as Direct Payments. ILF payments were paid by an arm of the DWP rather than the LA. If someone was assessed as requiring 20 hours of care or more in the Direct Payment assessment they could apply for ILF payments. In essence the client could receive double the amount of money for the provision of care. In December 2010 ILF closed its doors to all new ILF customers. The ILF closed on 30/6/15 and from 1/7/15 all existing customers became the responsibility of the Local Authorities. 13

14. Case Study Naomi is a female in her mid twenties who was in receipt of DP and ILF payments as she is physically disabled and requires the permanent use of a wheelchair. Naomi has been assessed as having full mental capacity. Naomi’s mum, Denise was her appointee and managed her DP and ILF account. The accounts were non managed accounts and therefore Denise was responsible for paying carers their wages, issuing payslips and sending the relevant payments to HMRC. Internal Audit received a telephone call from the third party payroll company advising a member of the public has contacted them explaining they had received a P45 in relation to a job as a carer for Naomi. 14

15. Case Study Cont’d…… The member of the public had never worked as a carer for Naomi and worked full time in security at Manchester Airport, a post she had been in for a number of years. Although she knew Naomi and her family. A full investigation revealed that Denise had set up a carer using the identity of the female who had received the P45 and paid herself, ex husband and son by writing a significant number of cheques and depositing them into their bank accounts. Cheques had also been addressed to payee ‘cash’. Many of the cheques had corresponding payslips to make the debits on the account look legitimate. 15

16. Case Study Cont’d….. Denise was arrested and interviewed and subsequently charged under the Fraud Act 2006 for the misappropriation of Direct Payments and Independent Living Fund money totalling £59,474.41. On the day Denise was arrested the DP and ILF payments were suspended and have not been claimed for since. Following a guilty plea at Minshull Street Crown Court, Denise received a 2 year custodial sentence suspended for 2 years, was placed on a curfew and tagged for 6 months. Now repaying the misspent monies on a monthly arrangement as she did not have any assets to pursue a Proceeds of Crime Act Order (POCA). 16

17. Other Direct Payment Cases 1 case currently with our legal team awaiting prosecution. 2 cases with the Crown Prosecution Service as DWP benefits also included. All 3 cases total £179,085.01 in Direct Payments alone. Other benefits fraudulently claimed by the three individuals uncovered during the investigations total £250,000.00 bringing the overall total to just under £430,000.00. TMBC have saved £101,604.52 per annum as a result of investigating DP fraud through suspending care packages. That is only on 8 cases. 4 further cases are currently being investigated. 17

18. Key Questions Is there a procedure in place if money has been identified as being misspent? Are Direct Payment accounts audited on a regular basis? Is there a procedure in place when returns are not sent into the LA? Have all Direct Payment clients signed a DP Agreement/Contract? What is included in the contract, does this need updating? Are surplus funds being clawed back in a timely manner and significant claw backs investigated? Do Social Workers/Assessors have access to Fraud training? 18

19. Any Questions? 19

20. Contact Details Claire.cunningham@tameside.gov.uk Tel 0161 342 3854 Jason.hevingham@tameside.gov.uk Tel 0161 342 2355 20