Law Professor: Foster Care Agencies Misappropriating Funds Meant for Kids

August 29, 2016 by Robert Franklin, Esq, Member, National Board of Directors, National Parents Organization

I haven’t read the book this article is about, but it’s on order. It looks too valuable to ignore. The book is by Baltimore Law School Professor Daniel Hatcher and it’s entitled “The Poverty Industry: The Exploitation of America’s Most Vulnerable Citizens.” This article is just a short interview with Hatcher, but it has enough in it to catch my eye (The Atlantic, 6/22/16).

Hatcher’s thesis is that federal and state governments are teaming up with private interests to monetize poverty in their own interests while largely ignoring those of the poor they’re supposed to be helping. The interview touches on two areas of public policy, dealt with in the book, in which this occurs. One is Medicaid and the other is foster care. The small nuggets of information on foster care were unknown to me and more than enough to make me buy the book.

Hatcher, a professor at the University of Baltimore’s School of Law, writes:

States and their human service agencies are partnering with private companies to form a vast poverty industry, turning America’s most vulnerable populations into a source of revenue … The resulting industry is strip-mining billions in federal aid and other funds from impoverished families, abused and neglected children, and the disabled and elderly poor.

How does this happen? Hatcher uses the example of the foster-care system, where some states enlist the help of private consultants to come up with strategies to maximize disability claims for children in its care. That results in higher payouts from the federal government. But instead of using that money to care for children, the money is diverted, and used for other things the state deems necessary.

Hmm. “Some states enlist the help of private consultants to come up with strategies to maximize disability claims for children in its care.” That sounds familiar. Remember when former North Dakota state Senator Bill Napoli explained to National Public Radio that, when the Adoption and Safe Families Act became law, states dramatically ramped up their efforts to take children from parents. Why? Because the federal government paid them to do so. He also pointed out that Washington was even more generous when it came to kids who were designated as having “special needs” by their state of residence. In the blink of an eye, North Dakota tagged every single Native American child within its borders as having “special needs.” I wonder if that’s an example of what Hatcher is referring to.

Hatcher began his career in Baltimore Legal Aid and saw first-hand what the state was doing.

Hatcher: My first job at Legal Aid was representing children in the Baltimore City foster-care system. Over a year, I probably represented 300 children or more. That experience has stayed with me: Seeing what these children are going through both while they’re in foster care, what brought them into foster care, and how they’re struggling when they leave foster care. I encountered this practice where the agencies that exist to serve foster children are taking their resources. It really spurred me into action.

White: How does this exploitation work, say in the case of foster services?

Hatcher: You have foster agencies across the country—these agencies that exist to serve abused, neglected children—partnering with revenue-maximization consultants. One of the strategies they use is to go after children’s survivor and disability benefits. They hire contractors to try to increase the number of children in their care determined to be disabled, or target those children that have deceased parents. It’s not to provide additional resources to those children or actually use those services to improve services for the child’s conditions, but to take the money as a state-revenue source. Then contractors will cut sometimes a contingency fee, sometimes a flat fee, depending on the arrangements.

I represented a former foster child in Maryland. He had been in foster care since he was 12. His father died while he was in foster care. The father worked, paid into the system, and so his child earned a survivor benefit, which is much like life insurance. The state applied for that money on his behalf and applied to become a representative payee to take control of the money. And then took the money. The foster-care agency took his money without even telling him he had this benefit that his father had left him. So that harm is not only just taking a cash benefit from a maltreated child, but it’s taking away a connection to a deceased parent that can have a vast emotional benefit.

That all sounds like malfeasance of a very high order and very worth exploring. I’ll report back once I’ve read the book.

Meanwhile though, it occurs to me that existing law has something to say about a state taking a child’s benefit and using it for its own purposes. That sounds like a violation of criminal as well as civil law. After all, whenever anyone receives money for the benefit of another, the first person becomes a fiduciary for the second. That means the first person is required by law to be responsible toward the second person, not misuse the money (as in speculative investments) and certainly not use the money for him/herself. Fiduciaries are held to the highest legal standard of anyone in any situation. So, based just on Hatcher’s brief statement, someone committed a legal wrong in the case of the child to which he referred.

This topic is too enticing not to pursue. So I will.




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#fostercare, #poverty, #violationoffiduciaryduties, #Medicaid

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