Sec. 7. Quality control
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Section 16(c) of the Food and Nutrition Act of 2008 (7 U.S.C. 2025(c)) is amended— in paragraph (1)— in subparagraph (D)(i)(II), by inserting except as provided in subparagraph (H), before require ; and by adding at the end the following: If a liability amount has been established for a State agency under subparagraph
(C)for 3 or more consecutive fiscal years, the Secretary shall require the State to pay the entire liability amount for those fiscal years. Subparagraph
(D)shall not apply to a State agency described in clause (i). ; by redesignating paragraph
(9)as paragraph (10); and by inserting after paragraph
(8)the following: In this paragraph: The term affected State agency means a State agency that maintains, for 2 or more consecutive fiscal years, a negative error rate that is more than 50 percent higher than the national average negative error rate, as determined by the Secretary. The term average negative error rate means the product obtained by multiplying— the negative error rate of a State agency; and the proportion of the total negative caseload of that State agency for the fiscal year, as calculated under the quality control sample at the time of the notifications issued under subparagraph (C), as determined by the Secretary. The term negative error rate means, for a State agency, the proportion that— the total number of actions erroneously taken by the State agency to deny applications or suspend or terminate benefits of a household participating in the supplemental nutrition assistance program established under this Act, as determined by the Secretary, in that fiscal year; bears to the total number of actions taken by the State agency to deny applications or suspend or terminate benefits of households participating in the supplemental nutrition assistance program established under this Act in that fiscal year. The term negative error rate does not include— an error resulting from the application of regulations promulgated under this Act during the period— beginning on the date of enactment of this clause; and ending on the date that is 121 days after the date on which the regulation is implemented; and an error resulting from— the use by a State agency of correctly processed information concerning households or individuals received under a Federal program; or an action that is based on policy information that is approved or disseminated, in writing, by the Secretary or a designee of the Secretary. For fiscal year 2012 and each subsequent fiscal year, the amount of the penalty for an affected State agency shall be equal to 5 percent of the amount otherwise payable under subsection (a). For each fiscal year, each State agency shall expeditiously submit to the Secretary data concerning the operations of the State agency sufficient for the Secretary to establish the negative error rate and penalty amount of the State agency. The Secretary may require a State agency to report any factors necessary to determine the negative error rate of the State agency. If a State agency fails to report information required by the Secretary, the Secretary may use any information, as the Secretary considers appropriate, to establish the negative error rate of the State agency for the applicable year. If a State agency fails to report information required by the Secretary, the Secretary may use the national average negative error rate to establish the negative error rate for the State agency. Not later than May 31 of each fiscal year, the case review and all arbitration of State-Federal differences on negative error rates for the previous fiscal year shall be completed. Not later than June 30 of each fiscal year, the Secretary shall, for the previous fiscal year— determine— final negative error rates; the national average negative error rate; and penalty amounts; notify affected State agencies of the penalty amounts; provide a copy of the notification under subclause
(II)to the chief executive officer and the legislature of the affected State; and establish a claim against the State agency for the monetary penalty amount assessed against the State agency. For any fiscal year, if the Secretary imposes a penalty amount against a State agency under subparagraph (D)(ii), the following determinations of the Secretary shall be subject to administrative and judicial review: The final negative error rate of the State agency. A determination of the Secretary that the negative error rate of the State agency exceeds 50 percent of the national average negative error rate. The monetary penalty amount assessed against the State agency. The national average negative error rate under this paragraph shall not be subject to administrative or judicial review. On completion of administrative and judicial review under subparagraph (E), an affected State agency shall pay to the Secretary the penalty amount designated under subparagraph (D)(ii), subject to the findings of the administrative or judicial review, not later than September 30 of the fiscal year for which the claim has been issued to the State agency. If a State agency fails to make a payment under clause
(i)by September 30 of the fiscal year for which the claim has been issued to the State agency, the Secretary may reduce any amount due to the State agency under any other provision of this Act by the amount of the monetary penalty established under subparagraph (D)(ii). Interest on the amount owed shall not accrue until after September 30 of the applicable fiscal year. .
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