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Adoption Subsidies Are Unchecked for Fraud

David J Lansner and Carolyn A Kubitschek


  • The federal government paid billions of dollars to states under the Adoption Assistance and Child Welfare Act in 2010.
  • A significant amount of that money may have been fraudulently collected by adoptive parents who are no longer supporting their adoptive children.
  • The U.S. Department of Health and Human Services has prevented states from investigating fraud related to adoption assistance payments, leading to substantial financial losses for states.
  • The lack of oversight and enforcement mechanisms for adoption assistance payments has resulted in potential misuse of funds, failed adoptions, and a need for more effective monitoring and eligibility determination processes.
Adoption Subsidies Are Unchecked for Fraud
Nattakorn Maneerat via Getty Images

In 2010, the federal government paid $2,501,000,000 to states under the Adoption Assistance and Child Welfare Act. Hundreds of millions of dollars of that money may have been fraudulently collected by adoptive parents who no longer support their adoptive children, made possible because the U.S. Department of Health and Human Services has prohibited the states from even investigating the fraud. States have lost an equal amount of money.

The U.S. government has long provided funds to states to operate foster-care programs, initially under the federal Aid to Families with Dependent Children program (AFDC). Like Aid to Dependent Children (ADC), the foster care program provided a monthly stipend for each eligible foster child. Like ADC, the money was paid to the adult caretaker (the foster parent) for the support and benefit of the child. As soon as a child left foster care, the monthly payment ended, whether the child left foster care to be reunited with his or her parents or to be adopted by new parents.

An unintended consequence of the program was that it discouraged adoptions by foster parents. As soon as a foster parent adopted his or her foster child, the foster-care maintenance payments stopped. Many foster parents were of modest financial means and could not afford to support children without the foster-care maintenance payments. In addition, many foster children required a large amount of support because of their special health, behavioral, or other problems. Accordingly, many children who had no hope of ever returning to their parents simply languished in foster care because the foster parents who loved them could not afford to adopt them and lose the foster-care payments, and no other adults were willing to adopt children who had so many problems.

In 1980, Congress enacted the Adoption Assistance and Child Welfare Act, which, among its many provisions, created a statutory scheme to encourage people to adopt children with special needs who were in the states' foster-care program by providing subsidies for the adoptive parents. The explicit purpose of the adoption assistance program, as articulated by the U.S. Department of Health and Human Services (HHS) Children's Bureau, is to "remove barriers and contribute to an increase in adoption of children with special needs." The statute implements its purpose by providing matching federal funds to state programs. The matching federal funds are contingent on a state "plan approved by the Secretary" of HHS, with the requirement that the state "administer, or supervise the administration of, the program." 42 U.S.C. § 671(a)(2); see Administration for Children's Families (ACF), HHS, Programs and Funding: Title IV-E Adoption Assistance.

The statute authorizes adoptive parents in participating states to receive reimbursement for one-time, nonrecurring adoption expenses and for monthly maintenance payments for the ongoing expenses associated with caring for the children. The amount of the monthly adoption subsidy payment for a child is determined by an agreement between the prospective adoptive parent and the state. It states that the amount may be readjusted periodically, "with the concurrence of the adopting parents," but may never be greater than the amount that the child would receive if he or she had remained in foster care. 42 U.S.C. § 673(a)(3).

The agreement between the adopting parent and the state is a "written agreement, binding on the parties to the agreement" that "specifies the nature and amount of any payments, services, and assistance to be provided under such agreement." 42 U.S.C. § 675(3)(A).

A 2008 study conducted by the National Resource Center for Family-Centered Practice and Permanency Planning found that maintenance payments are around $400 to $900 per month. The average base amount nationwide is about $350 a month. The federal government generally reimburses the states for 50 percent of the payments, although in some cases it pays a larger percentage. In 2010, according to tables released by the Administration for Children and Families, the federal government paid $2,501,000,000 to states for adoption assistance, including one-time reimbursements and monthly maintenance payments. Thus, states probably paid about $2 billion of their own money in adoption assistance payments.

Federal statutes 42 U.S.C. § 673 and 42 U.S.C. § 675 mandate that states terminate adoption assistance payments when any one of three events takes place:

  • The child ages out of the program by turning 18, if healthy—although states may, at their option, extend the program adoption assistance program to age 19, 20, or 21—or 21 if handicapped;
  • The state determines that the adoptive parent is no longer legally responsible for supporting the child; or
  • The state determines that the adoptive parent is no longer actually supporting the child.

Adoptive Parents' Failure to Support Their Children

While there may be many reasons that a parent is no longer supporting his or her adopted child under the age of 18, the most common scenario is that the child has stopped living with the parent. That may be the result of a divorce in which the state makes adoption assistance payments to one parent while the other parent has custody. More common are the cases where the child has left the home. Many children adopted from foster care run away from their adoptive parents or are forced out by them. The children may be put with another adult, return to their birth parents, return to foster care, live on the streets, or be incarcerated.

Because ACF guidance to states allows little room for states to monitor adoption assistance recipients' eligibility, there is no data on the total number of children who prematurely leave the homes of parents receiving adoption assistance. Available data suggest that the number of adopted children who do not live with their adoptive parents until they turn 18 is significant. Nina Williams-Mbengue, program director at the National Conference of State Legislatures, found that 10–25 percent of pre-adoptive placements disrupt before adoption proceedings are finalized, and 10–15 percent of adoptions dissolve after they are finalized. Some practitioners believe that the numbers are much higher. That substantial fraction should not be surprising; children adopted out of foster care tend to have serious emotional and physical scars from their "frequent displacement, exposure to drugs and alcohol from birth and at other points in their lives and other forms of abuse." Nina Williams-Mbengue, Moving Children Out of Foster Care, The Legislative Role in Finding Permanent Homes for Children [PDF].

Some adoptive parents find raising such children too difficult and voluntarily surrender those children. In other cases, the children run away, either because they want to live without restrictions or because of abuse in the adoptive home. Indeed, some states, such as Wisconsin, even define categories of "hard to place children" who are eligible for adoption assistance, in part, by their tendency to run away. A child who is moderately difficult to care for may "run away four to seven times a year and three or four days at a time," while a child who requires intensive care may "run away for long periods of time (eight or more times a year and five or more days at a time.)" North American Counsel on Adoptable Children, Wisconsin State Subsidy Profile, Question 4.

Diane Riggs of the North American Council on Adoptable Children has pointed out that pressure on states to increase adoption rates may in fact be leading to an increase in the number of adoptions that fail as states encourage adoptions by foster parents who are not actually capable of meeting the children's needs. Diane Riggs, Plan, Prepare, and Support to Prevent Disruptions. In the 1990s, disruption rates after adoption "for children with physical, mental health and developmental problems, range from approximately 10% to approximately 25%." (Sheena Macrae, Ed., Disruption & Dissolution: Unspoken Losses [PDF]. For an extensive discussion on subsidized adoption failures, see Dawn J. Post and Brian Zimmerman, "The Revolving Doors of Family Court: Confronting Broken Adoptions." 40 Cap. U. L. Rev. 437 (2012).

Oversight of Adoption Assistance Payments

As stated above, federal law requires a state to terminate adoption assistance payments when the state determines that the adoptive parent is no longer actually supporting the child. The statute does not explicitly provide a mechanism for a state to make such a determination. The sole provision in the statute is for self-reporting on the part of the adoptive parent: Persons "who have been receiving adoption assistance payments . . . shall keep the State . . . informed of circumstances which would, pursuant to this subsection make them ineligible for the payments, or eligible for the payments in a different amount" (42 U.S.C. § 673(a)(4)(B)).

Other federal benefit programs do not rely solely on the recipients to advise the government when they are no longer eligible for benefits. Many recipients simply will not advise the government and continue to receive benefits, even if they are no longer eligible. While knowingly accepting government benefits to which one is not entitled is, of course, a crime, many other federal-benefit programs do not rely on recipients' honesty, combined with the threat of criminal prosecution, to ensure that people stop receiving the benefits when they become ineligible. Instead, many programs contain explicit provisions for the administrators of the programs to determine individuals' continuing eligibility for benefits on a recurrent basis.

The Temporary Assistance for Needy Families (TANF) program requires states to develop procedures to track the income of people receiving payments through state TANF programs, efforts to gain employment, and the number of children living in a household, but the Social Security Act supplies no rules on what those procedures should be. States develop their own procedures to track benefits recipients and discourage fraud—for example, the Supreme Court noted in the 1971 case Wyman v. James that California had instituted a home-visit requirement in order to discourage fraud. The Social Security Act also does not explicitly allow states to condition benefits on cooperation with state monitoring procedures. Nonetheless, it is common practice for states to condition welfare eligibility on consent to home visits by a government employee, and the Court found in Wyman that mandatory home visits for welfare recipients do not violate the Fourth Amendment. The intrusiveness of home visits varies by state. San Diego's 100% Project requires TANF recipients, even those whose documentation is up to date and who are not suspected of committing fraud, to consent to home visits to verify their eligibility. The unannounced home visits, during business hours, include an interview and a 5- to 10-minute walk through the house by plainclothes investigators from the district attorney's office. Other TANF programs, such as Montana's, require a home visit only if, for instance, the recipient fails to or is unable to attend a mandatory meeting or eligibility interview.

The Supplemental Security Income program, which provides benefits to disabled, indigent adults and children, does not rely solely on self-reporting by beneficiaries. Rather, the statute itself authorizes the Commissioner of Social Security to determine how often to determine recipients' eligibility for benefits and the amount of benefits for which they are eligible.

Even the Social Security program, which provides insurance benefits to disabled workers and their dependents who have paid into the system through Federal Insurance Contributions Act (FICA) withholding, does not rely on self-reporting by beneficiaries. Instead, the government reviews disability determinations at least once every three years.

There is no language in the Adoption Assistance Act suggesting that self-reporting is the exclusive means of authorized oversight. On the contrary, 42 U.S.C. § 673(a)(4)(A) prohibits states from issuing payments to parents no longer supporting the adopted children, saying that a "payment may not be made . . . with respect to a child . . . if the State determines that the child is no longer receiving support from the parents or relative guardians." (emphasis added). The statute imposes on adoption assistance recipients the duty to report to the state if their circumstances change, but it does not provide guidance on how the state should act to make continuing eligibility determinations.

The fact that the statute contemplates individualized Adoption Assistant Agreements to govern the details of assistance payments and allows states to develop their own plans for implementing the statute suggests that Congress intended to leave significant discretion to the states in implementing their adoption assistance programs.

Federal Policy on Enforcement

The official U.S. policy on re-determination of eligibility for adoption assistance is found in the HHS Child Welfare Policy Manual. In Q&A format, the manual states:

  1. Question: What are the requirements for redeterminations of title IV-E adoption assistance eligibility?
    Answer: The title IV-E adoption assistance program does not require redeterminations of a child's eligibility. . . .
  2. Question: Some States are requiring adoptive parents to complete annual renewals of their adoption assistance agreements. Does title IV-E require the State or local agency to perform annual renewals or eligibility determinations for adoption assistance?
    Answer: No. There is no Federal statute or provision requiring annual renewals, recertifications or eligibility re-determinations for title IV-E adoption assistance.

While the Child Welfare Policy Manual itself does notprohibit states from re-determining eligibility (though it explicitly does not require states to re-determine eligibility), the HHS ACF has taken the extraordinary step of barring states from periodically re-determining eligibility for adoption assistance payments: "ACF advised against any intensive or intrusive inquiry into an adoptive family's life. . . . ACF informed [New York State] that the state cannot terminate or suspend adoption assistance if the adoptive parents fail to reply to the state's request for information." Therefore, while the state may request information from the adoptive parents relating to the continued eligibility for adoption assistance benefits, the adoptive parents may ignore such requests with impunity. New York State Office of Children & Family Services, Administrative Directive, 09-OCFS-ADM-11 [PDF], Adoption Subsidy and Education Requirements for Adoptive Children (May 7, 2009).

HHS spokesperson Shari Brown stated the agency's position even more bluntly, saying that "suspensions or reductions in a title IV-E adoption assistance payment are not permitted without the concurrence of the adoptive parents. . . ." Email message from Shari Brown to David J. Lansner, October 11, 2011.

The HHS interpretation of the statue thus makes it extremely difficult for the states to carry out their obligation to determine whether the adoptive parent is actually supporting the child. Indeed, at least one state has concluded that, even if the state knows that the adoptive parent is not supporting the child, the state is prohibited from suspending adoption assistance payments to the parent. In Ohio, even if an adopted child goes into foster care and the government is supporting the child, the state may not suspend adoption assistance payments to the parents. The most that the state of Ohio believes it can do in such a situation is to "renegotiate" the amount of the adoption assistance payment "with the concurrence of the adoptive parent." See the Adoption Subsidy and Policy Blog.

The reason that HHS gives for prohibiting states from carrying out their statutory responsibility to determine whether the adoptive parent is no longer supporting the child and is consequently no longer entitled to adoption assistance benefits is that adoption assistance benefits are an "entitlement." If states impose harsher requirements than those contemplated by Congress, they will deprive people of adoption assistance who are entitled to it under the Social Security Act. Therefore, ACF warned, while "attestations and affidavits by the adoptive parents" are "acceptable means of verifying support" (they fall under the self-reporting requirement quoted above), the state should not carry out "any intensive or intrusive inquiry into an adoptive family's life." 09-OCFS-ADM-11, p. 4.

Federal Policy Interferes with States' Ability to Enforce Law, Prevent Fraud

The term "entitlement" refers to a property interest, created by statute, which may not be discontinued as long as the beneficiary remains eligible to receive it. The U.S. Supreme Court first used the term in the 1970 case Golberg v. Kelly in connection with welfare benefits, specifically Aid to Families With Dependent Children. Six years later, in Matthews v. Eldridge, the Supreme Court also ruled that Social Security Disability benefits are an entitlement. While the Supreme Court has not reached the issue, the Ninth Circuit has ruled in the 2005 case ASW v. Oregon that adoption assistance benefits are an entitlement.

The fact that a benefit statute creates a property interest, or an entitlement, does not, however, mean that the recipient of those benefits is entitled to receive benefits in perpetuity. Rather, as the Supreme Court held in both Goldberg v. Kelly and Matthews v. Eldridge, it means only that the state may not deprive the individual of benefits without due process of law. As long as the state provides the recipient with notice and an opportunity to be heard at a meaningful time and in a meaningful manner, it satisfies the recipient's procedural due-process rights. Thus, even if adoption assistance benefits are an entitlement, the fact of entitlement merely guarantees that recipients are entitled to some kind of hearing prior to the termination of their benefits. The fact of entitlement does not guarantee that recipients will win their hearings and continue to receive benefits, even if they are no longer eligible.

Moreover, the fact that both welfare and Social Security disability benefits are entitlements does not prohibit the state or federal government from determining whether the recipients continue to be entitled to receive benefits—a decision that, if negative, would trigger the procedural due-process requirements of notice and an opportunity to be heard. Nor should the states be precluded from determining whether adoption assistance recipients continue to be eligible for those benefits. Requiring adoption assistance recipients to complete and return to the state a questionnaire once a year providing information as to whether they continue to support their adopted children does not run afoul of the due-process clause. Nor does it interfere with either the recipients' entitlement to receive benefits as long as they remain eligible or the recipients' right to notice and an opportunity to be heard if the state determines that the recipients' eligibility has ceased.

A Proposed Solution

While HHS apparently believes that it would be unconstitutional to require adoption assistance recipients to complete a brief questionnaire once a year and that failure to do so would trigger the due-process requirements of notice and a hearing on the termination of their benefits, other procedures exist in analogous situations. Congress recently expanded the adoption assistance program to include benefits to relatives who become legal guardians for children under "kinship guardianship programs." See 42 U.S.C. § 673(d). The kinship guardianship program mirrors the adoption assistance program in numerous ways, including the requirement that benefits will be terminated when the state determines that the relative guardian is no longer providing any support for the child. 42 U.S.C. §673(a)(4)(A)(iii).

The state of New York has a procedure for re-determining eligibility for benefits under its Kinship Guardian Assistance Program (KinGAP). New York permits localities to take the following steps when there is "reasonable cause to suspect that the relative guardian . . . is no longer providing any support for the child."

"[R]equire the relative guardian(s) to submit documentation" or attend a meeting to "address[] and verif[y] the continuing responsibility of the relative guardian to support the child and the provision of support of the child by the relative guardian(s)." In determining how to investigate a given case, social services must consider the individual circumstances of the relative guardian and child, such as availability for meetings and employment situation.

"If the relative guardian is unable to make the scheduled meeting for reasons beyond the guardian's control, the district must provide the relative guardian with one additional opportunity to meet in accordance with the standards set forth in this section."

The relative guardian's "failure to provide the requested documentation within the period requested or to meet with social services district staff as directed, may be a ground for termination of the kinship guardianship agreement and stopping payments of kinship guardianship assistance." See the New York State Office of Children and Family Services, Administrative Directive, Transmittal 11-OCFS-ADM-03, Kinship Guardianship Assistance Program (KinGAP), pp. 20–21,April 1, 2011 (Revised July 6, 2011).

New York procedures also warn that "any follow-up letter sent by the social services district [must] indicate the consequences of failure to follow up in the manner prescribed by the social services district." This procedure gives recipients numerous opportunities to verify their continuing eligibility for benefits.

Suspension of benefits based on a recipient's failure to respond to one request for documentation of continuing eligibility might create a risk of erroneous deprivation of benefits. However, if a recipient fails to respond to multiple requests for documentation and interviews, as New York procedures for KinGAP outline, a state could reasonably suspect that the recipient is not responding because he or she is hiding a change in circumstances. The risk of erroneous deprivation would be less. Moreover, as the Court stated in Joint Anti-Fascist Comm. v. McGrath and quoted in Matthews v. Eldridge, the "essence of due process is the requirement that 'a person in jeopardy of serious loss (must be given) notice of the case against him and opportunity to meet it.'" Several requests for documentation and notices would give a recipient ample opportunity to defend his or her position.


The HHS limitation on how states may enforce adoption assistance eligibility requirements has no legal basis. Neither the Social Security Act nor the Constitution restricts states from requiring recipients to submit to annual interviews or minimally intrusive inquiries as to their continuing eligibility for benefits. Neither the statute nor the Constitution bars states from suspending or terminating payments when recipients fail to submit documentation verifying their continued eligibility for adoption assistance. By supporting state efforts to collect data on the number of failed adoptions by proactively monitoring adoption assistance recipients, both the federal government and the states can ensure that only individuals who remain eligible for adoption assistance benefits continue to receive them. This is no small matter, considering the cost of the adoption assistance program and the number of adoptive parents who stop supporting their adopted children at some point during the children's minority. Such a policy also has the potential to reallocate significant sums of money that would otherwise be wasted on fraud to services that increase the number of successful adoptions—the very purpose of the adoption assistance program.