DFD Instruction No. 12-10-04

Regulatory References: N.J.A.C. 10:15-10.4; N.J.A.C. 10:15-3-1; N.J.A.C. 10:15-6.15



DFD Instruction No. 12-10-04

Regulatory References: N.J.A.C. 10:15-10.4; N.J.A.C. 10:15-3-1; N.J.A.C. 10:15-6.15

This instruction will impact the following programs: DFD Child Care Programs


To provide guidance to the CCR&Rs and Child Care Providers regarding the application of DFD Child Care Sanction Policy.


All providers receiving federal or state funding for child care services must meet certain criteria and be in good standing or in compliance with all required Federal and State laws, and program regulations to be eligible to receive government funding. In addition, parents/guardians are required, at all times, to comply with New Jersey’s subsidized child care program regulations and policies.

Any type of program violation including, but not limited to, falsification of records, non-use and misuse of the E-Child Care (ECC) system, fraud, and intentional program violations will subject the provider to penalties and sanctions that may include suspension, termination, criminal investigation and/or recoupment of payment, if the provider is found by DFD to be in violation of New Jersey’s child care assistance program. This is consistent with the DFD regulations at N.J.A.C.10:84-2.1 et seq., Exclusion from Contract Participation in the New Jersey Department of Human Services, Division of Family Development Programs, Pilot Projects, or Initiatives (Suspension, Debarment, and Disqualification).[Type text]

A case of program violation can be brought to the Department of Human Services Division of Family Development’s (DFD) attention through a variety of sources, such as a phone call, letter, e-mail, newspaper article, television news broadcast, personal knowledge, or through state databases used during the normal applicant eligibility determination process. There are two categorical types of program violations: Failure to Properly Utilize ECC, and Intentional Program Violations.



First Violation

In instances where there is a failure to properly utilize ECC, the provider must immediately notify the CCR&R by forwarding the Failure To Use ECC Form to the CCR&R. Failure to properly utilize ECC may occur when a parent fails to utilize the ECC system by not swiping consistently, or is swiping intermittently and thus adversely affects payment. Upon receipt of the Failure to Use ECC Form, the CCR&Rs have seven calendar days to send a warning letter to the parents. Copies of every warning letter must also be sent to the provider and placed in the case file.

Parents will have up to two weeks from the date of the warning letter to attend training, and remedy the action by demonstrating consistent use of ECC. The warning notice must include a training date and expectation for parents to come into compliance within two weeks of issuance. To document compliance or noncompliance, the CCR&Rs must print out the transaction report for that two week period once the 14 day back swipe period has closed.

Continued Violations

If the parent fails to comply with proper utilization of ECC after training, the CCR&R should immediately issue the following penalty procedures:

1) First Offense - three months suspension of child care services.

2) Second Offense - six months termination of child care services. In this phase, parents would need to reapply and be re-determined eligible. This could mean being placed on the waiting list if funds are not available.

3) Third Offense - 12 months termination of child care services. In this phase, parents would need to reapply and be re-determined eligible. This could mean being placed on the waiting list if funds are not available.

Parents who are sanctioned due to continued non-compliance with ECC cannot participate in any child care assistance program (CCAP or CCVC) for the above specified periods of time depending upon the penalty phase.

It is the right of every applicant adversely affected by an action of the CCR&R to request a review of his/her case by the CCR&R and/or DFD. The CCR&R must inform the applicant of his/her right to request a review.[Type text]


If there has been an allegation of ECC related misconduct, the CCR&R’s must contact DFD staff by email or phone. DFD staff will review and research the information to determine the level of investigation required and warranted. Staff may also conduct an unannounced visit.

Instances of program or ECC violations that are substantiated can result in one or more of the following:

• Written warning notice,

• Required submission of a time-phased corrective action plan

• Suspension for a set period of time up to eighteen months and prohibiting any more families receiving subsidies to enroll at the provider. Providers will not be able to be selected by a family receiving a child care subsidy while they are in suspension status.

• Termination from the child care program and prohibition from receiving government child care payments or subsidy;

• Referral for criminal investigation and/or recoupment of improper or fraudulent payments.


An Intentional Program Violation (IPV) occurs when a provider and/or parent/applicant intentionally makes a false or misleading statement or misrepresents, conceals or withholds information related to his or her request to be eligible for child care services, or a child care payment.

In keeping with child care eligibility and application certification requirements, DFD has developed the following IPV policy. In order to enforce the Federal policy regarding fraud, the State must attempt to recoup any child care subsidy funds that were expended as a result of a parent/applicant or provider providing false information (including Social Security Numbers), encouraging others to hold back information, or failing to report required information to comply with program eligibility or payment requirements.

It is a violation of state policy, if not State and Federal law, to intentionally mislead or misrepresent a material fact in order to receive child care services or child care payments. IPVs may subject the violator(s) to suspension of program benefits, program termination, and repayment of benefits paid for services received or given under false pretenses. Additional consequences for an IPV can include forfeiture of any state tax refund, rebate, or lottery winnings, as well as criminal prosecution, depending on the nature and extent of the offense.

First Violation

Any failure of a parent/applicant to report changes in family situations that may affect program eligibility within ten days will result in a suspension of child care benefits for a minimum of three months for a first violation. Examples of "failure to report changes" include any change in family size, family income, or any other circumstance that may [Type text]

affect eligibility, such as not reporting a change in work/school/training status or a misrepresentation that relates to child attendance, sign-in/out sheets, or misuse of Families First card.

Any provider who falsifies provider payment discrepancy forms, signatures, attendance logs, or any other required information for payment purposes would also be considered to be committing a first violation.

Any overpayment of child care benefits as a result of a first violation shall result in the development of a Child Care Services Repayment Agreement (see attached) that includes notification of appeal rights to the violator.

Second Violation

A second violation or failure to continue to make payments, as agreed upon within the signed Child Care Services Repayment Agreement, will result in a disqualification for child care benefits for a minimum of six months and the debt owed will be entered into the Set Off Individual Liability (SOIL) system if no payment has been made towards the debt owed for six months or more. The parent /applicant cannot reapply for a child care subsidy until the total amount of the debt owed is satisfied, either through a direct payment to the CCR&R agency or to the State of New Jersey.

Third Violation

A third violation will result in immediate termination and permanent disqualification for any future child care subsidy. Any debt incurred as a result of a third violation will be subject to a Child Care Services Repayment Agreement and if repayments are not agreed to or made by the violator, the debt will be entered into the SOIL system.


Pursuant to N.J.A.C.10:84-2.1 et seq. and Executive Order #34 (Governor Brendan Byrne, 1976), DHS may suspend, debar, or disqualify a Provider, Provider Agency or Affiliate of a Provider Agency from contracting with the Division of Family Development on the basis of lack of responsibility as evidenced by an offense, failure, or inadequacy of performance, for a reasonable period of time commensurate with the seriousness of the offense, failure, or inadequacy of performance. Suspension or debarment causes include, but are not limited to: the violation of State or Federal laws incident to obtaining a contract or in the performance of a contract; State or Federal offenses indicating a lack of business integrity or honesty; willful failure to perform or a record of failure to perform in accordance with the contracting terms; and any other cause affecting responsibility as a State contractor of such a serious and compelling nature as may be determined by DHS. The decision to suspend, debar, or disqualify a Provider, Provider Agency or Affiliate thereof is within the discretion of DHS, unless otherwise provided by law, and shall be rendered in the best interests of the State.

Provider Disqualification

(a) A provider shall be disqualified from participation as a child care provider if:[Type text]

(1) The provider is convicted of fraud by the court pursuant to N.J.A.C. 10:15-10; or

(2) The provider has been found to have committed fraud by an investigation conducted by the local CCR&R or DHS or DFD; or

(3) The provider has been found to have made or furnished false or misleading

statements to the local CCR&R or DHS or DFD; or

(4) The provider has been found to have made errors in completing the provider discrepancy form after the following has occurred:

a. The provider has received a notification from the local CCR&R or DFD staff describing errors that have been identified and how to complete the form correctly;

b. The provider has received mandated training regarding how to bill correctly; and

c. The provider has received a letter of warning regarding the requirement to

bill correctly or be terminated.

(5) The provider’s child care license or certificate was denied or revoked for furnishing or making false or misleading statements or reports to the Office of Licensing (OOL) pursuant to Licensing regulations;

(6) The provider fails to comply with the Parent Applicant Provider Agreement (PAPA) as specified in the provider handbook;

(7) The health or safety of a child is endangered as a result of the provider’s care, as detailed in the Manual of Requirements for Child Care Centers (N.J.A.C. 10:122) or the Manual of Requirements for Family Child Care Providers (N.J.A.C.10:126).

(b) If a child care provider is disqualified in accordance with (a) above and commits fraud, as specified in the Child Care Development Fund (CCDF) Final Rule, in any program administered by DHS or DFD, then the provider shall be disqualified to participate as a child care provider or receive any state funds under that program for a period of not less than 1 year. If a child care provider has had his/her child care license or certificate denied or revoked pursuant to N.J.A.C. 10:15- 10.2, then the provider will not be eligible to receive child care payment.

(c) Any provider who has been disqualified in accordance with (a) above shall be sent written notice from DFD regarding the disqualification as follows:

(1) The notice shall be sent via certified mail to the provider informing him/her of the date the disqualification shall be effective;

(2) The notice shall include the reason(s) for the disqualification; and

(3) The notice shall include information about the provider’s right to appeal the disqualification in accordance with DFD adverse action procedures.[Type text]

(d) The effective date of the disqualification shall be either:

(1) The effective date shown in the disqualification notice as described in (c)(1);

(2) If an appeal has been requested and the hearing officer upholds the decision by DFD, the date the hearing decision has been rendered; or

(3) If the basis for the disqualification is (a)(7) above, then the disqualification shall be immediate.

(e) The provider will not receive child care payments during an appeal, and if the disqualification decision is upheld by the DFD hearing officer or applicable appeals procedure, the provider shall repay any overpayment.

(f) If the DFD hearing officer or applicable appeals procedure finds in favor of the provider, then the disqualification shall not take effect, from the date of the final decision.

(g) Any parent, caretaker relative, or legal guardian eligible under the Child Care Services Manual (N.J.A.C 10:15) for child care services, who is utilizing the child care services of a provider who has been disqualified due to fraud by DHS/DFD shall be notified via mail that:

(1) The provider does not meet the minimum requirements to operate as a child care provider;

(2) DHS/DFD shall deny child care payment to the provider;

(3) DHS/DFD advises that other child care arrangements shall be made and to contact a child care resource and referral agency.

*** Please note, the aforementioned language applies except as otherwise noted in N.J.A.C.10:84-2.1(d) detailing Exclusion From Contract Participation in the New Jersey Department of Human Services, Division of Family Development Programs, Pilot Projects or Initiatives (Suspension, Debarment, and Disqualification).

Case/File Management

All sanction documentation must be maintained in the Case/Provider file and follow the families/providers without regard to the creation of new files and cases.


Parent Repayments:

The CCR&R shall maintain a copy of the Child Care Services Repayment Agreement in the family and/or child care provider case record. All funds received from the parent/applicant or child care provider as a result of a repayment agreement are to be timely entered in CARES, into the appropriate funding stream.

The CCR&R will collect and deposit in a bank all collections for overpayments received from the clients during the month. At the end of the month the CCR&R will write one check for the collections received during the prior month from the clients to the Division of Family Development, Attention: Robert Hughes, Financial Reporting Unit. The check [Type text]

should be made payable to "Treasurer State of New Jersey." The CCR&R will also send a detailed report along with the check identifying the client, the amount, and the specific contract component (funding stream) for which the reimbursement applies. See attached report template.

Provider Repayments:

All provider repayments should be entered as adjustments in EPPIC. Detailed notes

should be included in the appropriate section of the adjustment screen. CCR&R’s

should monitor the recovery to ensure that full repayment is made. Any changes in the

provider status that prevent the repayment or for those providers who are no longer

active in EPPIC should be immediately communicated to DFD for appropriate follow-up

collection action.


Any amount received from the parent or client as a result of a Child Care Services Repayment Agreement will be recorded in the CARES system through the "FISCAL MENU". The user will select the G/J Transaction and choose "Cash Receipt – Refund" to record the amount received into the "Fund" (the appropriate funding stream).

CARES will be modified to assist agencies with identifying parents/applicants (and eventually providers) that have outstanding payments due.



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