LAKEWOOD — State and county prosecutors are allowing people who believe they may have wrongly received Medicaid benefits to come forward and avoid criminal charges.

The pilot program, however, applies to residents of just one county — Ocean.

That's the county where 26 Lakewood residents this summer were arrested on state and federal charges of defrauding various welfare programs by underreporting their income. Some even earned millions in income while collecting the benefits, prosecutors say.

The program — Ocean County Recipient Voluntary Disclosure Program — will require county residents to repay the benefits and pay a fine. Those already charged are not eligible.

While people who come forward will not go to jail, state Comptroller Philip Degnan insists this is not an amnesty program or get-out-of-jail-free card.

“There is the requirement that you repay the benefits that you improperly received, that you pay a civil penalty, and we’re also very upfront about the fact that the information that we collect will be referred to state taxation and the social security agency in the federal system," Degnan said Thursday in an interview with New Jersey 101.5.

This could mean there might be tax implications and possible Social Security repayment requirements for anyone who under-reported their income in order to illegally get Medicaid benefits.

He also noted anyone who participates in the program will be disqualified from the Medicaid program for a year, and “you are disqualified from the program if you are currently under investigation by any state or county criminal body, or if you’ve previously entered into a settlement agreement with our office.”

“We’ve offered this program because based on our investigations in Ocean County we believe there may be a larger problem associated with Medicaid fraud,” he added.

“This is an opportunity to bring a significant number of people in that county into compliance with the program, which is our goal.”


Suspected Medicaid waste, fraud or abuse can be reported to 888-937-2835 or by submitting a complaint online.

Ocean County Prosecutor’s Office spokesman Al Della Fave said because the program was designed and rolled out by the State Comptroller’s Office, it would not appropriate for Prosecutor Joseph Coronato to comment on it.

He added if people in Ocean County choose to ignore opportunities to the right thing they will be prosecuted.

After the first round of arrests were announced in June, county officials said they were inundated with calls from Lakewood residents asking about how they could avoid legal trouble.

Reporting on the arrests highlighted the fact that the accused were members of the township's prominent Orthodox Jewish community. Authorities investigated several incidents of anti-Semitic vandalism and leafleting in Lakewood following the news.

Years earlier, the county prosecutor warned Lakewood residents about welfare fraud. A 2015 public meeting was attended by hundreds of residents. It was prompted after several residents were charged with fraud that year.

“It’s like any warning," prosecutor's spokesman Al Della Fave told New Jersey 101.5 in June. "Why do you have to warn people about drunk driving? Why do you have to warn about a seat belt? These are all things you would think people would do on their own but they don’t.”

A New Jersey 101.5 review of Census data in July found that Lakewood has the second-highest concentration of children on welfare in the state.

Out of the 43,571 children in Lakewood, 21,600 of them receive government benefits, according to a U.S. Census estimate from 2015.

Lakewood is No. 1 in the state when it comes to children in two-parent households receiving benefits. About 18,152 of the children in Lakewood who get welfare are in married households. Newark comes second with 7,752 of its children living in married households.

New Jersey has 1.77 million people on Medicaid.

The pilot program for Ocean County will run from Sept. 12 to Dec. 12.

To be eligible, a person has to be an Ocean County resident, must have received Medicaid benefits, cannot have a previous settlement with the State Comptroller, and cannot be facing other criminal charges.

When asked why someone who broke the law should not be criminally prosecuted, Degnan said “there’s a calculus with every decision, in terms of who to prosecute and who not to prosecute.”

So why is the program only being offered in Ocean County?

He pointed out it’s being started as a pilot program, and “this is our first effort at this. It hasn’t been done in New Jersey before. We looked at Ocean County because frankly we’ve been active there in terms of investigating these types of cases for a couple of years.”

He also said, “We believe there may be additional folks in Ocean County that were not subject to criminal charges that could take advantage of this program so it seemed like a good place to start.”

So will it be expanded at some point in the future?

“We’ll see how it goes and if it’s something that’s effective and makes sense. We’ve talking about rolling it out in other counties.”

When pressed on whether this kind of program was sending the wrong signal to lawbreakers in other parts of New Jersey, Degnan said "no."

“I certainly don’t view this is an opportunity for anyone to avoid responsibility for their conduct. We’re in fact requiring people take responsibility for their conduct.”

Officials are holding an informational meeting 6:30 p.m. Sept. 12 at Toms River North High School, 1245 Old Freehold Road, Toms River.

Sergio Bichao contributed to this report.

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