Amanda Clayton, lottery winner, defends food stamps. Michigan disagrees.

Michigan could become the first state to enact legislation that polices the access that lottery winners have to assistance programs – after two cases have come to light in which such an individual continued using food stamps after winning at least $1 million.

This week, Amanda Clayton of the Detroit area made headlines for acknowledging that she still received $200 in monthly food assistance after winning $1 million in state lottery money last September. Following an uproar, she was revoked of her benefits Wednesday.

Last year, Leroy Fick of Bay County, Mich., told a television reporter that he still used food stamps despite winning $2 million from the state lottery. Mr. Fick was acting within any laws and regulations, his lawyer reportedly argued.

The Fick case prompted the legislation that is now moving its way through the state Senate. The bill, which would prevent lottery winners from continuing in federal and state assistance programs, passed the House last month.

If the legislation passes, the Michigan Lottery would be required to send the names of anyone winning prizes over $1,000 to the state Department of Human Services, which would then have to cross-reference those names against those receiving public assistance.

“State assistance should only be granted to individuals who truly need it,” said state Rep. Dale Zorn (R) of Lansing, who sponsored the bill.

It is unclear if Ms. Clayton acted illegally. According to eligibility requirements posted on Michigan’s Department of Human Services website, wages, self-employment earnings, rental income, child support, Social Security benefits, and veterans benefits are all countable income. Lottery winnings are not in that list.

Human Services Director Maura Corrigan released a statement Wednesday, saying that her department “does not currently have the ability to verify a person’s lottery winnings in determining benefit eligibility” and that policy dictates relying “on clients being forthcoming about their actual financial status.” Not doing so results in a criminal investigation, she said.

Moreover, eligibility reform is required at the federal level, says US Sen. Debbie Stabenow (D) of Michigan, who is chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry. A reform measure, she says, will be in a new farm bill due this fall, which is expected to set America’s agriculture and nutrition program policies for five years.

Eligibility rules for food-stamp programs, or the Supplemental Nutrition Assistance Program (SNAP), are drawn up at the federal level. The program is also federally funded, but administered by the states. According to the National Conference of State Legislatures in Washington, states cannot change eligibility requirements, but they are responsible for determining and verifying eligibility.

States are subject to fines if their error rates continue higher than the national average. In 2010, 3 percent of SNAP payments were made to ineligible households or were in amounts considered excessive.

In its report for fiscal year 2009, the Michigan Inspector General’s Office reported 2,617 cases of fraud in the state’s food-assistance program, a 10 percent decrease since 2006. The most common type of fraud was selling benefit cards for cash or other illegal goods.

According to state data, the total number of recipients in Michigan’s food-assistance program reached 2.4 million in 2011, resulting in $3.1 billion in payments. In 2010, 2.3 million people received benefits, costing $2.8 billion.

As for Clayton, she won $1 million in the state’s “Make Me Rich!” game. According to The Detroit News, she took home $500,000, which she used to buy a new home and car.

The uproar over her winnings started this week after she told Detroit television affiliate WDIV that she was “struggling” to make ends meet.

“I thought they would cut me off, but since they didn’t, I thought maybe it was OK because I’m not working,” she said. “I feel that it’s OK because I have no income, and I have bills to pay. I have two houses.”

Senator Stabenow said in a statement: “At a time when so many out-of-work Michigan families are in real need of assistance, it’s outrageous for people to cheat and defraud the system like this.”