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Wis official says regulatory loophole causes fraud

MADISON, Wis. (AP) - A Wisconsin state official says a Middleton foster care company's alleged fraud was caused by a lack of financial oversight.

State Department of Children and Families officials told the Senate health committee on Thursday that the company's unusual expenses reports caught their attention in November 2011, when several counties reported missing the company's expenses reports.

The state says foster care companies used to set their own service rates and submit expenses to counties, but now the department can determine their rates and audit their expenses after legislators passed regulations in 2010.

The department says Community Care Resources Inc. has to pay back more than $6 million it allegedly overcharged by next Friday.

Community Care's attorney is disputing the allegations in a letter to the committee.

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