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updated 10/21/2010 3:29:45 PM ET 2010-10-21T19:29:45

Indiana has quietly ended a state grocery benefit paid to hundreds of developmentally disabled people who advocates say have no money of their own to buy food.

The state Family and Social Services Administration withdrew the grocery benefit just weeks after it announced it would no longer reduce the benefit for those who receive food stamps, which a lawsuit claimed was a violation of federal law that prohibits food stamps from being counted against other benefits.

The lawsuit was filed in July by the American Civil Liberties Union and Indianapolis attorney Steven Dick on behalf of Dick's 26-year-old autistic son. Dick said he believed the state ultimately decided to end the grocery benefit altogether because it could no longer factor in food stamps.

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"It was to me just a knee-jerk reaction to say 'OK, no food stamps, no groceries,'" Dick said.

Family and Social Services Administration spokesman Marcus Barlow denied that, saying the change was part of an overhaul aimed at curbing misuse of the Residential Living Allowance, which had included the grocery benefit.

Barlow said an agency review prompted by the lawsuit found that up to 70 percent of Residential Living Allowance recipients may have misused the program by misstating their incomes.

"The program was just too wide, too confusing, and that confusion was leading to abuse," he said.

The agency's Bureau of Developmental Disabilities Services issued a new 10-page policy in September outlining allowable household expenses under the Residential Living Allowance, including rent, utilities and telephone service. A copy of the policy obtained by The Associated Press does not explicitly state that food is not allowed, but it is not listed among acceptable expenses.

"There is no more grocery allowance," Barlow confirmed.

Barlow said about 440 people receive the living allowance and the state has budgeted $1.2 million for the program for next year — a slight increase from this year, he said. The allowance is part of a Medicaid waiver program designed to help the severely disabled live independently.

Erik Gonzalez, a Democratic fiscal analyst for the House Ways and Means Committee, said state lawmakers are concerned that without money to buy food, state aid recipients may have to drop out of the waiver program and be placed in group homes or other more institutionalized settings.

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The policy change "potentially puts many of these individuals in a worse predicament," he said.

A legislative Medicaid Oversight Committee is scheduled to take up the issue at a meeting Monday at the Statehouse.

The new policy encourages applicants to seek any other government aid for which they might be eligible, including food stamps, welfare, Social Security and Medicaid. The state-funded living allowance is intended to supplement to that other aid, Barlow said.

But John Dickerson, executive director of the advocacy group ARC of Indiana, said eliminating the grocery allowance could mean hardship for people who don't receive food stamps or have trouble getting approved. Most of those who depend on the state program have no means other than state or federal assistance and approval for some programs can take months, he said.

"We've got to have some sort of a way to cover people in the meantime because otherwise this new food policy could leave people without any food budget at all," Dickerson said.

Peter Zubler, director of community services with Tangram, which serves 200 developmentally disabled people in Marion, Shelby, Hancock and Hamilton counties, said his clients already have faced monthslong delays in approval of living allowances. Some have been waiting for approval since April, he said.

Some clients have been forced to go to food banks while others have had to turn to retired parents who are now trying to support their grown disabled children, he said.

The July lawsuit filed by Dick in Marion County alleged the Family and Social Services Administration had reduced its previous $200 monthly grocery allowance by any amount recipients received in food stamps. The agency changed that policy later that month.

Both sides are trying to negotiate a settlement in the lawsuit, Dick said.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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