(a) If the department has reasonable grounds for believing that assistance was improperly granted, it shall investigate and document the grounds in the case file, and, if it appears as a result of the investigation that assistance was improperly granted, it may, after providing an opportunity for a hearing, terminate or reduce assistance and notify the recipient to that effect. The department shall continue the payment of benefits pending the hearing. The state has a claim against a person who received an improper amount of assistance. The claim may be enforced by an action instituted in the name of the state by the attorney general to recover the amount paid to the person, with interest, together with the necessary costs of the action.
(b) If the department finds that recovery would work a financial hardship on the recipient to the extent that the health and well-being of the recipient would be threatened or that the costs of recovery would exceed the amount of assistance improperly granted, it shall waive recovery or reduce the amount to be recovered.