Section 8 sent me $1100 extra..and wants me to refund tenant

I am in NYS. My section 8 tenant of 2 years. Not a ideal scenario..2 bedroom she frequently has her kids stay, her boyfriend, etc. Her share of the rent was $106/Mon. I raised the rent $100 to be in line with market. Sept I end up getting $1100 extra. I call section 8 and they said they recalculated and she shouldn't have paid $106 so they gave me $1100 for Oct thru Aug. I asked why they didn't send it to her, they said that's not how they do it. First its 2 tax years, second there is no paper trail. They don't care.

Have you ever dealt with this? Then they did her recert and she has another extra person listed. Yet I know zero about that.

In NY if it's an immediate family member I can't refuse to rent.