[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
ENSURING THE INTEGRITY OF SOCIAL SECURITY PROGRAMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
MAY 10, 2001
__________
Serial No. 107-30
__________
Printed for the use of the Committee on Ways and Means
__________
U.S. GOVERNMENT PRINTING OFFICE
74-224 WASHINGTON : 2001
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J. D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Allison Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Social Security
E. CLAY SHAW, Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona BENJAMIN L. CARDIN, Maryland
KENNY C. HULSHOF, Missouri EARL POMEROY, North Dakota
RON LEWIS, Kentucky XAVIER BECERRA, California
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of May 3, 2001, announcing the hearing.................. 2
WITNESSES
Social Security Administration:
Fritz Streckewald, Acting Assistant Deputy Commissioner,
Disability and Income Security Programs.................... 7
Hon. James G. Huse, Jr., Inspector General, Office of the
Inspector General.......................................... 26
______
Consortium for Citizens with Disabilities, Ethel Zelenske........ 43
Essex County, New Jersey, Office of the Sheriff, John D. Dough... 55
Hennepin County, Minnesota, Children, Family and Adult Services
Department, Phillip Burnett.................................... 49
Vance International, Inc., Eljay Bowron.......................... 51
______
SUBMISSIONS FOR THE RECORD
Herger, Hon. Wally, a Representative in Congress from the State
of California, statement....................................... 6
Michael Steinberg & Associates, Tampa, FL, Michael A. Steinberg,
statement and attachments...................................... 68
National Association of Disability Examiners, Salem, OR, Sue
Heflin, statement.............................................. 70
ENSURING THE INTEGRITY OF SOCIAL SECURITY PROGRAMS
----------
THURSDAY, MAY 10, 2001
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:07 a.m., in
room B-318 Rayburn House Office Building, Hon. E. Clay Shaw,
Jr. (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
May 3, 2001
No. SS-2
Shaw Announces Hearing on
Ensuring the Integrity of Social Security
Programs
Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on ensuring the integrity of
Social Security programs. The hearing will take place on Thursday, May
10, 2001, in room B-318 Rayburn House Office Building, beginning at
10:00 a.m.
Oral testimony at this hearing will be from invited witnesses only.
However, any individual or organization not scheduled for an oral
appearance may submit a written statement for consideration by the
Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
Nearly $430 billion in Social Security and Supplemental Security
Income (SSI) benefits were paid last year to about 45 million retired
and disabled workers and their families, and to more than 6 million SSI
recipients. These benefits represent the largest expenditure in the
Federal budget today. Moreover, benefit amounts will continue to
increase during this decade due to increasing workloads caused by the
aging Baby Boom generation.
Ensuring the integrity of Social Security programs remains an
important goal of the Social Security Administration (SSA). Agency
objectives supporting this goal include making accurate benefit
payments, reducing the backlogs of continuing disability reviews,
improving accuracy and timeliness in posting earnings, increasing debt
collections, and aggressively deterring, identifying, and resolving
fraud.
Yet, despite SSA's efforts, certain Social Security and SSI program
activities continue to be subject to abuse. Examples include prisoners,
fugitive felons, and the deceased continuing to receive benefits they
are not entitled to, along with benefit payments being misused by
representative payees (individuals or organizations who have been
designated by SSA to receive benefit payments directly from the agency
on the recipient's behalf). During the 106th Congress, the
Administration and SSA's Office of Inspector General submitted draft
legislation to enhance the agency's ability to address these and other
program abuses. Many of the provisions submitted were included in H.R.
4857, the ``Social Security Number Privacy and Identity Theft
Prevention Act of 2000,'' which was approved by the Committee on Ways
and Means at the end of last year. However, the bill was not considered
by the full House of Representatives before the end of the session, due
to its referral to other committees of jurisdiction that did not take
action on the bill.
In announcing the hearing, Chairman Shaw stated: ``We must be
certain Social Security is doing everything it can to protect the
integrity of Social Security programs--before massive numbers of Baby
Boomers start to qualify for benefits. Efforts to stop benefits to
those who are not entitled must increase as must efforts to protect
Social Security beneficiaries who depend on representative payees to
handle their affairs. I look forward to hearing more about action being
taken, how these efforts can be improved, and how proposed legislation
will help.''
FOCUS OF THE HEARING:
The hearing will examine the SSA's efforts to stop benefits from
being paid to those who are ineligible for benefits and to prevent
misuse of benefits by representative payees. Witnesses will also
comment on legislative proposals aimed at improving the agency's
ability to ensure the integrity of Social Security programs.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch
diskette in WordPerfect or MS Word format, with their name, address,
and hearing date noted on a label, by the close of business, Thursday,
May 24, 2001, to Allison Giles, Chief of Staff, Committee on Ways and
Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the Subcommittee on Social Security office, room B-316
Rayburn House Office Building, by close of business the day before the
hearing.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. All statements and any accompanying exhibits for printing must
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or
MS Word format, typed in single space and may not exceed a total of 10
pages including attachments. Witnesses are advised that the Committee
will rely on electronic submissions for printing the official hearing
record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a
statement for the record of a public hearing, or submitting written
comments in response to a published request for comments by the
Committee, must include on his statement or submission a list of all
clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the
name, company, address, telephone and fax numbers where the witness or
the designated representative may be reached. This supplemental sheet
will not be included in the printed record.
The above restrictions and limitations apply only to material being
submitted for printing. Statements and exhibits or supplementary
material submitted solely for distribution to the Members, the press,
and the public during the course of a public hearing may be submitted
in other forms.
Note: All Committee advisories and news releases are available on
the World Wide Web at ``HTTP://WWW.HOUSE.GOV/WAYS__MEANS/''.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
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materials in alternative formats) may be directed to the Committee as
noted above.
Chairman Shaw. Good morning. Welcome to today's hearing. It
will be on ensuring the integrity of the Social Security
programs. This past year, Social Security paid out about $430
billion in Social Security and supplemental security income
benefits to nearly 50 million people who are unable to work due
to age or to disability. We must be certain that Social
Security is doing everything it can to protect the integrity of
the Social Security programs before massive numbers of baby
boomers start to qualify for benefits. Getting those payments
right is a huge task in and of itself. In addition, we must
have smart aggressive measures to prevent fraud and recover
misspent money.
This Committee has worked closely with the Social Security
Administration (SSA) to address waste and fraud in the Social
Security programs. Welfare reform included landmark legislation
insuring that checks go to the right people, preventing
prisoners from getting cash benefits, and helping the agency
better recover overpayments.
These efforts have saved literally billions of dollars
boosting taxpayers confidence that their money is being spent
wisely and as it should be spent. During the 106th Congress,
the Subcommittee held several hearings on the integrity of the
Social Security programs. We examined SSA's and the Office of
Inspector General's policies to combat fraud and abuse in
Social Security programs, SSA's oversight of representative
payee programs and proposed changes to the law submitted by the
agency to address these very issues. Many of the legislative
proposals considered at these hearings were included as part of
H.R. 4857, the Social Security Number Privacy and Identity
Theft Prevention Act of 2000.
Although this Act was approved by the full Committee, it
was not considered by the full House before the end of the
session due to its referral to other committees with
jurisdiction that did not take action on the bill. Today we
continue what we started last Congress. We begin with an update
from SSA and the Inspector General on their efforts to ensure
program integrity.
We will also hear their recommendations for legislation
that they support to improve their effectiveness as stewards of
the Social Security programs. We will then hear from our final
panel. They are individuals on the frontline who represent
claimants and who enforce the law. Their real life experience
will shed light on the true value of the proposed legislation.
Soon I intend to reintroduce common sense legislation to combat
waste and fraud in Social Security programs.
Like last year, I intend to work closely with my friend and
colleague, Mr. Matsui, and all of the colleagues on the
Subcommittee in a very bipartisan way to ensure that this bill
continues to have the bipartisan support that it enjoyed last
year.
Mr. Matsui.
[The opening statement of Chairman Shaw follows:]
OPENING STATEMENT OF THE HON. E. CLAY SHAW, JR., M.C., FLORIDA, AND
CHAIRMAN, SUBCOMMITTEE ON SOCIAL SECURITY
Welcome to today's hearing on ensuring the integrity of Social
Security programs.
This past year, Social Security paid about $430 billion in Social
Security and Supplemental Security Income benefits to nearly 50 million
people who are unable to work due to age or disability.
We must be certain Social Security is doing everything it can to
protect the integrity of Social Security programs--before massive
numbers of Baby Boomers start to qualify for benefits. Getting those
payments right is a huge task by itself. In addition, we must have
smart, aggressive measures to prevent fraud and recover misspent money.
This Committee has worked closely with the Social Security
Administration (SSA) to address waste and fraud in Social Security
programs. Welfare reform included landmark legislation ensuring checks
go to the right people, preventing prisoners from getting cash
benefits, and helping the agency better recover overpayments. These
efforts have saved literally billions of dollars, boosting taxpayer
confidence that their money is being spent as it should.
During the 106th Congress, the Subcommittee held several
hearings on the integrity of Social Security programs. We examined
SSA's and the Office of Inspector General's policies to combat fraud
and abuse in Social Security programs, SSA's oversight of the
representative payee program, and proposed changes to the law submitted
by the agency to address these issues.
Many of the legislative proposals considered at these hearings were
included as part of H.R. 4857, the ``Social Security Number Privacy and
Identity Theft Prevention Act of 2000.''
Although H.R. 4857 was approved by the full Committee, it was not
considered by the full House before the end of the session due to its
referral to other committees of jurisdiction who did not take action on
the bill.
Today, we continue what we started last Congress. We begin with an
update from SSA and the Inspector General on their efforts to ensure
program integrity. We will also hear their recommendations for
legislation they support to improve their effectiveness as stewards of
Social Security programs.
We will then hear from our final panel. They are individuals on the
front line who represent claimants and who enforce the law. Their real
life experiences will shed light on the true value of proposed
legislation.
Soon, I intend to reintroduce common sense legislation to combat
waste and fraud in Social Security programs. Like last year, I intend
to work with Mr. Matsui and all of my colleagues on the Subcommittee to
ensure the bill has bipartisan support.
Mr. Matsui. Thank you very much, Chairman Shaw. I would
like to thank and acknowledge you for calling the hearing and
obviously to welcome our witnesses today. One of the most
important services the Social Security Administration provides
is the delivery of benefits to the critically ill and severely
disabled through designated representative payees. The
representative payee system can be improved to deliver better
services and obviously to reduce fraud.
The Social Security Administration needs to speed up
compensation to beneficiaries who were defrauded by these
representative payees and the Office of Inspector General (IG)
needs statutory law enforcement authority, thereby enhancing
the IG's ability to investigate alleged cases of fraud.
The Subcommittee must ensure that the Social Security
Administration is funded at an adequate level to meet future
workload demands, including continued prevention and deterrence
of program fraud. The Independent Social Security Advisory
Board concluded in one of its reports earlier this year, and I
quote, ``the Social Security Administration's administrative
budget shortfall, which is undermining its ability to provide
appropriate level of services to the American people needs to
be addressed.'' The board further argued that the Congress and
the administration should provide the agency with a budget that
fits the needs of Social Security's contributors and
beneficiaries. I wholly agree with that statement.
Given the testimony that this Subcommittee has heard about
the staffing and administrative challenges that Social Security
Administration faces as part of the aging of the baby boom
population, this Subcommittee should ensure the Social Security
Administration has the resources for its needs.
I am hopeful we will be able to continue to work as we
have, Mr. Chairman, in a bipartisan fashion and obviously meet
the needs of Social Security Administration in the coming
years. Thank you.
Chairman Shaw. Thank you, Bob. I have a statement that Mr.
Wally Herger has asked be placed in the record at this time,
and without objection I will do so.
[The information follows:]
STATEMENT OF HON. WALLY HERGER, A REPRESENTATIVE IN CONGRESS FROM THE
STATE OF CALIFORNIA
I congratulate Chairman Shaw for calling this hearing today on
ensuring the integrity of Social Security programs. Given the
importance of Social Security and related benefits to millions of
families across America, there's hardly a more important topic that
comes before us.
I especially would like to commend the Social Security
Subcommittee, and the Human Resources Subcommittee I now chair, for
their past efforts to ensure the right benefits go to the right people
in keeping with the law and just plain common sense.
That hasn't always been the case. When Republicans became the
majority party in the House in 1995, one of the first things we did was
end the eligibility of drug addicts and alcoholics for Supplemental
Security Income (SSI) cash benefits. Before then, the law provided if
someone was disabled from working because they drank too much or took
drugs, they were entitled to a government check.
It's hard to imagine a more perverse, irresponsible, and anti-work
policy. Taxpayers perceived it as a waste of their money, it
perpetuated rather than solved beneficiaries' addictions, and it
undermined the entire SSI Program. Incredible as it may seem, the
number one reason drug addicted or alcoholic beneficiaries left the
program was not because they got treatment and recovered, or went to
work despite their addictions, but because they died. We were literally
subsidizing addicts to death. Some even had their government checks
sent straight to their favorite liquor store or corner bar. That is now
changed, and today no one qualifies for SSI disability checks only on
the basis of drug addiction or alcoholism.
Other important changes involved ending benefits for prisoners.
Some people were shocked to learn prisoners kept getting means tested
benefits behind bars. But while the law long provided that those on SSI
should not receive benefits while in jail, it was left to the
beneficiary to report his or her incarceration so benefits would end.
Naturally, few did. But working with Sheriff Mick Grey of Butte County,
California in my Congressional District and the Social Security
Inspector General, I drafted legislation that resulted in the
``bounty'' system that now encourages local jails to report prisoner
lists for matching against SSI rolls. The result has been tens of
thousands of inmates no longer getting benefits.
Still another program integrity step that is working involves
fugitive felons. The welfare reforms we made in 1996 ended the
eligibility of fugitive felons and probation and parole violators for
SSI benefits. According to testimony submitted for today's hearing by
the Social Security Inspector General, some 28,000 fugitives have been
identified and removed from the SSI rolls since then. That is a
tremendous result in itself. However, we also took the step of
directing the Social Security Commissioner to provide State and local
law enforcement officials with locator information about fugitives so
they could be apprehended, starting with the most dangerous ones.
I understand the Inspector General proposes in his testimony to
expand the fugitive felon prohibition to include Social Security as
well as SSI benefits. This is an excellent suggestion that would result
in additional savings to taxpayers. To their credit, the Social
Security Administration testifies they are willing to explore this
change as well. Other improvements, such as Social Security's tapping
additional sources of fugitive information, may result in even greater
savings for taxpayers.
Chairman Shaw. And any of the members that have an opening
statement they wish to include in the record, I'll be glad to
include that also.
Our first witness this morning is Mr. Streckewald, who is
acting assistant deputy commissioner of the Office of
Disability Income and Security Programs. Welcome. We have your
entire--the text of your entire statement, which will be placed
into record. You may feel free to summarize in any way you feel
comfortable.
STATEMENT OF FRITZ STRECKEWALD, ACTING ASSISTANT DEPUTY
COMMISSIONER, DISABILITY AND INCOME SECURITY PROGRAMS, SOCIAL
SECURITY ADMINISTRATION
Mr. Streckewald. Chairman Shaw, Congressman Matsui and
Members of the Subcommittee, thank you for inviting me to
discuss SSA's efforts to ensure the integrity of the Social
Security programs. I welcome the opportunity to talk about our
efforts to prevent misuse of benefits by representative payees
and our efforts to stop the payment of benefits to those who
are ineligible. I also want to discuss legislative proposals
that, if enacted, would allow the Social Security
Administration to do a better job of ensuring the integrity of
our programs.
As you know, we place great importance on our role as the
steward for the Old Age Survivors and Disability Insurance
(OASDI) program and the Supplemental Security Income (SSI)
program. In fact, $1 out of every $4 in SSA's administrative
budget is dedicated to program stewardship and program
integrity. One area to which we have devoted particular
attention is our representative payee program. We are deeply
committed to protecting the 6.5 million beneficiaries who are
paid $30 billion per year through their representative payees.
Our goal is to select the most qualified individual or
organization to serve as payee for our most vulnerable
beneficiaries: those who cannot manage their own funds. We
investigate all payees before they are selected and we provide
detailed information to payees as to their responsibilities and
their duties to the beneficiary.
SSA requires annual accounting by these representative
payees of all the benefits received and how they were spent. In
general, the representative payee program works well. Misuse of
funds occurs in less than 1/100th of 1 percent of all cases.
However, when problems occur, the result is almost always
hardship on the beneficiary. Therefore, we are constantly
working to strengthen the representative payee program.
Last year, we described to you our plans for improving the
administration of our representative payee program, and I would
like to take just a moment today to update you on some of these
initiatives. We began a triennial on-site review program of all
825 fee-for-service payees, all organizational payees who serve
100 or more beneficiaries, and all individual payees serving 20
or more beneficiaries. In the past year approximately 540 of
these reviews have been conducted. I am pleased to report that
the incidence of misuse found has been minimal.
Currently, nongovernmental, fee-for-service organizations
must be either licensed or bonded to serve as representative
payees. Beginning last June we began a program to
systematically verify on an annual basis that the bonding or
licensing requirement continues to be met.
Beginning with fee-for-service payees newly appointed in
January 2000, we began site visits 6 months after their initial
appointment as payee. This visit ensures that they fully
understand their duties and responsibilities as payees.
Each year SSA will conduct a random sample of 30 percent of
volume payees and fee-for-service payees that have not already
been selected for the triennial review.
SSA also continues to conduct reviews of payees in response
to third party reports of misuse, complaints from vendors for
failure to receive payments and similar reports. While we are
proud of our progress, we also recognize that administrative
actions alone are not sufficient to address all the issues and
concerns that have been identified with our representative
payee program.
Last year, the Ways and Means Committee adopted H.R. 4857,
the bill that would strengthen our recovery of misused funds by
payees, and more importantly, restore misused funds to our
beneficiaries. The provision requiring SSA to reissue benefits
when an organizational payee misuses payments would provide an
important protection to those most vulnerable beneficiaries,
beneficiaries who have no family or friends able to serve as
payee.
Another stewardship issue you asked me to discuss today
relates to the reporting of death information. As you know, SSA
processes over 2 million death reports each year. Our agency
compiles and maintains a comprehensive data base that contains
death information. We receive reports from family members,
funeral homes, all 50 States and many other sources. We
independently verify reports from third parties such as the
States and other governmental agencies, for example, the
Veterans Administration, before we terminate benefits.
Last year you considered a proposal that would have
required States to report death information to SSA within 30
days of when they receive it. Timely reports of death help
prevent overpayments. We want to continue to work with the
Subcommittee to explore ways to improve our death termination
process.
The last subject I want to discuss today is what we call
the Fugitive Felon Project. Under current law, it is illegal
for fugitive felons to collect SSI payments. Working with the
IG, we identified over 22,000 fugitives receiving SSI during
fiscal years 1998 to 2000. Using information provided by SSA,
the IG, and other law enforcement agencies apprehended more
than 2,800 of these fugitives. In an August 2000 report, the IG
recommended that SSA pursue legislation prohibiting payment of
OASDI benefits to fugitive felons. That recommendation is worth
exploring. There are obvious benefits to law enforcement if the
prohibition on paying benefits to fugitive felons were extended
to OASDI beneficiaries, and we would be happy to work with the
Subcommittee to develop such a proposal.
In conclusion, let me emphasize that we are committed to
our roles as vigilant stewards of the OASDI and SSI Programs,
and we look forward to working with the Subcommittee to
strengthen our performance.
My written testimony discusses the issues I have raised
with you today in greater detail. I would be pleased to answer
any questions you may have.
[The prepared statement of Mr. Streckewald follows:]
STATEMENT OF FRITZ STRECKEWALD, ACTING ASSISTANT DEPUTY COMMISSIONER,
DISABILITY AND INCOME SECURITY PROGRAMS, SOCIAL SECURITY ADMINISTRATION
Mr. Chairman, Congressman Matsui, members of the Subcommittee,
thank you for inviting me here today to talk to you on a variety of
issues that affect Social Security programs. I want to discuss some
recent improvements we have made to strengthen our representative payee
program as well as some legislative changes the subcommittee has
considered that would improve protections for beneficiaries with
payees. Additionally, I want to provide our perspective on legislative
proposals that would:
Require States to report death information to SSA in a more
timely manner; and
Apply the current Supplemental Security Income (SSI)
fugitive felon provisions to the Old Age, Survivors, Disability
Insurance (OASDI) program.
The Social Security Administration places great importance on our
role as stewards of the OASDI and SSI programs and in ensuring that
only those who are entitled to benefits receive them for any given
month. The public's trust in the Social Security program is vitally
important to us. Because of the importance of this trust, we have
devoted significant resources and attention to strengthening and
maintaining the integrity of the Social Security program; $1 out of
every $4 in SSA's administrative budget is dedicated to program
stewardship and program integrity.
Representative Payments
SSA is deeply committed to protecting the 6.5 million Social
Security and SSI beneficiaries who are paid $30 billion per year
through representative payees. Our goal is to select the most qualified
individual or organization to serve as representative payee. All payees
are investigated before being selected. If an interested family member
or friend cannot be found (or willing to serve), SSA will ask a
qualified organization willing to perform the duties of representative
payee.
When appointed, all payees receive information on their
responsibilities and duties as payees. Further, to provide additional
support for organizational payees, we recently revised a publication
(Guide for Organizational Payees) that we developed and sent last year
to all organizational payees. The newly revised version will be
distributed in June and will also be available on our web site. When a
suitable payee has been appointed, we also provide the beneficiary with
information explaining why they have a payee, how we selected their
payee, what to do if they want to appeal our selection of payee, what
they should expect of their payee and what they should tell their
payee.
Once selected, all payees must maintain records of the
beneficiary's income and expenses. SSA requires annual accounting of
all of the benefits received and how they were spent for every
beneficiary. If this information is not received or is incomplete, we
follow up with the payee. If SSA has cause to believe that an
organization is not using benefits properly, we have an additional
review procedure that focuses on the organization's records and
includes contact with the beneficiary and staff of the organization, as
well as vendors.
We believe this oversight process works well; misuse of funds
occurs in less than one-hundredth of one percent of all cases. However,
we are constantly seeking ways to improve the process.
Monitoring Initiatives
Last year, we described to you our plans for improving safeguards
for our most vulnerable beneficiaries--those who need assistance from a
representative payee. We have made great strides towards implementing
those representative payee program improvements. Let me briefly
describe our initiatives and then provide you with the status.
Triennial Onsite Reviews of all Fee-for-Service and Volume Payees
We have begun a review of the approximately 825 fee-for-service
representative payees on a triennial cycle. We are also performing
triennial reviews of all organizational payees serving 100 or more
beneficiaries, which we refer to as ``volume'' payees, and of all
individual payees serving 20 or more beneficiaries. This review
includes an assessment of the payee's record keeping, and we interview
a sample of beneficiaries in order to assess whether their needs are
being met. Expenses may be corroborated with providers of services. In
addition, we contact vendors to ensure that beneficiaries' bills are
being paid. Over the last year, approximately 540 of these reviews have
been conducted. While the incidence of misuse found has been minimal,
we have found problems with commingling of funds and incorrect titling
of accounts. We have taken corrective actions in those cases.
Annual Verification of Bonding or Licensing
Currently, in order to collect a fee from a beneficiary's check,
the non-governmental fee-for-service organization must be either
licensed or bonded to serve as representative payee. This is a
statutory requirement. Beginning in June 2000, we began an annual re-
certification of these organizations to ensure the bonding or licensing
requirement continues to be met. To date, we have completed 693 re-
certifications of the 825 fee-for-service payees.
For those fee-for-service payees that are bonded, there is no
requirement that specifies the minimum amount of the bond that would be
paid in the event of misuse (e.g., $600 of coverage for each
beneficiary). However, we are drafting a regulation that will give
guidance on the level of bonding needed by fee-for-service
organizations. We anticipate publishing this regulation in early 2002.
A 6-Month Review for All Newly Appointed Fee-for-Service Payees
Beginning with fee-for-service payees newly appointed in January
2000, we began site visits 6 months after their initial appointment as
payee. This visit ensures that they fully understand their duties and
responsibilities, and are on the right track with respect to record
keeping and reporting. We focus on their accounting procedures so that
they are able to account for beneficiaries' funds as well as comply
with our requests for review. To date, 17 visits have been made for
those fee-for-service payees newly appointed since January 2000.
Random Reviews of Volume and Fee-for-Service Payees
Each year SSA will conduct a random sample of 30 percent of volume
payees and fee-for-service payees that have not already been selected
for review. Of the cases selected, we will review a sample of
beneficiary records for compliance with our policies and procedures. We
issued instructions needed to implement this initiative in December
2000, and this program began this Spring.
In addition, we continue to monitor for ``trigger'' events. That
is, we conduct reviews of payees in response to third-party reports of
misuse, complaints from vendors of failure to receive payment, and
similar reports. Over the last year, we have done 26 reviews due to
trigger events.
We believe that our expanded onsite review program will:
protect vulnerable beneficiaries by quickly reacting to
questionable indications;
deter payee misconduct;
provide a strong oversight message to payees;
ensure that fee-for-service payees continue to be qualified
under the law; and
establish good lines of communication and promote good payee
practices.
Contracts Relating to Monitoring Initiatives and Background Checks
We are currently developing a contract proposal for an independent
audit firm to review the revised monitoring process and offer
suggestions for improvement. This includes a review of instructional
materials as well as onsite review processes. The contractor will
provide a report with any recommendations for corrective changes as
deemed appropriate. We expect to obtain bids by this Summer and start
the audit in the Fall of 2001.
We are also in the process of awarding a contract to obtain the
assistance of an expert consultant to explore options available for
criminal and credit background checks for fee-for-service payee
organizations. This effort is consistent with OIG's suggestion that we
put more emphasis on the selection of our representative payees.
Contractor bids were due by April 16 and we expect to award the
contract by early June. We expect the contractor to complete its work
in about 6 months and hope to have a final report of recommendations by
the end of the year.
Demonstration Project
We have undertaken a demonstration project to obtain expert
assistance in our onsite reviews in two regions. We have contracted
with an accounting and management firm to provide support to our review
teams when they conduct site reviews. This support will continue
through September 2001. The purpose of this demonstration is to assess
the value of using contractors with expertise in accounting practices
to assist the SSA teams in conducting the site reviews. To date, the
contractor has assisted our field review teams in 35 site reviews in
our Chicago and Philadelphia Regional Office areas, and is on schedule
under the terms of the contract. While no misuse of benefits was found
in these reviews, they revealed record keeping problems and that some
of the organizational payees have a weak financial position. We will
continue to monitor these payees.
Recruitment and Education Campaign
We have new projects either well underway or completed to help our
field offices recruit and educate new and existing organizational
payees. As previously noted, we revised our ``Guide for Organizational
Representative Payees'' and we expect distribution by June. This
booklet provides guidelines and suggestions to assist organizations in
understanding the principles of the representative payment program and
their responsibilities.
We have produced a training video which can by used by the field
offices when training organizational payees. Both the video and the
guide will become part of a ``training kit'' which includes a lesson
plan for training organizational payees, a power point presentation,
and CDs. We plan to release this kit to our regions in June. These
educational products will assist our field offices when providing
training for organizational payees and also serve as tools for payees
to refer to when questions arise or when the organizational payee has
staffing changes.
Changes to Representative Payee System and Related Systems
The Representative Payee System (RPS) is an integral part of the
representative payee application process as well as a centralized
computer file containing information about individuals and
organizations providing representative payment services and the
beneficiaries that they serve. While there have been some problems with
the RPS, especially with regard to the way the RPS interacts with other
SSA systems, it has been useful for investigating fraud, suitability of
payee applicants, and identifying trends.
The RPS contains a number of investigative features, for example,
the RPS:
Automatically verifies the representative payee's Social
Security number against SSA's Numident file;
Automatically checks the database for a history of misuse/
fraud;
Does not permit the selection of a person convicted of a
violation under section 208 or Section 1632 of the Social
Security Act (penalties for fraud) to serve as payee.
The RPS is our most effective investigative tool in assisting our
field office employees in making appropriate representative payee
selections. While the RPS provides many benefits, it needs to be
strengthened. An internal systems workgroup undertook a comprehensive
review of the RPS and related systems and developed a project that
includes a number of improvements to the RPS and the accounting
processes. The project will result in:
A redesign of the accounting systems,
Additional systems' support for an expanded monitoring
process, and
A comparison of databases to assure payee suitability.
We plan to implement improvements for both the RPS and the
accounting processes in three phases. The improvements will provide
additional information for use in determining the suitability of the
payee, additional information for use in monitoring payee performance,
and additional control and consistency of the Title II and Title XVI
accounting processes. For the RPS, the first phase, targeted for
implementation at the end of 2001, will involve database record clean-
ups (including the updating of the RPS to reflect terminated benefit
records involving prior payees) and the collection of additional data
for fee-for-service payees (e.g., license or bonding information such
as the amount of the bond and expiration dates). The next phase,
targeted to begin towards the end of 2002, will develop and/or improve
several alert processes and provide additional representative payee
data. The final phase will be a complete redesign of our current
accounting process. The timing of that redesign depends on the
completion of Phases 1 and 2 and the availability of resources.
By the fall of 2001, we also expect the RPS to contain additional
information needed to assist the expanded monitoring program. For
example, we plan to store the date of our site visit, the date and
reason why an organization is no longer authorized to charge a fee and
information regarding bonding and licensing of the organization. We
will have the capability of updating the information and storing it.
This will provide a historical record on each of the fee-for-service
organizations.
Legislation
We recognize that administrative actions alone are not sufficient
to address all of the issues and concerns that have been identified
with our representative payee program. Last year the Ways and Means
Committee adopted H.R. 4857, a bill that would strengthen our recovery
of misused funds by payees and, more importantly, restore misused funds
to our beneficiaries.
Currently, when any payee has been determined to have misused an
individual's benefits, SSA can reissue the benefits only in cases where
there has been negligent failure on our part to investigate or monitor
the payee. In virtually all other cases, the individual loses his or
her funds unless SSA or the beneficiary can obtain restitution of the
misused benefits from the payee. Additionally, SSA can seek restitution
only through a civil action if the representative payee refuses to
return the misused funds.
To facilitate restitution of misused funds to beneficiaries,
provisions contained in H.R. 4857 would require SSA to reissue benefit
payments (including any respective fees for fee-for-service payees) in
all cases when an organizational payee is found to have misused a
beneficiary's funds, without either a finding of negligence on SSA's
part or restitution from the organizational payee. Requiring re-
issuance of such misused benefit payments, including any fees that were
deducted from the beneficiary's benefit, would provide important
protection to the most vulnerable of beneficiaries--those who have no
family or friends willing or able to be a payee.
Such authority would enable us to restore benefits that have been
misused by an organizational representative payee, thereby reducing the
hardship that can be caused by such a loss. SSA would, through all
available avenues of legal recourse, continue to seek restitution of
the misused funds from the former representative payee.
In addition to this change, provisions such as those found in H.R.
4857 would provide increased safeguards for beneficiaries with
representative payees. Although SSA does not have a formal position on
these provisions, they would:
Require non-governmental fee-for-service organizational
payees to be bonded and licensed, provided that licensing is
available under State or local law. (The requirement under current
law is bonding or licensing.) State licensing provides some
oversight by the State into the organization's business practices,
and bonding provides some assurance that a surety company has
investigated the organization and approved it for the level of risk
associated with the bond. The proceeds from redeemed bonds would
reduce the costs to the program when re-issuing benefits in cases
of representative payee misuse.
Require SSA to conduct periodic onsite reviews of all non-
governmental fee-for-service representative payees, any other
organization serving 50 or more beneficiaries, and individual
payees serving 15 or more beneficiaries.
Provide that when an organization has been found to have
misused an individual's benefits, the organization shall not
qualify for the fee from that individual's benefits for months the
payee misused the funds. Requiring payees to return the fees
charged for periods of misuse is reasonable because the payee was
clearly not properly performing the service for which the fee was
paid. Permitting the organization to retain the fees is tantamount
to rewarding the payee for violating his or her responsibility to
use the benefits for the individual's current and future needs.
Provide that misused benefits (including any respective
representative payee fees) would be treated as an overpayment
to the organizational or individual representative payee and,
therefore, subject to current SSA overpayment recovery
authority. Although SSA has been given expanded authority in
the recovery of overpayments (such as tax refund offset,
referral to contract collection agencies, notifying credit
bureaus, and administrative offset of future federal benefit/
payments), these tools cannot be used to recoup benefits
misused by a representative payee. Providing that benefits
misused by any representative payee would be an overpayment to
the payee would provide SSA with additional means for recouping
the misused payments.
Extend civil monetary penalty provisions to representative
payees that misuse benefits. As it pertains to representative
payees, this provision would allow SSA to impose administrative
penalties and assessments against representative payees who
misuse benefits. This would improve our ability to ensure that
individuals who commit this type of fraud against SSA are
penalized, even if such individuals are not prosecuted
criminally.
Disqualify an individual from serving as representative
payee if he or she has been convicted of an offense resulting
in more than one year of imprisonment, unless the Commissioner
of Social Security determines such certification to be
appropriate not withstanding such conviction.
Provide authority to redirect Social Security benefits to
field offices when the representative payee fails to provide an
annual accounting of benefits. Notifying the payee of this
possibility, and redirecting benefits to the field office,
would provide an extremely effective tool for increasing the
number of payees who return the annual accounting form, while
providing the field offices the flexibility to take the most
appropriate action in a particular case.
SSA supports the Subcommittee's efforts to provide increased
safeguards for beneficiaries with representative payees and will work
with the Subcommittee staff to bolster the other efforts SSA has
initiated to help prevent misuse by payees.
Status of OIG Recommendations
In the mid-1990s, SSA requested the OIG to review and make
recommendations to improve the representative payee program. We
requested these reviews in order to better meet the needs of the
changing demographics of our representative payee population.
OIG made several recommendations--from how to select a
representative payee to the kind of monitoring program needed. SSA
evaluated the recommendations within the framework of our competing
priorities and resource limitations. We have implemented several
recommendations including:
Issuing instructions to field offices to screen payees more
thoroughly.
Conduct periodic reviews of selected payees.
Changing the focus of the current process from accounting to
monitoring and compliance.
In addition, we have the following OIG recommendations in process:
Develop an accounting form tailored to organizational
payees.
Expand our automated Representative Payment System.
Improve the ability to retrieve accounting forms when they
are needed for subsequent review.
Deceased Beneficiaries
Another important area I want to discuss is timely termination of
benefits to deceased beneficiaries. We process over 2 million death
reports annually. Our agency compiles and maintains a comprehensive
database, the death master file (DMF), which contains death
information. We receive reports from family members, funeral homes, all
50 States, the District of Columbia, some territories, the Department
of Veterans Affairs, the Health Care Financing Administration, the
postal authority, financial institutions, and other sources. We
independently verify reports from third parties (such as other
government agencies) before we terminate benefits.
We are always looking for ways to strengthen and improve our death
termination process and we are interested in ways to improve the
timeliness with which we receive and process death reports. Last year
you considered a proposal that would have required States to report
death information to SSA within 30 days of when they receive it.
Overpayments may occur when a spouse or a representative payee
negotiates a check after the Social Security beneficiary has died, or
when the benefit is electronically deposited into a joint or payee
account. Timely reports of death help prevent such overpayments. We
will continue to work with the subcommittee to explore ways to improve
our death termination process.
SSA has identified ways to improve its death report processing.
These improvements will be implemented through system enhancements,
such as modifying the Death Alert, Control and Update System and, when
completed, will strengthen the processes we use to terminate deceased
beneficiaries' benefits.
Within the next two months, we will pilot a project on Electronic
Death Registration under an agreement with the State of New Jersey.
This project will enable us to cooperatively test a process designed to
provide SSA with more accurate and up-to-date death data.
Fugitive Felons
Under current law, it is illegal for fugitive felons to collect SSI
payments. A fugitive felon is an individual who is:
Fleeing to avoid prosecution for a crime which is a felony
under the laws of the place from which a person flees;
Fleeing to avoid custody or confinement after conviction of
a crime which is a felony under the laws of the place from
which the person flees; or
Violating a condition of probation or parole imposed under
Federal or State law.
Working with the IG on what we call the Fugitive Felon Project, we
have identified over 22,000 fugitives receiving SSI during FY 1998-
2000. Using information provided by SSA, the IG and other law
enforcement agencies apprehended more than 2,800 of these fugitives.
While the monetary savings have been significant, just as important, is
the positive impact on public safety resulting from the apprehension of
these individuals.
This Fugitive Felon Project utilizes a multi-faceted approach that
requires extensive and cooperative efforts of many law enforcement
agencies throughout the United States. SSA and our IG are actively
involved in this project by identifying and taking action against
fugitive felons collecting SSI payments.
This project identifies individuals who are prohibited under the
law from receiving SSI benefits by conducting computer matches with
available sources of warrant information, which include the Federal
Bureau of Investigation's (FBI) National Crime Information Center
(NCIC) and the States. The NCIC is a major national repository for
information on felons and other offenders. We also have signed
agreements with the U.S. Marshals Service and the FBI, giving us access
to all federal warrants.
Unfortunately only about 30 percent of all outstanding warrants are
reported to the NCIC because the reporting of such information is
voluntary and selective. Eleven States report all of their warrants to
the NCIC. These States are Connecticut, Maine, New Hampshire, Alabama,
Florida, Georgia, North Carolina, Arkansas, New Mexico, Kansas, and
Missouri. The remaining 39 States report some, but not all warrant
information to the NCIC.
In a joint effort to develop comprehensive sources of warrant
information, SSA and the IG are actively pursuing matching agreements
with those States that only provide some of their warrants to the NCIC.
SSA currently has signed matching agreements with Alaska, California,
Colorado, Delaware, Kentucky, Nebraska, Massachusetts, New Jersey, New
York, Rhode Island, South Carolina, Tennessee, and Washington to obtain
the additional warrant information that is not reported to the NCIC. In
addition, we have agreements with four major metropolitan police
departments, New York City, Baltimore City, Baltimore County, and
Philadelphia.
Negotiating these individual State and local agreements is a major
undertaking. We need to address State and local variations in records,
incompatible formatting of data, privacy concerns, and the lack of
State and local central reporting repositories. Our regional fugitive
coordinators and field office staff are working to negotiate matching
agreements with all State and local authorities. We expect to have
negotiated matching agreements with all outstanding States within the
year. Every effort is being made to automate the matching operations
necessary to identify SSI recipients that have outstanding warrants.
One of the difficulties with such matches is that law enforcement
agencies frequently do not have accurate identifying information for
fleeing felons. Felons often use aliases and the law enforcement agency
may not have an accurate Social Security Number (SSN). Therefore, their
correct identification may be difficult. Unlike prisoners, fugitive
felons are not incarcerated and may not have been convicted of a crime.
For these reasons our matching operations are carefully designed to
determine that the person being sought by law enforcement is the same
individual receiving SSI. In order to protect individuals from
unwarranted invasions of their privacy resulting from collections and
use of information about them, all of our data matches and exchanges
are done pursuant to agreements that comply with Privacy Act
requirements, and we take security measures to limit access to the
data.
When we obtain warrant information from the NCIC or from any other
source, these records are first matched against SSA's files to verify
identity information, such as name, date of birth, and SSN. Once the
records are verified then a second match is conducted against our SSI
recipient files to determine which of the fugitives are receiving SSI
benefits. The results of the second match are then forwarded to the IG
for processing. The two-step matching process performed by SSA takes
four to ten days, from the time the warrant information is obtained
from a participating federal, State or local agency until the
information is forwarded to the IG.
The IG must conduct thorough investigations of the warrant
information matches to ensure that the fugitive felon warrants are
valid and that the appropriate individuals are brought to justice. The
IG works with the FBI Information Technology Center (ITC) to verify
that the felony, probation or parole violation warrant is active. The
ITC provides the address information about each SSI recipient to the
appropriate law enforcement agency so that they can apprehend the
individual.
After action by the appropriate law enforcement agency, the IG
refers their findings to SSA for appropriate action. SSA also provides
feedback to the IG reflecting the actions taken and any overpayment
that may have occurred.
Even though SSA is working to expand the number of matches through
agreements with local authorities, much of the investigative process
cannot be automated. Verification of warrant information requires
direct contact with the local law enforcement personnel who issued the
warrant. If the felon is no longer in the jurisdiction of the
originating law enforcement agency, then additional contacts must be
made with law enforcement personnel in the new jurisdiction in order to
facilitate the fugitive's apprehension.
SSA needs to be very careful when reviewing warrants to make sure
they are accurate, up-to-date, and that it pertains to the correct
person. To arrest or to suspend benefits of the wrong individual would
have severe consequences.
In their report dated August 2000, the IG recommended that SSA
pursue legislation prohibiting payment of OASDI benefits to fugitive
felons. That recommendation is worth exploring. We would be happy to
work with the Subcommittee to develop a fugitive felon provision for
the OASDI program.
Conclusion
SSA continues to strive to improve our programs through procedural
and technology changes and by supporting and proposing legislative
solutions. We are committed to our role as stewards of the trust funds.
We look forward to working with this subcommittee to assure public
confidence in our programs.
Chairman Shaw. Yes, sir. On the first page of your
testimony, you point out that you spent $1 out of every 4 in
SSA's administrative budget that is dedicated to program
stewardship and program integrity. I am reading from your
statement. What is the return you are getting for the amount of
money we are spending to----
Mr. Streckewald. The return varies by the initiative. For
some, the return or investment ratio is 3-to-1. For others, 5-
to-1 and some are much higher than that. SSI redeterminations,
of which we are going to do 2.2 million this year, give us an
approximate 5-to-1 return on investment, and the Continuing
Disability Reviews (CDR) project, which we are able to do with
the funding from support from this Subcommittee, gave us an 11-
to-1 return on this investment in fiscal year 1999.
Chairman Shaw. What if we spent more money on that? At what
point would we get a diminishing return?
Mr. Streckewald. We have charts that show the point of
diminishing return. What we try to do is fund the initiatives
just prior to when the diminishing return curve begins. So we
are looking at them very closely and making sure we get the
biggest bang for the buck.
Chairman Shaw. Mr. Matsui.
Mr. Matsui. Thank you, Mr. Chairman. The testimony of the
Inspector General, which will come after you indicate that SSA
paid about $31 million in benefits to 881 deceased
beneficiaries. You have indicated in the past, and I know that
others have suggested that you get your information about
whether a beneficiary is alive or not through various sources,
obviously through a surviving spouse, through funeral homes,
and obviously obituary notices and those kind of things. How
good is that? Do you have any systematic approach on how you
deal with this $31 million? That may be a lot in terms of the
overall budget, but it is certainly a lot of in terms of
beneficiaries.
Mr. Streckewald. We strive for perfection in this area. We
receive over 2 million reports of death a year. Most of those,
90 percent of them, come from family Members and funeral homes.
GAO reports, and the IG have said that the funeral home and
family member reports are 99 percent accurate. So we consider
them primary evidence of death. We immediately input these
reports into the system to stop the payments.
The other 10 percent is where most of the problems are.
These reports come from many sources. The States, as you know,
give us information. We receive information from other Federal
benefits from overseas, and those information sources we have
to verify. It can be somewhat of a lengthy process. But we
verify it before terminating benefits.
Mr. Matsui. So you don't do anything then in terms of
outreach? It is always input coming in?
Mr. Streckewald. We have relationships with funeral homes
all over the country. They are usually the first source. There
is a form they fill out, and they send it directly to Social
Security. We check to make sure it is the right person by
verifying that the Social Security number matches the name that
we have, and then we terminate benefits.
Mr. Matsui. Is there any thought about how you might be
able to use a system--I mean, it is obviously kind of a hit-
and-miss approach, but you get a lot of them. We are only
talking about 881, but on the other hand, it seems to me that
if a person is deceased people would----
Mr. Streckewald. Certainly receiving the death reports from
the States sooner would help. Right now it takes 90 to 120 days
to get the information from the States.
Mr. Matsui. Is that what the problem is?
Mr. Streckewald. It is a timing issue, right. Because we
normally verify the death with the family to make sure that
these other sources are correct. So I think primarily it is a
timing issue.
Mr. Matsui. You get reimbursement normally.
Mr. Streckewald. Yes, we do. I don't know the exact figure,
but we recover a huge percentage of the over payments that
occur after death. Because those are generally not fraudulently
obtained, they are simply checks that go out before we are able
to verify the death and we receive that money back from the
family.
Mr. Matsui. Why is it that $31 million has been lost?
Mr. Streckewald. That is probably the fraction of the total
payments that go out to these 2 million people that is not
recovered immediately.
Mr. Matsui. But you said that you usually get the money
back.
Mr. Streckewald. I don't know if the 31 million represents
an overpayment. Its a snapshot in time, and then if you were to
track that, we would end up recovering it. I am not sure what
that number represents.
Mr. Matsui. So we don't know whether or not it is all
recovered or not. Maybe----
Mr. Streckewald. We will be glad to submit that information
for you if we can get hold of that and show you how much of the
overpayment after death is recovered. We would be glad to
submit that for the record.
[The following was subsequently received:]
SSA recently conducted a study of payments after death in 1998,
including a longitudinal study of the resolution of incorrectly paid
benefits. Preliminary data from the study indicate that, for payments
made to a deceased individual with their own bank account, the
collection rate is more than 90 percent and recovery efforts are
continuing. Although not part of that study, This finding is similar to
the broader fiscal year-end data which shows SSA data indicate that in
2000 SSA paid out approximately $84 million after the death of the
beneficiary to spouses and representative payees. In that same year
collection of these types of overpayments totaled approximately $74
million, or about 88 percent.
Mr. Matsui. OK. In terms of last year we talked a little
bit about, you know, obviously you have 6-month reviews of
representative payees and things of that nature to try to make
sure that they are on the up and up and no fraud is committed.
But you are also looking at the possibility of background
checks and criminal background checks, credit and otherwise,
before a representative payee can be designated as such. How is
that program coming along and where are you on it, and
obviously this is only pertaining to the fee-for-service
payees, it doesn't pertain to those that are relatives and
others that don't receive these?
And I would like a comment from you about the latter as
well as to how you want to deal with background checks on those
folks.
Mr. Streckewald. You are right, we feel that the fee-for-
service and large organizational payees represent the most risk
simply because of the number of beneficiaries that they
represent. We are awarding a contract to look at the
feasibility of conducting background checks and credit checks
for all fee-for-service payees.
On the individual payees--when a person files to be payee,
first of all, we have to verify their identity, and we check
our records to make sure it is the same person that matches
with that name and number, and then we look in our records to
see if they have ever been found to have misused benefits for
anybody else. If that is the case, we do not select them as
payee.
We also verify their income source to make sure that they
have means to support themselves so they wouldn't be tempted to
use the beneficiary's money. So we do a fairly complete
questioning and review of the potential applicants before
appointing them as payeea.
Mr. Matsui. Is your program on this fully in place now, or
is there still more work to be done? I was under the impression
that more had to be done.
Mr. Streckewald. On the background checks, the actual
credit checks and criminal history checks, we have not
implemented that change yet. What we are doing is getting a
contract together to look at the feasibility of the cost of
doing that. The other one that I described is already in place.
It is part of a standing procedure when we identify the person,
we check to see if they have been found to have misused
benefits in the past and we ask them their income source.
Mr. Matsui. When do you think you will have the other part
of the program in place?
Mr. Streckewald. We expect to award the contract, I
believe, this June, and we hope to have the findings from that
contract later in the year.
Mr. Matsui. Last, the non fee-for-service, do you have any
plans on how you might want to deal with that? I know there is
some fraud involved there as well. But obviously, it is
probably of less concern because it is usually family members
or others, but in many cases it is not. There are some that are
friends, so to speak. And that obviously poses potential
problems.
Mr. Streckewald. Most of them are family members. There is
a list that field office employees are supposed to follow. It
is a priority list that provides that a family member with
custody, like a parent, obviously gets highest priority. They
move through that list that they never get to a remote relative
or an organization until they have made sure that there isn't a
family member, or a spouse or a parent with custody that would
make the best payee.
So we try to have strict adherence to that prioritization
list, and that cuts down a lot on any kind of misuse because
family members generally feel committed to providing for the
beneficiary more so than a person that does not have a close
relationship.
Mr. Matsui. What do you think in terms of your funding? Do
you need more or what? Obviously you need more, but----
Mr. Streckewald. Well, additional funds.
Mr. Matsui. Will you come here and say you have got the
problem solved?
Mr. Streckewald. Additional funds can always help us, but I
think that right now our current budget has us funded to be
able to take on the initiatives that we have committed to, the
contracts I have talked about, the increased monitoring and the
other things we do on the representative payee system. Our
current budget allows us to do that.
Mr. Matsui. So you feel it is adequate at this moment.
Mr. Streckewald. We do.
Mr. Matsui. Thank you.
Chairman Shaw. Mr. Doggett.
Mr. Doggett. Thank you. I think it would be helpful to have
the response back on $231 million, whether it is a net figure
after you have collected any payments that were made that were
not due and whether it is just one snapshot at a point in time
or reflective necessarily of a longer term experience.
Could you comment though now--not on the electronic death
registry that you are getting in place in the State of New
Jersey and any other initiatives that you have, to try to
assure that that $31 million, net or gross in most people who
hear about it, think it is gross in another sense, but to see
that it is cut as near to zero as possible.
Mr. Streckewald. The electronic death registration project,
as you mentioned, has a lot of promise for solving and
addressing some of the traditional problems in the death
process. The death process today is a paper-based process. It
includes coroners, funeral home directors, physicians, family
members, hospitals, providers. There are a lot of people
involved in that. And if we can have a process which we are
piloting in New Jersey next month that would allow every step
of the process to be input electronically and instantly
transferred to the next step, we would actually be receiving
death information, I believe within 7 days. That is a
significant acceleration of what we currently experience. So
that has a lot of promise. We hope to test it, get the results
in by the end of the year, and then if expansion is
appropriate, that is what we will aim for.
Mr. Doggett. Thank you very much.
Chairman Shaw. Mr. Cardin.
Mr. Cardin. Thank you, Mr. Chairman. I want to follow up on
Mr. Matsui's point for a moment if I might, and that is on the
budget support issues. One of the responsibilities of our
Committee is to work with the Budget Committee and
Appropriations Committee on appropriate support for your
mission. And I know that on other hearings that we have had
before this Committee on Social Security Disability Insurance
(SSDI) and other issues, the amount of administrative support
has been at issue in order to be able to do the type of work on
the integrity of the system that all of us expect.
Today we are talking about the representative payees and we
are talking about those people who are not entitled to
benefits, receiving benefits. But I just want to make it clear,
at least from your testimony, as to whether Congress is
providing adequate resources for you to, in a reasonable way,
carry out the mission that we expect. And I think it is
important that if you need additional help, that that
information be made available. We know the realities of the
budget process, but I think it is important for this Committee
to know from you whether there are additional resources that
are needed in order for you to be held accountable to carry out
your mission.
Mr. Streckewald. As I said, the additional resources always
help. We are currently funded for what we are trying to do in
the representative pay program. If I may, can we get back to
the Committee and with any type of further suggestions along
this line.
[The following was subsequently received:]
Resources Necessary to Address Program Integrity and Improper Payments
The Social Security Administration places great importance on our
role as stewards of the OASDI and SSI programs and in ensuring that
only those who are entitled to benefits receive them for any given
month. Improper payments are minimized by having adequate staffing
levels and providing the staff with the tools and resources necessary
to avoid making improper payments and to discover and recover
overpayments and to detect and pay underpayments. For any given level
of resources, SSA must allocate those resources to provide the best
balance between the need to provide services, such as the posting of
wages to a worker's record or making disability determinations for new
disability applicants, and the need to reduce improper payments, just
as such allocations must be made for the government as a whole by the
President and the Congress.
Currently, SSA devotes $1 out of every $4 of its budget explicitly
to minimizing improper payments. Given the government-wide budget
priorities and the balance that must be struck within SSA's own budget,
SSA believes that the current level and allocation is appropriate.
One way to conceptualize the utility of devoting a given level of
resources to minimizing improper payments is to consider the ratio of
improper payments detected, recovered or avoided for each dollar of
administrative cost invested. All other things being equal, one would
want to devote resources first to those efforts that would lead to a
greater amount of improper payments being detected or recovered for
each dollar invested. On the other hand, some categories of improper
payments have larger aggregate dollar amounts than other categories and
may have a greater effect on overall program integrity and the public
perception of fairness. Resources could be directed to those categories
even if the return on investment is lower than other categories.
For instance, the most powerful tool SSA has to reduce improper
payments in the SSI program, both underpayments and overpayments, is to
perform more redeterminations. In FY 2000, SSI redeterminations
detected $2.1 billion in overpayments and $933 million in
underpayments. Under the President's budget, redeterminations will
increase by 10 percent in FY 2002 over the FY 2001 level to 2,255,000.
There will be an estimated 6.4 million SSI recipients in FY 2002, so
approximately one of every three SSI recipients will be redetermined
that year.
The table below provides SSA's best estimate of the ratio (rounded
to the nearest whole dollar) of improper payments (both overpayments
and underpayments) detected, recovered, or avoided for each $1 invested
for particular activities.
------------------------------------------------------------------------
Activity Ratio
------------------------------------------------------------------------
SSI Redeterminations 7 to 1
------------------------------------------------------------------------
Continuing Disability Reviews 7 to 1
------------------------------------------------------------------------
Windfall Elimination/Gov't Pension Offset 6 to 1
match with OPM
------------------------------------------------------------------------
Disability Preeffectuation Reviews 13 to 1
------------------------------------------------------------------------
Tax Refund Offset 34 to 1
------------------------------------------------------------------------
OCSE match 3 to 1
------------------------------------------------------------------------
Savings as a result of Continuing Disability Reviews (CDRs) are
based on a 10-year life-cycle estimate. In FY 1999, SSA estimated $6.1
billion in savings from CDRs performed that year. This represents a
return of $11 to $1 for that year. However, SSA expects the return to
decline in future years to $7 to $1. SSA has benefited from an
adjustment to the discretionary budget caps to allow it to become
current with its CDR workload. The cap adjustment expires at the end of
FY 2002.
The determination of the level of resources that should be devoted
to minimizing improper payments and how to allocate those resources
among various activities is complex. SSA has, of course, developed a
plan for using its existing level of resources. Any plans for the use
of additional resources would depend on the level of those resources,
when they might be available, and whether Congress directs that the
resources be used in any specific area, such as was done with the
discretionary cap adjustment for continuing disability reviews. SSA
would be happy to work with the Committee on these issues.
Mr. Cardin. That would be helpful. Thank you, Mr. Chairman.
Chairman Shaw. Mr. Pomeroy.
Mr. Pomeroy. No questions.
Chairman Shaw. I have just a couple others. The witness on
our final panel, Zelenske, she says in her testimony that in
some cases an institution is chosen as payee even when there
are willing family and friends. Could you explain in what
situations an institution would be chosen over family or
friends, and could you explain whether the agency is required
to contact the family or friends before choosing an institution
as the payee?
Mr. Streckewald. As I mentioned before, we have a priority
list that starts off with close family members with custody as
the highest priority. Our field people work through that list.
Now, if they happen to come across a family member with custody
who has been convicted of a felony that we think is material to
their ability to be a good payee, that person will be passed
over. If they come across a family member who has misused
benefits in the past, that person will be passed over.
So we move down the list. If it turns out that between the
family members with custody, other family members and friends,
there is nobody who is suitable because of past convictions or
misuse, then, yes we might get to an organizational payee. But
we always start with the family and move down the list to the
organizational payees.
Chairman Shaw. And one other question, you have been
questioned somewhat about reports of death. The States are
required to make that report, is there anything we can do to--
or anything you think that you should be doing in that area to
see that the States do live up to that responsibility? They are
the ones that keep the records.
Mr. Streckewald. Last year you supported the legislation
that would have had the States report to us much sooner than
they currently do. And I think that obtaining State reports
sooner would serve certainly be helpful.
Chairman Shaw. Well, anything we can do to make that
happen? What would you suggest specifically what should we do
to make that happen?
Mr. Streckewald. I believe the provisions that were
proposed last year would be in line with our thinking in terms
of what would be useful to speed up the process.
Chairman Shaw. I guess what I am trying to get to is what
did we propose that hasn't been done and what we can do to see
that it is done.
Mr. Streckewald. Right now the States are only required to
provide the information, but they are not required to provide
it on time.
Chairman Shaw. I know within 30 days they have to report
it. But how can we put teeth into it? Is that a problem we
should be concerned about?
Mr. Streckewald. It can be a problem quite honestly,
because some of the States don't have the ability to report it
as soon as we like. So they may be looking for funds with which
they can automate some of their records and put them in an
electronic format. But right now it takes 90 to 120 days before
we get it from the States. So if there is legislation to help
us get it sooner, I think it would help a lot.
Chairman Shaw. That 30 days, did that pass or did it not
pass?
Mr. Streckewald. It didn't pass.
Chairman Shaw. I see. I was misunderstanding. I know we had
talked about it. Well, thank you very much, sir. We appreciate
your testimony.
[Questions submitted from Chairman Shaw to Mr. Streckewald,
and his responses follow:]
Social Security Administration
Baltimore, Maryland 21235-0001
1. During your testimony you spoke of several initiatives aimed at
monitoring organizational fee-for-service payees and institutional
payees. What percent of beneficiaries with a payee have volume/
institutional payees versus private individual payees? What are your
plans for improving oversight of representative payees who are
responsible for one or only a few beneficiaries?
Response
For those SSA beneficiaries that need a payee, about 12% are served
by an organizational/institutional payee; about 88% are served by
individuals. Because of the increasing number of problems in payee
performance involving volume/institutional payees, we have been
focusing our efforts in improving the monitoring for these payees. The
current oversight process for all other payees, including those who are
responsible for one or only a few beneficiaries, is the annual payee
reporting process, which is required by the Jordan \1\ court decision
and by the Social Security Act. If the payee does not respond to SSA's
request for the annual reporting, or the response indicates improper
use of benefits, we investigate and take the appropriate action based
on our review. We continue to seek improvements in the annual process
by refining the form used to report by payees, and by streamlining the
handling and tracking of the payee reports when they are received.
---------------------------------------------------------------------------
\1\ The Jordan court decision (U.S. District Court for the Western
District of Oklahoma) requires universal annual accounting of all
payees (except some Federal and State institutions which are subject to
a different monitoring process), including parents and spouses with
custody of the beneficiaries they serve. Prior to implementation of the
court decision, parents with custody of their children, and husbands
and wives with custody of their spouses were exempt from annual
accounting and only required to verify custody. The court's decision
for universal accounting was based on the constitutional standards of
due process and equal protection. The Omnibus Budget Reconciliation Act
1990 subsequently codified the Jordan court requirement for universal
annual accounting except for State and Federal mental institutions
participating in the onsite review program. Therefore, any change to
the accounting requirements would require a change in the law.
---------------------------------------------------------------------------
SSA also investigates and develops completely any allegation or
indication of misuse immediately, so as to protect the interests of the
beneficiary.
2. In your testimony you said beginning in January 2000 you began
site visits for fee-for-service representative payees 6 months after
their initial appointment. To date, you said you have conducted 17
visits to newly appointed fee-for-service payees. How many new fee-for-
service payees have been appointed since January 2000? What percentage
of the total number of fee-for-service payees does this represent?
Response
To date our records show 47 fee-for-service organizations were
newly appointed since January 2000. Thus, the percentage of new fee-
for-service organizations would be approximately 6% (47 of the 824). We
are making visits to these organizations on schedule. The primary
purpose of this initial visit is to ensure that the payee understands
his or her duties and responsibilities. We also want to make sure the
payee is able to provide us with the information that will be required
on how benefits are used.
3. In your testimony you mentioned that the Inspector General made
several recommendations for improving the representative payee program
and that the Social Security Administration was either in the process
of implementing some of these recommendations or planned to implement
them. Were there any recommendations that you decided not to implement?
If so, why?
Response
The following recommendations were not implemented:
a. SSA should exempt from annual accounting those payees who are
required to report to other officials, e.g., legal guardians. Because
the law requires that we obtain accountings from these payees, we have
not implemented this change.
b. SSA should conduct suitability checks only for those payee
applicants that we intend to select. We did not adopt this approach
because it presupposes the result, and we want to ensure that we select
the best applicant based on all the evidence presented.
c. SSA should revise the accounting form to focus on events that
payees commonly fail to report. The purpose of the forms is to
determine if the benefits are properly accounted for and if there have
been any changes in the beneficiary's custody. We believe the forms
accomplish this. An expansion of the form to collect more information
could be considered. However, a more complicated form would increase
not only the burden on the payee but would detract from the forms'
intent, accounting for the use of benefits. The forms do reinforce
reporting requirements and we encourage payees to tell us when an event
that may affect benefits occurs and not to wait for the accounting
form.
4. Ms. Zelenske mentioned in her testimony that the Social Security
Administration does not require State and Federal institutions to
submit annual representative payee accounting forms. Why is this the
case, and do you believe there is a need to change this?
Response
In 1970, SSA implemented the Representative Payee Onsite Review
Program. This program replaced the yearly individual accounting reports
for Social Security beneficiaries who reside in State mental
institutions and for whom the institution is the representative payee.
Each participating institution in every State is reviewed at least once
every 3 years. If there are indications of unsatisfactory performance,
additional reviews are conducted. The Onsite Review Program is intended
to decrease the burden on State mental institutions by eliminating the
need to complete the annual accounting paperwork for each beneficiary
for whom it serves as representative payee.
The Jordan court decision recognized the onsite review program as
an exception to annual accounting; this exception was subsequently
codified by the Omnibus Budget Reconciliation Act 1990. We believe that
this program continues to be an effective way to assess payee
performance and, in fact, we have shaped our expanded monitoring
program after it.
5. You provided us with examples in your testimony of projects to
recruit and educate new and existing organizational payees. Have you
found it difficult to recruit new organizational payees? When you
recruit an organization what concerns do they have about serving as
payee? For example, too much oversight, too many reports, unfounded
complaints by beneficiaries to the Social Security Administration, the
police, etc.?
Response
While SSA has not experienced problems in recruiting new
representative payees, we are undertaking a recruitment program in
order to ensure that we have a wide range of payees to choose from. At
present, if new organizational payees have concerns, we are usually
able to resolve them during the interview. We would caution, however,
that an increase in due diligence for selecting payees (e.g., requiring
bonding and licensing, conducting background checks, and so forth.) may
make payee recruitment more difficult and increase the concerns of
those organizations considering acting as payee.
6. You indicated in your testimony that currently no minimum bond
is required to be maintained by a fee-for-service payee and that you
are drafting regulations that will provide guidance on the level of
bonding needed for fee-for-service organizations. Will you require a
minimum bond? What impact will this have on your ability to recruit
representative payees?
Response
We are considering establishing a minimum bond amount of $600 for
each beneficiary served and the minimum coverage would be based upon
the number of SSA clients the organization served. For example, minimum
coverage for 5 beneficiaries would be a $3,000.00 bond, for 100
beneficiaries--$60,000.00. The average bond in these situations would
cost approximately 2 percent of the face value of the bond, although
there are numerous variables that would have a substantial affect on
the cost. We expect to publish regulations on bonding and licensing
issues in calendar year 2002.
Concerning the impact on recruitment, we expect that some
organizations may not be able to afford the cost of large bonds and we
could lose payees or preclude new ones from applying.
7. You mentioned in your testimony the annual reports filed by
representative payees. Is every representative payee required to file
an annual report? If not, why not?
Response
All representative payees, except for Federal and State mental
institutions participating in an alternative onsite review program, are
required by law to report annually on the use of benefits by completing
a Representative Payee Report. For those institutions not required to
report annually, SSA conducts onsite reviews every 3 years to ensure
compliance with representative payment polices and procedures.
8. You mention in your testimony that misuse occurs less than one-
hundredth of 1 percent of all cases. If certain representative payees
were to have a proven record of effective service, have you given any
thought to lessening their reporting requirements or reducing the
number of onsite reviews?
Response
Yes, we have considered lessening the reporting requirements for
certain payees. However, the current representative payee monitoring
process has been shaped to a large extent by the Jordan court decision
That decision requires universal annual accounting of all payees
(except some Federal and State institutions which are subject to a
different monitoring process), including parents and spouses with
custody of the beneficiaries they serve. Prior to implementation of the
court decision, parents with custody of their children, and husbands
and wives with custody of their spouses were exempt from annual
accounting and only required to verify custody. The court's decision
for universal accounting was based on the constitutional standards of
due process and equal protection. The Omnibus Budget Reconciliation Act
of 1990 subsequently codified the Jordan court decision requirement for
universal annual accounting except for State and Federal mental
institutions participating in the onsite review program. (The onsite
review program for State and Federal mental institutions is a triennial
review.) Therefore, a change to lessen the accounting requirements or
the onsite reviews would require a change in the law.
9. The Inspector General in his testimony suggested 4 legislative
proposals. While I recognize you are not prepared to take an official
position on these proposals, I would be interested in hearing your
agency's perspectives and ask that you provide the pros, cons, and
issues you believe the Congress should consider regarding each of the
following proposals.
(1) Trial Work Provision_As I understand it, an individual may work
for up to 9 months during a 60 month period and still receive benefits,
no matter how much the individual earns working. Right now an
unscrupulous beneficiary who feigned their disability or concealed the
fact they were working would, when caught, be permitted to keep the
benefits they received during the Trial Work Period. The Inspector
General believes this loophole should be closed.
Response
The Social Security Act provides a trial work period (TWP) as an
incentive for personal rehabilitation efforts for Social Security
Disability Insurance beneficiaries who work. The TWP allows them to
perform services and receive full benefits regardless of how high their
earnings might be if their impairment does not improve. The duration of
the TWP is 9 months (not necessarily consecutive) of services performed
within a rolling 60-consecutive-month period. ``Services'' means any
activity, although it is not SGA, you do in employment, or self-
employment for pay or profit or of the kind normally done for pay or
profit. We currently consider work to be services if an individual
earns more than $530 a month. This $530 criterion exists solely for
controlling the duration of the trial work period.
The IG has recommended that this trial work period not be available
to anyone who fraudulently conceals work activity. In other words, if
we find that a beneficiary had fraudulently concealed earnings, we
would, when considering the amount of overpaid benefits, include the 9
months of the trial work period. He provides a twofold rationale for
this proposal. First, the IG believes this would result in considerable
program savings to the trust funds. Secondly, the IG believes that
there is frustration in the Department of Justice with the current law,
and that certain U.S. Attorneys' Offices have stated a reluctance to
prosecute these cases given the current law, which allows beneficiaries
who have been found to have fraudulently concealed their work activity
to keep the 9 months' worth of benefits.
While no one at SSA would want the U.S. Attorneys to be reluctant
to prosecute fraud cases, there are some concerns about the proposal.
We need to ensure that in imposing new sanctions on those who conceal
earnings that we do not discourage the attempts of beneficiaries who
want to return to work and abide by SSA's rules.
The IG's proposal could result in lengthy retroactive cessations
after many months of legitimate entitlement despite only a few months
of concealed work activity. In the case of someone who fraudulently
establishes disability, we have always been able to go back and
overturn that decision and consider all benefits as having been
overpaid.
We believe that the current civil monetary penalties and other
existing requirements and sanctions in the law, which encourage
reporting of wages, are generally sufficient to defer fraud in this
area, although we are exploring the possibility of imposing civil
monetary penalties in cases of fraud by omission.
(2) Allowing the Inspector General to share information_Right now,
if a law enforcement officer is trying to determine whether he has the
right suspect, and there is no allegation that the individual has
committed a crime against Social Security, the Inspector General cannot
confirm whether an individual's name and Social Security number match
SSA records. The Inspector General is proposing that they be allowed to
share this information with law enforcement, whether there is an
allegation of a crime against Social Security or not.
Response
SSA is primarily a social insurance agency and the information the
Agency collects, including the SSN, is for the purpose of administering
its programs under the Social Security Act. The Commissioner is
responsible for establishing the Agency's policy concerning the
disclosure of SSA program records for law enforcement activities.
Vesting this authority with the IG through legislation could negatively
affect SSA's ability to obtain the often highly personal and sensitive
information needed to administer its programs.
This is an aggressive law enforcement proposal that goes well
beyond the core mission of the Agency, removing any nexus between SSA's
purpose in gathering the information and the disclosure of information.
There is currently in place a Memorandum of Understanding (MOU) that
permits IG employees' to verify the names and Social Security number
(SSN) information to Federal, State, and local law enforcement
officials. That MOU allows for the disclosure when the individual about
whom information is sought is suspected of misusing a SSN or of
committing crime against a Social Security program.
The proposed changes would allow IG staff to verify SSNs without
any allegation of fraud on Social Security programs. At times, law
enforcement officials may be engaging in ``fishing expeditions,'' or
may be interested in individuals who may only be witnesses to or
marginally involved with an alleged offense where there is absolutely
no connection with an SSA program. SSN verification under these
circumstances could easily result in serious erosion of individuals'
personal privacy rights and put them in positions of having to defend
themselves where they have not committed a crime.
As a result of increasing the access to SSA's information, fields
offices and the 800 number could be swamped with overflow requests and
possible complaints from the public diverting valuable and increasing
scarce resources from the agency's programs. Moreover, SSA has a
reputation for the vigorous defense of its program records. This
proposal is not consistent with that reputation.
Under current law and policy, the IG has full authority to disclose
information in connection with alleged violations of SSA programs. In
recent years, the Agency's law enforcement disclosure policy has been
expanded to allow SSN verifications for Federal, State, and local law
enforcement agencies where there may be allegations of SSN fraud or
misuse that could constitute felony violations of the Social Security
Act, even though the law enforcement agency pursuing an investigation
may not have the authority to investigate or prosecute a violation
occurring under the Act. The Commissioner has delegated authority to
the IG to make these disclosures under such circumstances.
This is a reasonable and balanced policy that allows SSA to provide
assistance to the law enforcement community, while at the same time
protect individuals' privacy rights. Providing SSN verification to
advance the broader national law enforcement agenda can only be done at
great risk to SSA's core mission.
(3) Control by the Office of Inspector General over their own
investigative files and records_As I understand it, currently, the SSA
Freedom of Information Officer may determine whether or not an SSA
record may be released to the public under the Freedom of Information
Act, this would include the records of the Office of Inspector General.
The Inspector General would like to be able to make their own decisions
on whether their information should be released.
Response
OIG has proposed legislation to give them control over FOIA
requests for their investigative files and records. To our knowledge,
the current statutory and regulatory scheme has worked well to manage
all of the Agency's documents, including those of the Inspector's
general (IG). We are unaware of any instances in which the Agency has
impaired the investigative function or the statutory mandate of the IG
through the administration of its information disclosure program.
Further, the Commissioner of Social Security can delegate to the IG
the ability to review and administer Freedom of Information Act
requests should that become necessary. Also, if SSA wants to establish
additional FOIA officers, this can be done by regulation. A legislative
fix to this problem, should there be a problem at all, would be
unnecessarily time-consuming and complex solution.
We believe there are compelling reasons for establishing a single
FOIA Officer for the Agency. To list just a few:
The processing of requests for records is only one of FOIA's
requirements. There are also publication and indexing requirements, and
the EFOIA amendments require agencies to post certain information to
their web sites. Agencies must also complete an annual report to the
Attorney General on FOIA activities. A separation of the function for
OIG will not be workable unless OIG takes on these functions as well.
FOIA requests often raise conflict of interest issues. It is
sometimes necessary to release documents that may be embarrassing to a
component or an individual. A FOIA Officer with no direct interest in
the matters involved in a request is in a better position to apply the
law equitably.
Many requests involve ``crosscutting'' documents--more than one
component has records responsive to the request or the request involves
correspondence between components. Often more than one component has
copies of the same documents. Control by one FOIA Officer helps ensure
consistency in the processing of the request.
(4) Title II fugitive felons_We changed the law so that fugitive
felons would no longer be eligible to receive Supplemental Security
Income benefits. The Inspector General is suggesting that fugutive
felons also not be eligible to receive Social Security benefits.
Response
While we believe this proposal has merit we need to proceed
carefully. We would be happy to work with the Committee on addressing
the issues that expanding the provision presents.
Even though the OASDI program is an entitlement program into which
beneficiaries have paid, we understand the argument that SSA should not
pay OASDI benefits to fugitive felons, as these benefit payments may
finance a potentially dangerous fugitive's flight from justice. The
expansion of the fugitive non-payment provisions to the OASDI program
would assist SSA in presenting a consistent policy with respect to
fugitives. At the same time it will increase public safety resulting
from the arrests brought about by our cooperation with law enforcement.
There are obvious benefits to law enforcement if the prohibition on
paying benefits to fugitive felons included OASDI beneficiaries;
however, there are issues that expanding the provision presents. As
with all changes in law, there would be policy, legal and operational
issues that must be addressed as well as an evaluation of the
programmatic or administrative costs and savings that would result from
this proposal.
Sincerely,
Fritz Streckewald
Acting Assistant Deputy Commissioner
for Disability and Income Security Programs
Chairman Shaw. We have a vote on the floor, but Mr. Huse,
we will get your testimony to begin with and we will come back
for the questioning. Jim Huse is the Inspector General of the
Office of the Inspector General. Certainly no stranger to this
Committee, and we appreciate your testimony and appreciate your
coming back.
STATEMENT OF HON. JAMES G. HUSE, JR., INSPECTOR GENERAL, OFFICE
OF THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION
Mr. Huse. Thank you, Mr. Chairman, members of the
Subcommittee. I want to thank you for the opportunity to be
here today to discuss ensuring the integrity of Social Security
programs and identify some of the challenges we still face and
some of areas in which legislation could help us in those
efforts.
In 1996, Congress enacted legislation prohibiting SSI
payments to fugitive felons and directed SSA to provide State
and local law enforcement officials with information needed to
locate and apprehend these fugitives. Together with SSA, we
have now identified some 28,000 fugitives saving more than 34
million in fiscal year 2000 alone. But perhaps even more
important is the removal of potentially violent criminals from
the streets. Unfortunately, this 1996 law does not extend to
those fugitives receiving Social Security benefits under Title
II.
An audit report issued by my office found that the trust
fund would have saved at least $108 million had the 1996
legislation included both Title 16 and Title II benefits in its
prohibition. The time has come to turn our attention to these
government financed fugitives. We also face continuing
challenges in the representative payee program. It is critical
that legislation be enacted to enable us to pursue those
representative payees who steal the benefits they handle. And
SSA must be authorized to reissue stolen benefits to the
beneficiary without declaring itself negligent.
It is grossly unfair to punish the victims of
representative payee fraud while allowing the perpetrator to
profit from his or her crime. Payment of benefits to deceased
beneficiaries also remains a significant problem. A draft
report prepared by our Office of Audit revealed significant
error rates in SSA's death master file, and another draft
report examines the system SSA uses to keep its death records
up to date and ensure that benefits are terminated as soon as
possible after a beneficiary's death.
Both audits indicate that while progress has been made,
much remains to be done. There are other areas in which
legislation would help my office in its fight against Social
Security fraud and I would like to point out just a few of
these. First and foremost, my office continues to seek
statutory law enforcement authority, including the authority to
cross-designate State and local law enforcement officers in
joint operations.
Second, the epidemic of identity fraud has resulted in a
wave of calls to my office by State and local law enforcement
officers seeking to verify the name and Social Security number
of those suspected of committing a felony crime. We have a
restrictive agreement in place with SSA to respond to some of
these requests, but our authority to thwart identity fraud in
its earliest stages should be made explicit by statute.
Third, we must protect the integrity of our sensitive
investigative documents. Under SSA's regulations, my office
does not have the authority to respond to the Freedom of
Information Act (FOIA) requests for our own records. This is in
conflict with our statutory independence.
Fourth, we have seen frustration among judges and United
States attorneys officers with respect to what is known as the
trial work period. Designed to encourage valid attempts at
vocational rehabilitation, this program has become a jackpot to
those who receive disability benefits fraudulently. When caught
and prosecuted, these unscrupulous individuals are permitted to
keep thousands of dollars in stolen benefits.
Fifth, while the Social Security Act provides for
incarceration and fines for those who commit fraud, it does not
permit judges to order these criminals to repay the money they
stole from SSA.
Finally, our civil monetary penalty program has been highly
successful, but is in need of legislative attention. Under
section 1129, we need authority to pursue payees for
conversion. We also need explicit authority to treat an
omission of material fact as if it were an affirmative false
statement. And under section 1140, two fixes are needed. First,
we need to clarify that any company which provides a fee-for-
service, which SSA provides free of charge, must conspicuously
state this on their advertisements.
And second, we must be permitted to continue our successful
efforts in eliminating misleading advertising using SSA's good
name through a statutory delegation of authority under section
1140 to the Inspector General.
The OIG, the Social Security Administration, and the
Congress have made enormous progress in combating fraud waste
and abuse there the few years since SSA's independence. And
these efforts will continue and endure. Hearings such as this
are evidence that more work remain to be done, and that we all
remain committed to this critical mission.
Thank you and I will be happy to answer any questions.
[The prepared statement of Mr. Huse follows:]
STATEMENT OF THE HON. JAMES G. HUSE, JR., INSPECTOR GENERAL, OFFICE OF
THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION
Good morning, Chairman Shaw and members of the Subcommittee. Let me
first thank you for the opportunity to appear today and address issues
related to fraud, waste and abuse in Social Security programs and
operations. As you know, my office has been working to preserve Social
Security resources for almost six years now, since our inception in
1995. In that time, we have made great strides in reducing fraud, but
there remains much work to be done, and I welcome this Subcommittee's
help in performing this critical task.
I'd like to talk very briefly about a few areas in which we have
been particularly successful, then address a few areas in which fraud
and waste continue to pose challenges. Finally, I'd like to suggest a
number of ways in which the Subcommittee can help us in our mission.
Anti-Fraud Efforts and Challenges
One of the first issues we explored as an organization was the
payment of benefits to prisoners. In an audit report issued less than a
year after SSA independence, we estimated that the annual cost to SSA
in erroneous payments to prisoners was $48.8 million, and we
recommended that SSA seek legislation to facilitate the exchange of
information with Federal, state, and local prison authorities. Such
legislation was enacted in 1999, removing the need for computer
matching agreements between SSA and prison authorities to be renewed
every 18 months. The elimination of this time-consuming process had an
overwhelming effect; according to SSA statistics, payments to more than
69,000 prisoners were suspended in FY 2000, based on more than 260,000
prisoner alerts that were received in large part because of that
legislation. Progress has been promising and the efficiency of this
program should continue to improve.
Another area in which we have focused a great deal of our energy,
and in which we have seen dramatic results, is the fugitive felon
program. In 1996, Congress enacted legislation making fugitive felons
ineligible for Supplemental Security Income, or SSI, payments. The
legislation also directed the Commissioner to provide state and local
law enforcement officials with locator information about such fugitives
to facilitate their apprehension. The Commissioner asked my office to
perform this function, and we began working with SSA immediately. To
date, we have identified some 28,000 fugitives receiving SSI. We have
provided law enforcement officials with the necessary information to
locate and apprehend these individuals, and have ourselves participated
in more than a thousand of these arrests. Agreements are in place with
the U.S. Marshals Service, the FBI, the National Crime Information
Center, twelve states, and three cities to improve the volume and
accuracy of the information that we act upon. More agreements are
pending, and we continue to expand and refine the processes by which we
receive and utilize fugitive information. The primary result is
savings--more than $34 million in FY 2000 alone. But perhaps even more
important is the removal of potentially violent criminals from the
streets, such as the California man we recently arrested, who was
wanted for assault with a deadly weapon on a police officer. This is a
program in which everyone wins but the felons, and it's limited only by
the resources available for this important mission.
Unfortunately, while the law prohibits felons from receiving title
XVI payments, it continues to permit fugitives to use title II benefits
to finance their flight from justice. This is where we turn from
success stories to areas where more can be done. An audit report issued
by my office found that the Trust Fund would have saved at least $108
million dollars had the legislation prohibited payment of both title
XVI and title II benefits to fugitives from its enactment in 1996 to
the audit period in August of 2000. In addition, the report estimated
that as of May, 2000, the Trust Fund was paying at least $39 million a
year in title II benefits to fugitive felons. As I stated earlier, this
waste of Federal funds goes to the heart of our mission, and our
inability to stop these payments is frustrating. What is more
frustrating to us as a law enforcement organization is that these
benefits were paid to some 17,300 fugitives, many of whom could have
been apprehended had my office been able to provide law enforcement
agencies with felons' addresses. The time has come to turn our
attention to these government-financed fugitives.
The representative payee program, the mechanism by which
individuals or organizations receive benefits on behalf of those
beneficiaries who cannot manage their own funds, has improved, but
remains a problem area. A year ago, I testified before this
Subcommittee and pointed out weaknesses detected by our audit and
investigative efforts. Those weaknesses covered the full spectrum of
Agency responsibilities in the representative payee program. We found
that the Agency's initial selection and screening process was deficient
because it failed to verify the accuracy of the identification,
financial, and security information provided by prospective
representative payees. We found that the Agency's monitoring and
oversight of representative payees also was deficient in that many
representative payees failed to submit annual accounting forms and SSA
failed to retain necessary documentation when such forms were
submitted. And, we found that when fraud did occur, there was
insufficient statutory authority to repair the damage already done. I
told you about a father who was appointed representative payee for his
disabled minor son in 1996, and how two years later, when the child's
mother also applied to be the child's representative payee, SSA learned
that the father never had custody of the boy. I told you that the more
than $10,000 in benefits that the father received was never used for
the child's benefit, and that the amount stolen fell below the U.S.
Attorney's Office's minimum for criminal or civil action. Finally, I
told you that because the child was entitled to the benefits, we could
not pursue the father under our existing Civil Monetary Penalty
authority, as the father's crime was deemed to be against the child,
not against SSA. Moreover, since the benefits were properly paid on the
child's account, SSA could not re-issue the stolen benefits, nor could
it charge the father's account for the stolen funds. So, the father was
able to keep the money he stole, and the child's only recourse would
have been to privately sue his own father.
SSA has made strides in this area in the past year, based in part
on our recommendations, but much remains to be done, and part of that
burden rests with Congress. It is critical that legislation be enacted
to enable us to pursue individuals such as the father I just described.
Our Civil Monetary Penalty authority must be expanded to include
conversion of benefits by a representative payee as a covered offense.
And SSA's ability to recoup such converted benefits, and any penalties
or assessments, must be expanded to make the representative payee
liable to SSA for the converted funds. Finally, SSA must be authorized
to reissue stolen benefits to the beneficiary without declaring itself
negligent. It is grossly unfair to punish the victims of representative
payee fraud, while allowing the perpetrator to profit from his crime.
Most representative payees are honest, and act only in the best
interests of these most vulnerable beneficiaries, but when this is not
the case, we must have the tools we need to act.
We have also identified problems with payment of benefits to
deceased beneficiaries. In a draft report issued by our Office of
Audit, we matched all 11.7 million auxiliary beneficiaries against
SSA's Death Master File and found that SSA had paid an estimated 881
deceased auxiliary beneficiaries $31 million in OASDI benefits after
their dates of death. On average, these deceased individuals continued
to be paid for some 63 months after death. This study also revealed
significant error rates in SSA's death matching process, and another
draft report examines the system SSA uses to keep its death records up-
to-date. Both audits indicate that while progress has been made, much
remains to be done in ensuring that benefits do not continue to be paid
to the deceased. We are pleased that SSA is proactively addressing
other systems deficiencies identified by our independent auditor,
PricewaterhouseCoopers, by doing more than what is minimally required
under the Federal Financial Management Improvement Act of 1996 and the
Government Information Security Reform Act. Our recently awarded
contract for the FY2001 financial statements provides for our
independent auditor to provide opinion-level assurance on the Agency's
compliance with FFMIA and GISRA. We believe that providing this opinion
will assist the Agency to identify and address critical vulnerabilities
within its systems environment.
These areas--prisoners, fugitive felons, representative payees, and
payments to deceased beneficiaries--represent four areas in which the
OIG and SSA are working together to improve payment accuracy and
minimize fraud and waste. All but the first are areas in which the
additional legislation I have already described would prove invaluable.
But there are other areas in which legislation could be a boon to my
office in its fight against Social Security fraud, and I'll close by
pointing out just a few of these areas.
Legislative Needs
First and foremost, my office has been seeking statutory law
enforcement authority almost from the moment we were established. For
six years, we've operated under a discretionary, revocable, and limited
deputation agreement from the Department of Justice. This tenuous
authority does not include the authority to cross-designate state and
local law enforcement officers, and carries with it a time-consuming
and unnecessary administrative burden. Our Special Agents have
conducted themselves with the same degree of professionalism and
devotion to duty as any other Federal law enforcement officers, and the
time has come to grant them the same legal status.
In the same vein, our unique status as an independent law
enforcement organization that is tied to a Federal agency creates
occasional conflicts in laws and regulations. Two of these conflicts
concern the treatment of SSA records, which are tightly controlled by
the Privacy Act and SSA's own privacy statute. While I am adamant that
my employees observe all applicable laws and regulations and even take
additional policy steps to protect Americans' private information, my
office is also charged with waging the war against Identity Theft. When
a law enforcement official is investigating an individual for the
commission of a felony, he or she will frequently contact my office to
determine if the suspect's name and Social Security number match SSA's
records. SSA agreed with us that it was in everyone's best interests to
use this early detection tool to prevent Identity Theft, but under
current law, SSA could only agree to permit us to provide law
enforcement with this information if the individual in question was
suspected of committing a crime involving a Social Security number. Our
authority to assist in the investigation of all felony crimes, while at
the same time detecting Identity Theft in its earliest stages, should
be a statutory authority and a statutory obligation.
Similarly, as an independent law enforcement organization, my
office must have control over its own investigative files and other
records. Under regulations promulgated by the Social Security
Administration, only the SSA Freedom of Information Officer may
determine whether or not an SSA record is released to the public--that
includes investigative and other records of my office. While we have
worked together with SSA to ensure the integrity of our records for the
past six years without significant incident, we have not been able to
convince SSA to amend the regulations to give the OIG final control
over its own records. This is contrary to the OIG's statutory
independence and at odds with the practices of many Federal departments
and agencies.
Turning to the program area, judges and United States Attorneys'
Offices have expressed frustration with respect to the Trial Work
Period provision of the Social Security Act. Under existing law,
disability beneficiaries may return to work and continue to receive
benefits while working for nine months or more. Designed to encourage
rehabilitation, and in most cases accomplishing just that, the Trial
Work Period becomes an unexpected jackpot for those individuals whose
very receipt of benefits is fraudulent. Under current law, there is no
way to avoid paying benefits during the Trial Work Period to
unscrupulous beneficiaries who feigned their disability or concealed
the fact that they were working. When caught, they are permitted to
keep thousands of dollars in stolen benefits because of this loophole
in the law. Prosecutors rightfully regard this with disdain and in some
instances, refuse to prosecute such cases. That loophole must be
closed.
We would also like to see judicial restitution authority added to
the felony provisions of the Social Security Act. Under existing law, a
Court may find an individual guilty of stealing Social Security
benefits, but cannot, as part of that individual's criminal sentence,
order her to repay the benefits she has stolen.
Finally, our civil monetary penalty program has been highly
successful. We have completed 66 successful cases under Section 1129 of
the Social Security Act for making false statements in connection with
benefit determinations, imposing over $2 million in penalties and
assessments. We have penalized 8 companies under Section 1140 for using
SSA's good name in misleading advertising campaigns, imposing over
$1.85 million in penalties. Both programs need a legislative boost.
Under Section 1129, as I discussed earlier, we need authority to pursue
representative payees for conversion--the current system allows far too
many of them to fall through the cracks. We also need explicit
authority to treat an omission of a material fact as if it were an
affirmative false statement. And under Section 1140, two fixes are
needed. First, we need to require any company that charges a fee for
performing a service that SSA provides free of charge to conspicuously
state this on their advertisements. And second, we would suggest a
technical change to Section 1140 to ensure that the OIG has the
critical tools and permanent authority to wipe out deceptive mailers
who target SSA beneficiaries.
The Office of the Inspector General, the Social Security
Administration, and the Congress have made enormous progress in
combating fraud, waste, and abuse in the few years since SSA
independence. Hearings such as this are evidence that more work remains
to be done, and that we all remain committed to this critical mission.
Thank you, and I'd be happy to address any questions.
Chairman Shaw. Thank you. We have one vote on the floor.
The Committee will stand in recess for approximately 15 minutes
so that the Members can vote, and then we will return for
questions. Mr. Huse, thank you.
Mr. Huse. Thank you, Mr. Chairman.
[Recess.]
Chairman Shaw. Thank you. Mr. Huse, in your testimony you
recognize SSA for increasing the number of matching agreements
they have entered into, which will result in more fugitive
felonies being identified. In your audit report issued last
August your findings appeared to be critical of the SSA for not
moving fast enough. Based upon your understanding of what SSA
has accomplished since your audit report, are you satisfied
with the progress that they are making and could you enlarge
upon what is working and what is not?
Mr. Huse. I would be glad to, Mr. Chairman. We are
satisfied with the progress we are making now with respect to
these matching agreements across the country. As a matter of
fact, we now have matching agreements with 12 States and three
cities. It is a very difficult prospect because the Computer
Matching Act, of course, requires that we have these matching
agreements before we exchange data. Some of the States have
different computer systems, incompatible computer systems, so
there are some technical issues that need to be overcome. And,
of course, some States and jurisdictions don't even have
electronic records. But we are getting there. And the
commitment is there. We are only limited in all of this by the
amount of resources that we are able to apply to it. And with
the resources we have now, we are 100 percent behind this
effort.
Chairman Shaw. How many States do not have electronic
reporting equipment? That is a little bit surprising to me.
Mr. Huse. I am not certain. Off the top of my head, I think
there are several, but we will be glad to get that for the
record. About four. We will give you the names of those States.
Chairman Shaw. Could you supply that for the record?
Mr. Huse. I would be glad to.
[The following was subsequently received:]
Social Security Administration
Office of the Inspector General
Baltimore, Maryland 21235-0001
June 15, 2001
Hon. E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
House of Representatives
Washington, D.C. 20515
Dear Chairman Shaw:
I am responding for the record in reference to a question you asked
me during my May 10, 2001 testimony before your Committee on the
subject entitled: ``Ensuring the Integrity of Social Security
Programs.''
Your question is repeated as stated and accompanied by the
following reply:
Question: How many States do not have electronic reporting
equipment?
I answered that approximately 4 States do not have electronic
reporting equipment. I would like to clarify for the record that all
states have some type of electronic equipment. However, not all States'
data systems are compatible or can meet SSA's reporting requirements.
SSA's Office of Systems requires all reporters to follow a strict
format. Although several States have tried to comply, we have
encountered problems with the files received. As an example of these
problems, the El Paso Sheriffs Department sent us 3 separate files and
despite the best efforts on the part of our computer specialists, these
files remain unreadable. El Paso has not been able to revamp their
computer systems to meet the specifications mandated by SSA. Another
example is the Baltimore City Sheriffs Department. After several
unsuccessful attempts to format data to SSA's specifications, this
jurisdiction continues to furnish our Baltimore office with paper
reports.
Jurisdictions at the State level have similar problems. For
example, according to a report prepared by SSA:
The State of Vermont indicated that it ``does not have the
resources to prepare files to submit remaining parole probation
violators'' to SSA.
The State of Indiana declined to participate in the Fugitive
Felon Program because it is unable to separate felony records
from misdemeanor records. SSA specifies that records must
contain felony warrants only.
The State of Iowa currently reports quarterly on paper. SSA
states (in part) that Iowa finds ``the matching agreement
reporting requirements burdensome. . . .'' Again, this clearly
indicates problems with electronic reporting equipment.
The State of Utah declined to participate ``due to resource
issues.''
Prior to SSA agreements with State and local jurisdictions, the OIG
contacted several law enforcement agencies. Although many agencies
indicated a willingness to provide data, several indicated that they
lacked the electronic reporting equipment needed to comply with SSA's
specifications. Still others indicated that meeting SSA systems
requirements would not be a problem, but the test files received were
unusable.
Should you have any further questions, or if you would like a
clarification of the above comments, please contact my Special Agent-
in-Charge of External Affairs, Mr. Rich Rohde at (410) 966-1722.
Sincerely,
James G. Huse, Jr.
Inspector General of Social Security
Chairman Shaw. I suppose one of them is not Florida.
Mr. Huse. No, Florida has electronic records. All of
America knows that.
Chairman Shaw. We are going to vote that way now too, I
guess. Mr. Pomeroy.
Mr. Pomeroy. Thank you, Mr. Chairman. Inspector General
Huse, you indicate two areas with the problem of preventing
fraud within the representative payee program that SSA has been
a little deficient in the past relative to the initial
verification and screening process as well as failing to verify
the accuracy of information provided by perspective
representative payees. Also that SSA failed to retain essential
supporting documentation when payees submitted their annual
reports. What progress has been made in these areas? Or what is
the state of resources within the agency to deal with those
particular issues?
Mr. Huse. As the agency testified before me, in their view,
they are adequately funded now to carry out some of these
responsibilities, but they are essentially in mid passage. For
example, we still haven't settled on a definitive process yet
to verify the credentials of a prospective representative payee
in terms of fiduciary history or criminal history, and which
one would be subject to that check. That is being developed
now, so that there is progress there.
I know the agency is working on regulations and a process
to take into account the annual review, or the periodic review
of rep payees around the country in terms of the benefit
payments and their, you know, viability; are the benefits
getting to the beneficiaries? That, too, is being worked out.
We are working with them on that in terms of providing some
kind of check on the process so that it fulfills our
responsibilities to report on that, but also giving advice
where we can in terms of what kind of a--it is not truly an
audit that can be done, but what type of review would be done
individually with these rep payees to get us to where we have
to go so we have a better handle on these people.
Mr. Pomeroy. So generally are you--resources are there, the
plans in implementation, things on track?
Mr. Huse. It is on track with all of what--I have to
qualify that by saying with all of what is done, of course,
these resources are balanced against other workloads. So
while--the theoretical effort is there in terms of the policy
and the commitment to do it. Any of these other workloads can
cause this progress to be slower or faster. Right now it is a
priority. But there are other things that can interfere. So I
am not saying that it is done, nor am I saying that the speed
is correct. I am just saying that they are involved in the
effort. But resources do influence the speed with which they
are accomplished.
Chairman Shaw. Mr. Ryan.
Mr. Ryan. No questions.
Chairman Shaw. Mr. Brady.
Mr. Brady. No, sir.
Chairman Shaw. Mr. Hulshof.
Mr. Hulshof. Thank you, Mr. Chairman. Mr. Huse, I want to
focus on some of the things you have suggested on pages three
and four of your written testimony as far as investigate
legislative proposals and legislative needs; and, of course,
that is where we come into play to some degree to a great
degree. And in your testimony, really two separate areas if I
have time to get to them.
You requested tort to have final control over Inspector
General reports as far as freedom of information requests. I
guess I am a little bit unclear as to how the process works
now. You indicate in your testimony, for instance, that this
is, your situation is contrary or at odds with the practices of
many Federal departments or Federal agencies. Could you
elaborate on that for me?
Mr. Huse. We are a relatively new office of the Inspector
General. In fact, we are just about 6 years old, from SSA
Independence Act. And when we came out of Health and Human
Services, a lot of underpinning that would normally take place
with respect to an IG was done very quickly, the structure was
set up. And some things weren't entirely worked through. So in
this particular context, we actually are subjected to the
agencies regulations and their final review of FOIA material.
This is contrary to the practice in most of the government
where the view of the Inspector General includes all audit
material generated by the IG.
Mr. Hulshof. Have you had some discussions with SSA about
this?
Mr. Huse. I have.
Mr. Hulshof. What has been their response?
Mr. Huse. I would say that the agency's position is they
see there as an area where they feel that they need to exercise
their control over what we do. And that is in conflict, we
believe, with the Inspector General Act. These things happen
where these conflicts come up. And we are seeking a legislative
relief because, quite frankly, I think we could go on for some
length of time without any amending regulatory change inside
the agency.
Mr. Hulshof. Mr. Huse, would you care to comment on any
instance--not asking a specific fact pattern, but has Social
Security Administration ever released records in a way that may
have caused interference with the Inspector General's work or
was contrary to the IG's best interest.
Mr. Huse. I know we have had high dialogue and difference
of opinions over release of some records, but I don't know of
any specific instance where I would sit here and say we have
had some damage.
Mr. Hulshof. Let me shift gears a little. I do have a few
moments left, and I know that the Chairman has been very strong
about getting to the root of identity theft. We have had a
series of hearings on that. So I want to focus on your
testimony regarding that instance which was enlightening to me.
Again, as I understand it, you are unable to share certain
information, name, Social Security number with outside law
enforcements unless there is an allegation of crime against
Social Security.
Mr. Huse. That is correct. There is one narrow exception
that is provided for Presidential threats and acts of
terrorism; but other than that, the prohibition is pretty
restrictive.
Mr. Hulshof. In your testimony, you recommend that the
Inspector General be authorized to assist outside law
enforcements in the investigation of all felonies by seeing
whether their suspect's name and Social Security number match.
Is that your request?
Mr. Huse. That is almost the standard request that is made
to us day in and day out by local, State, county law
enforcement around the United States; and we believe that is
something we should be able to do.
Mr. Hulshof. Again, let me ask. You had conversation with
the Social Security Administration about this aspect, and what
was their reaction?
Mr. Huse. In the last administration, we were able to
strike a compromise and work out a process where it allowed us
to provide some latitude here as long as we could identify a
violation that Social Security has jurisdiction over, and we
have looked at identity fraud as expanding that a little bit.
So we are part of the way there with you. We are not all the
way. We have to be to really, to really participate in this
identity fraud fight the way we should.
Mr. Hulshof. I see my time has expired. Thanks, Mr. Huse.
Thanks, Mr. Chairman.
Chairman Shaw. Mr. Lewis.
Mr. Lewis. Mr. Huse you have indicated that you have
provided the Social Security Administration with the
recommendation to improve its error rates in their death-
matching process and the time limits of their death records.
Could you provide us with some examples of those
recommendations which are being implemented by SSA.
Mr. Huse. Off the top of my head--if I could, could I
provide those to you in a written response?
[The following was subsequently received:]
Social Security Administration
Baltimore, Maryland 21235-0001
The Honorable Ron Lewis
House of Representatives
Washington, DC 20515
Dear Mr. Lewis:
I am writing in response to your question asked during the Social
Security hearing on ``Ensuring the Integrity of Social Security
Programs,'' held on May 10, 2001. You asked for examples of
recommendations issued by the Office of the Inspector General that were
being implemented by the Social Security Administration (SSA) to
improve the accuracy and timeliness of its death-matching process.
During this hearing I cited two reports, one report entitled ``Old-
Age, Survivors and Disability Insurance Benefits Paid to Deceased
Auxiliary Beneficiaries'' was issued by our Office of Audit June 19,
2001 (enclosed) and the other report entitled ``Unresolved Death Alerts
Over 120 Days Old'' is expected to be issued by early September. In
both reports, we provided SSA with recommendations to improve its
procedures for (1) detecting unreported and misreported deaths, and (2)
preventing improper payments to deceased beneficiaries. The first
report recommended that SSA periodically match its payment records
against its Death Master File, a repository of death information from
third-party sources such as Medicare and State vital statistics
agencies. SSA agreed to conduct the match in July 2001 and evaluate the
need for subsequent matches. This report also recommended that SSA
resolve discrepancies for 2,721 beneficiaries identified by the audit.
SSA agreed to complete its review of these cases by September 2001.
The second report recommended that SSA improve its controls to
ensure that discrepant death data identified by its automated system
are resolved in a timely manner. By June 2001, SSA agreed to develop
procedures, including timeframes, to take corrective action on all
cases outstanding for over 120 days. In addition, SSA agreed to monitor
these cases on a nationwide basis and follow up with its field offices.
This report also recommended that SSA implement a number of systems
modifications to enhance its death-matching process. SSA agreed to
implement such enhancements as resources permit.
If you have any questions concerning our response, please call me
or have your staff contact Douglas Cunningham, Special Assistant to the
Inspector General, at (202) 358-6319.
Sincerely,
James G. Huse, Jr.
Inspector General of Social Security
Mr. Lewis. Sure that would be fine. In your audit, did you
find instances of individual payers on the death record, but
still alive?
Mr. Huse. Yes we did. We have conducted the audits that I
have mentioned in my testimony, and we found that we had out of
the universe of auxiliary beneficiaries, now these are people
who, after the beneficiary died they were auxiliary
beneficiaries. There was an original beneficiary, and then they
have--the benefits went to them. That in that universe, 800
some-odd beneficiaries were deceased, but we had paid $31
million in benefits to them nevertheless. Now in the months
involved, there were anywhere from 19 months to 154 months that
the payments continued. That averaged out to be about 63 months
through that particular piece to the debt collected back from
them, and these are rough figures; and I would ask if we could
correct them, but basically we only get back about 10 percent
of what has been paid out. And the rest of it is written off as
uncollectible. There is a window in there where you get more
back if you identify the death within the first 20 minutes or
so or even a lesser period of time. There is more of an
opportunity, the likelihood there. If it goes beyond that,
those funds are pretty much difficult to get back.
Mr. Lewis. Now there is a proposal that was submitted last
year that requires States to report death information to the
agency within 30 days from when they receive it. Would that
help improve the accuracy and the timeliness of terminating the
benefits for those who have died?
Mr. Huse. Well timely reporting is the key to this
particular business process, of course. But we are up against
the same problem there that we get into with some of these
other efforts to collect information from other jurisdictions,
State, local, county, that all of these are not uniform in the
way they aggregate the data and report it to us. So the ideal
today with information technology is we reach this place where
all of this is done electronically and in real time. But we are
a long way from that. I think that is important to understand.
That also applies to the fugitive felon issue too. We are not
there yet. And to glibly state that we are is not correct.
Mr. Lewis. If we imposed on the States this reporting
requirement, do you think that would help?
Mr. Huse. I think if it gave them some bench marks that
they really ought to strive for, that would certainly help to
improve the situation now where those don't exist.
Mr. Lewis. Thank you.
Chairman Shaw. Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman. I am interested in
your remarks about not being able to function in a law
enforcement capacity as easily as you would like to and you
tell us that we need to change some of the laws but tell me how
you would propose to do that.
Mr. Huse. Well, right now the office of the Inspector
General has its actual police powers, it has law enforcement
powers provided by a deputation from the United States Marshall
Service. Our agents are special deputy United States marshals.
And we do not sneer at that. That is a pretty good status. But
as an OIG, we lead all of the inspector generals in government
in terms of arrests, in terms of what we do in our
investigative activities.
Ninety-seven percent of the work we do involves external
crime. That is very different from most inspectors general. We
are, in fulfilling some of plan dates we have on the street
with local law enforcement around the country, just as any of
the other traditional law enforcement agencies are. By being
special deputies though, we are limited in our ability to
organize task forces with local county, States' law enforcement
to accomplish some of these tasks like particularly with
fugitive felons, which really has great potential.
Mr. Johnson. Yes, but how would you envision changing that
relationship with the Justice Department?
Mr. Huse. It has to be by statutory----
Mr. Johnson. I understand, but what are you asking for?
Mr. Huse. We are asking those powers to be included in the
Social Security Act.
Mr. Johnson. But are we establishing another separate law
enforcement agency when we do that?
Mr. Huse. Well the law enforcement agency already exists.
It exists as the OIG now, but it doesn't have the full range of
powers it needs to do the job as well as it can.
Mr. Johnson. Well part of the problem with our system out
there is the courts and attorneys won't accept cases for
something unless it is 10,000 or even $100,000. If it is not a
big number, they do not want to go to court over that. How do
you propose to handle that because a lot of yours are smaller
amounts, aren't they?
Mr. Huse. They are, but we have some other remedies. We
have the Social Security Act civil money penalty powers, which
allow us to find folks that commit fraud against Social
Security.
Mr. Johnson. Without going to court?
Mr. Huse. Without going to court.
Mr. Johnson. OK.
Mr. Huse. But those civil money penalty actions depends on
the work of our investigators. And we have built up some great
traction the last few years using these tools which I think are
very good tools that take some of the burden off of the
Department of Justice folks so that they can concentrate those
bigger number crimes.
Mr. Johnson. But specifically, how do you recommend that we
try to fix it in law?
Mr. Huse. With your statutory authority in adjusting the
civil money penalty.
Mr. Johnson. Or you want to be an independent agent; don't
you?
Mr. Huse. We do.
Mr. Johnson. So you would still be under justice, I
presume?
Mr. Huse. We still would be subjected to the Federal rules
of criminal procedure and the Justice Department's requirement
enforcement production of quality criminal investigations. But
we would be subject to the authority of the Commissioner of
Social Security in terms of law enforcement powers. So we are
answerable just like any Federal law enforcement agency would
be answerable to the head of the agency or to the cabinet
secretary if it is a Treasury agency.
Mr. Johnson. Right. Are your guys trained as law
enforcement officials? Do they carry weapons?
Mr. Huse. They do now, and they are trained exactly the
same as any other Federal agent with the same requirements and
maintain the same standards of physical fitness and firearms
prowess. I would submit that in the past 5 years, we have
become one of the best and most professional pieces of Federal
law enforcement there is.
Mr. Johnson. Thank you, sir.
Mr. Huse. Thank you, sir.
Mr. Johnson. Thank you, Mr. Chairman.
Chairman Shaw. What would be the consequences if you were
moved to Justice?
Mr. Huse. Well, I think we belong where we are because of
the relationship we have with Social Security Administration to
do this job. When you look at how much----
Chairman Shaw. You keep talking about independent.
Mr. Huse. Well, there is no artful answer to the IG
independence versus the being a part of the agency. I think
Congress never wanted that to be completely answered as a
dynamic tension there that is always present. I don't find that
to be insurmountable, and it is healthy. But we would be
independent as we are now in the conduct of our investigative
and audit activities. What we are asking for is to strengthen
that though, with the ability to be able to do more in terms of
our law enforcement activities with those partners we have to
have at the local, State, and county level to get things done.
Chairman Shaw. OK. Thank you. Mr. Becerra.
Mr. Becerra. Thank you, Mr. Chairman. Mr. Huse, thank you
for being here. Let me see if I can ask a couple of questions.
I followed--you have discussed a little about the process of
trying to collect information of death, and I know that is
always a difficult process and sometimes cumbersome and in some
cases very delayed.
Is there some way to try to streamline the process that has
been suggested to you? And has the suggestion ever been
received to try to perhaps ask the physician who writes, who
makes note of death on a death certificate been proposed to you
as an idea of trying to first get information about death to
the Social Security Administration?
Mr. Huse. It sounds to me like a reasonable proposition. I
wouldn't, I don't know that that is under consideration. That
is a policy area that the agency would probably be better able
to answer for you. But, I think there would have to be some
kind of incentive here, but that is certainly a good way.
Mr. Becerra. But in your investigation no one ever brought
that out about a way of trying to streamline the process of
trying to collect death?
Mr. Huse. I think that is one of the recommendations we
made. The key is the timeliness. I remember when I was
responding to the earlier question, same issue, if we can get
notification timely it is vastly easier to get these benefits
back. Because in a lot of cases they are just sitting there in
a stack of checks or in a terms of electronic funds
transferred, it is easier to catch them before they have been
withdrawn from an account.
Mr. Becerra. And right now there is no uniform method of
checking this information that SSA has.
Mr. Huse. Pretty much the standard method is to receive
notification from loved ones or funeral homes. And that works
pretty well. But this would be an added dimension to cover. My
colleague from Social Security testified, the 10 percent of
instances where we do have a problem with the early reporting.
Mr. Becerra. And the difficulty with receiving notification
from loved ones or perhaps even a funeral home is that there is
no legal requirement that those individuals pass on that
information.
Mr. Huse. I am not sure I know the answer to that.
Mr. Becerra. Some of the fraud we do see occurs that some
people do report individuals dead that aren't. And it would
seem to me that if a physician signing a death certificate goes
beyond an enforcement, that is a very formal, official act. And
you are right, it probably would need some kind of incentive
for the physicians to want to do that, but if that physician
has to be receiving Federal funding for some of the services he
or she provides folks, Medicare, Medicaid, there might be some
type of way to provide the connection for that physician to
require to have to do that.
Mr. Huse. Certainly.
Mr. Becerra. What of the question of OASDI benefits. I know
there has been a recommendation that we prohibit felons from
receiving those benefits as well. In what you have seen, is it
possible for SSA to take on that task of also trying to
preclude benefits from going to felons under OASDI without
additional resources.
Mr. Huse. Well, we use all of the resources we have right
now just to do the title 16 fugitive felons. But the issue is
one of equity here. These, the title two beneficiaries
certainly, we shouldn't be funding their fugitive status with
these benefit payments. The issue of resources is difficult.
Mr. Becerra. You have just mentioned you have used up all
your resources.
Mr. Huse. We do. And testify point, we can't even address
the universe we have completely in title 16. So perhaps some
other type of a funding mechanism might be appropriate here
such as scoring giving us our administrative costs back from
the savings we bring in and thus allowing us to staff up to the
point where we could really get to the full potential of the
savings here that Congress intended that we go after.
Mr. Becerra. And I believe you indicated in your report you
would probably need about 128 additional full-time employees to
cover the work of going after or trying to stop benefits from
being received by fugitive felons.
Mr. Huse. I think our latest number may even be more than
120. I think it is about 182.
Mr. Becerra. So if we would pass legislation to prohibit or
stop funding from OASDI funding from going to a fugitive felon
without giving--you have the resources to do the work. We are
really passing laws that can't be implemented.
Mr. Huse. Well, I think we would be in the same situation
we are now where we would have to prioritize and take what we
could get from that triaging effort to try to make a
demonstration at least in both violation areas that the law is
being followed and fulfilled. But, no, the answer is we can't
go to the universe either way without more resources.
Mr. Becerra. Mr. Chairman, thank you. Mr. Huse, thank you
for your testimony.
Chairman Shaw. Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman. Mr. Huse, in your
statement, you make the comment that while we have worked
together with SSA to ensure the integrity of our record for the
past 6 years without significant incident, we have not been
able to convince SSA to amend the relations regulations to give
the OIG final control over its record. Evidently there have
been some minor instances or you foresee the possibility of
problems. What would be some of those problems or a probable?
Mr. Huse. Well the worst problem would be where a record
that was released that revealed some of our investigative
techniques or the identity of someone who had provided us
information which we are bound to protect by law or statute.
And that is really what we are talking about is that our final
review of what should be released should be the final review.
It shouldn't go to someone else and have them second guess our
decisions which is the case today. It is needless bureaucracy.
Mr. Collins. You say without significant incident. What
have been some of the insignificant instances. Is that an
example of what has happened in the past?
Mr. Huse. That is the example of the type of arguments we
have. That is, quite honestly, what we have disagreements over,
what is releasable and what isn't. And with law enforcement
record, there are charges that you protect the identity of
those citizens who come forward to give us--I mean, that is the
basis of any good case any way is someone giving an indicator
that the crime has been committed and who done it.
Mr. Collins. Another area, we suggest a technical change to
section 1140 to ensure that the OIG has the critical tools and
permanent authority to wipe out deceptive mailers who target
SSA beneficiaries. Inform us of a couple of examples of
deceptive mailers.
Mr. Huse. We have had some great cases here. We had a case
in New York where the literature sent out by this company
literally was charging citizens for services that Social
Security provides for free. And we put them down. We
investigated them and served an injunction on them and put them
out of business. And that is basically what we have done around
the country. I am getting a nod from our chief counsel who is
in charge of this, but we have had great successes.
Mr. Collins. Well then you have the tools and the
authority. It must be something somewhere.
Mr. Huse. What this is all about, and I am going to make
this straight forward, there is too much bureaucracy. We do
their work. It was delegated to us by the commissioner. It is
in the Social Security Act, but because of the little bit of
ambivalence in the notice legislative language, we have too
many cooks involved in this process, too many lawyers actually.
And the agencies office of general counsel gets in--what we are
trying to do is get do this in a more efficient way. The other
problem is if you give it, if you delegate something that the
IG--by statute, we are independent from the agency so that the
concept of the agency's general counsel directing us is in
opposition to the IG act. So we are just trying to clean that
up with a change in the wording of the 1140 piece.
Mr. Collins. Good. Thank you. That is all I have, Mr.
Chairman.
Chairman Shaw. Thank you. Mr. Huse, we are going to get
more into the question of deceptive mailings at a future
hearing and perhaps you will come back and visit us.
Mr. Huse. I would be delighted.
[Questions submitted from Chairman Shaw to Mr. Huse, and
his responses follow:]
Social Security Administration
Office of the Inspector General
Baltimore, Maryland 21235
1. Both you and the Social Security Administration indicated that
more agreements are pending to allow you to find more fugitive felon
warrants. Is your goal to expand agreements to the remainder of the
states, and will those include agreements with more local law
enforcement entities?
The goal of the Social Security Administration (SSA) is to enter
into agreements with the remainder of the States that do not report all
felony warrants and persons wanted for violation of Federal or State
probation and parole to the National Crime Information Center. SSA will
also enter into agreements with local law enforcement jurisdictions in
circumstances where they do not report felony warrants to a central
State repository.
2. You indicated in your testimony that agreements are in place
with several Federal law enforcement authorities, 12 States and 3
cities to improve the volume and accuracy of the information that you
act upon. What inaccuracies have been found in the information you have
received?
Warrant files have been received that contain misdemeanor as well
as felony warrants. SSA is working very closely with State reporters to
ensure warrant files include only records of felonies and parole/
probation violators, as specified in the enabling legislation.
Additionally, SSA continues to work with the States to ensure files are
received in a format suitable for automated use.
3. Your office works with Federal, State and local law enforcement
agencies to apprehend fugitive felons who receive SSI benefits. From
Chief Dough's testimony, we saw that one of the ways you work with
these agencies is through joint fugitive felon task forces. Could you
explain for the Subcommittee how a task force works? Who would be
involved? What type of information would the Office of Inspector
General provide to secure the apprehension of fugitive felons? What
involvement would an Office of Inspector General Special Agent have in
the arrest of the fugitive?
A task force is a team that may be comprised of individuals from
Federal, State, local agencies, the private sector, (i.e., bank, credit
card, and insurance fraud investigators) or any combination thereof.
The task forces serve to combine the resources, talents and
jurisdictional authority of the individual components in a way that
increases efficiency in pursuing objectives of mutual interest. One
example of this symbiotic relationship is the pooling of intelligence
data from various sources that separately have little value, but when
combined, provide excellent investigative leads.
OIG would provide information indicating the address where a
fugitive receives SSI payments or a parole/probation violator receives
payments or benefits. In those task forces where the OIG is an active
member, we would participate to the extent of our authority, including
arrest situations, resources permitting.
4. You indicated in your testimony that the Social Security
Administration has made great strides in the representative payee
program. Could you elaborate as to what the Social Security
Administration has done in the past year? What, in your view, is left
to be done by the Social Security Administration? By Congress?
Last year, SSA established a Representative Payee (Rep Payee) Task
Force to perform a comprehensive review of the features and
vulnerabilities of the current Program. The Task Force is comprised of
three subgroups concentrating on:
Monitoring Representative Payees
Systems Support for the Representative Payee Program
Bonding and Licensing of Representative Payees
SSA has completed approximately 540 on-site reviews of Rep Payees,
verified that 693 organizational fee-for-service Rep Payees continue to
have the required bond or license, and performed 26 random reviews of
Rep Payees. In addition, SSA has contracted with an accounting firm to
conduct financial reviews of 60 Rep Payees.
However, much is left for SSA to do to address the vulnerabilities
and weaknesses in the Rep Payee Program. This work includes the
following:
Selection of Rep Payees--SSA is yet to determine whether and how
they will stop the selection of those Rep Payees who are most likely to
commit misuse. Currently, SSA does not perform a background check of
Rep Payees to determine whether they have financial problems, bad
credit, have been convicted of a felony, and so forth. However, SSA is
planning to award a contract for research options concerning criminal
and financial background checks.
Bonding and Licensing of Rep Payees--SSA's policy specifies neither
the amount of bond necessary to adequately protect beneficiaries nor
the type or nature of licenses that are permitted. To date, SSA has not
made any revisions to its policy to address these vulnerabilities.
Rep Payee System--SSA is working to correct a number of systems
weaknesses we previously identified. Some of the items SSA has not yet
implemented follow:
SSA systems do not effectively track Rep Payees who do not
respond to and complete the Rep Payee Reports.
SSA cannot always locate and retrieve completed Rep Payee
Reports when needed.
SSA systems do not include information on all Rep Payees and
beneficiaries that have Rep Payees as required by law.
SSA needs to develop a systems match to identify deceased
Rep Payees.
SSA needs to develop a system to control and monitor the
processing of alerts that have identified Rep Payees who have
been incarcerated.
As to congressional action, we support legislative efforts to
strengthen SSA's oversight of Rep Payees. In particular, the provisions
in H.R. 4857 provide important safeguards that would protect Social
Security beneficiaries from unscrupulous Rep Payees. The provisions of
the legislative proposal we support addressed:
The re-issuance of Social Security benefits in cases of
misuse by individual or organizational Rep Payees;
Requirements to conduct periodic on-site reviews of certain
Rep Payees;
Disqualification of individuals from serving as Rep Payees
who have been convicted of an offense resulting in more than 1
year in prison;
The treatment of misused benefits by a Rep Payee as
overpayments to the Rep Payee, subject to current overpayment
recovery authorities; and
The imposition of civil monetary penalties for offenses
involving misuse of Social Security benefits received by a Rep
Payee on behalf of another individual.
5. According to both yours and the Agency's testimony, the Social
Security Administration has added many new procedures to its
representative payee oversight program, including annual verification
of bonding or licensing and random reviews of volume and fee-for-
service payees. What is your office's role in this process? What
audits, reviews, investigations are planned?
Our role is to provide an independent assessment of SSA's
stewardship over the Rep Payee Program and to identify vulnerabilities
to fraud, waste or abuse. In addition, we investigate all allegations
of Rep Payee fraud and/or misuse. As you know, since 1996, we have made
several recommendations to improve SSA's Rep Payee Program. These
recommendations addressed many of the areas SSA is now working to
correct. For example, we recommended that SSA more thoroughly screen
potential Rep Payees, change the focus of its Program to increase the
monitoring of Rep Payees, and determine why Rep Payees do not complete
and return Rep Payee Reports.
In FY 2001 we performed six financial-related audits of Rep Payees.
Our audit results showed that Rep Payees did not always meet their
responsibilities to the beneficiaries they served. We identified
deficiencies with the financial management of, and accounting for,
benefit receipts and disbursements; vulnerabilities in the safeguarding
of beneficiary payments; poor monitoring and reporting to SSA of
changes in beneficiary circumstances; and inappropriate handling of
beneficiary conserved funds.
We continue to identify problems with SSA's oversight of Rep
Payees. For example, in March 2001, we alerted SSA to a condition
whereby individuals were serving as Rep Payees who also had a Rep Payee
to manage their own Social Security benefits. SSA subsequently
identified several thousand instances where this had occurred. We also
recently identified an instance where a Rep Payee continued to serve as
a Rep Payee while incarcerated.
In FY 2002, we will conduct an additional six financial-related
audits of Rep Payees. In addition, we will perform audits/reviews of
SSA's oversight of the Rep Payee Program. They include audits/reviews
of Rep Payees who have committed misuse, SSA's on-site reviews of Rep
Payees, SSA's Rep Payee System, and Rep Payees who are fugitive felons.
Finally, will continue to investigate allegations of Rep Payee fraud
and/or misuse.
6. Both you and Ms. Zelenske mentioned that the Civil Monetary
Penalty authority should be expanded to include conversion of benefits
by a representative payee as a covered offense. Would you agree with
Ms. Zelenske's suggestion that this should be limited to cases of
``misuse'' of benefits or should it be broader?
We agree with Ms. Zelenske that expansion of the OIG's civil
monetary penalty authority to include conversion of benefits by a
representative payee should be limited to instances of misuse. We also
agree with Ms. Zelenske that there is a significant distinction to be
made between ``misuse'' and ``improper use'' of benefits by a
representative payee. Thus, we do not foresee a need for broader
authority at this time. We would note, however, that the language in
section 406 of H.R. 4857 pertaining to representative payee conversion
is consistent with the definition of misuse contained in section 401.
Therefore, we do not believe that any change in the language of the
legislation is necessary to address Ms. Zelenske's concerns. The
expanded authority proposed in the draft legislation would
significantly enhance the OIG's efforts to reduce this type of fraud
against SSA's most vulnerable clients while continuing to recognize
that representative payees play a vital role in the administration of
SSA's programs and should not be unnecessarily or unfairly sanctioned.
The Honorable James G. Huse, Jr.
Inspector General
Chairman Shaw. Thank you very much. We now have a panel. If
they would come to the witness table. Ms. Ethel Zelenske, who
is the cochair on the Task Force on Social Security Consortium
For Citizens With Disabilities; Philip Burnett, who is an
accountant for Hennepin County Children, Family, and Adult
Service Department, Minneapolis, Minnesota; Eljay Bowron, who
is the executive vice president of Vance International, Inc.,
Oakton, Virginia; and, yes, there is a John Dough. John D.
Dough is the chief of Essex County Sheriff's Department,
Newark, New Jersey. And I am sure, Mr. Dough, you have some
wonderful testimony to give us about how hard it is to get a
credit card if your name is John Dough.
Mr. Dough. Or to get a pizza delivered.
Chairman Shaw. When ordering pizza, I would use another
name. Ms. Zelenske, as always, we have everyone's full
testimony made part of the record; and you may summarize as you
see fit.
STATEMENT OF ETHEL ZELENSKE, CO-CHAIR, TASK FORCE ON SOCIAL
SECURITY, CONSORTIUM FOR CITIZENS WITH DISABILITIES
Ms. Zelenske. Thank you for inviting me to testify this
morning. One of our task force's key priorities is to ensure
that SSA's representative payee program adequately protects
beneficiaries. A recent court decision from Illinois captures
the problems faced by beneficiaries under the current system.
In the case Cannon v. Apfel, Ms. Cannon's uncle, her payee,
spent more than $23,000 of her past due SSI benefits when she
was a minor.
SSA determined that the uncle had, in fact, misused nearly
all of the money. She was able to recover some of the funds
from him but sought the remainder from SSA alleging that the
agency was negligent in selecting her uncle as her payee and in
monitoring him.
What happened in that case? Well, first of all, the uncle
claimed that he had never been convicted of a felony. In fact,
he had been convicted of three felonies, none of them under the
Social Security Act. The court found that SSA did not have the
benefit of this information because of its lack of diligence in
engaging in a thorough investigation of the uncle. The court
also noted there was nothing in the Social Security Act
requiring SSA to conduct a criminal background check in this
case.
The uncle also failed to promptly respond to the requested
annual accounting, although he did eventually. The court, in
response to that issue, said that the tardiness was not so
unusual, relying on SSA's policy allowing up to 6 months to
respond before further action is taken. In the court's words,
SSA came to its own defense in determining that it had not been
negligent and thus was not liable for restitution to Ms.
Cannon. Seven years after the misuse occurred, the court
reluctantly affirmed Social Security's finding of no
negligence.
What lessons can be learned from this case? First, there is
a need to have adequate protections in place to prevent misuse.
Second, if the misuse occurs, there is a need for viable
remedies to make the beneficiary whole again.
The best way to prevent misuse is to hold Social Security
accountable in carrying out its duties. However over the past
decade, we have found that Social Security's workers have been
unable to keep up with hands-on work, like issues involving
representative payees. The task force is concerned about the
long-term downsizing of the Social Security work force which we
feel, in part, has affected the integrity of the Social
Security and SSI Programs.
The task force strongly supports efforts to provide SSA
with adequate resources to meet its responsibilities including
the required oversight of the representative payee program.
Regarding specific proposals to prevent misuse, there is a
need for increased oversight. SSA must be vigorous in its
oversight of all payees, not just volume providers and fee-for-
service payees but also individuals and governmental agencies.
In response to what SSA said earlier, there are problems with
responsible family members being passed over as payees. It is
not just when they have a criminal background or have been
found to misuse benefits. There are situations where families
are pressured into allowing an agency to be the payee. I know
from my own experience there were cases where tearful elderly
mothers had been removed as payees because they used benefits
for clothing or for trips home on the weekends for their adult
children who were in institutions rather than turning over all
of the check to the institution.
Second, there is a need to pay closer attention to the
background of payee applicants. There needs to be more thorough
background checks of the criminal record and disqualification
for conviction and imprisonment for any offense. In the Cannon
case, you can see how this lack of a background check led to
problems.
Third, there is a need for better monitoring through the
annual accounting process and follow up more promptly when
accounting forms are not returned. For instance, in the Cannon
case, 5 to 6 months is simply too long. A lot of mischief can
ensue in that amount of time. Also, redirecting delivery of
benefits for failure to provide the form is a good option.
However, you need to ensure that benefits are not interrupted
to the beneficiary.
The other issue I want to address is providing further
protection when benefits are misused. Last year's bill, H.R.
4857, did talk about reissuing benefits by SSA in limited
situations by eliminating the negligent failure requirement for
certain payees. Also, it designated misused benefits as an
overpayment which triggers a wider variety of remedies.
I wanted to focus on the reissuance provision. The case
that I described, the Cannon case, is a good example of the
problems that a beneficiary encounters in being made whole
where the payee misuses benefits. Obtaining restitution from
SSA is extremely difficult under the existing law because the
individual must show that SSA engaged in negligent failure.
As I said, H.R. 4857 would have eliminated this requirement
for misuse by any payee that is not an individual or an
individual who serves 15 or more beneficiaries. This would not
have helped in the case I just described to you. We ask the
Subcommittee to consider expanding the types of representative
payees where the negligent failure requirement could be
eliminated.
We understand the concerns about fraudulent claims of
misuse, but the Cannon case is a good example where everyone
agreed, including the agency, that benefits had been misused.
In addition, H.R. 4857, as introduced last year, would have
eliminated the negligent failure requirement for individual
payees serving a smaller number of beneficiaries. Thank you for
allowing me to testify this morning.
[The prepared statement of Ms. Zelenske follows:]
STATEMENT OF ETHEL ZELENSKE, CO-CHAIR, TASK FORCE ON SOCIAL SECURITY,
CONSORTIUM FOR CITIZENS WITH DISABILITIES
My name is Ethel Zelenske and I want to thank the Subcommittee for
inviting me to testify at today's hearing on proposals to prevent
misuse of benefits by representative payees. I am submitting this
testimony on behalf of the undersigned members of the Consortium for
Citizens with Disabilities Task Force on Social Security.
I am the Director of Government Affairs for the National
Organization of Social Security Claimants' Representatives and serve as
co-chair of the Consortium for Citizens with Disabilities (CCD) Task
Force on Social Security. The Consortium for Citizens with Disabilities
is a coalition of approximately 100 national disability organizations
working together to advocate for national public policy that ensures
the self-determination, independence, empowerment, integration and
inclusion of children and adults with disabilities in all aspects of
society. The Task Force on Social Security monitors Social Security and
Supplemental Security Income issues affecting individuals with
disabilities. One of our key priorities is to ensure that the Social
Security Administration's representative payee program protects
beneficiaries who have payees.
Previously, I spent many years representing hundreds of individuals
who received disability benefits. A number of my clients, residing both
in institutions and in the community, had issues regarding
representative payees, so I am familiar with the problems that exist in
the program.
Millions of beneficiaries have payees, with the vast majority
performing their duties admirably under difficult circumstances.
However, a small percentage of payees have misused benefits and
violated their fiduciary duties. Provisions like those included in H.R.
4857, which was passed by the full Ways and Means Committee in the last
session with broad bipartisan support, would provide needed protections
to vulnerable beneficiaries.
In general, the CCD Task Force on Social Security supports
provisions that protect beneficiaries. However, these protections,
while foremost in importance, should not be implemented in such a way
as to deter responsible individuals and organizations from serving as
payees. In my experience, it was often extremely difficult to recruit
payees and this problem has grown worse over the years.
My testimony will address the provisions that were included in H.R.
4857, with recommendations for additional protections.
AUTHORITY TO REISSUE BENEFITS MISUSED BY ORGANIZATIONAL PAYEES
A. Reissuance of benefits
Under the Social Security Act, SSA will provide restitution of
misused benefits only ``where the negligent failure of the Commissioner
of Social Security to investigate or monitor a representative payee
results in misuse of benefits by the representative payee \1/4\.'' 42
U.S.C. Sec. Sec. 405(j)(5), 1383(a)(2)(E). This standard places an
onerous burden of proof on the beneficiary which, in practical terms,
makes it extremely difficult to obtain restitution from the agency.
First, the beneficiary must prove SSA's ``negligent failure'' to
investigate. Under SSA's policies, this means that there must be a
showing that SSA failed to follow established procedures for
investigating payee applicants and monitoring payees. Second, the
beneficiary must show a causal connection between SSA's ``negligent
failure'' and the payee's misuse of benefits.
Because of the difficulties that the current statute poses
regarding restitution from SSA, we support legislation similar to
Section 401 of H.R. 4857 which would eliminate the ``negligent
failure'' requirement where misuse has occurred by any payee that is
not an individual or is an individual who serves 15 or more
beneficiaries.
While we recognize the problems with SSA providing restitution to
beneficiaries for misuse by individual payees serving fewer
individuals, we ask the Subcommittee to further analyze whether there
is a way to extend this protection while, at the same time, creating
procedures that would limit fraudulent claims of misuse. For instance,
H.R. 4857, as introduced last year, included individuals who served as
payees for at least ten, rather than fifteen, beneficiaries. In
addition, it should be made clear that restitution from SSA for misuse
would remain available where ``negligent failure'' exists, regardless
of the type of payee.
B. ``Misuse'' of benefits defined
Section 401 of H.R. 4857 defined ``misuse'' by a representative
payee as converting benefits ``to a use other than for the use and
benefit of such other person.'' The Committee Report accompanying H.R.
4857 explained that the Committee did not intend for the definition of
misuse ``to include a conversion of benefits that is not exclusively
for the `use and benefit' of the beneficiary.'' The example given is
where the payee uses the benefits to help pay the rent for an apartment
shared with the beneficiary. We support this interpretation and urge
that similar language be included.
In addition, there should be a distinction between ``misuse'' and
``improper use'' of benefits. In ``misuse,'' benefits are not used for
the benefit of the individual. In ``improper use,'' benefits are not
used in necessarily the wisest manner but are still used for the
benefit of the individual. ``Improper use'' should not trigger the
penalties associated with ``misuse.''
Existing regulations and SSA policies give payees a fair amount of
discretion in determining the use of benefits so long as it is for
``the use and benefit'' of the beneficiary. This is defined as using
the benefits for the individual's ``current maintenance,'' i.e., food,
clothing, shelter, medical care, and personal comfort items. In order
to encourage individuals to serve as payees, they should be able to
enter into that capacity knowing that their judgment will not be
continually questioned, while understanding that SSA has the duty to
monitor their actions.
OVERSIGHT OF REPRESENTATIVE PAYEES
We support changes that would require additional oversight of
representative payees, similar to those included in Section 402 of H.R.
4857, such as requiring nongovernmental fee-for-service organizational
payees to certify that they are both bonded and licensed and requiring
SSA to conduct periodic onsite reviews of certain payees. The onsite
review requirement in H.R. 4857 is limited to: (1) any individual who
serves as payee for 15 or more beneficiaries; (2) a nongovernmental
fee-for-service agency payee; and (3) any other agency serving as payee
for 50 or more beneficiaries.
H.R. 4857 provided no standards for the onsite reviews. However,
the Committee Report accompanying H.R. 4857 does recommend that
``appropriate auditing and accounting standards be utilized.'' We also
suggest that onsite reviews include interviews with beneficiaries, to
the extent that they are able to participate, or if unable to
participate, with a family member where possible. Beneficiaries and
their family members can provide important information about the
quality of the services provided by the payees. In addition, interviews
would also allow the auditors/investigators to make their own judgments
about whether the payees are using benefits for the ``use and benefit''
of the beneficiaries, e.g., does the individual have adequate food,
clothing and shelter? are other needs of the individual being met?
DISQUALIFICATION FOR CONVICTION AND IMPRISONMENT FOR MORE THAN ONE YEAR
Current law disqualifies an individual from acting as a
representative payee if convicted of criminal violations of the Social
Security Act. We support expansion of this provision, similar to
Section 403 of H.R. 4857, that would disqualify individuals convicted
of any crime resulting in more than one year of imprisonment. However,
we also support including an exception that gives the Commissioner
discretion to allow the individual to be payee where ``appropriate
notwithstanding such conviction.'' Such an exception, if proper
protections for the beneficiary are in place, would allow family
members or friends to be payees where they can otherwise show their
suitability, e.g., the imprisonment occurred long ago, the offense was
unrelated to fraud or other financial crimes.
FEE FORFEITURE IN CASE OF BENEFIT MISUSE BY PAYEES
We support a legislative change, similar to Section 404 of H.R.
4857, that would require forfeiture of the fee by the payee where
misuse has occurred. The payee should not be able to benefit further
from taking advantage of the beneficiary.
LIABILITY OF PAYEES FOR MISUSED BENEFITS
Section 405 of H.R. 4857 established that, following a
determination of misuse, the payee would be liable for the misused
amount and that any amount not repaid would be treated as an
overpayment by SSA. We support a provision similar to Section 405.
Over the years, there have been conflicting court decisions
regarding SSA's ability to recover misused benefits from the
representative payee's own Social Security benefits. This provision
would clarify that SSA is authorized to recoup the misused benefits
from the payee's own benefits. In addition, Congress has expanded SSA's
debt collection authority over the past few years, providing other
avenues for recovery of overpayments, e.g., tax refund intercepts,
offsets from other federal benefits.
Recovery under this provision would provide the payee with due
process rights in case of an improper misuse determination. By treating
the misused amount as an overpayment, the statutory and regulatory
protections would apply, such as notice of the overpayment, the
opportunity to contest the overpayment, and to appeal adverse
determinations.
We would expect that a provision similar to Section 405 would lead
to increased restitution for beneficiaries, especially for those still
required to show ``negligent failure'' to obtain restitution from SSA.
However, on the other hand, if there was no ability to recover the
misused benefits from the payee under a provision similar to Section
405, restitution should still be available from SSA by showing the
agency's ``negligent failure.''
EXTENSION OF CIVIL MONETARY PENALTY AUTHORITY
Section 406 of H.R. 4857 would add civil monetary penalty authority
with respect to payees who misuse benefits. The intent of this
provision, according to the Committee Report, is to provide SSA with an
additional way to address misuse by payees. We support this provision
but recommend that it incorporate the definition of misuse set forth in
Section 401 to ensure that it is applied consistently with the other
penalties for misuse. One approach would be to require a determination
of ``misuse'' before a civil monetary penalty could be triggered.
REDIRECT DELIVERY OF BENEFITS FOR FAILURE TO PROVIDE REQUIRED
ACCOUNTING
Current law requires most payees to submit annual accounting
reports, or at any time specifically requested, to SSA regarding the
use of payments they have received. 42 U.S.C. Sec. 405(j)(3). Section
407 of H.R. 4857 would give SSA the authority to redirect payment of
benefits to a local Social Security office if the representative payee
fails to provide the required accounting report. After providing notice
and an opportunity for hearing to the payee and the beneficiary, the
payee would be required to collect the payments in person at an SSA
field office. The intent of this provision is to increase the number of
payees who return the accounting form.
The accounting reports are an effective tool in monitoring
representative payees' use of benefits. While recognizing this need, we
are concerned that this provision could further harm beneficiaries by
interrupting receipt of benefits, leading to critical situations such
as loss of housing and basic utilities, lack of food, and loss of other
basic necessities. In addition, given the stretched resources in field
offices, SSA workers might inadvertently delay processing these cases.
Further, there may be payees who do not promptly appear at a field
office after benefits have been redirected.
Proposed legislation should include some protection for
beneficiaries to ensure that their receipt of benefits is not
interrupted and that an alternative payment procedure is provided.
ADDITIONAL RECOMMENDATIONS
1. Additional oversight of governmental payees
Governmental agencies and institutions often act as representative
payees for children committed to their care and custody and for adults
with mental impairments. These are some of the most vulnerable
beneficiaries since many do not have family and friends to act in their
best interests. Too frequently, a fiduciary/creditor conflict arises in
these cases. As representative payee, the governmental agency or
institution has a fiduciary duty to act in the individual's ``best
interest.'' However, the payee is also a creditor, seeking to reimburse
itself for the cost of care. Unfortunately, in too many cases, the
creditor, and not the fiduciary, wins out.
While payment for shelter and food is a priority use of benefits,
``current maintenance'' for persons in state institutions includes
expenditures for items that will aid in the beneficiary's recovery or
release from the institution or personal needs items to improve the
individual's conditions while in the institution. 20 C.F.R.
Sec. 404.2040(b). Based on my personal experience, these needs often
are not provided, raising questions about whether the benefits are
being used in the individual's best interest.
While recognizing that there is no one else to act as payee for
these individuals, there still is a need to provide closer oversight of
governmental agencies and institutions. For instance, current law, 42
U.S.C. Sec. 405(j)(3)(B), does not require State or Federal
institutions to submit annual accounting reports. While institutions
are subject to onsite reviews once every three years, we see no reason
why they should be exempted from submitting annual reports.
Another problem is that in some cases, a governmental agency or
institution is selected as representative payee even where family or
friends are available and willing to serve as payee. In my experience,
there often would be a ``race'' to the Social Security district office.
This is inconsistent with SSA's preference list, embodied in its
regulations, that ranks governmental institutions and agencies after
family or friends. We believe that this is a serious problem in certain
jurisdictions and we recommend that the Subcommittee use its oversight
authority to monitor this problem.
2. Report to Congress
Because of the large number of beneficiaries who have
representative payees and the history of problems with the program,
Congress should play a role in providing oversight. Amendments passed
in 1990 required SSA to provide, on an annual basis, information
regarding the representative payee program, including the number of
cases where payees were changed, the number of cases where benefits
were misused and how SSA dealt with those cases, and the final
disposition of those cases. The statutory provision requiring this
information, 42 U.S.C. Sec. 405(j)(6), states that it be included in
the annual report submitted to Congress under section 704 of the Social
Security Act. However, section 704 was substantially revised by Pub. L.
No. 103-296, the law that made SSA an independent agency, and the
annual report requirement was eliminated.
We recommend that an annual reporting requirement be reinstated for
the information described in 42 U.S.C. Sec. 405(j)(6).
On behalf of the CCD Task Force on Social Security, thank you for
the opportunity to testify today.
ON BEHALF OF:
Adapted Physical Activity Council
American Association of University Affiliated Programs
American Association on Mental Retardation
Brain Injury Association
Epilepsy Foundation
International Association of Psychosocial Rehabilitation Services
NISH
National Association of Protection and Advocacy Systems
National Organization of Social Security Claimants' Representatives
National Senior Citizens Law Center
Research Institute for Independent Living
The Arc of the United States
United Cerebral Palsy Associations, Inc.
Mr. Johnson. [Presiding.] Thank you. We appreciate your
testimony. Burnett, you may proceed.
Mr. Burnett. Chairman and other Subcommittee Members.
Excuse me while I----
Mr. Johnson. Pull it over closer if you want to, and then
you won't have to struggle with it.
STATEMENT OF PHILLIP BURNETT, ACCOUNTANT, HENNEPIN COUNTY
CHILDREN, FAMILY AND ADULT SERVICES DEPARTMENT, MINNEAPOLIS,
MINNESOTA
Mr. Burnett. I have a visual difficulty so it will take me
a while to read the testimony. Hennepin County, in the State of
Minnesota, under the Children, Family and Adult Services serves
as representative payee to over 2000 recipients of governmental
benefits. We have provided this service for more than 35 years
to a population who may be disabled persons, children in out-
of-home placement, or people with chemical or mental health
behavior difficulties.
We process an average of 14 thousand transactions per month
for the purpose of these accounts. The staffing required to
handle these functions is as follows:
Three accounting staff, who are responsible for maintaining
the account transactions and provide service desk coverage; 180
social financial or case aid workers, who establish case and
payment plans on. On an average, these workers spend 4 to 6
hours monthly performing duties for their clients with rep
payee accounts. Two social security liaisons, these are county-
paid individuals who coordinate a flow of information and
reporting requirements between Social Security Administration,
the workers, and the accounting department.
Fraud and misuse of funds. During my 22 years as supervisor
of the accounting area, there have been no more than eight
allegations of fraud or misuse. Once an allegation is received,
the matter is to be referred to our county attorney's office,
internal audit division, and the sheriff's departments for
investigation. Of those reported cases, only three were
substantiated. In these three cases, action taken was the
dismissal of the guilty employee.
County administration dollars, at that time, this was many
years ago, but county administration dollars were used to
replace the misused funds to the clients' accounts. An
additional safeguard is also in place. If satisfaction by the
claimant is not reached, we have neighboring county agreements
to conduct independent investigations if necessary. To ensure
benefits are more properly used and well accounted for, we are
required by Social Security Administration to complete manual
reporting. Also there is a periodic audit conducted by Social
Security Administration on a sample of our accounts. Monthly,
the county reconciles the total of account books balances
against the bank balance. These reconciliations are then
submitted to the internal and external audit annually.
Relationship with other payee agencies represent payee
services. When closing a client's social service case at the
county and if continued representative payee services are
required, we refer the recipient and or Social Security
Administration to an agency payee. We refer to local agencies
which are community based or private fee for the purpose of
service. These agencies are required in the State of Minnesota
to have bonding and licensing.
Relationship with Social Security Administration in
Hennepin County. With Hennepin County being one of the largest
providers of payee service in the nation, we have developed a
very good and close working relationship. Our two liaison staff
meet with Social Security service staff twice a week to deliver
repayment and obtain receipts. Also the liaisons have daily
phone contact with Social Security Administration
representatives for a variety of reasons.
A couple of ongoing problems are the following: Repayment
of funds for deceased clients. Since the benefits are directly
deposited to our bank account, the Federal Treasury has and
exercises the right to attach our bank account for the
reclamation; at the same time, the Social Security
Administration is requesting the county to return the funds via
check.
There needs to be a set procedure so that we are not paying
twice and having to seek refunds for one of the payments. A
possible solution may be a better communication link between
the Social Security Administration and the Federal Treasury.
Another problem is other payments made directly to Social
Security. When the county hand-delivers and receives checks for
conserved funds or overpayments, there is a 3 to 5 week delay
in the Social Security Administration in cashing the payments.
The delay locks up our ability to close our accounts from our
book. It probably costs time, effort, and money to the Social
Security Administration also.
Pertaining to H.R. 4857, title four, from the 106th
Congress. Although the language in these sections does not
specifically apply to government agencies, we feel the
amendments put forth are reasonable. There is a trust we accept
in taking on the role as representative payee or custodian for
others. And that trust should not be broken. Too often the
recipients are people with limited resources and many needs and
to have them deprived of basic needs because of fraud or misuse
of their funds should be addressed harshly. Thank you very
much.
[The prepared statement of Mr. Burnett follows:]
STATEMENT OF PHILLIP BURNETT, ACCOUNTANT, HENNEPIN COUNTY CHILDREN,
FAMILY AND ADULT SERVICES DEPARTMENT, MINNEAPOLIS, MINNESOTA
Hennepin County, in the State of Minnesota, under the Children,
Family and Adult Services Department serves as Representative Payee
(Rep Payee) to over 2,000 recipients of governmental benefits. We have
provided this service for more than 35 years to a population who may be
disabled persons, children in out-of-home placement or people with
chemical or mental health behavioral difficulties. We process an
average of 14,000 transactions per month for these accounts. The
staffing required to handle these functions is as follows:
3 Accounting staff who are responsible for maintaining the
account transactions and provides service desk coverage.
180 Social, Financial or Case Aide Workers who establish
case and payment plans. On average these workers spend 4 to 6
hours monthly performing duties for their clients with Rep
Payee accounts.
2 Social Security Liaisons (County paid staff) who
coordinate a flow of information and reporting requirements
between the Social Security Administration (SSA), the workers
and the Accounting Department.
Fraud and Misuse of Funds
During my 22 years of supervising the Accounting area, there have
been no more than 8 allegations of fraud or misuse of benefits. Once an
allegation is received the matter is referred to the County's
Attorney's Office, Internal Audit Division and the Sheriffs Department
for investigation. Of these reported cases only 3 were substantiated.
In these 3 cases the resulting action taken was the dismissal of the
guilty employee. County Administration dollars were used to replace the
misused funds to the client accounts. An additional safeguard is also
in place if satisfaction by the claimant is not reached. We have
neighboring County agreements to conduct independent investigation, if
necessary.
To ensure benefits are properly used and accounted for, we are
required by the (SSA) to complete annual reporting. Also there is a
periodic audit conducted by the SSA on a sampling of our accounts.
Monthly the County reconciles the total of account book balances
against the bank account balance. These reconciliations are then
submitted to Internal and External Audit annually.
Relationship with Other Agency Representative Payee Services
When closing a client's social service case at the County and if
continued Rep Payee services are required, we refer the recipient and/
or SSA to an agency payee. Referrals to local agencies are community
based or private fee-for-service. These agencies are required to have
bonding and licensing.
Relationship with Social Security Administration and Hennepin County
With Hennepin County being one of the largest providers of payee
services in the nation, we have developed a very close and good working
relationship. Our 2 liaison staff meet with SSA service staff twice a
week to deliver repayments and obtain receipts. Also the liaison staff
have daily phone contact with the SSA representatives for a variety of
reasons.
A couple of on-going problems are the following:
Repayment of funds for deceased clients--Since the benefits
are directly deposited to our bank account the Federal Treasury
has and exercises the right to attach our bank account for the
reclamation. At the same time the SSA is requesting the County
to return the funds via a check. There needs to be a set
procedure so we are not paying twice and then having to seek
refund of one of the payments. A possible solution may be a
better communication link between the SSA and the Federal
Treasury Department.
Other Payments made directly to the SSA--When the County
hand delivers and receipts checks for conserved funds or
overpayments there is a 3 to 5 week delay in the SSA in cashing
the payments. This delay locks up our ability to close the
accounts from our books. It probably costs time, effort and
money for the SSA, too.
Pertaining to H.R. 4857--Title IV from the 106th Congress
Although the language in these Sections does not specifically apply
to government agencies, we feel the amendments put forth are
reasonable. There is a trust we accept in taking on the role as
representative payee or custodian for others and that trust should not
be broken. Too often the recipients are people with limited resources
and many needs and to have them deprived of basic need because of fraud
or misuse of their funds should be addressed harshly.
Chairman Shaw. [Presiding.] Mr. Bowron.
STATEMENT OF ELJAY BOWRON, EXECUTIVE VICE PRESIDENT, VANCE
INTERNATIONAL, INC., OAKTON, VIRGINIA
Mr. Bowron. Good morning, Mr. Chairman, and thank you,
members of the Subcommittee, for the opportunity to be here
today to discuss extending statutory law enforcement authority
to special agents of the Social Security Administration Office
of Inspector General. I am currently the executive Vice
President of Vance International, a worldwide security firm,
but more importantly, for our purposes here today, prior to
joining Vance, I held several Federal Government positions,
including Inspector General for the Department of Interior,
Assistant Comptroller General of the United States for the
Office of Special Investigations, and I also served as the
director of the United States Secret Service.
For a time, a brief time, I served as the Deputy Inspector
General of the Social Security Administration. These
responsibilities afford me a perspective of the unique needs
for criminal investigators of SSA's Office of Inspector
General, or OIG, as it is called to derive permanent law
enforcement authority from the Social Security Act rather than
their present authority, which is a delegation of special
deputy marshall status granted from the Department of Justice.
I am familiar with the professional standards that must be
met and the performance record that must attest to a law
enforcement agency's standing in order to be granted such
permanent authority. I am also familiar with the training and
recruitment issues involved. I believe that this OIG is
qualified and prepared for that high level of trust. Its
demonstrated record of success for the past 6 years speaks to
the quality of this outstanding investigative organization. The
deputation under which this OIG has operated is burdensome,
both in the limitations of the authority it imposes and in the
administrative toll that it takes.
With respect to the former, while the deputation grants the
authority to execute warrants and to make arrests and carry a
weapon, it limits the OIG in failing to provide cross-
designation authority. That is the OIG's ability to cross-
designate State and local law enforcement agencies as special
agents for the purposes of specific joint operations and task
forces. This poses a particular hardship to an organization
that has limited resources and relies so heavily on cooperative
efforts with other law enforcements agencies.
With respect to the administrative burden, the agreement
under which the Department of Justice has deputized the OIG
special agents must be renewed periodically requiring the
attention of two organizations. Further, each year the OIG is
required to make a written report to the criminal division of
the Justice Department detailing the investigative and
prosecutive activities of the persons employed by the OIG who
have received special deputations.
The report must contain information on the number of
occasions on which the authority conferred by the deputation
was used in connection with arrests, searches, execution of
restraining orders, protection of witnesses, dangerous
surveillance of investigative subjects, interview under
hazardous circumstances, temporary custody of Federal
prisoners, support for undercover operations, the service of
subpoenas under hazardous circumstances and in assisting in
electronic surveillance.
Tracking and reporting every such instance in which the
delegated enforcement authority is used creates an
administrative burden on two agencies. The OIG, and its
management structure in particular, are fully prepared and
capable of ensuring the professionalism and qualifications of
its agents without doubling the work involved by requiring a
second Federal agency to perform essentially the same function.
Statutory law enforcement for an OIG is not a unique concept.
The Offices of Inspector General for the Department of
Agriculture and the Department of Defense and the Treasury
Inspector General for Tax Administration all have such
authority, as does the Inspector General for the U.S. Postal
Service.
Unsurprisingly, these are the inspectors general with a
high volume of investigations and a high concentration in
external investigation. The SSA/OIG is similarly situated. The
bulk of its considerable investigative activity is external,
investigating those who perpetrate crimes against Social
Security programs. Much of this office's law enforcement
activities involves fugitive felons and other violent
criminals.
In fulfilling these missions, the SSA/OIG works with law
enforcement agencies at the State and local levels and often on
task forces. Permanent law enforcement authority would enhance
this cooperative effort. It would reduce the administrative
burden on the two agencies and would enable the OIG to better
execute its statutory duties. Proposals have been made in the
past to grant all offices of Inspector General such authority.
They should each be considered individually. Some offices
conduct almost exclusively investigations of Federal employees,
contract matters and other internal issues. The SSA's Office of
Inspector General, on the other hand, investigates almost
exclusively external crimes.
I would close with a few words as to the qualification of
this organization for the trust and responsibility that it
seeks from this Subcommittee. As the director of the Secret
Service, I supervised many of the managers of this Office of
Inspector General during their tenure with the Secret Service.
The men and women in whose hands you would place your trust are
among the finest law enforcement officials in this country, or
any other country for that matter. Their integrity and sense of
duty is unassailable and unmatched. Your trust and faith could
not be in better hands.
A Federal law enforcement organization with special agents
who are highly trained, fully qualified and uniquely skilled
has grown under their tutelage. Every new special agent
undergoes rigorous training at the Federal Law Enforcement
Training Center. The same training required by most Federal
statutory law enforcement agencies as well as the additional
training administered by the Inspector General Academy,
specific and exhaustive training in SSA programs, annual
training conferences and quarterly firearms qualifications.
In its 6 years of operation, this OIG has conducted itself
professionally and with distinction. It is an organization in
need of permanent law enforcement status and an organization
that has earned that responsibility.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Bowron follows:]
STATEMENT OF ELJAY BOWRON, EXECUTIVE VICE PRESIDENT, VANCE
INTERNATIONAL, INC., OAKTON, VIRIGNIA
Good morning, Mr. Chairman, and thank you for the opportunity to be
here today to discuss extending statutory law enforcement authority to
the Special Agents of the Social Security Administration's Office of
the Inspector General. I am currently the Executive Vice President of
Vance International, Inc., a worldwide security firm. Prior to joining
Vance, I held several Federal government positions, including Inspector
General of the Department of the Interior, Assistant Comptroller
General of the United States for Investigations, and Director of the
United States Secret Service. I also served for a time as Deputy
Inspector General of the Social Security Administration.
These responsibilities afford me a perspective on the unique need
for the Criminal Investigators of SSA's Office of the Inspector
General, or OIG, to derive permanent law enforcement authority from the
Social Security Act, rather than from their present authority, which is
a delegation of Special Deputy United States Marshal status from the
Department of Justice. I am familiar with the professional standards
that must be met and the performance record that must attest to a law
enforcement agency's standing in order to be granted such permanent
authority, and I am also familiar with the training and recruitment
issues involved. I believe that this OIG is qualified and prepared for
that high level of trust. Its demonstrated record of success for the
past six years speaks to the quality of this outstanding investigative
organization.
The deputation under which this OIG has operated is burdensome,
both in the limitations of authority it imposes and in the
administrative toll that it takes. With respect to the former, while
the deputation grants the authority to execute warrants, make arrests,
and carry a weapon, it limits the OIG in failing to provide cross-
designation authority, the ability to designate qualified State and
local law enforcement officials as Special Agents for the purposes of
specific joint operations or task forces. This poses a particular
hardship to an organization with limited resources that relies so
heavily on cooperative efforts with other law enforcement agencies.
With respect to the administrative burden, the agreement under
which the Department of Justice has deputized the OIG's Special Agents
must be renewed periodically, requiring the attention of two
organizations. Further, each year, the OIG is required to make a
written report to the Criminal Division of the Department of Justice
detailing the investigative and prosecutive activities of the persons
employed by the OIG who have received special deputations. The report
must contain information on the number of occasions on which the
authority conferred by the deputation was used in connection with
arrests, searches, execution of restraining orders, protection of
witnesses, dangerous surveillance of investigative subjects, interviews
under hazardous circumstances, temporary custody of federal prisoners,
support for undercover operations, service of subpoenas under hazardous
circumstances, and assisting in electronic surveillance. Tracking and
reporting of every such instance in which the delegated law enforcement
authority is used creates an administrative burden on two agencies. The
OIG, and its management structure in particular, are fully prepared and
capable of ensuring the professionalism and qualifications of its
Special Agents without doubling the work involved by requiring a second
Federal agency to perform essentially the same function.
Statutory law enforcement for an OIG is not a unique concept. The
Offices of Inspector General for the Department of Agriculture and the
Department of Defense, and the Treasury Inspector General for Tax
Administration all have such authority, as does the Inspector General
for the U.S. Postal Service. Unsurprisingly, these are the Inspectors
General with a high volume of investigations and a high concentration
in external investigations. The SSA's OIG is similarly situated. The
bulk of its considerable investigative activity is external--
investigating those who perpetrate crimes against Social Security
programs. Much of this office's law enforcement activity involves
fugitive felons and other violent criminals. In fulfilling these
missions, the SSA's OIG works with law enforcement agencies at the
State and local levels, often on task forces. Permanent law enforcement
authority would enhance this cooperative effort, reduce the
administrative burden on two agencies and enable the OIG to better
execute its statutory duties.
Proposals have been made in the past to grant all Offices of
Inspectors General such authority--this is not necessary. Many such
offices conduct, almost exclusively, investigations of Federal
employees, contract matters, and other internal issues. The SSA's OIG,
on the other hand, investigates almost exclusively external crimes.
I would close with a few words as to the qualification of this
organization for the trust and responsibility it is seeking from the
Subcommittee. As the Director of the Secret Service, I supervised many
of the managers of this OIG during their tenure with the Secret
Service. The men and women in whose hands you would place your trust
are among the finest law enforcement officials in this, or any,
country. Their integrity and sense of duty is unassailable and
unmatched. Your trust and faith could not be in better hands. A Federal
law enforcement organization with Special Agents who are highly
trained, fully qualified, and uniquely skilled, has grown under their
tutelage. Every new Special Agent undergoes rigorous training at the
Federal Law Enforcement Training Center--the same training required by
most Federal statutory law enforcement agencies--as well as the
additional training administered by the Inspector General academy,
specific and exhaustive training in SSA programs, annual training
conferences and quarterly firearms qualifications. In its six years of
operation, this OIG has conducted itself professionally and with
distinction. It is an organization in need of permanent law enforcement
status, and an organization that has earned that responsibility.
Thank you, and I would be happy answer any questions.
Chairman Shaw. Chief Dough.
STATEMENT OF JOHN D. DOUGH, CHIEF, ESSEX COUNTY SHERIFF'S
OFFICE, NEWARK, NEW JERSEY
Mr. Dough. Chairman Shaw, it is my privilege to address you
today on behalf of Sheriff Armando B. Fontoura, who is
currently hosting local police week ceremonies in Newark New
Jersey. The Essex County Sheriff's Department wholeheartedly
supports and endorses the efforts of the Social Security
Administration and its Inspector General in maintaining the
integrity of Social Security. More specifically, the assistance
that the IG's Office offers local law enforcement in general,
and our department, in particular, is invaluable in our efforts
to identify, locate and arrest fleeing felons. The population
of Essex County is over 800,000, rising to 1 million daily. The
State's largest city, Newark, is within the county, and we are
just 5 miles from New York City.
Unfortunately, the county has a high level of violent
crimes. In fact, one out of every four violent crimes in the
State of New Jersey occurs in Essex County. As successful as
law enforcement in Essex County has been in arresting violent
offenders, our criminal justice system is flooded with criminal
warrants for those who have failed to appear, skipped bail or
have been indicted and not apprehended.
Consequently we have over 20,000 warrants still
outstanding, of which over half are criminal warrants. My
department receives 1,100 warrants monthly. Felons are
notorious for not being truthful in their bail information as
to their address and next of kin. And while the fugitive is
doing his or her best to keep his or her whereabouts from law
enforcement, that same fugitive is also doing his or her best
to maintain contact with Social Security in order that their
SSI payments continue.
The Essex County Sheriff's Department is active partner in
the IG's New York regional task force. Since July of 2000, our
department has received information from SSA on 185 fugitive
criminal felons, of which we arrested 97. Most of these cases
were at a dead end. We had exhausted all local means of finding
these individuals. Without the vital information supplied by
SSA, 97 criminal fugitives would still be at large and living
in Essex County. Two recent arrests have exemplified the
success of this partnership that has been forged with the IG's
Office.
Within the past few weeks SSA information was forwarded to
the Essex County Sheriff's Department on a suspect wanted by
our agency for nearly a decade on aggravated arson charges. He
had previous charges of arson dating back to 1985. Quite
frankly, gentlemen, our investigation was at a dead end. On a
recurring basis, this case was frequently reopened only to have
it reach a standstill due to lack of fresh information. Days
within receiving information from Social Security, the fugitive
was found, put in custody and the illegal benefits stopped.
In another case, a person wanted for shooting was wanted
since 1992. Through the information provided by Social
Security, this individual was located in Virginia. Before we
could even send officers down to extradite, he put himself on a
bus and surrendered to our officers in Newark. The suspension
of his SSI benefits was that strong of an encouragement. The
partnership that Social Security and law enforcement has
developed has proven to be a tremendous success, both in terms
of taking hardened criminals off our streets and saving our
taxpayers' hard-earned money.
Sheriff Fontoura of the Essex County Sheriff's office and I
urge you to continue and expand this information partnership
between law enforcement and Social Security Administration. The
52 percent clearance rate that our Department has achieved with
the information supplied by SSA is notable only in that it
underscores the potential for further success in expanding the
mandate to use Title II information.
There are those who would portray horror stories of law
enforcement that bring wheel-chaired elderly into custody for
minor infractions using Title II information. Let me assure the
Committee that this is farthest from the truth. The thrust of
our efforts is locating the violent offender who is a fugitive
from justice, not the incarceration of somebody for traffic
tickets.
The laws associated with the use of this information, local
protocols and our professionalism will protect this from
happening. Expansion of using Title II information will allow
for a broader base of information to be shared, and the success
stories that I mentioned before will increase 100-fold.
Government should not underwrite a legal sanctuary of
information to protect fleeing felons. The people of Essex
County, New Jersey and this Nation deserve better. Thank you.
[The prepared statement of Mr. Dough follows:]
STATEMENT OF JOHN D. DOUGH, CHIEF, ESSEX COUNTY SHERIFF'S OFFICE,
NEWARK, NEW JERSEY
Good morning, Chairman Shaw, Ranking Member Matsui and Committee
members. My name is John D. Dough and I am the Chief of the Essex
County (New Jersey) Sheriff's Office. It is my privilege to address you
today on behalf of Sheriff Armando Fontoura who is currently hosting
``National Police Week'' ceremonies in Newark, New Jersey.
The Essex County Sheriff's Department wholeheartedly supports and
endorses the efforts of the Social Security Administration and it's
Office of the Inspector General in maintaining the integrity of Social
Security. More specifically, the assistance that the Inspector
General's Office offers local law enforcement in general, and our
department in particular, is invaluable in our efforts to identify,
locate and arrest fleeing felons.
The population of Essex County is over 800,000 rising to over
1,000,000 during workdays. The state's largest city--Newark--is within
the County and we are just 5 miles from New York City. Unfortunately,
the County has a high level of violent crime; in fact, one out of every
four violent crimes in the State of New Jersey occurs in Essex County.
As successful as law enforcement in Essex County has been in arresting
violent offenders, our criminal justice system is flooded with criminal
warrants for those who have failed to appear, skipped bail or who have
been indicted but not apprehended. Consequently, we have over 20,000
warrants still outstanding of which half are criminal warrants. The
Department receives over 1,100 warrants monthly from the courts.
Felons are notorious for not being truthful in their bail
information as to their addresses and next of kin. And, while the
fugitive is doing his or her best to keep his or her whereabouts hidden
from law enforcement, that same fugitive is also doing his or her best
to remain in contact with Social Security in order that their SSI
payments continue.
The Essex County Sheriff's Department is an active partner of the
Inspector General's New York regional task force. During the first
quarter of 2001, based upon information provided to us by the Social
Security Administration, New York/New Jersey metropolitan law
enforcement agencies made 95 fugitive felon arrests, saving an
estimated $3 million in illegal SSI payments. Since July of 2000, our
Department has received information on 185 fugitive criminal felons,
which led to the arrest of 97 fugitives. Most of these cases were at a
dead end, we had exhausted all local means of locating these felons.
Without this vital information 97 fugitives would still be at large and
still living within Essex County. Where the fugitive was discovered not
to be living at an address to which an SSI check was delivered, arrests
have been made for fraudulently cashing the fugitive's SSI check. At
the very minimum, there was a suspension of benefits.
During recent months, the Essex County Sheriff's Office and other
law enforcement agencies have greatly benefited from information
supplied to us by the Social Security Administration. Two recent
arrests exemplify the success of this partnership that has been forged
by the Inspector General's Office of the Social Security
Administration.
Within the past few weeks, Social Security Administration
information was forwarded to the Essex County Sheriff's Office on a
suspect wanted by our agency for nearly a decade on aggravated arson
charges. He had previously been convicted of arson in 1985. Quite
frankly gentlemen, our investigation was at a dead end. On a recurring
basis this case was frequently re-opened only to have the investigation
come to a complete standstill, due to a lack of fresh information. Days
after receiving information from Social Security the fugitive was in
custody and illegal benefits checks stopped.
In another case a person was wanted for a shooting that occurred in
1992. Through the information supplied by Social Security this felon
was located in Virginia. Before we could send officers down to
extradite, he put himself on a bus and surrendered to our office in
Newark. The suspension of his SSI was that strong of an encouragement.
The partnership that Social Security and law enforcement has
developed has proven to be a tremendous success both in terms of taking
hardened criminals off our streets and terms of saving our taxpayers
hard-earned dollars illegally paid out to fugitives.
Sheriff Fontoura, the Essex County Sheriff's Office and I urge you
to continue and expand this information partnership between law
enforcement and the Social Security Administration. The 52% clearance
rate our Department has achieved with the information supplied by the
Social Security Administration is notable only in that it underscores
the potential for further successes in expanding the mandate to use
Title II information.
There are those that will portray horror stories of law enforcement
agencies bringing the wheelchair elderly into custody for minor
infractions using Title II information. Let me assure the Committee
this is farthest from the truth. The thrust of our efforts is in
locating the violent offender who is a fugitive from justice, not the
incarceration of someone for traffic tickets. The laws associated with
the use of this information, local protocols and our professionalism
will protect this from happening. Expansion of using Title II
information will allow for a broader base of information to be shared
and the success stories I mentioned before will increase one hundred
fold. Government should not underwrite a legal sanctuary of information
to protect fleeing felons. The people of Essex County, New Jersey and
this nation desire better.
Thank you for this opportunity to address you on this very
important issue. I would be happy to answer any questions the committee
might have.
Chairman Shaw. Thank you.
Mr. Bowron, it appears from your testimony that you are in
complete agreement with Mr. Huse as to how the law enforcement
should be expanded in his office.
Mr. Bowron. Yes, sir I am. Based on the previous discussion
on this subject, I think I would just want to note that it is
not uncharted water. There are other offices of Inspector
General that have had this authority conveyed to them.
Chairman Shaw. What offices do not?
Mr. Bowron. I believe the Office of Personnel Management,
IG does not; the Department of Interior Inspector General does
not, the Department of Labor, I couldn't name all of them off
the top of my head, but there are a number that do not.
Chairman Shaw. All right. Thank you. Mr. Brady.
Mr. Brady. Thank you Mr. Chairman. All that was excellent
testimony, and my experience is everything looks perfect on
paper in Washington, D.C. How it works in real life is a whole
different matter, and it is very valuable to get that
perspective, your perspective.
Chief Dough, I know people ask you this, but there is no
chance your wife is Jane?
Mr. Dough. Actually, my sister is Mary Jane.
Chairman Shaw. Your parents must have one hell of a sense
of humor.
Mr. Dough. That is true.
Mr. Brady. In your testimony, you talked about the
authority provided by the Office of Inspector General would be
a positive effect for you, and I talked about the success you
have had, and the two questions I have for you is based on the
fugitive felons that you have caught. Do you believe the Social
Security benefits that they received were a major source of
income helping them to evade capture? And second, you hope to
share more information, expand the information-sharing
partnership between yourself and the Social Security
Administration. How would you expand that? So did the benefits
make a big difference? How do you expand the information?
Mr. Dough. As far as the benefits they were receiving,
those figures are maintained.
Mr. Brady. From your experience in dealing with them, did
you think that was a sole source of income, a major participant
of their income?
Mr. Dough. Besides their own criminal endeavors, it is
probably a major source of income to them, yes. As far as how
we would efficiently exchange the information, it was testified
before by Mr. Huse is that we are just getting into the
electronic age, so consequently, a more efficient way for us to
submit our warrants that we are looking for in exchange if they
fit in with the Inspector General's parameters to find out
their addresses. It is all labor intensive right now. We have
to manually present them to the Inspector General. They, in
turn, have to search through the National Crime Information
Center's (NCIC) database and their own databases, and then
return it to us.
Electronically, a more efficient way of moving the data
back and forth will help immensely. Everything is labor
intensive. We mentioned I have 20,000 warrants. I only have 30
investigators. At any one time, four of my investigators are
somewhere in the United States on extradition, much of it
coming hopefully from more information from Social Security.
Mr. Brady. So sharing the information faster and more
efficiently, you are not thinking that there need to be
expanding information shared between----
Mr. Dough. No. All I want--believe it or not, I am just
looking for another little piece of critical information, where
the check is going so that I can at least establish the
validity that the individual may or may not be living there.
Just give me another lead so I can do better.
Mr. Brady. Thank you for your testimony.
Chairman Shaw. Mr. Hulshof.
Mr. Hulshof. Ms. Zelenske, I have a couple questions. If
you could pull the mike closer to you. Really, just a couple
points of clarification. One of the suggestions--first of all,
thanks for being here on behalf of Consortium, and I want to
talk a little bit about oversight. First of all, you suggest
additional oversight of representative payees, and I guess we
have lumped them into two categories, that is, those
individuals that pay, the nongovernmental entities and then the
governmental entities. On your suggestion on the
nongovernmental entities, you suggest that we include a
provision that they be both licensed and bonded; is that right?
Is that for each and every one or is that for just those that
may represent more than 15 beneficiaries? Do you provide such a
cutoff?
Ms. Zelenske. I think it was the provision that was in H.R.
4857, which I think referred to organizational fee-for-service
payees, not individuals who served 15 or more. And I think it
would just be that there would be a requirement that they be
licensed and bonded. However, I am not familiar with State
laws. I don't know that individuals who serve as payees for a
number of beneficiaries (volume providers) can or should be
bonded as well. It seems like it would probably be a good idea.
I just don't know enough about State law.
Mr. Hulshof. Let me ask you about your position on
additional oversight of rep payees, and especially now the
institutional rep payees. You have indicated that you have
support, more SSA oversight for government rep payees,
especially government institutions. In addition to requiring
annual reports, what other measures might you recommend for us?
Ms. Zelenske. In my written statement, I talked about this
conflict between the government institution acting as a
fiduciary in the individual's best interest, and then acting as
a creditor. The financial agents of the institutions are
looking to be reimbursed. There seems to be a breakdown often,
even among staff within the institution.
I know that under SSA's current procedures, they do not
require annual accounting from State institutions, but they do
require an onsite review every 3 years. I am not sure what
really goes on in that review, and whether it is a real quality
review where they aren't doing anything more than looking at
the books, which I would suspect in most of these situations
are handled well. There should be interviews with
beneficiaries, for instance, actually going and looking at the
wards where they are living and seeing what kind of conditions
they are living under, and talking to family members as well.
Mr. Hulshof. You mention, and started out of our testimony,
with the one particular case that was recently decided in your
testimony, you also support the extension of the ability of the
commissioner to reissue benefits for misuse and thanks for
making a good strong clarification for misuse and improper use
in your testimony. Is 15 the correct number?
Ms. Zelenske. That is the big question. As I said, in last
year's bill when it was originally introduced, it did have the
number 10. I don't know what happened, why it ended up 15 at
the time the Committee passed it. I assume you are talking
about aggregate amounts and having it just be large enough
amounts of money. But I don't know what went into that. Again,
in the Cannon case, even if you reduced it to 10, it wouldn't
have helped her in that situation where everyone agreed that
there was misuse.
Mr. Hulshof. Do you have any other suggestions as to what
procedures we might employ to limit fraudulent claims?
Ms. Zelenske. Of misuse?
Mr. Hulshof. Yes.
Ms. Zelenske. It would seem if SSA makes a misuse
determination, it requires them to do an investigation and get
some kind of supporting documentation for it. I don't know what
you would need beyond that. Again, you get into the
administrative issues. You want to make sure if SSA is
investigating these allegations and if they are going to have
to reissue benefits, that their own misuse determination is
supported.
I don't think they go out of their way to make misuse
determinations, but I just think that you want to make sure
they are doing an adequate investigation themselves.
Mr. Hulshof. My time is about to expire, so let me yield
back.
Chairman Shaw. Mr. Becerra.
Mr. Becerra. Let me see if I can follow along those lines.
You mentioned your concern in the instance that you mentioned
the case of the individual who would not have been able to
collect Social Security payments as a result of the activity of
the payee, representative payee. And you mentioned bonding and
licensing, or less than the 15 for an individual who acts as a
representative payee for 15 or more individuals. You mentioned,
I think in your testimony, response to Mr. Hulshof's questions
that perhaps it should be done for individuals who have fewer
than 15 representatives, or agency's representative for the
fewer than 15 individuals. I am wondering if that was your
testimony I want to make sure that is clear on the record.
Ms. Zelenske. Without looking at the existing legislation,
I think the requirement is that fee-for-service organizations
only are required to be either licensed or bonded. I think it
is just limited to that group.
Mr. Becerra. Right.
Ms. Zelenske. I think what I said in response to Mr.
Hulshof's question was that individuals who are payees for a
number of individuals should be bonded.
Mr. Becerra. That is much farther along than just requiring
fee-for-service?
Ms. Zelenske. Right.
Mr. Becerra. Bonded or licensed.
Ms. Zelenske. And I am only saying that if you are bonded,
it means there is some guarantee about repaying the individual,
which is where my focus is. I know, for instance, with
attorneys who do wrong things with their clients' money, that
most States have established some way of providing restitution
to the individual. And I guess that is where my focus is here.
Mr. Becerra. I think there is a compelling argument to
make, if someone wishes to act as the representative payee,
support an individual, that certainly that person wants to look
after that individual's needs and should be willing, you would
think, to prepare to be bonded or licensed, if that were the
case.
Now chances are there are a lot of individuals who would
not be able to act as a representative payee if we required a
bond of that individual or asked them to get licensed, whatever
the requirements for the license might be. But I am wondering,
because you speak from the perspective of someone on the ground
who works with a lot of these individuals, we just get to
legislate. The numbers we follow are on paper. Whether they
work or not is something else. And while I think it is clearly
appropriate under the law to ask for a fee-for-service agency
to be licensed and bonded, I would love to hear more from folks
like you who know on the ground how this works, if it would be
appropriate to consider extending it further, because there is
fraud, there is abuse. And it is even abuse that occurs within
a family.
And as much as it would pain us to think that we may want
to require a family member to be bonded and licensed, we have
to do something about this fraud, because otherwise it does
endanger the entire program. It is like welfare, every time you
find a welfare cheat, it destroys the opportunities for someone
who really does need some welfare benefits for a short time to
get back on his or her feet.
So I am wondering if could you continue to stay in touch
with the Committee on your perspective on that, because we do
need to find a way to make sure that we do rid ourselves of the
abuse and the fraud, and although I don't believe any of us
wish to diminish the opportunities for good people to serve as
representative payees, we do have to find a way, short of
having to prosecute or go after a repayment, to figure out how
we can curtail the amount of abuse that does occur. So I thank
you for that testimony.
If I could ask Chief--is it Bowron? Mr. Bowron, as well,
their thoughts on what Inspector General Huse said about
expanding the prohibition on fugitive felons to the OASDI
portion. I believe, Mr. Bowron, you agreed with that, right?
Mr. Bowron. I do agree with the Inspector General's
comments, yes, sir.
Mr. Becerra. Chief, do you also agree we should extend the
prohibition on fugitive felons.
Mr. Dough. Yes, without a doubt.
Mr. Becerra. OK. If we do that, the Inspector General has
indicated that it had would be tough to implement a good law
that extends the prohibition to fugitive felons when it comes
to OASDI, unless there are additional resources so they can
actually have the agents and so forth to do the work.
Do you agree with their statement that they would probably
need more resources to implement that new law?
Mr. Dough. Well, I am not going to speak for the Inspector
General but there are--there are some ways that that may allow
us to reduce the amount of labor intensive investigators out
there just exchanging information, and that may be some
restricted access to either verify an address of the criminal
felon directly into a database. And with the proper audit and
audit capabilities, there could be a lot of other types of
restrictions that could be put on local law enforcement. So
just give me access, audit me and if I violate it, then, you
know, take care of business.
Mr. Bowron. I also can't speak specifically to the manpower
requirements for the Offices of Inspector General, but I am
familiar enough with programs there, the size and the breadth
of the benefit programs to know that they are completely tasked
and taken with what they have to do right now. So certainly to
undertake additional responsibilities, you know, to just, you
know, use a colloquialism, I guess, something has to give. And
there are only so many resources and they can only be spread so
far.
Mr. Becerra. Thank you all for your testimony. Mr.
Chairman, thank you very much.
Chairman Shaw. Mr. Johnson.
Mr. Johnson. No questions.
Chairman Shaw. I have one last question that I would like
to direct to Mr. Burnett, the Consortium for Citizens for
Disabilities recommended in their testimony additional
oversight of the government payees. Could you comment on that
recommendation?
Mr. Burnett. Yes, I strongly believe in Minnesota. We as I
stated before, the representative payees have to be bonded and
licensed. I am--the short notice that I had before the hearing
in contacting three of those pay services that we utilize,
though have not had any fraud or misuse of funds. They do have,
say, same required reporting mechanisms in place. Throughout
the Nation, though, we believe that that is not the case, that
this is something that should be in place as stronger languages
and stronger penalties for the misuse of funds.
Chairman Shaw. Yes, sir. Thank you. And thank this entire
panel for a very fine testimony. We will be going forward. This
will be the first of a series of hearings having to do with
this particular subject as we start to build legislation. Thank
you very much. And we are adjourned.
[Whereupon, at 12:18 p.m., the hearing was adjourned.]
[Questions submitted from Chairman Shaw to the panel, and
their responses follow:]
National Organization of Social Security
Claimants' Representatives
Washington, DC 20005
June 19, 2001
E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
U.S. House of Representatives
Washington, DC 20515
Dear Chairman Shaw:
This letter responds to the questions in your letter dated June 6,
2001, requesting additional information following the May 10, 2001
hearing on the integrity of the Social Security programs. I am
submitting these answers in my capacity as co-chair of the Consortium
for Citizens with Disabilities Social Security Task Force. Each
question is answered as follows:
1. What legal or agency procedures discourage representative payee
participation and what changes would you recommend to encourage
individuals to become representative payees without eliminating
safeguards to deter abuse?
Answer
Responsible individuals who might be interested in becoming
representative payees are discouraged by a lack of practical
information regarding: their role as a payee; their authority as a
payee; how to handle funds; SSA's role in monitoring their activities;
and their potential liability. These issues may become particularly
acute where the beneficiary is not always cooperative and challenges
the payee's use of benefits.
SSA needs to provide better information and ongoing support for
representative payees. Suggestions include:
Clarifying the scope of the representative payee's
authority. Information should make sure that payees understand
their role; explain the fiduciary relationship between the
beneficiary and payee; and make clear the authority of the
payee so long as benefits are used in the payee's best
interest.
Providing general guidelines regarding handling of funds,
e.g., setting up bank accounts; separation of funds where
possible; documentation of expenditures.
Providing training and ongoing support. This could be
provided by periodic trainings and orientation sessions and be
made available in alternative formats, e.g., in person, videos,
Web site, printed materials. While acknowledging the budgetary
and staffing constraints, it would be extremely useful if there
was an identified person in each field office with particular
expertise in representative payee issues.
2. You recognize the need for annual accounting reports by the
representative payee, while acknowledging the representative payee may
not report promptly, delaying benefits payments to the recipient. Do
you have any suggestions as to how we might resolve this problem?
Should representative payees be required to report to the Social
Security Administration offices within a limited number of days and if
they fail to do so, risk being replaced by a substitute representative
payee?
Answer
As noted in my written statement, we generally support a provision
that would redirect delivery of benefits if the payee fails to return
the required accounting report, so long as adequate protections exist
to ensure that the beneficiary's receipt of benefits is not interrupted
and that an alternative payment procedure is provided. There is
precedent in current law for direct payment of benefits to the
beneficiary pending selection of a representative payee, 42 U.S.C.
Sec. Sec. 405(j)(2)(D). In the Conference Report accompanying the 1990
legislation that contained this provision, Congress explained that it
was not intended that SSA be encouraged to withhold benefits from a
beneficiary who needs a payee. This was especially true if the benefits
were being used to meet immediate needs such as shelter, food and
clothing.
Replacing the payee is one way to address the failure to submit
forms on a timely basis. However, there is a need to provide adequate
opportunity to explain why the form was not submitted. In addition,
from a practical point of view, finding a new payee may be difficult.
Thorough, initial screening of representative payee applicants is the
best way to prevent subsequent problems. In addition, SSA needs to
explain clearly its expectations regarding accounting of benefits.
Also, SSA should consider ways to make reporting easier for payees such
as electronic reporting or a dedicated fax line. The availability of a
field office staff person to answer questions would be helpful.
3. In his testimony, the Inspector General recommended that we
close the loophole with respect to the Trial Work Period that allows
unscrupulous beneficiaries to keep the moneys paid by SSA during their
Trial Work Period. In your opinion, what are the pros and cons to the
Inspector General's recommendation and would you alter any of the
Inspector General's proposals?
Answer
The integrity of the Social Security and SSI disability programs
must be protected and cases of true fraud should be uncovered. However,
we are very concerned about creating additional penalties based on work
activity. There is a particular need to be cautious about imposing new
penalties just as the 1999 work incentives law is being implemented.
For the reasons described below, we do not support the OIG's
recommendation at this time.
Under current law, work activity at the time of application does
not, per se, preclude a finding of disability. In addition, work
activity often changes while an application is pending or after
entitlement. We are concerned that the OIG's proposal assumes that the
individual is fraudulently concealing work activity if SSA does not
have the information on file. In fact, there are a number of reasons,
unrelated to fraud, why SSA does not have the information. At the
application stage, the SSA worker taking the application may not have
asked specific enough questions or the questions may have been
misunderstood by the claimant, a distinct possibility in light of the
complicated rules regarding work. Also, if the SSA worker completes the
application for the claimant, the information may not have been
transcribed exactly. Further, as detailed below, SSA does not have
procedures in place that can promptly and accurately track changes in
work activity.
The CCD Social Security Task Force has been concerned about SSA's
longstanding inability to track and document earnings properly or to
promptly adjust benefits when individuals report earnings. SSA's
failure to address this problem poses a serious threat to the agency's
efforts to enable individuals to return to work. Until SSA is better
able to document and track earnings, we do not support the creation of
additional penalties, such as elimination of the trial work period.
Currently, there is no uniform, reliable and beneficiary-friendly
method of collecting and recording, in a timely manner, information
regarding a worker's earnings. As the system now operates,
beneficiaries are fearful of overpayments. Frequently, these fears are
justified as beneficiaries receive belated notices of overpayments that
may amount to tens of thousands of dollars.
Further, even where earnings are properly recorded, it appears that
SSA workers and OIG officials are unfamiliar with many of the existing
work incentives deductions. A member of the National Organization of
Social Security Claimants' Representatives recently reported about two
clients who were charged criminally due to work activity. In one case,
the attorney found that SSA had failed to provide the beneficiary with
a number of work-related deductions which, when applied to her
earnings, placed her well below the SGA level. Eventually, the criminal
charges were dropped and benefits were resumed. However, this low-
income beneficiary with severe disabilities was faced with possible
criminal penalties for years because SSA and OIG were unfamiliar with
how to apply the proper earnings deductions.
In the other case, an individual received both SSDI and employer-
related disability benefits. SSA terminated benefits based on a
criminal investigation by the Federal agency employer. SSA did not act
on a request for reconsideration because of the pending criminal
matter. The individual's attorney met with the U. S. Attorney assigned
to the case who was unfamiliar with the SGA level, trial work period,
and other work incentives. The criminal matter was eventually dropped
after the investigation concluded there was no fraud. Nevertheless, the
Social Security reconsideration was denied and a request for hearing is
pending.
We raise these issues to highlight the problems with referring
cases due to work activity and do not mean to minimize the need to
investigate cases of true fraud.
Thank you for inviting me to testify on behalf of the CCD Social
Security Task Force.
Sincerely,
Ethel Zelenske
Co-Chair, Social Security Task Force
Consortium for Citizens with Disabilities
Hennepin County Children, Family and Adult Service
Department
Minneapolis, Minnesota 55487
Is Hennepin County required to submit annual accounting reports to
the Social Security Administration and is this overly burdensome?
Yes, Hennepin County is required by the Social Security
Administration (SSA) to submit ``Representative Payee Report--Form SSA-
623-OCR-SM'' for each recipients account, annually. We have electronic
downloading of the annual line item amounts that are filled onto the
report. For this reason, the process is no longer burdensome.
Can you briefly describe the situations in which Hennepin County
applies to be a representative payee when there are family or friends
available? Why is this done and does it put the local Social Security
Administration office in a difficult decisionmaking situation?
This question will be address in two parts:
Adults--Hennepin County only becomes Representative Payee for
Adults when the County has an open Social Service case and where there
are no other persons willing to be payee or if the previous payee was
not responsibly handling the client's funds. In many cases we seek to
have other family members or payee agencies be the representative
payee.
Children--When a child is placed in out-of-home-placement the County
becomes payee to ensure the benefits are properly used for that child's
care. Once the County applies, the Social Security Administration
notifies the current payee and allows 10 days for appeal of this
decision before the transfer occurs.
A more responsive reply to the question posed by Congressman Shaw
regarding the concerns by the Consortium for Citizens with
Disabilities. The Consortium recommends additional oversight of the
government agency payees because of the dual role of fiduciary/
creditor. Of the 2,000 Representative Payee accounts within Hennepin
County there are 210 accounts (children in placement) where the County
acts as the fiduciary/creditor. For ALL of these accounts the State of
Minnesota mandates either monthly personal needs payments from the Rep
Payee account or the personal needs amount must be included in the rate
paid the provider of services. The State and the County ensure these
costs are met:
Shelter
Food
Medical
Clothing
Personal Needs
If other governmental agencies are not doing the same, then
``yes,'' there should be additional controls put in place to ensure the
funds first meet the needs of the beneficiary before the funds are
taken by the creditor.
From your perspective, can you think of any way the Social Security
Administration could change its procedures to make the representative
payee accounting process less onerous while still ensuring that
benefits are used appropriately?
With Hennepin County's electronic accounting system design it is
not burdensome to maintain the accounts. We feel there's nothing
further needed from the SSA in this area. If other agencies providing
Rep Payee services to multiple recipients are not using an electronic
system then it should be these organizations which should adopt some
sort of electronic bookkeeping system.
Your testimony said local agencies that are community based or
private fee-for-service representative payees are currently required to
have bonding and licensing in Minnesota? Would such a recommendation at
the Federal level in your view be wise, in your view--being mindful of
the fact that we do not want to create a more burdensome program for
all the participants?
Bonding and licensing ensure there is a way to obtain restitution
in cases of fraud or misuse of recipient's funds. The requirements
might deter groups from becoming payee. This question might be better
answered by some of the outside agency payee services. On the last page
of this document a few agencies providing Rep Payee services in
Hennepin County are listed.
You have raised a problem involving the repayment of benefits made
to a deceased beneficiary. Could you explain the process you go through
when a beneficiary, for whom you are a representative payee, dies? Do
you advise the Social Security Administration of the death? Who advises
the Treasury? Does the Treasury attach your bank account to reclaim the
money before SSA requests repayment? What are the complications and
costs to the county of this system and do you have any recommended
changes?
As soon as the County learns of a client's death the County worker
does notify the SSA directly or through our County liaison staff. At
the present time the County does not inform the Federal Treasury. The
account is locked to avoid any additional disbursements until
determination can be made of what should be done with the balance.
After the hearing on May 10, 2001, I learned the County can ask our
back to transmit the electronic funds received after date of death back
to the Federal Treasury via the PAR/TRACER number. This, in turn, would
lock up their system from taking any further reclamation(s). This may
be the solution to the problem mentioned in my oral testimony. If SSA
request repayment, we would inform them of our action.
Your testimony contained references to several internal and
external audits and controls Hennepin County has in place. How do these
controls help you and your beneficiaries? I am particularly interested
in your testimony regarding safeguards for situations in which the
claimant and the county can not reach agreement. Give us an example of
such a case and what procedures would you follow to attempt to satisfy
the claimant? If you did not satisfy the claimant, what happens?
Annually, the County is required to report all County bank account
balances and reconciliations to our Internal Audit Department. This
includes the accounts in Rep Payee. The County also arranges for an
external auditing firm to review our books. These reconciliations and
audits simply determine our book to bank account values. The accounts
are available for the SSA to review to ensure payments are made to
rightful providers of service.
There has not been a case within the Rep Payee accounts where the
County has had the necessity to contact another County to investigate
or examine a claimant's complaint of fraud or misuse of funds. In my
testimony I was only providing this information to illustrate the
County's desire to do everything possible to ensure compliance and
openness.
Since your county has served the community for 35 years, can you
provide any suggestions for improvement based on your long experience
and the experience of the organizations you work with?
Speaking toward the accounting aspects for Representative Payee,
the County has designed its system with what Social Security
Administration has in place. Mainly the direct deposits of the benefits
to our bank account. As stated during the testimony, there is the need
for timely cashing of payments by the SSA and a set procedure for
reclaiming funds for deceased recipients. The main problem we hear from
the new Representative Payee when closing our account is the time delay
between the County returning the conserved funds and when those funds
are sent to the new payee. In some cases the recipient does not have
financial resource for weeks and may have to go without needs for this
period.
REPRESENTATIVE PAYEE SERVICES
ENTITLEMENT MAINTENANCE
PO BOX 582832
MINNEAPOLIS MN 55458--PHONE . . . 612 420 6000
JT KITT SOCIETY
PO BOX 68036
MINNEAPOLIS MN 55418--PHONE . . . 612 781 6255
CHURCH OF ST. STEPHEN
ALLIANCE OF THE STREETS
1829 PORTLAND AVE SO
MINNEAPOLIS MN 55404 1812--PHONE . . . 612 870 0529
DIRECTOR: HERB FREY
Phillip Burnett
Vance International, Inc.
Oakton, Virginia 22124-2700
June 14, 2001
1. How do the Special Agents of the Social Security Inspector
General's office differ from those of other Inspector General Offices?
Is their training different? Are their duties different?
Many of the other Inspector Generals Offices investigate almost
exclusively internal issues--investigations of Federal employees,
contract matters, and so forth. The majority of the investigative
activity of the Social Security Administration Office of the Inspector
General's (SSA OIG) Special Agents is external--investigating those
people who perpetrate crimes against the Social Security programs. Much
of their law enforcement activity involves fugitive felons and other
violent criminals. In order to accomplish their mission, the SSA OIG
Special Agents work with State and local law enforcement agencies,
often on task forces.
SSA OIG Special Agent training differs from other OIG Special
Agents training in that after the basic Criminal Investigative Training
Program and the Inspector General (IG) Investigator Training Program
the SSA OIG Special Agents receive additional follow on training
specific to SSA. This training includes a course in the SSA Title II
program (Benefit Basics and Retirement Insurance Benefits, Disability
Benefits, Health Insurance Benefits) and Title XVI program
(Supplemental Security Income Benefits).
The next part of the training is a weeklong program where agents
receive training that includes:
Field Perspective in Program Fraud
Computer System Inquiries
Program Fraud Investigation
Employee Fraud
Hotline Briefing
Computer Requests from Treasury
Computer Requests on the SSA System
Administrative Case Management System
OIG Automated Forms
Representative Payee Investigation
Undercover SSN Process
Identification Theft
Strategic Enforcement Division Overview
Additional Agency Resources
Special Programs
Fugitive Felons
Cooperative Disability Investigations Unit
Psychology of Officer Safety
Technical Investigative Equipment
Ethics
The Office of the Counsel to the Inspector General also instructs
agents in the following specific legal topics: Agent Authority, OIG
Administrative Subpoena Process, Employee Cases, Privacy Law, and SSA's
disclosure policy.
2. You mentioned the increased paperwork burden the Inspector
General currently has under the Memorandum of Understanding regarding
Special Agents. Can you tell me more about this? Would this burden be
reduced if the Inspector General were granted statutory law enforcement
authority, and if so, how?
The Memorandum of Understanding under which the Department of
Justice (DOJ) deputizes the SSA OIG's Special Agents must be renewed
periodically; currently this renewal is every 3 years. This requires
the participation of two agencies: SSA and DOJ. Furthermore, each year
the SSA OIG is required to make a written report to DOJ's Criminal
Division detailing the investigative and prosecutive activities of all
of the SSA OIG's Special Agents. The report contains information on the
number of occasions on which the authority conferred by the deputation
was used in connection with arrests, searches, execution of restraining
orders, protection of witnesses, dangerous surveillance of
investigative subjects, interviews under hazardous circumstances,
temporary custody of Federal prisoners, support for undercover
operations, services of subpoenas under hazardous circumstances, and
assisting in electronic surveillance. The tracking and reporting of
each instance in which the delegated law enforcement authority is used
creates an administrative burden on both SSA and DOJ.
If statutory law enforcement authority were granted to the SSA OIG
Special Agents, the Memorandum of Understanding, the periodic
deputation renewals, and the annual written deputation activities
report would be eliminated. The elimination of these requirements would
reduce the paperwork burden currently experienced by the SSA OIG.
Respectfully,
Eljay B. Brown
Executive Vice President
Essex County Sheriff's Department
Newark, New Jersey 07102
E. Clay Shaw, Jr., Chairman
Congress of the United States
House of Representatives
Committee on Ways and Means
Washington, D.C. 20515
Dear Chairman Shaw,
In reference to my testimony before the Subcommittee regarding the
integrity of Social Security programs, I have provided the following
answers to the questions in your letter of May 21, 2001.
Question #1
``You have provided two examples of the types of fugitive felons
you have apprehended with the assistance of the Inspector General. Of
the fugitives you have apprehended, have most been found to still live
in the Newark area? After you captured the fugitive felons, were you
able to determine whether they had committed other crimes while they
were fugitives?''
Answer
Part 1--Yes, most of the fugitives were found to live in the Newark
area.
Part 2--No, most fugitives had no new charges pending.
Question #2
``You indicated in your testimony that you have received
information on 185 fugitive criminal felons since July 2000. Can you
tell us how many fugitive felon warrants you have submitted to the
Inspector General?''
Answer
Of the 185 fugitive felon warrants this office submitted to the
Inspector General, 97 were closed out by arrest.
Sincerely,
John D. Dough
Chief
[Submissions for the record follow:]
Statement of Michael A. Steinberg, Michael Steinberg & Associates,
Tampa, Florida
Mr. Chairman and Members of the Subcommittee on Social Security,
thank you for the opportunity to present a written statement for the
printed record of the above referenced hearing.
Since the focus of the hearing is:
a) to examine the Social Security Administration's efforts to stop
benefits being paid to those who are ineligible for benefits and;
b) to prevent misuse of benefits by representative payees, I will
limit my comments to these two concerns.
BACKGROUND
I am an attorney who has been practicing in the area of Social
Security Disability law for almost 19 years. I have written articles
for periodicals and have lectured at national Social Security
disability law conferences.
In my practice I have represented claimants who have been overpaid
benefits and assisted them in applying for a waiver of overpayment or
setting up a repayment plan. I have also served as a representative
payee on a number of occasions and have been involved with issues
pertaining to other representative payees' regarding misuse of funds
and fraud.
WHO IS BEING OVERPAID BENEFITS?
There are several categories of claimants who are generally
overpaid:
1) SSI claimants who underreport income and/or resources;
2) Disability Beneficiaries who have received workers compensation
or some other benefit and the Social Security Administration
erroneously failed to offset that income;
3) Disability Beneficiaries whose benefits were terminated, but
elected to have those benefits continued while their appeal was
pending, and eventually a final decision was rendered finding them
ineligible for benefits;
4) Persons who are incarcerated, but did not report their
incarceration and continued to receive benefits.
Attached hereto are samples of letters clients of mine have
received from the Social Security Administration regarding overpayment
of benefits. Their names are deleted to protect their privacy. I don't
know the numbers of these payments nationwide, but considering the fact
that I have an average size practice and there are about 3,500
attorneys around the country who handle primarily Social Security
Disability matters, if my clients are representative of claimants
nationwide, the overpayment figures are enormous.
Ironically, in most of these cases, the claimant is without fault
in causing the overpayment. The claimants have no idea what information
the Social Security Administration requires or how much money they
should have been receiving. More often than not, it is the Social
Security Administration's mistakes that cause the overpayment and, by
the time the mistake is caught, the claimant has no funds with which to
repay the money.
SOLUTION
As you know, the Social Security Administration has a limited
budget. If the budget was unlimited, sufficient personnel could be
hired to calculate benefits and monitor cases so that very few
overpayments occur. However, the cost to hire these workers may exceed
the savings from preventing the overpayments; therefore, a cost benefit
analysis must be performed. Ideally, the Social Security Administration
will hire enough trained workers to reduce the number of overpayments
to a tolerable level, but not to a point of overkill. (Economics 101--
Law of diminishing returns). A study should be conducted by the
administration to determine this optimal number. The Social Security
budget should be expanded if by doing so there is a savings in an
amount greater than the expansion of the budget.
MISUSE OF BENEFITS BY REPRESENTATIVE PAYEES
Basically there are three types of representative payees.
1) Family or friends of claimant;
2) Parent or guardian of children;
3) Non-profit organizations, such as Lutheran Social Services,
Jewish Family Services, etc.
REPRESENTATIVE PAYEES FOR ADULTS
With respect to adults, representative payees are usually
appointed, because the claimant has a severe mental impairment which
prevents him or her from being able to handle funds. Often alcohol or
drug abuse is involved.
Many times a mentally ill claimant has difficulties finding a payee
to handle his funds, because a family member or friend cannot legally
be compensated for acting as representative payee. Furthermore, this
type of claimant usually is difficult to deal with, making the job of
representative payee even more undesirable. As a result, some persons
reluctantly agree to be representative payees, only to quit a few
months later due to badgering by the beneficiary. Other payees simply
turn over the check to the beneficiary without ensuring that the money
is used for appropriate purposes. Still others illegally convert a
portion of the beneficiary's check to their own use.
As an illustration of the perversity in the Representative Payee
Program, I once had a client who was a drug addict, alcoholic, and
prostitute. She was receiving benefits herself due to being HIV
positive. Her boyfriend was also an alcoholic and drug addict and was
awarded Disability Insurance Benefits due to a mental disorder. Social
Security proceeded to appoint his girlfriend as the payee. It is
needless to say what happened to the money.
In another case, a client was an alcoholic with a bipolar mental
disorder. He had a history of violence as well. He was found disabled
by an Administrative Law Judge, but the judge put in her decision that
the claimant's wife was not to be the payee. The claimant appealed to
the Social Security Administration, the order of the Administrative Law
Judge regarding the appointment of a representative payee, and the
Social Security Administration capitulated and allowed the wife to be
the payee. A few months later I received a call from the claimant's
father advising that his son was in jail on second degree murder
charges for murdering his wife. (Perhaps the judge was correct in being
concerned that the claimant would act violently if the wife tried to
perform her duties as a representative payee appropriately).
REPRESENTATIVE PAYEES FOR CHILDREN
Representative payees are always appointed for children. Usually
parents or guardians are appointed representative payees. The Social
Security Regulations has strict guidelines as to how SSI funds for
children are to be deposited and used. These guidelines are almost
never followed and the Social Security Administration almost never
enforces these regulations.
In the best case scenario, representative payees simply use the SSI
money as an additional resource to pay household expenses. In the worst
case scenario, the SSI money is used to pay for the parent's drug or
alcohol habit.
NON-PROFIT ORGANIZATIONS
On occasion, a claimant for Disability or SSI Benefits will not be
able to find anyone to act as his representative payee and a non-profit
organization is selected to act as his or her representative payee.
Under appropriate circumstances, these organizations can charge a small
fee to a beneficiary to act as representative payee, but usually don't.
The aforesaid non-profit organizations generally make sure the
claimant's funds are used for appropriate purposes and, because there
is no familiarity between the organization and the claimant, the
claimant is unable or less able to pressure the payee to improperly
turn over the funds.
SOLUTION
The Social Security Administration should attempt to use non-profit
organizations to act as payees, if at all possible. Funds should be
paid to these organizations to insure proper training and incentive to
do this. This funding can come from claimants or other resources.
CONCLUSION
The overpayment of benefits by the Social Security Administration
is apparently at an intolerable level. This is not due to rampant fraud
on the part of beneficiaries but, more often than not, due to
inadvertence or mistake on the part of the agency.
Possibly the Social Security Administration is underfunded to the
point that it is impossible to reduce the amount of overpayments.
Perhaps the agency is mismanaged and/or employees are under-trained.
This subcommittee may not be able to improve the integrity of the
Social Security Disability Program without help from the Appropriations
subcommittee and the President.
Regarding representative payees, it is essential that professional,
paid representative payees be appointed, where a beneficiary cannot
handle his or her funds. This would insure that funds are being used
for the purposes intended, and also, may reduce some of the
overpayments as well.
Thank you for your consideration of the above and the attached.
[Attachments are being retained in the Committee files.]
STATEMENT OF SUE HEFLIN, PRESIDENT, NATIONAL ASSOCIATION OF DISABILITY
EXAMINERS, SALEM, OREGON
Chairman Shaw and members of the Subcommittee, on behalf of the
National Association of Disability Examiners (NADE), thank you for
providing this opportunity to comment on efforts needed to ensure the
integrity of Social Security programs.
NADE is a professional organization whose mission is to advance the
art and science of disability evaluation. Our membership is strongly
committed to ensuring the integrity of the Social Security and
Supplemental Security Income (SSI) disability programs. Although the
majority of our members are employed in the state Disability
Determination Service (DDS) offices, our membership also includes
Social Security Headquarters staff and Field Office personnel,
attorneys, claimant advocates and physicians. It is the diversity of
our membership, combined with our ``hands on'' experience, which we
believe provides us with a unique understanding of the issues facing
the Social Security and SSI disability programs. We recognize the need
for ongoing vigilance to ensure the integrity of those programs. We
believe it is essential that the Administration and Congress provide
the resources necessary to administer these programs in such a way that
those who are entitled to disability benefits receive them and that
those who are not, do not.
While traditionally the Social Security retirement program has
received high grades in terms of public confidence and support, the
disability programs have not. In part this is due to lack of public
understanding of these programs, their more subjective nature and the
public perception that benefits are often fraudulently obtained and/or
are being misused.
We agree with the Social Security Advisory Board that,
``Consistency and fairness should be fundamental goals of the
disability programs.'' The integrity of these programs--and the
public's confidence in them--has been threatened by the significant,
poorly explained, differences in decisions between states and regions
and between different levels in the appeals process. The differences in
decisional outcomes between the DDSs and the Administrative Law Judges
has led to a pervasive public perception that ``everyone'' is denied by
the DDS and must request a hearing before an Administrative Law Judge
in order to receive the ``right'' decision. The difference in
decisional outcomes between states and regions has received a great
deal of press coverage in recent weeks. This, again, reduces public
confidence in the consistency and fairness of the disability programs.
NADE believes, and has stated in previous testimonies, that these
inconsistencies can be corrected only through maintenance of the
appropriate staffing levels, on-going, joint training for all decision
makers; uniform policies, binding on both the DDSs and the ALJs; and
clear and consistent feedback from quality assurance reviewers. To do
this, however, requires adequate resources. NADE believes that in order
to provide the resources necessary to efficiently administer the
disability program, SSA's administrative budget must be removed from
the discretionary spending cap.
To help ensure that benefits are not fraudulently obtained, NADE
strongly supports the Cooperative Disability Investigations (CDI) teams
currently operating in several states. These teams combine the
resources and talents of Office of Inspector General (OIG) special
agents with State and local law enforcement officers, and SSA and DDS
professionals to prevent individuals from fraudulently receiving
benefits. These efforts have successfully prevented millions of dollars
in benefits from being disbursed. While it is more efficient to prevent
benefits from being awarded than to try to obtain restitution once
benefits have been disbursed, it is equally important to stop
disability payments if those benefits have been fraudulently obtained.
The CDI units do both. NADE supports continued expansion of this
project which has thus far produced excellent results and is an
effective way to address disability fraud.
Accurate initial disability decisions, with benefits granted
expediently and appropriately, are essential to maintaining program
integrity and to restoring and maintaining public confidence in the
disability program. However, maintaining program integrity also
requires that individuals who are no longer disabled should not be
receiving benefits. We commend the Congress and SSA for the progress
made in reducing the backlog of continuing disability reviews (CDRs).
This initiative has resulted in significant program savings. It makes
sound financial sense for Congress to continue to fund the Continuing
Disability Reviews independently from other SSA programs so the CDR
backlog can be kept current. Unfortunately, however, staffing levels in
many DDSs are such that even with those funds, administrators must
choose between processing CDRs or processing initial claims.
It is essential that the Field Offices and the DDSs maintain
sufficient staff to process all current and future workloads. The
Social Security Advisory Board, in their February 2001 report,
Challenges For The New Congress And The New Administration, stated, ``.
. . under SSI the fact and degree of eligibility can change from month
to month based on changes in income, resources, individual living
arrangements and place of residence.'' It is important, both to ensure
program integrity and to restore and retain public confidence, that the
Social Security Field Offices have sufficient resources to monitor
those changes. In addition, because those receiving disability benefits
are among the country's most vulnerable population, it is equally
important that the Field Offices have sufficient resources to monitor
Representative Payees and to ensure that funds are being used in the
beneficiary's best interest.
The Social Security and Supplemental Security Income disability
programs are a vital part of America's ``safety net.'' It is essential
that the Congress appropriate sufficient resources to ensure that these
programs are administered efficiently, that fraud and abuse are
eliminated, that those who are entitled to benefits receive them as
early in the process as possible and that those benefits are used
appropriately.
We believe, however, that any initiatives by SSA to maintain public
confidence and ensure the integrity of its programs are hampered by the
fact that the Agency does not have a permanent, confirmed Commissioner.
Regardless of how competent or respected he or she is, an Acting
Commissioner lacks the authority to initiate change or to provide the
level of leadership needed to manage an agency as important as Social
Security. SSA needs a confirmed Commissioner, respected by both
parties, with broad management experience and a true understanding of
the critical issues the agency is facing.
Thank you for allowing NADE the opportunity to present this
statement for the record. We appreciate the oversight initiatives this
Subcommittee has consistently undertaken and remain committed to assist
in any efforts to improve the Social Security and Supplemental Security
Income disability programs.