[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]
H.R. 743, THE ``SOCIAL SECURITY PROTECTION ACT OF 2003''
SUBCOMMITTEE ON SOCIAL SECURITY
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FEBRUARY 27, 2003
Serial No. 108-31
Printed for the use of the Committee on Ways and Means
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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 SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana JIM MCDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona EARL POMEROY, North Dakota
JERRY WELLER, Illinois MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia
Allison H. Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
SUBCOMMITTEE ON SOCIAL SECURITY
E. CLAY SHAW, JR., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia BENJAMIN L. CARDIN, Maryland
J.D. HAYWORTH, Arizona EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri XAVIER BECERRA, California
RON LEWIS, Kentucky STEPHANIE TUBBS JONES, Ohio
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
C O N T E N T S
Advisories announcing the hearing................................ 2
Social Security Administration, Hon. James G. Huse, Jr.,
Inspector General.............................................. 7
U.S. General Accounting Office, Barbara D. Bovbjerg, Director,
Education, Workforce, and Income Security Issues; accompanied
by Dan Bertoni, Deputy Director................................ 11
American Bar Association, Nancy M. Coleman....................... 31
Consortium for Citizens with Disabilities, Marty Ford............ 35
National Association of Disability Representatives, and Insuring
Assistance, Inc., Arthur Kaufman............................... 43
National Organization of Social Security Claimants'
Representatives, Richard P. Morris............................. 48
SUBMISSIONS FOR THE RECORD
Association of Texas Professional Educators, Austin, TX,
Cannon, Frank O., North Hollywood, CA, statement................. 65
Herger, Hon. Wally, a Representative in Congress from the State
of California, statement....................................... 65
Montague, Sally, Bridge City, TX, statement...................... 66
National Association of Disability Examiners, Madison, WI,
Theresa B. Klubertanz, letter.................................. 66
National Council of Social Security Administration Field
Operations Locals, and American Federation of Government
Employees, Social Security General Committee, Witold
Skwierczynski, statement....................................... 67
National Education Association, statement........................ 70
National Senior Citizens Law Center, Los Angeles, CA, Gerald A.
McIntyre, statement and attachment............................. 72
Padgett, Barbara, Iowa Park, TX, statement....................... 77
Rutkoski, Joan, San Antonio, TX, joint statement................. 77
Sweeney, Jane, San Antonio, TX, joint statement (see listing
under Joan Rutkoski)........................................... 77
Texas Classroom Teachers Association, Austin, TX, statement...... 22
Texas Federation of Teachers, Austin, TX, Eric Hartman, statement 22
Texas State Teachers Association, Austin, TX, Jack Kelly,
Walters, Lynne, Auburn, ME, statement............................ 78
Wise, Ruth, San Antonio, TX, joint statement (see listing under
Joan Rutkoski)................................................. 77
Zwirn, Stephen, Fort Lauderdale, FL, statement................... 78
H.R. 743, THE ``SOCIAL SECURITY PROTECTION ACT OF 2003''
THURSDAY, FEBRUARY 27, 2003
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
The Subcommittee met, pursuant to notice, at 9:07 a.m., in
room B-318, Rayburn House Office Building, Hon. E. Clay Shaw,
Jr. (Chairman of the Subcommittee), presiding.
[The advisory and revised advisory announcing the hearing
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 20, 2003
Shaw Announces Hearing on H.R. 743, the ``Social Security Protection
Act of 2003''
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 H.R. 743, the ``Social
Security Protection Act of 2003.'' The hearing will take place on
Thursday, February 27, 2003, in room B-318 Rayburn House Office
Building, beginning at 10:00 a.m.
In view of the limited time available to hear witnesses, 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.
Despite the Social Security Administration's (SSA's) best efforts
to accurately pay and protect an estimated $500 billion in benefits
this fiscal year to be paid to over 50 million Social Security and
Supplemental Security Income (SSI) beneficiaries, certain Social
Security and SSI program activities continue to be subject to fraud and
Representative payees manage benefits for nearly 8 million Social
Security and SSI beneficiaries who cannot manage their own affairs.
While most representative payees are honest and conscientious, some
abuse the trust placed in them. The SSA Office of Inspector General has
reported that in a 2-year period, SSA identified over 2,400
representative payees who misused approximately $12 million in benefits
entrusted to their management. The Inspector General has also found 121
cases of SSI beneficiaries who acted as representative payees and
managed over $1.4 million in benefits, even though their own benefits
were suspended or terminated because they were fugitive felons or
parole or probation violators.
Furthermore, Social Security benefits are paid to beneficiaries who
are also fugitive felons and probation or parole violators. In August
1996, the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (P.L. 104-193) prohibited payment of SSI benefit payments
to such persons. The Congressional Budget Office estimates that
extending this prohibition to Social Security beneficiaries would save
$698 million in Social Security and Medicare costs over the next 10
In addition to these program vulnerabilities, SSA has a complex
disability application process that many claimants find difficult to
navigate without the help of a claimant representative. Unfortunately,
some claimants have difficulty obtaining legal representation. To
encourage attorneys to assist claimants, SSA will pay an attorney's
fees directly out of past-due Social Security benefits.
However, this service is not available for SSI claimants,
potentially limiting their access to representation. Also, the
Subcommittee has heard testimony that SSA's charges for processing
attorney fee withholding substantially reduce an attorney's net
revenue, and thereby discourage attorneys from representing claimants.
On February 12, 2003, Chairman Shaw introduced H.R. 743, the
``Social Security Protection Act of 2003,'' to address these and other
serious program vulnerabilities. The bill includes provisions to:
Give the SSA enhanced tools to protect individuals
from benefit misuse by representative payees and to hold
representative payees responsible for their actions,
Deny Social Security benefits to fugitive felons
and parole violators,
Expand the SSA's ability to punish and deter
perpetrators of fraud through new civil monetary penalties,
Prevent persons from misrepresenting themselves as
they provide Social Security-related services,
Protect Social Security employees from harm while
conducting their duties;
Help individuals with disabilities gain access to
Clarify and improve the Ticket to Work program and
other provisions that enable individuals with disabilities to
seek work opportunities.
In announcing the hearing, Chairman Shaw stated: ``The Social
Security Protection Act gives the SSA the enhanced tools it needs to
fight activities that drain program resources and undermine the
financial security of beneficiaries. This hearing will shine a bright
light on the need for this legislation and the importance of acting
now, before massive numbers of Baby Boomers start to qualify for
FOCUS OF THE HEARING:
The Subcommittee will hear testimony from witnesses explaining the
need for quick action and the extent to which the bill will give the
SSA the tools it needs to prevent misuse of benefits by representative
payees, prevent program fraud and abuse, help individuals with
disabilities gain access to representation, and aid individuals with
disabilities to return to work. The Subcommittee will also hear
testimony about the impact of the legislation's provisions on
beneficiaries, workers, and others.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Due to the change in House mail policy, any person or
organization wishing to submit a written statement for the printed
record of the hearing should send it electronically to
[email protected], along with a fax copy to
(202) 225-2610, by the close of business, Thursday, March 13, 2003.
Those filing written statements who wish to have their statements
distributed to the press and interested public at the hearing should
deliver their 200 copies to the Subcommittee on Social Security in room
B-316 Rayburn House Office Building, in an open and searchable package
48 hours before the hearing. The U.S. Capitol Police will refuse
sealed-packaged deliveries to all House Office Buildings.
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
1. Due to the change in House mail policy, all statements and any
accompanying exhibits for printing must be submitted electronically to
[email protected], along with a fax copy to
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a
total of 10 pages including attachments. Witnesses are advised that the
Committee will rely on electronic submissions for printing the official
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. Any statements must include a list of all clients, persons, or
organizations on whose behalf the witness appears. A supplemental sheet
must accompany each statement listing the name, company, address,
telephone and fax numbers of each witness.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov.
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
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
***NOTICE--CHANGE IN TIME***
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 26, 2003
Change in Time for Hearing on H.R. 743, the ``Social Security
Protection Act of 2003''
Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced the
Subcommittee hearing on H.R. 743, the ``Social Security Protection Act
of 2003,'' previously scheduled for Thursday, February 27, 2003, at
10:00 a.m., in room B-318 Rayburn House Office Building, will now be
held instead at 9:00 a.m. The hearing will end no later than 11:00 a.m.
All other details for the hearing remain the same. (See
Subcommittee Advisory No. SS-1, dated February 20, 2003)
Chairman SHAW. Good morning. Today, we consider the Social
Security Protection Act of 2003 (H.R. 743), which is a
bipartisan bill that was introduced earlier this month by
myself and Mr. Matsui, along with other Subcommittee Members,
and other Members of Congress. The Protection Act will give the
Social Security Administration (SSA) the additional tools
needed to fight activities that drain resources from Social
Security and undermine the fiscal security of the
beneficiaries. In past Subcommittee hearings, we received
testimony about individuals or organizations called
``representative payees,'' who are appointed by SSA to help
nearly 8 million beneficiaries manage their benefits when these
beneficiaries are not able to do so for themselves. While most
representative payees are conscientious and honest, there are
always a few who are not. Despite current precautions, some
representative payees' misuse the benefits entrusted to their
care. The Social Security Inspector General reported that
during a 3-year period ending in the late-1990s, over 2,400
representative payees were identified for misuse of about $12
million in benefits. This bill raises the standards for persons
and organizations serving as representative payees, and imposes
stricter regulations and monetary penalties for those who
mismanage the benefits.
This bill also picks up where the 1996 legislation left off
in ending benefit payments to those who have committed crimes.
While parole and probation violators, along with others trying
to flee the law, are denied Supplemental Security Income (SSI)
benefits, they are still allowed to receive Social Security
benefits. The Congressional Budget Office estimates that we
will pay over $500 million out of the trust fund to those
lawbreakers over the next 10 years. This is not right, and this
legislation will deny them benefits. The Protection Act also
provides tools to further safeguard Social Security programs.
It will help shield Social Security employees from harm while
conducting their duties, expand the Inspector General's ability
to stop perpetrators of fraud through new civil monetary
penalties, and it will prevent people from misrepresenting
themselves as they provide the Social Security-related
services. On top of this, the bill helps claimants legitimately
seeking benefits by improving the attorney fee withholding
process. This bill caps the current attorney fee assessment and
extends fee withholding to SSI claims, enabling more
individuals with disabilities to receive help navigating the
complex benefit application process.
In addition to helping individuals obtain benefits, the
bill enhances provisions of the Ticket-to-Work program. This
will enable the SSA to better test ways to help individuals
with disabilities return to work, and provide more individual
access to support and services to help them do so. It also
encourages more employers to hire individuals with disabilities
by expanding eligibility for the work opportunity tax credit.
Finally, the bill contains several provisions aimed at
correcting inequities in the law regarding benefit coverage and
receipt, as well as making technical corrections to the law.
One example is the provision adding Kentucky to the list of
States allowed to have what is called a ``divided retirement
system.'' This provision would allow certain police officers
under a newly created local government in Kentucky to
voluntarily choose Social Security coverage if they desire it,
without changing the retirement benefits of other current
employees who would rather pay into the public pension plan
instead of Social Security.
Our witnesses will explain why these changes in the law are
needed, how they would affect beneficiaries, and how they will
help ensure taxpayers' hard-earned payroll tax dollars and the
Social Security Trust funds are being spent accurately, wisely,
and in the best interest of the beneficiaries. There is one
provision in the bill that particularly embodies the tension
between protecting the trust funds and providing adequate
benefits. The provision implementing the U.S. General
Accounting Office (GAO) recommendation to bolster what is
called the ``last-day rule'' in applying the government pension
offset provision. There is no evidence that this last-day rule
was put into law simply to allow workers to bypass or avoid the
government pension offset by switching jobs, as has been
advertised by certain organizations. However, GAO determined
that such public employees are using it to avoid a reduction of
Social Security spouse and survivor benefits that all other
workers in both the public and the private sector experience.
While the government pension offset was intended to be an
equalizer, not a penalizer, many public workers believe it to
be unfair. The overall fairness of this offset must not be
given short shrift, and will be examined in detail in a
separate hearing by this Subcommittee in the near future.
Today, in the interest of time, and to ensure adequate
discussion of all the bill's provisions, it is important that
our witnesses limit their comments to the merits of the last-
day rule. Perhaps I should have limited the duration of this
opening statement; this thing is endless. Protecting Social
Security programs is a key responsibility of the SSA, and of
Congress, and this bill is a culmination of bipartisan efforts,
as well as the cooperation and support of the SSA and the
Social Security Inspector General. This is why the 107th
Congress' version of this bill, the Social Security Program
Protection Act of 2002 (H.R. 4070), passed the House by
overwhelming bipartisan vote of 425 to 0, and passed the
Senate, as amended, under unanimous consent. I hope today's
hearing will be the first step toward quickly enacting these
changes that are so necessary to protect the most vulnerable
beneficiaries, and prevent Social Security from wasting
precious dollars through fraud and benefits misuse. Do we have
an opening statement on the minority side?
Mr. BECERRA. Yes, Mr. Chairman.
Chairman SHAW. I yield to the gentleman from California.
Mr. BECERRA. Mr. Chairman, thank you very much. On behalf
of my colleague from California, Mr. Matsui, the Ranking Member
of the Subcommittee, and the other Members on the minority side
of the Subcommittee, I want to welcome the witnesses who are
here. It is good to see some of you again. Mr. Chairman, thank
you very much for the work that has been done on this
particular legislation, H.R. 743, the Social Security
Protection Act of 2003. It is great when we are able to move
forward in a bipartisan fashion, and try to address some of the
very real concerns, so that people who qualify for benefits
under the SSA's programs have a chance to see this happen. We
are very pleased that we could move forward. We are looking
forward to what the witnesses say. If the bill is able to move
forward on a suspension basis to the floor immediately from
here without having to work through Committee--we are very much
looking forward to the opportunity to work out any particular
changes to the bill that we might find productive as a result
of the testimony we will take today. We are very much looking
forward to working with the Chairman and all the Members of the
Subcommittee to move this forward on a rapid basis--to try to
make those changes, as necessary. With that said, Mr. Chairman,
thank you very much.
Chairman SHAW. Thank you. On our first panel this morning,
we have, from the SSA, the Honorable James G. Huse, who is the
Inspector General; and Barbara Bovbjerg, who is the Director of
Education, Workforce, and Income Security, at GAO; and she is
accompanied by Mr. Dan Bertoni, the Deputy Director. Mr. Huse,
you may proceed as you see fit--and the testimony of all the
witnesses this morning will be placed in full in the record.
STATEMENT OF THE HONORABLE JAMES G. HUSE, JR., INSPECTOR
GENERAL, SOCIAL SECURITY ADMINISTRATION
Mr. HUSE. Thank you, Mr. Chairman, and Members of the
Subcommittee; good morning. I welcome the opportunity to
testify today about the need for legislation to protect the
integrity of the SSA's vital programs, and the representative
payee program in particular. In the interest of time, let me
ask that my full statement be entered into the record, and I
will summarize briefly. There are currently about 5.4 million
representative payees who manage benefits for about 7.6 million
beneficiaries. As I have previously testified before this
Subcommittee, not all representative payees properly manage the
benefits entrusted to them. Some misuse these funds, and the
effect on those beneficiaries is catastrophic. We have worked
closely with your staff, and the result was a legislative
proposal that provides greater oversight of representative
payees, as well as additional civil and administrative
penalties to allow my office to combat this problem. This
bipartisan legislation came close to passage last session. I am
pleased, Mr. Chairman, that you have reintroduced this
important legislation in this session.
Legislation is needed to ensure the integrity of the
representative payee process at several stages: first, in the
selection of a representative payee; second, in the monitoring
and oversight; third, in proper accounting when funds are
misused; and, fourth, in measures designed to punish and deter
such misuse. I believe this legislation makes important strides
in each of these areas. For example, in October 2002, we issued
a report that identified 121 individuals whose own SSI benefits
were stopped by SSA because they were fugitive felons, or
parole or probation violators. These individuals were also
serving as representative payees for others. As you know,
current SSA policy permits fugitive felons and parole or
probation violators to serve as representative payees. We also
stated in our report that we were working on an additional
audit concerning the number of representative payees who were
fugitive felons, regardless of whether they were receiving SSI
payments. This audit is currently in draft with the SSA.
Once the selection of an appropriate representative payee
has been completed, it is then incumbent upon SSA to adequately
monitor that individual or organization to ensure that the
benefits are being used, as intended, to aid the beneficiary.
The bill, H.R. 743, improves the oversight function, and
further provides much-needed penalties for deliberate misuse.
We have found the Civil Monetary Penalty (CMP) program to be an
effective tool against program fraud. In many instances, H.R.
743 addresses this concern and adds CMPs to particularly
troubling areas. I also want to add that the extension of
protection for Social Security employees conducting Social
Security's business is an important piece of H.R. 743. This
protection is the same as is afforded those employees in the
Internal Revenue Service, and it is a critical need. I really
believe that it is a very key part of this legislation. In sum,
this legislation will give us some key tools to do a better job
in many areas. Finally, I believe the extension of the fugitive
felon provisions to those who receive Title II benefits is a
key piece in the effort already made in the Welfare Reform Act
1996 (P.L. 104-193) to deny benefits to those who are fleeing
from justice. With that, I will answer any questions that you
might have. Thank you.
[The prepared statement of Mr. Huse follows:]
Statement of the Honorable James G. Huse, Jr., Inspector General,
Social Security Administration
Good morning, Chairman Shaw, Ranking Member Matsui, and Members of
the Subcommittee on Social Security. I welcome the opportunity to
testify today about the need for legislation to protect the integrity
of the Social Security Administration's (SSA) vital programs.
THE REPRESENTATIVE PAYEE PROGRAM
SSA provides Social Security and Supplemental Security Income (SSI)
benefits to the most vulnerable members of our society--the young, the
elderly, and the disabled. Congress granted SSA the authority to
appoint representative payees to receive and manage these
beneficiaries' payments. There are currently about 5.4 million
representative payees who manage benefits for about 7.6 million
A representative payee may be an individual or an organization.
Individual representative payees are typically relatives of the
beneficiary, who are entrusted to use such funds in the best interest
of the beneficiary. Although individual representative payees may at
times provide services to multiple beneficiaries, they are prohibited
from charging fees for such services.
Organizational representative payees, on the other hand, are
typically large institutions that provide care and treatment for
beneficiaries residing in such institutions (e.g., Department of
Veterans Affairs hospitals, State psychiatric institutions, and
extended care facilities). Other types of organizational representative
payees may include community groups, charitable organizations, and
other nonprofit agencies. The Social Security Act allows qualified and
authorized organizational representative payees to collect a fee for
providing representative payee services.
As I have previously testified before this Subcommittee, not all
representative payees properly manage benefits entrusted to them. I
have previously recounted several instances in which a representative
payee had misused funds intended for a beneficiary in their charge. The
effect on the lives of the beneficiaries in those cases was
catastrophic. At that hearing, both SSA and my office identified
problems and proposed solutions. We worked closely with your staff, and
the result was a legislative proposal that provides greater oversight
of representative payees as well as additional civil and administrative
penalties to allow my office to combat this problem. This bi-partisan
legislation came close to passage last session and I am pleased, Mr.
Chairman, that you have reintroduced this important legislation this
As we have pointed out in audit reports and prior testimony,
legislation is needed to ensure the integrity of the representative
payee process at several stages: selection of a representative payee,
monitoring and oversight, proper accounting when funds are misused, and
measures designed to punish and deter such misuse. I believe this
legislation makes important strides in each of these areas.
At the outset, closer attention to the initial selection process
can resolve many potential problems before they arise, so it is
critical that SSA more thoroughly screens potential representative
payees. In October 2002, we issued a report that identified 121
individuals whose own Supplemental Security Income (SSI) benefits were
stopped by SSA because they were fugitive felons or parole or probation
violators. These individuals were also serving as representative payees
for others. As you know, current SSA policy permits fugitive felons and
parole or probation violators to serve as representative payees. We
also stated that we were working on an additional audit concerning the
number of representative payees who were fugitive felons regardless of
whether they were receiving Supplemental Security Income payments. This
audit is currently in draft with the Agency.
Once an appropriate representative payee is selected, it is then
incumbent upon SSA to adequately monitor that individual or
organization to ensure that the benefits are being used as intended to
aid the beneficiary.
In an audit report entitled ``Nonresponder Representative Payee
Alerts for Supplemental Security Income Recipients'' (September 23,
1999) my office recommended that SSA develop procedures for employees
to redirect benefit checks to field offices (and require representative
payees to provide the accounting forms before releasing the checks) in
instances where other attempts to obtain the required forms have been
unsuccessful. SSA agreed with this recommendation however,
implementation is pending until the legislative changes contained in
H.R. 743 are approved. Our most recent financial audits of
representative payees continue to show that the receipt and retrieval
of annual accounting reports remain a problem. Over the past 2 years,
we have requested 474 representative payee reports, but SSA has been
able to retrieve only 228, less than 50 percent.
Even with improved oversight, there will always be representative
payees unable to resist the temptation to misuse beneficiary funds.
When this does occur, two things should happen: the beneficiary's funds
should be reissued by SSA and the representative payee who misused them
should be liable to repay them. Unfortunately, under current law, SSA
has authority to reissue benefits misused by a representative payee
only if it finds that it has been negligent to investigate or monitor a
representative payee and this results in the misuse of benefits. Not
only does this withhold benefits from those who need (and deserve)
them, but a finding of negligence can have a catastrophic effect on any
ongoing criminal investigation of the representative payee. For
example, in the Aurora Foundation case, had SSA made a determination of
negligence, the United States Attorney indicated that his ability to
prosecute would have been seriously impaired. This legislation
eliminates the requirement that benefits can be reissued only upon a
finding of SSA negligence, by requiring SSA to reissue benefits, even
absent a finding of negligence. Further, this legislation makes the
representative payee liable for the amount of benefits misused.
Once the beneficiary's needs have been addressed, attention then
turns to punishing and deterring misconduct by representative payees.
We have found the Civil Monetary Penalty (CMP) program to be an
effective tool against program fraud, in other areas. Unfortunately, as
we have reviewed potential cases for enforcement under the CMP program,
we have found that the current CMP statutes do not adequately address
some of the most egregious situations involving representative payees.
To remedy this, we proposed two amendments to the CMP statutes, both of
which are included in H.R. 743.
The first is amending Section 1129 of the Social Security Act to
allow the imposition of CMPs for the willful conversion of a
beneficiary's funds by a representative payee. For example, the
benefits of a disabled child whose mother (as a minor herself) could
not serve as her son's representative payee, were instead paid to the
father. The father, who did not live with the child and the child's
mother converted more than $10,000 of his child's benefits to his own
use. The United States Attorney declined to prosecute the father
criminally, and the case was referred to my office for consideration
under the CMP statutes. Unfortunately, the current CMP statutes do not
provide for penalties to be imposed for conversion of benefits by
representative payees. H.R. 743 provides this authority.
These provisions provide much needed legislative relief to improve
the integrity of SSA's Representative Payee Program.
ADDITIONAL CMP AUTHORITIES
In addition to the CMP authority concerning representative payees,
H.R. 743 closes a loophole that has long existed. Under current law,
there is no explicit authority to impose CMPs against individuals who
fraudulently obtain benefits by withholding information from SSA,
rather than by making an affirmative false statement. The ability to
pursue those who, for example, continue to receive and use the benefits
of a deceased relative, provides us with a new and important tool for
I know there has been some concern expressed as to the reach
intended by this amendment. I can assure you that my office is aware
that many of the individuals with whom we deal have physical and/or
mental impairments, may be elderly, or are otherwise incapable of
forming fraudulent intent. We do not pursue such individuals under
existing authorities, and will not do so should this new authority be
enacted. We will, however, enthusiastically pursue able-minded and
able-bodied individuals who purposely conceal information from SSA in
order to continue wrongfully receiving SSA benefits.
In addition to the amendments to Section 1129 of the Social
Security Act (Act), described above, H.R. 743 also amends the other CMP
provision of the Act, Section 1140. Section 1140 prohibits the misuse
of SSA's program words, letters, symbols, or emblems, in advertisements
or other communications, and H.R. 743 amends this statute in two ways:
First, Section 1140 would be amended to require entities to clearly
state in their mailing or solicitation that the product or service that
they propose to provide for a fee is one which is available directly
from SSA free of charge;
Second, the list of prohibited terms in Section 1140 would be
expanded to include many of the terms that seniors and others commonly
associate with Federal benefits, and SSA programs and benefits in
These amendments will further bolster our successful CMP program
and enable us to better protect America's seniors and other vulnerable
FRAUDULENT CONCEALMENT OF WORK ACTIVITY
We believe that an individual who is receiving Social Security
disability benefits should not get credit for a trial work period when
the individual has fraudulently concealed the work from SSA. I will
briefly touch on the problem caused by the existence of the trial work
period as described to me in a letter from a United States Attorney.
She wrote to advise me that if SSA did not change its trial work period
policy for individuals being investigated and prosecuted for fraud, it
could have a serious impact on whether her office took our future cases
where SSA granted a trial work period. The United States Attorney noted
that her office had several such cases pending at the time of her
In the case that prompted her letter, the suspect received Social
Security disability benefits. While receiving these benefits, he began
working in the construction industry under an alias using another
person's Social Security number (SSN) and failed to inform SSA that he
was working. SSA allowed the suspect a trial work period in the
construction industry effectively eliminating the overpayment.
In another recent case, SSA gave an individual, under
investigation, credit for a trial work period even though he worked as
a truck driver under one SSN while receiving benefits under a second
We have long sought a legislative amendment to eliminate this
unintended windfall for those who are convicted in Federal court of
fraudulently concealing work activity from the Commissioner, and H.R.
743 provides such relief.
INTERFERENCE WITH SSA FUNCTIONS AND PROTECTION OF SSA EMPLOYEES
Like its predecessor, H.R. 743 would also amend existing law to
provide a criminal penalty for corrupt or forcible interference with
the administration of the Social Security Act. It would impose a fine
or imprisonment for interfering with SSA employees acting in their
official capacities. It broadly defines an employee as including any
SSA officer, employee or contractor, State Disability Determination
Service employee, or any individual designated by the Commissioner. On
a daily basis, SSA employees interact with members of the public who
are undergoing times of great stress, such as after the death or
disabling injury of a loved one. This exposes our employees to an
increased risk of danger. Enactment of this provision would provide
clear authority to our office to investigate any incidents that do
JUDICIAL RESTITUTION AUTHORITY
Under Section 208 of the Social Security Act, a court may find an
individual guilty of stealing Social Security benefits, but cannot, as
part of that individual's criminal sentence, order the individual to
repay the stolen benefits. Your proposed legislation would close this
EXPANSION OF FUGITIVE FELON AUTHORITIES
We have always believed that criminals fleeing from justice should
not have the support of Federal benefits. Therefore, we support H.R.
743's expansion of the Title XVI fugitive felon provisions to the Title
Mr. Chairman, we have called for a number of the measures embodied
in H.R. 743 for several years, and I am very pleased to see such strong
legislation come out of the starting gate so early in the session.
I am honored to contribute to the ongoing discussion of how we may
protect Social Security programs. H.R. 743 is a major step in closing
several loopholes that currently exist and will provide greater
oversight for representative payees. This along with the enhanced
criminal and civil penalties will help to provide greater protection to
some of our country's most vulnerable. I applaud your efforts and
pledge my support to work with you in the future. Thank you.
Chairman SHAW. Thank you, Mr. Huse. Ms. Bovbjerg?
STATEMENT OF BARBARA D. BOVBJERG, DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING
OFFICE; ACCOMPANIED BY DAN BERTONI, DEPUTY DIRECTOR
Ms. BOVBJERG. Thank you, Mr. Chairman, and Members of the
Subcommittee. Thank you for inviting me here today. I am here
to discuss the Social Security system's government pension
offset exemption, a provision of the program that is addressed
in H.R. 743, and in the President's 2004 budget. The government
pension offset was enacted to equalize the treatment of workers
covered by Social Security, and those with government pensions
not covered by Social Security. The government pension offset
prevents workers from receiving a full Social Security spousal
benefit on top of a pension earned from government employment
not covered by Social Security. However, the law provides an
exemption from the government pension offset if the
individual's last day of work is in a position covered by both
a public pension system and Social Security. In these cases,
the government pension offset will not apply, and the Social
Security spousal benefits will not be reduced. Last year, Mr.
Chairman, you asked us to assess the extent to which
individuals retiring from jobs not covered by Social Security
are using the so-called, last-day exemption. Today, you have
asked that I summarize our findings from that report.
First, let me say that no one really knows the extent to
which the government pension offset exemption is being used.
There are no central data on the State and local government
retirement plans that do not participate in the Social Security
system and could seek to use the exemption. However, we
identified two States--Texas and Georgia--in which the
exemption is being used, and believe that this use could
readily become more widespread. Let me speak to what we found
in these two States. In Texas, almost 4,800 teachers worked in
Social Security-covered positions for short periods to qualify
for the exemption. They worked typically for just a single day
in non-teaching positions, primarily clerical, maintenance, and
food service. Most were paid about $6 an hour for these 1-day
positions, meaning that Social Security payroll taxes for the
day would be about $3. We saw this 1-day approach being touted
on websites, in seminars, in newspapers, and believe it is
becoming a routine part of individuals' retirement planning.
One university we visited is scheduling these government
pension offset work days through 2005.
In Georgia, we found much less activity. About 24 teachers
not covered by Social Security--so we are talking about a
relatively low number--went to work for approximately 1 year in
another teaching position that is covered by Social Security.
Officials there told us that the teachers' interest in
obtaining last-day coverage helped the school system address
teacher shortages in certain school districts that happen to
offer coverage. In the course of our work, we found other
States where such arrangements appear to be possible--that is,
the pension systems do not participate in Social Security but
include such coverage for some subsets of employees. In our
view, it is just a matter of time before the approach used in
Texas becomes relatively widespread. Let me now turn to the
potential impact on the Social Security trust funds. We came up
with a very rough estimate, based on an average government
pension offset amount and average retiree life expectancies--
and just for the individuals we found in Texas and Georgia, so
just a little over 4,800 people who have already qualified for
the exemption--the cost would be about $450 million. That is
$450 million of benefit payments by trust funds whose financial
position is precarious--a situation about which I know I don't
need to remind this Subcommittee.
That number assumes that no more individuals take action to
invoke the exemption. If the Texas approach grows as expected,
and if other States and localities begin to help their
employees to qualify for the exemption, the numbers will be
much, much larger. We were also asked to provide options for
addressing this loophole, and our report identifies two. One
option is a proportional approach, wherein people who spend a
certain percentage of their career in a position covered by
Social Security could be exempt from the government pension
offset. This option has the advantage of being finely
calibrated, but it could be administratively burdensome, and it
would be difficult to get the data necessary to make the
calculation. The simpler approach which is proposed in H.R. 743
is to change the last-day provision to a longer minimum time
period. Although this may be less fine-tuned than the other
approach, it would require only small changes at the
administrative end. In conclusion, the government pension
offset loophole I have described raises issues of fairness and
equity in the Social Security program. The ability to earn
benefits with contributions as little as $3, when others are
contributing throughout their working lifetimes, undermines
confidence in a program that Americans rely on. Although taking
advantage of this loophole is legal, the institutionalized use
of it is particularly troublesome, and we urge the Congress to
take action. That concludes my statement, Mr. Chairman. Mr.
Bertoni and I are here to answer any questions.
[The prepared statement of Ms. Bovbjerg follows:]
Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and
Income Security Issues, U.S. General Accounting Office; accompanied by
Dan Bertoni, Deputy Director
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss Social Security's
Government Pension Offset (GPO) exemption. As you know, the GPO was
enacted in 1977 to equalize the treatment of workers covered by Social
Security and those with government pensions not covered by Social
Security. In short, the GPO prevents workers from receiving a full
Social Security spousal benefit on top of a pension earned from
government employment not covered by Social Security.1
However, the law provides an exemption from the GPO if an individual's
last day of state/local government employment is in a position that is
covered by both Social Security and their state/local pension system.
In these cases, the GPO will not apply, and Social Security spousal
benefits will not be reduced.
\1\ Currently the reduction in spousal benefits is two-thirds of
the amount of their public pension.
Last year, you asked us to (1) assess the extent to which
individuals retiring from jobs not covered by Social Security may be
transferring briefly to covered jobs in order to avoid the GPO, and (2)
estimate the impact of such transfers on the Social Security Trust
Fund. To complete our work, we first reviewed the GPO's legislative
history and government reports documenting the purpose of the offset
and the Social Security Administration's (SSA) policies and procedures
for administering it. We also performed limited work with associations,
researchers, and retirement system officials in 28 states.2
Finally, we performed audit work in Texas and Georgia, two of the
states where we identified use of the last-day exemption. On August 15,
2002, we reported to you on the results of our work.3 Today
I will discuss the findings of our review.
\2\ States were selected either because they were authorized to
operate retirement systems with both covered and noncovered positions
or because their state and local government plans had a mix of covered
and noncovered positions, thus offering the greatest potential for use
of the last-day exemption.
\3\ See U.S. General Accounting Office, Social Security
Administration: Revision to the Government Pension Offset Exemption
Should Be Considered, GAO-02-950 (Washington, D.C.: Aug. 15, 2002).
In summary, because no central data exists on use of the GPO
exemption by individuals in approximately 2,300 state and local
government retirement plans nationwide, we could not definitively
confirm that this practice is occurring in states other than Texas and
Georgia. In those two states, 4,819 individuals had performed work in
Social Security-covered positions for short periods to qualify for the
GPO last-day exemption. In Texas, teachers typically worked a single
day in nonteaching positions covered by Social Security, such as
clerical or janitorial positions. In Georgia, teachers generally agreed
to work for approximately 1 year in another teaching position in a
school district covered by Social Security. Officials in both states
indicated that use of the exemption would likely continue to grow as
awareness increases and it becomes part of individuals' retirement
planning. For the cases we identified, increased long-term benefit
payments from the Social Security Trust Fund could be about
$4504 million over the long term and would likely rise
further if use of the exemption grows in the states we visited and
spreads to others. SSA officials acknowledged that use of the exemption
might be possible in other state and local government retirement plans
that include both those positions covered by Social Security and those
\4\ This estimate was calculated by multiplying the number of last-
day cases reported in Texas and Georgia (4,819) by SSA data on average
annual offset amount ($4,800) and the average life expectancy upon
receipt of spousal benefits (19.4 years).
The GPO ``loophole'' raises fairness and equity concerns for those
receiving a Social Security pension and are currently subject to the
spousal benefit offset. In the states we visited, individuals with a
relatively minimal investment of work time and Social Security
contributions can gain access to potentially many years of full Social
Security spousal benefits. The last-day exemption could also have a
more significant impact if the practice grows and begins to be adopted
by other states and localities. Considering the potential for abuse,
our report presented options for revising the GPO exemption, such as
changing the last-day provision to a longer minimum time period or
using a proportional approach based on the number of working years
spent in covered and noncovered employment for determining the extent
to which the GPO applies.
The Social Security Act requires that most workers be covered by
Social Security benefits. Workers contribute to the program via wage
deductions. State and local government workers were originally excluded
from Social Security.
Starting in the 1950s, state and local governments had the option
of selecting Social Security coverage for their employees or retaining
their noncovered status. In 1983, state and local governments in the
Social Security system were prohibited by law from opting out of it. Of
the workers in the roughly 2,300 separate state and local retirement
plans nationwide, about one-third are not covered by Social Security.
In addition to paying retirement and disability benefits to covered
workers, Social Security also generally pays benefits to spouses of
retired, disabled, or deceased workers. If both spouses worked in
positions covered by Social Security, each may not receive both the
benefits earned as a worker and the full spousal benefit; rather the
worker receives the higher amount of the two. In contrast, until 1977,
workers receiving pensions from government positions not covered by
Social Security could receive their full pension benefit and their full
Social Security spousal benefits as if they were nonworking spouses. At
that time, legislation was enacted creating the GPO,5 which
prevented workers from receiving a full spousal benefit on top of a
pension earned from noncovered government employment.6
However, the law provides an exemption from the GPO if an individual's
last day of state/local employment is in a position that is covered by
both Social Security and the state/local government's pension
system.7 In these cases, the GPO will not be applied to the
Social Security spousal benefit.
\5\ Public Law 95-216, Section 334 (1977).
\6\ Currently, the reduction in spousal benefits is two-thirds of
the amount of their public pension.
\7\ Exemption due to ``The Last Day of Employment'' Covered Under
Social Security--State/Local or Military Service Pensions (SSA's
Program Operations Manual System, GN 02608.102).
Nationwide Extend of Transfers to Avoid the GPO Unknown, but Expected
While we could not definitively confirm the extent nationwide that
individuals are transferring positions to avoid the GPO, we found that
4,819 individuals in Texas and Georgia had performed work in Social
Security-covered positions for short periods to qualify for the GPO
last-day exemption.8 Use of the exemption may grow further
as the practice becomes more rapidly institutionalized and the aging
baby-boom generation begins to retire in larger numbers. SSA officials
also acknowledged that use of the exemption might be possible in some
of the approximately 2,300 state and local government retirement plans
in other states where such plans contain Social Security-covered and
\8\ Technically, individuals could have used this exemption since
its passage in 1977. However, nearly all of the transfers we identified
in Texas and Georgia occurred in the last several years.
Use of GPO Exemption in Texas is Growing
Officials in Texas reported that 4,795 individuals at 31 schools
have used or plan to use last-day employment to take advantage of the
GPO exemption. In 2002, one-fourth (or 3,521) of all Texas public
education retirees took advantage of this exemption.
In most schools, teachers typically worked a single day in a
nonteaching position covered by Social Security to use the exemption.
Nearly all positions were nonteaching jobs, including clerical,
food service, or maintenance. Most of these employees were paid about
$6 per hour. At this rate, the Social Security contributions deducted
from their pay would total about $3 for the day. We estimate that the
average annual spousal benefit resulting from these last-day transfers
would be about $5,200.
School officials also reported that individuals are willing to
travel to take these jobs--noting one teacher who traveled 800 miles to
use the last-day provision. Some schools reported that they charge a
processing fee, ranging from $100-$500, to hire these workers. These
fees are a significant source of revenue--last year one school district
collected over $283,000 in fees.
Our work shows that use of the exemption in Texas has increased
since 1990, which was the earliest use reported to us.
In one school district, for example, officials reported that use of
the exemption grew from one worker in 1996 to 1,050 in 2002. Another
school district that began offering last-day employment in 2002 had
received over 1,400 applications by June of that year from individuals
seeking to use the exemption.
Use of the exemption is likely to grow further, according to trends
in Texas teacher retirements and information from school officials.
There were about 14,000 teacher retirements in 2002, as opposed to
10,000 in 2000. At one university we visited, officials have scheduled
workdays for imminent retirees, through 2005, to work in covered
employment, an indication of the rapid institutionalization of this
practice. The GPO exemption is also becoming part of teachers' regular
retirement planning process as its availability and use is publicized
by teaching associations and financial planners (via Web sites,
newspapers, seminars, etc.) and by word-of-mouth. One association's Web
site we identified lists the names and telephone numbers of school
officials in counties covered by Social Security and how to contact
those officials for such work. A financial planner's Web site we
identified indicated that individuals who worked as little as 1 day
under a Social Security-covered position to quality for the GPO
exemption could earn $150,000 or more in benefits over their lifetime.
In Georgia, Workers Obtain GPO Exemption by Transferring Positions
In Georgia, officials in one district reported that 24 individuals
have used or plan to use covered employment to take advantage of the
GPO exemption. Officials told us that teachers generally agreed to work
for approximately 1 year in another teaching position in a school
district covered by Social Security to use the GPO exemption. These
officials told us that they expect use of the exemption to increase as
awareness of it grows.
According to Georgia officials, their need to address a teacher
shortage outweighs the risk to individual schools of teachers leaving
after 1 year. Officials in fast-growing school systems reported they
needed to hire teachers even if they only intended to teach for 1 year.
However, some schools reported that they have had teachers leave
shortly after being hired. For example, in one district, a teacher
signed a 1-year contract to teach but left after 61 days, a time
sufficient to avoid the spousal benefit reduction. In some of the
applications for school employment we reviewed, individuals explicitly
indicated their desire to work in a county covered by Social Security
in order to obtain full Social Security spousal benefits.
Tansfers to Avoid the GPO May be Possible Nationwide
Use of the GPO exemption might be possible in other plans
nationwide. SSA officials told us that some of the approximately 2,300
state and local government retirement plans--where such plans contain
Social Security-covered and noncovered positions--may offer individuals
the opportunity to use the GPO exemption. Officials representing state
and local government retirement plans in other states across the
country also told us that their plans allow covered and noncovered
Social Security positions, making it possible for workers to avoid the
GPO by transferring from one type of position to the other. For
An official in a Midwestern state whose plan covers
all state government employees, told us that it is possible for
law enforcement personnel (noncovered) to take a covered job in
the state insurance bureau (covered) just before retiring.
In a southern state with a statewide retirement
plan for school employees, teachers and other school
professionals (noncovered) can potentially transfer to a job in
the school cafeteria (covered) to avoid the GPO.
A retirement system official from a north central
state reported hearing of a few cases where teachers had taken
advantage of the exemption by transferring to jobs in other
school districts covered by Social Security.
Finally, in a western state with a statewide
retirement plan, workers could move from one government agency
(noncovered) to a position in another agency (covered).
Cost of Transfers to the Social Security Trust Fund is Growing, but
Options Exist to Address Potential Abuse
The transfers to avoid the GPO we identified in Texas and Georgia
could increase long-term benefit payments from the Social Security
Trust Fund by about $450 million.9 We calculated this figure
by multiplying the number of last-day cases reported in Texas and
Georgia (4,819) by SSA data on the average annual offset amount
($4,800) and the average retirees life expectancy upon receipt of
spousal benefits (19.4 years). We believe that these estimated payments
would likely increase as use of the exemption grows.
\9\ This estimate may over/under estimate costs due to the use of
averages, the exclusion of inflation/cost-of-living/net present value
adjustments, lost investment earnings by the Trust Funds, and other
factors that may affect the receipt of spousal benefits.
Our prior report identified two options for addressing potential
abuses of the GPO exemption. The first option, as proposed in H.R. 743,
is to change the last-day provision to a longer minimum time period.
This option would require only small changes to administer and would be
less burdensome than other methods for SSA to administer. Also, this
option has precedent. Legislation in 1987 required federal employees
transferring between two federal retirement systems, the Civil Service
Retirement System (CSRS) and Federal Employees Retirement System
(FERS), to remain in FERS for 5 years before they were exempt from the
GPO. We found that most of the jobs in Texas last for about 1 day, so
extending the time period might eliminate many of the exemption users
The second option our report identified is to use a proportional
approach to determine the extent to which the GPO applies. Under this
option, employees who have spent a certain proportion of their working
career in a position covered by Social Security could be exempt from
the GPO. This option may represent a more calibrated approach to
determining benefits for individuals who have made contributions to the
Social Security system for an extended period of their working years.
However, SSA has noted that using a proportional approach would take
time to design and would be administratively burdensome to implement,
given the lack of complete and reliable data on noncovered Social
The GPO ``loophole'' raises fairness and equity concerns for those
receiving a Social Security pension and currently subject to an offset
of their spousal Social Security benefits. The exemption allows a
select group of individuals with a relatively small investment of work
time and only minimal Social Security contributions to gain access to
potentially many years of full Social Security spousal benefits. The
practice of providing full spousal benefits to individuals who receive
government pensions but who made only nominal contributions to the
Social Security system also runs counter to the nation's efforts to
address the solvency and sustainability of the Social Security program.
Based on the number of people reported to be using the loophole in
Texas and Georgia this year, the exemption could cost the Trust Fund
hundreds of millions of dollars. While this currently represents a
relatively small percentage of the Social Security Trust Fund, costs
could increase significantly if the practice grows and begins to be
adopted by other states and localities.
Considering the potential for abuse of the last-day exemption and
the likelihood for its increased use, we believe timely action is
needed. Accordingly, our August 2002 report includes a Matter for
Congressional consideration that the last-day GPO exemption be revised
to provide for a longer minimum time period. This action would provide
an immediate ``fix'' to address possible abuses of the GPO exemption
identified in our review.
Mr. Chairman, this concludes my prepared statement, I will be happy
to respond to any questions you or other members of the Subcommittee
GAO Contributions and Acknowledgments
For information regarding this testimony, please contact Barbara D.
Bovbjerg, Director, Education, Workforce, and Income Security Issues,
on (202) 512-7215. Individuals who made key contributions to this
testimony include Daniel Bertoni, Patrick DiBattista, Patricia M.
Bundy, Jamila L. Jones, Daniel A. Schwimer, Anthony J. Wysocki, and
Jill D. Yost.
Related GAO Products
Social Security Administration: Revision to the Government Pension
Offset Exemption Should Be Considered. GAO-02-950
Washington, D.C.: August 15, 2002.
Social Security Reform: Experience of the Alternate Plans in Texas.
GAO/HEHS-99-31, Washington, D.C.: February 26, 1999.
Social Security: Implications of Extending Mandatory Coverage to State
and Local Employees. GAO/HEHS-98-196 Washington, D.C.:
August 18, 1998.
Social Security: Better Payment Controls for Benefit Reduction
Provisions Could Save Millions. GAO/HEHS-98-76 Washington,
D.C.: April 30, 1998.
Federal Workforce: Effects of Public Pension Offset on Social Security
Benefits of Federal Retirees. GAO/GGD-88-73 Washington,
D.C.: April 27, 1988.
Chairman SHAW. Thank you very much. Mr. Hayworth?
Mr. HAYWORTH. Mr. Chairman, I thank you. I would like to
thank our witnesses this morning. Mr. Huse, to listen to what
has transpired about payees misusing beneficiaries' funds is
nothing short of catastrophic in terms of not only personal
situations but also public policy. The Protection Act that we
are discussing includes provisions to stop fugitive felons and
probation and parole violators from becoming representative
payees, and requiring SSA to increase its oversight of these
payees. Could you give us some examples of benefit misuse in
the past that might have been avoided if we had the provisions
of this bill in place in law right now?
Mr. HUSE. Specific anecdotal examples I am not able to
provide right now, Mr. Hayworth, because I simply do not have
the memory. I see many cases day after day dealing with
representative payee issues. There is not one of them that is
easy to read, because the effect on the beneficiaries is
devastating. Last year, in fiscal 2002, we opened 565 separate
investigations of representative payee abuse. Of the 565, 547
were individual representative payees, and 18 were
organizational representative payees, but in all of these
instances, there is always some other horrific crime that is
involved. Sometimes it is abuse. Sometimes it is malnutrition
or other aspects of abuse. In any case, in those 565
investigations, we arrested 98 people and obtained 109 Federal
indictments. The fraud we cleared as a result of this was over
$5.5 million. I think those numbers speak volumes about the
fact that this is a really serious crime.
Mr. HAYWORTH. In the testimony you provided for us, it says
that although there are criminal penalties associated with
misuse of benefits by representative payees, the U.S. attorney
has the option, and could decline to prosecute. Why would a
U.S. attorney refuse to prosecute? I am interested in this
because H.R. 743 creates a CMP to punish those unscrupulous
individuals who misuse benefits. To what extent does a CMP make
it easier to punish these wrongdoers?
Mr. HUSE. That is a great question. I think it is a
misconception among all of us that our U.S. Department of
Justice can prosecute every single criminal instance that comes
to it. Obviously, like every other function in government,
there is more work than there is capacity, and it is a capacity
issue for U.S. attorneys. They are just as outraged as any of
us are by these crimes, but they simply do not have the
capacity to take all of the crimes we bring to them. So, this
new tool would give us the opportunity at least to impose CMPs
against these people who betray the trust of the people they
care for, as well as the trust of the SSA in delivering this
key service. So, I think that kind of gives you a sense of why
CMPs help us.
Mr. HAYWORTH. I thank you, sir; and again, thanks to the
panel. Thank you, Mr. Chairman.
Chairman SHAW. Thank you. Mr. Becerra?
Mr. BECERRA. Thank you, Mr. Chairman, and thank you to our
two witnesses for their testimony. Mr. Huse, I have a quick
question with regard to the issue of fugitive felons and the
violators of probation and parole. When you testified before us
last summer, you mentioned that there were any number of
individuals, in the thousands, who have been fugitive felons or
parole or probation violators who are receiving SSI. You have
done some study into this. Can you give us your sense today of
where we stand, and what effect will this particular
legislation, H.R. 743, have with regard to the issue of
fugitive felons and violators of parole and probation when we
extend what is the existing application to SSI over to Social
Security benefits as well? Can you explain the work that you
have done, the work that is under way on your part, and the
concerns that led you to do the audit?
Mr. HUSE. We have done several audits about the fugitive
felon issue. Early on, when the legislation was first passed in
the Welfare Reform Act 1996, we did work to try to identify the
universe of how many people would be in the fugitive felon
category. Of course, that legislation only dealt with those
receiving Title XVI benefits. When we did that work, we saw
that there was a far greater number of fugitive felons who were
actually receiving Title II benefits. In fact, I believe a five
times greater number would be encompassed by adding the Title
II coverage to the fugitive felon universe than who we deal
with now under Title XVI. It is also a matter of equity. Some
of the fugitive felons receiving Title II benefits are not
covered by the prohibition right now. It is our experience that
some of the more serious criminals are in the Title II area.
This is what drives it now. Over time, as we have worked with
this existing legislation, I know that there are a number of
questions that have been raised. What is happening with our
enforcement of this program? How does it work? Those questions
are valuable. Some of the questions have been raised by
advocacy groups and the media. This has prompted us to take a
look at this issue, and we have an audit underway that will be
some months in finishing, but will provide some of these
Mr. BECERRA. Have you gotten any answers with regard to the
issue of the high number of fugitive felons who are out there,
and when you supply the information of addresses and names to
the local authorities, even after the fact that that has been
provided to the local authorities, the vast majority of those
77,000 felons that you have identified remain on the loose,
without apprehension. I think the statistic that we have here
is that 8,000 of those individuals whose names and addresses
you provide to local authorities, have been arrested by local
law enforcement, but that is only 8,000 of 77,000. Is there a
reason why local law enforcement, after you have given names
and addresses, is not apprehending individuals who are fugitive
Mr. HUSE. I will offer a variation of the answer I gave Mr.
Hayworth earlier. Like every other function of government, our
local criminal justice system, as is the case with the Federal
system, is overloaded. So, they really----
Mr. BECERRA. Does that have an implication for those
individuals, maybe not fugitive felons--maybe we are talking
more in terms of the probation or parole violators. I
understand that the media has reported instances where
individuals try to turn themselves in, but local law
enforcement is no longer interested in pursuing the violator.
As a result, those individuals who try to turn themselves in
and do the right thing not only cannot do the right thing
because local law enforcement does not want to proceed, but at
the same time, they are losing benefits that they would
otherwise be entitled to.
Mr. HUSE. The concept that you should not receive benefits
if you are fleeing from justice is a valid one, and I think
that that law and order imperative is very good----
Mr. BECERRA. I think we all agree with that.
Mr. HUSE. I believe that is underneath this legislation.
Mr. BECERRA. I think we all agree with that.
Mr. HUSE. Now is the first time over the course of our
experience with this legislation that we have real data to
review. We are going in to review this data and see exactly how
this system is really working in terms of how it has been put
together in the last 6 or 7 years. This will give us an
opportunity to come back to Congress and say, this is exactly
how the program is working. I think that in the end, you are
going to see that the initial imperative that was behind the
intention of Congress to keep fugitives from justice from
receiving Social Security benefits is there. I would be remiss
if I tried to talk about that now, until this work is
completed, because one of the things I have learned as an
Inspector General is that I need workpapers, and that, I
promise you, is underway. We expect this work to be done
sometime in the autumn. When the work is completed, we will be
able to come back and answer some of these questions in a
Mr. BECERRA. We may have passed this bill before then.
Mr. HUSE. I don't think the changes in the bill, or
extending the coverage of the fugitive felon legislation to
Title II, is wrong. I think we need both in order to make sure
that we are meeting the intentions of the bill in the first
place, which is to remove from criminals the opportunity of
receiving Social Security benefits to enhance their flight from
justice. I think the fine-tuning will come when we bring back
the facts as this law is administered, because this is a
program that cascades through every level of government, and it
is very complex.
Mr. BECERRA. We agree with you on that.
Mr. HUSE. Regarding your other concern about the equities
to the beneficiaries, I believe Social Security does a really
good job in taking the equities of each beneficiary into
account, in the actual management of the program. I do not
believe anyone has been damaged that way over time.
Chairman SHAW. Mr. Huse, let me ask you a question
following up on Mr. Becerra's questioning, and also somewhat on
Mr. Hayworth's. I can understand the problem of prosecutors
being overworked, and they have to be selective as to what
cases they are going to prosecute, and which ones they are
going to walk away from. I understand that. I would like to
know a little bit about the enormity of the information that
you are giving to local law enforcement, and why they do not go
out and get these guys when you give them their name and
address. That is a little disturbing to me. I can understand
what Mr. Becerra is talking about--that some of them are parole
violators, or something that is rather minor, and perhaps they
just cannot get their record cleaned up. Obviously, we do not
want to hurt those folks. I would personally like to know in
Palm Beach and Broward Counties, Florida, how many of these
there are. What information can you give me--and I would like
to go on my own and talk to local law enforcement to get a
better idea of exactly why they have not pursued this. From
that standpoint, perhaps other Members on the Committee would
like to have that information, too, so they could take it home
and talk to their folks. I think that would give us a good
Mr. HUSE. I would be glad to do that, but I think it would
be wrong for me to sit here and not say that on behalf of those
law enforcement officials, both elected and appointed, I
believe the serious criminals involved here do get apprehended.
I am sure that----
Chairman SHAW. There are some that you would like to point
out to us, and I think all of us would like to go to our local
law enforcement and say, ``Here is what I have; why don't you
tell me your side of the story?''
Mr. HUSE. As you know, Mr. Chairman, you can talk about law
enforcement simplistically, but as it really works through the
various levels of government, it is often driven by budget
restraints and ability to expedite and so on.
Chairman SHAW. Well, let them tell us that.
Mr. HUSE. There are many aspects, but I will be glad to
[The information follows:]
Social Security Administration
Baltimore, Maryland 21235
March 9, 2004
Chairman E. Clay Shaw, Jr.
Subcommittee on Social Security
Committee on Ways and Means
1102 Longworth House Office Building
Washington, DC 20515
Dear Chairman Shaw,
Here is the information on completed Certification Reports (OI-5C)
returned by law enforcement in Broward and Palm Beach Counties since
the inception of the electronic matching program (March 2000):
Broward County--461 responses to 576 referrals (80%)
Palm Beach County--40 responses to 56 referrals (71%)
Please keep in mind that the national average for responses from
state reporters is 49%. As you can see, the percentages from Broward
and Palm Beach Counties are well above that. Our RAC in Ft. Lauderdale,
Dan Lynch, has related that we enjoy an excellent relationship with law
enforcement officials in both counties.
Patrick P. O'Carroll
Acting Inspector General
Chairman SHAW. Yes. Well, I think they can tell us that,
and that will make us do a better job. Mr. Brady?
Mr. BRADY. Thank you, Mr. Chairman. First, I would like
your permission, on behalf of Congressman Sam Johnson and I, to
submit the written testimony of the Texas State Teachers
Association, Texas Classroom Teachers Association, and the
Texas Federation of Teachers into the record.
Chairman SHAW. That will be done as part of the next panel without
[The information follows:]
Statement of Jack Kelly, Texas State Teachers Association, Austin,
Representative Shaw, Members, I am Jack Kelly with the Texas State
Teachers Association and I appreciate the opportunity to talk with you
about HR 743, the Social Security Protection Act of 2003.
HR 743 is an important bill and TSTA concurs with many of the
provisions in the bill. It is imperative that Congress provides
safeguards for Social Security annuitants and the programs they depend
I want to talk with you about one provision in the bill, Section
418, which amends the eligibility requirements for qualifying for
spousal benefits. HR 743 is very similar to HR 4070 that the House
passed unanimously (425-0) last session. The change contained in
Section 418 was not in the version of the bill that the House
considered and approved last year. It was not even mentioned by Rep.
Shaw on February 12, 2003 when he introduced HR 743 and outlined the
purposes and the key provisions of the bill. Section 418 would change
the requirement that was adopted by Congress and has been in place for
about twenty years. The current law allows a person who, on his or her
last day of employment, paid into both the state retirement system and
Social Security to be eligible for spousal benefits. The change
recommended in Section 418 will be detrimental to the Texas education
profession and Texas educators. TSTA believes that this body has not
had a chance to adequately discuss it. TSTA does not want to impair or
even slow down the passage of changes contained in HR 743 that would
stop abuse and fraud in the Social Security system. However, there are
thirty other bills that have already been filed in this session of
Congress that deal with proposed changes in Social Security, including
some that would adjust benefits and eligibility for benefits. TSTA
would encourage this Subcommittee to delete Section 418 from this bill
and include consideration of this proposed change at the same time the
Subcommittee is considering some of the other bills that address
changes in Social Security benefits.
If Section 418 passes it will negatively impact the ability of
school districts to attract and retain quality teachers. There is
already a critical teacher shortage in Texas. As some of you may know
Texas has a rapidly growing, diverse student population. We increase by
about 70,000 students in average daily attendance every year--that is
like adding a new school district the size of Austin or Ft. Worth each
year. In addition to just more students and more diverse students, both
ethnically and economically, Texas is trying to raise promotion and
graduation requirements to better serve the students in our state. This
week our third grade students are taking the new Texas Assessment of
Knowledge and Skills test that they must pass in order to be promoted
to the fourth grade. Our high school students will soon have to take
the recommended or advanced high school curriculum in order to get a
diploma. That means more math, more science and more foreign language
credits. That also means we need more teachers in those fields. In
addition to the changes Texas has imposed upon itself, we, like the
other states, are trying to meet the new standards Congress has imposed
in the No Child Left Behind (NCLB) legislation. A couple of those
provisions require that, immediately for new hires and by 2006 for
existing staff, all our support personnel must pass a test or have the
equivalent of 2 years of college and that all our teachers must meet
the new definition of ``highly qualified.''
A recent study by our State Board for Educator Certification showed
that out of the 280,000 Texas teachers in 2001-02, nearly 43,000 were
certified but teaching more than 50% of the day out of their field of
certification (not allowed under NCLB) and another nearly 15,000 were
teaching on emergency permits or some form of certification waiver (not
allowed under NCLB). In addition to the fact that about 20% of the
current staff does not meet the new standards, Texas has the additional
problem that about half of all newly certified teachers quit within
their first 5 years of teaching. We literally have hundreds of
thousands of students every day who are being taught, at least part of
the day, by uncertified or under-certified people. I wanted you to have
an appreciation for the size of the problem Texas is addressing and why
the change proposed in Section 418 makes the goal of attracting/
retaining highly qualified educators even more challenging.
In Texas we have implemented, even before the Federal NCLB
recommendations, a Career to Classroom initiative. Texas sought to
attract qualified people who wanted to make mid-life career changes and
bring them into public education. One of the major hurdles to the
success of that effort has been the impact on the person's Social
Security benefits. A person, who was working in private industry and
building up a retirement through that company and a Social Security
benefit, did not want to take a lower paying job and lose access to
most of their Social Security benefits. Since 1000 of the 1050 school
districts in Texas do not participate in Social Security, the person
wanting to go into education would see their own Social Security
benefits reduced because of the windfall elimination provisions. At
present, they can still qualify for at least 50% of their spouse's
benefits. Similarly, the potential reduction in Social Security
benefits will make it more difficult for school districts attempting to
recruit teachers from other states to come to Texas.
Finally, immediate passage of this provision would work an unfair
financial hardship on the current school employees who having been
planning their retirement based on the current law that has been in
place for about twenty years. School employees are a dedicated group of
people. They have generally worked with low pay and few benefits out of
love for the students they served. It is almost unconscionable to think
Congress would pass a law that tells these educators in ninety days you
will lose access to about one-fourth (for many teachers) or one-half
(for many support personnel) of the retirement benefits you had been
planning on. That is a major change in a prospective retiree's budget.
Please allow these educators to retire in dignity.
TSTA would urge Congress not to make this change. However, if you
are going to enact language like Section 418 in this bill or as part of
some future discussion of Social Security benefits, school employees
deserve adequate time to adjust to a financial decision that is going
to affect the quality of the rest of their lives.
Much as Congress did when it enacted the current government pension
offset provision, you ought to pick a date in the future and provide
that the current law will cover anyone who is eligible to retire at
that point, whether they actually retire or not. This will protect our
career educators who do not have time to replace the Social Security
benefits they had been factoring into their retirement plans. It will
give our younger educators advance notice that the current Social
Security benefits will not be available to them and give them time to
adjust to the change and plan their retirement and savings accordingly.
Again, I thank you for the opportunity to share TSTA's concerns
about this bill and I look forward to working with your staff as HR 743
moves through the legislative process.
Statement of Texas Classroom Teachers Association, Austin, Texas
Thank you for this opportunity to provide comments on H.R. 743. We
appreciate this committee's efforts to protect the integrity of the
Social Security system while ensuring maximum benefits for those it was
designed to help.
The Texas Classroom Teachers Association (TCTA) was established 75
years ago and has grown to more than 46,000 members across the state.
TCTA membership is limited to teachers and related non-administrative
personnel who are directly involved with student instruction or
support, and TCTA is not affiliated with a national organization.
Our members are particularly interested and concerned about Section
418 of this legislation, which would revise the existing ``last-day''
exemption to require that an employee have worked at least 60 months
for the relevant government entity participating in Social Security. As
you know, many Texas teachers have utilized this legal exemption in
order to qualify for Social Security benefits earned by their spouses
who have participated in Social Security. The extensive use of the
exemption in our state is an indication of the fundamental problem with
the structure of the system. These Texas educators are now painfully
aware of the fact that, had they chosen not to work outside the home at
all, rather than devoting their lives to public service, there would be
no question about their eligibility for spousal benefits. Many teachers
have only recently realized that the government benefits which have
been a major part of their retirement planning will not be available to
them after all. Those entering school employment near the end of their
working years may not have the opportunity to meet the 60-month
requirement if this provision were changed.
We appreciate Chairman Shaw's acknowledgement of this concept and
encourage support for the legislative proposals by Chairman Shaw and
others to eliminate or reduce the impact of the Government Pension
Offset (as well as the Windfall Elimination Provision). We are very
concerned that elimination of the last-day exemption to the offset
without a corresponding change to or elimination of the offset itself
will exacerbate the critical teacher shortage and cripple recruitment
efforts in Texas and other states.
We encourage members of the committee to carefully reflect on this
issue, and reject consideration of this section of the bill until such
time that the underlying issues can receive a comprehensive
Statement of Eric Hartman, Texas Federation of Teachers, Austin, Texas
When strict adherence to a legal rule allows an injustice to be
avoided, that is not a problem--it is the solution to a problem.
Unfortunately, Section 418 of H.R. 743, the bill before you today,
would change Social Security law to make the injustice of the
Government Pension Offset effectively unavoidable for the 43,000
members of the Texas Federation of Teachers, on whose behalf this
testimony is submitted.
We respectfully request that the Subcommittee remove Section 418
from this bill and reserve judgment on the issue until it can be
addressed as part of a broader question: namely, the question of
whether the offset itself should be continued or abolished. We urge the
subcommittee chair to schedule such a comprehensive hearing on issues
and legislation relating both to the Government Pension Offset and the
kindred Windfall Elimination Provision as early as possible. We would
note that H.R. 594, a bill filed earlier this month to repeal both
provisions by Rep. Howard McKeon of California, already has drawn the
cosponsorship of 109 House members.
The Government Pension Offset affects the vast majority of Texas
school employees, who are eligible for state Teacher Retirement System
annuities after retiring from school districts that do not participate
in Social Security. The effect of the offset is to deprive them of all
or part of the spouse's or surviving spouse's Social Security benefits
to which they would otherwise be entitled thanks to their spouse's
fully earned Social Security coverage.
Under the ``last-day'' provision of the law that would be changed
by Section 418, the effect of the offset can be avoided by going to
work briefly before retirement in another school district that does
contribute to Social Security and does withhold Social Security taxes
from the employee's paycheck. By strictly following the letter of this
law, a teacher or other school employee in Texas thus can avoid the
offset, and by the reckoning of the General Accounting Office thousands
have done so.
The question before you is whether this perfectly legal method of
avoiding the offset should be foreclosed by a new requirement that the
employee must work at least 60 months for a school district covered by
Social Security before the offset can be avoided.
We believe that this change would compound the injury done to Texas
school employees by the offset itself, to their great detriment and yet
without significant beneficial impact on the finances of the Social
The staff of the Congressional Budget Office, in testimony before
this subcommittee 2 years ago (Statement of Paul R. Cullinan, Chief,
Human Resources Cost Estimates Unit, June 27, 2000), described the
Government Pension Offset as ``a blunt instrument.'' Our members,
including many low-income retirees who have been and will be hurt by
the offset, would certainly agree.
Chairman Shaw, in filing another bill (H.R. 75) that would reduce
the Government Pension Offset by 50 percent, also has acknowledged
tacitly that there is something seriously wrong with the Government
Pension Offset. (In passing it is worth noting that the CBO, in the
same testimony cited above, estimated ``the long-term impact'' of a 50-
percent reduction in the Government Pension Offset, in terms of costs
to the Social Security program, ``would be insignificant.'')
There is indeed something seriously wrong with the Government
Pension Offset. This offset has its harshest impact on those who can
least afford the loss: lower income women. It also discriminates
against individuals who have chosen to serve their communities in
public employment; had they not worked at all, they would not be
affected by the offset. By targeting the pensions of teachers and other
school employees, the offset discourages qualified individuals from
serving in our public schools precisely at the time when our Nation
faces a severe shortage of teachers.
Consider the far from unusual case of a woman who worked in the
home while her own children were in school but then returned to the
workforce in middle age as a Texas teacher. A dozen years of employment
as a teacher in a typical Texas school district could entitle that
teacher to a Texas Teacher Retirement System annuity of perhaps $900 a
month. Though her spouse fully qualified for Social Security benefits
in covered employment, the Government Pension Offset could eliminate
her entire benefit as a spouse or surviving spouse under Social
Security. The offset would have the same devastating effect on a
classroom paraprofessional who devoted 25 years of service to Texas
schoolchildren while never receiving even $20,000 a year in pay. These
are individuals whose retiree health-insurance premiums and other out-
of-pocket health-care costs alone can easily eat up more than half of
their state retirement annuity.
The marginal savings to the Social Security program that you would
reap by tightening the screws on the Government Pension Offset cannot
justify the large and harsh impact this measure would have on thousands
of Texas school employees. Again, we urge you to delete Section 418
from H.R. 743 and to consider this issue in the wider context of a full
review of the merits of the Government Pension Offset itself.
If that means the discussion should widen also to consider the
future of the exemption from Social Security for employers such as
Texas school districts, then so be it. Meanwhile, our school employees
face a situation not of their own making that can leave them in severe
financial straits when they retire. They are justified in avoiding the
injury of the Government Pension Offset by strictly adhering to the
letter of the law. Before rendering unavoidable the injury to school
employees caused by this ``blunt instrument,'' Congress should consider
the outright repeal of the Government Pension Offset.
Mr. BRADY. Great. I am sorry they could not be here today;
they got caught by the rare occurrence of Texas snow, so they
are back home. I want to thank them for the timely submission
of their testimony. It was helpful to read it in advance and
digest it. I have a couple of thoughts. The government pension
offset and last-day of employment loophole are emotional issues
for me and my constituents. Those are Texas teachers. They are
in the Texas retirement system, which is the fifth-largest
retirement system in the Nation not covered by Social
Security--but it is a very good system. These teachers work
very hard and are not paid a lot. Their challenges in the
classroom are much different than when you and I were growing
up. There is a great deal of conflicting information
circulating about the government pension offset and how it
affects our educators. We have an opportunity to clear up much
of the confusion surrounding the issues today, and in the end,
we have a responsibility to ensure that all wage-earners,
either inside or outside Social Security, are treated fairly.
So, a couple of thoughts. Ms. Bovbjerg, thank you for being
here--and thanks for your report. My teachers are being told
that they are being unfairly singled out by the government
pension offset--that the government pension offset
discriminates against them versus other families, and many of
them are being told that Congress will not change it because
Members of Congress are not part of Social Security anyway.
Those are the issues that come up regularly both in townhall
meetings, at the dry cleaners--I went to the swimming pool this
summer and was immediately visited about this issue. Help
clarify, Ms. Bovbjerg, some of the issues. In the testimony,
for example--here is a good way to get to the heart of the
matter--in the testimony from Eric Hartman of the Texas
Federation of Teachers, he testifies that, ``There is indeed
something seriously wrong with the government pension offset.
By targeting the pensions at teachers and other school
employees, the offset discourages qualified individuals from
serving in our public schools precisely at a time when our
Nation faces a severe shortage of teachers.''
Here is the example that he gives, ``Consider the far-from-
unusual case of a woman who has worked in the home while her
own children were in school and then returned to the workforce
in middle age as a Texas teacher. A dozen years of employment
as a teacher in a typical Texas school district could entitle
that teacher to a retirement annuity of perhaps $900 a month.
Though her spouse fully qualified for Social Security benefits
in covered employment, the government pension offset could
eliminate her entire benefit as a spouse or surviving spouse
under Social Security.'' He testifies that this is different
treatment than other families get. Can you address that? In
this case, I think I know the answer, but I want you to explain
it. Is this teacher in the retirement system of Texas treated
differently, better, or worse than other families?
Ms. BOVBJERG. As you know, it depends on what families you
are looking at, and I think the confusion with the government
pension offset is that many people compare the benefits that
they would get after being offset with the benefits of a
household with a nonworking spouse. In fact, government pension
offset was created to equalize the treatment of households with
two working members, so that in fact this teacher would be
treated much the same as a spouse working in a position covered
in Social Security. When you consider this, think about
government pension offset as equalizing working spouses. There
have been people who have pointed out that there are inequities
between the treatment in Social Security of nonworking spouses
and working spouses, and that is really the heart of the
concern about government pension offset. I would say that
whatever you do in the conflict between the working and the
nonworking spouses, if anything, you would want to treat both
the covered working spouses and the noncovered working spouses
Mr. BRADY. In this case, isn't the point that for this
Texas teacher, when her spouse passes away, she would have the
choice of either the spousal benefits from Social Security or
her own pension, whichever is higher; is that correct?
Ms. BOVBJERG. Yes. Actually, I tried to figure this out a
little bit before I came, and I made myself some notes on
spousal benefits. Actually, I thought that if you have two
spouses who are getting roughly the same size benefit, if they
are both covered by Social Security and one dies, that
remaining spouse just gets their benefit--that's it. If in the
same situation the wife is under the Texas teachers system,
after the husband died, the wife's benefit would go up, because
only two-thirds of the spousal benefit is offset. So, even with
the government pension offset, an uncovered spouse would do a
little better than someone under Social Security.
Mr. BRADY. That is the point I think I was trying to get
to--that under the government pension offset, it appears when
you study most of the cases, that Texas teachers are reduced by
two-thirds of their pension offset; other teachers or other
families are reduced dollar-for-dollar. Is that correct?
Ms. BOVBJERG. Yes, that is right.
Mr. BRADY. So, they are either treated the same or even a
little better, depending on the circumstances.
Ms. BOVBJERG. Yes.
Mr. BRADY. There has been an explosion--your report
indicated the use of the loophole or the exemption, because
their teachers do not feel like it is a loophole. They feel
like they are recovering benefits that are due to them; that is
what they are being told, and emotionally, they feel that way.
You indicated that this has become more widespread in the past
2 years. A person could put in as little as $3 in contributions
and receive up to $150,000 in the typical lifespan from the
report that I read. Usage has grown so much. To what do you
attribute the explosive growth in the use of this last-day
Ms. BOVBJERG. Dan, do you want to talk about that? Dan was
in the field.
Mr. BERTONI. Sure. There is no question that there has been
rapid growth. Although we are aware of at least one case dating
back as far as 1990, nearly all of the 1-day transfers occurred
in and around 2002. It is not clear who or what is the primary
information force or the drivers of these transfers, but it is
clear that the teaching community relies on the various
associations there that represent them for their information,
especially in regard to retirement planning. I had the
opportunity to actually go into the various websites, various
avenues, and it was clear that these associations are making
known the availability of this loophole, as well as how you
would go about taking part in it. Based on the fact that this
information is out there, it is being advertised, not only in
the groups and associations that represent teachers, but the
financial planning community is starting to find out about
this. There are potentially solicitations out there to help
people work the 1 day to reap $150,000 in benefits, according
to one website claim. So, it is probably fair to say that much
of the growth is coming through this web activity, as well as,
ultimately, word-of-mouth. The concern is that it could move
into other States and areas.
Chairman SHAW. The gentleman's time has expired. I have
been lenient to both sides with regard to the time clock, but I
am going to ask Members if you can hold it to 5 minutes so we
can move it along. As this is your first hearing on this
Subcommittee, Ms. Tubbs Jones, I am going to be lenient with
Ms. TUBBS JONES. You are kind, Mr. Chairman, and I
appreciate it. Thank you, Mr. Chairman. I am going to use a
couple of my minutes to refer to a job that I had. I am a
former Cuyahoga County prosecutor, elected for 8 years, and I
was a judge for 10 years. When we use the term ``fugitive
felon'' in these hearings, conceptually it sounds really good,
like we are upholding justice and so forth. The reality is that
the National Crime Information Center (NCIC), Animal and Plant
Health Inspection Service (APHIS), and all those data systems,
hold criminal justice information--bad information in, bad
information out. You have a ton of people who go in and end up
saying, ``I am Stephanie Tubbs Jones,'' and when the record is
cleared up, they are Stephanie Tubbs Smith--but Stephanie Tubbs
Jones's record never gets cleared up. I am not saying that with
regard to generally the more serious offenders. Usually the
records are not kept clear on the minor offenses, and the
reality is that the sheriffs and law enforcement people in all
these communities--and I want you to tell all of them that I
stood up on their behalf in this hearing--really are overloaded
with all kinds of work that they do. To be able to clear the
system will take massive amounts of dollars.
What I really think we ought to conceptually think about--
and I know a lot of you say that people are not going to come
forward--is whether we might issue a statement to someone
receiving disability that it has come to our information that
you have XYZ record, or that you are a probation violator, and
you will not be able to continue to get benefits if you do not
clear this up. A lot of people may take affirmative steps to do
that because they are minor violations. From the bench when I
was in the arraignment room, when someone failed to show up in
Ohio and other communities--let us say, for example, that you
get arrested--they release you, and then your information goes
to a grand jury. The grand jury charges you, and then your
indictment is sent to your last known address. Many of the
people who are engaged in minor drug felonies, their last known
address would never be the address they give. They have moved
on somewhere else, and they never got notice of the fact that
they had even been charged on an offense--just as an example. I
am thinking that perhaps that might be a way to issue--and I do
not know if you do that or not, Mr. Huse, now. Do you do that
and say to them, the reason you are going to lose your payment
is because you have this record, or----
Mr. HUSE. It is a two-part process. My office looks at the
verification of the actual warrant itself. So, the numbers that
we give you are warrants that we have verified to exist, and
exist for a valid reason. So, we take the error out of the
front end of the process. On the back end of the process----
Ms. TUBBS JONES. You verify it by--I am sorry, I missed
Mr. HUSE. We verify it by working right back to the
initiating jurisdiction, and that happens before we ever pass
the information on to the SSA for suspension activity.
Ms. TUBBS JONES. Okay.
Mr. HUSE. In Title XVI, that suspension occurs only after
notice is given to the beneficiary, so they have an opportunity
to clear up the outstanding warrants. This is what happens with
a lot of the outstanding warrants. That is why there is a
difference between the front-end number and the back-end
action, but that kind of judgment goes in there. I think that
when our work comes back, you will be able to see this better
as to what offenses are the felonies that I think the
legislation intends to focus on, and what are, what I would
call for lack of a better term, ``coincidental'' felonies,
something that started out perhaps as a misdemeanor, but
because of failure to appear or what-have-you----
Ms. TUBBS JONES. The failure to appear is also the basis of
a warrant on any minor offense.
Mr. HUSE. Right.
Ms. TUBBS JONES. What about on the probation violation
piece as well--do you go through that same step of trying to
clear that up?
Mr. HUSE. We verify every one of these on the front end,
before we pass them on to the SSA to deal with the suspension.
It is a very, very involved and complex process. We are talking
thousands and thousands of warrants.
Ms. TUBBS JONES. I remember one time we were in a meeting
in Cuyahoga County--it was the judges, the prosecutors, and
everyone--and someone said the number of failures to appear or
probation violators, and everyone said, ``Oh, no, we are going
to be in total trouble,'' because all these people are out
there--fugitive felons. The reality is that the numbers far
exceed the harm that may well come to people in a jurisdiction.
I have another question which I think I actually lost as I was
listening to what you were saying. Oh, I know what it was--with
regard to people who are representing recipients, I think the
other thing that we need to take a look at after we have
clarified whether the beneficiary is, ``an appropriate
beneficiary.'' You are going to come across some families in
some jurisdictions where the only person who is going to care
about that person may well be a fugitive--or, not a fugitive,
but could have a felony record or could be a probation
violator. Again, I think that, it sounds great in the world
that we want to make sure the recipients are taken care of, but
the reality may well be that it could be a mother from some
neighborhood who has a son, and that is the only child she has
left, the only person who cares for her, and if we can go
through and clear that out as well, I think it would be a
useful process. It could be any race or any religion where that
Mr. HUSE. I agree with you that there are different
circumstances, but I think the review needs to take place,
Ms. TUBBS JONES. Oh, I wholly support that review.
Mr. HUSE. Some discretionary judgments made, and that is
what our point is. We do not disagree that sometimes the care
giver may not be somebody who passes every test in life.
Ms. TUBBS JONES. Well, I am just trying to make sure that I
am weighing in and giving you a piece of what I think you ought
to consider. I am just one person, but I would ask you to take
that into consideration. I think I am out of time, but you can
finish your answer.
Mr. HUSE. My response would be that the Commissioner is
very aware of this program, and she has a number of changes
that she may be making to this program that are in conception
or in regulation-rewriting stages. We all know that this needs
to be adjusted.
Ms. TUBBS JONES. Mr. Chairman, just one more thing. I would
also suggest, sir, that perhaps what you might want to do is to
contact, maybe, the National District Attorneys' Association or
the National Sheriffs' Association, weigh in on this subject,
and perhaps collectively they may have some ideas of when and
how you could work together to resolve some of those issues.
Mr. HUSE. We will do that.
Ms. TUBBS JONES. Okay. Thank you. Thank you, Mr. Chairman.
Chairman SHAW. Mr. Lewis?
Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Mr. Huse,
the bill H.R. 743 will have legislation that will provide
protection for Social Security employees where there may be
attempts to influence the Administration on Social Security--to
help them, to provide penalties to keep people from trying to
do them harm, or try to change their ability to do their job.
How pervasive really is that, and can you give us some examples
of some of the problems there?
Mr. HUSE. I would be glad to. There is not a week that goes
by when we do not receive a report from a Social Security field
office that a Social Security service representative or claims
representative has been threatened with their lives, or that
the whole office has been threatened to be bombed by a member
of the public that Social Security services on a daily basis.
Understanding Social Security's programs--some of their service
is directed to those who are mentally ill, and sometimes
threats come from that sphere. Additionally, as we administer
some of these programs for some of the fugitive felons, there
are threats made. Covering SSA's employees with at least the
benefit of some investigative and prosecutorial result from
these threats is a good thing. That same coverage is extended,
for example, to the employees of the Internal Revenue Service.
Sometimes good government means saying no, and that raises
someone's ire. These things can happen. I think the criminal
justice system does a good job of sorting out who is a real
threat and who is not, but I think the coverage is very
important--for the morale, if nothing else, of Social
Security's employees as they undertake these challenges.
Mr. LEWIS OF KENTUCKY. Thank you. Thank you, Mr. Chairman.
Chairman SHAW. Mr. Johnson?
Mr. JOHNSON. Thank you. Ms. Bovbjerg, last August, you all
made two policy recommendations, and one is in this bill--to
increase from 1 day to 5 years the amount of time that a
teacher would have to work under Social Security coverage. The
other is to address the amount of time the person works in two
separate systems. Such a proportional approach would take time
to design, I think. Do you have any suggestions for us on
trying to make the system more proportional?
Ms. BOVBJERG. Well, in fact, in that report, we had
recommended extending the time, which is the approach embodied
in H.R. 743. We looked at the proportionate approach because
that is similar to what is done in the windfall elimination
provision, which is another provision in law that applies to
non-covered employment--but this approach is difficult to
administer. Social Security would have to get data from States
and from individuals as to how much they worked here, and how
much they worked there. It would definitely be more finely-
tuned than just saying 5 years or whatever period of time, but
it would be very difficult to administer.
Mr. JOHNSON. As you know, Texas teachers are not the only
people around who have opted out of the system early on. Do you
see problems with other segments of society that we have not
Ms. BOVBJERG. Most State and local systems cannot back out
of Social Security now.
Mr. JOHNSON. I understand.
Ms. BOVBJERG. There are about 5 million State and local
employees who are not covered. They are scattered across the
United States. Seven States are the big ones--of which Texas is
one. Texas and Georgia are certainly not the only places that
could invoke the 1-day exemption. It is difficult to predict
exactly where this could occur, because you need to have a
system with noncovered employment that has a few positions that
are covered in it. So, in the case of Texas, teachers can work
for another school district or can work in another kind of job
in their own district or can work in a university--and that
works out. There are some States where the vast, vast, vast
majority of the State employees are in noncovered employment.
They would have a hard time finding a position to shift to for
1 day. There are other States where it seems as if this could
work, and the word is getting out. So, we do think that it
would not only grow in Texas, but it would spread to other
Mr. JOHNSON. Thank you. Thank you, Mr. Chairman.
Chairman SHAW. I want to yield my 5 minutes to Mr. Brady.
Mr. BRADY. Thank you, Mr. Chairman. Just to follow up on
Mr. Johnson's questioning, our teachers feel like they are
being singled out through the government pension offset, but
the government pension offset really applies to a much broader
group of individuals; isn't that correct?
Ms. BOVBJERG. Yes. It applies to the 5 million people that
I just mentioned. I had actually made a note to get back to
you, because you had asked about Federal employees and Members
of Congress. In fact, anyone who is covered under the old plan,
the Civil Service Retirement System, is subject to this offset,
and there is no exemption for Federal employees. After 5 years
of employment in Federal Employee Retirement System (FERS), the
offset would not apply.
Mr. BRADY. Congress never intended to target teachers, or
to make education more difficult, in your----
Ms. BOVBJERG. No, and certainly teachers are not the only
people to which the offset applies, nor are they the only ones
who would be able to invoke this exemption.
Mr. BRADY. The follow-up question to Mr. Johnson's is that
there are 5 million people, I read in your report, in about
2,300 different retirement systems, who could take advantage of
this. If that exemption were used more broadly, what could be
the financial impact on Social Security in future years?
Ms. BOVBJERG. We had a really rough estimate in there--$450
million just for the people in Texas and Georgia. I do not know
that all 5 million State and local employees who are not
covered would be able to invoke the exemption, but if they did,
you would multiply our numbers by 1,000, so you would be
talking about $450 billion.
Mr. BRADY. These exemptions spread very quickly in our
State. If this exemption were kept in place, do you anticipate
more growth in the use of it?
Ms. BOVBJERG. Absolutely. In fact, we were a little bit
concerned in contacting 28 States that we talked to to see if
they were doing it--trying to figure out where this is
happening. We were talking to people who were saying, ``You can
do that?'' Clearly, they were interested, and we were trying
not to talk about it too much once we found out they were not
Mr. BRADY. A lot of my teachers are now planning on using
the exemption and have used it, and as a result of this
legislation, they ask not only why are you changing it, but why
to 5 years. My understanding is that there is a precedent for
the recommendation of a 5-year length of employment. Can you
Ms. BOVBJERG. When we created FERS for Federal employees
and Members of Congress--this is a system covered by Social
Security, and the old system was not. We offered people a
choice as to whether they wanted to switch from the old system
to the new. If they switched, the offset still applied, but
once they had been in FERS for 5 years, it seemed a sufficient
time to assure that they had contributed to Social Security for
a meaningful period. We picked 5 years in our report because of
Mr. BRADY. In your final recommendation--Mr. Chairman, I
will be very brief--in the final part of your report, you
mention that there are some options for addressing government
pension offset legislation that Chairman Shaw and others have
introduced. Also, the other solution on this would be
proportionality, weighing how much time was in noncovered, in
this case, Texas teachers system--which, by the way, is really
well-run and pays strong benefits. If anyone is thinking that
they should become part of Social Security, my argument would
be that Social Security probably needs to be more like the
teacher retirement system, frankly. They are just concerned
again about the cost overall. The proportionality is just tough
to figure--is that the answer?
Ms. BOVBJERG. It is difficult to get the information and to
calculate it. I think it is also a little more difficult for
participants to understand. People can understand 5 years;
proportionality, they have to think a little more about how
that would affect their benefits. It is also easier for Social
Security to explain to people.
Mr. BRADY. Thank you. Thank you, Mr. Chairman, for your
Chairman SHAW. Thank you, and I thank the panel for being
with us this morning, as usual. We will be moving this
legislation very quickly. On our next panel, we have Nancy
Coleman, who is Director of the Commission on Law and Aging at
the American Bar Association (ABA); Marty Ford, Co-Chair of the
Social Security Task Force of the Consortium for Citizens with
Disabilities (CCD); Art Kaufman, President of the National
Association of Disability Representatives (NADR), from
Massachusetts; and Richard Morris, President of the National
Organization of Social Security Claimants' Representatives
(NOSSCR) in New York. Mr. Jack Kelly was supposed to be on this
panel, but as Mr. Brady pointed out, due to unusual weather in
Texas, he was unable to be with us. Without objection, his
entire testimony will be made a part of this record. Again,
your entire testimony will be made a part of the record, and
you may proceed as you see fit. Ms. Coleman?
STATEMENT OF NANCY M. COLEMAN, DIRECTOR, COMMISSION ON LAW AND
AGING, AMERICAN BAR ASSOCIATION
Ms. COLEMAN. Thank you. I am really very pleased to be here
today. I am Nancy Coleman, and I am here today on behalf of the
ABA. I appear before you today in my capacity as Director of
the ABA's Commission on Law and Aging. In addition, several
years ago, I chaired the SSA's Federal Advisory Committee,
which looked at the representative payee program. That
Committee, which was formed in July 1995, presented its
findings in November 1996. The 25 recommendations that were
made by that group have a great deal of relevance to what we
find in H.R. 743, the bill that we are here considering today.
I am pleased that the ABA was asked to testify and to take a
look at this particular legislation. For the most part, we are
commenting only on those provisions for which the ABA has
policy, and those that relate to Sections 101, 102, et cetera.
They have to do with what organizational payees are working
with and how they should be reimbursed. We believe that there
should be a great deal of oversight, and that there should be
mandatory bonding. I am going to come to this in just a second,
but we believe that the provision in H.R. 743 that talks about
mandatory bonding and licensing, if necessary, through the
State, is something that really needs to be looked at again.
The reason is that the provision calls for licensing of
agencies, and what is unclear to me is how that licensing
relates to the financial and fiscal responsibility of the
representative payee. An agency might be licensed to be a
social service agency, it might be licensed to be a nursing
home. How does that relate to the bonding question or the
fiscal security of the payee's money? In addition, we believe
strongly that public agencies, which are not now included in
either the bonding or the licensing requirement--that is, a
State department of social services or a public welfare
agency--ought to at least be required to assure that the money
that is made, which they are collecting and spending on behalf
of beneficiaries, is available only to the beneficiary, and if
misuse occurs that they are willing and able to make whole the
beneficiary again. We are very much in favor of the periodic
onsite review, especially the random onsite review for all
beneficiaries, not just the large payee beneficiaries. I want
to spend a couple of minutes looking at what I think is a new
Two days ago, the U.S. Supreme Court issued a decision in a
representative payee case. It is not very often that the U.S.
Supreme Court looks at representative payee cases, but in the
representative payee case of Keffler v. Washington State,
decided in a 9-to-0 decision, the Supreme Court asked that--the
question that arose was whether or not the State foster care
agency could act as the representative payee and use the money
that they collected as the representative payee to pay for the
foster care services. The State Supreme Court of Washington had
stated that the agency already had the funds through State
funds, and with some matching funds, to pay those services; why
should they be using beneficiaries' money to pay what they
would otherwise pay? Why not save those funds, either to
conserve funds for kids who were getting out of foster care, or
to pay for services that were not otherwise covered? The U.S.
Supreme Court disagreed with that position. I think there are
some implications here for this legislation that is now going
through, that you are looking at, and I would like a couple
more days to re-look at that and perhaps provide some
commentary as to what you might do with that in terms of its
implications. I will stop there and wait for the rest of my
panelists, but the position that the ABA took, both on the
Keffler case, as well as on the rest, is in the material that I
[The prepared statement of Ms. Coleman follows:]
Statement of Nancy M. Coleman, Director, Commission on Law and Aging,
American Bar Association
Mr. Chairman and members of the Subcommittee:
My name is Nancy Coleman and I am here today on behalf of the
American Bar Association, the world's largest voluntary professional
organization with more than 400,000 members. I appear before you today
in my capacity as the Director of the ABA's Commission on Law and
Aging. In addition, I chaired The Social Security Administration's
Federal Advisory Committee, which looked at the Representative Payment
program. The Committee was formed in July 1995 and presented its
findings to the Social Security Administration in November 1996. The 25
recommendations have a great deal of relevance to H.R. 743, the
``Social Security Program Protection Act of 2003'' that is being
considered here today. However, I do not speak to you today in that
capacity but speak only as a representative of the ABA. The ABA has
developed policy in many of the areas that the Social Security Program
Protection Act covers that I will discuss below.
I. Protection of Beneficiaries
In February 2002, the ABA adopted policy that is very directly
related to the performance of Representative Payees. In part the policy
provides as follows:
RESOLVED, that the American Bar Association urges the
Administration to support and Congress to enact legislation
that would strengthen the safeguards and protections of
individuals receiving benefits under the Old Age, Survivors and
Disability Insurance programs and the Supplemental Security
Income program of the Social Security Act (Beneficiaries)
which, because of such Beneficiary's disabilities and
incapacities, are being received and managed by organizations
designated by the Social Security Administration (SSA) as
``representative payees.'' Such protections should include:
(A) Replacement by SSA of any benefits misappropriated
or misused by an organizational representative payee if
not otherwise reimbursed;
(B) Mandatory initial and continued bonding of
organizational representative payees in all states
where they provide services;
(C) Forfeiture by representative payees of any fees
normally allowed by SSA for any months in which an
organizational payee has misused all or part of a
Beneficiary's benefits; and
(D) Authority for SSA to impose a civil monetary
penalty against organizations which misuse, convert, or
misappropriate payments for Beneficiaries received
while acting in a representative payee capacity.
Not many years after enactment of the Social Security Program in
1936, Congress passed legislation granting the Social Security
Administration (SSA) the power to appoint ``representative payees''
(RPs) to receive and disburse benefits for Social Security
beneficiaries who were too frail, too young or too incapacitated to
manage their own finances [currently laid out in 42 U.S.C. 405(j) for
old age, survivor and disability benefits and 1383(a) for SSI benefit
recipients]. That initiative took place in 1939, then covering retired
workers, their spouses, their widows and children of deceased workers.
Today, the Representative Payment System is potentially available
to all of the more than 50 million individuals receiving some form of
Social Security benefit (including disabled workers and means-tested
Supplemental Security Income beneficiaries whose benefit eligibility
was established by legislative amendment several years after initiation
of the RP system).
There are now more than 6.6 million persons whose benefits are
actually under representative payee management, a group comprised of
roughly 60% of children and 40% of adults. This equates to an
approximate (and surprising) caseload of 1 out of 8 Social Security Act
benefit recipients in the United States. Moreover, that proportion
promises to rise in the near future as the number of our aged (and
frail aged) citizens with ``baby boomer'' roots attain Social Security
retirement benefit ages and the as incidence of SSI disabled child
beneficiaries continues to expand.
In overall volume, the hybrid and mammoth ``special guardianship''
program represented by the federal RP system now exceeds by a factor of
more than 10 the combined number of all court guardianships/
conservatorships active in the 50 states (estimated at roughly
600,000). Fortunately, more than 80% of today's RPs are parents,
spouses, other relatives, friends of long standing, and court appointed
guardians of the adult and child beneficiaries who they serve and,
thus, can be generally counted on for loving and responsible benefit
management. However, no program this large could avoid instances of
fiduciary fraud and abuse. Such incidents have indeed occurred and
these have been particularly troublesome in the area of multi-client
Organizational payees are typically non-profit agencies and
organizations which serve as RPs for individuals without access to
family members or close acquaintances who might be able to step in to
meet their needs for responsible benefit management. Such organizations
have a definite need to fill and most are responsible state
institutions and community agencies with long histories of competent
service. However, these entities, by their nature and the vacuum that
they fill, frequently wind up in charge of the monthly Social Security
income of 15 or 50 or 100 or 200 or more SSA beneficiaries with large
accumulations of funds to administer on a regular basis and enormous
power over the economic well being of the incapacitated individuals
they have been authorized to serve.
The American Bar Association supports many of the legislative
reforms introduced in the ``Social Security Program Protection Act of
2003.'' These include:
101. Restitution by SSA of benefits misused by
organizational payees (without any negligent causation test on
SSA's part) if not otherwise reimbursed. These elements
A definition of misuse of benefits as
defined in the proposed legislation.
Applying this provision to payees who
provide services to 15 or more beneficiaries.
102. Oversight of RPs Including:
Mandatory bonding of RPs (RPs are not
Periodic Onsite Review of organizational
payees and large volume payees as well as Random Onsite
Review of all types of payees
Organizational payees would be required to
provide an annual certification of their bond as well
as have and provide to Social Security and an
An annual report to Congress about the
results of the on site reviews.
There is one exclusion that needs to be addressed and that is a
bonding or assurance from public agencies or governmental entities that
are payees. While the public agencies are subject to the onsite review,
as they have been under the current legislative structure for
institutions, they are not subject to the bonding requirement. In
recent years there have been numerous times, as pointed out by the
Inspector General through his investigations, that public agencies may
have misused benefits.
The Social Security Administration on its own, either based on the
recommendations of the Advisory Committee (1996) or because of the
years of recommendations made by the Inspector General, has implemented
a much improved method of monitoring payees through onsite reviews and
greater scrutiny of new organizational payees. 102 simply puts into
legislation that which the Commissioner has already initiated
supporting its importance.
104 Fee forfeitures by RPs otherwise entitled to
fees for misuse and misappropriation of benefits.
Authority for imposition of civil monetary
penalties against organizational payees who misuse funds.
106 Authority to Redirect Delivery of Benefit
payments when an Accounting is not filed. This provision is a
method of enforcement that uses the annual accounting to
encourage payees to file timely reports or be subject to
loosing the authority to continue as the payee.
The ABA believes that there should be a forfeiture of any fees
normally allowed by the Social Security Administration for any months
in which an organizational payee has misused all or part of a
111 Civil Monetary Penalties.
The ABA's policy states that there should be the authority to
impose a civil monetary penalty against organizations which misuse,
convert, or misappropriate payments for beneficiaries received while
acting in representative payee capacities.
The foregoing enforcement and monitoring tools are stated as
desirable legislative objectives without detailed explication so that
the Congress can achieve the levels of specificity it deems appropriate
for each initiative and can invest SSA with authority to prescribe
standards and rules needed for optimal performance.
II. Attorney Fees (Section 301)
The ABA is pleased that H.R. 743 will raise the fee agreement cap
in Social Security Old Age, Survivors and Disability Insurance (OASDI)
cases. The ABA supports repeal of the provisions in P.L. 106-170 that
impose an assessment on attorneys' fees in Social Security OASDI cases.
The attorney's fee in these cases is already highly regulated and
capped. The additional assessment of a ``user fee'' discourages
attorneys from representing claimants in these matters. Many such
claimants are in poor health, and have little education and few
resources. Without representation, they will not be able to navigate
the appeals process successfully, and will not receive the benefits to
which they are entitled.
H.R. 743 would cap the ``user fee'' assessment on withheld
attorneys' fees at $75.00 or 6.3% (whichever is less). We believe this
legislation is a step in the right direction. Thus, we would support
enactment of these provisions contained in H.R. 743.
The American Bar Association is pleased to have been asked to
testify before the House Ways and Means Subcommittee on Social Security
on this very important piece of legislation. We support the provisions
in H.R. 743, 101, 102, 104, 106, 111, and 301. Thank you for the
consideration of our views. If we can provide any additional
information please do not hesitate to contact us.
Chairman SHAW. Ms. Coleman, without objection, I will leave
the record open if you care to submit something further with
regard to that case. For the people who are standing in the
back, you can fill in these front seats now; the witnesses are
all at the table. Ms. Ford?
STATEMENT OF MARTY FORD, CO-CHAIR, SOCIAL SECURITY TASK FORCE,
AND WORK INCENTIVES IMPLEMENTATION TASK FORCE, CONSORTIUM FOR
CITIZENS WITH DISABILITIES
Ms. FORD. Thank you, Chairman Shaw, and Members of the
Subcommittee. Thank you for this opportunity to testify. The
CCD Task Forces on Social Security and Work Incentives
Implementation appreciate your leadership and commitment in
last year's passage of H.R. 4070. We applaud your commitment to
move H.R. 743 quickly in this Congress. The bill, H.R. 743, is
very important for people with disabilities. It should be
enacted as soon as possible. People with disabilities need the
protections of the representative payee provisions. Those
attempting to work need the statutory changes in the Ticket-to-
Work program in order to better utilize work incentives. They
need the provision requiring SSA to implement a centralized
computer file and to issue written receipts whenever
beneficiaries report earnings or a change in work status.
Claimants with disabilities in the SSI program need the option
of using the attorneys' fees payment system to ensure that
representation is available to those who need it. These
important provisions have enjoyed significant bipartisan
support, and we believe that H.R. 743 should move quickly so
that these important protections become available to
beneficiaries as soon as possible. I would like to highlight a
few areas from my written testimony. First, on earnings
reports, we have testified in the past about concerns that the
chronic problem of overpayments to beneficiaries in both
programs is a major barrier to beneficiaries' ability to take
advantage of the work incentive programs.
The Section 202 requirement that SSA provide a receipt
whenever a beneficiary reports a change in earnings or work
status is an important provision, and the requirement would
remain in place until SSA implements a centralized computer
file recording the date of the report. Together, these
requirements could go a long way in helping to resolve problems
with earnings reports. The Section 201 CMPs would not go into
effect until the centralized computer file is implemented. We
believe also that the effective date of Section 208 should be
tied to this provision. In our view, it is impossible for SSA
or the Office of Inspector General to begin to judge whether
there is any fraudulent intent on the part of the beneficiary
if SSA has no accurate method of determining whether a
beneficiary has properly reported. Regarding fugitive felons,
we urge the Subcommittee to consider some additional changes in
Section 203 which address the fugitive felons and people in
violation of parole or probation. While important for ensuring
the integrity of the disability programs, we are concerned that
the current law provisions for the SSI program and the proposed
provisions for Title II are overly broad and probably more
inclusive in their reach than originally intended. We have
included some examples of situations where provisions in SSI
have operated in a particularly harsh manner, and I would like
to also submit for the record some further examples that have
come to my attention in a Los Angeles Times article on similar
situations, if that is possible.
[The information follows:]
Copyright 2002 The Times Mirror Co.; Los Angeles Times
All Rights Reserved
Los Angeles Times
September 6, 2002 Friday Home Edition
SECTION: California Metro; Part 2; Page 1; Metro Desk
LENGTH: 1666 words
HEADLINE: Criticism of U.S. Felon Program Grows; Benefits:
Thousands of blind, disabled and aging Californians have lost
Social Security payments after they were tracked down for long-
BYLINE: STEVE BERRY, TIMES STAFF WRITER
BODY: A Federal program designed to catch fugitives and
deny them welfare benefits has snared thousands of blind,
disabled and aging Californians. The program is coming under
growing criticism from California lawyers representing the
The fugitive-felon program has funded a massive computer
dragnet that has saved $130 million and led to the arrest of
thousands of fugitives, law enforcement officials said.
Most of those caught are the aged, blind and disabled who
are accused of violating probation and parole or other
nonviolent crimes, many of which are decades old.
The program has suspended Supplemental Security Income
(SSI) benefits to nearly 7,500 blind, disabled and aged
Californians since 1996, according to figures from the Social
The SSI recipients also have been ordered to reimburse the
agency for some payments.
The program compares computer databases of aid recipients
with fugitives. When Social Security turned the names and
addresses of those aged and disabled recipients over to
California law enforcement agencies, authorities apprehended
2,831 of them, according to Social Security statistics. The
statistics showed that very few of them were murderers,
rapists, robbers, kidnappers or other violent offenders.
About 90% of those arrested in California have been
violators of probation, parole or some nonviolent crimes.
Nationwide, 4,721 have been arrested and 45,000 recipients
have had their benefits suspended.
Since midsummer, public defenders, court officials, legal
aid lawyers and law enforcement officers in California have
been contacted by people threatened with loss of benefits.
Social Security officials said they will restore assistance
if recipients provide proof that warrants have been cleared,
said Mariana Gitomer, spokesman for the Social Security
Administration in California.
``A lot of taxpayers would be indignant to know that public
funds are being used as fuel to escape law enforcement,'' said
Dick Lynch, director of Social Security's Strategic Enforcement
Division at the agency's Office of Inspector General in
``Who can argue against the benefit of taking murderers,
kidnappers and armed robbers off the street?'' he said.
Critics complain that the program has not focused on such
``They make this sound like a law enforcement jihad, when
they actually are getting old, toothless people who are easy to
find and not fleeing from anyone,'' said Bruce Schweiger, a Los
Angeles County deputy public defender, who alone has answered
more than 100 calls in the last three or 4 weeks.
``They are using a fire hose to extinguish a birthday
candle,'' he said.
San Francisco lawyer Jane Gelfand, whose Positive Resource
Center represents people with HIV, said, ``These are people who
are severely disabled with limited assets and income and
frequently cut off from family, friends or other social
One of her clients, Mark Pruitt, thought that he had
completed probation for a drunken-driving conviction in
Pruitt, 41, said he never heard anything further about the
incident until he got a notice from Social Security officials
last year saying that his SSI benefits would be suspended. He
said the SSI check provided one-third of his monthly income and
helped pay for some of the drugs he needs to combat full-blown
AIDS. He has diabetes and high blood pressure. Two hip
replacement surgeries, a degenerative shoulder condition and
deteriorating joints have left him unable to hold down jobs
requiring much physical exertion, Pruitt said.
In San Diego County, Chief Deputy Public Defender Bob Stall
said most of the cases ``are quite old, 15 years or older, and
involve nonviolent offenses, drugs, bad-check cases.''
One great-grandmother in Los Angeles lost her benefits
because she never completed probation on a 1973 drug possession
conviction. Dora Price, 65, spent six months in County Jail
that year and then violated probation early the next year,
court records show.
Price said she moved to Shreveport, La., to escape the
daily, unrelenting pressure from her drug-using friends to
resume her narcotics use.
There, she beat her drug habit and got ``a good-paying''
job making telephones for AT&T. She returned to Los Angeles in
the mid-eighties and has a clean record.
Her notice came June 17, suspending her $175 monthly SSI
check. She was left with $600 a month for rent, utilities and
Price got good news this week. A Los Angeles County
Superior Court judge, at the request of her public defender,
voided the arrest warrant.
Although the law is called the fugitive-felon law, former
SSI recipient Yolanda Randall, 50, never fled after she broke
probation 27 years ago over a gambling-related charge in Los
Angeles. Randall, 50, continued living in her home for 2 years
after the judge entered a bench warrant for her arrest in 1975.
Court records show that Randall's violation was failure to pay
a $150 fine.
Randall is disabled by obesity and arthritis, and has drawn
SSI since 1995, her sister, Nora Ashford, said. She was drawing
$750 a month when she got her notice on June 25. It also
ordered her to repay $18,652 in benefits she had already
``I took her to three stations trying to get her into
custody so we could clear up the warrant,'' Ashford said.
Nobody would take her. One officer referred her to the public
Lynch said such violators have no one to blame but
``You are supposed to pay for your crimes,'' he said. ``If
you have someone in their eighties with a warrant from their
forties, couldn't you argue they've had ample opportunity to
turn themselves in?''
One who tried that is Susan Irene Reid, who fled Los
Angeles after pleading guilty to kicking a police officer in
the leg in January 1988. Reid, who was a 24-year-old
psychiatric patient, said she agreed to take medication for her
illness and to remain on probation for a year. But she ran away
from the probation office on her first visit.
``I couldn't admit to my psychiatric problems, and I didn't
want to take medication,'' she said.
Over the next 11 years, Reid was taken into custody three
times-- first in Texas, where she turned herself in and spent 9
days in jail, and twice in Minnesota--on the outstanding
warrant. Each time Los Angeles authorities declined to
SSI helped pay her $400 monthly medication bill and
qualified her for assistance for psychiatric care to control
her manic depression, Reid said. But when the computers ground
out her name July 31 for that 1988 warrant, the agency
suspended the SSI.
Last week a judge dismissed the warrant, in part because
authorities chose not to seek extradition. Her payments will
resume when she provides a copy of the court records to Social
Security. Meanwhile, she said, she still has to battle Social
Security's claim that she owes back payments, which she
estimates could be at least $5,000.
The fugitive-felon program grew out of a provision of the
Welfare Reform Act of 1996, which also prohibited fugitives
from obtaining food stamps. Though the U.S. Department of
Agriculture moved quickly to implement the law, the Social
Security Administration did not.
In 2000, Social Security gained access to FBI computer data
on outstanding warrants. Early last year, the agency signed its
first contracts with states to compare the names of SSI
recipients to lists of fugitives provided by police. In return,
Social Security would provide law enforcement with the
addresses to which it mailed benefits.
In California, the program got started earlier than in most
states, Social Security officials said. The state's Department
of Social Services started providing Social Security with
addresses of SSI recipients it had matched with the Department
of Justice's outstanding warrant files by 1998, Napolski said.
In Los Angeles, authorities said they seldom bother with
probation violators or others accused of nonviolent offenses
that would not carry state prison time.
If such violators ever appear in court, it usually is
because the outstanding warrant surfaced in a later police
encounter, such as a routine traffic stop.
Only the more serious violators--those accused of murder,
rape or other crimes that would put them in a state prison--
prompt law enforcement to go to the expense of a search and
extradition effort, prosecutors and law enforcement officials
``If it's a probation violation, it usually means the
individual has not been sentenced to state prison,'' said John
Paul Bernardi, director of the Los Angeles County district
attorney's Support Operations Bureau.
``When it comes to felonies, you still have to analyze how
serious the offense is, how dangerous they are, its deterrence
role, and then you have to decide whether it's a wise
allocation of resources.''
If a trial will be required, the case may not be provable
if witnesses are no longer available or evidence is missing, he
LAPD Capt. James Miller, area commander of the 77th Street
Station, said that even serious larceny cases do not always
He cited a mid-eighties case in which prosecutors decided
not to extradite a man who had fled to the East Coast to escape
charges of grand larceny and receiving stolen property.
When asked about circumstances similar to Randall's
gambling-related probation violation, Miller said, ``Somebody
who has gone for 25 years without being picked up, she's
obviously changed her life, which is the whole purpose of
Schweiger, the Los Angeles deputy public defender, doesn't
advocate abandoning the fugitive-felon program. It just needs
to be amended, he said.
``The problem is that you have these two huge bureaucracies
that . . . don't take the human costs into account,'' he said.
``They are doing nothing but matching names and addresses
with checks without giving thought to the actual
consequences,'' he said.
The Commissioner should have the authority to pay benefits
where good cause is shown for such payment. Often, the
triggering offense is decades old and of no further interest to
the jurisdiction where it was committed. More important, for
people with mental impairments, the beneficiary may not even be
aware of the violation, may not have understood the terms of
parole or probation, or may have other misunderstandings about
his or her legal status. The examples that have come to my
attention since the summer on the SSI program make it clear
that people, even when they do learn from Social Security of
the violations, have great difficulty managing to clear it up,
especially if they are far away and actually have no money left
to travel. The Commissioner should have the authority to pay
benefits in these situations. In addition, the ``good cause''
exception should be extended to those in violation of parole or
probation requirements, and we believe that the ``good cause''
exception should apply to the SSI program as well. Regarding
attorneys' fees, we support the inclusion of provisions to
establish a mechanism in SSI for payment of attorneys' fees.
However, we are concerned that the sunset provision could add
unnecessary complexity and uncertainty to the program. In
addition, we understand the interest in extending the
attorneys' fees payment system to non-attorneys who are
successful in representing claimants. There are numerous issues
here, and they deserve full research and discussion before a
workable solution is devised. The issues should not be allowed
to impede the progress of the rest of H.R. 743, including the
extension of the fee payment system to SSI. We support the
provision providing for a GAO study of the issue with a report
due to Congress in 1 year. Thank you for this opportunity to
testify. We look forward to working with the Subcommittee for
passage of this legislation.
[The prepared statement of Ms. Ford follows:]
Statement of Marty Ford, Co-Chair, Social Security Task Force, and Work
Incentives Implementation Task Force, Consortium for Citizens with
Chairman Shaw, Representative Matsui, and Members of the
Subcommittee, thank you for this opportunity to testify regarding the
Social Security Protection Act, H.R. 743.
I am Director of Legal Advocacy for The Arc and UCP Public Policy
Collaboration. I am testifying here today in my role as co-chair of the
Social Security Task Force and the Work Incentives Implementation Task
Force of the Consortium for Citizens with Disabilities. CCD is a
working coalition of national consumer, advocacy, provider, and
professional organizations working together with and on behalf of the
54 million children and adults with disabilities and their families
living in the United States. The CCD Social Security and Work
Incentives Implementation Task Forces focus on disability policy issues
in the Title XVI Supplemental Security Income program and the Title II
CCD welcomes the opportunity to testify here today and appreciates
your holding a hearing regarding H.R. 743, the Social Security
Protection Act of 2003. We appreciate the hard work and the
perseverance of this Committee in addressing this important legislation
over the course of two Congresses and again in this 108th Congress.
Your leadership and commitment last year resulted in the passage of
the Social Security Program Protection Act of 2002, H.R. 4070, in the
House by a vote of 425 to 0. Clearly, the issues addressed in the
Social Security Protection Act are important to people with
disabilities who must depend on the Title II and Title XVI disability
programs. Furthermore, the Committee's proposed solutions are
bipartisan. We support your past efforts and encourage your work again
this year in pushing for passage of H.R. 743.
H.R. 743 is a very important bill for people with disabilities. We
believe that it should be enacted as soon as possible. People with
disabilities need the protections of the representative payee
provisions. People with disabilities who are attempting to work need
the statutory changes to the Ticket to Work program in order to better
utilize the intended work incentive provisions enacted in 1999. In
addition, beneficiaries with disabilities need the provision requiring
the Social Security Administration to issue written receipts whenever
beneficiaries report earnings or a change in work status. These
important provisions have not been controversial--in fact, they have
enjoyed significant bipartisan support--and have simply fallen prey to
the legislative process over the last two Congresses. We appreciate
your interest in moving H.R. 743 quickly so that these important
protections can become available to beneficiaries as soon as possible.
The remainder of this testimony will discuss many of the important
provisions included in H.R. 743. In some cases, we will make
recommendations for additional changes or further refinements to
enhance the usefulness of H.R. 743 from the perspective of
beneficiaries with disabilities. We stand ready to work with the
Committee and your staff on these recommendations in order to ensure
speedy enactment of the Social Security Protection Act of 2003.
Representative Payee Improvements
Approximately 6 million Social Security and Supplemental Security
Income beneficiaries have representative payees, often family members
or friends, who receive the benefits on behalf of the beneficiaries and
have a responsibility to manage the benefits on behalf of these
H.R. 743 includes important provisions strengthening SSA's ability
to address abuses by representative payees. The provisions would:
require non-governmental fee-for-services
organizational representative payees to be bonded and licensed
under state or local law;
provide that when an organization has been found to
have misused an individual's benefits, the organization would
not qualify for the fee;
allow SSA to re-issue benefits to beneficiaries
whose funds had been misused;
allow SSA to treat misused benefits as
``overpayments'' to the representative payee, thereby
triggering SSA's authority to recover the money through tax
refund offsets, referral to collection agencies, notifying
credit bureaus, and offset of any future federal benefits/
require monitoring of representative payees,
including monitoring of organizations over a certain size and
government agencies serving as representative payees.
We support these provisions, including establishing the definition
of ``misuse'' in the statute, rather than leaving it solely to
administration policy. We believe that such provisions should be
enacted. In addition, we believe that SSA should address the
accountability of state or federal agencies who serve as representative
payees and also ensure that governmental agencies or institutions are
not selected as representative payees where family or friends are
available, willing, and capable to serve as payee. This could be
achieved through SSA's monitoring efforts to implement the requirements
specified in Section 102(b) addressing ``periodic onsite review''.
As we have testified in the past, the chronic problem of
overpayments to beneficiaries in both Title II and Title XVI is a major
barrier to beneficiaries' ability to take advantage of the work
incentives programs, including the incentives of the Ticket to Work and
Work Incentives Improvement Act (TWWIIA). If not addressed,
beneficiaries will continue to be fearful of working.
As the system now operates, chronic overpayments to beneficiaries
result from significant delays in, and sometimes complete failure of,
SSA personnel recording earnings reports for working beneficiaries. As
we have noted before, we believe that part of the problem may be that
SSA workers do not get any credit for this work in their work
evaluations. In addition, there is not a well-defined process for
beneficiaries to use in reporting earnings. Beneficiaries often tell us
that they are very conscientious in reporting their earnings, but the
overpayments still occur over significant periods of time. When that
happens, beneficiaries are not equipped to know whether the benefit
amount they are receiving is correct or whether SSA has made an error
or failed to record earnings. Over time, overpayments build and it is
not unusual for beneficiaries to be told to pay back tens of thousands
of dollars. Beneficiaries are so fearful of overpayments, and the
inadequate notices from SSA that go with them, that the Ticket program
and other work incentives could fail.
We have urged SSA to establish a reliable, efficient, beneficiary-
friendly method of collecting and recording, in a timely manner,
information regarding a worker's earnings. In addition, SSA must adjust
benefits in a timely manner. CCD has further recommended that Congress
require SSA to forgive overpayments if the beneficiary is not notified
within a reasonable period of time.
We appreciate the inclusion in the Social Security Protection Act
of 2003, H.R. 743, of the Section 202 requirement that SSA provide a
receipt to the beneficiary whenever a change in earnings or work status
is reported. This requirement would remain in place until SSA develops
and implements a centralized computer file recording the date on which
a disabled beneficiary reports a change in earnings or work status.
These requirements could go a long way in helping to resolve some of
the problems with earnings reports. The effective date for the Section
201 civil monetary penalties could not go into effect until the
centralized computer file described in Section 202 is implemented. We
also believe that the effective date of Section 208 must be tied to
this important Section 202 provision regarding the central computer
file. In our view, it is impossible for SSA or the Office of Inspector
General to begin to judge whether there is any fraudulent intent on the
part of a beneficiary if SSA has no accurate method of determining
whether a beneficiary has properly reported earnings or changes in work
In addition, we understand that SSA is embarking on an initiative
to study the effects of electronic earnings reports for the
Supplemental Security Income program. We are pleased to see this
development and look forward to reports on its effectiveness and
possible applicability to the Title II disability programs. In the
meantime, the requirement for written receipts and a central computer
file are important protections for beneficiaries.
Attorneys' Fees in SSI
We have testified in support of the Subcommittee's efforts to amend
the statute to allow SSI claimants to voluntarily enter into agreements
with attorneys allowing SSA to withhold and provide direct payment of
attorneys' fees from their past due SSI benefits. This provision,
Section 302 of H.R. 743, is similar to the current provision in Title
II allowing such payment of attorneys' fees. We continue to support
such a provision because it will help ensure that claimants have
adequate representation to appeal their cases. The reasons behind the
withholding and direct payment of attorneys' fees in Title II cases
apply with equal force to SSI cases. The SSA disability determination
process is very complex and beyond the capacity, training, or
experience of many claimants to negotiate without knowledgeable
assistance. Furthermore, ensuring that attorneys will be paid a fee for
successful work on a claimant's behalf helps to ensure that a
knowledgeable, experienced pool of attorneys are available to represent
claimants. The limit on fees and the involvement of SSA in establishing
the fees helps to ensure that the fees are reasonable.
While we appreciate and support your inclusion of provisions to
establish a mechanism in SSI for payment of attorneys fees, we are
concerned about the inclusion of the three-year sunset provision
(Section 302(b)(2)). To our knowledge, there are no outstanding
significant policy concerns regarding the attorneys fees provisions in
the SSI program. Such a provision was included in H.R. 4070, which
passed the House with overwhelming support. We are concerned that a
sunset provision could add unnecessary confusion, complexity, and
uncertainty to the program without adding any benefit.
We are aware of the interest by some to extend the attorneys' fees
payment provisions to non-attorneys who are successful in representing
claimants. We have some concerns about this proposal. We believe that
Social Security claimants benefit from the legal training and testing
required of attorneys or members of the bar. Furthermore, state bar
associations screen potential members and provide on-going monitoring.
Attorneys found in violation of state bar codes of ethics and conduct
face a loss of their professional license to practice law. Claimants
who have been harmed by their attorneys' actions or failures have
recourse through the state bar complaint procedures.
While recognizing that many non-attorneys successfully represent
the interests of claimants in the SSA hearings and appeals processes,
there is no established system of training, certification, monitoring,
and enforcement available to protect beneficiaries from unscrupulous
non-attorneys. There are numerous issues involved here that deserve
full research and discussion before a workable solution is devised.
While the issue has merit and should be addressed, it should not be
allowed to impede the progress of the rest of H.R. 743. Therefore, we
support the provision in Section 302(c) providing for a GAO study of
the issue, with a report due to Congress in one year.
We support the provisions in Section 301 setting a cap on the
assessment owed to SSA by attorneys who have used the attorneys' fees
Work Incentives and Demonstrations
As you know, the CCD Task Forces supported the Ticket to Work and
Work Incentives Improvement Act on behalf of people with disabilities
who wanted to work but were prevented from doing so by the barriers
that existed in the Title II and SSI programs and Medicare and
Medicaid. We believe that the purpose of the bill was to ensure that
people with severe disabilities would not permanently lose needed
supports if they attempted to work and to expand their opportunities to
make those attempts.
It is clear that there are some technical problems that need
resolution through statutory change in order to ensure that the Ticket
program works as originally intended. There are similar changes needed
in the Commissioner's authority to conduct demonstration programs
related to work efforts. We support the inclusion of Sections 401
through 405 in H. R. 743 which will make those important adjustments.
At the same time, we ask the Subcommittee include a further
technical correction to TTWWIIA that would permit veterans vocational
rehabilitation programs authorized under Title 38 of the US Code
(Veterans Benefits) to serve as employment networks. This change would
respond to unsuccessful efforts made last year by one such Title 38
program to qualify as an EN in order to serve disabled veterans on
Good Cause Exception
We urge the Subcommittee to consider some additional changes in
Section 203, which addresses the denial of benefits to fugitive felons,
persons fleeing prosecution, and persons in violation of parole or
probation. While these are important considerations for ensuring the
integrity of the Social Security disability program, we are concerned
that the current law provisions for the SSI program, and the proposed
provisions for the Title II program, are overly broad and are likely
more inclusive in their reach than originally intended. The current law
SSI provisions and the Section 203 provisions of H.R. 743 need some
additional refinement in light of recent experience in implementation
in SSI. Included as Appendix A are three examples of actual cases that
have come to our attention from recent implementation of the SSI
provisions. In addition, we are aware of the situations portrayed in
the September 6, 2002 article in the Los Angeles Times, by reporter
We strongly believe that it is important for the Commissioner to
have authority to pay benefits where good cause is shown for such
payment. The good cause exception in the bill, Section 203(a)(4),
currently applies only to those considered fleeing felons and not those
in violation of parole or probation requirements.
We believe that the good cause exception should also apply to
parole or probation violations, especially where the original offense
was a misdemeanor and does not rise to the level of offense delineated
under the fugitive felon section. Further, we believe that the good
cause exceptions should apply to the SSI program as well as to the
Title II disability programs.
Often, the triggering offense is decades old and of no further
interest to the jurisdiction where it was committed. More importantly,
we are concerned that, for people with mental impairments, including
cognitive limitations, the beneficiary may not be aware of the
violation, may not have understood the terms of parole or probation, or
may have other misunderstandings about his/her legal status. Where the
Commissioner finds that the individual is only in technical violation
of a judicial order, where the original jurisdiction has no continuing
interest in the individual, or where the individual's mental impairment
is a factor in the violation, the Commissioner should have the
authority to pay benefits. We urge the Subcommittee to support such a
``good cause'' exception for both the Title II and SSI programs.
Thank you for this opportunity to testify on H.R. 743, the Social
Security Protection Act of 2003. We believe that none of the issues
that have recently been raised about this legislation--including
withholding of fees for non-attorney claimant representatives and the
pension offset for certain public employees--should delay swift passage
of HR 743. Action on legislation to restore integrity to the
representative payee system is long overdue. We look forward to working
with the Subcommittee for passage of this important legislation.
ON BEHALF OF:
American Association on Mental Retardation
American Congress of Community Supports and Employment Services
American Council of the Blind
American Network of Community Options and Resources
Brain Injury Association of America
Inter-National Association of Business, Industry and Rehabilitation
International Association of Psychosocial Rehabilitation Services
National Alliance for the Mentally Ill
National Association of Developmental Disabilities Councils
National Association of Protection and Advocacy Systems
National Organization of Social Security Claimants' Representatives
Paralyzed Veterans of America
Research Institute for Independent Living
The Arc of the United States
United Cerebral Palsy
World Institute on Disability
In 1988, a severely psychotic, mentally ill woman from Rhode Island
was wandering the streets, walked to Massachusetts, and found a house
to sleep in. She was arrested and charged with night-time breaking and
entering (B&E). She was arraigned and given a return date. However, on
the date of arraignment, she was admitted to a psychiatric facility and
records document that she was ``delusional and psychotic.'' She was
hospitalized for several months. She was discharged shortly before the
court date but had no memory of the incident and arraignment and left
the community. A warrant was issued. A few days after the court date,
she was again involuntarily committed due to her ongoing mental
She continues treatment for her mental illness and was unaware of
the outstanding warrant until she received the SSA notice terminating
her SSI benefits. When she and her social worker went to the SSA
district office about the notice, she was told that she could not
appeal until she cleared up her warrant. Charges have been dismissed
and benefits reinstated; however, she has an overpayment which remains
The individual was on probation in Massachusetts. She told her
probation officer (PO) that she was moving to Rhode Island. The PO
tried to transfer supervision to Rhode Island, but did not have the
proper government address. As a result, a default warrant issued. Her
PO submitted a letter that confirmed the above facts and, in addition,
stated that he believed that the individual did not intentionally avoid
probation in Massachusetts.
In July 2000, a Minnesota resident attempted suicide in Ohio by
jumping off a railroad bridge. The police were called and train traffic
was stopped while they talked him down. The police took the individual
to a mental health facility. Several days later, they issued a warrant
for his arrest for interruption of public services, which is a felony
in Ohio. However, they never served the warrant, even though they had
his address. Several weeks later, he moved to Minnesota where he was in
and out of mental hospitals, had a few more suicide attempts, but
finally his condition was stabilized. He then started living in a group
home, takes his medications and receives ongoing mental health
In February 2002, he received a notice from SSA terminating his SSI
benefits because of the outstanding warrant from Ohio. Both his
therapist and attorney contacted the authorities in Ohio but failed to
get the charges dismissed. The individual maintained that he was unable
to go to Ohio to resolve the warrant because he had no money and the
trip would be harmful to his mental health.
Chairman SHAW. Thank you, Ms. Ford. Mr. Kaufman?
STATEMENT OF ARTHUR KAUFMAN, OWNER AND CHIEF EXECUTIVE OFFICER,
INSURING ASSISTANCE, INC., HILLSBOROUGH, NEW HAMPSHIRE, AND
PRESIDENT, NATIONAL ASSOCIATION OF DISABILITY REPRESENTATIVES,
Mr. KAUFMAN. Thank you. Good morning, Chairman Shaw and
Members of the Subcommittee. My name is Arthur Kaufman, and I
am President of NADR. I am also a full-time practicing
representative for claimants seeking disability benefits from
Social Security, a vocational consultant, and function as an
employment network for the Ticket-to-Work program. The NADR is
a not-for-profit organization in its second operational year.
Our job is to serve the needs of our members in the areas of
professional education and enhancement of representational
skills, and our attempt is to provide highly ethical and
principled representation. We are now in the process of
developing a set of standards to augment those presently
codified by the Administration. Many of our members have had
long and diverse careers which have prepared them to be
competent representatives. These include but are not limited to
former SSA employees, nurses, physical therapists, social
workers, and even attorneys. Clearly, none of us is an amateur
in this field, and we provide quality representation to
impaired people trying to obtain disability benefits. Our
members and executive board would like to congratulate the
Chairman and Ranking Member for a bill that effectively
addresses the abuse of vulnerable Social Security beneficiaries
by strengthening the protections for recipients who are
dependent upon representative payees to manage their financial
affairs, the common-sense changes allowing the Inspector
General to fight systemic fraud and abuse, the Ticket-to-Work
program moving persons with disabilities to meaningful
employment, and the protection of dwindling Social Security
The one key area that we believe would enhance this
legislation is simply to establish parity for both attorneys
and non-attorneys who represent persons seeking Social Security
Disability Insurance (SSDI) and SSI benefits in the area of fee
withholding. This would increase the field of qualified
representatives, thus providing greater service to persons with
impairments. Presently, only non-attorneys are eligible to have
their fees withheld by SSA. Non-attorneys, although explicitly
recognized in the Tax Code as equals in all other aspects of
representation, are not allowed to utilize this service. The
bill, H.R. 743 continues this disparity within SSDI and extends
it to SSI benefits as well, while entirely ignoring non-
attorney representatives. After reviewing the record from the
2001 hearing, I have concluded that the overwhelming theme from
this Committee is that you want more qualified representatives.
We strongly concur. We propose that parity in fee withholding
would assist in accomplishing this goal. Confident
representatives are presently kept out of the marketplace
because they cannot compete with attorneys who receive an
unfair business advantage over non-attorneys due to this
present lack of parity. You have been sensitized via prior
written testimony that the lack of the equivalent to bar
oversight for non-attorneys may result in unqualified, poorly
prepared, or even unscrupulous representation.
It is asserted for this reason that fee withholding for
non-attorney representatives should be deferred until a study
is completed. We believe that this argument is without merit.
Federal regulations of the SSA clearly outline not only the
affirmative responsibilities of all representatives but also
provide for severe penalties to anyone who does not abide by
those rules. The Administration may and does prohibit anyone
from practicing in this arena on a Federal level if it deems
such is appropriate. This applies equally to attorneys and non-
attorneys. Clearly, this is one area where our colleagues who
also practice law feel parity is acceptable. Representatives
must have their fees approved by the Administration. Current
law requires the SSA oversight of all fees, and it allows all
claimants to attest any fees approved. The issue of parity is
not new. During the last 15 years, I, and many fellow NOSSCR
members, have frequently expressed concerns about the disparate
treatment in fee withholding under the statute. I have
previously expressed my dissatisfaction with the utilization of
the word ``attorney'' in regard to fee withholding, and I have
asked NOSSCR to assist in crafting legislation that would
simply change the term to ``appointed representative.'' With
your permission, I would like to submit my letter detailing my
concern to NOSSCR for the record.
[The information follows:]
Insuring Assistance, Inc.
Hillsborough, New Hampshire 03244
November 26, 2001
Executive Director NOSSCR
6 Prospect Street
Midland Park, NJ 07432-1691
I have been a NOSSCR member for nearly 15 years.
I want express my extreme disappointment in my status within NOSSCR
as a non-attorney representative and NOSSCR's apparent stand regarding
such relative to HR 3332. This bill is obviously supported and probably
even developed by NOSSCR yet it essentially discriminates against non-
I agree with the intent of this legislation but am displeased that
the fee withholding provisions are only applicable to representatives
who are attorneys. Many competent representatives throughout the
nation, like myself, have been providing this service for years yet are
unable to partake of this provision which is limited strictly to
attorney representatives while novice attorneys fresh out of law school
can engage the Administration to act as their collection agency. This
exclusion essentially demotes highly qualified non-attorney
representatives to a second class status.
As an example of the impact this has had specifically upon me, I
would briefly like to provide you with the following. I have provided
Social Security Representation services to a Long Term Disability
Insurance Carrier for about 11 years. They were recently purchased by a
much larger conglomerate. They have now given a directive to their
Social Security specialists that they cannot refer cases to
representatives unless a fee can be withheld and paid directly to that
person. A law student fresh out of law school, who has no knowledge nor
history of this extremely complex administrative process beyond ``book
learning'' can get their fees withheld and paid by the Social Security
Administration while I cannot. While fairness should not be an issue,
it becomes one when I cannot achieve parity due to legislative
I do not know whether the writers of this bill understood that non-
attorneys could even be representatives but certainly NOSSCR
I ask that you, as executive director of NOSSCR, please advocate my
position. If NOSSCR is truly ``committed to providing the highest
quality representation and advocacy on behalf of persons who are
seeking Social Security and Supplemental Security Income'' as the
statement of purpose professes, then I ask you to commit your position
on the board to that purpose.
It is NOSSCR with an R for Representatives not NOSSCA with an A for
I have written to David Green who is my representative to the board
and will be forwarding a similar letter containing much of the above to
all board members. Please have NOSSCR press for a change in HR 3332
from the word ``attorney'' to the term ``appointed representative'' and
as the leader of the organization that I have supported with my dues
for 15 years I ask that you individually do the same to your
If you have any questions please feel free to contact me.
Arthur Kaufman, M.Ed.
Mr. Chairman, if the goal of this Committee is to provide
increased numbers of qualified representatives in an
expeditious manner, then we submit that providing a level
playingfield for all professional representatives. Parity will
help achieve this goal. I strongly encourage you to amend H.R.
743 to initiate fee withholding parity for professional non-
attorney representatives under SSDI as well as any changes that
may be made to SSI. On behalf of the NADR, I thank you for
inviting me to comment on this important legislation. We look
forward to working with you toward enacting this legislation in
a manner that will increase access to quality representation
for our citizens with significant impairments. Thank you.
[The prepared statement of Mr. Kaufman follows:]
Statement of Arthur Kaufman, Owner and Chief Executive Officer,
Insuring Assistance, Inc., Hillsborough, New Hampshire, and President,
National Association of Disability Representatives, Framingham,
Good morning, Chairman Shaw, Congressman Matsui and members of the
Subcommittee. My name is Arthur Kaufman. I am honored to appear before
you today to talk about H.R. 743, the Social Security Protection Act of
2003, and in particular the issue of representative fee withholding.
The National Association of Disability Representatives, Inc. (NADR)
is a relatively new not-for-profit organization in its second
operational year. Our job is to serve our existing membership's needs
in the area of professional education, political action, and in
maintaining and enhancing the skills of the membership. In our attempts
to provide highly ethical and principled representation, we are now in
the process of developing a Code of Standards for NADR members as well
as what is tentatively called the NADR Satisfaction Guarantee for our
members to give to their clients. I would like to submit for the record
a draft of NADR's ``Methodology to Achieve Stated Goals and
Objectives,'' which makes reference to these efforts.
NADR has recently applied for membership within CCD and such is
pending. We have been notified by the membership committee chair that
we have been recommended for membership will be serving as a member on
their Social Security task force.
Many of NADR's members who now perform professional disability
representation were previously employed or contracted in various
positions within the Social Security Administration. These positions
have included claims representatives, examiners, supervisors, executive
assistants, field office managers, paralegals, and agency analysts. We
also have masters level nurses, social workers, physical therapists,
lawyers, and vocational rehabilitation professionals, and others coming
from a multitude of professional or educational backgrounds bringing
various skills to claimant representation. None of us is an amateur in
this field and we provide quality representation to impaired people
trying to obtain Social Security Disability Benefits as well as
Supplemental Security Income benefits. We are delighted that you have
sought our views on this important legislation.
Our members and executive board would like to congratulate the
Chairman and ranking member for a bill that effectively addresses the
abuse of vulnerable Social Security beneficiaries by strengthening
protections for recipients who are dependent upon representative payees
to manage their financial affairs, the common sense changes allowing
the Inspector General to fight systemic fraud and abuse, the Ticket-to-
Work program moving persons with disabilities to meaningful employment,
and the protection of dwindling Social Security resources. It is
evident that striving toward individual actualization for our
beneficiaries with disabilities while safeguarding our diminishing
fiscal resources are clearly key considerations of this Subcommittee,
as well as our organization, and I commend you for these efforts.
I am not only appearing before you as the president of NADR, but
also as a person who has been successfully representing persons with
impairments before the SSA since 1986. My background is Vocational
Rehabilitation, and in the past year I became an employment network
under the Ticket-to-Work Program. I have also served as a vocational
expert for the SSA for about 2 years.
The one key area that NADR believes would enhance this legislation;
is to simply establish parity for both attorneys and non-attorneys who
represent persons seeking SSDI and SSI benefits.
Presently only attorneys are eligible to have their fees withheld
by SSA. Non-attorneys, although explicitly recognized as equals in all
other aspects of representation, are not allowed to utilize this
service. H.R. 743 continues this disparity within SSDI and further
proposes to extends it to SSI benefits, while entirely ignoring non-
Non-attorney representatives have historically represented
claimants applying for SSI benefits even though our fees were not
withheld nor guaranteed by the Administration. Many of our members
client base is with such individuals.
After reviewing the written testimony and subsequent submissions
from the May 17, 2001 hearing, I concluded that the overwhelming theme
from this Subcommittee is that you want more qualified representatives
to assist claimants in the cumbersome application and appeals process
of SSDI and SSI. We strongly concur. We propose that parity in fee
withholding would assist in accomplishing this goal. Competent
representatives are presently kept out of the marketplace because they
cannot compete with attorneys who receive an unfair business advantage
over non-attorneys due to this present lack of parity.
The disparity of fee withholding is elucidated by these small
For more than 10 years I had been referred clients by an LTD
insurance carrier to help their clients get SSDI. That carrier was
purchased about a year ago by another LTD insurer. Upon completion of
the purchase, I was notified that my services were no longer going to
be utilized as the new carrier is only referring cases to persons or
companies who can have their fee withheld and paid by SSA. After 10
years, I no longer get referrals from this company.
Another disparity arises when an attorney fresh out of law school
having never seen a Social Security application nor spoken to an
Administrative Law Judge, represents his or her first client and wins.
The SSA will guarantee that he or she is paid. I, on the other hand,
with more than 17 years experience, cannot utilize this service, even
though my skills and experience far outweigh this attorney's. From my
time as a vocational expert at SSA, I was oftentimes appalled by the
lack of knowledge many attorneys exhibited when appearing before the
ALJ in my Local Office of Hearings and Appeals (at that time there were
no non-attorney representatives actively practicing in that office).
Mr. Chairman, I would respectfully submit that simply the existence
of a law degree does not ensure competence in a complex area such as
this. Many representatives from our organization can enumerate examples
of cases which we have taken after an attorney was unsuccessful in his
or her representation. With your permission, I would like to submit for
the record letters that were written to our members by claimants
describing how pleased they were with their non-attorney
You have been sensitized via the written testimony as well as the
oral presentations made by the colleagues of mine on this panel that
the lack of an equivalent of Bar oversight for non-attorneys may result
in unqualified, poorly prepared, or even unscrupulous representation.
It is for this reason they claim that fee withholding for non-attorney
representatives should be deferred until the study at Sec. 302 (c) of
H.R. 743 is completed, and that such withholding not commence under
Title II. We believe that this argument is without merit. The
regulations of the Social Security Administration clearly outline not
only the affirmative responsibilities of all representatives but also
provide for severe penalties for representatives who do not abide by
the rules for representatives outlined by the Social Security
Administration (20 C.F.R. Pt. 404, Subpt. R for Title II, 20 C.F.R. Pt.
416, Subpt. O for SSI, and 62 F.R. 41,404-41,418, August 4, 1998, Final
regulations that establish Standards of Conduct for Claimant
It is imperative to note that the attorney Bar does not act pro-
actively to determine nor monitor whether attorneys are practicing good
law. Rather it relies upon complaints being made by a dissatisfied
party or member of the court. It is then, and only then, that an
inquiry would commence. The Social Security Administration system
presently has the rules and regulations in place to perform the same
duties as each State's individual bar. If a dissatisfied claimant or a
member of the Administration feels that the representative, whether
they are an attorney or not, has not performed to standards which are
expected, they have the right to complain directly to the Social
Security Administration and that complaint will be evaluated. These
rules however are uniform and apply equally throughout the nation.
Unfortunately the same case cannot be made regarding each individual
State's Bar. Furthermore, since an attorney does not need to be
admitted to a State Bar to practice before the Social Security
Administration, many attorneys provide representation in more than one
State. The uniformity of rules on a federal level provides a far
superior system for maintaining quality representatives than
individually nuanced State rules.
The Administration may, and does prohibit anyone from practicing in
this arena on a federal level if it deems such is appropriate. This
applies equally to attorneys and non-attorneys alike. Clearly, this is
one area where our colleagues who also practice law feel parity is
The idea that attorneys have more at stake so they will be better
practitioners is invalid. Clearly even disbarred attorneys still have
skills that can be transferred to gainful employment in another field
of endeavor. The same is true for non-attorney representatives.
However, most of us are single practitioners or ``mom and pop shops''
where husbands and wives provide a service of Social Security
representation. We do not provide representation for Worker's
Compensation, Personal Injury, ERISA, or do wills, divorces, or any
other area of law. We are highly trained specialists who focus our
knowledge and understanding to the single area of Social Security
representation typically on a full-time basis. Because this is our
primary focus, we are astutely familiar with the rules, regulations and
laws surrounding SSDI and SSI. This is not necessarily the case with
Since we ``have all our eggs in one basket'' our incentive to excel
in our career and avoid any negative publicity not to mention
condemnation from the Social Security Administration is paramount.
Should we be unqualified, or provide poor or unscrupulous
representation then the marketplace would soon drive us out of a job
and, in all likelihood, our career. Such cannot be said about the
Currently, any representative, whether they are an attorney or not,
must have their fee agreement or petition approved by the
Administration. The oversight and protection by the Social Security
Administration does not stop there however. Even after a fee has been
approved, claimants are given the additional security to dispute the
amount of and entitlement to a fee by a representative. This
notification is provided directly to the claimant in the Notice of
Award by the Administration on any claim where there has been
professional representation involved.
The withholding of fees has never been the central focus of NADR's
legislative agenda, but it is rather to obtain parity in the
representation of persons with impairments before SSA. Our membership
has divergent opinions about the utilization of fee withholding, but
has significant interest in achieving an equal status with
representatives who also practice law.
We sympathize with the members of the Committee who have been told
that this issue had not surfaced until late in the 107th Congress, but
this is simply is not the case. Having been a member of the National
Organization of Social Security Claimants' Representatives (NOSSCR) for
more than 15 years, many of the non-attorney colleagues had frequently
expressed concerns about the disparate treatment we have received from
that organization. My concerns crescendoed when H.R. 3332 was
introduced early in the 107th Congress. I personally contacted the
Executive Director as well as all Circuit Representatives of NOSSCR and
clearly expressed my dissatisfaction with the utilization of the word
``attorney'' in regards to fee withholding. I explicitly asked them to
assist in crafting legislation that would change the term to
``appointed representative.'' I was told that such could not be
addressed at that time, but could be in future legislation. I would
like to submit the letters detailing my concerns to NOSSCR to the
Committee with my testimony.
The disregard of non-attorney representatives' concerns within
NOSSCR led me to run for the presidency of NADR, and bring these
concerns before Members of Congress, and in particular, this Committee.
Being aware of these facts, it is my belief that the members of the
Committee would not knowingly want to do damage to my profession.
On behalf of NADR, I strongly encourage you to amend H.R. 743 to
allow professional non-attorney representatives to receive equitable
treatment from SSA in all areas by initiating fee with-holding parity
under SSDI, as well as in any changes which may be made to SSI. We
believe that all qualified representatives should receive the identical
benefits that attorneys derive from the Social Security Administration
in all areas because all professional representatives, whether or not
they are attorneys, are subject to the same regulations and codes of
conduct when representing claimants before the Administration.
I am confident that the members of this Subcommittee are fair-
minded, and will therefore want to take the necessary steps to provide
parity in the way all representatives are treated by the SSA. If the
goal of this Committee is to provide increased numbers of quality
representatives in an expeditious manner, then we submit that providing
a level playing field for all professional representatives--parity--
will help achieve this goal.
On behalf of the National Association of Disability
Representatives, Inc. I thank you for inviting me to comment on this
important legislation. We look forward to working with you toward
enacting this legislation in a manner that will increase access to
quality representation for our citizens with significant impairments.
Chairman SHAW. Thank you. Mr. Morris?
STATEMENT OF RICHARD P. MORRIS, PRESIDENT, NATIONAL
ORGANIZATION OF SOCIAL SECURITY CLAIMANTS' REPRESENTATIVES,
MIDLAND PARK, NEW JERSEY
Mr. MORRIS. Thank you, Mr. Chairman. Mr. Chairman, Members
of the Social Security Subcommittee, I thank you for inviting
me this morning to testify at this hearing on the Social
Security Protection Act of 2003. I am Richard Morris. I am the
President of the NOSSCR. The NOSSCR was founded over 20 years
ago as a professional association of over 3,400 attorneys and
other advocates who represent individuals seeking Social
Security disability or SSI benefits. As you know, the SSA's
disability determination system is a complex, multi-level, and
often time-consuming process. Appealing the denial of an
application for disability benefits is a daunting task for
anyone without the necessary legal experience, but for
individuals who are in poor health or disabled, the procedural
hurdles that must be cleared in order to obtain disability
benefits can often seem insurmountable. We are appreciative of
your commitment to this legislation, which is of great
importance to these claimants. Although we discuss several of
the provisions we support in our written submission, including
the added protections for beneficiaries who have representative
payees and the reduction of the user fee, in my testimony this
morning, I would like to focus on the sunset provision for
Title XVI withholding as well as the GAO study.
Although we support the extension of the fee payment
process to Title XVI, we are very dismayed by the addition of a
sunset provision for this program. Enactment of an attorneys'
fee payment system with an ``end date'' will undercut its very
purpose, which is to enable SSI claimants seeking an attorney
to hire one. I know that many of my attorney colleagues will
conclude that the future for this provision is too uncertain.
In the meantime, SSI claimants will continue to face
difficulties in hiring an attorney and thus securing
representation. The sunset provision shortchanges these
claimants, and we strongly urge its deletion from the bill. We
do support the provision that requires the Comptroller General
to undertake a study regarding fee withholding for non-attorney
representatives. The NOSSCR wants to ensure that claimants have
equal protection regardless of their representatives, and we
echo the advocacy community's concern with expanding the system
to non-attorney representatives. Because of the importance of
the outcome of Social Security disability appeals, we believe
the issues of qualifications, competency, accountability,
ethics, and training should be studied by GAO in the report
mandated by this legislation. Our accountability concerns do
not pertain to paralegals employed by legal service
organizations or law firms. The claimants they represent are
afforded the same protections, which I will discuss, as
claimants represented by attorneys in those organizations or
To be licensed to practice law, individuals in every State
must pass the minimum of a 2-day bar exam and must prove they
meet the character requirements necessary for the practice of
law. In contrast, in order to represent individuals before the
SSA, the only requirement is completion of the 1-page
``Appointment of Representative'' form, which requires only the
representative's name, address, and telephone number. The SSA
only relies on the representative's self-certification as to
their good character and reputation. Others would suggest that
the ethical requirements that govern the practice of law are
similar to 2 pages of Social Security regulations entitled
``Rules of Conduct and Standards of Responsibility for
Representatives.'' The truth is that the actions of attorneys
are much more heavily regulated and face greater scrutiny than
the actions of non-attorney representatives. In every Social
Security disability case, a comprehensive cannon of ethics
regulates the conduct of attorneys and operates in addition to
any Social Security rules of conduct. Unlike many voluntary
association's conduct guidelines, State bar ethical cannons are
not hollow documents. These cannons are comprehensive, and they
are enforced. Failure to abide by them will result in fines,
censure, or even disbarment.
Finally, if an unaffiliated, non-attorney representative
behaves unethically, the client is limited to complaining to
SSA. The client cannot bring a charge against a non-attorney
representative before an ethics Committee because such a
committee does not exist. The SSA has no obligation to
investigate the misconduct of a non-attorney representative,
unlike a State bar commission, and SSA is the only entity that
can take action against those unaffiliated non-attorney
representatives who would bilk or otherwise harm Social
Security disability claimants. The Social Security disability
process is designed to benefit claimants. Expanding the system
to include withholding for non-attorneys will harm these
claimants, and such an expansion is fraught with many problems
including the lack of minimum levels of competence for non-
attorney representatives, the lack of controls necessary to
protect claimants, and the lack of standards regulating such
individuals. When Congress enacted in 1965 the law allowing
only attorneys to receive direct payment of their attorneys'
fees, it did not do so to give attorneys a competitive
advantage in this field. It did it to protect those most
vulnerable members of society. In conclusion, the members of
NOSSCR and those claimants we represent thank the Chair and all
Members of this Subcommittee for your interest. I would be
pleased to respond to any questions you might have. Thank you.
[The prepared statement of Mr. Morris follows:]
Statement of Richard P. Morris, President, National Organization of
Social Security Claimants' Representatives, Midland Park, New Jersey
Mr. Chairman, Congressman Matsui, and the Members of the Social
Security Subcommittee, thank you for inviting me to testify at today's
hearing on the Social Security Protection Act of 2003. I am Richard P.
Morris, the president of the National Organization of Social Security
Claimants' Representatives (``NOSSCR'').
The issues that you are discussing today are of great importance to
claimants, to beneficiaries, and to those legal advocates whom they
choose to represent them. We support this legislation, including those
provisions that provide protections for claimants who require
representative payees, attorney fee payment system improvements, and
amendments to the Ticket to Work Act. We do have some concerns
regarding provisions relating to fugitive felons, which are addressed
later in our testimony.
Founded in 1979, NOSSCR is a professional association of attorneys
and other advocates who represent individuals seeking Social Security
disability or Supplemental Security Income (``SSI'') benefits. NOSSCR
members represent these disabled individuals in legal proceedings
before the Social Security Administration and in federal court. NOSSCR
is a national organization with a current membership of 3,400 members
from the private and public sectors and is committed to the highest
quality legal representation for claimants.
An applicant for any type of Social Security benefit may choose to
be represented at all stages of the process. However, I, and the other
members of NOSSCR, typically represent individuals who are seeking
disability benefits. As an attorney in a two-person law firm in New
York, I have represented claimants for the past twenty-six years. While
I represent claimants from the initial application through the Federal
court appellate process, the majority of my cases are hearings before
Social Security Administrative Law Judges and appeals to the Social
Security Administration's Appeals Council.
Representation is a Valuable Asset for Claimants and for the
As you know, the Social Security Administration's disability
determination system is a complex, multi-level, and often time-
consuming process. Appealing the denial of an application for
disability benefits is a daunting task for anyone without the necessary
legal experience, but for individuals who are in poor health or
disabled, the procedural hurdles that must be cleared in order to
obtain disability benefits can seem insurmountable. As a result, many
of the hard working men and women applying for Social Security
disability insurance benefits or SSI benefits choose to retain an
attorney to help them with their appeal.
It is not surprising that these individuals want to have legal
representation, in light of the complexity of the disability
determination process, the individual challenges each case contains,
and the undeniable importance of the outcome. Exactly why a claim has
been denied is frequently a mystery to the claimant who receives an
initial denial notice. The men and women that come to my office often
have been out of work for many months and are seeking the disability
benefits for which they and their employers have paid FICA taxes. Many
have no income other than the financial support they receive from their
friends, family, or church or synagogue. Most have no health insurance
and cannot pay for the medical treatments necessitated by their sudden
disability. These men and women understand that their family's welfare
may be dependent on receiving disability benefits and the accompanying
Medicare or Medicaid health insurance coverage.
The ability to have an experienced professional provide legal
assistance is certainly valuable for claimants. The Social Security
Administration has found that almost 75 percent of Social Security
disability claimants were represented by an attorney in 2000.
Approximately 64 percent of disability claimants who were represented
at the hearing level were awarded disability benefits, while only 40
percent of claimants without representation were determined to be
eligible for such benefits.
We believe this discrepancy between approval rates is due, in large
part, to the assistance of a knowledgeable representative who knows the
sequential evaluation system set forth in the regulations and Social
Security Rulings. The representative can marshal evidence from doctors
and hospitals, school systems, vocational testing centers, previous
employers, and others who can shed light on the claimant's entitlement
to disability benefits.
Such trained legal professionals can also thoroughly interview
vocational and medical witnesses during the hearing before the
Administrative Law Judge. These are daunting tasks for pro se
claimants, especially when we consider that they are in poor health and
often have only limited education. Indeed, the Social Security Act
requires the Social Security Administration to provide information on
options for seeking legal representation, whenever the agency denies a
claimant's application for benefits.
It is my experience that attorneys are also a valuable resource for
the Social Security Administration by helping to streamline the
disability determination process. Attorneys and other representatives
routinely explain the disability determination process and procedures
to their clients with more specificity than the Social Security
Administration's information specialists. Additionally, they ensure a
more efficient system by developing an accurate and complete medical
and vocational record and presenting the supporting documentation and
statements that the adjudicators require for a full and fair evaluation
of the claim. Oftentimes, the evidence we obtain and the legal briefs
we prepare on behalf of our clients contain the requisite evidence to
support a finding of disability by an Administrative Law Judge without
the necessity of a hearing, thereby saving time and expense for both
the Social Security Administration and the claimant.
Clearly, legal representation is needed and desired by Social
Security disability claimants and is beneficial to the disability
determination system in general. We believe that the Social Security
Protection Act of 2003 makes needed reforms to the user fee tax and
increases the availability of representation for SSI claimants seeking
Rationalize the Amount of the User Fee
In an effort to ensure the availability of representation for
claimants who desired it, Congress, in 1965, enacted a system for
direct withholding of attorneys fees from a Social Security disability
claimant's award. The legislation you are considering today corrects a
serious and, we believe, unintended consequence of an amendment added
by the Ticket to Work Act during the 106th Congress. Although this
clearly was a landmark piece of legislation, the Act also established,
for the first time, a user fee tax to be charged to attorneys whenever
the Social Security Administration pays an attorney's fee. The statute
set the user fee as 6.3% of the amount of the attorney fee. This
assessment is unfair because the amount of the charge bears no
relationship to the cost of providing the service.
When an attorney is successful in proving that a claimant is
eligible for benefits, the Social Security Administration computes the
amount it owes to that claimant. Under the attorney fee agreement
provision of the Social Security Act, an attorney may receive 25
percent of the claimant's past-due benefits or $5,300, whichever amount
is less. The Social Security Administration calculates the claimant's
past-due benefits, determines 25 percent of the amount, and then
determines whether that amount exceeds $5,300. This is a routine
calculation, which does not require a substantial amount of time or
effort. Furthermore, although the agency has indicated it cannot
calculate the actual cost of writing a check for an attorney's fee, we
note that the Social Security Administration website, in encouraging
beneficiaries to use direct deposit for their checks, states, ``It
costs 42 cents to process and mail each check, compared to 2 cents for
direct deposit.'' (Source: www.ssa.gov/deposit/DDFAQ898.htm).
This 6.3 percent user fee, which may total as much as $334 for the
simple administrative task of writing a check, is assessed regardless
of how long it takes for the Social Security Administration to issue
the fee check. As this Subcommittee has noted in past hearings, the
pace of fee payments has slowed substantially in recent years. NOSSCR
members report that the processing and payment of attorneys' fees from
the Social Security Administration often takes as long as one year.
At least once a week, a member has advised me that he or she is
taking a bank loan or using a line of credit for the first time in
order to meet payroll, because the agency is not paying the fees in a
timely manner. This has led many attorneys to reduce their staffs.
Others have decided to leave this area of practice altogether, and many
more are considering substantially reducing this line of casework in
their offices. As a result, the most vulnerable claimants--those with
serious physical or mental impairments, those with financial
challenges, and those who do not or cannot understand the disability
claims process--are often left to find their own way through the Social
Security Administration's labyrinthine bureaucracy. This bill seeks to
reverse this trend and to encourage attorneys to continue providing
this much-needed public service by enacting rational and equitable
modifications to the user fee tax. For this reason, we support the
reduction of the user fee tax, as provided for in this legislation.
Improve Access to Legal Representation for Supplemental Security Income
As you know, SSI is designed to assist the most financially
vulnerable members of our society. Those who apply for disability
benefits from the SSI program must meet very low income and resource
limits, in addition to meeting the standard for establishing
disability. SSI claimants are often in dire financial and health
straits; an award of benefits will provide a monthly subsistence check
and access to health care through the Medicaid system in most states.
Many SSI claimants want and need representation for the same
reasons that Social Security disability claimants do. Legal services
programs across the country provide excellent representation for many
SSI claimants. Unfortunately, many of these legal services programs are
under-funded and unable to accept all of the SSI claimants who seek
their assistance. SSI claimants often cannot retain a lawyer from the
private sector, not because their cases lack merit, but only because
the attorneys cannot take the risk of not being paid even if the claims
are awarded. Some of the attorneys who used to take these cases on a
pro bono basis or with a recognition of the uncertainty of payment can
no longer afford to do so, in light of the impact of the user fee tax,
We believe that this lack of availability of representation
explains the statistics that show only 46 percent of SSI claimants were
represented at the hearing level in 2000, compared to almost 75 percent
of Social Security disability claimants. As noted above, represented
claimants fare better than do unrepresented claimants in the disability
We also believe that extending the attorney fee direct payment
system to SSI will bring the availability of counsel for SSI claimants
to the same level as for Social Security disability claimants.
It is our position that establishing a fee payment process for SSI
claims, as provided by this legislation, would address directly the
underlying reason that many attorneys will no longer accept SSI cases:
lack of assurance of receiving their fee if the outcome is successful.
If assured of the payment of their fee in successful cases, many
attorneys are ready, willing, and able to undertake representation for
many SSI claimants. If this legislation is enacted, SSI claimants who
want to have representation would find it generally available. Only if
the claimants were awarded benefits would their attorneys receive
attorneys' fees. In addition, the amount of those fees would be
regulated by the existing processes established under the Social
We are dismayed, however, by the addition of a sunset provision for
this program. Enactment of an attorneys' fee payment system with an
``end date'' will undercut its very purpose: to enable more SSI
claimants seeking a lawyer to hire one. Adding a sunset provision will
be interpreted by many attorneys as a lack of commitment to the
attorneys' fee payment process in SSI cases. Many attorneys will
conclude that the future for this provision is too uncertain. They may
well make a decision not to participate in representing SSI claimants
because of concerns about investing additional resources and personnel
in a practice which may disappear in just three years. In the meantime,
many SSI claimants will continue to face difficulties in hiring a
lawyer and thus securing representation. The sunset provision
shortchanges them. We are not aware of any policy justification for
this provision, and we urge its deletion from the bill.
Study On Fee-Withholding for Non-Attorney Representatives
We support the provisions of the Social Security Protection Act of
2003, which require the Comptroller General to undertake a study
regarding fee withholding for non-attorney representatives representing
claimants before the Social Security Administration. The legislation
sets forth several areas of concern that should be taken into account
when the General Accounting Office compares non-attorney and attorney
representatives, including the effect on claimants and program
administration of extending fee withholding to unaffiliated non-
attorneys. Our accountability concerns do not pertain to paralegals
employed by legal services organizations or law firms because the
claimants they represent are afforded the same protections as clients
represented by attorneys in those organizations or firms.
We would urge the Subcommittee to ensure that the following issues
are addressed by the study, which should be completed and evaluated
before any changes are made regarding fee-withholding for non-attorney
In order to become an attorney, individuals in every state must
pass a minimum two-day bar examination and must prove they meet the
character requirements necessary for the practice of law. Thus, each
state bar association requires prospective applicants to complete a
lengthy application detailing information on each aspect of their lives
that sheds light upon their character. This includes information on all
civil and criminal proceedings (including traffic citations), financial
and credit information, as well as numerous character references.
Further, many states now add a third day to the written bar examination
that deals solely with ethical issues. Many states also require a
personal interview with a representative from the state bar committee.
Such thorough investigations into an individual's background serve to
protect those seeking legal services, which includes those individuals
seeking the assistance of an attorney in a Social Security disability
case. It is evident that the Social Security Administration benefits
from these thorough character examinations, and such benefits arise at
no additional expense to the agency.
In order to represent individuals before the Social Security
Administration, the only requirement is completion of the one-page
``Appointment of Representative'' form. The form requires only the
representative's name, address, and telephone number. The Social
Security Administration has no method for verifying the character of a
non-attorney representative; nor does it possess the resources to do
so. The Social Security Administration can only rely on the
representative's self-certification as to their ``good character and
reputation.'' In contrast, the Social Security Administration requires
that an attorney must be admitted to practice law in a State and be in
good-standing with that State's bar. Thus, attorneys must have been
vetted by a state bar and have had to prove their good character before
being allowed to engage in the practice of law.
The actions of attorneys also are more heavily regulated and face
greater scrutiny than the actions of unaffiliated non-attorney
representatives. States have enacted institutional controls to govern
the conduct of professionals such as attorneys. The only controls that
exist for non-attorney representatives are two short pages of
regulations entitled ``Rules of Conduct and Standards of Responsibility
for Representatives.'' By contrast, attorneys and paralegals they
supervise must comply with both these Social Security Administration
standards and state bar codes of conduct, which are much more stringent
and impose much more severe punishments for violations. While the
Social Security Administration standards for non-attorney
representatives do provide a starting point, the standards are general
and, to date, enforcement has been limited. In contrast, state
institutional controls provide many protections for disability
claimants who are represented by attorneys and those paralegals they
Because unaffiliated non-attorney representatives do not fall under
the purview of such institutional controls, claimants do not have many
protections from unscrupulous non-attorney representatives. In order to
practice law, attorneys must swear to abide by the ethical code of the
state in which they practice. Failure to abide by such codes will
result in fines, censure, or even disbarment. In contrast, non-attorney
representatives are not under any similar ethical standards promulgated
by a licensing body. The legislation this Subcommittee is considering
today includes an important provision, which we support, that would
increase the institutional protections afforded to claimants
represented by attorneys. This provision would prohibit disbarred
attorneys from serving as non-attorney representatives for Social
Security disability and SSI claimants. Because non-attorney
representatives are not governed by equivalent ethical standards,
claimants are not afforded adequate protection against unscrupulous
More troubling, if an unaffiliated, non-attorney representative
behaves unethically the client has no direct recourse. The client
cannot bring a charge against the non-attorney representative before an
ethics committee because such a committee does not exist. The client is
limited to complaining to the Social Security Administration, which may
or may not bring a charge against the non-attorney representative.
Surprisingly, the Social Security Administration has no obligation to
investigate a charge of misfeasance or malfeasance against a non-
attorney representative, unlike a state bar commission of professional
conduct which is required by law to conduct an investigation of any
charge of wrongdoing. Thus, the state licensing scheme for attorneys
provides clients with direct recourse if they have a complaint.
Furthermore, complaints against attorneys and any resulting
disbarment proceedings are public records, and the information is
available to potential and current clients. On the other hand,
information that the Social Security Administration has disqualified or
suspended a representative under its own rules is not available to the
public. Unfortunately, Social Security and SSI disability claimants
have no way to determine whether non-attorney representatives have had
any complaints filed against them. However, they can obtain similar
information about attorneys from the State bar. Thus, Social Security
disability claimants have no way to determine whether certain non-
attorney representatives have had any complaints filed against them,
but they can easily ascertain similar information about attorneys from
a state bar association.
The Social Security Administration standards of conduct for non-
attorney representatives are reactive and not proactive. Whereas
attorneys can be disciplined for ethical lapses that do not involve
their work as attorneys, the Social Security Administration can only
punish non-attorney representatives after they have harmed a Social
Security disability claimant. Consequently, the Social Security
Administration standards by themselves do not adequately protect Social
Security claimants. The absence of strict ethical guidelines to govern
the conduct of representatives is troubling and is a powerful argument
for a thoughtful, deliberate GAO study.
More importantly, even state governments cannot protect their own
citizens by prohibiting unskilled or disreputable non-attorney
representatives from taking advantage of Social Security disability
claimants who reside within their states. Under the law, the Social
Security Administration is the only entity that can take action against
those non-attorney representatives who bilk or otherwise harm Social
Security disability claimants.
Additionally, most states require attorneys to contribute to a
``clients' security trust fund'' to reimburse clients for losses caused
by attorney malfeasance. Such funds do not exist for non-attorney
representatives, illustrating yet another control that protects
attorneys' clients, but not non-attorney representatives' clients.
Similarly, many states require attorneys to obtain malpractice
insurance before they can practice law. Non-attorney representatives do
not have such obligations, and claimants who suffer at the hands of
non-attorney representatives cannot sue those individuals for
malpractice. Furthermore, the Social Security Administration does not
have the capacity to administer a similar ``clients' security trust
fund'' for non-attorney representatives.
Furthermore, in completing an ``Appointment of Representative''
form, non-attorney representatives are not required to certify that
they have the training or experience to handle the appeal of a Social
Security disability claim. As such, the Social Security Administration
provides no opportunity to claimants to allow them to investigate the
competence of non-attorney representatives. The Social Security
Administration study mandated in this legislation will shed light on
the proper level of training or education a non-attorney representative
needs to adequately represent a Social Security disability claimant.
Because of the importance of the outcome of Social Security
disability appeals, we believe the issues of qualifications,
competency, accountability, ethics, and training should be studied by
the General Accounting Office in the report mandated by this
Other Provisions of H.R. 743
Representative Payment Protections
We support the provisions in Title I of the bill that benefit the
most vulnerable Social Security and SSI beneficiaries-those who require
a representative payee. These provisions provide additional safeguards
to ensure these individuals are protected from unscrupulous
Issuance of Receipts to Acknowledge Earnings Reports or Change in Work
Under this legislation, the Social Security Administration, for the
first time, would be required to issue a receipt whenever a beneficiary
reports earnings or a change in work status. Overpayment due to work
activity has been a serious problem for beneficiaries who take
advantage of work incentives programs. These overpayments, which may
amount to tens of thousands of dollars, often are caused by the lack of
a single process for reporting earnings and the failure of Social
Security Administration personnel to record earnings when they are
reported. This legislation seeks to address this problem in a
Extending the Suspension of Benefits for Fugitive Felons
Similar to a provision in H.R. 4070, this bill extends the denial
of Title II benefits to ``fugitive felons and probation and parole
violators.'' This ineligibility provision has existed in the SSI
program since 1996. However, this legislation includes an important
improvement-the ``good cause'' exception, which allows the Commissioner
to continue benefits for fugitive felons. However, this exception does
not apply to those in violation of probation or parole requirements. We
urge that this provision is expanded to include fugitive felons and
probation and parole violators.
This good cause exception is extremely important, in light of the
hardships caused by the SSI ineligibility provision. While the agency
has lauded the tens of thousands of fugitive felons identified under
this provision, SSI advocates around the country have been inundated
with requests for assistance from SSI beneficiaries whose benefits have
been terminated for often minor, decades-old offenses which prosecutors
have no intention of pursuing. However, the good cause exception, as
currently drafted, only applies to fugitive felons.
We urge the Subcommittee to extend the good cause exception to
probation and parole violators. In addition, the good cause exception
should be extended to the SSI program. In determining whether to apply
this exception, the Social Security Administration should consider: the
seriousness of the alleged crime or violation; the length of time that
has passed since the crime or violation occurred; whether there is an
intent to extradite or prosecute the individual; any physical or mental
limitations of the individual; and any linguistic and educational
limitations of the individual. The inclusion of such protections, we
believe, would ensure that the Social Security Administration considers
all relevant information before determining the ineligibility of these
In conclusion, the members of NOSSCR and those claimants we
represent thank the Chair and all members of this Subcommittee for your
interest in these issues. I would be pleased to respond to any
questions you may have.
Chairman SHAW. I find it very interesting, Mr. Morris, that
you and Mr. Kaufman are seated next to each other.
Mr. BRADY. Mr. Chairman, on two issues--sunset and attorney
versus non-attorney representatives. On the sunset provision,
it seems to me in reading the original bill that a sunset
mechanism gives us an opportunity to really measure the results
of that change. It enforces the timetable for us to review it
and lets us know if we are really accomplishing what we set out
to accomplish. Is your concern with the sunset concept, or is
it the 3-year period that is too short in order to measure that
given the length of how long the process can work for a
claimant? Can you be more specific about what the objections
are--any of the panelists.
Mr. MORRIS. Our concern is the longevity of taking a Social
Security or an SSI claim from beginning to completion. I try
cases every day; some claims have lasted as long as 8 or 9
years. My office as well as most of my colleagues do a lot of
the work that Social Security would do in terms of completing
applications, completing forms, obtaining necessary medical
evidence. My concern would be that if a law firm gears up to
take care of this project and then finds out that it cannot
successfully complete the actions, we have hired staff, we
Mr. BRADY. Within the 3 years? Is it the shortness that
Mr. MORRIS. That is it at this point. I think we would have
to further study whether the entire concept is totally
bothersome. I would hate to see attorneys or non-attorney
representatives gear up to take care of these cases and have
the rug pulled out from under them.
Mr. BRADY. That makes sense--but you do not object to the
concept of us measuring the consequences of this change to see
if it is really accomplishing what we want?
Mr. MORRIS. I think that that is probably a good idea.
Mr. BRADY. Good. Any other comments?
Mr. KAUFMAN. I would like to interject on that. Presently,
non-attorney representatives who do not have their fees
withheld represent people for SSI. We have been doing it for
years. For many members of our organization, their primary
focus is on claimants with SSI. These are social workers,
mental health workers, who have found out how to get through
the process and how to help these individuals. There is no
guarantee in the fees that these individuals receive, yet they
have been doing it for years and helping these disabled, highly
impaired individuals. Now what the attorneys are saying is let
us un-level the playingfield, let us make it unlevel for the
people who have been in business for years doing this work,
helping these individuals, and--as he just said--we will ramp
up and get started to process all of these individuals. What
that will do, however, I believe, is it will put some of the
people who have been doing this really good work for an
extended period of time out of business or certainly reduce the
business to a great degree.
Mr. BRADY. Thank you. Any other comments?
Mr. Chairman, the study in the bill regarding attorney
versus non-attorney representation--what is the timetable for
reporting back on that?
Chairman SHAW. Staff advises us that it is 1 year.
Mr. BRADY. I think that is a good approach, because one,
you can never underestimate the value of a law degree and the
training and regulation that goes with it. On the other hand,
some of the non-attorney representatives who have been in my
office on this issue know the system well, and they are very
sharp. It seems to me that if the system becomes more litigious
and legal, that is where the emphasis ought to be. If we can
start to reform this so that more decisions are made accurately
before it gets to the activities of daily living system, then I
think we need to have a good, strong system of non-attorney
representatives in place. So, I think the study and the 1-year
timetable is a very thoughtful approach. Thank you, Mr.
Chairman SHAW. Mr. Becerra?
Mr. BECERRA. Thank you, Mr. Chairman. Actually, I would
like to ask a few questions about the fugitive felon and parole
and probation violators, but before I go to that, Ms. Coleman,
I want to make sure that you understand that I think most
Members of Congress respect the work that is done by some of
the non-attorney representatives on behalf of disability
clients and Social Security clients and SSI clients. Some of
the work done by these individuals is tremendous. They are
extremely qualified; they have demonstrated the ability, with
or without a license, to practice law. At least for me, what
would concern me is the fact that there is no way to ensure
that there is a prohibition against those who are not
qualified. If you are an attorney and you abuse your license as
a representative of a disability applicant, you are subject to
any number of disciplinary actions, perhaps disbarment, and
under this legislation you would be barred from ever practicing
in an administrative hearing for an SSDI claim. So, there are
protections, and affording someone who is licensed to practice
law that opportunity to be paid directly I think is a way of
saying we expect that we can hold you to a higher standard.
Also, remember that if you are disciplined or disbarred, it
will not just be for practicing law in this area. It is from
any other area of law; you lose that license if you should be
So, if there were something that non-attorney
representatives had that was similar, perhaps I would have more
comfort, but right now, I think that for the protection of the
client, of the beneficiary, we need to do what we can to ensure
that there is protection. I hope that we take a close look at
this 3-year sunset, because to me, it does not seem to provide
any additional protections to the beneficiary in trying to move
through the process, which is already a big maze, as Mr. Brady
pointed out. On the issue of violators of probation or parole
and fugitive felons, it seems to me that because over half of
the individuals who would be affected by this area on the
parole or probation side, not necessarily fugitives from a
felony, that we might want to look closely at this, because
this bill applies to any parole or probation violator
regardless of how minor that probation or parole violation
might have been. If I could get comment from any of you on that
particular matter and on the ``good cause'' exception that we
provide in the legislation that would allow for some discretion
on the part of the Social Security administrator to ensure that
if there is good cause to provide payment to the beneficiary.
We have to remember that these folks did pay into the
system, so what we are trying to do is avoid those who are
fleeing jurisdiction because they committed a felony, or they
are violators of probation or parole, and we do not think they
are entitled to this. For those who are innocently committing
this violation--and it might be, in many cases, a very minor
violation--perhaps what we could do is extend the ``good
cause'' exception so that it applies not just to fugitive
felons, as it does in this bill, but also to parole and
probation violators. Perhaps what we should do is give some
criteria for this ``good cause'' so that if someone makes an
effort after being notified by Social Security that they are
considered a parole violator, and you are in a nursing home,
and you are not going to leave that nursing home, perhaps there
is some way for you to show that you made a good faith effort
to try to clear this, and if that is the case, all of a sudden,
you will not find that you have been dropped from the rolls
simply because the violation cannot be cured or has not been
cured despite your effort. Any comments? Yes, Ms. Ford.
Ms. FORD. We agree with your position. We think that the
parole and probation violators should also be subject to the
``good cause'' exception and that the entire ``good cause''
exception including parole and probation should apply to the
SSI program. What I think we have learned from the Inspector
General's work over the last year is that the computers are now
very good at talking to each other and matching numbers and
finding people. What is not appearing to happen in many cases
is the human element of making a judgment about what is really
going on there. Some of the cases that have come to my
attention are people who had something filed against them in a
State more than 20 years ago, and they have never even been
notified of it, who learn about it in a nursing home when they
are receiving benefits, and they get a letter from SSA. These
are the kinds of situations that happen. Even when they take
steps, they find difficulty in repairing the situation.
Mr. BECERRA. The image of a fugitive felon that we have, or
even a parole or probation violator, is not the image of the
man or woman who is pretty much set up in a nursing home and
has been and is not going to try to run and would probably find
it very difficult even to try to cure the violation.
Ms. FORD. Correct. In the cases that I have seen, it has
taken a good deal of work for the attorneys or legal defenders
to help the individual clean it up. Sometimes it is interstate.
People have moved. The event was 20 years ago. It is very, very
difficult sometimes to even remember the situation. There are
lots and lots of things that need to be taken into account. In
our testimony, I indicated that we also have to look at the
issue of mental impairment. There are some people whose mental
impairment--the very disability for which they are entitled to
these benefits--is an important element in the fact that they
are either fugitive felons or probation violators. That needs
to be taken into account in looking at this issue, not just
having the interface with the Social Security number and the
judicial system. There is a judgment that has to be made in
these situations. I would suggest that the Commissioner should
have that authority to waive for good cause even if we have not
yet seen the Inspector General's report in the fall.
Chairman SHAW. I would say to the gentleman that we share
their concerns, and that is still under study and may be
addressed in the final legislation by amendment.
Mr. BECERRA. Thank you, Mr. Chairman.
Chairman SHAW. Mr. Lewis?
Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Mr. Morris,
is there a difference between an attorney and a non-attorney
representative in the recourse that a claimant can have if they
have been misrepresented?
Mr. MORRIS. I think there is a vast difference. First of
all, many States require malpractice insurance before an
attorney can practice law. There are all sorts of ethical
grievance committees that are out there in every jurisdiction
in the country where the claimant can file a complaint. There
are funds that are set up to protect claimants from attorneys.
I have an escrow account; the interest from my escrow account
goes to a fund maintained by the State of New York as a client
security fund. There is the fear of disbarment, there is public
censure. We read about attorneys in the newspaper. The bar
associations publish the results of disciplinary activities.
None of this would apply to a non-attorney. There is no
mechanism set up to inform the public. This is a claimant-
oriented program, the SSA. It is not an issue between attorney
and non-attorney. I believe the issue should be how do we best
protect the claimants and allow the claimants to get those
benefits that they need to maintain themselves. So, there is a
vast, vast difference between the recourse available to a
claimant when represented by an attorney or a non-attorney.
Mr. LEWIS OF KENTUCKY. Mr. Kaufman, would you like to
respond to that?
Mr. KAUFMAN. I would, sir. The marketplace in and of itself
takes place of quality representation or lack thereof. An
individual who has never practiced before the SSA can come in
today if they have a law degree, win their first case, and have
their fee withheld. I, after practicing for 17 years, am not
afforded that same option. What ends up happening is that
inexperienced attorneys who do not truly understand the whole
system and have not been able to grasp it, even though they may
be very ethical and moral individuals and have all of the
necessary background and studies and passed all the
examinations that are necessary to pass the bar, they do not
understand Social Security, just like they might not understand
patent law. You would not want an individual to be able to
obtain benefits that the government is granting to an explicit
subset of representation. The SSA has always admitted that non-
attorney representatives are perfectly acceptable and can
practice before them. It was discussed in the rules for
representation back in 1998. There is no question that those
things continue today. I believe that we are trying to raise
the bar--there is no question about that--because there has not
been a standard throughout the country that we have been able
to work with. I am a member of NOSSCR and have been for 15
years, and I still am today. It is a wonderful organization,
but it does not look out, and it does not increase the bar or
raise the bar or provide anything for non-attorney
representatives, and that is what we are trying to do, sir, is
to make it so that it becomes a more even playingfield.
Mr. LEWIS OF KENTUCKY. Let me ask you this, Mr. Kaufman.
For a claimant who would like to have some assurances with a
non-attorney representative about their success, their
background, and so forth, what is available for them to check
out a non-attorney representative?
Mr. KAUFMAN. Claimants call me all the time and say, ``I
got your name from a friend of mine who said you do a great
job.'' That is about the best that I think anyone can do, be it
an attorney or a non-attorney. With an attorney, you can open
the phone book and see that I do Social Security law. I cannot
do that. There is nothing there that says ``Lawyer'' or ``Non-
Attorney Representation'' for me. So, I cannot advertise in
that realm, but people can ask, ``Have you done a good job?'' I
have long-term disability carriers that I have done work for
for years, and this is a very important example as to how the
marketplace works. I helped set up their Social Security
program. I worked it; we got everything going. They would refer
cases to me. That long-term disability carrier was purchased. A
new carrier came in. When that carrier came in, they decided,
``We are going to let the government pay for the checks that
are going out to the representatives, and therefore, we are not
going to provide any additional referrals to individuals who
cannot have their fee withheld.'' I have been doing that work
with that specific company for 10 years, and they were very
happy with the work that I did, but because I cannot get my fee
withheld now and the new company comes in, I am no longer able
to. So, there are protections, and the protections are word-of-
mouth and the marketplace.
Mr. LEWIS OF KENTUCKY. Do you want to respond to that, Mr.
Mr. MORRIS. I was not aware that we would be engaging in a
debate, Mr. Lewis, but I do not think the concern of this
Committee should be who gets the greatest share of the
marketplace. The concern of this Committee, I believe, should
be how do we protect the disabled claimant who is out there
struggling for a way to pay his bills, and the only way that we
can protect the disabled claimant who is least able than
anybody else to determine who is a good representative and who
is not a good representative is for the Committee to ensure
that for them. Three years of law school teaches advocacy
skills. There are clinical programs. It teaches us ethical
guidelines, trains one's mind how to think in an analytic,
attorney-like way. The concern should not be can a non-attorney
with 17 years of experience adequately represent a claimant,
but can anyone with no experience, which is what this
legislation would allow. Can the claimant's next-door neighbor
say, ``I will take care of you, Joe; I will go in and I will
represent you''? That is the concern that we have, and Joe, who
may suffer from a psychiatric disorder or who may have
cognitive defects, knows the next-door neighbor is a nice
fellow, and he says, ``Sure, why don't you take care of it for
me?'' That is the concern that we have is the protection of the
claimant, not the market share and who makes money.
Chairman SHAW. The time of the gentleman has expired.
Mr. LEWIS OF KENTUCKY. Thank you. Thank you, Mr. Chairman.
Chairman SHAW. Ms. Coleman looked like she was about to
come across the table, so I will defer to her for a moment.
Ms. COLEMAN. Thank you, Congressman. I am in a funny
position. I am sitting here representing the ABA, and the
question is whether there should be attorneys or non-attorneys
doing this. I think I would reflect on what Mr. Morris said and
suggest that there are five or six elements that I think really
need to be looked at. One is the issue of malpractice insurance
and whether or not from a claimant's perspective--we are
talking about people who are very vulnerable--what is it if
they do not have access to that kind of thing. The second is
that there are disciplinary actions that State bars do take
against attorneys. There are ethical rules that people must
look at. There is a fee dispute mechanism in most State bars
right now, so that if there is a difference between fees that
are charged, they can go to that. Last is that--and I think Mr.
Morris mentioned this--increasingly, there are funds that are
put in escrow through client security funds. In fact, these are
very voluminous kinds of things. They are taken very seriously,
especially by vulnerable clients. So, I think those are the
elements to look at. We at the ABA do not do disciplinary
issues, so it is not our bailiwick, but it is what we support
in terms of looking at State bars and providing issues for
Chairman SHAW. Thank you. Ms. Tubbs Jones?
Ms. TUBBS JONES. Thank you, Mr. Chairman. Mr. Kaufman is
about to come over the table, so I am going to give him a
minute and a half to respond to all these attorneys in the
room--and I am one of them. Go ahead.
Mr. KAUFMAN. Thank you. I truly appreciate that. As far as
the fee dispute, just to respond to some of the things that we
have been hearing this morning, the SSA sets the fee. It sets
the fee for the attorney and non-attorney representative alike.
Every, single step of the process from the beginning paperwork
that an individual signs all the way through the very end when
you get the Notice of Award, is identical. I have no say over
what my fee is going to be. The Administration says this is how
much you can charge--no more. I can charge less, and many non-
attorney representatives frequently do--but we do not charge
more. If we did--and I think this is another important point--
this is basically what we do. We do Social Security
representation. We do not do wills, we do not do divorces, we
do not do personal injury work. Most of us do Social Security.
If the SSA reprimands us and does not allow us to practice, we
cannot go to another area of specialty as an attorney could.
Now, granted, a bar may disbar you, but if they have a problem
with Social Security, they can do something else.
Ms. TUBBS JONES. Let me ask you this, Mr. Kaufman. So, in
reality, what you are arguing to us is that you want to be able
to have Social Security pay your fees directly, but otherwise
you do not have any problem performing the services that you
Mr. KAUFMAN. We want parity, and if that is the only issue
that is left, then that is what we want.
Ms. TUBBS JONES. I am too new to this to say that it is the
only issue that is left one way or the other----
Mr. KAUFMAN. I believe it is.
Ms. TUBBS JONES. Let me ask you this, Mr. Kaufman. How do
I, as Joe Jones out there on the street, learn about you doing
this? Are you listed in the telephone book as a counsel? How do
I find you?
Ms. KAUFMAN. As I said, word-of-mouth, typically. We have
been in business for 15 years. We finally found a place in the
Yellow Pages after working against and with Verizon for years.
They have headings and places. It is called ``Social Security
Representatives and Counselors.''
Ms. TUBBS JONES. You represent an organization of those
folks; is that a fair statement?
Mr. KAUFMAN. That is correct.
Ms. TUBBS JONES. Is there a fee charged to be a member of
Mr. KAUFMAN. Yes, $200.
Ms. TUBBS JONES. Is there some certification for your
Mr. KAUFMAN. As I explained in my testimony, we are just a
little over 2 years old--just under 3 years old at this point.
We are working on all of those things, but----
Ms. TUBBS JONES. So, are you asking us as Members of
Congress, then, to wait until you can certify your guys in some
way before we take away your ability to be able to get paid
Mr. KAUFMAN. We are receptive to certification as long as
it is on an equal basis. If an attorney wants to----
Ms. TUBBS JONES. On an equal basis with what?
Mr. KAUFMAN. An attorney.
Ms. TUBBS JONES. You cannot be on an equal basis with an
attorney, sir. That is the reality of law. I am trying to
figure out how we--first you ask for parity; now you are asking
for equal basis. What are you asking for? It is not the same
Mr. KAUFMAN. Well, I had understood that it was
interchangeable. We are asking for whatever an attorney gets as
far as fee withholding; they would have to provide the same
competency that we would have to provide. If a new attorney
comes into the system, they should not have fee withholding if
I am not able to access it as well. That is all that we are
Ms. TUBBS JONES. It is really a dilemma that my colleagues
and I are put in with regard to this issue, and I am not
adverse to at least walking through it. The dilemma that you
really face is age-old--what attorneys supposedly have it up on
non-attorney representatives. What I would suggest to you is
that you continue to walk down the path of certification and
whatever else there is and ultimately to give us a basis upon
which to make such a claim of parity. Otherwise we are caught
in a catch-22 with people out here saying, ``Hey, how are we
going to go after those people? Where did they come from? How
do we find them?'' because in reality, if we wanted as Members
of Congress to legislate something away from you, it would be
to legislate that you cannot do the job. I do not think anybody
wants to go that far away at all, and I just think that you
guys and women who do this practice need to give us a reason to
put you in the position. I am personally not quite there, but I
am not averse. I yield back the balance of my time, Mr.
Chairman, and I appreciate it. I did not give anybody else a
chance to answer because you all had all the time. I gave you
parity, Mr. Kaufman, remember that.
Chairman SHAW. Mr. Pomeroy?
Mr. POMEROY. It has been a very good discussion. I commend
both sides advancing their interests in very articulate ways. I
would note a reservation similar to my colleague, Ms. Tubbs
Jones. You are asking for parity on the one hand, and then you
are indicating but you are only 2 or 3 years along, and you are
trying to get an organization and get some minimum
certification or quality assurance dimensions. Let me pursue
that just briefly. Mr. Kaufman, is there anything that would
restrict me from calling Verizon now that you have got this
Social Security counselor designation and saying, ``Put me down
there,'' and without any further check or anything, I am
holding myself out to the public without the assurance of any
type of licensure or any administrative sanction if I do
something wrong or withhold the money, and mostly a prospect of
not having malpractice insurance coverage?
Mr. KAUFMAN. I believe, Mr. Pomeroy, that you are an
Mr. POMEROY. I am, actually.
Mr. KAUFMAN. So, you would be able to qualify under that
and have your fee withheld.
Chairman SHAW. Well, I think, Mr. Kaufman, the record will
show that you are outnumbered by attorneys here.
Mr. KAUFMAN. Yes, sir.
Mr. POMEROY. The best thing I can say about my law practice
is that the statute of limitations has now run; I am now out of
the business. Hypothetically, let us say I am not an attorney.
Let us say I am my brother-in-law. Could my brother-in-law call
and get his name listed and just be ready to do this?
Mr. KAUFMAN. He probably would be able to get his name
listed; you are absolutely correct, sir. However, what we are
trying to do----
Mr. POMEROY. I hope no one would call my brother-in-law for
this sort of thing.
Mr. KAUFMAN. What we are trying to say, sir, is that
competency is the issue, and an individual who is not competent
to practice in an area of specialization such as Social
Security or patent law or things that just are not in the
normal flow of practice--those individuals should not have
their fees withheld. Whereas at the same time, individuals who
are competent and have been doing it for an extended period of
time--and obviously, the marketplace in this instance proves
competency because if we do not get our fee approved by the
Administration, we cannot collect it from the claimant, and if
we do not collect it from the claimant, we cannot be in
business for very long. If you are in business for 17 years or
12 years or 3 years or 5 years, and you are successful, and you
are continuing to get individuals that you are representing and
bringing them before the Administration at any level--and that
is one of the things that we pride ourselves on is that we do
it at all levels, not focusing primarily at the administrative
law judge level--if you can get those individuals, and you can
get paid, then you are probably successful and competent. We
suggest, sir, that maybe an issue of competency or a
methodology of determining competency be established so that
competent representatives, be they attorneys or non-attorneys--
that is the parity that we are talking about--get paid by the
Administration. Those people who cannot or have not proven
competency do not get the fee withheld. Therefore, you can put
your name in there, but until you have proven competency, you
can work as hard as you can and try to collect the fees
individually, but when you prove your competency, then the
Administration can withhold your fee, and you can get it paid
by the Administration.
Mr. POMEROY. Let us ask the ABA representative to respond
to that because it is an interesting point.
Ms. COLEMAN. First of all, competency is one thing.
Screening people to understand what is probably only second to
the tax system, the most complicated system in the world--the
Social Security System--is, in fact, a very difficult one. I
think that Congresswoman Tubbs Jones really hit it on the head.
When you have a screening process that allows you to screen and
certify and educate and prove to the public--which is really
part of what we are doing--it is a sale on two sides. It is a
sale to the public--that is, how do you advertise who you are--
and it is a sale to you guys and Social Security as to how they
should be paid. It is a twofold thing. When that exists, I
think you can go there. There could be a requirement of
malpractice as well. It is certainly possible that Social
Security could say to folks practicing in this area, ``You must
have malpractice insurance,'' and seek to do it. There are lots
of ways that people do that who are not attorneys as well. So,
there are ways of doing that. Again, the ABA does not sit there
and hold that bar up for folks to pass under, so we do not
license or certify or do those things.
Ms. FORD. Could I respond?
Mr. POMEROY. Yes, please.
Ms. FORD. Our fear from the beneficiaries' standpoint is
the issue of those who are not competent and what happens to
the beneficiary in terms of missing critical deadlines that may
in fact have an impact on whether they are ever eligible
because they could lose insured status. We try to come at this
from the perspective of the beneficiaries, and we think that
there are some issues like training, certification, monitoring,
and enforcement that have run through this discussion that are
really valid and need to be seriously look at. I think this
whole discussion has pointed out the need for the GAO study for
a year. I think we need to get all that on the table and look
at it and figure out what makes the most sense--what needs to
be done and who should do it, and how do you best protect the
beneficiary in this process.
Mr. POMEROY. Thank you. I yield back, Mr. Chairman. Thank
you for this excellent hearing.
Chairman SHAW. Yes, sir, I think this has been interesting,
and I think it has been shown that we have a little bit of a
dilemma which really boils down to the simple fact that we
depend upon the States to monitor who is a lawyer and who is
not. They make that determination, and each of the 50 States
has their bar association with the ability to disbar or qualify
or disqualify. Just because someone is an attorney does not
mean they are competent in this area--I can tell you that--in
fact, most attorneys do not know beans about this area, but at
least it gives us a framework to work with, and that is the
dilemma that we are facing. I think we have had a very open
discussion of both sides of the argument. Now this Committee
will have to decide how it is going to go. Thank you. The
hearing is adjourned.
[Whereupon, at 11:00 a.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Association of Texas Professional Educators, Austin, Texas
The 100,000-member Association of Texas Professional Educators
(ATPE), the largest educators' association in Texas and the largest
independent educators' association in the country, is opposed to HR 743
in its current form. While ATPE supports the legislation's goal of
reducing fraud and abuse in the Social Security and Supplemental
Security Income programs, Section 418 of HR 743 will hurt Texas'
ability to recruit and retain quality teachers for our classrooms. For
that reason, HR 743 should be amended to strike Section 418.
The state of Texas faces a teacher shortage approaching 40,000 and
a $10 billion budget deficit for the 2004-05 biennium. One of the major
concerns of ATPE members and other educators across the state is the
loss of their retirement benefits due to the Government Pension Offset
(GPO) and Windfall Elimination Provision (WEP).
The GPO reduces, by two-thirds, the spousal or widow(er) Social
Security benefits of those who also receive a government pension. The
history behind the creation of this provision was Congress' desire to
prevent ``dual entitlement'' of Social Security and spousal benefits or
government pensions and spousal benefits. However, the practical
consequence of the GPO has been a financial penalty against public
educators and others who work in relatively low-paying public service
careers and who are eligible for government pensions.
Most educators affected by the GPO do not learn they will be
subject to the provision until they are preparing for retirement; the
Social Security Administration does not inform educators that their
benefits will be reduced by the GPO when the administration sends
benefit projection notices to educators. For these reasons, ATPE
supports HR 594, the Social Security Fairness Act of 2003, which would
completely repeal the GPO and WEP.
Because of our opposition to the GPO and WEP, we cannot support
Section 418 of HR 743. This section would effectively remove a
provision in current law that allows Texas educators exemption from the
GPO if they work a short period of time in school districts that pay
into or participate in both the Teacher Retirement System and Social
Enactment of Section 418 could induce hundreds of veteran teachers
to retire immediately so they can receive exemption from the GPO while
the opportunity still exists. This would create a financial crisis for
the state and local districts as they scramble to hire substitutes and
replacements for those who retire. Plus, students would suffer the loss
of the benefit of experienced and skilled teaching. In this time of
teacher shortage and rising accountability standards, Texas needs its
most experienced teachers to remain in the classroom.
Public educators and other public servants who make the sacrifice
to work in low-paying government careers should not have their
retirement benefits reduced because they choose careers of service.
Until legislation to repeal the GPO and WEP is enacted, the provision
in current law that allows educators exemption from the GPO should be
retained in its current form. For these reasons, ATPE urges the
subcommittee to amend HR 743 to strike Section 418.
Statement of Frank O. Cannon, North Hollywood, California
I strongly support HR 743. However, it would be even more effective
legislation, if it included a provision to keep Social Security numbers
confidential. I recently had my SS # changed by the California DMV, due
to an entry error made by a clerk during an application for replacement
drivers license. I believe that SS numbers should only be used for the
original intended purpose--for benefits tracking--and not for a
convenient way to identify citizens.
I would be very interested in your viewpoint on my comment.
Statement of the Honorable Wally Herger, a Representative in Congress
from the State of California
Over the past several years, Chairman Shaw and other Members of the
Ways and Means Committee have worked tirelessly to improve Social
Security programs that provide an important safety net for many of our
nation's neediest disabled and elderly individuals. These changes have
been designed to ensure that the right benefits go to the right people,
which should guide all our efforts on behalf of the taxpayers we serve.
I am pleased that the Social Security Protection Act of 2003 continues
this important work and builds so effectively on earlier Committee
For example, we've made sure that drug addicts and alcoholics are
no longer eligible for Supplemental Security Income (SSI) cash
benefits. Also, thanks to changes we have made, thousands of prisoners,
fugitive felons, and probation and parole violators have been
disqualified from getting SSI cash benefits that should be reserved for
those in need. In the process, literally billions of dollars have been
saved for taxpayers and rightful recipients.
Through such changes, we have made significant strides in reducing
fraud and abuse in Social Security and SSI programs. It is noteworthy
that SSI, which for years suffered from rampant abuse, was recently
removed from the U.S. General Accounting Office's list of programs at
high risk for fraud and abuse.
Still, there is more work to be done. For instance, prisoners,
fugitive felons, and probation or parole violators still collect Social
Security benefits and can even act as representative payees for
disabled individuals, entrusted to handle their cash benefits for them.
The legislation being discussed today would end these destructive
practices. In addition, it would make other important changes to
protect Social Security programs and further prevent fraud and abuse.
Doing so will save hundreds of millions of dollars more for taxpayers.
I look forward to continuing to work with Chairman Shaw and the
Social Security Administration as we look for more ways to stop fraud
and abuse and further improve the integrity of these important
programs. The Social Security Protection Act of 2003 builds on the
successful reforms we already have made, giving the Social Security
Administration new tools to more effectively combat fraud and abuse. I
strongly support this legislation.
Statement of Sally Montague, Bridge City, Texas
Please help to eliminate the GPO/WEP Offset law so that the public
servants in 15 states can get their OWN Social Security. I have taught
in the Texas Public Schools for 32 years, but worked for other
businesses before and after to get more than forty quarters paid into
SS. The government wants to give me only one-third of my benefits due.
Being a widowed teacher, I am having to substitute teach in the schools
to pay bills. My retired teacher friends and I would appreciate it if
we could just get what we paid into the Social Security System. Please
National Association of Disability Examiners
Madison, Wisconsin, 53707
March 11, 2003
The Honorable E. Clay Shaw, Jr.
Subcommittee on Social Security
Washington, DC 20515
Members of the National Association of Disability Examiners (NADE)
have reviewed with interest the testimony presented at the February 27,
2003 hearing on H.R. 743, ``The Social Security Protection Act of
2003''. We would like to offer our support for that legislation.
NADE strongly supports the provision to amend existing law to
provide a criminal penalty for corrupt or forcible interference with
SSA employees acting in their official capacity. We appreciate the
language in this bill that defines an employee to include state
Disability Determination Service (DDS) employees, as well as SSA
employees and contractors. We agree with the Inspector General's
statement that, ``On a daily basis, SSA employees interact with members
of the public who are undergoing times of great stress, such as after
the death or disabling injury of a loved one. This exposes our
employees to an increased risk of danger.'' This seems to be
increasingly true and additional tools, such as those provided in H.R.
743, are needed to protect employees.
In addition, while we believe that most Representative Payees act
in the best interest of the beneficiary they serve, additional
safeguards are needed to protect this most vulnerable population. We
support those provisions of H.R. 743 which would increase oversight of
Representative Payees. In order for this oversight to be effectively
conducted, however, adequate resources must be provided. Periodic
onsite reviews, for example, can be very effective monitoring tools.
They are also more labor intensive. As with any legislatively mandated
initiative, appropriate resources must be allocated to enable SSA to
conduct these reviews on a timely and ongoing basis.
Thank you providing this opportunity to comment.
Theresa B. Klubertanz
Statement of Witold Skwierczynski, American Federation of Government
Employees, Social Security General Committee, and National Council of
Social Security Administration Field Operations Locals
Chairman Shaw, Ranking Member Matsui, and members of the Social
Security Subcommittee, I respectfully submit this statement regarding
H.R. 743 ``The Social Security Protection Act of 2003''. As a
representative of AFGE Social Security General Committee and President
of the National Council of SSA Field Operations Locals, I speak on
behalf of approximately 50,000 Social Security Administration (SSA)
employees in over 1300 facilities. These employees work in Field
Offices, Offices of Hearings & Appeals, Program Service Centers,
Teleservice Centers, Regional Offices of Quality Assurance, and other
facilities throughout the country where retirement and disability
benefit applications and appeal requests are received, processed, and
Ticket to Work Enhancements (Section 202 and Title IV--Miscellaneous
and Technical Amendments; Subtitle A--Relating to Ticket to
Work and Work Incentives Improvement Act of 1999)
As members of this Subcommittee are well aware, Congress
unanimously passed the Ticket to Work and Work Incentives Improvement
Act, including Section 121 calling for a corps of accessible and
responsive trained work incentives specialists within SSA. This
position is the key to delivering service to the public in the
beleaguered and complex area of work incentives. The success of TWWIIA
is dependent on implementation of this legislatively mandated position
as SSA's corps of trained, accessible and responsive work incentives
SSA created the Employment Support Representative (ESR) position as
this work incentives specialist. The pilot of 32 ESRs that tested
models of how best to service the disabled community concluded in
August 2001. AFGE has testified on many prior occasions about the
success of the ESR pilot. AFGE has advocated for the implementation of
the Employment Support Representative (ESR) in SSA's field offices
throughout the country since the enactment of TWWIIA. SSA's own pilot
of the ESR position recommended that ESRs be established, as soon as
feasible, in every SSA field office. The pilot results concluded that a
key success factor for the Ticket to Work effort was national
implementation of the ESR.
There are numerous undisputed reasons the ESR is a key element of
enabling beneficiaries to successfully understand and navigate work
incentives and, consequently, is a key factor in a successful
transition to work.
The ESRs were able to develop a single point of contact with
beneficiaries, monitor their work progress in a timely and supportive
manner, and process work reports and work-issue Continuing Disability
Reviews (CDRs) timely. This resulted in reducing large benefit
overpayments and a reduction in anxiety for the beneficiary. ESRs gave
examples of customers who, with ESR guidance, were able to reliably
predict the outcome of their work activity and viewed benefit cessation
as a mark of achievement.
The significance of the single point of contact within SSA that the
ESR provides cannot be overemphasized. Currently, little coordination
exists in offices between the work incentives in SSI and SSDI. This
confuses beneficiaries, and often results in discouraging them from
working, or from not effectively utilizing all available work
incentives. The ESR is a specialist in both SSDI and SSI work
incentives, processes trial work periods, completes work issue
continuing disability reviews, promotes Plans to Achieve Self Support,
posts wages to SSI records, and explains Medicare and Medicaid
entitlements. Furthermore, the ESR, as a specialist in work issues for
both programs, recognizes and develops timely entitlement to SSDI
benefits on the part of the SSI recipient.
Many disabled individuals with mental impairments are those who
would benefit from a return to work program. Work activity is a key
element in the therapeutic treatment of mental conditions. The nature
of work activity on the part of these individuals characteristically
includes frequent work attempts, many different employers, and work
under special conditions. These beneficiaries especially require the
consistency and expertise that a single point of contact within SSA
The troublesome treatment in SSA of work reports made by disabled
beneficiaries is the subject of Section 202 of H.R. 743, requiring SSA
to provide a receipt each time a beneficiary reports a change in work
activity. AFGE has previously testified about enormous overpayments
incurred by beneficiaries, who have timely reported a return to work to
SSA, yet the Agency failed to process such a report. Consequently,
beneficiaries are confused about their reporting responsibilities. The
requirement to issue a receipt amplifies the need to have a dedicated
person within SSA acting on the reports in a timely and consistent
manner. The ESR handles work reports effectively and promptly. The ESR
controls and monitors the case on a continuing basis from the initial
return to work by the beneficiary.
Overpayments on backlogged cases can reach hundreds of thousands of
dollars for an office, and employees have encountered overpayments on
individual records reaching $100,000! Unfortunately, the Union is
unaware of any statistical data regarding the numbers of work CDRs
processed, the number pending, and the cessation rate due to work
activity. SSA should be required to maintain and produce such data. In
processing the medical issue CDRs, SSA contends that for every dollar
spent, seven to twelve dollars in benefits are saved. The cost savings
are greater for ``work'' CDRs since the cost of medical decision-making
is eliminated, and the cessation rate on work issues is higher. AFGE
estimates cost savings approaching $30 to the Trust Fund, for every
dollar spent. Investing in the ESR position is a perfect example of
applying stewardship responsibilities effectively and investing
resources in a high cost-benefit manner. Full ESR implementation should
have a significantly positive impact on the Trust Fund balance and
consequently extend the solvency of the Fund.
Unfortunately, SSA does not plan to implement the ESR position, due
to shortages of staff and resources in field offices. SSA does not plan
to ask for additional funding earmarked for ESR implementation. SSA's
latest alternative strategy is apparently a combination of training all
employees again on work incentives, providing ``systems enhancements''
and designating additional duties called ``Work Incentives Liaison
(WIL)'' or `` Work Incentives Specialist (WIS)'' as collateral
functions for existing Claims Representatives, Technical Experts,
Management Support Specialists, Public Affairs Specialists, and other
AFGE conducted a Work Incentives Liaison (WIL) survey in August
2001. The survey results indicated that most WILs had insufficient time
to address their duties, that they received inadequate training, and
were provided with no other workload adjustment to enable them to
process their additional work incentives assignments. Many employees
did not know who the WIL was in their offices.
AFGE conducted an updated WIL survey in January 2003 in order to
have a current picture of the WIL situation. This was done to assess
the feasibility of assigning the duties of work incentives specialists
to a myriad of management and bargaining unit positions.
Nationally, the survey results were incredibly consistent in all
the regions. Less than 10% of the WILs reported they spend more than
25% of their time on WIL duties. Some noted they had spent no time, had
no WIL duties, and a disturbing number had received no WIL training.
Sixty percent of the more than 200 respondents said they had received
no specialized training. Most of the WILs indicated their WIL duties
basically consisted of serving as a point referral person for office
staff and outside groups. Outreach functions, such as organizing
workshops and conferences and coordinating or leading outreach
activities for beneficiaries, were indicated in one-third of the
respondents. Many respondents indicated they would like to have the
opportunity and time to conduct this type of outreach.
Ninety-six percent of the respondents said they had no workload
adjustments to accommodate their WIL duties. They expressed
frustrations with this. The following are representative comments from
``The broad possibilities of the WIL are only
slightly worked in our office.''
``All I do is answer phone calls averaging one
every 3-4 months.''
``My manager does not expect me to perform all the
WIL duties because manpower-wise we cannot afford it.''``I
would love to present workshops, but I don't have time.''
``I am not given time to research material needed
to further my knowledge of WIL duties.''
``I do not have the time or the training to
adequately perform WIL duties. In essence, I am a figurehead
solely for management to say that there is someone with that
``No training. No assignments. No idea what duties
might be, if any, ever.''
WILs were asked to provide numbers, if known, of pending work CDR
cases in their offices. Most were not responsible for processing the
work CDRs. Many did not know the numbers pending. It appeared the work
CDRs were disbursed among Claims representatives in many offices.
Numbers reported varied widely, as high as 200, 350, 400, 600, and 1000
were reported as pending work CDRs.
There were some comments from WILs about work CDR cases:
``Someone needs to get a clue about how time
consuming work CDRs are. Frequent requests for info going back
``Work CDRs are some of the most labor-intensive
and technically demanding cases this Agency has. Just think
about subsidies, IRWEs, self employment SGA, etc., . . . trying
to uphold integrity in rules and regulations while making a
fair and timely decision for each claimant.''
This survey clearly demonstrated that the approach by the agency of
assigning work incentives duties to many existing positions has
relegated work incentives to the back burner and not fulfilled the
legislative mandate requiring trained accessible and responsive work
incentives specialists within SSA.
In contrast, following are views submitted by ESRs as to why this
position is so successful with beneficiaries, your constituents, and
``Congress should be concerned with the person
being treated fairly and getting the full benefit of the law,
not just how many work CDR's were cleared for an office. Cases
laid for 2-3 years and were never worked and then the claimant
had a tremendous overpayment to pay back. The whole point in
the Ticket legislation calling for this position was to correct
what was going on in the offices.''
``The other part of our job, which has been the
outreach, has been an invaluable service to the public. I have
provided training in most offices in my state on the MRTW and
Work CDRs. Still, most of the CRs, SRs and even TEs in the
field do not know work CDRs. They also were stupefied by the
complexity of the MRTW. It's not that they can't learn it, it
is that they don't have time for it!''
``These relationships, both with the claimants and
beneficiaries, and with the community, are essential if we are
to be serious in our endeavor to help individuals with
disabilities to work. The CRs, though most of them are
excellent servers of the public, cannot be dedicated to only
the task of work issues. There are just too many other issues
to be dealt with. It was necessary to have the ``dedicated''
language in the legislation because an effort like this merited
one on one and on going attention. That was the problem with
the WILs; they were not dedicated and they could not
concentrate on the problem of work issues. This is the reason
we have so many overpayments. However, if you dedicate someone
to be the point person for these issues, then you curb these
``The ESR acts as an ombudsman to the community,
resolving public relations problems, solving complex work
incentive issues, teaming with community leaders to form best
practices in addressing vocational needs in their area, and
acts as an expert resource for field office employees. There is
no computer program that can ``take over'' for these duties.''
``Additionally the outreach fosters better
relationships with organizations. This eliminates the fear
factor and fosters faster reporting, which also minimizes
overpayments. Overpayments are a major disincentive to keeping
the disabled in the workforce. When claimants receive an
overpayment letter the most likely course of action is for the
person to stop working. This is particularly true when the
nature of the impairment is mental rather than physical. The
added stress of the overpayment very frequently is enough to
trigger a relapse.''
The following are some opinions expressed by disability advocates
regarding SSA's ESR position:
``The ESR position is particularly helpful in
concurrent cases. Because (ESR) is knowledgeable in both
programs, he can figure out a complex situation or problem and
the beneficiary gets immediate resolution.''
``With the onset of the Benefits Planning,
Assistance and Outreach (BPAO) projects, the need for more ESRs
is clear. Our goal is to reach as many SSI recipients and SSDI
beneficiaries as possible, and to provide information which
will allow them to make an informed choice about employment.
Our efforts would be greatly enhanced by the addition of an ESR
for every resident.''
``Not all disabled are able to work, but for those
who can, an ESR should be available in every SSA Office to help
eligible individuals through a sometimes intimidating
``By giving beneficiaries and benefits planners
access to an ESR, the Social Security Administration will
improve communication between the local offices and the
communities they serve, resulting in better services, fewer
overpayments, and more time for beneficiaries with disabilities
to experience the joy of working.''
AFGE believes an Agency decision not to implement the ESR would be
a tragic mistake when the ESR has proven to be a winner for all
parties. For SSA, it shows superb service to the public, provides
stewardship in reducing benefits and overpayments, and results in SSA
compliance with the legislative mandate for work incentive specialists
within SSA. For the public, it provides stellar service, a single point
of contact, and assists beneficiaries in leaving the disability rolls.
For the taxpayer, it saves money and prolongs Trust Fund solvency.
In the Union's view, the only way to ensure that Ticket to Work is
successful is for Congress to mandate the rollout of the ESR position
and to fully fund the ESR. AFGE has submitted a proposed amendment to
HR 743, which is attached, that would ensure that the ESR is fully
funded within SSA. Additionally, legislation should also require SSA to
report on continuance and cessation rates of work issue CDRs,
overpayments due to work cessations, and benefits saved the Trust Fund
by work cessations.
Thank you for the opportunity to submit this statement.
Statement of National Education Association
On behalf of the National Education Association's (NEA) 2.7 million
members, we would like to thank you for the opportunity to submit our
comments onthe Social Security Protection Act (H.R. 743). Our comments
will focus solely on Section 418 of the Act, which would require a
public employee to work a minimum of 60-months in a job covered by
Social Security in order to avoid application of the Government Pension
NEA strongly supports complete repeal of the Government Pension
Offset and the Windfall Elimination Provision (WEP), which unfairly
reduce the Social Security and Social Security survivor benefits
certain public employees may receive. We oppose efforts, such as that
in Section 418 of the proposed Social Security Protection Act, that
would close the so-called ``loophole'' employed by some public
employees in order to avoid the devastating impacts of the GPO.
Instead, we urge the Subcommittee, and the entire Congress, to address
the underlying problem, by repealing the GPO and WEP. Although Section
418 attempts only to close the ``loophole'' with respect to the GPO, we
will address both the GPO and WEP in our testimony.
The Government Pension Offset: Background
The original Social Security system, established in 1935, excluded
state and local government employees from coverage. In the 1960s,
however, state and local employees were given the opportunity to elect
to participate in the Social Security system. As a result, public
sector employees in 36 states opted to enroll in Social Security in the
1960s and 1970s.
In 1977, Congress enacted legislation requiring a dollar-for-dollar
reduction of Social Security spousal benefits to public employees and
retired public employees receiving earned benefits from a federal,
state, or local retirement system. This offset impacted educators in 15
states as well as other public servants--including police,
firefighters, and federal workers across the country.
In response to significant calls for repeal of this dollar-for-
dollar reduction, Congress and the President agreed in 1983 to limit
the spousal benefits reduction to two-thirds of a public employee's
retirement system benefits. This remedial step, however, falls well
short of addressing the continuing devastating impact of the GPO.
The Windfall Elimination Provision: Background
The original Social Security formula was intended to help low-paid
workers by replacing a higher proportion of their earnings than for
workers with higher earnings. However, the formula could not
differentiate between those who worked in low-paid jobs throughout
their careers and those who appeared to have been low paid because they
worked many years in jobs not covered by Social Security. Congress
enacted the WEP in 1983, intending to remove this advantage. Yet,
instead of protecting low-earning retirees, the WEP has unfairly
impacted lower-paid retirees such as educators.
The Impact of the GPO on Public Employees
The GPO penalizes individuals who have dedicated their lives to
public service, often at substantial financial sacrifice. Nationwide,
more than one-third of teachers and education employees, and more than
one-fifth of other public employees, are not covered by Social
Security, and are, therefore, subject to the Government Pension Offset.
These individuals lose benefits earned by their spouses--benefits they
counted on in planning their retirement.
The Government Pension Offset (GPO) reduces public employees'
Social Security spousal or survivor benefits by two-thirds of their
public pension. Estimates indicate that 9 out of 10 public employees
affected by the GPO lose their entire spousal benefit, even though
their deceased spouse paid Social Security taxes for many years.
Moreover, these estimates do not include those public employees or
retirees who never applied for spousal benefits because they were
informed they were ineligible. The offset has the harshest impact on
those who can least afford the loss: lower-income women. Ironically,
those impacted have less money to spend in their local economy, and
sometimes have to turn to expensive government programs like food
stamps to make ends meet.
Stella, and NEA member, worked for over 20 years in
the Colorado public school system as a teacher's aide. She
receives a monthly pension of $637. Her husband worked in the
private sector, paying into Social Security for 50 years. After
her husband's death, Stella expected to receive $520 a month in
survivor benefits. However, the GPO reduced Stella's survivor
benefits by \2/3\ of her public pension. As a result, Stella
only receives $96 a month in Social Security. Her total monthly
income is $733, instead of the $1157 she would have gotten if
not for the GPO.
NEA member Martha began working as a teacher in
Texas in 1978. Martha's husband worked in the private sector
and paid into Social Security. Based on his earnings, Martha
should have been eligible for $970 in widow's benefits.
However, Martha has also been told that, should she outlive her
spouse, her widow's benefits would be reduced by \2/3\ of her
public pension, or by $949 a month. Therefore, her $970 benefit
would be reduced to only $21 a month.
The Impact of the WEP on Public Employees
The Windfall Elimination Provision (WEP) reduces the earned Social
Security benefits of an individual who also receives a public pension
from a job not covered by Social Security. While the amount of
reduction depends on when the person retires and how many years of
earnings he or she has accumulated, many public employees can lose up
to 60 percent of the Social Security benefits they earned in other
Debbie, an NEA member in Georgia, worked for
several years in the private sector and then for 14 years as a
school bus driver. She expected to receive a monthly Social
Security benefit of $600. However, Debbie's actual Social
Security benefit is only $61 a month because of the WEP--a loss
of over $500. Debbie fears having to turn to food stamps and
other government programs to survive.
NEA member Bob worked for many years in Oklahoma in
jobs covered by Social Security before moving to California and
becoming a teacher. He was informed by the Social Security
Administration that he would receive approximately $360 a month
based on his earlier earnings in the private sector. However,
when he retired, Bob discovered his Social Security benefit was
reduced to $172 a month because of the WEP. Bob calculates he
loses $2196 a year, because of the WEP and has already lost
nearly $11,000 in total.
The National Impact of the GPO and WEP
The GPO and WEP have an impact far beyond those states in which
public employees like educators are not covered by Social Security.
Because people move from state to state, there are affected individuals
everywhere. The number of people impacted across the country is growing
every day as more and more people reach retirement age.
Perhaps most alarming, the GPO and WEP are impacting the
recruitment of quality teachers to meet urgent national shortages.
Record enrollments in public schools and the projected retirements of
thousands of veteran teachers are driving an urgent need for teacher
recruitment. Estimates for the number of new teachers needed range from
2.2 to 2.7 million by 2009.
At the same time that policymakers are encouraging experienced
people to change careers and enter the teaching profession, individuals
who have worked in other careers are less likely to want to become
teachers if doing so will mean a loss of Social Security benefits they
have earned. Some states seeking to entice retired teachers to return
to the classroom have found them reluctant to return to teaching
because of the impact of the GPO and WEP. In addition, currentteachers
are increasingly likely to leave the profession to reduce the penalty
they will incur upon retirement, and students are likely to choose
other course of study and avoid the teaching profession.
The GPO and WEP also impact other critical public services fields,
including police and firefighters. Our nation can ill-afford to allow
the very real fear of poverty in retirement to force talented,
dedicated individuals out of these professions.
The So-Called ``Loophole''
Educators in some states have sought to avoid the unfair and often
devastating impacts of the GPO and WEP by transferring from non-Social
Security school districts to school districts in which educators are
covered by Social Security. By retiring from a Social Security
district, these educators are then able to collect the Social Security
benefits they or their spouse have earned.
The rationale behind these educators' actions is clear and
understandable. Educators who have served in the public schools their
whole lives, and who have counted on spousal benefits when planning
their retirement, are often shocked and frightened to learn these
benefits will not be there for them. Similarly, educators who paid into
Social Security in previous careers are also surprised to learn that
they cannot collect from the system they spent years paying into.
Individuals facing retirement on substantially less income than they
anticipated cannot be faulted for attempting to salvage their
Given the reality of the impact of the GPO and WEP on public
employees, it is clear that the underlying GPO and WEP, not the
``loophole,'' must be fixed.
NEA urges Congress to respect, not penalize, public service. We
urge you to delete Section 418 of the proposed legislation as you move
the rest of the bill forward. Instead of working to close a
``loophole'' that allows dedicated educators to avoid the harsh impacts
of the GPO, Congress should focus its efforts on addressing the
Representatives McKeon (R-CA) and Berman (D-CA) have introduced the
Social Security Fairness Act of 2003 (H.R. 594). This bipartisan
legislation, which already has over 100 cosponsors, would eliminate the
GPO and WEP, thereby allowing public employees, like all other
employees, to collect the benefits they earned and need. The McKeon-
Berman legislation garnered the bipartisan support of over 180 Members
of Congress last year.
NEA urges the Subcommittee, and the entire House of
Representatives, to take immediate steps toward passage of the McKeon-
Berman bill. Passage of this legislation would restore equity to public
employees, would prevent public servants from facing poverty in
retirement, and would eliminate the need for the so-called ``loophole''
addressed by Section 418 of the legislation before the Subcommittee
We thank you for your consideration of these comments.
Statement of Gerald A. McIntyre, National Senior Citizens Law Center,
Los Angeles, California
In over thirty years of advocacy on behalf of America's low income
elders and people with disabilities, the National Senior Citizens Law
Center (NSCLC) has long recognized the pivotal role played by Social
Security and SSI in enabling older Americans to live independently with
a modicum of dignity. We are concerned that Sec. 203(a)(4) of the bill
expands a significant hole in the Social Security and SSI safety net
and, for that reason, must oppose passage of the bill as currently
We recognize that the bill contains provisions which are beneficial
to America's elders and people with disabilities. In particular, we
applaud the inclusion of the provisions of Title I of the bill,
designed to protect vulnerable beneficiaries from misuse of funds by
representative payees. However, the benefits of Title I will be
significantly outweighed by the harm which will ensue from
Sec. 203(a)(4) of the bill which will extend to Title II, the
restriction on receipt of benefits for those who are ``fleeing to avoid
prosecution, or custody or confinement . . . for . . . a felony'' and
those who are ``violating a condition of probation or parole.'' If the
experience of the last couple of years with the parallel provision in
SSI, 42 U.S.C. Sec. 1382(e)(4), is any guide, this provision is likely
to result in the loss of benefits for hundreds of thousands of the most
vulnerable beneficiaries and will serve no useful law enforcement
NSCLC has no quarrel with Sec. 203(a)(5) of the bill, which
authorizes the Commissioner, with appropriate safeguards, to release
information to law enforcement authorities with respect to the address,
Social Security number and photograph of individual beneficiaries. We
agree that someone who has been accused of a crime should not be able
to hide under the confidentiality provisions of the Social Security Act
to elude law enforcement. It is the analogous provision for reporting
to law enforcement agencies which is responsible for virtually all of
the apprehensions reported in the SSI program, not the provision which
renders individuals ineligible for benefits.
Section 203(a)(4) will penalize only those individuals law
enforcement agencies have decided not to pursue. It is important to
recognize that the Social Security Administration (SSA), in its
implementation of the parallel provision governing SSI benefits, does
not even notify the SSI recipient that benefits will be suspended until
after it has notified the appropriate law enforcement agency of the
individual's whereabouts and given the law enforcement agency ample
opportunity (60 days) to take the individual into
custody. Thus, it is only those who law enforcement has
chosen not to pursue, for whatever reason, who will be penalized.
Ironically, those who law enforcement decides to apprehend and who
presumably are wanted for more serious offenses will not be subject to
the loss of benefits by this bill because they will either 1) be
incarcerated and thus not eligible for benefits under 42 U.S.C.
Sec. 402(x) or 2) they will be released on bail or on their own
recognizance and will then be eligible for full benefits because the
warrant will have been vacated. Thus, only those whose offenses are too
minor or too remote in time are likely to suffer the loss of benefits.
This is borne out by the requests for assistance on this issue that
NSCLC has received and by the Los Angeles County Public Defender in
responding to requests from SSI recipients who had lost their benefits.
In an informal survey done in one office of the Los Angeles County
Public Defender last year of individuals who contacted them because
they had lost their SSI benefits as a result of 42 U.S.C.
Sec. 1382(e)(4), 40 of 61 warrants were more than ten years old and a
majority of the defendants had been diagnosed with either a serious
mental illness or cognitive impairment. In one case the warrant was 38
years old and in another the SSI recipient was 91 years old.
Fortunately, the experience of the Los Angeles County Public Defender
is that they are able to get most of these warrants vacated, and
benefits are thus presumably restored, although after a significant
period of deprivation. Unfortunately, in other jurisdictions it is
often more difficult for an individual to obtain assistance in getting
the warrant vacated. Since most of the cases involve warrants from a
state other than the one in which the individual resides,
it is close to impossible for an individual of limited means to return
to the jurisdiction from which the warrant was issued and remain there
until the matter is disposed of.
\\ GAO (U.S. General Accounting Office), GAO-02-716, Welfare
Reform: Implementation of Fugitive Felon Provisions Should Be
Strengthened 35, Figure 2: SSA's Process for Identifying and
Terminating SSI Benefits to Fugitive Felons and Providing Information
about Them to Law Enforcement Agencies.
\\ SSA., Office of Inspector Gen., Audit Report A-01-98-61013,
Identification of Fugitives Receiving Supplemental Security Income
Payments 10 (2000).
While the number of people affected by the SSI ``fugitive''
provision was relatively small in the first several years of the
statute, the number of people losing benefits in the last couple of
years has increased dramatically. More SSI recipients lost their
benefits because of this provision in FY 2001 than in the previous 4
years combined. By September 30, 2001, SSA reports that
45,071 people had been determined ineligible as ``fugitive
felons.'' By June 30, 2002, SSA reports that the number
had increased to 77,933, an increase of 32,862 over a nine month
period. At this pace, the number of individuals who have
lost SSI benefits is certainly over 100,000 by now. Extension of this
penalty provision to the much larger Title II program would be sure to
impact a far greater number of older Americans and people with
disabilities. The number of vulnerable individuals who will be
subjected to needless deprivation by Sec. 203(a)(4) of this bill will
far exceed the number who will be saved from loss of benefits by the
representative payee provisions of Title I of the bill.
\\ GAO-02-716, supra, 15, Table 3.
\\ SSA, Office of Inspector Gen., Fact Sheet, Fugitive Felon
Program (June, 2002), available at www.ssa.gov/oig/
We strongly believe that Sec. 203(a)(4) serves no useful purpose
and should be deleted from the bill because of the significant harm it
will bring to some of our most vulnerable citizens. However, if this is
not possible, consideration should be given to ameliorating some of its
harsher effects. One way to limit the harm done by the statute would be
to limit the sanction to situations where the underlying offense is a
crime of violence. An additional possibility might be to not apply the
sanction if the warrant is more than five years old since a successful
prosecution is much less likely in such situations. Also, it is often
more difficult to obtain access to older police and court records since
they are likely to be archived. Another option might be to restrict the
application of the statute to probation or parole violators to those
instances in which the underlying offense is a felony.
Finally, it is worth noting that one area in which more problems
might be expected when the ``fugitive'' provisions are extended to
Title II, is cases of mistaken identity. A small number of such cases
have been brought to our attention in the context of SSI. However,
cases of mistaken identity are likely to be much more common among
Title II beneficiaries because of the increasing prevalence of identity
theft. This is likely to have a greater impact on those receiving
retirement benefits since, by and large, they are a more attractive
group of victims for this particular type of crime since they are
likely to have better credit ratings than most SSI recipients.
In sum, we believe that Sec. 203(a)(4) is by far the most important
part of this bill. It is the one section that will have the most far
reaching impact on America's most vulnerable elders and people with
disabilities. It should be deleted from the bill. If this provision
remains in the bill, the bill should not be enacted into law.
We are attaching as an Appendix to this statement, a few sample
cases to demonstrate how the analogous ``fugitive'' provision in the
SSI program affects SSI recipients.
``FUGITIVE FELON'' EXAMPLES
1. Flight to a Nursing Home--In April, 1978, J.B. of Macon,
Georgia, was sent to Seattle, WA as part of his job as a
telephone installer/repairer. After he settled into his motel
his employer notified him that the job fell through and that he
would not receive the advance pay he had been told he would
receive. He had no money to pay the motel bill and the
innkeeper seized all his belongings when he left to go to his
next assignment in Portland, OR. As far as he was concerned,
that was the end of the unpleasant episode. What he did not
realize was that in August, 1978, long after he left Seattle,
the motel owner filed criminal charges for fraud against an
innkeeper for his failure to pay the bill and that in August,
1978 a Seattle Justice Court issued a warrant for his failure
to appear on the charge. He was not aware of the warrant or the
criminal charges filed against him until October, 2001, by
which time he was residing in a nursing home. At that time,
both his SSI and Social Security benefits were
terminated because he was allegedly fleeing to avoid
prosecution. He was also sent an overpayment notice for all
benefits received since October, 1998. In January, 2002, he
obtained representation from a legal services office, which, in
turn, contacted the Office of the King County Public Defender.
The public defender brought the matter to the attention of the
court in Seattle, which then dismissed the charges in February,
2002. SSA then agreed to restore benefits prospectively, but
refused to concede entitlement to benefits for the period
before dismissal of the charges and continued to pursue the
overpayment. In September, 2002, an ALJ reversed the
determination finding that J.B. was not notified of the
criminal case and found there was justification for his conduct
in leaving Washington.
\\ Title II benefits are not covered by the current fugitive
felon provisions and those benefits were soon restored after a legal
services office in Georgia intervened.
2. Flight to Care for an Ailing Grandfather--M.G. of
Richmond, CA is a California native who receives SSI on the
basis of the combined effects of a developmental disability and
mental illness. In 1981, at age 14 she moved to Virginia with
her mother who was transferred there by the U.S. Navy. She
remained there until June, 1990 when she moved back to
California with her mother who needed to return to care for
M.G.'s ailing 86 year old grandfather, whose wife had just
died. However, in May, 1990, before she left Virginia, she was
charged with unauthorized use of a motor vehicle. After her
arrest, there was a fire in the courthouse resulting in the
courthouse being closed because of asbestos contamination on
the day later in May when she was scheduled to appear. She then
moved to California in June and states that she did not receive
notice of a new court date. In December, 2001 she was notified
that her benefits would be terminated. She requested
reconsideration by means of a formal conference at which she
would be able to present witnesses, cross-examine adverse
witnesses and see any documentary evidence the agency has.
However, she was denied her right to a conference. Instead SSA
just sent her a Notice of Reconsideration affirming the
original decision without stating any reasons. Her benefits
were then discontinued in February, 2002. On April 26, 2002 an
ALJ reversed the agency's decision to terminate benefits,
stating that he found the facts in her case to be
``compelling'' and noting that she had a reason for returning
to California and was now experiencing ``considerable
hardship.'' Nevertheless the Appeals Council took the case on
own motion review and in July, 2002 reversed the ALJ decision.
The Appeals Council cited undisclosed ``Social Security
Administration guidelines'' for the proposition that whenever
there is an active felony warrant, ``the claimant is assumed to
be a fugitive felon.'' M.G. has now been without benefits for a
full year and has had to rely on the kindness of members of her
church. She has appealed her case to the U.S. District Court,
but a determination is not likely before summer. M.G. has no
money to be able to return to Virginia to defend the charges.
3. Mistaken Identity--J.G. is a severely ill AIDS patient in
San Diego, CA who is unable to leave his home because of severe
respiratory problems. He has an extremely common name which
also happens to be the name of a serial offender in Los Angeles
who was born on the same day he was. J.G. is a Mexican
immigrant who has never had criminal charges filed against him
either in Mexico or in the United States. He has also never
been to Los Angeles which is where all the offenses have
occurred. When his benefits were terminated, it was ascertained
that all of the offenses were alleged to have taken place in
Los Angeles and that the defendant, while having the same name
and birth date, had a different Social Security number.
Nevertheless, he was told that the warrant would have to be
satisfied for benefits to be restored. Fortunately for him, the
police in Los Angeles did catch up with the other J.G. and put
him behind bars for a period, thus causing the warrant to be
recalled. SSA then restored benefits to J.G. in San Diego.
However, J.G. in Los Angeles is apparently on the loose again
and J.G.'s benefits in San Diego have once again been
4. Mistaken Identity--G.A., a Mexican-American woman from
California, had her SSI benefits terminated based on a warrant
from Massachusetts although she had never been to the East
Coast. With the assistance of a public defender working with a
legal services lawyer in California, benefits were restored
when it was established that the defendant in Massachusetts,
who had the same name, was Puerto Rican and was in fact a
5. Shoplifting--J.G., a Connecticut resident, returned to
his native Georgia for his mother's funeral over ten years ago.
At the time he was drug addict and his life was a shambles. He
had no money and nothing to eat. He was charged with
shoplifting. However, he was unable to stay to respond to the
charges because he had no place to stay and no money to live
on. Instead he returned to Connecticut. In the intervening
decade he has become a different person and has kicked his drug
habit. However, he has AIDS and is unable to work and was
receiving SSI because of his AIDS diagnosis. His SSI benefits
were terminated last year because of the pending Georgia
warrant. He is waiting for an ALJ hearing and still has no
benefits. He is financially unable to return to Georgia to
defend the charges.
6. Hazy Memories of a Visit to New York--L.G. is a Texas
resident who had her benefits terminated in early 2002 based on
a warrant from New York City. She clearly recalled visiting New
York over twenty years ago but her serious mental limitations
made her a very poor historian and she was unable to recall
anything about the alleged incident. However, a dogged pro bono
attorney in a law firm in Houston enlisted the assistance of a
Legal Aid Society lawyer in New York and they discovered that
the underlying charge from over twenty years ago was for fourth
degree larceny involving an undisclosed item valued at $7.00
and that the charge was not a felony. Thus it clearly does not
fall within the purview of the statute. However, that did not
end the matter. The attorney representing L.G. reports that it
took over a month of persistent haggling to finally restore
benefits in November, 2002.
Many attorneys and other advocates report similar
experiences with clients whose severe impairments prevent them
from providing an adequate account of the circumstances
surrounding the warrant.
7. No knowledge of charges--C.C. is a Cambodian refugee who
arrived in the United States in 1981 and settled in Allston,
Massachusetts. He remained there until 1985 when he and his
family moved to San Francisco. Their departure 18 years ago was
a case of flight to escape the cold winters of the Northeast.
He began receiving SSI in 1989 and now resides in Antioch, CA,
outside of San Francisco. He was unaware of any criminal
charges until he received a notice dated June 26, 2002 telling
him his benefits would be terminated because he was a fugitive
felon. Benefits were terminated on July 1 without any
opportunity for reconsideration.
With the assistance of both a public defender and a
legal services lawyer in Massachusetts, documentation was
obtained from the Brighton Municipal Court where the charges
were filed. The court records show that the charges were for
welfare fraud and were filed on September 1, 1988, three years
after C.C. left Massachusetts. The reason given for issuance of
the warrant was that the prosecutor had indicated that the
defendant ``may not appear unless arrested.''
C.C. requested reconsideration of SSA's decision in
July. SSA promptly responded with a notice stating ``we are not
reconsidering your claim since the principal issue is that we
received an Office of Investigations notification that you are
a fugitive felon.'' The notice goes no to state ``you will need
to clear up this warrant before SSI benefits are reinstated.''
He has had no benefits since June of last year and has no funds
to return to Massachusetts to respond to the charges. He is
currently awaiting an ALJ hearing.
8. No criminal charges--C.B. is a Los Angeles resident who
lost his SSI benefits because he is alleged to be a ``fugitive
felon'' on the basis of a warrant in a child support case in
Chicopee, Massachusetts. Since child support proceedings are
not criminal proceedings, they clearly do not fall within the
statute and the matter should be resolved.
9. Contract dispute--J.G. is a 69 year old man currently
residing in California who lost his SSI benefits in September,
2001 because he was determined to be a fugitive felon. He had
been receiving benefits on the basis of disability since 1996.
He lived in Nebraska in 1992 and that year entered into a
contract to do some carpentry work for which he was given a
$2,000 advance. In the fall of that same year he moved to
Colorado prior to completing the work. However, before he left
Nebraska, he met with the property owner and a friend of his
who agreed to complete the work. The three of them agreed to
the terms and he paid the friend the $2,000 advance and left
for Colorado. In May, 1997 the owner of the property wrote to
him in Colorado alleging that the work was never completed and
that J.G. owed him $2,000. J.G. agreed to pay $75 per month
with the understanding that criminal charges would not be
filed. He was only able to continue this for a few months on
his limited SSI income. It was only when his SSI benefits were
stopped in 2001 that he learned that criminal charges that had
been filed against him in Nebraska on Dec. 29, 1993, more than
a year after he left the state.
After spending a year without SSI benefits, J.G.
received an ALJ decision restoring his benefits in September,
2002. The ALJ noted that J.G. was unaware of the criminal
charges, that the County Attorney's office in Nebraska had
declined extradition and that J.G. could not afford to travel
to Nebraska to defend the charges.
10. Flight to a Nursing Home--L.B. has had three heart
attacks and is another nursing home resident in Macon, Georgia.
She was threatened with termination of benefits in July, 2001
for failure to appear on a charge of filing a false instrument
in Elmira, NY that dated to 1979. Prompt coordinated action by
a legal services lawyer in Georgia, and the public defender and
the District Attorney in Elmira resulted in a judge promptly
dismissing the charges in the interests of justice in August,
2001 and benefits continuing.
11. Flight to a Nursing Home--In yet another case of flight
to a nursing home, also in Macon, Georgia, M.F. had been
accused of fleeing to avoid prosecution for an eleven year old
burglary charge in Texas. A legal services advocate in Georgia
obtained verification that the charges in Texas had been
dismissed and benefits were promptly restored.
Statement of Barbara Padgett, Iowa Park, Texas
As a public school teacher in Texas, I am distraught that your
committee continues to ignore the many thousands of Federal, State and
local government workers such as myself in our plea to repeal the
Government Pension Offset provision of Social Security law. I find it
even more disturbing that you will soon further try close any
possibility of myself and many of my fellow Texas teachers of being
able to receive spousal S.S. because of the offset penalty. Your
provision to lengthen the time of working for a system that pays Social
Security to at least 5 years is a very unfair, discriminatory proposal.
It would be unfair to change S.S. law now because it would single out
teachers such as myself who are retiring and prevent us from receiving
the same benefits that are now being enjoyed by those who who have
preceded us in retirement. I am not asking for full benefits that are
received by those who have worked in professions where social security
was paid. I do however feel that I should be able to receive spousal
S.S. benefits based on my husbands S.S. benefits. Why should I be
denied benefits solely because I chose to be productive and work
outside the home when a spouse who never worked in a paying job will be
able to receive spousal and widows benefits without any penalty
whatsoever? Sure, I will have some retirement benefits based on my
years of teaching, but it will scarcely be enough to meet my basic
needs in my retirement years. In the event of my husbands death I will
be living in poverty since I will have NO S.S. benefits to assist me in
my basic needs. I plead that you amend H.R. 743 to exclude Section 418.
I further ask that you as members of Congress, that you lend your
wholehearted support to H.R. 594 and S 349 which both seek to repeal
the offset provisions in Social Security law that reduces and in most
cases eliminate Social Security benefits for thousands of teachers and
other government employees. Think about the phrase'' Teaching is the
profession that teaches all other professions.'' As you weigh your
decisions think about all the dedicated teachers who helped to mold and
to encourage you to be what you are today. Is this the way that you
want to penalize these dedicated individuals by denying them benefits
that others now enjoy? I think not!! Just examine your heart and
conscience and I know you will undo this gross injustice. Thank you.
Statement of Joan Rutkoski, Jane Sweeney, and Ruth Wise, San Antonio,
We are sending an appeal to you on behalf of all educator--the
majority of which have held down full teaching positions, dedicating
themselves to the betterment of our youth and therefore our nation. At
the same time, they have both supported and helped their spouses to
achieve success in their chosen fields. Yet, these educators will not
qualify for social security based on spousal benefits.
This is just another slap in the face for those of us who have
dedicated our lives to helping America's children reach their
potential. We beseech you to either eliminate the social security
windfall provision totally for educators or allow the loop hole to
remain in place. The loop hole would at least allow those who are
eligible for benefits to find alternate employment with a district
paying social security at the end of their career.
You know, this nation is supported by us, the working class. We
raise our families, support our Presidents, send our children to war,
pay our taxes--Do you not think it is time to give us some support. In
our cases, as I am sure is the case of other educators, the windfall
provision will make a difference of approximately $1,000. in retirement
income. We listen daily to talk shows that condom our educators and
educational system, yet arrive each morning at 7:30 to tutor, often
here till 5:00. It is provisions like the Windfall that continue to
demoralize good and caring teachers and will do nothing but cause
future competent teachers to think twice about this profession.
If we can be of any assistance to you or answer any questions,
please contact us through e-mail or at Madison High School, San
Antonio, Texas. We thank you for the opportunity to voice our concerns.
Statement of Lynne Walters, Auburn, Maine
As a soon-to-be retired teacher and recent widow, I implore you to
do everything you can to eliminate the WEP and the GPO! Teachers and
other public employees in a number of states are hurt badly by the
current laws regarding the offsets.
These offsets hurt me in several ways. As a retiree, my earnings
under Social Security would be offset and thus, substantially reduced
by more than half. As a widow, I will be entitled to ZERO benefits
based on my pension from the state. We have always heard from the
government that Social Security, a pension plan, and savings should all
be counted on for retirement. Now, one of those basic pieces has been
eliminated. A large portion of the people who are hurt are widows like
There are other problems and questions: How about teachers and
other public workers in the affected states who work at a second job?
They are paying into Social Security with every check, but will never
get in retirement what workers in the other states will receive. How
about people who change to teaching, for example, in mid-career? If
they work in an affected state, they will lose much of their Social
Security for themselves as well as their spouses. (Laura Bush has made
a concerted effort to encourage career changes in order to get many
more teachers, yet they will lose a great deal financially.) How about
people who live in other than the 15 states, but work in an affected
state? These offsets affect many, many people.
I have heard the phrase ``double-dipping'' when referring to the
affected people. There are people who have been in the military, had
second and even third careers, receive pensions for all, plus full
Social Security. Friends and family in PA (where I used to work)
collect from both Pennsylvania State Retirement System and Social
Security and receive full benefits from each.
The offsets are an insult to people who have worked hard all of
their lives in public service. We have had low-paying jobs, and since
our salaries determine the amount of our pension, we therefore have low
pensions. Then we are penalized in our Social Security benefits.
Please support Senate Bill 349 which would repeal the offsets.
Please also help convince other members of Congress how important this
bill is and what it will mean for senior citizens throughout the
country who have spent their careers working in the public sector.
Statement of Stephen Zwirn, Fort Lauderdale, Florida
My name is Stephen Zwirn, a vendor under the name of the Work
Search Organization, Coconut Creek, Florida, under contract with the
Social Security Ticket to Work program, assisting disabled Floridian's
return to work.
I write in support of this legislation, and ask the Sub Committee
to pass this important piece of legislation on behalf of many disabled
beneficiaries who want to work.
An important component to HR 743 in my view is the provision to
allow tax credits to qualify employers who hire a disabled beneficiary
under the provisions of the Ticket legislation.
In addition, I am a member of U.S. Chamber of Commerce and member
in the national organization Society for Human Resource Management, and
wish to state for the record, tax credits for businesses are highly
This provision in the proposed bill, will give individual
Employment Networks the opportunity to issue the tax credits directly.
This will allow greater flexibility in the issuance of the tax credit
and allow many employers to deal directly with Employment Networks
without having to go through a State or other bureaucratic agency, thus
reducing the costs, with greater efficiency.
Thus, to re-state, as a Florida Employment Network, alongside other
Florida Employment Networks, asking to support this legislation.