[Senate Hearing 111-871]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 111-871
                      COMMERCIAL DRIVER'S LICENSES 



                               before the


                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                             SECOND SESSION


                             AUGUST 4, 2010


        Available via the World Wide Web: http://www.fdsys.gov/

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               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk
         Patricia R. Hogan, Publications Clerk and GPO Detailee


                     CARL LEVIN, Michigan, Chairman
THOMAS R. CARPER, Delaware           TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              SUSAN M. COLLINS, Maine
CLAIRE McCASKILL, Missouri           JOHN McCAIN, Arizona
JON TESTER, Montana                  JOHN ENSIGN, Nevada
            Elise J. Bean, Staff Director and Chief Counsel
                         Laura Stuber, Counsel
            Christopher J. Barkley, Minority Staff Director
               Andrew C. Dockham, Counsel to the Minority
        David W. Cole, Professional Staff Member to the Minority
                     Mary D. Robertson, Chief Clerk

                            C O N T E N T S

Opening statements:
    Senator Levin................................................     1
    Senator Coburn...............................................     4
    Senator Carper...............................................     5
Prepared statements:
    Senator Levin................................................    39
    Senator Coburn...............................................    43
    Senator Carter...............................................    45

                       Wednesday, August 4, 2010

Gregory D. Kutz, Managing Director, Forensic Audits and Special 
  Investigations, U.S. Government Accountability Office..........     7
Hon. Michael J. Astrue, Commissioner, Social Security 
  Administration.................................................    20

                     Alphabetical List of Witnesses

Astrue, Michael J.:
    Testimony....................................................    20
    Prepared statement...........................................    57
Kutz, Gregory D.:
    Testimony....................................................     7
    Prepared statement...........................................    47

                              EXHIBIT LIST

1. GGAO Report, Social Security Administration--Cases of Federal 
  Employees and Transportation Drives and Owners Who Fraudulently 
  and/or Improperly Received SSA Disability Benefits, GAO-10-444, 
  June 2010......................................................    73
2. a.-d. GSubmissions for the hearing record to the testimony of 
  Hon. Michael J. Astrue, Commissioner, Social Security 
  Administration.................................................   122
3. GLetter from Senator Carl Levin and 35 other Senators to 
  Chairman Tom Harkin and Ranking Minority Member, Thad Cochran 
  of the Appropriations Subcommittee on Labor, Health and Human 
  Service, Education and Related Agenceis, dated July 23, 2010, 
  requesting full FY2011 funding for Social Security 
  Administration's administrative expenses.......................   129
4. GResponses to supplemental questions for the record submitted 
  to Gregory D. Kutz, Managing Director, Forensic Audits and 
  Special Investigations, Government Accountability Office.......   134
5. GResponses to supplemental questions for the record submitted 
  to Hon. Michael J. Astrue, Commissioner, Social Security 
  Administration. [Note: A portion of the response to Question 36 
  has been Sealed and will be retained in the files of the 
  Subcommittee.].................................................   138

                      COMMERCIAL DRIVER'S LICENSES


                       WEDNESDAY, AUGUST 4, 2010

                                   U.S. Senate,    
              Permanent Subcommittee on Investigations,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 2:32 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Carl Levin, 
Chairman of the Subcommittee, presiding.
    Present: Senators Levin, Carper, and Coburn.
    Staff Present: Elise J. Bean, Staff Director and Chief 
Counsel; Mary D. Robertson, Chief Clerk; Laura Stuber, Counsel; 
Nina Horowitz, Detailee (GAO); Christopher Barkley, Staff 
Director to the Minority; David Cole, Professional Staff Member 
to the Minority; Andrew Dockham, Counsel to the Minority; and 
Lindsay Harrison, Fellow; Michael Wolf, Law Clerk; Joshua 
Nimmo, Intern; Jeffrey Goldenhersh, Intern; Peter Tyler (Sen. 
Carper); Russell Sloan and Shannon Lovejoy (Sen. Pryor); .


    Senator Levin. Good afternoon, everybody. The Social 
Security Administration (SSA) manages two programs that 
together provide a critical safety net for millions of 
Americans with disabilities. The first is the Social Security 
Disability Insurance (SSDI) program, which provides benefits to 
disabled individuals who can no longer work. The second is the 
Supplemental Security Income (SSI) program, a portion of which 
provides support to disabled persons and their families based 
upon financial need. In 2009, these two programs provided 
disabled Americans with financial benefits totaling about $160 
    One hundred sixty billion dollars is a big number even by 
Washington standards, and the purpose of today's hearing, which 
was initiated at the request of Senator Coburn, is to 
strengthen stewardship of our disability programs to ensure 
that the benefits are going to those who really need and are 
entitled to them, and that precious dollars are not spent 
unwisely, erroneously, or wrongfully in these important 
    The Social Security Administration has long acknowledged 
that its disability programs are not infallible. Sometimes the 
programs overpay the benefits owed; sometimes they underpay. 
Overall, the Social Security Administration has overpaid, and 
the total amount of uncollected overpayments has grown from 
about $7.6 billion by the end of 2004 to $10.7 billion by the 
end of 2008. And while the overpayment rate in the Disability 
Insurance program has been quite low, about 1 percent in 2008, 
the overpayment rate in the Supplemental Security Income 
program has been far higher--10 percent, approximately. In 
2009, the SSI program reduced its overpayment rate to 8 
percent. That was a reduction from the prior year, but that is 
still, obviously, way too high.
    To help bring down that overpayment rate, today's hearing 
focuses on a Government Accountability Office report evaluating 
disability payments made to persons who work. While most 
disability recipients are unable to work, the government does 
allow disabled individuals to undertake a 9-month trial work 
period, without losing their benefits, to see if they can 
manage a job. When a disability recipient takes a job, they are 
required to notify the Social Security Administration about 
their employment status and whether they are earning in excess 
of program limits.
    The GAO report focuses on the extent to which disability 
recipients may be abusing that work program. To do so, the GAO 
conducted two data matches. First, the GAO matched a database 
of Social Security disability recipients against Federal 
payroll databases covering about 4.5 million persons who worked 
for government agencies for varying periods of time from 
October 2006 to December 2008. Of those 4.5 million Federal 
employees, the GAO identified about 24,500 who received 
disability payments while also earning Federal paychecks. Since 
disabled persons are encouraged to work, and most of those 
24,500 workers were paid less than the disability program limit 
of $1,000 per month, many may have been in compliance with the 
program rules. However, 1,500 of those Federal employees were 
paid more than the program limit of about $1,000 per month, 
which means that they may have been improperly receiving 
disability payments. While 1,500 out of 4.5 million represents 
a small percentage--about 0.03 of 1 percent of the total--those 
1,500 employees received disability benefits totaling $1.7 
million per month.
    The second match that GAO performed compared the disability 
rolls to a database of 600,000 persons holding a commercial 
driver's license, as well as another database, and identified 
62,000 individuals who received their commercial driver's 
license after their disability start date. That data match, 
like the Federal employee match, raises questions about whether 
those workers may be improperly receiving disability payments 
worth millions of dollars.
    The GAO used the data matches to select 20 individuals for 
additional analysis, 18 of whom were Federal employees and 2 of 
whom held commercial driver's licenses. The GAO concluded that 
all 20 were improperly receiving disability payments, finding 
that in 5 cases fraud was involved on the part of the 
individual, 11 involved potential fraud, and 4 did not involve 
fraud but administrative errors on the part of the Social 
Security Administration. Those 20 cases were not randomly 
selected; the GAO picked them because they had facts suggesting 
fraud. Those 20 cases illustrate some of the abuses that are 
occurring and that need to be stopped
    The fraud cases involved individuals who received 
disability payments, were later able to land a job, and then 
failed to tell the Social Security Administration about their 
employment. The administrative error cases involved workers who 
told the Social Security Administration to stop their 
disability payments or where the Social Security Administration 
determined that the payments should stop, but the payments kept 
arriving anyway. In one case, the GAO reported that an 
individual told the agency to stop making payments when he 
first landed a job and again 2 years later, but kept receiving 
funds. The GAO wrote: ``[A]fter 2 years of full-time work, [the 
individual] again contacted [the Social Security 
Administration] and implored the agency to stop paying him 
because he knew something was not right and that he would have 
to return the money.'' That person must now repay the $12,000 
erroneously sent to him.
    More can and must be done to stop improper disability 
payments to workers. As a first step, the Social Security 
Administration should investigate the 1,500 Federal employees 
and 62,000 commercial driver's license holders identified by 
the GAO. Resolving those cases alone could save millions of 
dollars in overpayments.
    Second, the Social Security Administration needs to set up 
additional data matches to identify improper payments going to 
workers. Right now, the Social Security Administration 
undertakes a data match three times a year comparing its 
disability rolls to wage data compiled by the IRS from W-2 
forms submitted with the prior year's tax returns. While 
useful, that approach provides the Social Security 
Administration with wage data that is 12 to 18 months out of 
date. The Social Security Administration should supplement this 
approach by performing regular data matches with more timely 
Federal payroll data, which is compiled every 2 to 4 weeks. The 
Social Security Administration should also investigate other 
wage databases that could be used to root out overpayments to 
employed individuals, especially in the SSI program.
    Third, the Social Security Administration needs to 
strengthen its internal controls to halt payments that a 
disability recipient says should stop.
    Now, Congress also has a role in stopping the overpayments. 
The Social Security Administration currently uses two 
mechanisms to police disability payments: Continuing Disability 
Reviews (CDRs) in the Disability Insurance program, and 
Supplemental Security Income redeterminations. Those are SSI 
redeterminations. Both evaluate whether payments should be 
discontinued because a person is no longer disabled. Studies 
show that CDRs save $10 for each dollar spent while the SSI 
redeterminations save $8 for each dollar spent.
    Now, despite these cost savings, until recently there has 
been limited funding for these reviews. According to the SSA 
data, 10 years ago, in 2000, it spent about $600 million on 
CDRs. By 2007, the funding had dropped to less than half to 
about $300 million. By 2009, funding was back up to $400 
million; still, that is a third less than was available for 
enforcement and policing less than 10 years ago. Similarly, 
funding for SSI redeterminations dropped to less than half from 
the year 2000 to the year 2007 and has only slowly regained 
ground since then.
    Now, the current Administration has proposed increasing 
funding for CDRs and redeterminations in the fiscal year 2011 
budget, which I hope Congress will support. We need to invest 
in oversight and enforcement to stop the abuses. There is 
little point in criticizing SSA for failing to reduce billions 
of dollars in overpayments if we deny them the enforcement 
funds needed to do just that.
    Finally, I would be remiss not to mention one other 
longstanding disability issue that has plagued my home State of 
Michigan as well as other States, and that is the huge backlog 
in processing applicants who were denied benefits. Some 
individuals now wait as long as 3 years for a complete review 
of their disability applications, undergoing enormous financial 
pressures in the meantime. While this backlog is down from its 
height, hundreds of thousands of people are still caught up in 
the system, most waiting for appeals hearings. The Social 
Security Administration has a plan to eliminate this backlog by 
2013, but it requires Congress to approve the Administration's 
funding request for that purpose as well.
    Federal disability payments provide an essential safety net 
to millions of disabled Americans. Application backlogs deny 
critically needed benefits while improper payments reduce the 
funds available to those who truly need them. The Social 
Security Administration needs to strengthen its internal 
controls to address both problems.
    Senator Levin. I commend Dr. Coburn for his leadership on 
this issue, and I now turn to him for his opening remarks.


    Senator Coburn. Mr. Chairman, thank you for allowing me to 
hold this hearing. I also want to thank the witnesses that will 
testify today. I have a statement for the record, and I will 
just make a few points that I think are important for us to 
look at.
    I also would say that I agree with everything that you just 
said, Chairman Levin. The greatest responsibility does not lie 
at the Social Security Administration for the problems that we 
see. They lie right here with Congress. First, there has been a 
failure to do oversight, to direct and see what the problems 
are. There has also been a failure to effectively fund the 
Social Security Administration to make sure they have the 
assets, the systems, and the rules within the law to make sure 
that we support and help those who need us, but do not have a 
system that can be gamed.
    I think this is a phenomenal number, Mr. Chairman--that 1 
in 20 Americans in this country are on a disability program. 
That does not include veterans. It is unbelievable that 1 in 20 
Americans are truly disabled under the Social Security Act. And 
if you read the definitions in the Act, you will be astounded 
because one of the requirements is that you cannot perform any 
job that exists in the U.S. economy.
    So this is not Social Security's problem. This is Congress' 
problem because we created a program that has been difficult, 
if not impossible, for them in many ways to manage effectively.
    I will not repeat what the Chairman has said. Although I am 
disappointed with the Social Securities statement that 
overpayments are unavoidable. I do not think overpayments are 
unavoidable in the Federal Government. I think if that is our 
attitude, that overpayments are unavoidable, we will never 
solve, never refine, and never make sure the programs that we 
have are working.
    I want to commend the GAO for the work they have done. I 
have never found an area where they were not thorough and 
exemplary in how they carried out their investigations. I do 
want to make sure that we find out what we need to know as we 
go through these hearings and studies on these disability 
programs so that we can actually make the changes both in the 
law and in oversight to help Social Security. The SSA 
disability programs must be the tool that not only supplies 
this benefit for the rest of the disabled Americans, but also 
do so in a way that does not throw billions of dollars away 
every year through fraudulent schemes or inappropriate 
bureaucracies that delay the time at which we recognize when 
programs should be ceased for individuals.
    I would say, Mr. Chairman, I think the reason we find this 
study--and you mentioned it--is because we have failed to do 
our job, and had congressional oversight been effective and 
frequent, I do not think we would have some of the findings we 
have today.
    With that, I would like unanimous consent to introduce my 
opening statement to the record, and I yield back.
    Senator Levin. Thank you very much, Dr. Coburn. Of course, 
the full statement will be made part of the record.
    Senator Levin. Senator Carper has an opening statement.


    Senator Carper. Thanks, Mr. Chairman. It is good to be here 
with you and Dr. Coburn. Welcome to Mr. Kutz and others who are 
coming to testify today.
    Overpayment and fraud within the Federal Government's 
disability benefits program is an important topic to me, and I 
know to my colleagues to my right, and deserves the attention 
not just of this Subcommittee, but it deserves the attention of 
Congress. And the idea, the notion of overpayments is getting a 
lot of attention, not just from this Subcommittee, not just 
from the Congress, but from the Administration, and that is 
good news.
    I should note that in July we celebrated the 20th 
anniversary of the passage of the Americans With Disabilities 
Act. This anniversary reminded me of the many people in my 
State of Delaware and across the Nation who face the challenges 
of physical and mental disabilities every single day of their 
lives. Social Security disability programs are a critical 
lifeline for many who are facing huge challenges in their life, 
economic challenges among them.
    As the witnesses' testimony is going to show us today, the 
Supplemental Security Income program and the Disability 
Insurance program, these are very large. In 2009, these two 
disability programs provided benefits totaling, I think, about 
$160 billion. By April 2010, I think there were some 18 million 
people enrolled in the two programs, and nearly 1 in 20 
Americans is receiving disability benefits of some kind. In 
fact, the number of individuals applying for disability 
apparently continues to grow. The Congressional Research 
Service estimates, I believe, the current backlog of pending 
applications waiting an initial determination by the Social 
Security Administration exceeds 1 million people. And with 
programs of this size and complexity, oversight is, as we know, 
very important for ensuring that our taxpayer dollars are spent 
    Unfortunately, the two disability payment programs managed 
by the Social Security Administration make very large amounts 
of overpayments. According to the Social Security 
Administration's latest report, improper payments total more 
than $10 billion, and there is also fraud, I think, on top of 
that. And given the amount of money that is involved, we should 
not be surprised that there are significant overpayments. There 
are overpayments in almost every agency, and this is a lot of 
money, so the amount of the overpayments is not going to be 
    But last year, I joined with Dr. Coburn, Senator McCain, 
and others to request GAO examine the two disability payment 
programs for improper payments. The resulting audit underscores 
the need for reforms and improvements to the oversight of these 
two Social Security disability programs.
    I think we can draw many useful conclusions from the work 
that GAO has done and their recommendations. I also understand 
that the Social Security Administration's Inspector General has 
conducted audits and that their findings are along similar 
    My staff in Delaware work with many constituents who 
receive benefits from the Social Security disability program. I 
am sure my colleagues in the other 49 States have staff who do 
the same thing for their constituents. The constituents report 
many problems that further illustrate the challenges of 
improper payments, including how the constituents must work 
with the Social Security Administration to straighten out 
    Due to the complexity and the size of the two disability 
payment programs, I do not think that there is a single silver-
bullet solution. I wish there were, but I do not think there 
is. There are likely many ideas that ought to be heard, 
debated, and some of them implemented. However, one idea I 
would like to explore is if Congress is being penny-wise and 
pound-foolish. I understand that the Inspector General noted 
that we could easily avoid billions in overpayments with a 
fairly small increase in oversight investment, and that is 
something I want us to drill down on today.
    Again, we thank GAO for helping us with this, and the IG as 
well. Mr. Chairman and Dr. Coburn, I am happy to be your 
partner in this effort to do our job and to help make sure that 
we are not wasting money; by the same token, we are trying to 
make sure that the folks who have a disability are getting the 
help that they need.
    Thanks very much.
    Senator Levin. Thank you very much, Senator Carper, and 
also thank you both. You sponsored a bill called the Improper 
Payments Elimination and Recovery Act of 2010. The two of you 
took that initiative. I think it was recently signed into law, 
and that should be helpful, and you two have devoted a lot of 
time, and we and the taxpayers should appreciate that effort.
    Senator Carper. Thank you.
    Senator Levin. Mr. Kutz, let me call you now as our first 
witness. Gregory Kutz is the Managing Director of Forensic 
Audits and Special Investigations at the Government 
Accountability Office. We appreciate your being with us. We 
also appreciate all the work that you do at the GAO. It is a 
critical part of our effort to have the essential oversight 
which we engage in.
    Pursuant to Rule VI, as you know, all witnesses who testify 
before this Subcommittee are required to be sworn, so at this 
time I would ask you to please stand and raise your right hand. 
Do you swear that the testimony that you are about to give will 
be the truth, the whole truth, and nothing but the truth, so 
help you, God?
    Mr. Kutz. I do.
    Senator Levin. We will be using a timing system today. 
About 1 minute before the red light comes on, you will see the 
lights change from green to yellow, so you can conclude your 
remarks. Your written testimony will, of course, be printed in 
the record in its entirety, but we would ask that you try to 
limit your oral testimony to no more than 7 minutes.
    Mr. Kutz.

                     ACCOUNTABILITY OFFICE

    Mr. Kutz. Mr. Chairman, Ranking Member Coburn, and Senator 
Carper, thank you for the opportunity to discuss Social 
Security disability programs. Today's testimony highlights the 
results of our investigation into Federal workers and 
commercial drivers improperly receiving disability benefits.
    \1\ The prepared statement of Mr. Kutz appears in the Appendix on 
page 47.
    My testimony has two parts: First, I will discuss our macro 
analysis; and, second, I will discuss our specific 20 case 
    First, our analysis identified 1,500 Federal workers that 
appeared to be improperly receiving disability benefits while 
working. For Disability Insurance, this included individuals 
that received more than 12 months of pay above the $940-per-
month threshold. For Supplemental Security Income, this 
included individuals receiving more than 2 months of pay above 
the $1,400-per-month threshold. We also identified about 
600,000 commercial drivers that were receiving full disability 
    To refine this analysis, we obtained current information 
from 12 States on 144,000 of these individuals; 62,000, or 43 
percent, had their commercial licenses issues after Social 
Security determined that they were fully disabled.
    So why should we be concerned about these 62,000 
individuals? Because every 2 years, a licensed medical examiner 
must certify that these individuals are mentally and physically 
able to operate a commercial vehicle. Does this mean that all 
62,000 cases are disability fraud? No. In fact, our past 
investigations found that workers with disqualifying 
disabilities were still driving. These individuals were driving 
without medical certifications or had forged the medical 
examiner's signature. In other words, they should have not been 
on the road. In contrast, those that passed the medical exam 
and are gainfully employed are likely fraudulently receiving 
disability pay.
    Moving on to my second point, we validated 20 cases of 
fraudulent and improper payments from this overall analysis. As 
you mentioned, this was not a statistical sample and cannot be 
projected. Examples included a Transportation Security 
Administration (TSA) security screener that fraudulently 
received $108,000. Social Security improperly paid her for 5 
years, each year increasing the amount of disability pay by her 
reported Federal salary.
    A home improvement contractor also fraudulently received 
payments. This individual told our investigator that he puts 
everything in his wife's name because he is on disability.
    A legal assistant that worked for the Social Security 
Administration improperly received $11,000. Social Security was 
not aware of this until we informed them.
    And a Postal Service clerk fraudulently receiving $19,000, 
told us that she did not report that she was working because 
she needed the money.
    As you know, Social Security has downplayed the extent of 
the problems that I am discussing today. However, I want to 
mention that the numbers of potential fraudulent and improper 
cases here is significant, and the evidence for these 20 cases 
is irrefutable.
    Here is the evidence we have that Social Security does not: 
Video of people working that Social Security should not have 
paid; admissions from some to Federal agents that they 
committed fraud; interviews with supervisors; biweekly payroll 
records from Federal agencies; Florida and Texas roadside 
inspections for a truck driver that Social Security says was 
not working; and a job description that says, ``stooping, 
bending, and arduous physical labor.'' This was for a Veterans 
Administration (VA) worker on disability with a bad back.
    As our report makes clear, nobody will ever know how many 
Federal workers and commercial drivers are improperly being 
paid. To conclude beyond the 20 cases, you need to have the 
video, the face-to-face interviews, and the payroll records, 
among other things.
    In conclusion, I understand that SSA faces significant 
pressure to reduce the backlog and get needed payments to 
millions of Americans with disabilities. However, with our 
Nation's fiscal troubles, workers that are not entitled to 
these benefits should be stopped from being paid. Thus, it is 
important, as you have mentioned here, that Congress hold 
Social Security accountable and provide them with sufficient 
resources to minimize fraudulent and improper disability 
    Mr. Chairman, that ends my statement, and I look forward to 
all of your questions.
    Senator Levin. Thank you very much, Mr. Kutz.
    Let us try a 7-minute round for questions.
    First, about the 20 cases in the GAO report, most involved 
a person who got a job, started owing money in excess of the 
program limit of $1,000 per month, as I understand it, did not 
tell the Social Security Administration about the change in 
their employment status or that they were earning more than the 
program limits.
    How do you select those 20, first of all?
    Mr. Kutz. Some of it had to do with geography. Some of them 
had characteristics of large overpayments. As I mentioned, it 
was not a statistical sample. You cannot take these and project 
them to the 1,500 or the 7,000 or, as you mentioned, the 
24,000. But they are cases that I think identify certain issues 
that need to be addressed, such as the AERO system that we have 
recommended to them, or the fact that payroll data, as several 
of you have mentioned, is better data than IRS data 12 months 
    So it does raise legitimate issues, but I think that they 
were not representatively selected at all.
    Senator Levin. Nor do they purport to be.
    Mr. Kutz. No, we do not purport that at all.
    Senator Levin. And you mentioned the 1,500--and I think we 
mentioned that figure as well--and the 24,000. So are you able 
to give us an estimate of the percentage of the 1,500 in the 
one case and the 24,000 in the other case, what percentage of 
those are likely to involve fraud? Are you able to do that at 
    Mr. Kutz. No, because--let us use the 1,500. There are 
certain numbers of those 1,500 that are not improper payments. 
There are certain conditions that would mean that they are not 
improper. However, there are other people that would be 
improper payments. For example, some of the 5,500 people, 500 
more of those were SSI cases. Well, the threshold for earnings 
for those is $85, so very likely many of those are improper 
payments. So there are some that would increase it and some 
that would decrease it, so we just cannot be more precise 
without conducting a full investigation of each case.
    Senator Levin. Now, the Disability Insurance program had an 
overpayment rate of about 1 percent in 2008; the SSI program 
had an overpayment rate of about 10 percent in 2008 and 8 
percent in 2009, according to our calculations. Does that sound 
about right?
    Mr. Kutz. Those are the reported numbers by Social 
Security, correct. We have not audited those ourselves. The IG 
probably looks at those.
    Senator Levin. All right. Now, what explains--and I will 
ask, obviously, Social Security about this as well, but what 
explains that huge difference in the overpayment rate between 
the Disability Insurance program and the SSI program?
    Mr. Kutz. I do not know. I think the Commissioner can 
answer that better, but certainly they are different programs. 
The SSI program is a means-tested program versus the Disability 
Insurance program. So it would be the nature of the programs. 
We have not looked at the difference as to why one was higher 
than the other. The 1 percent to me sounds suspiciously low, 
given the investigation we have done here. But it is improper 
payments, so that does not necessarily include fraud, as one of 
you all have said that. So we would look mostly here at 
disability cases, although 300 of the 1,500 Federal workers 
were getting SSI.
    Senator Levin. Do you recommend that the Social Security 
Administration investigate these 20 cases?
    Mr. Kutz. The 20 cases, I think they have already looked at 
them. We shared those with them many months ago, and I believe 
most of them --they represent that they identified 10 
themselves, although they still got overpaid. They are aware of 
the other 10. I think that the payments have been shut off for 
most, if not all of them, and the IG is investigating several 
others, although with the U.S. Attorneys you are not going to 
get many of these cases ever prosecuted.
    Senator Levin. Now, of the 4.5 million Federal employees 
that you matched, about 1,500 received disability payments 
while also receiving Federal paychecks over $1,000 a month. Is 
that correct?
    Mr. Kutz. For Disability Insurance, it was over $940. That 
was 2008 information. But, correct, they received payments, 
Federal pay for more than 12 months while getting the 
disability because the threshold--there is the trial work 
period and other grace periods. So everybody above 12 months 
was a potential improper payment.
    Senator Levin. And you recommended that the Social Security 
Administration investigate all of those 1,500 cases?
    Mr. Kutz. We could not give those to them because we had 
certain agreements with the people that gave us the payrolls, 
so they are going to have to probably get the payroll records 
themselves. We are not authorized to share that payroll 
information necessarily. But certainly I think it is something 
that Social Security could do with a very small investment 
periodically, because, again, this payroll information is every 
2 weeks. So you could see, for example, workers working every 2 
weeks for 12 months, 18 months, 24 months that were on 
disability. That would be more useful than getting IRS 
information, certainly.
    Senator Levin. And why aren't you able to give the 
information to the Social Security Administration?
    Mr. Kutz. Because usually when we get data agreements--we 
have data agreements with the agencies. When we get them, we 
get them for the purpose of doing the work for you. If it is a 
fraud case or a specific case we drilled down on, we typically 
can refer those. When we have the larger numbers and payroll 
data, we typically do not give that information, because we did 
not investigate. As I mentioned, the other cases are not 
necessarily improper payments, but some probably are. But we 
did not actually thoroughly vet those. But, again, it is 
payroll data that they should be able to get through data 
agreements with other agencies as part of their internal 
    Senator Levin. Yes, I am just wondering, though, why, if 
you selected 1,500 where at least there is some evidence--it 
may not be ultimate evidence; it may not be evidence that is 
absolute or anywhere near beyond a reasonable doubt, but at 
least it is some significant evidence that there is an 
overpayment. Shouldn't we allow you to forward those to the 
Social Security Administration?
    Mr. Kutz. We would be happy to. It is the Postal Service, 
Treasury, and the Department of Defense. If you would like us 
to work with Social Security to make sure that we can actually 
share that information, we would be happy to try to do that, 
    Senator Levin. I think when you go as far as you have gone 
with the matching--I do not see any reason why you should not 
be able to share that information.
    Mr. Kutz. All right. Well, we will agree to speak to those 
agencies and Social Security, and if they allow us to share 
that information, we will do it.
    Senator Levin. All right. That would be good. And if not, 
tell us if there needs to be a change in the law.
    Mr. Kutz. We will let you know if we cannot.
    Senator Levin. When you go to the extent that you have 
gone, this is not talking millions or hundreds of thousands. 
This is after all a weeding-out process.
    OK. I think I will turn now to Dr. Coburn.
    Senator Coburn. Thank you, Mr. Chairman.
    Of the 1,500 Federal employees who could have received--and 
I say ``could have received''--payments improperly, was there 
evidence in any of those cases of true fraud taking place, not 
just bookkeeping errors but true fraud?
    Mr. Kutz. Sixteen of the 20 we looked at. Beyond that, we 
really cannot tell. The 16 of the 20 had not reported their 
work activity to the Social Security Administration. The five 
that we say are fraud cases basically either admitted to us or 
made acts of deception that make those, in our judgment, fraud 
    Senator Coburn. How does somebody know they have to report 
that to the Social Security Administration?
    Mr. Kutz. The Commissioner can surely talk about that, but 
I think there are certain disclosures. It is any information 
the people--we interviewed all 20. They all knew they were 
supposed to tell Social Security.
    Senator Coburn. So Social Security had done a good job in 
advising them what their requirements were to advise back to 
Social Security when the beneficiary returned to work?
    Mr. Kutz. Very few said they did not know they were 
supposed to report. Virtually all said they had. But when we 
checked with Social Security, only four had actually done it 
according to Social Security's records.
    Senator Coburn. OK. The 20 case studies, were those 
individuals aware that you were investigating them?
    Mr. Kutz. Yes, we interviewed every one of them, 
absolutely--except there is one we did not. The Social Security 
employee we did not because the Social Security IG Office asked 
to do the interview. So we interviewed 19 ourselves, and then 
the Social Security IG interviewed the other worker that worked 
for them.
    Senator Coburn. After these interviews were conducted, did 
you get any sense of what those individuals thought about the 
degree of difficulty to defraud the Social Security disability 
system or SSI?
    Mr. Kutz. Well, I think that they believe, which is 
probably true, that the consequences of getting caught here are 
not significant. The chances of any of these people ever 
getting prosecuted is probably very slim. Most cases would be 
below a declination level for a U.S. Attorney. So from a 
prosecution standpoint, the risk is low.
    If you get caught, you may have to pay back the whole 
amount with no interest, so that is not a big consequence. And 
you may get to pay back pennies on the dollar.
    So the consequences do not seem to be for the beneficiaries 
that are committing fraud or getting improper payments that 
significant. And to be fair, a lot of these people are in 
serious financial trouble, so I understand Social Security has 
to be very understanding of these Americans with disabilities, 
some of them have terminal cancer or other things. So there are 
other factors, I am sure, that play into this.
    Senator Coburn. For a number of cases, GAO provided an 
estimate of the SSA overpayments. Were there other costs to the 
Federal Government that are not captured in your estimate?
    Mr. Kutz. Yes. For example, the two truck drivers get 
Medicare, so if you are fraudulently getting Social Security 
Disability Insurance, you get Medicare after a certain period 
of time. And then once you are on the rolls, you get it for 93 
months, or something like that; whereas, SSI, I think Medicaid 
is what covers them.
    Senator Coburn. So you get Medicare for 93 months once you 
get on the roll?
    Mr. Kutz. It is 90-some months, I believe, once you get 
into the rolls beyond the time that you are in there, yes. It 
is a long time.
    Senator Coburn. In my other life, I practice medicine, and 
I have filled out hundreds of these commercial driver's license 
physical exams. I have also read both the law and the 
regulations on eligibility for Social Security Disability 
Insurance and SSI. I know what I believe, but can you give a 
comment on your thoughts about if somebody can actually pass 
this physical exam, whether or not they would meet the 
requirements of the program?
    Mr. Kutz. Absolutely. Here is my view. These are mutually 
exclusive populations. You cannot really technically be on one 
and the other at the same time. And I am sure as a physician, a 
doctor, you know that. I mean, the requirements to drive a 
vehicle are significant. And so I think they are a mutually 
exclusive--maybe with some exceptions and footnotes, but for 
the most part, if you can drive a commercial vehicle, you 
should not be getting disability payments.
    Senator Coburn. Was there anywhere in your study where you 
looked at the decisionmaking to allow people to qualify for the 
disability programs based on the criteria that Social Security 
sets up?
    Mr. Kutz. No, we did not look at the front end of this. No.
    Senator Coburn. After looking at the back end, do you think 
there is any reason that the criteria ought to be reviewed or 
looked at?
    Mr. Kutz. Well, certainly, the mental disabilities, bad 
backs and stuff are the ones--there are certain types of 
conditions that seem to be more subject to fraud, and I am sure 
that the Social Security Commissioner can tell you those. He 
probably knows them much better than I do. But there are 
certain conditions that would lend themselves to this, and I 
think that is just something that we noticed when we looked at 
    Senator Coburn. I had the frequent experience of any new 
lawyer that came to town, if, in fact, you would not write the 
physical exam for Social Security the way they wanted it, they 
never came back and asked you to do it again because they could 
not get what they wanted, even though you gave an honest exam. 
You all have not looked at any of those areas?
    Mr. Kutz. No. I mean, from an internal control standpoint, 
that front end is probably the most important part of the 
process. Once someone gets in the system--and it is hard to get 
in; there is a backlog--it is harder to get out. And that is 
where we have some of the problems here. Once they are in, it 
is harder to get out, and that is where you get a lot of the 
improper payments.
    Senator Coburn. In your assessment--and this may be 
premature--does SSA have an effective system to prevent 
overpayment fraud within the two disability programs?
    Mr. Kutz. We have not looked at it overall. There are 
certainly some things that we think they can do better. The 
data matching things that several of you have mentioned are 
things that we believe they should look at. They do certain 
matches now, for example, with the new-hire database. I believe 
that is for SSI only. Why they do not do it for DI, I do not 
know, but that is actually an excellent database. It is the 
information on payroll, so it gives you an indication. So 
things like that, that they do utilize at least for SSI, are 
good things. But we have not taken a comprehensive look, but I 
think with the backlog issues at the front end, it seems like 
the CDRs and some of the things they do have suffered a little 
bit from a resource perspective, which is----
    Senator Coburn. Which is our fault.
    Mr. Kutz. Yes--well, I do not know. I am not going to blame 
you. I work for you. [Laughter.]
    Senator Coburn. Well, I have already said I blame us, and--
    Mr. Kutz. I will let you say that.
    Senator Coburn [continuing]. Senator Levin has also noted 
that we have not funded it appropriately.
    Do you believe it would be difficult for SSA to use the 
AERO computer program to determine if individuals have returned 
to work?
    Mr. Kutz. I do not know if it would be difficult, but they 
have said that they are going to look at the feasibility of it, 
and I think it would be very useful for them to attempt to do 
    Senator Coburn. That was, by the way, one of the 
recommendations you all made?
    Mr. Kutz. That was one of them, and they have agreed in the 
recommendations to look into that.
    Senator Coburn. You all did make other recommendations. 
Would you summarize those rather quickly?
    Mr. Kutz. It is really the AERO system and to periodically 
match data records at Social Security against Federal payroll 
records. We asked them to look at the feasibility of both of 
those, and they have agreed to do both of those.
    I would say this, though: I think the other one that needs 
to be--we did not make a recommendation, but the truck driver 
one, as you and I just talked about here, is certainly a 
population that is potentially a high-return-on-investment 
population, so I think you may agree with me that is something 
that they should probably consider.
    Senator Coburn. Mr. Chairman, I do not know if we are going 
to need to go to another round. If I had about maybe another 
minute and a half, I would be fine.
    Senator Levin. Well, Senator Carper has graciously said, 
``Of course.''
    Senator Coburn. All right. [Laughter.]
    I was watching CNBC this morning, and Commissioner Astrue 
stated that your study was hopelessly flawed, it has no useful 
data and has no actual recommendations for change.
    How do you respond to that? Have you ever heard anything 
like that on anything GAO has ever put out before?
    Mr. Kutz. Not quite that clear, no.
    Senator Coburn. OK. Were those concerns raised to you----
    Mr. Kutz. Yes.
    Senator Coburn [continuing]. Prior to today?
    Mr. Kutz. Absolutely.
    Senator Coburn. In those same terms?
    Mr. Kutz. Probably in harsher terms. Yes.
    Senator Coburn. Did you ask the Social Security 
Administration to comment on the methodology you all used?
    Mr. Kutz. Yes, we sent them methodology information in 
December 2009.
    Senator Coburn. OK. And what was their response?
    Mr. Kutz. They never did respond until I guess--the 
``hopelessly flawed'' is probably the response.
    Senator Coburn. OK. Thank you, Mr. Chairman.
    Senator Levin. Senator Carper.
    Senator Carper. Just share with us, if you could, Mr. Kutz. 
You were asked by Congress to do this analysis. GAO does the 
analysis. You come up with your findings and your 
recommendations. I presume when you engage with the Social 
Security Administration, the key people, that there is a 
meeting, a dialogue, a discussion to indicate to them what you 
have been asked to do. Is that the way it works?
    Mr. Kutz. That is correct. The initial step was we had to 
get--we have an entrance conference. We have requests for the 
larger databases, and then we pulled case studies from which we 
picked these 20. Those 20 are not representative, again. They 
were aware of those, and so they knew who the 20 were quite a 
while ago, which is why I believe they have taken action on 
most of those 20.
    So at a staffing level, we had a pretty constructive, I 
think, dialogue with them. They never denied us any access to 
the case files or the databases or anything.
    Senator Carper. All right. Going back to my experience in 
State government, we have a State auditor in Delaware, an 
elected State auditor, and sometimes agency heads would feel 
that the State auditor, particularly as we got closer to his or 
her reelection, was interested in--I will not say ``gotcha'' 
investigations and reports, but you get the drift. And you are 
not running for reelection at GAO, so that is not a concern.
    Mr. Kutz. I would not win if I was running in the Executive 
Branch, that is for sure.
    Senator Carper. Well, you might. You are pretty good at 
this. But is there some feeling within the Social Security 
Administration that GAO was on a ``gotcha''-like mission?
    Mr. Kutz. No, I do not think so. They have put money into 
their budget, for example, as I understand, to get additional 
authority or resources to do these CDRs and some of the other 
internal controls. So I think they themselves believe--it may 
be that they do not--I cannot explain the rest of it, but I 
think constructively, going forward, this can be useful to 
them. Certainly these case studies, I think, showed them that 
this AERO system could be used for more than increasing the 
disability payments but actually to flag people that should not 
be paid.
    So if anything comes from it--and I think the truck driver, 
as Senator Coburn was saying, his doctor--he has seen this 
before. He apparently has signed many of those forms. Those two 
populations are very much mutually exclusive if you actually 
understand the DOT regulations.
    Senator Carper. The Chairman was nice enough to mention the 
legislation that Dr. Coburn and I worked on for a number of 
years. It is a follow-on to 2002 legislation which called on 
Federal agencies to try to identify improper payments. It did 
not call on all the Federal agencies but some to let us get 
started. The legislation the President signed last month says 
not only do we want some Federal agencies, we want all Federal 
agencies to identify improper payments. We want them to stop 
making improper payments to the extent that they can, and that 
to the extent we have improperly paid money, overpaid money, or 
there is money that has been defrauded from the government or 
from the trust funds, we want you to go out and get that money.
    We are trying to create almost--I do not know what Dr. 
Coburn calls it--but I call it within the Federal Government 
almost a culture of thrift, the idea that we have these huge 
deficits and we have to look in every nook and cranny and under 
every rock to see what we can do better. Everything I do I know 
I can do better. And I think that is true of all of us.
    I would say the folks at Social Security should not be 
defensive about this. Just use this as an opportunity to try to 
do better what they are already charged with doing. And to the 
extent that we can be helpful, one of the things I hope to come 
out of this hearing today is some constructive advice for us, 
what we could on this side of the dais be supportive.
    Let me ask, if I can, Mr. Kutz, was it difficult or 
relatively easy to obtain access to the Federal salary and 
other databases used that the auditor did? Did your team 
experience difficulty in gaining access? Just a short answer.
    Mr. Kutz. No. Probably the most reliable data in the 
Federal Government is payroll data.
    Senator Carper. OK.
    Mr. Kutz. The quickest and most reliable, I would say, yes.
    Senator Carper. Are there additional databases that your 
GAO audit team considered for comparison to Federal disability 
payments or that you would recommend the Social Security 
Administration might consider for its oversight work?
    Mr. Kutz. Certainly Medicare and Medicaid providers, for 
example, might be a population or the Central Contract Registry 
(CCR), which has government contractors. There are 500,000 or 
600,000 of them. One would think that if you are a government 
contractor and you are the principal, you may have gainful 
employment and income. So there are potentially a lot of 
databases, and I think you and I have talked about this at 
other hearings before, the importance of data sharing in the 
government. We are one government, but we are thousands of 
stovepipes. And so you know as well as I do that there is a lot 
of potential out there that these agencies have that is not 
tapped, and really it is a matter of reaching out and getting 
data-sharing agreements. It is too bad we have to do data-
sharing agreements, but that is kind of how it ends up working, 
as you know.
    Senator Carper. Yesterday I chaired a hearing literally in 
this room--it was the Subcommittee of Federal Financial 
Management, the Federal Workforce, and the District of 
Columbia--and we looked at a topic that is kind of similar to 
what we are talking about here today. Office of Management and 
Budget (OMB) is pursuing some innovative ideas to try to reduce 
improper payments, including fraud. They are using modern 
information technology ideas, some very clever stuff.
    For example, the White House recently announced an 
initiative to establish a nationwide Do Not Pay List so that 
all agencies can check the status of potential contractors or 
individuals, and we applaud them for that.
    Also, Medicare will soon establish a demonstration program 
using a cutting-edge fraud-mapping tool that was pioneered by 
the Recovery Accountability and Transparency Board relating to 
the stimulus program. Some of those ideas rely on access to 
private sector databases to either corroborate the data or to 
gain additional insights.
    Do you have any thoughts on private sector partnerships 
that might prove useful, including accessing commercially 
available databases, to confirm the employment status of 
disability program recipients?
    Mr. Kutz. Well, the new-hire database, as I mentioned--that 
is not a private sector database, but there is private sector 
information feeding into that from employers across the 
country. That is a mother lode. I mean, that is something that 
if they have access--I think they have access to that. That is 
something that has employment data presumably for anyone 
getting a W-2 or pay if the States properly fill that. So that 
certainly is something that is an important database, and there 
are probably others out there besides that.
    Senator Carper. I am going to ask you to answer that for 
the record, if you would.
    Mr. Kutz. Sure, that would be fine.
    Senator Carper. If you would, please.
    The last thing I want to ask, I have talked to people 
before--and my colleagues may have as well, and you all may 
have, too--who are on disability who have the opportunity to go 
to work, but they are reluctant to go to work because they 
would lose their disability payments. In some cases, they think 
they deserve both. In other cases, they have said to me, 
``Well, it really works as a disincentive. I go to work, and I 
lose all or most of my disability payments.''
    In trying to think about human nature and how we think, any 
ideas on how we might modify the incentives so that when people 
go to work--eventually if they make enough money, they lose 
their disability payments, but there is a way to structure it 
so that human nature does not keep people on the sidelines not 
working, just continue to be dependent on the rest of us. I 
think we have probably tried to do that in the law. I do not 
know if we do it perfectly. But if you have some thoughts on 
that at this time, I would welcome those.
    Mr. Kutz. Yes, I think the Commissioner is going to talk 
about it. There are lots of work incentives out there. They 
encourage people to go back to work. They have got the trial 
work period where you can be paid a 9- and 12-month grace 
period at the same time you are getting your disability 
payments. So I believe there is some. Whether there is more out 
there that can be done, I am certainly not an expert at that. 
But certainly we want to encourage our Americans with 
disabilities to work.
    I have done a lot of work with service-disabled veteran 
entrepreneurs, for example, the contracting program for them. 
And there are a lot of possibilities for us as a government to 
help people in those situations get employment gainfully.
    Senator Carper. Good.
    Mr. Kutz. And those are entrepreneurs. They are good 
    Senator Carper. Maybe I can follow up with our next panel 
on that. I would just say to my colleagues, I do not know if 
you all have heard the old saying, ``Without dreams, there is 
no reason to work. Without work, there is no reason to dream.'' 
What we do, the work that we do, is a big part of our lives. 
People say, ``Well, what do you do?'' You meet somebody and 
say, ``What do you do?'' If they are on disability, they may 
say that. But a lot of people are very proud of the work they 
do and want to be able to say, ``This is what I do.'' And part 
of what I hope comes out of this is a way we can incentivize 
more people to do work if they can and to realize their dreams.
    Thanks very much.
    Mr. Kutz. Thank you, Senator.
    Senator Levin. Along that line, Senator Carper, some people 
say that the unemployed can find work if they want to, and I 
come from a State with a 14-percent unemployment rate, and I 
have known of very few people who are not desperately looking 
for work who are unemployed.
    Senator Carper. I was pleased to hear that some of the 
folks are going back to work building cars, trucks, and vans, 
and very good ones as well. It was a new announcement on one of 
the Chrysler plants reopening.
    Senator Levin. Indeed. Sterling Heights. Thank you.
    We talked about working with database providers with the 
Federal employees. Can you also work with the database 
providers to see if you could share the 62,000 names in the 
other piece of your effort with the Social Security 
    Mr. Kutz. That would be the Department of Transportation. 
Actually, there were 12 States, Senator, that we got that data 
from, so we will have to work through that situation. But there 
were 12 large States.
    Senator Levin. But you could do that?
    Mr. Kutz. We will look into that, yes.
    Senator Levin. OK. And then Dr. Coburn raised a question 
which is, I think, troubling to all of us, and that is what the 
quoted response is of the Social Security Administration. I 
always had thought that the GAO gave agencies an opportunity to 
comment on their findings, and that is a very important part of 
your process.
    So in terms just of the chronology here so that we can go 
over that with the Social Security Administration when they 
testify, how much time did they have? Was that a reasonable 
length of time to respond? Or was that just provided to them a 
few days ago? Or how does that work?
    Mr. Kutz. They had two chances to respond. The first report 
went to them and we actually met with them in March, and that 
was when they--I would say ``disagreed'' is an understatement 
with everything, and we agreed to actually go to Baltimore, and 
we went to Baltimore. I went myself with several staff and met 
with them and went over each of these 20 cases and discussed 
the issues.
    And then we gave them a second chance to respond, and that 
was their formal written comments that went into our report. 
And then to the extent we had any disagreements--there were not 
quite as many disagreements in that written letter as there 
were with the ``hopelessly flawed.'' That was not the term in 
the letter necessarily.
    So I think that we took our best shot. We spent several 
months working through the issues, and at some cases at the end 
of the day, I stand behind those 20 cases. Those are slam-dunks 
in my view. They may disagree with that, and I do not know what 
else we can do. I mean, I told you the evidence we had. We have 
people admitting to Federal agents that they committed fraud. I 
am not sure what more you need to prove a case.
    Senator Levin. Yes. I think the issue is whether or not--we 
will wait to hear from them, but whether or not there is an 
overstatement. And I think you were careful here to say you 
cannot project from that.
    Mr. Kutz. No, and our report says that. These are 
indicators. These are things for them to consider, as you have 
talked about, in a constructive manner. Should we look at a 
database of truck drivers who receive their commercial driver's 
license after Social Security said that they were 100-percent 
disabled? That seems to me to be a reasonable thing for them to 
    Senator Levin. Do some States allow you to renew a driver's 
license without a test? And could it be that--I am just 
speculating here--some people may want to just keep their 
current driver's license alive and current so when they recover 
from their disability they will have a license there? Is there 
something like that that could explain that?
    Mr. Kutz. Absolutely. You have to get one every 2 years. 
You have to pay a fee. You have to pay for a doctor to actually 
sign. I do not know, Dr. Coburn, what you charge from that, but 
there certainly is a charge to have that certification.
    Senator Levin. In other words, you must in all the States, 
have a doctor look at you every 2 years.
    Mr. Kutz. Every 2 years.
    Senator Levin. It cannot be that you just send some money 
and get a driver's license----
    Mr. Kutz. No.
    Senator Levin [continuing]. Renewed without a physical 
    Mr. Kutz. You need a medical examination by a certified 
professional every 2 years.
    Senator Levin. In all the States?
    Mr. Kutz. Every one.
    Senator Levin. Is that a Federal requirement?
    Mr. Kutz. Yes, Senator, that is a Federal requirement.
    Senator Levin. Very good. Thank you. Dr. Coburn.
    Senator Coburn. You looked at 12 States' commercial 
driver's licenses. Were those the 12 most populous? In other 
words, you are saying we cannot extrapolate it, but I am 
sitting here thinking 60,000 in 12 States. Were these the most 
populous States? And is that why the number is so high?
    Mr. Kutz. Some of the big ones, California, Florida, Texas, 
but not necessarily all the big ones. So they were ones that we 
had worked with before on other work we have done on commercial 
drivers, so we had a relationship. They had good data, and they 
gave it to us. It is not necessarily the biggest, but some of 
the very biggest are in there. So it may represent 40 or 50 
    Senator Coburn. So we will not try to extrapolate it, but 
we may come back and ask you to look at that for all of them. 
You have worked with all the States before.
    Mr. Kutz. We have worked with many of the States. Not all, 
but many.
    Senator Coburn. OK. Well, let me go back again. Having been 
a practicing physician who has filled out this form--and you 
have read the regulations.
    Mr. Kutz. Yes, I have.
    Senator Coburn. Both in Social Security and for commercial 
driver's licenses.
    Mr. Kutz. Correct. We have done work for Chairman Oberstar 
over in the House on the transportation site, yes.
    Senator Coburn. And your statement was if you are qualified 
to get a commercial driver's license, you are absolutely 
unqualified to receive Social Security disability.
    Mr. Kutz. I am sure there are exceptions, but they seem to 
be mutually exclusive populations, yes.
    Senator Coburn. And we are not talking about the time 
period where somebody is getting better over the 9 months or 12 
months, where they still get their payment. But if, in fact, 
you can pass this physical exam, there is nothing in the Social 
Security law or regulations that would say you are excepted 
from that, to your knowledge.
    Mr. Kutz. Not to my knowledge, but these 62,000 all passed, 
presumably, one of these exams after Social Security said that 
they were fully disabled.
    Senator Coburn. OK. Now, it is important that we note this 
is not Social Security's problem necessarily.
    Mr. Kutz. Not necessarily. I agree.
    Senator Coburn. Because what it means is either we have 
accurate exams or we have inaccurate exams. Social Security 
cannot make that judgment.
    Mr. Kutz. No, and I mentioned we found people that were 
driving that should have been receiving Social Security 
benefits, but they were a hazard to the road.
    Senator Coburn. Right.
    Mr. Kutz. People blacking out, people on anti-seizure 
medication, people who were blind, who could not hear--not that 
they should not have a certain type of job, but 18-wheeler 
driving is not one of them.
    Senator Coburn. Right. OK. Thank you, Mr. Chairman.
    Senator Levin. Thank you very much, Dr. Coburn. And, Mr. 
Kutz, thank you.
    Mr. Kutz. Thank you again, Senator.
    Senator Levin. You are excused, and we will now call our 
second witness for this afternoon's hearing.
    Our second witness this afternoon is Hon. Michael Astrue, 
the Commissioner of the Social Security Administration. We 
warmly welcome you, Commissioner. We thank you for coming. We 
know that this required a scheduling change for you, and we are 
appreciative of your making that change so that we could have 
this hearing this afternoon.
    Pursuant to Rule VI, all witnesses who testify before this 
Subcommittee, as you know, are required to be sworn, so please 
stand and raise your right hand. Do you swear that the 
testimony you are about to give to this Subcommittee will be 
the truth, the whole truth, and nothing but the truth, so help 
you, God?
    Mr. Astrue. I do.
    Senator Levin. We thank you very much, and if you can, also 
give us your oral testimony in no more than 7 minutes. That 
will leave a lot of time for questions. Your entire statement 
will be made part of the record, and please proceed.


    Mr. Astrue. Thank you, Mr. Chairman. Chairman Levin, 
Ranking Member Coburn, and Members of the Subcommittee, thank 
you for this opportunity to discuss the Government 
Accountability Office's (GAO) recent investigation of Federal 
employees and other workers who receive Social Security 
disability payments. I appreciate your stewardship of Federal 
resources, and I strongly share your commitment to the 
taxpaying public.
    \1\ The prepared statement of Mr. Astrue appears in the Appendix on 
page 57.
    We pay about 58 million Americans who deserve to receive 
their benefits timely and accurate, and we deliver on that 
responsibility in nearly all cases. While we certainly make 
some payment mistakes, fraud in our programs is exceptionally 
rare. Nonetheless, we work with our Inspector General (IG) to 
prevent it. For example, we work with our IG, State disability 
partners, and local law enforcement to identify and combat 
fraud through 21 disability investigation units across the 
country. This important new effort has already saved nearly 
$1.5 billion for our disability programs and $891 million for 
programs such as Medicare and Medicaid. We expect to open our 
22nd unit by October. The agency and our Office of the 
Inspector General (OIG) would welcome support for these 
    GAO spent 21 months investigating these cases. Beginning 
with a large sample of over 600,000 individuals, it selected 20 
cases it classified as having egregious overpayments. So far, 
none of the six cases that have been closed by the OIG--four of 
them in consultation with the Department of Justice--has 
resulted in an actual finding of fraud.
    There is no question that some of these cases are 
problematic, and my review of each raised a number of issues.
    First, when paying as many people as we do--about 12 
million people get disability benefits--we do make mistakes. 
These mistakes are often due to the mind-bending complexity of 
our programs.
    Second, insufficient resources to review cases compound 
incorrect payments.
    Third, it is nearly impossible for us to know about work 
that is not reported to the Internal Revenue Service (IRS). 
While it is difficult for us to find these cases, our IG has 
cost-effective ways to identify and pursue some of them--a 
point that is not addressed in the GAO report.
    Finally, the lag time for annual wage reports from IRS 
makes optimal enforcement actually impossible. Congress has 
passed complex laws to encourage disability beneficiaries to 
work. The Social Security Act allows some beneficiaries to work 
and collect benefits at the same time. It would be 
irresponsible and inappropriate for us to presume fraud and cut 
off benefits at the first sign of work. Instead, we must go 
through a lengthy process to identify a person's unique 
circumstances and apply the complex rules accordingly.
    It is important to remember that these are real people who 
often struggle with mental as well as physical disabilities. 
Very few of them are out to defraud the government.
    Program simplification would dramatically improve the 
quality of self-reporting and would improve the quality of our 
enforcement. We do have a thorough training program, but it 
takes years for employees to fully understand and implement the 
complexities of our work. Senator Grassley has noted that 
because of that complexity it takes longer for us to train 
field employees than it takes NASA to train an astronaut. And, 
sadly, he is right. As importantly, we simply do not have 
enough employees to handle all these cases on a timely basis, 
particularly in urban areas.
    Between 1992 and 2007, Congress appropriated less than the 
President's budget request, and we could no longer fulfill many 
key responsibilities. Hearing backlogs rose dramatically, and 
program integrity work dramatically declined. Since 2007, we 
have been reversing these trends. With the support we have 
received from Congress and President Obama, we have hired 
employees who are gradually gaining the experience needed. Even 
with rising workloads, we have steadily increased our program 
integrity efforts in the last 3 years.
    The President's fiscal year 2011 budget includes additional 
resources for two major efforts to prevent overpayments: 
Continuing Disability Reviews (CDRs) and Supplemental Security 
Income (SSI) redeterminations. We estimate these reviews will 
save more than $7 billion over the next 10 years.
    While there is room for improvement, our current processes 
for identifying improper payments are effective. We use 
electronic data matching to flag cases that warrant review. We 
match IRS records against our disability rolls to identify 
beneficiaries with earnings, but there has been a long lag time 
getting those records since 1977, when Congress changed the law 
and moved from quarterly to annual wage reporting.
    We are making it easier for beneficiaries to report their 
return to work. We plan to extend the existing SSI wage-
reporting process to Social Security Disability Insurance 
(SSDI) beneficiaries. We will offer a Web site for disability 
beneficiaries to report their wages. We are developing a 
predictive model to help us prioritize cases for action. We 
also will be matching our payroll records against the 
disability rolls to identify agency employees earlier.
    Despite our efforts to prevent improper payments, they do 
occur and we have a comprehensive debt collection program to 
recover them. In fiscal year 2009, we recovered over $3 billion 
at a cost of only 6 cents for every dollar collected. While we 
make every effort to preserve taxpayer dollars, we must follow 
the congressional requirement to balance compassion with 
stewardship. We understand the importance of properly managing 
our resources and program dollars, and we take that 
responsibility very seriously. Congress can help by providing 
timely, adequate, and sustained funding.
    Thank you, and I would be happy to answer any questions you 
may have.
    Senator Levin. Thank you very much, Commissioner.
    How much a part of the problem here that exists between you 
and the GAO has to do with the definition of fraud?
    Mr. Astrue. I think you are in the right zone, Mr. 
Chairman. I will acknowledge we have had a lot of tension with 
GAO, and my concern is that by grossly oversimplifying fraud, 
GAO could mislead the Congress and the American public. The 
draft report came to us with some conclusions that were just 
flat wrong, and we were told that they were nonnegotiable. So 
at that point, as I discussed with you earlier, I went to 
Acting Comptroller General Dodaro and expressed my concerns, as 
Mr. Kutz said, very forcefully. To Mr. Dodaro's credit, he 
agreed with us and he told his staff that they needed to make 
some changes because there was some real risk of misleading the 
Congress and the public if there was not a lot more accuracy 
and a lot more precision in the report than was in the first 
draft that was sent to us.
    Senator Levin. Now, give us some examples of the 
conclusions that are flat wrong in the final report.
    Mr. Astrue. In the final report, Mr. Kutz is very clear 
that these are cases of fraud, but Mr. Kutz has refused to go 
through the whole statutory analysis in these cases to come to 
those conclusions. For instance, the 1,500 Federal employee 
match did not account for the separate, much higher standard of 
substantial gainful activity for the blind, nor did it account 
for the wage exclusions, including all the periods for extended 
work and trial work. GAO just wanted to do a simple match and 
say, ``That is fraud.'' And that was GAO's initial position.
    I complained, and the response was the language was changed 
to ``may be fraud.'' But the truth is that GAO does not have 
any idea what percentage of those cases are fraud.
    Senator Levin. Well, they made that clear, I think, today. 
Did they not?
    Mr. Astrue. Right, but we had to go through a substantial 
back-and-forth to get GAO to----
    Senator Levin. But that is the purpose of the back-and-
forth, to go through the back-and-forth----
    Mr. Astrue. But at the----
    Senator Levin. If you will wait just one second. I am 
saying in the final report, after the back-and-forth, what are 
flat-wrong conclusions?
    Mr. Astrue. Well, the conclusion that a lot of the world is 
already taking is----
    Senator Levin. No, excuse me. Not the conclusion that the 
world is taking, because that is a filter which is not 
necessarily the GAO filter. What conclusions in the report are 
flat wrong?
    Mr. Astrue. There are no data in the report that gives you 
or me any idea of the incidence of fraud in our programs, the 
incidence of improper payments in our programs.
    Senator Levin. Well, that is a shortfall in the report, 
    Mr. Astrue. That is right.
    Senator Levin. Maybe. But that is not a flat-wrong 
    Mr. Astrue. Well, the flat-wrong----
    Senator Levin. You made the allegation. There may be a 
flat-wrong conclusion.
    I am just saying here you said that some of their 
conclusions are flat wrong. I am asking you, in the final 
report what conclusions--give us some examples--are flat wrong?
    Mr. Astrue. In the report, GAO said 16 of the 20 cases were 
potentially fraud. If I am misremembering the report, because I 
remember I am under oath, I apologize and I will correct it for 
the record. Mr. Kutz said quite vigorously that is absolutely 
undeniable, or words to that effect.
    Senator Levin. OK. Now, I want to get to that definition of 
fraud, because I do think that----
    Mr. Astrue. Right, and we have had difficulty getting 
timely evidence from these investigations from GAO. I would 
like to submit for the record \1\ from our OIG some of the 
concerns it has had about the data not being turned over to us 
on a timely basis. The OIG has been able to review six of these 
cases, and so far there is not one case of fraud in the cases. 
There are overpayments to be sure, but no cases of fraud yet. 
And four of those were done in conjunction with the Department 
of Justice.
    \1\ See Exhibit No. 2a. which appears in the Appendix on page 122.
    Senator Levin. OK, that is what I want to get to, the 
definition of fraud. Here is what the report says: ``Our 
investigations found that five individuals committed fraud in 
obtaining SSA disability benefits because they''--and here are 
the words--``knowingly withheld employment information from 
SSA. Fraud''--and I am reading from their report--``is a 
`knowing misrepresentation of the truth or' ''--and here are 
the key words--```concealment of a material fact to induce 
another to act to his or her detriment.' ''
    Do you accept that definition of fraud?
    Mr. Astrue. I think that is substantially correct. In my 
opinion, GAO has been too quick on the basis of the evidence to 
label something fraud. And I just do not think that we actually 
have fraud in a lot of these cases.
    Now, in a couple cases, it may just simply come down to the 
mental capacity of the individual at the other end. You will 
note that approximately half of the cases, if I recall, involve 
people that at one point we determined to be so mentally ill 
that we did not believe they could work.
    Senator Levin. All right. But I want to go back to these 
words. There is an obligation to notify the Social Security 
Administration if somebody gets employment, and apparently, 
when they talked to all of these folks, they were aware of that 
    Is the failure in and of itself to notify the SSA of the 
fact that somebody is now employed, is that failure by itself 
    Mr. Astrue. No. It appeared to me that GAO originally 
started from that conclusion. It is just not accurate.
    Senator Levin. Doesn't that get to the heart of this issue? 
When they say fraud is the ``concealment of a material fact,'' 
they then say that if you do not inform the SSA, that in and of 
itself is fraudulent. Is that possible that is the conclusion 
that they have reached and you do not accept that?
    Mr. Astrue. Again, I am a little reluctant to speak for 
    Senator Levin. No. Is that possible that explains the 
difference? You do not accept the failure to notify you per se 
in and of itself is fraudulent. But I think they might say that 
is fraudulent.
    Mr. Astrue. I agree with you, Mr. Chairman. I think that 
may be part of the difference between the agencies. Another 
major difference is GAO's failure to consider the complexities 
of all our return-to-work rules, which I do not think I could 
fluently explain to you. In fact, Congress appropriates about 
$23 million a year just to hire contractors to explain the 
return-to-work rules to claimants. It is that complicated. We 
have charts to give you more of a visual on this. The SSI 
program and the SSDI program have different return-to-work 
rules. Some people qualify for both, and those are the mind-
bending complicated cases. Also, some of these claimants have 
mental disabilities; some of them are not very well educated.
    Senator Levin. All right. Let me just ask Mr. Kutz a 
question. Is the failure to notify--forgive me for going back 
and forth, but we may be able to--you can just stand where you 
are at, if it is OK. Is the failure to notify SSA that you are 
now working, is that fraudulent in your study?
    Mr. Kutz. When they said that they did that in order to get 
the money, they knew it was wrong. In our judgment, yes, that--
    Senator Levin. You have to add that piece, that they did it 
knowing that they had to notify the SSA.
    Mr. Kutz. ``I needed the money.'' That is a justification, 
that was the reason why----
    Senator Levin. I understand. And they said----
    Mr. Kutz. Right.
    Senator Levin. Would you agree now--and then I will finish 
because I am over my time here. Would you agree that if 
somebody said, ``I knew I had to report, I did not because I 
needed the money,'' would you agree that constitutes fraud?
    Mr. Astrue. Sure.
    Senator Levin. OK.
    Mr. Astrue. If somebody confesses to fraud, which in our 
experience I think is very rare, absolutely, I agree that 
constitutes fraud.
    Senator Levin. OK. Thank you. Dr. Coburn.
    Senator Coburn. Let me just note for the record, in the 
official response to the GAO report that Mr. Astrue sent to the 
GAO, SSA agreed with the two GAO recommendations. In their 
formal response to the report, SSA agreed to the 
recommendations GAO made.
    Now, what I am having trouble understanding--and this 
really gets to how do we help you.
    Mr. Astrue. Right.
    Senator Coburn. That is what this hearing is about. This 
hearing is not to beat up Social Security. It is not to say you 
are not working hard. It is how do we find the problems that 
will most effectively help those people who need our help, but 
not help people who are gaming the system. I will tell you, I 
am biased when we have 1 in 20 people in this country on 
disability. I do not believe it. As a practicing physician in a 
poor area of the country with lots of problems, I do not buy 
it. So I think there is a lot of fraud out there. We may 
disagree on the level of fraud.
    So the whole purpose of the hearing is how do we change, to 
make it easier for you all to administer the disability 
programs. I have been through all the breakdowns of everybody 
that is getting disability. I know all the factors. I know the 
amount of schizophrenics; I know the amount of psychotics. I 
have it all right here. I also know the number that are 
disabled based on anxiety.
    I will just relate a story to you. The guy that bricked my 
medical building was on full-time Social Security disability, 
and he was on it because he had a bad back. But he heave-ho's 
those bricks and that concrete and everything else, and he did 
it to every building in town and continued to get Social 
Security disability. And he knew he was supposed to report that 
he could work, but he did not.
    Now, that may not be fraud to the Social Security system, 
but it is to the average American in this country. Mr. 
Chairman, I thank you for that, because we have to help you 
make it to where it is easier to help people and at the same 
time prevent fraud and abuse with the system.
    We are just starting down this area. This is something I am 
going to work on over the next 2 or 3 years, if I am here. We 
are going to clean this up. We are going to make it easier for 
Social Security to do its job. We are going to give you the 
tools that you need, and we are going to give you the money. So 
there cannot be a reason for us not doing it, but we have to 
know what the real problems are.
    Look, if I was running this and read this report, I would 
not like it either, and I know it is a difficult area to 
administer because I know my staff helps people get Social 
Security disability every day. I have two people that work on 
it full-time as a U.S. Senator. I know the first review is 
normally that you do not qualify. And I know the system and how 
it is gamed.
    I want to go back. The AERO program could be helpful, 
    Mr. Astrue. Yes, I agree, but with a qualification. I think 
the sense that I got from GAO--and, again, you have a lot of 
people here. It may be that I misunderstood. I do not mean to 
be unfair to GAO. The AERO system, as it is, generates such a 
huge amount of information that we cannot possibly follow up on 
the leads that would come from it--certainly not in my 
professional lifetime in the agency.
    What I think we can do----
    Senator Coburn. Let me stop you right there for just a 
second. Save your second thought. It generates so much 
information we cannot follow up.
    Mr. Astrue. Right. But let me----
    Senator Coburn. Let me go on with that, because I hear that 
all the time up here, what we cannot do. We have technology 
available today to do all sorts of things that we could not do 
last year.
    Mr. Astrue. That is the point I was trying to get to.
    Senator Coburn. OK. So I think it is important. The fact is 
if there is data out there and if we may have a problem--and 
that is what you are saying, there may be a problem.
    Mr. Astrue. Right.
    Senator Coburn. The fact that somebody was not prosecuted, 
that does not mean anything because the Department of Justice 
(DOJ) is not going to prosecute them if they fall under a 
certain dollar amount. They are not going to even get referred. 
When the agency refers a case to the Justice Department for 
$10,000, they know it is not going anywhere. They do not even 
refer anymore. Why waste their time? They know it is not a 
    The other thing, the IRS data you are using is old.
    Mr. Astrue. Right, absolutely.
    Senator Coburn. The new-hire database is quarterly. But SSA 
states that using that is not cost-effective, I do not 
understand why that would not be cost-effective for you. Does 
it require too much more investment to be able to effectively 
use it? Or is it not cost-effective because it does not give 
you new data?
    Mr. Astrue. Let me go back to AERO first. I would like to 
complete the thought.
    Senator Coburn. OK.
    Mr. Astrue. What we are doing increasingly when we have 
these millions of pieces of information, which has worked quite 
well for us in recent years, is utilizing predictive models. So 
we do not think a simplistic response to the AERO information 
is going to work. We think that we may be able to build 
computer programs that can screen through the system to 
identify patterns from the data that might be high predictors 
of fraud.
    Now, we are doing that already with representative payees. 
We have 5 million people who take care of our recipients who 
are not competent, and we do have some fraud in that area. We 
have worked with the National Academy of Sciences on the 
predictive models. They are not perfect, but they really do 
allow us to do a lot better.
    Senator Coburn. You are better than you were.
    Mr. Astrue. One of the things that we have done is to 
address a lot of the concern from Congress on why it takes so 
long for the easy cases. There are certain people who are 
really disabled. So we use computer models now to scan the 
cases, and we can pull out with a high degree of accuracy the 
cases that really should be allowed, including certain types of 
cancers and rare genetic diseases.
    Senator Coburn. Pancreatic cancer.
    Mr. Astrue. Pancreatic cancer, those kinds of things. And 
we always have a human review, because you could go through a 
medical report and the doctor could say, ``Thank God it is not 
pancreatic cancer,'' and that would just show up as pancreatic 
cancer in the model.
    So we think that we are going to be able to do that with 
AERO. We are not sure. It is a long and complicated project. I 
would guess that maybe by sometime toward the end of next year 
we would have a much better sense of whether that is going to 
be beneficial.
    For the new-hire database, my understanding is that my 
staff has come to the conclusion that it is not cost-
beneficial. I think there are a lot of things that go into 
their assessment. I do not want to get that wrong or 
inaccurate, so I would like to submit that for the record, if I 
    Senator Coburn. So you do not think it will be beneficial.
    Mr. Astrue. I know that my staff thinks that it is not.
    Senator Coburn. Would you do us a favor and submit to the 
Subcommittee an analysis of why you think utilizing this data 
will not be cost-effective.
    Mr. Astrue. Sure.\1\
    \1\ See Exhibit No. 2c. which appears in the Appendix on page 126.
    If I remember correctly, we now allow claims 
representatives to use it on a discretionary basis when they 
think they see an issue. As I understand it, we get about a 
2.7:1 return when we use it on a discretionary basis. When we 
use it on a more aggressive basis, it is just above break even, 
about 1.4:1.
    If you look at all the other matches that we have and all 
the other leads that we cannot follow up on because we do not 
have the staff, the return to the taxpayer is much higher 
following up on some of the other matches. So that is my 
understanding of the staff's position.
    Senator Coburn. That gets back to one of the things the GAO 
testified about today, the after-the-fact stuff.
    Mr. Astrue. Yes.
    Senator Coburn. Where you are like Medicare. You pay and 
    Mr. Astrue. To some extent, Senator Coburn. Not entirely.
    Senator Coburn. OK. But the point is, how do we help you on 
the front end? The phenomenon--we know every time we have a 
recession we have a big jump in disability claims.
    Mr. Astrue. Right.
    Senator Coburn. Now, did everybody get hurt because we have 
a recession? Or did people get more disease because we have a 
recession? Or is it because here is a source of revenue because 
we have a recession?
    Both the Chairman and myself are committed to making sure 
those people who have true disabilities that need this 
country's help, we are going to help make sure that gets there. 
Are we going to allow what we think may be--not is, may be--
significant and I will use the word ``fraud?'' You and I 
obviously have a very different definition of what fraud is. 
Are we going to allow fraud to steal the future from our kids?
    With a large deficit that is the fault of everybody in 
Congress the last 20 years, not one Administration or not one 
President and not one party, what are we going to do together 
to solve the problems to get our country out of the hole we are 
    Mr. Astrue. First of all, I want to go----
    Senator Coburn. One of the things we want to know is how do 
we go on the front end to make it better. My observation, in 
the medical field, is there are certain doctors that do Social 
Security disability exams. Correct?
    Mr. Astrue. Yes.
    Senator Coburn. They do a lot of them.
    Mr. Astrue. They do.
    Senator Coburn. That is right. Do you ever allocate those 
with the ones that are truly eligible and are not? In other 
words, have you ever done a statistical analysis? Because here 
is the way it works out there in lots of instances--not all. A 
lawyer hooks up with a doctor: You give me what I need, I give 
you a big payment for--not a bonus payment on getting 
disability, but you give me what I need, and you can make two 
and a half or three times on this physical exam versus what you 
were spending with some other patient. So have you all looked 
at that?
    Mr. Astrue. Sure. Multiple questions, let me try to answer 
    Senator Coburn. Sorry.
    Mr. Astrue. As I understand it, in the mid-1980s the courts 
interpreted the Act as creating something called the treating 
physician rule that basically said we have to give deference to 
the doctor chosen by the patient. That is not our choice, so we 
cannot dictate, and we do not really----
    Senator Coburn. If you think there is a questionable mal-
distribution of approvals, you are inhibited by law to have a 
second exam by somebody, the choice of the Social Security 
    Mr. Astrue. We can get second consultative exams. But as I 
understand--again, if I get this a little wrong, we will 
correct it for the record--we have to basically overcome the 
presumption that the treating physician's conclusions are 
correct, and that can be difficult in some cases.\1\
    \1\ See Exhibit No. 2c. which appears in the Appendix on page 126.
    Senator Coburn. OK. That is fair. Again, that is exactly 
the thing we need to know if we are really going to help you 
fix it on the front end. We need to ensure we are accurately 
helping those people who need help, but not helping those that 
do not need help, because one thing that was not mentioned, Mr. 
Chairman, is the trust fund is going belly up in 6\1/2\ years 
for SSDI. There is no way we change it without doing something 
major in terms of supplementing it from the rest of the Federal 
budget. So what we have to do is be very accurate.
    Would you just sit down with your key people and say--you 
all know the regulations better than anybody in the country; 
nobody else knows them like you do--``What is it that Congress 
could do for us that would help us meet the goals of the 
programs, but limit the need for us to pay and chase?''
    Mr. Astrue. Sure. I have a backlog of answers here for you.
    Senator Coburn. OK.
    Mr. Astrue. First of all, I do not think that we are as pay 
and chase as most other Federal programs. By statute, we do a 
50-percent quality review by our quality performance people--
not the original reviewers--of all allowances. That is a 
statutory requirement that a lot of people overlook called pre-
effectuation review. And we probably end up saving the trust 
funds, if I remember correctly, about $800 to $900 million a 
year through those pre-effectuation reviews.
    On my watch, we are in the process of rolling out the 
Assess to Financial Institutions (AFI) program. We now have 
arrangements with banks to track assets for the Title 16 
program, and we will be able to find assets that are hidden.
    Senator Coburn. You are talking about SSI now.
    Mr. Astrue. Yes. That is also a back-door way of getting at 
earnings because if you have inappropriate earnings, you are 
going to be hiding inappropriate assets.
    I also think that we have tried to get the Congress' 
attention on the fine work the Office of the Inspector General 
has been doing with the Continuing Disability Investigations 
(CDI) programs. I have been out to look at those programs 
personally. I think they are a great investment for the public, 
and part of what they do is to develop these teams for the 
people who are looking at these cases on the front end. So if 
there is a real concern, an uneasiness, they can go and they 
can tap into the expertise of people with experience combating 
    So I think we really do a lot. I am not saying we are doing 
everything we could conceivably do, but I think that we do a 
lot on the front end to make sure it is not pay and chase.
    In terms of ways you can help us, I think, with all due 
respect to GAO underestimates the difficulty and cost, 
particularly for us, of setting up matches if the other 
organizations are not required to do so by law. When GAO comes 
knocking on the door and says it wants to look at another 
agency's data to do a match, I think that agency jumps much 
more than when the Social Security Administration----
    Senator Coburn. That is a way we can help you.
    Mr. Astrue. Yes, that is right. I am on the same wavelength 
with you, Senator. I am making your point. And I think that 
could be helpful.
    As I prepared for this hearing, one of the things that I 
learned is that we have statutory barriers to prompt 
collection. So if we think that there is an overpayment and we 
are trying, for instance, to collect it from a Federal 
employee, we cannot fully access on a timely basis the Treasury 
Offset Program, which is one of our big tools for collecting 
those debts because of waiting periods that have been 
established by the Congress in statute.
    So at least one good thing that came out of the GAO report 
is that I learned about debt collection barriers by preparing 
for today's hearing. And so there are subjects like that that I 
would have liked to seen this report go into in more detail to 
give specific concrete things we can do----
    Senator Coburn. I promise you, they are coming back.
    Mr. Astrue. OK.
    Senator Coburn. Mr. Chairman, are you going to want to ask 
more questions.
    Senator Levin. I am.
    Senator Coburn. Let me yield back to you, and then I will 
follow up.
    Senator Levin. First of all, I am not sure there is a 
definition of fraud that is different between you and the GAO, 
because when I asked Mr. Kutz whether per se not reporting that 
you are back at work is fraudulent, his answer was no, there 
had to be something more than that, like an acknowledgment from 
the people they interviewed that they did not report it because 
they needed the money, which I would consider also to be 
fraudulent because there is a knowing non-statement there, 
knowing that someone is relying upon your failure to report. So 
I am not sure it is different once he said that it is not per 
se fraud not to report. I am not sure of that. It seems to me 
you are a lot closer in that than I frankly thought you might 
    Second, I guess there are two major ways of finding out who 
is receiving benefits who is not supposed to be receiving 
benefits. One is through these checks, these computer checks, 
and there are various ways of doing it. Some you are continuing 
to explore, some you may not think are worth the investment, 
but some I think may be worth the investment.
    Mr. Astrue. Yes, absolutely.
    Senator Levin. And you get much more current information, 
and you are exploring that, as I understand it right now, and 
we would like you to report back to this Subcommittee on those 
explorations which you are undertaking on these matches.
    Mr. Astrue. Yes, we would be glad to do that.
    Senator Levin. Another way, though, I assume, is that 
sometimes you get reports from people.
    Mr. Astrue. Yes, and our lead on that and our lead on fraud 
generally is the Office of Inspector General, and it does very 
important work in the process. People call our 800 number to 
report fraud, which is very similar to the HHS fraud line. 
People see someone like Senator Coburn's landlord, and they 
call and report; unhappy ex-spouses report. We get lots of 
different types of reports from the public. And probably one of 
the things that we can and should do better, which I will 
commit to try to do, is we can probably try to raise the 
profile of that line better than we have before. It is really 
the best tool that we have for getting at things like the 
under-the-table payments and things like that, because we 
cannot get that through matches.
    Senator Levin. All right. Now, there is also in the 
Improper Payments Act that I referred to, that Senators Carper 
and Coburn took the lead on, authorizes, as I understand it, to 
hire recovery audit contractors to identify and recover 
overpayments. Are you going to be using that authority?
    Mr. Astrue. We expect to, yes. We are discussing it with 
the lawyers. As I understand it, we are not quite sure of the 
application of the statute to certain types of things that we 
do. But we do think that a lot of the practices that are in the 
statute are things that we already have done. We have been the 
leader in some of these areas for fighting improper payments. I 
was there when the bill was signed, and we take it extremely 
    Senator Levin. There was an IG report in July 2009, a 
Social Security Administration IG report, that found that the 
number of SSI redeterminations conducted over a 6-year period 
from 2003 to 2008 had dropped by more than 60 percent, while 
the number of SSI recipients increased by nearly 9 percent. And 
the IG found that by 2008, the Social Security Administration 
was conducting redeterminations for only 12 percent of the 
recipients, down from a 36-percent redetermination in fiscal 
year 2003. Was that a funding issue.
    Mr. Astrue. Well, I suppose a funding issue, and it was 
also a will issue. When I joined the agency in 2007, I reversed 
the trend in declining program integrity work. We are doing 
substantially more redeterminations, we are doing more 
continuing disability reviews, and we are doing it with 
enormous pressure from the Congress to reduce the backlogs and 
in the biggest recession since the Great Depression.
    So I think it is a sign of my commitment on reducing fraud 
and reducing improper payments that the agency was reducing the 
commitment to these areas in easier times, and in hard times we 
have made the tough choices, and we have upped our commitment 
in these areas. And I think it is important that we do that.
    Senator Levin. Is there also a funding issue that goes to 
    Mr. Astrue. Absolutely. We do not have the people that we 
need to get up to the standards of 10 years ago when that was 
approximately, for instance, the right number of continuing 
disability reviews that were done. And the Congress is going to 
have to make a choice when the economy improves and 
unemployment goes down. We have significantly staffed up the 
disability determination services to handle 650,000 extra 
disability cases each year, more than we orginally projected. 
Before the recession, we were projecting 2.65 million; we are 
seeing last year and this year about 3.3 million. And we have 
done quite a good job of staffing up and keeping new backlogs 
from developing--not perfect, but a pretty good job.
    Senator Levin. So one of the ways that Congress can be 
helpful is to provide the funding requested for these 
enforcement activities.
    Mr. Astrue. Congress will have a choice when unemployment 
starts to drop: Do we maintain these people? Do we move them 
over into CDRs? Or do we just let them attrit down and reduce 
the administrative budget?
    Senator Levin. But we also have a choice this year as to 
whether we put in the budget request--whether we adopt the 
budget requested by the Administration, I assume, for these 
    Mr. Astrue. Right.
    Senator Levin. A number of us signed a letter--it is a 
bipartisan letter--on this funding issue on the staffing 
    \1\ See Exhibit No. 3 which appears in the Appendix on page 129.
    Mr. Astrue. And it has been enormously helpful, and we are 
extremely grateful.
    Senator Levin. All right, but that is not a done deal yet.
    Mr. Astrue. No. And it is one of the difficulties in 
planning when you go into a fiscal year and you do not know 
what you are going to be able to spend. It does make it harder 
to spend the dollars that are being appropriated in a wise and 
cost-effective way.
    Senator Levin. OK. You have had better luck on the 
percentage of--on your success rate in getting down the 
erroneous payments in the SSI program, which is down to about 1 
percent, in the DI program. The DI program is down to 1 
percent. The SSI program I think is at 8 percent.
    Mr. Astrue. Right.
    Senator Levin. What explains that difference?
    Mr. Astrue. I think the biggest difference has been the 
drop in redeterminations that went from a high of, if I 
remember correctly, 2.4 million and change down to 600,000 and 
change. And at that level, a lot of things happen that should 
not be allowed to happen. And this year we are just a few tens 
of thousands of cases under the all-time high for the number of 
redeterminations we are doing. We are doing 2.4 million and 
change, if I remember correctly.
    We think that is going to make another substantial 
improvement next year. I know that my operations people believe 
that. I also think that the AFI program is going to be very 
important. So I am optimistic that our numbers are going to be 
improving significantly in the next 2 years, but we will have 
to wait and see what happens.
    Senator Levin. Thank you. Dr. Coburn.
    Senator Coburn. Talk to me for a minute about the CDR 
reviews and the statistical sampling you all do for their 
accuracy. Having done Social Security disability exams before, 
what background information helps you know that this is 
accurate? You all obviously have studied this for a long time. 
You know what works. What is the statistical model that 
supports your assertion that medical CPR mailers are 85 percent 
accurate. Isn't that what your numbers are?
    Mr. Astrue. Yes, let me give you my understanding of this, 
but again, I will supplement my answer for the record.
    You can debate the exact percentage, but there is probably 
a little over half, maybe 60 percent, of the beneficiaries 
where in any fair look you cannot reasonably expect them to go 
back to work. My Dad was a disability beneficiary. He had a 
massive cerebral hemorrhage, same form of brain cancer as 
Senator Kennedy. There was no way he was going back to work. 
There are many people in that category. Maybe 40 percent would 
be my number where it is a closer call, and so my understanding 
of what the staff does is, as I mentioned before, they develop 
models to try to figure out the reviews that will give the 
maximum return to the trust funds.
    And so there are certain types of cases that are more 
error-prone, more fraud-prone than others, and those are 
weighted. Because of the cost of lifetime entitlement, not just 
for our programs but really more significantly for Medicare, 
the younger people tend to draw closer scrutiny whereas someone 
who is already 61 is not going to draw as much scrutiny.
    So we use these screens. The psychiatric cases, the muscle 
tissue cases, those are the inherently difficult ones.
    Senator Coburn. I agree.
    Mr. Astrue. We try not to do CDRs for people with head and 
neck cancer and pancreatic cancer and ALS and diseases like 
that, and we try to focus----
    Senator Coburn. No, I agree. You all have done 
statistically significant studies to show you are modeling on 
where you need to go.
    Mr. Astrue. Yes, and that is how we get the 10:1 return. It 
may, in fact, be true that the return is a little higher right 
now because we have not been doing them as often. But in an 
optimal system, my understanding is it is about a 10:1 return.
    If we did them randomly, we would not get a 10:1 return. We 
would get a much smaller return for the trust funds.\1\
    \1\ See Exhibit No. 2d. which appears in the Appendix on page 127.
    Senator Coburn. Would there be any benefit if there was 
statutory guidelines for a larger penalty for not complying 
with notification, one, that you are working; and two, 
notification that you are working and you know you are not 
    Mr. Astrue. I think that is possible. In my preparation for 
this hearing, it is a question I have asked myself. I know that 
the staff perspective generally is that a lot of these people 
are economically marginal. There is a real limit to how much 
you can get from these people.
    On the other hand, when you read through the case studies, 
there are certain patterns, particularly on non-cooperation, 
where I am looking at the cases and saying: ``You know what? 
Maybe we should be more aggressive with our existing tools. 
Maybe we need some new tools.''
    So I think that is a fair point, and certainly on the 
review that I have done so far, that is high on my list.
    Senator Coburn. But the real important thing is how do we 
help you up front.
    Mr. Astrue. Correct.
    Senator Coburn. How do we create a system where people who 
are getting on--first of all, that 60 or 65 percent that are 
unlikely to recover, we know--there is no question, we do not 
really even have to do a CDR. We know the outcome is not great. 
We know that. How do we help you with the other 35 percent?
    I am going to tell you a story about a family that is 
collecting in excess of $50,000 a month from your organization 
by teaching children how to pass the test for autism and having 
multiple children so that they game the system. This happened 
about 18 months ago in Oklahoma. What we have to do is fix it 
up front, because if we can really make significant changes 
that make it easier for you up front, the chasing later does 
not have to be as complex.
    What I hope our hearing will generate is real good 
communication with this Subcommittee on what is it that you see 
as the problem, you and your staff; what is it that you see 
that needs to be changed.
    Mr. Chairman. I heard a couple of times--which bothers me, 
which is kind of cultural within SSA, the statement was made 
multiple times to my staff that, ``we are an entitlement 
agency, not an enforcement agency.'' If, in fact, that is the 
culture, then SSA is biased against the balance that needs to 
be there. I just wondered if you would comment. You were put 
there to be a compassionate agency. There is no question. But 
you also were put there to be an enforcement agency of the 
rules and regulations that you have written and the laws.
    Mr. Astrue. I do not know what was said. All I can say, 
speaking for myself, I do not see any tension between the 
roles, and particularly where we have been given clear guidance 
by Congress. And Congress has told us, for instance, in the 
Title 16 program, we are only allowed to recover a relatively 
small percentage of the debt annually because of the situation 
of the individuals. And so there is a tension between the 
public mission and the stewardship mission that sometimes 
Congress has told us to not be as tough as we could be on the 
stewardship mission.
    But as I said, I came here under extremely difficult 
circumstances, national media and the Congress all over the 
agency saying, ``What are you going to do about this horrible 
backlog problem? You are horrible people.'' And then the 
recession hit. OK? And despite all that, every single year----
    Senator Coburn. You have improved.
    Mr. Astrue. Well, we have increased the effort, and I think 
that we are improving generally. It is sporadic in places, but 
I think that the investment is paying off. And I think that the 
key here is for the Congress to stick with us. We are worried 
because there are tough budgetary times ahead. And this has 
been something that at times in the past Congress has lost 
interest in. So I think it is very important for Congress to 
continue to be persistent in its support of these activities.
    Senator Coburn. I would tell you, I do not think Chairman 
Levin, once he gets an interest in anything, loses interest. I 
do not think I do, either. I will commit to you to make sure 
that we follow up. We really do need the communication coming 
from you of what are the problems you see, what are the 
recommendations that will make SSA more effective. But, again, 
even with the Title 16 program, if it was not overpaid in the 
first place, you would not have a problem with slow collection.
    Mr. Astrue. Right.
    Senator Coburn. So the key is eliminating the problem 
rather than allowing a problem to be created and then spending 
money solving the problem.
    Mr. Astrue. Right.
    Senator Coburn. I am with you. I thank you for coming and 
testifying before us today.
    Mr. Astrue. Thank you.
    Senator Levin. Well, Commissioner Astrue, thank you again 
for coming. The only comments that I would add to Dr. Coburn's 
is that I think that the compassion is clearly appropriate in 
many cases, obviously. There are also many cases, though, 
where, in fact, people are not notifying you and know they 
should, and the reason that they are not is because they need 
the money. That is not good enough.
    Senator Coburn. That is what Willie Sutton said.
    Senator Levin. That is not going to cut the mustard. And so 
in those cases, I would think that there ought to be interest 
owing on money that is wrongfully paid. Apparently, you are not 
allowed--if I heard your testimony correctly, you cannot 
recover interest on----
    Mr. Astrue. Let me say, we do penalties and interest I 
believe in a relatively small--
    Senator Levin. That is OK. As long as you have the power to 
do that----
    Mr. Astrue. I stand corrected. We do administrative 
penalties. We do not generally exercise our authority on 
interest. In general, the perspective has been it is tough 
enough getting the base payment out of these people. I think 
the sense has been that it makes it that much harder to 
actually collect what they promise to pay with the interest on 
top of it. But I think it is a fair question, and it is 
something that we should go back and reexamine with an open 
    Senator Levin. You may have a lot of situations where it is 
going to be counterproductive to pile on the interest, but you 
are going to have a lot--there is a deterrent effect here, too. 
According to Mr. Kutz, we have people that the GAO talks to who 
say, ``Yes, I know I was supposed to report, and I did not.'' 
``Why didn't you?'' ``I needed the money''? That is not 
    Mr. Astrue. I agree with that.
    Senator Levin. To the taxpayer, that is----
    Mr. Astrue. And what I want to make sure is that in the 
effort to catch those people whom we very much want to catch, I 
just want to make sure that we do not catch the people who are 
trying and hopelessly confused by one of the most confusing 
systems that we inflict on the American people.
    Senator Levin. That is fair enough, and we should give you 
the waiver authority. It is not something that should be 
automatic. But unless people know that they cannot just simply 
say, ``I needed the money so I did not report''----
    Mr. Astrue. Sure.
    Senator Levin. And my final comment has to do with you and 
the GAO. You both perform essential services, one you do for 
the public, the GAO for us. We need that watchdog. And so what 
we need you to do, where there are disagreements--those are 
going to happen all the time, but we should not have 
disagreements over definitions.
    Mr. Astrue. Sure.
    Senator Levin. Fraud ought to be commonly defined or told 
to us that there is a difference on this. And it makes a huge 
difference in terms of those numbers. I think part of the 
problem here probably was that there was an exaggerated 
statement about what they found, not by them but possibly by 
somebody in the media. It is rare that there is an exaggeration 
like that. But once in a blue moon it does happen. This may 
have been the blue moon. But we cannot allow that remote 
possibility to get in the way of two agencies that are so 
important, yours for the millions of people, the GAO for the 
millions, too, but through the Congress.
    Mr. Astrue. I agree, Mr. Chairman.
    Senator Levin. Finally, a request which kind of goes in the 
opposite direction of trying to make sure we do not overpay 
folks who are able to work, and that is, we have this backlog 
in processing applications, and I know you get this a lot. I 
just want to let you know it is an important issue. We hope we 
get enough funding in here to reduce that backlog for the 
people who are entitled and should be given disability. We do 
not want them waiting in line 3 years. I think you have cut 
down that backlog, and I give you credit for that. But I just 
want to mention that because it is an issue, and it is an issue 
which cuts in the other direction. But as both of us say, we 
want the right people to get the help. We do not want people 
who are not entitled to help to get it for two reasons: The law 
does not allow it; equally significantly, if not more, we 
cannot afford the resources that way. We have to put the 
resources where they should be going.
    Mr. Astrue. So, Mr. Chairman, I rarely have the opportunity 
to give unadulterated good news to Members of Congress, so if 
you could indulge me for a moment.
    Senator Levin. That is a good note to end on.
    Mr. Astrue. So in addition to having each year pretty much 
steadily reduced the backlog for all five of the offices, I 
believe you are on the verge of the big change. So in Livonia, 
Michigan, next week we will open a new hearing office. I will 
not be able to make it--because of a commitment to Senator 
Baucus--to the Mount Pleasant opening on August 23. There is 
also a satellite office planned for Marquette. I believe the 
General Services Administration (GSA) still has to finalize 
some things, but it will open probably next spring. So there is 
significant additional capacity coming to Michigan.
    Senator Levin. And I assume that is true around the country 
that you are trying to get these backlogs down.
    Mr. Astrue. We have 25 offices opening in an 18-month 
period over the base of 142. We have looked at the 
demographics. We have looked at the economics. We have looked 
at the filing patterns. And what we have tried to do is take 
the pressure off the most backlogged offices.
    So in the beginning of fiscal year 2007, Atlanta and 
Atlanta North were at 900 days and 885 days as an average 
processing time. We only have two offices left in the country 
that are over 600 days. They will be under 600 days and 
probably under 500 before long with the new offices. So I think 
we are making very substantial progress.
    We also keep a focus on the aged cases, which the agency 
was not doing before, and we have raised the standard every 
year. So when I started, an aged case----
    Senator Levin. A what case?
    Mr. Astrue. An aged case.
    Senator Levin. We call that seniority around here. 
    Mr. Astrue. A vintage case. We had 65,000 cases that had 
been waiting a thousand days or more. We had people in this 
country who had been waiting 1,400 days for a hearing. So in 
addition to trying to improve the average, we have insisted on 
going after the outliers. In every single year I have been on 
the job, we have raised the bar on the agency. So this year the 
bar is 825 days, which is the longest anyone is going to be 
waiting for a hearing. We are ahead of goal on that. We will 
make it. We will adjust that goal downward, probably around 750 
or 775 days for next year. And each year, in addition to 
bringing down the average times, we are making sure that there 
are not those outliers out there. We are making steady 
progress, and we are grateful for the support of you and the 
Congress for that effort.
    Senator Levin. And Dr. Coburn, of course, points out that 
the quality of those reviews, to make sure we get it right up 
front, is important as well as making sure we do not keep 
people waiting for 3 years. And I agree with his sentiment on 
that as well.
    We thank you. We thank our witnesses.
    Mr. Astrue. Thank you, Mr. Chairman.
    Senator Levin. I think it has been a very useful hearing.
    Senator Coburn. Again, I thank both of you. I would note, 
earlier in your testimony you said, I think, you spend $20 
million on contractors for educating people on this 
information. I think one of the things that GAO did find out, 
although I do not think they put it in their study, SSA is 
doing a pretty good job of telling people what they are 
supposed to do. The problem is compliance, once you know what 
you are supposed to do versus doing what you are supposed to 
do. So I think you have a good contractor regarding educating 
the recipients.
    Mr. Astrue. I agree, and I think the challenge is generally 
making sure the obligation to report is understood. Where we 
run into difficulty is the trial work period, the extended 
period of eligibility, and the complexities of the ticket-to-
work program. I think if you survey claimants, they are baffled 
by it, and that is really where the contractor has the issue--
getting the claimants to understand those difficulties. So I 
think a lot of the time where there are good-faith mistakes 
made by claimants, it really does derive from the complexity of 
the program. And if we simplify the program, we will have fewer 
of those mistakes up front. We are working on a simplification 
proposal for next year's budget, which we will see whether we 
can get approved.
    Senator Coburn. Send it to us.
    Mr. Astrue. That is exactly what you are asking us to do.
    Senator Coburn. You have bipartisan agreement. We want to 
fix the problems.
    Mr. Astrue. OK.
    Senator Levin. Does most of that complexity come from 
regulation or from legislation?
    Mr. Astrue. It is from legislation, Mr. Chairman.
    Senator Levin. Send us recommendations.
    Mr. Astrue. We are working on it. We have been working on 
it for a long time. We are hopefully towards the tail end.
    Senator Levin. Thank you both again.
    [Whereupon, at 4:25 p.m., the Subcommittee was adjourned.]

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