[Senate Hearing 111-871]
[From the U.S. Government Publishing Office]
S. Hrg. 111-871
SOCIAL SECURITY DISABILITY FRAUD:
CASE STUDIES IN FEDERAL EMPLOYEES AND
COMMERCIAL DRIVER'S LICENSES
=======================================================================
HEARING
before the
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
AUGUST 4, 2010
__________
Available via the World Wide Web: http://www.fdsys.gov/
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
----------
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Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
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
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware
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
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
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
EDWARD E. KAUFMAN, Delaware
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
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Opening statements:
Page
Senator Levin................................................ 1
Senator Coburn............................................... 4
Senator Carper............................................... 5
Prepared statements:
Senator Levin................................................ 39
Senator Coburn............................................... 43
Senator Carter............................................... 45
WITNESSES
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
SOCIAL SECURITY DISABILITY FRAUD:
CASE STUDIES IN FEDERAL EMPLOYEES AND
COMMERCIAL DRIVER'S LICENSES
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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); .
OPENING STATEMENT OF SENATOR LEVIN
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
billion.
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
programs.
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.
OPENING STATEMENT OF SENATOR COBURN
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.
OPENING STATEMENT OF SENATOR CARPER
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
appropriately.
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
insignificant.
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
lines.
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
errors.
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.
TESTIMONY OF GREGORY D. KUTZ,\1\ MANAGING DIRECTOR, FORENSIC
AUDITS AND SPECIAL INVESTIGATIONS, U.S. GOVERNMENT
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.
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My testimony has two parts: First, I will discuss our macro
analysis; and, second, I will discuss our specific 20 case
studies.
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
benefits.
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
payments.
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
later.
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
all?
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
controls.
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.
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
cases.
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
this.
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
that.
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
people.
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
Administration?
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
consider.
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
exam.
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
percent.
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.
TESTIMONY OF HON. MICHAEL J. ASTRUE,\1\ COMMISSIONER, SOCIAL
SECURITY ADMINISTRATION
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.
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\1\ The prepared statement of Mr. Astrue appears in the Appendix on
page 57.
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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
efforts.
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,
maybe.
Mr. Astrue. That is right.
Senator Levin. Maybe. But that is not a flat-wrong
conclusion?
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.
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\1\ See Exhibit No. 2a. which appears in the Appendix on page 122.
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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
requirement.
Is the failure in and of itself to notify the SSA of the
fact that somebody is now employed, is that failure by itself
fraudulent?
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
GAO----
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,
correct?
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
priority.
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
could.
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\
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\1\ See Exhibit No. 2c. which appears in the Appendix on page 126.
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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
chase.
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
in?
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
them.
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
Administration?
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\
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\1\ See Exhibit No. 2c. which appears in the Appendix on page 126.
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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
fraud.
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
be.
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
seriously.
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
this?
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
efforts.
Mr. Astrue. Right.
Senator Levin. A number of us signed a letter--it is a
bipartisan letter--on this funding issue on the staffing
levels.\1\
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\1\ See Exhibit No. 3 which appears in the Appendix on page 129.
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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\
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\1\ See Exhibit No. 2d. which appears in the Appendix on page 127.
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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
entitled.
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----
[Pause.]
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
mind.
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
compassion.
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.
[Laughter.]
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.]
A P P E N D I X
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