[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
               SECOND IN A HEARING SERIES ON SECURING THE 
                FUTURE OF THE SOCIAL SECURITY DISABILITY 
                           INSURANCE PROGRAM 

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 24, 2012

                               __________

                          Serial No. 112-SS12

                               __________

         Printed for the use of the Committee on Ways and Means

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                      COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                      SAM JOHNSON, Texas, Chairman

KEVIN BRADY, Texas                   XAVIER BECERRA, California
PATRICK J. TIBERI, Ohio              LLOYD DOGGETT, Texas
AARON SCHOCK, Illinois               SHELLEY BERKLEY, Nevada
RICK BERG, North Dakota              FORTNEY PETE STARK, California
ADRIAN SMITH, Nebraska
KENNY MARCHANT, Texas

                   Jennifer Safavian, Staff Director

                  Janice Mays, Minority Staff Director




                            C O N T E N T S

                               __________

                                                                   Page

Advisory of January 24, 2012, announcing the hearing.............     2

                           OPENING STATEMENTS

The Honorable Sam Johnson........................................    63
The Honorable Xavier Becerra.....................................    65

                               WITNESSES

Carolyn Colvin, Deputy Commissioner, Social Security 
  Administration, testimony......................................     8
Patrick P. O'Carroll, Jr., Inspector General, Social Security 
  Administration, testimony......................................    24
Thomas Brady, Special Agent, Office of the Inspector General, 
  Social Security Administration, Kansas City Field Division, St. 
  Louis, Missouri................................................    31
Paul Neske, Detective, St. Louis County Police Department, St. 
  Louis, Missouri, shared testimony..............................    31
Steve Clifton, President, National Council of Social Security 
  Management Associations, testimony.............................    36

                       SUBMISSIONS FOR THE RECORD

Consortium for Citizens with Disabilities........................    87
National Council of Disability Determination Directors...........    91

                        QUESTIONS FOR THE RECORD

Ms. Colvin.......................................................    68
Mr. O'Carroll....................................................    73
Mr. Brady........................................................    79
Mr. Clifton......................................................    82


    SECOND IN A HEARING SERIES ON SECURING THE FUTURE OF THE SOCIAL 
                 SECURITY DISABILITY INSURANCE PROGRAM

                              ----------                              


                       TUESDAY, JANUARY 24, 2012

             U.S. House of Representatives,
                       Committee on Ways and Means,
                            Subcommittee on Social Security
                                                    Washington, DC.

    The subcommittee met, pursuant to notice, at 10:47 a.m., in 
Room B-318, Rayburn House Office Building, the Hon. Sam Johnson 
[chairman of the subcommittee] presiding.
    [The advisory of the hearing follows:]

HEARING ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS


               Chairman Johnson Announces the Second in a

              Hearing Series on Securing the Future of the

              Social Security Disability Insurance Program

                       Tuesday, January 24, 2012

    U.S. Congressman Sam Johnson (R-TX), Chairman of the House 
Committee on Ways and Means Subcommittee on Social Security, today 
announced a hearing on combatting disability waste, fraud and abuse. 
The hearing will take place on Tuesday, January 24, 2012, in B-318 
Rayburn House Office Building, beginning at 10:30 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Subcommittee and 
for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    In December 2011, the Subcommittee began a hearing series focusing 
on the history of the Disability Insurance (DI) program, the income 
security it provides, and its financing challenges. DI benefits 
currently average $1,111 per month for disabled workers. According to 
the Social Security Administration (SSA), almost half of families 
receiving DI benefits rely on these benefits for the majority of their 
family income. On average, each disability benefit award is valued at 
$250,000 in DI and Medicare benefits over a beneficiary's lifetime.
    Over the past four decades DI program annual costs have climbed 
from $18 billion to $124 billion as the number of those receiving 
benefits has more than tripled from 2.7 to 9.7 million. Demographic 
changes also played an important role as during this same period the 
size of the overall workforce has grown, the large baby-boom generation 
has aged into its most disability-prone years, women have entered the 
workforce and become insured for benefits should they become severely 
disabled, and Congress has periodically reevaluated and revised 
eligibility guidelines. Wage levels, the basis for both the program's 
financing and its benefit levels, have also risen. In their 2011 Annual 
Report, the Social Security Trustees project that the DI Trust Fund 
will become exhausted in 2018, at which point revenues will cover only 
86 percent of benefits.
    As DI program enrollment has increased, so too has the potential 
cost of error, waste, fraud, and abuse. The DI program has an 
overpayment rate of 1.5 percent, but in fiscal year (FY) 2010, each 
tenth of a percentage point in payment accuracy represents about $706 
million in retirement and disability program outlays, according to the 
SSA. DI medical and work-related overpayments detected by the SSA have 
grown from about $860 million in FY 2001 to about $1.4 billion in FY 
2010, according to the Government Accountability Office. While the 
agency collected or recovered $839 million in overpayments in FY 2010, 
DI overpayment debt reached $5.4 billion. The SSA has no agency-wide 
performance goals for debt collection.
    One of the SSA's FY 2012 Agency Performance Plan priority goals is 
to ``ensure the effective stewardship of our programs by increasing our 
program integrity efforts.'' In the Plan, the agency pledged to 
``continue to demonstrate an unyielding commitment to sound program 
integrity efforts by minimizing improper payments and strengthening 
efforts to protect program dollars from waste, fraud, and abuse.''
    FY 2012 goals include completing 592,000 full medical continuing 
disability reviews (CDRs), an increase of 82 percent over FY 2010. CDRs 
are a valuable tool in ensuring that disability beneficiaries continue 
to be eligible for the benefits they receive. Every dollar spent on 
CDRs results in at least $10 in lifetime program savings, including 
savings accruing to Medicare and Medicaid. At the beginning of FY 2011, 
there was a backlog of 1.4 million medical CDR cases. In the Budget 
Control Act of 2011, Congress authorized $13 billion in additional 
funds above the discretionary budget caps over the next ten years 
exclusively for program integrity work. According to the SSA, these 
funds will enable the agency to complete nearly 8 million full medical 
CDRs, eliminating the DI CDR backlog by 2016.
    Another important tool in combatting fraud is the Cooperative 
Disability Investigation (CDI) program. The FY 2012 Performance Plan 
identified a strategic goal to ``preserve the public's trust in our 
programs'' with the objective to ``protect our programs from waste, 
fraud, and abuse,'' by expanding the CDI program as resources may 
permit. The CDI program was created in 1998 as a joint effort between 
the SSA and OIG, working with the State Disability Determination 
Services and State or local law enforcement, to pool resources for the 
purpose of preventing fraud in the SSA's disability programs. Since the 
program's inception, the CDI program efforts nationwide have resulted 
in savings of $1.9 billion in Social Security disability benefits and 
$1.2 billion in programs such as Medicare and Medicaid, for a total 
savings of approximately $3.1 billion.
    In announcing the hearing, Social Security Subcommittee Chairman 
Sam Johnson (R-TX) said, ``Waste, fraud, and abuse in the disability 
insurance program cheat honest, hardworking American taxpayers. As we 
work to secure the future of this program, we need to protect the 
American taxpayer from con artists who are stealing from the system by 
making sure benefits are paid only to those who deserve them.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on the SSA's efforts to minimize improper 
payments and protect taxpayers' dollars from waste, fraud, and abuse.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word or 
WordPerfect document, in compliance with the formatting requirements 
listed below, by the close of business on Thursday, February 7, 2012. 
Finally, please note that due to the change in House mail policy, the 
U.S. Capitol Police will refuse sealed-package deliveries to all House 
Office Buildings. For questions, or if you encounter technical 
problems, please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
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    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

                                 

    Chairman JOHNSON. Welcome to our second hearing in our 
hearing series on Securing the Future of the Social Security 
Disability Insurance Program. Today our focus is on combating 
waste, fraud, and abuse.
    In our first hearing, we talked about the important 
milestone set in 1956 by the creation of this cash benefit 
program for those who could no longer work due to disability. 
From the beginning, there was a great deal of concern about the 
high risk for fraud, waste, and abuse because of the changing 
nature of disability and the inherent subjectivity of 
determining whether a person was truly disabled.
    Today, the disability insurance program pays benefits to 
individuals with disabilities that meet certain medical 
criteria, so long as they work long enough and paid Social 
Security taxes.
    Over the past four decades, disability program costs have 
soared from $18 billion to $124 billion as the number of those 
receiving benefits has more than tripled from 2.7 to 9.7 
million people. The size of the overall workforce, more women 
in the workforce, the aging of the Baby Boomers into their 
disability-prone years, and relaxed eligibility requirements 
have all contributed to this growth.
    That continued growth is putting a massive strain on the 
program. According to the 2011 Trustees' Report, without 
Congressional action, the Disability Insurance program will be 
unable to pay full benefits beginning in 2018. That's just a 
few years from now. And as the size, cost, and complexity of 
the disability insurance program has increased, so has the 
program's exposure to waste, fraud, and abuse.
    In fiscal year 2011, Social Security paid $130 billion--
that's with a ``b''--in disability benefits. That's about what 
it costs to run three federal agencies, believe it or not: the 
Department of Homeland Security, NASA, and the Department of 
Housing and Urban Development. In that same year Social 
Security's disability overpayments were 1.4 percent of total 
benefits paid. That percentage may sound small, but 1.4 percent 
of benefits equals $1.8 billion in overpayments.
    In fact, according to Social Security, each tenth of one 
percent point in payment accuracy represents 706 million in 
outlays for the retirement and disability program. Said another 
way, for every 
1/10 of 1 percent Social Security improves its payment 
accuracy, it can pay disability benefits for a full year to 
close to 5,300 people. That's real money for those who can't 
work and who count on these benefits to keep a roof over their 
head and food on the table.
    Finally, while Social Security collected $839 million in 
overpayments in fiscal year 2010, cumulative overpayment debts 
still reached $5.4 billion that same year.
    Continuing disability reviews also protect the disability 
program by making sure those receiving disability benefits are 
still disabled. Every $1 spent on the reviews results in $10 of 
program savings, including both Medicare and Medicaid. There is 
a growing backlog of medical continuing disability reviews, and 
in the Budget Control Act, Congress authorized $13 billion in 
additional funding over the next 10 years exclusively for these 
and other reviews.
    The best way to protect the disability program is to 
prevent fraud before it occurs. The Cooperative Disability 
Investigation program does just that. This program is a joint 
effort between Social Security, the Office of Inspector 
General, working with the state disability determination 
services and state or local law enforcement. Since 1998, 
efforts by these units nationwide have resulted in $3.1 billion 
in disability savings. As impressive as some of these anti-
fraud efforts appear, their very success raises questions about 
how many other examples of abuse are yet undetected.
    The disability program is of vital importance to millions 
of Americans whose lives are changed forever by the onset of a 
disability. We need to protect that program for those who truly 
need its benefits. Waste, fraud, and abuse in the disability 
insurance program cheat honest, hardworking American taxpayers. 
As we work to secure the future of this program, we need to 
protect taxpayers from con artists who are stealing from the 
system by making sure benefits are paid only to those who 
deserve them, an undertaking I know all of us on the 
Subcommittee stand firmly behind. And I thank the IG for 
working that program.
    Everybody says it's just a minor amount. But billions of 
dollars is not minor, in my view, regardless of how you compare 
it to other programs.
    With that, I yield to Mr. Becerra for his comments.
    Mr. BECERRA. Thank you, Mr. Chairman. Nearly 157 million 
Americans contribute to Social Security with every paycheck. In 
return, these workers and their families earn guaranteed 
protection against the devastating consequences of disappearing 
pensions and retirement savings, premature death, and career-
ending disability.
    The vast majority of American workers never have to use the 
disability insurance in Social Security. But for those who 
become so disabled that they can't work at all, it is a 
lifeline. We owe it to American workers to safeguard their 
contributions to the Social Security trust fund, whether 
against the Wall Street privatizers who would raid the trust 
fund, or from erroneous payment of disability benefits to those 
who have not earned them.
    That is why it's crucial that the Social Security 
Administration receive the funding it needs to fight waste, 
fraud, abuse, and to prevent simple errors. The increased 
funding for program integrity within the SSA, which was 
authorized in last fall's bipartisan Budget Control Act, is a 
very good step in that direction.
    The Congressional Budget Office estimates that the 
increased resources will prevent about $11 billion in 
overpayments within the decade, and even more later. That's 
because the eligibility reviews that SSA is able to conduct as 
a result of this special funding will generate $10 to $12 in 
savings for every dollar we invest.
    It sure would be nice, though, to see more consistency in 
Congress's commitment to payment accuracy. A little more than a 
decade ago, the Clinton Administration, working with Congress, 
completely eliminated the backlog of benefit payment cases that 
needed review. Devastating subsequently, we saw that Congress 
has let the funding drop by almost 75 percent by the year 2007. 
And the backlog came back with a vengeance.
    In 2009 and 2010, working with President Obama, we restored 
some of SSA's budget, and succeeded in reducing the backlog. 
But then last year was a disaster. Congress's continuing 
resolution for 2011 froze the Agency's funding once again, and 
at a time when over 13,000 Baby Boomers are starting to collect 
their Social Security benefits every day. This funding roller 
coaster has real consequences for the Social Security trust 
fund.
    We also need to put the program integrity funding, which is 
about six percent of Social Security's overall operating 
budget, in context. One of our witnesses, Mr. Steven Clifton, 
will let us know a little bit more about that. He will indicate 
that most of SSA's quality control efforts, including program 
integrity, are performed on the front lines by regular office 
staff, not by some special cadre of employees.
    Preventing and correcting errors is a day-to-day 
responsibility. It falls on the same field offices and the same 
state disability determination workers who process the initial 
claims, who answer questions for the public, who track down 
lost checks, who assign Social Security numbers, and who do 
everything to provide other services Americans need under 
Social Security. It's up to them to do the program integrity, 
as well.
    So, when Congress decides to limit SSA to a smaller actual 
operating budget than what SSA had the year before, that has 
real consequences for payment accuracy. When you force SSA to 
operate under a hiring freeze, as it had to last year, and 
continues to this year, that means SSA can't replace retiring 
or departing employees who are the experienced and hard-working 
members of the force. They are the very people who we rely on 
to prevent mistakes on the front end, so we don't have to 
correct them on the back end.
    One final point. As important as it is to make sure Social 
Security payments are accurate, and as significant as the 
savings can be when SSA has the resources to do the job well, I 
want to make sure we keep SSA's overpayments in perspective. In 
2010, Social Security, which had 72 million field office visits 
and phone calls, processed over 8 million benefit applications, 
and paid out benefits to over 54 million seniors, survivors, 
and disabled workers, had a 4/10ths of 1 percent overall 
overpayment rate.
    More specifically, Social Security's disability insurance 
program, which handles a complicated eligibility process and 
requires applicants to provide specialized medical and 
vocational evidence, had an overpayment rate of 7/10ths of 1 
percent. Most of this was due to simple error.
    I refer you to charts that you see on the screens. For 
comparison, the cost overrun for 98 of the Department of 
Defense's major weapons systems was 31 percent. Not 31/100ths 
of 1 percent, 31 percent. What makes this a glaring statistic 
and makes it even worse and more staggering is the fact that 
DoD continues to do business with hundreds of contractors which 
the Pentagon knows were involved in fraud against the 
taxpayers.
    [The insert of The Honorable Xavier Becerra follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    So, Mr. Chairman, I look forward to working together with 
you and our colleagues to safeguard the investment American 
workers make in Social Security. And let's keep the big picture 
in mind. Tens of millions of Americans and their families rely 
on Social Security to be there when they need it. That means 
having a Social Security office open and fully staffed to help 
them. It means getting back every penny in Social Security 
overpayments. And for the sake of fairness and integrity, it 
means applying the same rigor and standard of accountability 
for all programs within the federal budget, from Social 
Security to national security.
    I yield back, Mr. Chairman.
    Chairman JOHNSON. Yes. I might remind you this is not the 
Armed Services Committee.
    Mr. BECERRA. But Mr. Chairman, we always are looking for 
ways to collect any overpayments.
    Chairman JOHNSON. I know, I know.
    Mr. BECERRA. National security or Social Security.
    Chairman JOHNSON. Thank you.
    Ms. Colvin, I understand Social Security is going to resume 
making benefit estimate statements available, but only to 
certain groups. I look forward to being briefed by your staff 
and holding a future hearing on this. The statements are an 
essential tool for helping Americans prepare for their 
retirement. But you can tell your Chief he should have told us 
about it before he did that.
    As is customary, any Member is welcome to submit a 
statement for the hearing record. Before we move on to our 
testimony today I want to remind our witnesses to please limit 
their oral statement to five minutes. However, without 
objection, all the written testimony will be made a part of the 
hearing record.
    We have one panel today, and our witnesses who are seated 
at the table are Carolyn Colvin, Deputy Commissioner of Social 
Security Administration; Patrick O'Carroll, Jr., who is the 
Social Security Administration's Inspector General; Thomas 
Brady, who is Special Agent, Office of the Inspector General, 
Social Security Administration, from the Kansas City field 
division in St. Louis. He is joined by Paul Neske, Detective, 
St. Louis County Police Department, St. Louis. Steve Clifton is 
President, National Council of Social Security Management 
Associations.
    I appreciate you all being here. And, Ms. Colvin, you are 
welcome to proceed for five minutes.

  STATEMENT OF CAROLYN W. COLVIN, DEPUTY COMMISSIONER, SOCIAL 
                    SECURITY ADMINISTRATION

    Ms. COLVIN. Chairman Johnson, Ranking Member Becerra, 
Members of the Subcommittee, thank you for inviting me to 
discuss our efforts to preserve the integrity of our disability 
programs. I am the Social Security Administration's Accountable 
Official for improper payments.
    I want to thank Congress for getting our budget to us early 
this year. It helps us minimize disruptions in serving the 
American public. Our dedicated employees continue to improve 
our efforts to prevent, detect, and recover improper payments, 
making the Social Security program the most accurate in Federal 
Government.
    Throughout my career I have worked closely with the 
vulnerable individuals who benefit from Social Security's 
programs. They look to the disability program for assistance, a 
program they have contributed to through their payroll taxes.
    The payments we make under the SSDI program are 
exceptionally accurate. In fiscal year 2010, 99.31 percent of 
all SSDI payments were free of an overpayment, and 98.97 
percent were free of an underpayment. While we are proud of 
these results, we still look for ways to do better, because we 
realize that even a small error rate represents sizeable 
incorrect payments.
    Funding for our program integrity work is key to ensuring 
that we continue proper payments to those individuals who are 
entitled to benefits. Continuing disability reviews play an 
especially important role. CDRs are re-evaluations of 
beneficiaries' medical conditions and earnings to determine 
whether they should continue to receive benefits. Medical CDRs 
yield $10 in savings for every $1 invested.
    In 1996 we received a 7-year commitment of special funds to 
conduct medical CDRs. At the end of the 7 years, we had 
processed 4.7 million full medical reviews. Over the subsequent 
five years, inadequate funding meant that we had to reduce the 
number of medical CDRs we completed. Now we have a backlog of 
about 1.3 million cases. We are doing 90,000 more medical CDRs 
this year. But because we did not receive full funding for 
program integrity, as authorized under the Budget Control Act, 
we will complete about 130,000 fewer full medical reviews than 
we could have done. Given the high return on investment of 
medical CDRs, full funding of this workload is a smart 
investment.
    We are focusing resources on our work CDRs. We are taking 
actions more timely, and addressing overpayments more quickly. 
Our workloads are growing at the same time we are losing 
experienced staff, increasing the strain on our front-line 
employees, the same employees who conduct CDRs and perform core 
duties, including getting out that first payment to deserving 
beneficiaries. We must balance quality and quantity. Thus, we 
are forced to do less with less.
    The SSDI work activity rules are extremely complex and 
difficult to implement. The President's fiscal year 2012 budget 
included a work incentive simplification proposal that we 
believe could simplify SSDI program rules, and address a 
significant disincentive to work that occurs under the current 
rules: the fear of losing benefits due to work activity. We 
urge Congress to consider the work incentive simplification 
policy proposal.
    We would not be good stewards of our programs if we did not 
have a comprehensive debt collection program in place to 
recover program dollars. We do. Across all of our programs we 
recovered $3.2 billion in debt in fiscal year 2011, and $14.7 
billion over the previous 5-year period at an administrative 
cost of $.08 for every dollar collected.
    We make every effort to identify and collect that as soon 
as possible, so we can arrange a repayment plan with the 
beneficiary. If the overpaid person no longer receives 
benefits, we arrange for debt collection through installment 
payments. If this is unsuccessful, we turn to authorized 
external debt collection tools.
    Our employees are vigilant and, when they suspect someone 
is receiving benefits through fraudulent means, make referrals 
to our Office of Inspector General. Last year we made 19,000 
referrals. OIG opened 4,600 of these cases for investigation 
and possible criminal prosecution. We have a low incidence of 
fraud in our programs.
    We are committed to preserving the integrity of our 
programs. I must emphasize that just because a benefit payment 
is improper does not mean there was fraud. Our programs are 
complicated. And we work to ensure that our beneficiaries 
understand the reporting requirements. We take pride in our 
ability to protect and manage the resources and programs 
entrusted to us. We have earned the public's trust, and we 
intend to keep it.
    Congressional support is vital. To complete all of the work 
for which we are responsible, we need Congress to fully fund 
our workloads in future appropriation cycles.
    Thank you very much. I am happy to answer your questions.
    [The prepared statement of Ms. Colvin follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, ma'am.
    Mr. O'Carroll, welcome. Please go ahead.

  STATEMENT OF PATRICK P. O'CARROLL, JR., INSPECTOR GENERAL, 
                 SOCIAL SECURITY ADMINISTRATION

    Mr. O'CARROLL. Good morning, Chairman Johnson, Ranking 
Member Becerra, and Members of the Subcommittee. Thank you for 
the invitation to testify today.
    SSA provides about $10 billion in disability insurance 
payment to more than 10 million citizens every month. More and 
more Americans are turning to SSA as Baby Boomers reach their 
most disability-prone years. The Agency received an all-time 
high 3.2 million initial applications for disability benefits 
in fiscal year 2011. Thus, it is a critical time to focus on 
the future of the disability program.
    My office's efforts to secure the disability program focus 
on investigating individuals suspected of committing Social 
Security fraud, completing audit reviews, and recommending ways 
for SSA to improve disability program integrity and efficiency. 
Last year OIG agents reported more than $410 million in 
investigative accomplishments. That includes more than $80 
million in SSA recoveries and restitutions, and about $330 
million in projected savings from programs such as the 
Cooperative Disability Investigations effort, which we will 
hear about more shortly.
    Last year our office received more than 103,000 fraud 
allegations and 43 percent of all allegations were disability-
related. We have also made many recommendations to SSA in 
recent years that support OIG's focus on disability program 
integrity.
    SSA projected a backlog of about 1.4 million continuing 
disability reviews at the end of Fiscal Year 2011. Our audit 
work has found the Agency would have avoided paying hundreds of 
millions of dollars to ineligible beneficiaries if CDRs were 
conducted when they were due. SSA estimates that every dollar 
spent on CDRs yields at least $10 in SSA program savings. The 
Agency has requested additional funds this year for program 
integrity efforts. SSA has a goal of conducting more than 1.4 
million CDRs. However, this amount will not significantly 
reduce the CDR backlog.
    We also believe reducing the complexity of SSA's disability 
programs would help prevent millions of dollars in overpayments 
that occur each year.
    SSA has had to evaluate earnings and work incentives before 
stopping benefits. So simplifying these provisions could have a 
positive effect.
    Our support for stewardship activities has never waivered. 
My written statement for the record includes other 
recommendations we have made to SSA. We continue to pursue the 
establishment of self-supporting fund for integrity 
initiatives, such as CDRs and our CDI program.
    The CDI program has received tremendous support from your 
subcommittee. In late August, Chairman Johnson was kind enough 
to visit our Dallas CDI unit. And Congressman Brady and I 
toured the Houston CDI unit, and we greatly appreciate all of 
your interest.
    I am also pleased the subcommittee invited OIG Special 
Agent Tom Brady and St. Louis County Detective Paul Neske to be 
here today. They are members of our CDI unit in St. Louis.
    To highlight our anti-fraud efforts, I would like to share 
with you a CDI surveillance video. We currently have 25 CDI 
units across the country, and this case comes from our Tampa 
CDI unit.
    [Video.]
    Mr. O'CARROLL. The unit investigated a 54-year-old man. He 
said he used a cane for walking for assistance, and he could 
not perform household chores. The Tampa disability examiners 
referred the case to the CDI unit, due to medical 
inconsistencies. And here you see him limping into the local 
SSA office.
    The investigation revealed that the man was hardly 
incapable of performing household chores. Surveillance showed 
the man, as you can see here, lifting a large piece of wooden 
furniture, and sweeping debris from the roof of his home. With 
this information, the DDS denied the claim, preventing an 
improper SSA payment.
    I have also available additional case example videos from 
Chairman Johnson's district that we showed during a CDI unit 
visit last summer. Special Agent Brady and Detective Neske will 
provide more details on the CDI program in their testimony.
    And thank you, again, for this opportunity to testify. And 
I will be happy to answer any questions.
    [The prepared statement of Mr. O'Carroll follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, sir. Keep up the good work.
    Special Agent Brady and Detective Neske, welcome. Please 
proceed.
    Mr. BRADY. Thank you, sir.

    STATEMENT OF THOMAS BRADY, SPECIAL AGENT, OFFICE OF THE 
INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION, KANSAS CITY 
FIELD DIVISION, ST. LOUIS, MISSOURI, ACCOMPANIED BY PAUL NESKE, 
   DETECTIVE, ST. LOUIS COUNTY POLICE DEPARTMENT, ST. LOUIS, 
                            MISSOURI

    Mr. BRADY. Good morning, Chairman Johnson, Ranking Member 
Becerra, and Members of the Subcommittee. My name is Tom Brady, 
and I'm a special agent with the SSA office of the inspector 
general. I serve as the team leader for the cooperative 
disability investigations unit in St. Louis, Missouri. I am 
joined today by Detective Paul Neske of the St. Louis County 
Police Department, one of the St. Louis CDI unit's local law 
enforcement partners. Thank you for the invitation to testify.
    We believe program integrity is a critical element in the 
Agency's efforts to secure the future of its disability 
insurance program. For the past 12 years, our unit has been 
extremely successful in detecting abuse in SSA's disability 
programs, and preventing payment on disability cases involving 
potential fraud.
    CDI was established in 1998 with 5 units. There are 
currently 25 units covering 22 states, with the most recent 
unit opening in Jackson, Mississippi in November. Since the 
program was established, the program's work nationwide has 
resulted in approximately $1.9 in projected SSA savings. Our 
St. Louis CDI unit includes two detectives and an intelligence 
analyst from the St. Louis County police department, one 
detective from the Sikeston, Missouri police department, an SSA 
operations supervisor, and a DDS hearings officer.
    I now introduce Detective Neske, who will provide more 
information on the CDI process.
    Mr. NESKE. Thank you, Tom. The process typically begins 
with the fraud referral from the state's DDS or SSA to the CDI 
unit. The referrals are benefit applications or reviews that 
have been identified as suspicious by DDS.
    Types of disability fraud can involve malingering, filing 
multiple applications, exaggerating or lying about 
disabilities, and concealing work or other activities. The CDI 
unit team leader screens the allegations and works with the 
team members to investigate. Upon completion of the 
investigation, a report detailing our findings is sent to DDS, 
which determines whether a person is eligible for benefits. 
Some of our cases may result in criminal prosecution or civil 
penalties.
    [Video.]
    Mr. NESKE. For example, in this video you see a 45-year-old 
woman who had been collecting Social Security disability 
benefits since 2009. She alleged chronic back pain, and said 
she used the cane for assistance. But during our continuing 
disability review by the Missouri DDS in 2011, the disability 
examiner noticed that the woman walked without a limp. The case 
was referred to the St. Louis CDI unit for further 
investigation.
    As you can see at her home, she was able to walk down the 
front steps and carry her cane under her arm. But on the day--
but on that day, outside of the medical office, she struggled 
to climb the steps to the office door. After her appointment, 
the woman is seen climbing her front steps without the use of 
the cane, and she is even carrying a child's playseat.
    We forwarded this information to Missouri DDS and they 
seized the woman's Social Security benefits.
    Mr. BRADY. Thank you, Paul. Since 1999, the St. Louis CDI 
unit has closed more than 1,900 cases, resulting in more than 
$84 million in projected SSA program savings. The Government 
Accountability Office has advocated expansion of the CDI 
program to all 50 states. We in the OIG share that enthusiasm. 
We look forward to continuing to assist SSA in this vitally 
important and growing initiative, doing our part in maintaining 
the integrity of Agency programs, and protecting the taxpayers 
of this great nation.
    Thank you again for the invitation to testify. Detective 
Neske and I would be happy to answer any questions.
    [The prepared statements of Mr. Brady and Mr. Neske 
follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you so much for your testimony. I 
appreciate it.
    Mr. Clifton, welcome. Please go ahead.

  STATEMENT OF STEVE CLIFTON, PRESIDENT, NATIONAL COUNCIL OF 
            SOCIAL SECURITY MANAGEMENT ASSOCIATIONS

    Mr. CLIFTON. Chairman Johnson, Ranking Member Becerra, and 
Members of the Subcommittee, I am Steve Clifton, president of 
the National Council of Social Security Management 
Associations, NCSSMA, and the district manager of the Social 
Security office in Greeley, Colorado. Thank you for the 
opportunity to speak on behalf of the 3,500 NCSSMA members 
across the country. We share your concern about the disability 
program and combating waste, fraud, and abuse.
    First, let me thank you for the fiscal year 2012 
appropriation SSA received, which included specific funding for 
program integrity initiatives such as medical continuing 
disability reviews. This funding is critical to process core 
workloads, and to improve payment accuracy. NCSSMA considers it 
a top priority to deliver quality service to the American 
public, and to be good stewards of the taxpayers' monies. SSA 
completed 1.4 million medical CDRs in fiscal year 2011. But a 
backlog of 1.3 million still exists.
    The fiscal year 2012 program integrity funding could allow 
SSA to complete 592,000 full medical CDRs, an 82 percent 
increase over fiscal year 2010. This is a program integrity 
workload that saves at least $10 in lifetime program savings 
for every $1 invested.
    In addition to conducting program integrity workloads after 
benefits have been paid, we believe that it is equally critical 
to prevent improper payments before claims are processed. While 
this hearing is taking place, the American public is calling or 
walking in to Social Security field offices all across the 
country to discuss retirement, the loss of a loved one, or the 
onset of their disability, frequently with a sense of urgency 
or even desperation, as they look to us for assistance.
    Last fiscal year, we assisted almost 45 million visitors. 
We also received 3.2 million initial disability claims and 
nearly 860,000 hearing requests. Both were the highest volume 
in our history.
    The same employees that process program integrity workloads 
also answer public telephone calls, take initial applications 
for disability and retirement benefits, and process claims, 
core workloads that are not program integrity funded, but do 
ensure the accuracy of payments. To this end, having adequate 
staffing levels in SSA field offices to process workloads, 
sufficient time to address complex issues, answer questions, 
and educate the public on their reporting responsibilities is 
essential to saving taxpayer dollars.
    SSA employees want to do quality work and prevent 
overpayments at all points of contact with the public. Adequate 
resources to conduct training and to perform quality reviews 
for claims accuracy are also imperative to discharging SSA's 
stewardship responsibilities. Even with the fiscal year 2012 
appropriation enacted, SSA field offices have been operating 
for over 15 months under a continuing hiring freeze, with very 
little overtime. Geographic staffing imbalances are occurring, 
due to uneven attrition across the country. These all detract 
from the efficiency of operations and serve to compromise 
efforts to improve payment accuracy.
    We also see areas to improve efficiency and to prevent 
improper payments by expanding electronic services available to 
the public, simplifying disability rules such as enacting WISP 
legislation, implementing federal wage reporting, and expanding 
data exchanges such as workers compensation information. This 
would allow SSA to address payment accuracy and ensure program 
integrity, both before and after claims are processed.
    We ask that Congress give thoughtful consideration 
regarding the future of SSA to ensure the preservation of this 
valued program. We sincerely appreciate the subcommittee's 
interest in the vital services Social Security provides, and 
your ongoing support. A strong Social Security program equates 
to a strong America. And it must be maintained as such for 
future generations.
    On behalf of NCSSMA members nationwide, thank you for the 
opportunity to present our testimony.
    [The prepared statement of Mr. Clifton follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, sir. I appreciate all your 
testimony.
    Mr. Brady is not here yet. He had an illness in the family 
so he had to leave town. But we appreciate his support. And he 
is behind everything that you all are doing. And I thank the IG 
for getting out there where the action is.
    As is customary, for each round of questions I will limit 
my time to five minutes and ask my colleagues also to limit 
their time to five minutes.
    Mr. O'Carroll, I want the Subcommittee to hear about the 
cases I saw when I visited your office in Dallas. Would you 
walk us through that video, and then I'll ask questions on the 
other side of it?
    Mr. O'CARROLL. Yes, Mr. Chairman. Thank you for your 
interest in this. If you remember when you were in our Dallas 
CDI unit, we showed three videos. The first one was a person 
conducting some business that--we had a video camera with us 
and were showing that he was actively engaged in business. And 
then there was another one with a lot of driving and other 
things which really wouldn't lend themselves too good for 
this--you know, for showing here today.
    This one I did bring with me today, is one of the ones you 
saw. And it's about a 53-year-old woman who alleges chronic 
back pain, headaches, loss of vision, and she says she uses a 
walker for mobility and is incapable of driving. She says she 
falls down often because her legs give out.
    [Video.]
    Mr. O'CARROLL. I think this one is going to speak well for 
itself. You can see her getting into a taxi without the walker. 
Now she comes back to her car or her truck, and heads to a 
convenience store. Then, when she goes to the convenience store 
she purchases three cases of soda, which you can see her 
carrying here. And as a result of that, obviously, we turned 
this information over to the DDS and they turned down her 
application.
    Chairman JOHNSON. I wonder how many of those go on that we 
don't know about?
    Mr. O'CARROLL. Yes, these are the ones that we actually 
see----
    Chairman JOHNSON. Yes.
    Mr. O'CARROLL.--and can record. There are thousands more 
out there that we just don't have the opportunity to 
investigate.
    Chairman JOHNSON. Are the states working with you pretty 
well?
    Mr. O'CARROLL. Yes, sir. The states are working with us 
very well. We have very good cooperation with the states. It's 
getting a little more difficult with funding in some of the 
states where they're not as ready to help us as they used to be 
in the past. And I can give you details on that.
    Chairman JOHNSON. Thank you. Ms. Colvin, according to the 
GAO, in fiscal year 2010 Social Security failed to collect $5.4 
billion in cumulative disability overpayments. GAO also told us 
Social Security has no performance goal for debt collection. Is 
collecting the debt not a priority for Social Security?
    Ms. COLVIN. I think that we--yes. Collecting the debt is 
absolutely one of our highest priorities. I believe that we 
have a very excellent debt collection program. I will say that 
our cumulative debt is about $15 billion. Last year we had 
newly established debt of about $5.6 billion. But last year we 
also collected $3.2 billion in debt.
    It is easier for us to collect the debt when the 
beneficiary is on the rolls. We can simply deduct the monthly 
payment that's been determined from the monthly benefit. It 
becomes much more difficult when the individual is no longer on 
the rolls. However, we have a number of tools that we use to 
collect the debt. We have the tax offset, we have regular 
billings where we attempt to collect and have the ability to 
report debt to the credit reporting agencies. We have numerous 
tools and we're always looking at additional tools. So it does 
remain a high priority.
    I do want to point out that many of these individuals who 
receive an overpayment are most vulnerable. They are probably 
our most destitute. And therefore, the amount that we are able 
to collect on a monthly basis is small.
    But we are very aggressive. The debt now, with the new rule 
with IRS, we are no longer limited to 10 years. So we are 
implementing a system that will allow us to continue to go 
after that indefinitely. And then, if someone leaves the rolls 
and come back on the rolls again, we use a process that would 
allow us to reduce the amount. If they receive another Federal 
benefit, we can also offset that against the amount.
    So, I believe that we have a very strong debt collection 
process in place. We have to balance what we are able to do 
with other resources. And so we are always looking at what is 
the most cost-effective way of doing this.
    Chairman JOHNSON. Thank you. Mr. Brady and Detective Neske, 
what's the most common way people commit disability fraud and 
what tools do you have to use for your investigations?
    Mr. BRADY. Some of the most common areas that we see are 
individuals that are malingering, exaggerating their symptoms, 
or just outright, straight-out lying about their disabilities.
    We also find that there is information out there in the 
public about steps to take to get on disability. In fact, 
recently we became aware of a document that prisoners had 
created--a prisoner had created called ``15 Steps to SSI.'' And 
basically, it explains to them the process of trying to get on 
disability.
    Chairman JOHNSON. Well, thank you for the work you all do.
    My time is expired. Mr. Becerra, you are recognized for 
five minutes.
    Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for 
your testimony. And to those of you who do the work out there, 
thank you so much for the effort. And I suspect you would love 
to have a few additional folks on your team to be able to do 
some of this, because we all know that that's not the only 
person out there that you could videotape.
    A few questions. Mr. Brady, let me ask you first. How do 
you--what's the source of the information that you get that 
allows you to move on that tip and start the investigation?
    Mr. BRADY. The majority of our allegations come in from 
either DDS or the Social Security Administration. But we also 
receive tips from the general public, anonymous sources. Also 
ODAR, part of Social Security. And, based on that information, 
we will have our--do an extensive background history on that 
person.
    Mr. BECERRA. Okay. So you can actually--we can encourage 
the public to submit those complaints or that information, 
those tips, directly to you?
    Mr. BRADY. Absolutely.
    Ms. COLVIN. Yes.
    Mr. BECERRA. I suspect they also can give them directly to 
the Social Security office, and they would then send that to 
you.
    Mr. BRADY. Yes, they do.
    Mr. BECERRA. So the majority of your cases come through 
your--the Social Security system itself, through the personnel 
at the Social Security offices.
    Mr. BRADY. Correct.
    Mr. BECERRA. Okay. And give me a sense. What's the typical 
case of fraud? A case like this, where it's clear that somebody 
was abusing the system, what's a typical punishment that 
someone like that would face?
    Mr. BRADY. Well, generally, in most of the CDI cases, 
since--and in the example we gave today, it was an initial 
claim. And DDS subsequently denied that person's claim. So----
    Mr. BECERRA. Okay. Give me a sense--not someone who hasn't 
been collecting, because we just deny them and I suspect they 
go away, unless they're crazy enough to try again. What about 
someone who has actually been collecting for some time? Give me 
a sense of the typical penalty that they're going to face?
    Mr. BRADY. In those cases that we present to the U.S. 
Attorney's Office for prosecution, it could range from anywhere 
to probation to some time in prison, depending on what the loss 
is to the government.
    Mr. BECERRA. Okay. So let me ask you now--and also to 
Officer Neske, Mr. Neske--that particular question. Are the 
penalties severe enough for those that we prove defrauded the 
Social Security system and the taxpayers?
    Mr. BRADY. That's--if you're asking my personal opinion----
    Mr. BECERRA. I am.
    Mr. BRADY [continuing]. I think in some respects they need 
to be more severe or they need to--there needs to be more of a 
penalty as far as--what we see, what frustrates us, is that a 
person will apply for benefits, they will get denied, and then 
the next day they're applying----
    Mr. BECERRA. They're right at it again. Mr. Neske, would 
you like to comment? Is the penalty severe enough for those who 
commit that kind of fraud?
    Mr. NESKE. Some of it is desperation.
    Mr. BECERRA. Your microphone.
    Mr. NESKE. Can you hear me now?
    Mr. BECERRA. Yes.
    Mr. NESKE. A lot of it's desperation. They don't have 
anywhere to turn to for income.
    Mr. BECERRA. Yes.
    Mr. NESKE. You can kind of sympathize with them and 
understand, but it doesn't make it right.
    Mr. BECERRA. And I suspect in those cases where there is 
some desperation involved, the prosecutor or the judge is 
probably going to have some empathy there, and try to make the 
punishment fit the crime.
    But to my thinking, we should descend on folks who do this. 
Because if you don't, then it only encourages neighbors and 
others who see this and say, ``Hey, you can do it? I can do 
it.'' And I would hope that in the clear cases that we make--
these are the poster child cases, where you put them out there 
and say, ``Do this, and you're in trouble. So if you're close 
to getting a disability benefit, don't mess around because you 
may deprive yourself of, in the future, being able to get it.''
    Now, Mr. O'Carroll, let me ask this. You mentioned that if 
we reduce the CDR backlog, we reduce overpayments. So let me 
ask you this. If we had more personnel to conduct these CDRs so 
they could more quickly reduce the backlog of CDRs, would we 
reduce the level of overpayment?
    Mr. O'CARROLL. The easy answer on that is yes, which--but 
in a little bit more definition to it is that they are very----
    Mr. BECERRA. And give it to me in 20 seconds, because 
otherwise I won't get to ask other questions.
    Mr. O'CARROLL. Okay, okay. Real quick on it is that they're 
very difficult labor-intensive to do. The more people doing it, 
the better on it. The more resources that are put towards doing 
the CDRs, the better for it. And it's decisions that have to be 
made on prioritizing.
    Mr. BECERRA. Okay. So you can't just do a CDR quickly, or 
with just one or two individuals. That takes time. And I 
suspect Mr. Clifton would say you--it takes a lot of his 
personnel moving away from providing someone the assistance 
they need to apply for a Social Security number or apply for 
retirement benefits to do these CDRs, which are essential to 
make sure that we're not giving money to people who don't 
deserve it.
    But that means unless we're going to increase the backlog 
of people who are applying for their benefits appropriately, we 
need to have the personnel who can do this very important work, 
because we know the return, 10 to 1 on the dollar, is 
excellent.
    So, it's all pointing to me that no one is telling me that 
Social Security personnel are sitting on their duff, doing 
nothing. It's that we found out that if we pursue some of 
these--I would call some of these folks crooks--we can get some 
results. And in many cases, it's not that they're crooks, it's 
that they're desperate. Or, as we find--and, Ms. Colvin, I know 
my time is up, but I suspect you would say to me that the 
majority of cases where there has been an overpayment to an 
individual aren't the case of fraud, it's a case of mistake, 
either by the individual, who had a very complicated case, or 
maybe the Agency missed something. But it was more an error, 
and then once you correct it you try to see if you could 
collect the overpayment.
    Ms. COLVIN. Absolutely. I couldn't say that better.
    Mr. BECERRA. Well, I hope we continue to give you the 
resources. I'm glad that after--at the beginning of the year 
the Congress cut, or essentially left flat, the funding for 
that program integrity work--that we were able to get the money 
last month to actually beef it up. But the more we can do 
this--and I think the more we can hang it out there like a 
poster child, that if you do this stuff, you know, you do the 
crime, you pay the fine--I think the better off we'll be, and 
let only those who legitimately deserve the benefits get them.
    So, Mr. Chairman, I thank you for this hearing, and thank 
you for the time.
    Chairman JOHNSON. Thank you. Mr. Smith, you're recognized 
for five minutes.
    Mr. SMITH. Thank you, Mr. Chairman. And Mr. O'Carroll, we 
have heard a little bit about the penalties. Sometimes it is 
just denial of benefits. Other times it is jail time, perhaps 
more. Can you elaborate?
    Mr. O'CARROLL. Yes, sir. It's pretty much what we're--
again, with the CDI units we're talking about here is the 
deterrent at the beginning of it. We are trying to keep the 
money from being spent.
    Then, the other one there was some discussions on is that 
we do have a lot of tools out there in terms of jurisdictions 
that we can use for people defrauding the United States 
Government. Unfortunately, what we're up against with a lot of 
these things is that the amount of fraud, in terms of the 
dollars, when we go to a U.S. Attorney's office for a 
prosecution on these things, is so much less than, you know, 
bank robbers or whatever it is. In the priorities of the 
jurisdiction, it's difficult to get prosecutions for a lot of 
the disability fraud that we have.
    So, for that reason, on it--is that we use--you know, we do 
try to bundle them, to get U.S. Attorney's offices to prosecute 
on it. As Mr. Brady said on it, the range of prosecution or 
penance--penalty of it goes anywhere from probation to prison 
time. But I got to admit, it's usually going to be the more 
egregious ones that are going to be getting the prison time on 
it.
    Another tool that we are using is civil monetary penalties, 
so that if we can't get them prosecuted, at least we're going 
after any of the resources that they have.
    Mr. SMITH. Do you have the authority to do that already?
    Mr. O'CARROLL. Yes, we do.
    Mr. SMITH. Okay. So, in terms of resource allocation, 
because I mean, that's kind of what this boils down to, can you 
share kind of the cost benefit analysis of, I mean, what kind 
of resources it takes? You know, savings--of course we've got 
the bigger issue of wanting to send a message that this is not 
good, and prevent others from even trying. Can you elaborate on 
that?
    Mr. O'CARROLL. Yes, I can. Usually on the cost of doing 
this thing--for example, CDRs that we were talking about, there 
is sort of a range on them. To do a medical CDR, where somebody 
is coming in, where we believe that they are feigning a medical 
issue or whatever, they cost about $1,000, and they take a, you 
know, series of months.
    The next one down on it is that when we do the worker--SSA 
does a work CDR on it type of thing, there is--that's the next 
one down. That's about $400 per one that they do, to give you 
an idea of the cost on it. And then a mailer that goes out is 
about $20.
    So, those are pretty much the costs going into it. And just 
to kind of use the flip side of it is that the savings that we 
have on the back end that we're experiencing on this thing is 
that we're seeing about a $90,000 savings for every person that 
doesn't come--get on to benefits is what we've been figuring 
out on our adjustment for that.
    And then, when we're also figuring is anybody who is in 
pay, we're going to be taking whatever they would have been 
getting for that percentage, or a percentage of what they're 
getting on their pay, and then multiplying that for it by--
we're usually throwing them off the benefits for about five 
years. So we can include that into it.
    And then, the other one that's not seen on this thing is 
it's sort of a waterfall effect on different ones with state 
supplements that are put into it. We're taking a look at other 
benefits that are coming for--you know, that are out there on 
it. And then all those get thrown in that are savings to the 
government, too.
    Mr. SMITH. How much review is there, in terms of the 
supporting witnesses? Is there review of that situation or that 
process, where someone may have erred, or even worse than that, 
in terms of providing supporting information?
    Mr. O'CARROLL. Yes, again, that is significant. I don't 
really have a good figure on how much time would go into the 
prepping on something like that. But in terms of, you know, the 
witness interviews and all the other ones that, you know, 
pretty much we're talking about today are all very time-
consuming and all go into the length of time it takes us to do 
an investigation.
    Mr. SMITH. Thank you. I yield back.
    Chairman JOHNSON. Thank you. You care to question Mr. 
Stark?
    Mr. STARK. May I?
    Chairman JOHNSON. Yes, sir. Mr. Stark, you are recognized.
    Mr. STARK. Well, thank you, Mr. Chairman. And thank you for 
this exceptional hearing. Let it be known that the scooter 
store called me this morning and I said no, I wouldn't ride 
their scooter to the hearing.
    [Laughter.]
    Mr. STARK. And also, this hearing is a first----
    Chairman JOHNSON. You had the IG watching you.
    Mr. STARK. The hearing is really a first for me, because it 
is the first time I have ever been in a room with a detective 
where I get to ask the questions.
    [Laughter.]
    Mr. STARK. But I want to congratulate Ms. Colvin on the 
excellent record that SSA has had under your leadership in 
these areas. How many claims a day does--do you have any idea--
that SSA has to process under this program?
    Ms. COLVIN. I don't know that I can give you----
    Mr. STARK. Thousands?
    Ms. COLVIN. Thousands, yes. The staff do both initial 
claims, as well as CDRs, et cetera. I can certainly provide you 
the specifics----
    Mr. STARK. No, I just----
    Ms. COLVIN. But it is significant.
    Mr. STARK. It is many thousands, I would----
    Ms. COLVIN. It is many thousands. And----
    Mr. STARK. And wouldn't it--isn't it correct that most of 
the overpayments or incorrect payments, if you will, are not 
fraud? They are mistakes?
    Ms. COLVIN. I am really pleased that you raised that. Most 
of the improper payments are not fraud. In fact, improper 
payments are overpayments. The reason for most of the 
overpayments are directly related to the work activities, like 
the substantial gainful activity. People are confused about 
when they report and how--and the other pieces of that 
legislation.
    For instance, they have a nine-month trial work period. 
They have an extended eligibility period. They can earn up to 
the substantial gainful activity amount, which I believe in 
2012 is $1,010. So, even when we get a work report, we still 
have to review all of those things to determine whether or not 
the payment is impacted. And that's why it takes us so long to 
do a work CDR.
    Also, no one has mentioned that improper payments are also 
underpayments, which means that we have made some errors and 
people are entitled to a higher benefit. And I think focusing 
on underpayments is just as important as focusing on 
overpayments.
    Mr. STARK. It is important to get it right. If the system--
--
    Ms. COLVIN. It's important to get the right check to the 
right person the right time. And we take very seriously fraud. 
As was mentioned, our team referred over 19,000 suspicious 
activities last year. They do not want to see the program 
jeopardized by individuals getting a benefit to which they are 
not entitled. And this is something we focus on daily, with 
everything we do.
    Mr. STARK. And I thought that guy following me around with 
a camera was just interviewing me for a political ad.
    [Laughter.]
    Mr. STARK. I wanted to suggest to my colleagues, if they 
don't already know--but I will bet that for all of us sitting 
here on the dais, certainly in my office--next to immigration 
cases, the most case work, as we call it in our district 
office, comes in regard to people with questions about Social 
Security or disability benefits.
    And, Mr. Clifton, I just have to congratulate your 
colleagues, or the people you work with. We--our office goes to 
the San Jose office. And they have just been--over the years, I 
am talking 20 years--this office has just been more than 
helpful. And I hope you will extend to them our gratitude from 
Fremont, California, for all the help they give us. Because we 
couldn't handle it all. Many of them take special expertise, 
which the people that work in your department enjoy. And we 
really appreciate it.
    So I wanted to just, in all seriousness, thank those of you 
who are working to make this system work. We have to--the 
public has to make sure that they think it is on the level. And 
Sam, I just--I think you are heading in the right direction. We 
have got to see--we want to see the program continue. A few 
years, you will be old enough to get into it, but don't rush. 
And I will let you know what it is like.
    Then, as I say, it is an important--one of the most 
important social policies that we have in this country, is 
taking care of seniors and children. And I just appreciate all 
of our witnesses' efforts in the direction of making the 
program secure, fair, accurate. And I know that you need help.
    Ms. COLVIN. We do.
    Mr. STARK. I think we all know that. And you can't cut--
what did you have to lay off, 4,000 employees? Something like 
that?
    Ms. COLVIN. Not layoff, but they retired and----
    Mr. STARK. You couldn't rehire.
    Ms. COLVIN. We could not rehire them, yes.
    Mr. STARK. And you probably need more than that. And I hope 
that we can find a way to get the necessary resources.
    Ms. COLVIN. We need adequate sustained funding.
    Mr. STARK. Okay, thank you. We will try and see what we can 
do to do that.
    Ms. COLVIN. Thank you.
    Mr. STARK. Thank you again, Mr. Chairman.
    Chairman JOHNSON. Thank you, Mr. Stark.
    Mr. STARK. I yield back the balance of my time.
    Chairman JOHNSON. The time frame on the continuing review 
is what that CDR is. We use acronyms around here, and a lot of 
people don't know what we are talking about. Are the time 
frames that are set for CDRs okay, or do we need to look at 
them?
    Ms. COLVIN. I believe that the reviews that we have done 
indicate they are adequate. Depending upon the disability, it 
could be within one to three years, if medical improvement is 
expected. If medical improvement is not expected rapidly, it 
could be three to five years. And then, of course, there are 
some conditions where medical improvement is not expected at 
all, a terminal illness or something of that nature.
    And we have a profiling system that allows us to select the 
CDRs that would have the highest return on investment, and 
that's a very elaborate matrix. I am not able to explain that 
here, but I could provide that to you later. But I think that 
the time line works. In fact, we have got a backlog because we 
can't get to them within the time frame that we should be. We 
have about 100----
    Chairman JOHNSON. Yes, more than you can handle.
    Ms. COLVIN [continuing]. 1.3 million----
    Chairman JOHNSON. Yes, okay.
    Ms. COLVIN [continuing]. that we can't handle.
    [The insert of Ms. Colvin follows:]

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    Chairman JOHNSON. Thank you. Mr. Marchant, you are 
recognized.
    Mr. MARCHANT. Thank you, Mr. Chairman. For clarification, 
the CDIs and CDRs, they don't involve overpayments, do they?
    Mr. O'CARROLL. The CDRs and CDI, what they are involved 
with is preventing overpayments.
    Mr. MARCHANT. So the actual overpayments that Ms. Colvin is 
talking about are not really in the CDR and CDI backlog. Is 
that correct?
    Ms. COLVIN. Go ahead, you want to answer?
    Mr. O'CARROLL. No.
    Ms. COLVIN. Some of them could be. The CDI program was 
really set up as a joint effort between OIG and SSA to prevent 
people from actually coming on the rolls to begin with, so you 
wouldn't have an overpayment there.
    But if we get information that suggests that someone who is 
on the rolls is, in fact, not disabled, that would be the type 
of referral that we would send to OIG. And that could be 
reviewed by the CDI unit. If, in fact, that person then is 
found not to be disabled, has been getting a benefit, that's an 
overpayment. It's a fraudulent payment, though, and that 
person----
    Mr. MARCHANT. Are inadvertent overpayments or mistakes or 
any of those things ever referred over to the CDI/CDR units?
    Ms. COLVIN. Not if there is no instance of or suspicion of 
fraud.
    We have some overpayments inherent in the system. For 
instance, if someone is on the rolls and they file an appeal, 
they are entitled to stay on the rolls until such time as that 
appeal is adjudicated. If we--if the appeal is denied, then all 
of that money that they have been getting is an overpayment. So 
then we have to start a collection process to get that money 
back.
    Mr. CLIFTON. And Congressman, if I may add too, there are 
overpayments--as we are developing work CDRs, we discover that 
they have worked, perhaps not told us. We determine that they 
are not due benefits, determine that they are overpaid. Those 
can be referred not necessarily to the CDI unit, but to OIG for 
possible prosecution. Because they did something perhaps in our 
investigation where we felt like they were fraudulent. So it 
may not go to CDI, but it could go to OIG.
    Ms. COLVIN. Yes.
    Mr. MARCHANT. I would like to go down a little different 
line of questioning. In many instances, a claimant will hire an 
attorney. And in many of those instances, that trial or that 
process will take months and sometimes it could take as long as 
a year.
    Many times there is a pretty large lump sum payment made at 
the end of that. And at the end of that period, I have heard of 
people getting $20,000, $30,000, of which, in many instances, a 
third of that or 40 percent of that is going to the attorney. 
When it gets to an investigation for fraud later down the road, 
do you have recourse against anyone that assists the person 
that might have committed the fraud in the repayment system?
    Mr. O'CARROLL. That's the first time that one has come up, 
where we'd be looking for anybody who helped somebody or 
facilitated them getting on the rolls when they shouldn't have 
been on it, and then do we have the recourse to penalize that 
person----
    Mr. MARCHANT. Do you have legal recourse to go and bring 
them into the suit or into the recovery? Say there was $20,000 
recovered, of which you got $8,000. The person that you 
assisted in committing this fraud, as you have determined 
fraud, are we making a demand on all $20,000 for them? Does 
their recourse then go against the person that assisted them in 
that fraud, or do you have the right to go straight to anyone 
that assisted? Maybe it would be a doctor, maybe it would be 
somebody who gave false testimony. Maybe it would be somebody 
who had a Yellow Pages ad.
    Chairman JOHNSON. Good question.
    Mr. O'CARROLL. I guess probably the easiest way on that one 
is--which ties into the CDIs that we're talking about--is that 
we are looking for third-party facilitators, anybody else that 
is assisting a person to fraudulently get on benefits. And we 
do go after them both criminally, when we have that evidence on 
it.
    On your question of if we are assessing an overpayment and 
trying to recalculate it, we have, to my knowledge, have not 
gone after a third----
    Mr. MARCHANT. I am off of overpayment. I am on to just 
direct fraud.
    Mr. O'CARROLL. Right, fraudulent. Well, fraudulent 
overpayment.
    Mr. MARCHANT. Yes, fraudulent overpayment. And I am really 
more targeted towards the large, lump sum payments that are 
made which, in many times, much of that goes to pay for the 
expense of getting on the roll itself.
    Mr. O'CARROLL. I will have to tell you, Mr. Marchant, I am 
not familiar with us going after anybody, you know, kind of 
concurrently as we are going after somebody who is defrauding 
us. But let me check on that and get back to you if we've had 
any other examples of that.
    Mr. MARCHANT. A lot of newspaper articles that have been 
written in the last few months have been about this kind of 
fraud. And I think the public is interested in it, and it may 
be a way that we can make a higher recovery. Thank you.
    Chairman JOHNSON. That is an interesting question you guys 
ought to take a look at. Are there lawyers that help these 
people when they come to you? Do you know?
    Mr. O'CARROLL. I am sure there are. I don't have any 
specific examples of it.
    Chairman JOHNSON. You don't know if they have?
    Mr. O'CARROLL. But let me take a look at it and get back to 
you formally on that one.
    Chairman JOHNSON. Thank you. Mr. Tiberi, you are 
recognized.
    Mr. TIBERI. Mr. Chairman, I would just like to provide some 
information for the record, if I may. Social Security's fiscal 
year 2012 total operating budget, which was encompassed in 2 
pieces of legislation that passed the House, the Senate, and 
signed by the President, is 22 million more dollars than the 
fiscal year 2011 appropriation. It was H.R. 2055 and H.R. 3672. 
They were supported equally by both parties, including the 
President, the Chairman of the Committee, the Ranking Member of 
the Committee, the Chairman of the Subcommittee, the Ranking 
Member of the Subcommittee, as well.
    Social Security continues to receive an increase in 
dollars, despite a 1.5 percent decrease in the discretionary 
cap. In fact, while Social Security is subject to the same 
long-term domestic spending caps that were in the Budget 
Control Act, which was mentioned at the beginning of the 
hearing, that same bill gives the Social Security 
Administration an additional $11 million from fiscal year 2012 
to fiscal year 2021 over the budget caps to increase continuing 
eligibility reviews and its Disability Insurance and 
Supplemental Security Income programs.
    With respect to employees, I think it is important to note 
that Social Security increased its overall staff by 3,269 
employees in fiscal year 2009 and by 2,346 in Fiscal Year 2010. 
The Social Security Administration continued to hire during 
fiscal year 2011 at a lower rate. It was mentioned, and it is 
true, that retirements and resignations reduced Social Security 
Administration's employee level by 2,791 in fiscal year 2011 to 
a total staff of 64,176 employees. It is important to note that 
that exceeds the number of employees by 2,824 that began fiscal 
year 2009.
    And a final note, Mr. Chairman. According to a recent 
Commissioner's broadcast, funding levels near the House or 
Senate fiscal year 2012 Labor HHS level will enable Social 
Security to hire replacements this year. I just want to put 
that in for the record.
    And I do have a question for Mr. O'Carroll or Mr. Clifton. 
As Mr. Stark said, we have a lot of Social Security activity in 
our district office as well. I have a constituent who was 
notified that she was overpaid by $100,000 between 2003 and 
2009. And it was a CDR that caught this. My understanding, 
however, is by law there needs to be a review every three 
years. And apparently in her case there was not a review.
    My question is, is there a better way to do this? Maybe 
matching IRS records? Working with the Internal Revenue 
Service? Are there a number of reviews that aren't done timely, 
according to the law, as was this case? Or did this happen to 
be maybe just one that fell through the cracks?
    Mr. CLIFTON. If I can, I will start.
    Mr. TIBERI. Sure.
    Mr. CLIFTON. There is some confusion about continuing 
disability reviews. There are medical ones and there are work 
ones. I don't know the particulars of your case, but I would 
venture to guess it was not a medical CDR. Medical CDRs, when 
DDS determines that a person is no longer eligible for 
disability benefits because they have medically improved, those 
are not retroactive.
    Ms. COLVIN. Right.
    Mr. CLIFTON. So if I decide today that you have medically 
improved, typically not retroactive, so it would be extremely 
unusual we would go back three years and say you were not 
disabled clear back here.
    So I would venture to guess that was probably a work CDR. 
So it wasn't a diary, like a three-year or a five-year or a 
seven-year diary. Those are medical CDRs. So I would suspect, 
without knowing the specifics, but based upon what you said, we 
probably discovered earnings on her record and said at that 
point, ``In the past, your benefits should have stopped.'' And 
so it created a very large overpayment.
    But going back to your question--it's a very good one--what 
kind of tools can we use to catch those quicker? There are a 
couple of things. Of course it's a resource issue in the sense 
that if I have a work CDR and she reported her work, I've got 
to have the time to get to it. Those are time-consuming, 
because they are complicated. I send out information to an 
employer, they reply back to me. It takes a while to develop 
those.
    We get information on earnings once a year, based upon W-
2s. Things that could help is if we got earnings reported 
quarterly, much quicker than the earnings that they already 
get.
    Patrick, any further things?
    Mr. O'CARROLL. Yes, just to follow up on it, as you were 
saying, it is a work CDR. And one of our concerns--and we've 
mentioned it a few times already--is the backlog on it. And 
that is probably what happened with this one. It was 
identified, went into the backlog, and it took a while for it 
to be addressed.
    So, the two things. One, if they were getting the wages 
quicker, the alerts quicker on it, and then getting to the work 
CDR and addressing it with the claimant quicker, would have 
avoided all this. And that's where we keep going back to here, 
is trying to reduce the backlog on CDRs. And this is obviously 
an example of that.
    Mr. TIBERI. Thank you.
    Chairman JOHNSON. Thank you. What is the backlog, do you 
know?
    Mr. O'CARROLL. The backlog is about 1.2 million CDRs.
    Ms. COLVIN. No, that's not work----
    Mr. O'CARROLL. Oh, oh----
    Ms. COLVIN. That's not work CDRs.
    Mr. O'CARROLL. Oh, that was all CDRs.
    Ms. COLVIN. We really don't have what is considered a 
backlog on work CDRs. We have 1.3 million for medical CDRs. The 
work CDRs is a rolling workload. Whenever we get a report of 
work, we try--if it's a self-report, we try to get to that 
report within 30 days. It generally takes us about 270 days to 
process that because of the complexity of what we have to go 
through. We have to look at every month that the individual has 
had work reported. We have to see if it exceeded the SGA, which 
is $1,010. We have to see if they have finished their trial 
work period. We have to see if they are finished their extended 
eligibility period. We have to see if they have any impairment-
related expenses.
    That is why we are hoping that this committee will support 
the work simplification proposal that we have in the 
President's budget, WISP, the work incentive simplification 
proposal, to help simplify this.
    Also, there are a number of other proposals, such as the 
workman's compensation proposal, that would allow us to get 
this information directly from the administrator of the 
compensation program, rather than the individual.
    So it is the complexity of the program. And the reason it 
takes so long--right now we--last year we did about 312,000 
work CDRs. We are--that was in 2010. And in 2011 we did 
324,000. This year so far we have done 80,000. We hope we can 
do as many. But it really is a resource issue, because the same 
people who do this work, this program integrity work, are the 
ones who do the initial work to get these checks out, et 
cetera.
    But we are devoting attention to this. I have set goals, 
and we are monitoring the progress in that area. We have 
dedicated more staff to process the work CDRs, so they can get 
them timely. We triage the work so that we address those that 
have the highest earnings first. And we have drastically 
improved our processing time. Less than six percent of the work 
CDRs are now over 270 days old. And the work CDR is at the end 
of the process. You have to do all these other things to 
determine.
    The other thing I need to mention is that probably about 
less than a third of the work issues that we review actually 
result in work CDRs, because the people are falling within 
those other categories that I talked about. And so their 
benefit is not yet impacted.
    Chairman JOHNSON. You know what? You guys convinced us that 
if we upgraded your computer system you could do all of this 
faster. You got 18,000 computers over there now, and you ought 
to be able to get it done.
    Mr. Berg, you are recognized.
    Mr. BERG. I am not sure if I want to go after that.
    [Laughter.]
    Mr. BERG. We are running late here, but I hopefully will be 
able to catch a ride back with Mr. Stark, I am sure.
    [Laughter.]
    Mr. BERG. I do want to thank you for being here. And, Mr. 
Clifton, thank you for your help and your office's help with 
all the constituents that we have. It is frustrating for me. It 
is such a huge, complicated thing. I know there are people that 
don't understand all the rules and legitimately make mistakes. 
I am sure there is people on the other spectrum that they know 
the rules are complicated and they know they always have an 
out, because they can say, ``We didn't understand that.''
    Ms. Colvin, I think in your testimony you mentioned there 
were 4,000 new cases a year.
    Ms. COLVIN. No, I indicated that we made 19,000 referrals 
to the OIG for suspected fraud, and----
    Mr. BERG. Well, let me back up.
    Ms. COLVIN. Oh.
    Mr. BERG. My question is, just in the big picture, how many 
cases do we have per year? And if you can't answer this, maybe 
you could provide the Committee with that information. But the 
number of cases that you have, and then ultimately how those 
things play out. Has 4,000 a year been typical? Are we having 
400 people that end up doing jail time? If that is information 
we get later, I would appreciate it.
    Mr. O'CARROLL. Since you're talking cases--I guess that's 
where we got confused--cases, investigative cases on that----
    Mr. BERG. Yes, I am sorry.
    Mr. O'CARROLL. What we are doing with our investigative 
cases every year is we are getting--we get about 150,000 
referrals every year, which end up being about 7,000 
investigations. And on that, our--I guess their conviction rate 
on that one is probably about 20 percent of those 
investigations end up in--with convictions. But I can give you 
all those specifics on it. They are in our semi-annual report.
    Mr. BERG. What I am trying to do is to somehow very quickly 
drill down to the questions that Mr. Becerra addressed on if 
the penalties are appropriate. Certainly if someone walked into 
a store and stole something out of a store, we have pretty 
clear penalties for that.
    The other question--probably even the bigger question this 
is to you, Mr. O'Carroll--is there a way we can reduce the 
complexity of this program? You mentioned that in your 
testimony. What would you do to reduce this complexity?
    Mr. O'CARROLL. A lot of the complexity on it that we are 
concerned with is that--and I guess in general the program is 
very complex. What I was talking about in my testimony was the 
complexity of the CDRs, and that it's so hard to do the 
continuing disability reviews.
    As the Deputy Commissioner said, one of the big issues of 
it is we are trying to figure out when a person is working, get 
that information right away. But the other part that Mr. 
Clifton I am sure will go into is that then the claimant's rep 
has to go in and be taking a look at any bonuses that a person 
made, any severance pay that they got, any sick pay that they 
got. There is a lot of calculations that all go into this 
thing, many of which would probably, if they could simplify 
whether or not--could simplify the process of it--would make it 
a bit easier.
    But right now, in order to give all the benefits to the 
beneficiary on it, there is so many different steps, it takes a 
lot to do it. So that is part of the complexity, is all the 
calculations that go in it. Mr. Clifton?
    Mr. CLIFTON. I would echo that. It's a very complicated 
workload. And you hit the nail on the head when you say the 
ability of the public to understand the disability program and 
what they're allowed to do--they are allowed to work, but there 
is just certain levels when that work will stop their benefits.
    So, one, if you're talking about incentives for people to 
work, they're scared at times because they're not sure what the 
outcome will be. As they mentioned, they're afraid if they 
work, three years later someone will discover that they owe the 
government $100,000. Now, that's different than the out and out 
fraud that they mentioned before in there.
    So, program simplicity, simplifying the program, would go a 
long way towards the public understanding what effect the work 
would have. It would also go a long way towards processing a 
very complicated workload. As you mentioned, they could get 
severance pay, they could get things that are not going to 
affect their disability, but it will show up as work and 
earnings that you have to investigate. I hope that helps.
    Mr. BERG. Good luck.
    [Laughter.]
    Mr. BERG. Thank you, Mr. Chairman.
    Chairman JOHNSON. Thank you. I appreciate you all being 
here. We visited a Wal-Mart down in Texas that had disability 
workers as part of their program, and they were doing a good 
job. They really were.
    Mr. BECERRA. Mr. Chairman, can I add something?
    Chairman JOHNSON. Yes?
    Mr. BECERRA. Mr. Chairman, I just wanted to add something. 
I think Pete did a good job of acknowledging the work that you 
all do. I hope that in no part of this hearing we leave the 
impression that we don't believe that each and every one of 
you, wherever you are, whether you are a detective, with the 
local police department, whether you are in the investigative 
offices, or you're in the shop day to day in Social Security 
doing the work, I hope we don't leave the impression that we 
don't think you are working hard.
    And I would like to echo what Mr. Stark said, that we want 
to thank each and every one of your people--I don't care what 
office it is--for the work that you are doing. Because, at the 
end of the day, what we are trying to do is make sure that 
millions of Americans who every day are paying through their 
paycheck for Social Security to be there, have an opportunity 
to see it there for them, because they legitimately earned it, 
not for folks who are trying to abuse it.
    So, thank you for the work. Convey that message to all the 
folks back home. Because we hope we can give you the tools you 
need to do this better so that everyone agrees that the program 
works for them the way it should. Thank you.
    Chairman JOHNSON. Again I want to thank you all for being 
here today and for your testimony. And I look forward to 
working with you and all my colleagues, as we continue to 
examine ways to secure the future of Social Security and this 
vital program.
    With that, this Subcommittee stands adjourned.
    [Whereupon, at 12:05 p.m., the Subcommittee was adjourned.]
    [Submissions for the Record follow:]

                           OPENING STATEMENTS

                 Statement of The Honorable Sam Johnson

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                 Statement of Honorable Xavier Becerra

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    [Questions for the Record follow:]
                  Questions for the Record Ms. Colvin

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               Questions for the Record for Mr. O'Carroll

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                 Questions for the Record for Mr. BRADY

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                Questions for the Record for Mr. Clifton

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    [Submissions for the Record follow:]
               Consortium for Citizens with Disabilities

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         National Council of Disability Determination Directors

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