[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
PREVENTING DISABILITY SCAMS
=======================================================================
H E A R I N G
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 26, 2014
__________
Serial 113-SS010
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM McDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, Jr., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, Jr., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON HUMAN RESOURCES
SAM JOHNSON, Texas, Chairman
PATRICK J. TIBERI, Ohio XAVIER BECERRA, California
TIM GRIFFIN, Arkansas LLOYD DOGGETT, Texas
JIM RENACCI, Ohio MIKE THOMPSON, California
AARON SCHOCK, Illinois ALLYSON SCHWARTZ, Pennsylvania
MIKE KELLY, Pennsylvania
KEVIN BRADY, Texas
C O N T E N T S
__________
Page
Advisory of February 26, 2014 announcing the hearing............. 2
WITNESSES
PANEL 1:
The Honorable Carolyn Colvin, Acting Commissioner, Social
Security Administration, Testimony............................. 11
PANEL 2:
J. Matthew Royal, Vice President and Chief Auditor, Unum Group,
Chattanooga, Tennessee, Testimony.............................. 43
William B. Zielinski, Deputy Commissioner of Systems and Chief
Information Officer, Social Security Administration, Testimony. 48
Alan R. Shark, Fellow, National Academy of Public Administration,
Testimony...................................................... 58
MEMBER QUESTIONS FOR THE RECORD
The Honorable Carolyn Colvin..................................... 82
PUBLIC SUBMISSIONS FOR THE RECORD
Coalition Against Insurance Fraud................................ 89
Consortium for Citizens with Disabilities........................ 91
IBM.............................................................. 96
James Goodman.................................................... 106
Michael Gilbert.................................................. 109
National Organization of Social Security Claimants'
Representatives................................................ 113
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PREVENTING DISABILITY SCAMS
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WEDNESDAY, FEBRUARY 26, 2014
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The subcommittee met, pursuant to call, at 10:01 a.m., in
Room B-318, Rayburn House Office Building, the Honorable Sam
Johnson [chairman of the subcommittee] presiding.
[The advisory of the hearing follows:]
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HEARING ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
Chairman Johnson Announces Hearing on
Preventing Disability Scams
B-318 Rayburn House Office Building at 10:00 AM
Washington, Feb 19, 2014
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 ways to prevent conspiracy fraud in the Social
Security Disability Insurance program. The hearing will take place on
Wednesday, February 26, 2014 in B-318 Rayburn House Office Building,
beginning at 10:00 a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Subcommittee and
for inclusion in the printed record of the hearing.
BACKGROUND:
According to the Social Security Administration (SSA), 11 million
beneficiaries received $139.4 billion in Social Security Disability
Insurance (SSDI) benefits in fiscal year 2013. Currently, 160 million
workers contribute to Social Security. The 2013 Social Security
Trustees report projects that revenues will be sufficient to pay only
80 percent of SSDI benefits beginning in 2016. The SSDI program is
under increased scrutiny after a Senate investigation and two
investigations uncovered significant incidents of fraud costing
taxpayers millions.
On September 19, 2013, the Subcommittee on Social Security held a
hearing on an SSDI fraud conspiracy in Puerto Rico. In August of 2013,
authorities in Puerto Rico arrested more than 70 individuals charged in
the conspiracy, including several doctors and a former SSA employee.
Under the alleged scheme, the former SSA employee would help a claimant
file an SSDI application and, with the assistance of a conspiring
doctor, provide fraudulent medical evidence that would result in
benefits for individuals who did not, in fact, meet the legal
eligibility standard for disability benefits. The hearing examined the
details of the scheme, the SSA's oversight of the SSDI program in
Puerto Rico, as well as the agency's overall efforts to detect, prevent
and prosecute fraud.
In October of 2013, the Senate Homeland Security and Governmental
Affairs Committee released the results of a bipartisan investigation
detailing inappropriate conduct and collusion between a Kentucky law
firm, an SSA Administrative Law Judge in Huntington, West Virginia and
local doctors. The investigation revealed that inappropriate collusive
actions were taken to approve disability benefits and highlighted years
of ineffective oversight by the SSA.
Following an announcement by the New York County District
Attorney's Office regarding the indictment of 106 defendants for their
alleged involvement in a criminal conspiracy, the Subcommittee held a
hearing on January 16, 2014, focusing on the details of the New York
scheme that cost taxpayers approximately $23.2 million. In exchange for
individual cash payments of up to $50,000, four facilitators helped
coach 102 SSDI applicants, including many retired police officers and
firefighters, on how to falsely demonstrate symptoms of mental
disorders in order to fraudulently obtain disability benefits. At the
hearing, Subcommittee Chairman Johnson asked the Acting Commissioner of
Social Security to present Congress with a full report, within 30 days,
detailing the agency's efforts to combat fraud conspiracies targeting
the SSDI program, plans for future initiatives and recommendations for
legislation.
[[Page 3]]
In announcing the hearing, Social Security Subcommittee Chairman
Sam Johnson said, ``When criminals are able to take advantage of Social
Security's disability program due to its outdated policies and pay-
first chase-later culture, taxpayers and those who count on the vital
program end up paying the price. That's wrong! If Social Security wants
to regain the public's confidence, it must commit itself to preventing
fraud from happening in the first place. It's time for Social Security
to protect precious taxpayer dollars. That's why last month, I asked
Acting Commissioner Colvin for a plan detailing the immediate actions
Social Security is taking to prevent further disability fraud.
Hardworking taxpayers want, need, and deserve real action. I look
forward to hearing her ideas and those of our other experts.''
FOCUS OF THE HEARING:
The hearing will examine the Acting Commissioner's plan and
legislative recommendations for preventing conspiracy fraud. The
Subcommittee will also hear the recommendations of public and private
sector experts to stop disability fraud schemes before benefits are
awarded and to deter criminals from attempting to cheat the system.
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 Wednesday, March 12, 2014.
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
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. 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.
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Note: All Committee advisories and news releases are available on
the World Wide Web at http://www.waysandmeans.house.gov/.
Chairman JOHNSON. Good morning. Appreciate you all being
here today.
As part of my ongoing efforts as chairman to rout out
fraud, waste, and abuse in the Social Security Disability
Insurance program, we are here on behalf of the 11 million
people with disabilities and their families and hardworking
taxpayers, Americans demanding action now from Social Security.
We need answers on how it will prevent conspiracy fraud in the
Social Security Disability Insurance program.
In September 2013 and more recently in January, this
subcommittee held two hearings on disability conspiracy fraud
occurring in Puerto Rico and New York City. Just yesterday, we
learned about 28 more indictments in the ongoing New York
conspiracy investigation, including 16 former New York police
officers and 5 New York firefighters. To date, almost $30
million has been stolen from taxpayers in this case alone.
Last October, the Senate Homeland Security and Governmental
Affairs Committee released the shocking results of their
bipartisan investigation detailing abusive conduct and
collusion between a law firm, a Social Security Administrative
Law Judge, and local doctors in West Virginia in approving
benefits.
Two themes run through all these alarming cases. First,
these cases involve professionals, a shadowy industry of
doctors, lawyers, and enablers, such as former Social Security
employees, who know it pays to break the law, some of them.
I hope you got rid of them.
Second, while frontline employees ultimately detected these
conspiracies, preventing fraud from occurring in the first
place was not a priority for Social Security's leadership.
Catching bank robbers before they get the cash is a lot easier
than trying to recover stolen money later. That is just common
sense.
During last month's hearing, Commissioner Colvin told us
that she considered it a success that Social Security staff
discovered the fraud in Puerto Rico and New York. And we
appreciate that. Let me be clear: That is not how I define
success. More importantly, I don't think that is how those who
count on these benefits or the taxpayers who support the
program would define success either. Success is not discovering
massive fraud; success is preventing it in the first place.
Preventing fraud is what Social Security has to start doing
right now.
And at the January 16th hearing, I asked Acting
Commissioner Colvin to give us a plan on ways to help stop
organized fraudsters. I have since met with the Acting
Commissioner and appreciate that she delivered that plan to us
before the 30-day deadline and look forward to discussing it
today.
Further, I have asked the Social Security Inspector General
to do a full investigation of Social Security's management and
their failure to prevent fraud conspiracies, such as Puerto
Rico and New York. The IG's report will be important in
determining whether Social Security is truly committed to
preventing fraud conspiracy.
[[Page 5]]
Also with us today is a panel of public- and private-sector
experts with their recommendations on preventing fraud.
In the past, Congress has sent Social Security billions of
taxpayer dollars in extra funding to make sure those on the
rolls deserve to be there. That is not only expensive but also
an ineffective and inefficient way to find the fraudsters on
the dole. It also doesn't find the crooks that help them get
their illegal checks. Enough is enough. Money alone won't
change Social Security's culture of pay first and chase later.
Social Security's credibility is on the line.
Further, how can Social Security even begin to ask for
bigger budgets from hardworking, struggling taxpayers when,
since the recession began in 2008, it paid out $244 million in
employee bonuses, when it spends close to $15 million each year
for employees to do union work instead of Social Security work,
and when it is spending over $5 million fixing the damage of
the Puerto Rico case, with more spending to follow in the New
York case?
I would like to add for the record that Social Security
will receive full funding to conduct continuing disability
reviews. But the bottom line is that preventing fraudsters from
getting on the rolls in the first place will only happen if
Social Security makes a complete and genuine commitment to end
this pay-first-and-chase-later culture. Crimes against the
program cheat hardworking Americans and honest beneficiaries.
It must stop now. Americans want, need, and deserve no less.
I now recognize our Ranking Member, Mr. Becerra, and my
friend for his opening statement.
Mr. BECERRA. Mr. Chairman, thank you very much.
And I note that this is our third hearing about
conspiracies to steal from Social Security.
In our first two hearings, we heard what the Social
Security Administration did to stop fraud. Their frontline
employees detected the suspicious pattern, their investigators
followed up, and hundreds of people have now been indicted.
Today, we need to talk about what Congress should be doing
to support the Social Security Administration and to protect
Social Security.
I hope, Commissioner, that you will be blunt with us about
what we in Congress need to do about the fraud and errors that
SSA can't prevent unless Congress steps up to the plate.
At our hearing on the New York conspiracy, we learned that
over 100 people have been indicted for fraud, partly because
SSA Special Agent Peter Dowd came up with a creative idea. He
thought of checking to see whether the retired police officers
who SSA suspected had submitted fraudulent evidence still had
licenses to carry concealed weapons--licenses which would not
be issued if the applicant suffered from mental impairments.
Special Agent Dowd worked for SSA's Cooperative Disability
Investigations Unit in New York. Since this CDI program began,
CDIs have successfully pursued over 30,000 fraud cases, saving
taxpayers over $3\1/2\ billion. But what if the New York scheme
had unfolded in 1 of the 29 States that don't have a Special
Agent Dowd because SSA can't afford to staff a CDI unit in
those States?
[[Page 6]]
At our hearing on the Puerto Rico conspiracy, we learned
that the ringleaders were caught because of the vigilance of
frontline staff who evaluate applications. Medical consultant
Dr. Vicente Sanchez was the first to report the suspicious
medical evidence to SSA, and program analyst Susan Palais and
Maria Lora conducted numerous case reviews to spot the trends
that helped SSA find the fraud.
Tips from frontline SSA workers account for nearly two-
thirds of fraud investigations and most successful
prosecutions. But what if the Puerto Rico scheme happened now,
after Republican budget cuts significantly reduced the number
of trained examiners like Susan Palais and Maria Lora?
Mr. Chairman, too many frontline SSA employees and
investigators played key roles in exposing fraud in New York
and Puerto Rico for me to name them all during my 5 minutes. I
ask unanimous consent, however, to include their names in our
hearing record.
Chairman JOHNSON. Without objection.
[The information follows:]
[[Page 7]]
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.eps
Mr. BECERRA. SSA is required to periodically review whether
beneficiaries are too disabled to work. In 2011, SSA reviewed
about 350,000 targeted beneficiaries to see if they were still
medically eligible for disability benefits and found that a
small percentage were not. Social Security's Chief Actuary
estimates that those reviews will eventually save taxpayers
$5.4 billion, a return on our investment of $13 for every $1
spent.
But what about the 1.3 million cases SSA couldn't review?
Since 2011, our colleagues on the Republican side in the House
have pre
[[Page 8]]
vented over a million case reviews by blocking program
integrity funding authorized by the Budget Control Act.
Let me be clear: Those failures to protect Social Security
aren't the SSA's fault. In 2012, Social Security paid 56
million Americans over $600 billion in earned benefits. SSA had
a 0.22 percent overpayment rate. That is less than one-half of
1 percent overpayment rate.
This low error rate didn't happen by accident. It happened
because the SSA has conscientious, well-trained staff. But
since 2011, Social Security has lost thousands of highly
trained employees to budget cuts. Ultimately, Congress is
responsible for protecting Social Security, and Congress needs
to do its job.
Over Social Security's lifetime, American workers have
contributed over $14 trillion to Social Security. The Social
Security Trust Fund currently has a $2.7-trillion surplus--
money American workers have contributed and that they will need
when they retire. In exchange for their contributions to Social
Security, American workers get real economic security. They
know that they and their families will be protected when they
can no longer work.
For 77 years and through 13 recessions, including the 2008
Wall Street recession, Social Security has paid Americans their
benefits that they have earned on time and in full. That means
it is vitally important that we prevent fraud, waste, and
errors that could drain the trust funds and prevent us from
paying Americans the benefits they earned and depend on to pay
their bills.
Mr. Chairman, today, I am introducing legislation to help
SSA protect Social Security while still paying every American
his or her earned benefits on time and in full. I am pleased to
be joined by my colleagues on the Democratic side of this
subcommittee. My proposal provides SSA with the new tools it
needs to fight fraud and prevent errors.
As our recent experience demonstrates, there is no getting
around the hard fact that one of those tools has to be adequate
resources. SSA needs more tools to go after the people who
violate positions of trust and rob Social Security, whether
they are doctors, lawyers, translators, or even Social Security
employees.
Mr. Chairman, you and I have discussed working together to
fight fraud, prevent errors, and support the Social Security
Administration, and I want to continue that process. We have
worked on some tough issues together in the past, and I believe
we can solve this one too. And for that reason, I am pleased
that we are doing this hearing, and I appreciate that you are
helping us move forward this issue of fighting fraud within
Social Security.
With that, I will yield back the balance of my time.
Chairman JOHNSON. Thank you.
Chairman JOHNSON. As I said in our last hearing, I would
like to work with you. Preventing fraud ought not to be a
partisan issue, and I don't think it is, at least the way you
and I see it. I look forward to reviewing the provisions in
your bill.
As is customary, any Member is welcome to submit a
statement for the hearing record.
Chairman JOHNSON. Before we move on to our testimony today,
I want to remind our witness to please limit your oral state
[[Page 9]]
ment to 5 minutes. However, without objection, all the written
testimony will be made a part of the hearing record.
We have two witness panels today. In the first panel, we
have the Honorable Carolyn Colvin, Commissioner of Social
Security Administration.
And they call you Acting, but I think you are Commissioner.
Ms. COLVIN. Thank you.
Chairman JOHNSON. So, welcome. Please go ahead.
STATEMENT OF THE HONORABLE CAROLYN COLVIN, ACTING COMMISSIONER,
SOCIAL SECURITY ADMINISTRATION
Ms. COLVIN. Thank you. Chairman Johnson, Ranking Member
Becerra, Members of the Subcommittee, good morning. I am
Carolyn Colvin, the Acting Commissioner of the Social Security
Administration. I thank you for continuing the conversation
about our antifraud efforts.
Like you, Mr. Chairman, I am outraged and personally
offended whenever anyone attempts to defraud the American
people. We strive to preserve the public's trust in our
programs, and we have no tolerance for fraud. Every day, our
employees honor these principles, and I am very proud of them.
To those who would cheat us, let me emphasize: We will find
you, we will seek the maximum punishment allowable under the
law, and we will fight to recover the money you have stolen
from the American people.
Regrettably, there will always be people who try to steal.
Recognizing this, we comprehensively train our field office and
disability determination services employees to detect fraud.
Because of this training, our dedicated DDS employees in New
York City and Puerto Rico identified suspicious patterns in
some disability claims and referred these cases to our OIG for
investigation. Our employees remain our first and best line of
defense against cheats. Last fiscal year, they referred almost
23,000 cases to the Office of the Inspector General.
We know that we cannot prevent all fraud schemes any more
than we can stop all crime. We can, however, deter and
prosecute fraud. As the recent cases show, we tirelessly seek
to bring to justice anyone who tries to cheat American
taxpayers. While any level of fraud is unacceptable, the low
level of fraud in our disability program speaks to our efforts.
The best available evidence from OIG shows that the level of
actual disability fraud is below 1 percent.
We recognize that criminals continuously devise more
complex and sophisticated methods to steal. Thus, with new
tools now available, we are expanding our use of data analytics
to enhance our ability to detect possible fraud. Data analytics
should increase our ability to find questionable patterns in
disability claims and prevent payment of fraudulent claims.
Even the post powerful data analytics, though, will only
produce leads that employees still must investigate. We are
also collaborating with private insurers and other Federal
agencies to learn new ways to combat complex and sophisticated
fraud schemes. We will expand our successful antifraud training
to all SSA employees, specifically focusing on lessons learned
from real-life examples.
[[Page 10]]
Time and time again, this training has paid off. To
illustrate, a field office employee in Texas suspected that a
disability beneficiary was working but not reporting his
income. The employee referred the case to OIG, who determined
that the beneficiary concealed his employment and conspired
with his company to pay his wages in his wife's name. The
beneficiary, his wife, and the company were all sentenced.
The Cooperative Disability Investigation, or CDI, program
is our best disability fraud prevention tool. For instance, a
man in his 30s alleged a mental impairment that made him
nervous around others. A CDI unit investigated after receiving
a tip that the man worked as a model and actor. The CDI unit
discovered that he was working as a model and regularly
appeared on a television show. The casting director described
the man as happy, upbeat, and very sociable. His claim was
denied.
We will add seven CDI units by the next fiscal year. We
will also expand the capacity of a number of current CDI units
by increasing the number of law enforcement investigators in
them. According to the OIG, for every dollar spent on a CDI
unit, we save $17.
We are also establishing a central and specialized fraud
unit, which will consist of disability examiners with
considerable experience in potential fraud cases. They will
review suspect cases and help develop further analytical tools.
Additionally, we will expand our fraud prosecution unit. We
have placed a number of our own attorneys in U.S. attorneys'
offices to serve as fraud prosecutors. Since fiscal year 2003,
they have secured over $60 million in restitution and more than
1,000 convictions. We are doubling the number of fraud
prosecutors.
As I have noted, all of these efforts require additional
resources. We appreciate the additional funding that you gave
us this fiscal year; however, without adequate sustained
funding going forward, we may be unable to achieve all that we
can in our antifraud activities. We need your support to ensure
that we can continue to enhance our antifraud efforts.
In short, we have long been committed to combating fraud.
Although the level of fraud in our disability program is low,
no amount of fraud is tolerable. Fighting fraud is an ongoing
and evolving process, and we continue to adapt our antifraud
strategies.
Routing out fraud is a team effort. We need people who
suspect something to say something. If you suspect fraud,
please call OIG at 1-800-269-0271.
Thank you. I am very happy to answer any questions you may
have.
Chairman JOHNSON. Thank you, ma'am. Appreciate your
testimony.
[The prepared statement of Ms. Colvin follows:]
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Chairman JOHNSON. Ms. Colvin, Social Security's budget
increased by 27 percent from 2006 to 2014 at the same time that
major fraud scandals were going on. That is nearly double the
growth rate of the entire Labor-HHS appropriations bill, which
funds Social Security.
As you know, the stimulus provided Social Security $1
billion that was used, in part, to reduce disability backlogs
and hire 2,115
[[Page 18]]
workers. Clearly, more money and manpower did not help prevent
fraud from happening in Puerto Rico, New York, and West
Virginia.
During the period Social Security received special funding
to handle the surge in disability applications, how was this
funding used to prevent fraud rings from getting claimants on
the rolls? And the continuing disability reviews don't count.
That happens after they are getting paid.
Ms. COLVIN. Mr. Chairman, we take fraud very seriously in
the agency. We have a culture where we are training people, if
they see something, say something; if they hear something, do
something about it. So every step of our process, there are
antifraud activities.
There are many, many cases that you will never see, that
will never come to the media, where we prevent fraud every day.
We mentioned that last year we referred 22,500 cases of
suspected fraud. So this is something where we are vigilant,
where we are always looking.
There are going to be cases that we are not going to detect
before it happens, but I need to reemphasize that there are
thousands and thousands of cases that we do not pay because we
have, in fact, detected fraud. And I think that is why the
Office of the Inspector General has indicated that our fraud
rate is so low.
But when we detect fraud, we very aggressively pursue it.
We refer it to the Inspector General, who makes that
determination. We prosecute to the full extent of the law. And
we actively seek reimbursement or restitution.
One of the things that we would like to do is be able to
expand some of those efforts nationwide. I have directed
considerable resources away from our direct services in order
to address this issue. And that is one of the reasons we had to
take some of the drastic actions, like reducing the number of
hours that our offices were open to the public, because we
wanted our staff to have time to do those things.
Remember, we lost over 11,000 employees in the last 3
years. So that means we have 11,000 less employees who are
being vigilant and looking for fraud.
Chairman JOHNSON. Yeah, you have said that several times.
How much did you spend from your operating budget last year
to prevent fraud?
Ms. COLVIN. I don't know that I can pull that out
specifically because each stage of the process there are
antifraud activities involved. For instance, at the front
level, when the first application is taken, the individual is
looking for whether or not there are any credibility issues
based on the actual interview with the individual. And then we
have a quality assurance review to make sure that that process
has been handled right.
When it moves from the front line of the field office and
goes into the DDS, we have an in-line quality review that is
even more important and more difficult than at the first level.
And then when it moves from there, it goes to the hearing
level.
So a part of all of the work that our staff is involved in
is also antifraud activity. I can give you the cost of our CDI
units, which are specifically our fraud units, the cost of our
prosecutors. But
[[Page 19]]
when we look at our staff, because fraud is one piece of what
they do, it is somewhat difficult to tease that out.
Chairman JOHNSON. Well, how many dollars are you spending
on fraud?
Ms. COLVIN. Again, I have to give you that for the record,
because what I will have to do is give you the costs for the
CDI units and the prosecution units, which are for specifically
fraud.
But, for instance, the dollars that we are spending now
just to deal with the cases that have been identified in Puerto
Rico and New York are dollars that are being redirected, and we
would have to tally what those costs are. And then, of course,
the training that we provide that is focused on antifraud, that
is another cost.
So I would like to try to pull that together and provide it
to you for the record.
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Chairman JOHNSON. Okay. I appreciate you getting your plan
to us. Unfortunately, there aren't a lot of details. Will you
provide the subcommittee a detailed timeline for the
implementation of each initiative in your plan?
Ms. COLVIN. I would be happy to do that.
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Ms. COLVIN. Most of the things that we identified in the
plan are ongoing. Some of them are going to be expanded in
2015. We are very fortunate that, with the fiscal year 2014
appropriations, we are able to expand our CDI units. We were
able to establish a special fraud unit in Ms. Disman's area in
New York, where those individuals will have specialized
experience in dealing with these types of cases. We want to
expand that and bring in some additional skills. We are doing a
number of things as a result of the 2014 budget, and then,
depending upon a sustained budget for 2015, we would expand
that further.
[[Page 28]]
But I can certainly give you a breakdown. But right now the
things that we are doing in 2014 include more hiring on the
front line, so we are bringing in more staff as a result of our
2014 budget to replace some of the losses. It won't make us
whole.
We are increasing the number of CDRs. Now, even though CDRs
are not designed specifically to deal with fraud, when we do
those medical reviews, we may find situations where there is
conflicting information or whatever, and then we can refer
those cases. So the fact that we have 1.3 million CDRs in our
backlog does not help our program integrity efforts.
We are in the process of developing and testing our
predictive analytic tools. You have seen the things that we are
doing with Judge Ray in ODAR. We would like to be able to
expand that. So we are looking at our ability to do some
expansion in 2014, and, again, with additional funding, we
would like to do that more. But remember, even though data
analytics has some real potential for us, it still requires
human intervention. We have to have staff to analyze the data
and to identify the patterns that exist and to develop the
cases.
The specialized fraud unit is already in existence in New
York. We are looking at all of those cases, the lessons
learned. Bea Disman has experience with this as a result of
what has happened in Puerto Rico and New York. She will be
taking cases from all over the country so that we will have a
specialized unit. We would like to be able to fully staff that
unit, and as it perfects its work there, we would like to
expand that.
We want to double the number of fraud prosecutors. We want
to reestablish the antifraud committee. Bea Disman established
an antifraud committee back in the 1990s when I was here; it
was highly successful. But for the last 10 years, it has been
dormant. We are reestablishing that. That has already been
reestablished.
And with that committee, I think--I mean, with that
antifraud committee, we will use that to benchmark what is
happening in the industry, because fraud is not just an SSA
problem. We will look at what is happening in other Federal
agencies, and what is happening in the private sector. We have
already had a meeting with eight Federal agencies to look at
what they are doing with data exchange and data analysis so
that we can develop a community of practice that will allow us
to try to tackle this problem.
Fraud is a social problem. It exists everywhere. The
fraudsters are becoming more sophisticated, and we want to be
able to get out in front of them. And so that is why data
analytics is important.
Chairman JOHNSON. So you have brought back the national
antifraud committee?
Ms. COLVIN. Yes, we did.
Chairman JOHNSON. Why was that dismantled in the first
place?
Ms. COLVIN. I have only been in this position for 1 year
this month----
Chairman JOHNSON. Yeah, but they probably told you about
it.
Ms. COLVIN. It was obviously determined not to be as high a
priority as some of the other work.
One of the things I did when I first assumed this role a
year ago was say we had to balance our direct services with our
antifraud
[[Page 29]]
services and other program integrity activities. So that meant
redirecting the resources, but we had to make tough decisions
there. As a result, I closed offices and consolidated. I
mentioned that we had to stop--a lot of the training previously
had been stopped because of the budget. I reinstituted
training.
So what we are trying to do is just balance the need to
provide services to people who have earned these benefits. We
have very long waiting times, very long processing times. We
were making progress, and now, with the funding, because we
have had $1 billion less per year than the President's budget,
we have had to cut those things, Mr. Chairman.
I know you don't want me to talk about resources, but SSA
is one of the most efficient organizations I have ever worked
with. Our overhead is 1.4 percent of our outlays--1.4 percent.
I am not sure that even Unum, the insurance company here, has
that number. I certainly have checked with other private
agencies.
So SSA is an efficient organization, but we can't do
everything that we were able to do when we had 11,000 more
employees at the same time that our workload is increasing.
Chairman JOHNSON. Mr. Becerra, you are recognized.
Mr. BECERRA. Thank you, Mr. Chairman.
Commissioner, thank you again for being here.
Let me begin by asking a question that I posed in my
opening statement. New York, you had a Cooperative Disability
Investigations Unit. You found this fraud committed by people
that we typically trust----
Ms. COLVIN. Absolutely.
Mr. BECERRA [continuing]. Former police officers,
firefighters, people that we hold in high regard. But in 29
States you don't have a CDI unit.
Ms. COLVIN. Absolutely.
Mr. BECERRA. If this same fraud had occurred in 1 of those
29 States, would we have detected it?
Ms. COLVIN. Maybe. We refer cases to the Office of the
Inspector General. But unlikely, because we would not have had
the strong coordination.
The CDI unit, for those who may not know, is comprised of
SSA staff, DDS staff, OIG staff, and local law enforcement, so
it is a coordinated effort. And they are able then to look very
carefully at the cases that come in and use the data. We spend
a lot of time developing those cases for OIG. So when you don't
have that, you don't have the same level of coordination.
I am very proud that the first CDI unit was developed when
I was here in 1998 as the Deputy Commissioner. And, again, that
was because we had a culture where we wanted to make sure the
right check got to the right person at the right time. We are
not an organization that pays first and chases later. I want to
stress that.
And so all the kinds of things that we are doing that have
been effective could be much more effective if we had the
resources.
And I want to reemphasize again that you don't hear of the
cases that we don't pay. There are hundreds, thousands of cases
that we don't pay because we do see that there is something
fraudulent, and they are not paid.
[[Page 30]]
Mr. BECERRA. Could you use this coordination of the
different agencies and offices so you would have more fraud
busters in these 29 States?
Ms. COLVIN. Yes, Mr. Becerra, we certainly could. We would
double what we are doing in the other areas with new money.
Mr. BECERRA. And would you expect to have the same type of
return on investment----
Ms. COLVIN. Absolutely.
Mr. BECERRA [continuing]. Where you would return far more
money in savings of not having fraud committed than the money
you use to pay these fraudbusters?
Ms. COLVIN. Absolutely, sir. We would still be looking at
$17 for every dollar we spend in our CDI unit, $9 for every $1
we spend in our CDRs.
We have demonstrated that if you give us the resources, we
produce what we say we are going to produce. We are a
production agency, a service agency, and it is very easy to
show you how we spend that money. And I think you will find
that we have always had good financial audits that show that we
spend that money wisely. We are good stewards of the American
taxpayers' dollars.
Mr. BECERRA. Yeah. Any investor on Wall Street would love
those types of returns, $17 for every dollar invested, $9 for
every dollar invested.
Let me ask you this. Would it help the Social Security
Administration if Congress increased the financial penalties
that we assess for Social Security fraud committed by people
who should know better?
Ms. COLVIN. Absolutely. When there is a conviction, it acts
as a deterrent. If others see that they can commit fraud and
they are going to get a slap on the hand, why wouldn't others
be encouraged to do it? So, yes, a deterrent would help us.
Mr. BECERRA. Would it help the Social Security
Administration if we gave you the ability to ban doctors who
have committed fraud from participating in the determination of
eligibility for benefits?
Ms. COLVIN. Yes. We do have that, to some degree. We do not
use physicians who are on the do-not-pay list as maintained by
Medicare. But certainly there would be others that perhaps we
could find, and we would benefit from that.
Mr. BECERRA. Those are some of the provisions that we have
in our legislation that we are introducing today to give you
more tools to try to fight this fraud.
Let me go back to something with regard to your budget.
Again, recognizing that you serve 56 million Americans who are
receiving benefits from you, not here and there--56 million
Americans. One in every six Americans receives Social Security
benefits, having paid for them, having earned them. Now it is
up to you to make sure one in six Americans gets what he or she
earned on time and in full.
Yet, with that number--and I think any business in America
would love to say that their error rate is less than one-half
of 1 percent. Having said that, it is a growing population that
you serve, because all those baby boomers are beginning to
retire.
Now, on the budget, your budget today is about $800 million
lower than it was 4 years ago.
[[Page 31]]
Ms. COLVIN. Yes, that is correct.
Mr. BECERRA. So, even though more and more baby boomers are
retiring and going on to Social Security to collect their
benefits that they earned, you are receiving less money today
than you received 4 years ago. In 2011, this Congress, under
Republican leadership, cut your budget and rescinded most of
your reserve funds that you had. In 2012, they left the budget
as it was, at that low 2011 number, despite your growing number
of beneficiaries. And in 2013, your budget was cut again by the
autopilot, across-the-board, insane sequester cuts.
So this year's budget only restored part of those 2013
losses that you suffered, and none of the other cuts were
restored, except for providing program integrity money after a
2-year delay. And that program integrity money is what helps us
go after the fraud; it is those fraudbusters.
And so I think we have to recognize that you have work to
do, but we have work to do here in Congress, as well. And the
worst thing that we can do is shackle your ability to do your
job with a growing number of beneficiaries so that you can go
after the fraud to protect the money that people have earned
and put into Social Security.
And so it is a tango; you have to dance, we have to dance.
I hope you will continue to be honest with us, about what we
have to do. Because we have to help you make sure that the
money that people send to Social Security is there for them
when they need it and they have retired and have to pay their
bills.
With that, Mr. Chairman, I yield back my time.
Chairman JOHNSON. The gentleman's time has expired.
Mr. Renacci, you are recognized.
Mr. RENACCI. Thank you, Mr. Chairman.
And thank you, Acting Commissioner Colvin, for being here.
You know, it is interesting because, coming from the
private sector, we always had to learn to live with less. And,
you know, I hear the Ranking Member talk about your budget
being cut, and I don't know whether your budget 4 years ago was
already too high, so we don't know that. But what I really know
is that the best way to fix things is fixing them early on and
having you have the ability to prevent this early on.
And I think, again, a couple of the ideas the Ranking
Member brought up I think are good ideas, and I would like to
hear some of those from you, as I think we in Congress should
be hearing what you believe are some of the ways we can help
you.
But I would really like to find out, what are we doing with
all this information to train those employees? I mean, I know
you have a lot of good employees, but are they being trained
properly? I will give you an example. How much time do your
regional managers and executives really spend with the
frontline staff? And then all these areas that we are finding
problems, are we fixing them at the frontline staff?
Can you kind of go into that a little bit? Because I think
that is so important.
Ms. COLVIN. Thank you, sir.
We have always said that the strength of our organization
is our employees. So we spend tremendous time and resources in
training
[[Page 32]]
them. It has often been said that it takes longer to train one
of our staff than it does to train an astronaut.
And we have very comprehensive training, both how to do the
work as well as how to identify fraud. This is done when they
first come in. It is done on an ongoing basis, on a yearly
basis. If we identify that there are specific problems, then
there is special training so that they are prepared to address
that.
The managers assign mentors to the employees to work with
them. There are quality reviews to see if the training that we
have given them has benefited them and that they are learning
it and doing the work right.
So I believe that the training is key to the success of
what we do. We have a highly competent group of staff. They
have mentors. And our managers are very committed to ensuring
that they get the job done. There is a lot of pride in the
organization in providing good customer service but more pride
in being good stewards of the tax dollars. So I think we do
that.
And I would reemphasize that, unfortunately for us, you
don't see all the good things we do, so you don't see all the
fraud that is prevented.
Mr. RENACCI. All right. Well, and I do believe that there
are cases that aren't being paid. I heard you say that. The
question is, for the people back in my district, they are
concerned about the dollars that do get paid out and trying to
avoid those. And I realize you have a low percentage, but any
percentage----
Ms. COLVIN. Any percentage is too much.
Mr. RENACCI [continuing]. Any percentage is too much.
Ms. COLVIN. Absolutely.
Mr. RENACCI. So when you find problems like we find in
Puerto Rico or West Virginia or New York, when you found issues
that was fraud-related, what is process of taking some of those
issues and bringing them back to the frontline staff to stop
it?
Ms. COLVIN. Absolutely. That is what Ms. Disman is doing. I
mentioned that we have established a special fraud unit, so we
have individuals who have a great deal of experience in dealing
with these types of cases. So we identify lessons learned, and
then we come back and we incorporate that in the new training
for the staff on the front line.
We are really problem solvers in SSA. I will give you a
good example. When Treasury decided that all benefits had to be
through direct deposit, we had a significant number of
fraudsters who were attempting to redirect those direct
deposits. At one time, we were looking at as many as 3,000
attempted fraud activities in a week. We are now down to fewer
than, around 400. And that is because we identified what was
happening, and we put things in place to ensure that it would
not continue to happen.
But, even more importantly, I would say 75 percent of the
attempts we were able to prevent from even happening before a
benefit is redirected. And the 25 percent of the cases where
there may be a benefit directed, we are talking about 1 month,
and then we aggressively go back to pursue that.
So whenever we see a situation occur, we do a careful
analysis of what happened and what we need to do to prevent it
from happening again. Fraudsters have become very
sophisticated, and that
[[Page 33]]
is why we are turning to data analytics and looking at what
tools can be addressed. Because when you have a third-party
person facilitating the fraud, like a physician or a
firefighter or someone who are persons of trust, it becomes
more difficult.
Mr. RENACCI. Real quickly, I know my time has run out, but
how quickly does that process get put back into the front line?
Ms. COLVIN. Immediately. Immediately.
Mr. RENACCI. All right.
Ms. COLVIN. We have ongoing training. It is not one-time.
It is ongoing.
Mr. RENACCI. All right. Thank you. I thank you for your
testimony.
I yield back.
Chairman JOHNSON. Thank you.
Mr. Kelly, you are recognized.
Mr. KELLY. Thank you, Mr. Chairman.
Ms. Colvin----
Chairman JOHNSON. Oh, excuse me. I skipped over my Democrat
friend, Doggett. And he is from Texas. How could I miss him?
Mr. DOGGETT. Well, Mr. Chairman, I want to join with you
particularly in your concluding remarks, that crimes against
Social Security cheat hardworking Americans and honest
beneficiaries. And I think that there is strong bipartisan
support, as we have looked at these various instances of fraud,
about our need to ferret them out.
And I think, just as your statement and all of our comments
is not directed at attacking all police and firefighters around
the country because of the wrongdoing of a handful, but a
significant handful, of firefighters and police officers,
retired officers in New York City, that it is important as we
look at this overall system that we not attack all advocates on
behalf of the disabled because there may be some wrongdoing or
misconduct by a handful of them. It is important when these
individuals with disabilities go before the Social Security
Administration that they have the opportunity to be represented
by honest advocates, as many of them are.
Similarly, it is important to recognize that, while not
every employee in the Social Security Administration or every
administrative judge working on Social Security cases is doing
a good job, that the vast majority of them are. And as we find
examples of individuals that are not up to the task, that needs
to be dealt with. But we need to recognize that we basically
have a system that works. And what we are trying to do is
ferret out the crimes, just as though law enforcement officers
around the country dealing with other kind of crimes and fraud
are trying to ferret that out. Even though we never get to 100
percent in preventing burglaries, robberies, other kinds of
fraudulent conduct, we won't get to 100 percent of fraud of
Social Security, but that ought to be our goal.
Now, how do we accomplish that goal? Well, I think we have
to have adequate resources, as the Acting Commissioner has
indicated, and adequate tools to address fraud.
And without doing a lot of finger-pointing about the cuts
and the inadequacies of the Social Security budget, Mr.
Chairman, I think it would be constructive--I know that in our
full committee we have Secretary Sebelius and Secretary Lew
coming to testify about
[[Page 34]]
aspects of the President's budget; I don't know what will be in
the budget concerning fraud reduction and the Social Security
Administration generally--but to have a hearing in this
subcommittee on the budget for Social Security and its
adequacy.
When you hear that a dollar spent on OIG generates such
significant returns, I think we need to scrutinize carefully
the entire budget for Social Security and ensure that it is up
to the task of fulfilling our bipartisan commitment to reducing
crime.
And then, in addition to just the dollars that are
available, we need to be sure that we have the tools available.
I joined with Mr. Becerra in his legislation. I realize that
this is recently filed legislation, but I think it is the first
specific legislative steps that have been presented to this
subcommittee for how to deal with this problem.
And I would hope that we could have a hearing on the
proposal that you have advanced. I am sure that there are many
other ideas that can be advanced about the best way to deal
with fraud. But instead of our just talking and having an
expose about fraud that some may feel is designed to kind of
tarnish the whole Social Security disability system, let's
focus on what we can do about it in the dollars and the
specific tools.
I think you have some good ideas. I am sure you are open to
getting other specific legislative proposals. But we are not
short of time in this Congress. We have the opportunity for
constructive action and a prompt hearing on the Social Security
budget and on the Becerra proposal and any other ideas that
Members have for addressing fraud. Seems to me to be the most
specific and constructive way forward to put a stop as much as
we possibly can to the abuse we have seen in New York and
Puerto Rico and some other parts of the country.
I thank you, and I yield back.
Chairman JOHNSON. Thank you, Mr. Doggett.
Mr. Kelly, you want to speak?
Mr. KELLY. Thank you, Mr. Chairman.
Ms. Colvin, thanks for coming in to see us again.
What I always wonder about in these things, how big is your
agency right now, when you take total people on staff?
Ms. COLVIN. We have about 62,000 employees throughout the
country.
Mr. KELLY. And your budget?
Ms. COLVIN. $11.7 billion? Yes, $11.7 billion.
Mr. KELLY. Okay, so it is 66,000, did you say?
Ms. COLVIN. No, 62,000.
Mr. KELLY. Sixty-two thousand staff.
Ms. COLVIN. We have lost 12,000.
Mr. KELLY. Okay. And, again, the budget is what?
Ms. COLVIN. $11.7 billion is about right.
Mr. KELLY. $11.7 billion. Okay.
And the reason I bring it up, because I think there is
always confusion that says, well, if the government would just
give us more money--listen, this is not an indictment on Social
Security people.
Ms. COLVIN. I understand.
Mr. KELLY. But in my life and in what I have done for a
living up until the last 3 years, it is employers and employees
paying in
[[Page 35]]
together into this fund. And if I am reading the notes right,
we say that by 2016 the revenues will be sufficient to pay only
80 percent of SSDI benefits beginning in 2016.
So we are on a trajectory that doesn't look good. And what
you are doing, you are trying to get this fraud eliminated.
Early detection is always the best type of correction, right?
You are going to minimize your loss if you get it early enough.
And I am interested to hear Mr. Royal from Unum, because I
know from the private sector it is not a matter of whether you
want to do it or not. It is you either do it or you don't
survive. You have to get it in line.
What else can you do? Because it seems to me, in a country
that leads the world in technology and being able to derive
tendencies--and in my business, I am an automobile dealer, we
have something called warranty reimbursement. That is where
something goes wrong with your car and they say, well, it is
the result of either poor workmanship or something didn't work
right. But I have to tell you, the factories are all over me
all the time when they look at the number of dollars we are
claiming for doing warranty work. And we are doing the same
thing with the Social Security Disability system. You are
saying, okay, this is fraudulent, we want to go back and
collect it.
Mr. Becerra made some points. What are the penalties for
people who do these fraudulent things?
Ms. COLVIN. Unfortunately, we don't control the penalties.
That is in the law, in the judicial system. I have always been
concerned that they get off rather lightly, but, you know, that
is white-collar crime. And it always has been a light sentence.
We would like to see the maximum sentence under the law, but we
don't control that. Once it goes to the Office of the Inspector
General and then gets----
Mr. KELLY. But that is something we could help you with,
right? I am assuming Mr. Becerra is making some suggestions
about how to change.
Ms. COLVIN. I would certainly hope that you can.
Mr. KELLY. Because if the time doesn't fit the crime, I
mean, what is the reason for not doing it? Too many of these
people are making a great living off it.
Ms. COLVIN. Well, you are aware that in many States the
U.S. Attorneys will not even accept our cases because they
don't come up to the dollar value that they are interested in
pursuing. That is one of the reasons we began to use Social
Security dollars to use our own attorneys in the 12 States
where we are, where the U.S. attorneys were willing to work
with us. But many States will not accept these cases for
prosecution because they don't rise to the dollar level, so
that is a big issue for us.
Mr. KELLY. Yeah, I am sure it is. That is difficult. If you
really aren't going to hit them in the wallet, they are going
to say, well, no big deal, I will just keep doing what I am
doing, it is not that big of a deal.
Ms. COLVIN. Well, we are still aggressive in identifying
them. Unfortunately, we don't control the outcome, but we are
very aggressive. As I mentioned, last year we referred 22,500
cases.
[[Page 36]]
Mr. KELLY. And so, of those 22,500, how many were actually
looked at?
Ms. COLVIN. I think about 100 were accepted for
prosecution.
Mr. KELLY. One hundred?
Ms. COLVIN. One hundred.
Mr. KELLY. Out of how many?
Ms. COLVIN. Twenty-two thousand, five hundred.
Mr. KELLY. That is incredible.
Ms. COLVIN. I don't control that, sir.
Mr. KELLY. I know. I am not saying you do. Whenever
employers and employees put this money into this fund--this
isn't government-funded, this is wage-tax funded, and I think
sometimes we forget about this. And so when people start
saying, if we just put more money into it--if you are going
back to these people to pay this and saying, if you just put
more money in, maybe it will stay--but it has always bothered
me that sometimes there is a disconnect about who actually
funds all this stuff.
If you are telling me that you come up with 22,000-some
cases and they accepted 100, that has to be very frustrating
for the people that are out there doing that work.
Ms. COLVIN. It absolutely is, but fortunately we have a
dedicated team who still refer the cases.
Now, we have been able to do some things. For instance, the
Office of Inspector General has increased the number of civil
penalties that they are able to impose. I don't think I have
the dollar here, but they are doing more. We strengthened our
administrative sanctions process.
But, basically, the prosecution is the thing that would
deter folk, and the prosecutions are not that successful.
Mr. KELLY. All right. Well, then I would think, though, for
us, for both sides, if we would help you, if we would put more
teeth into these things, it would help you to win. So it does
come back to the, you know, help us to help you.
I am glad you are here. I am glad you are telling us all
about that. I am concerned about it, because I do know where
the funding comes from. I know it is not from the government; I
know it is from people who paid wage taxes. I would like to see
more people get back to work, quite frankly.
Ms. COLVIN. Right.
Mr. KELLY. That would help, too. But we don't see that
happening as quickly as we would like to see it happen.
But, again, stay in touch with us on this, and let us know
how we can help you.
Ms. COLVIN. Absolutely.
Mr. KELLY. Mr. Becerra, I would like to take a look at your
piece. I think that we are on the right track, but we got to
make sure--throwing money at a problem isn't the answer. We
have to get more bang for the bucks. And I know we talk about
the percentage, but a small percent of a big number is a big
number. And it is all taxpayer-funded.
Mr. BECERRA. Will the gentleman yield?
Mr. KELLY. Yes, certainly.
Mr. BECERRA. The chairman and I were just chatting about
how what we could try to do is move forward from these hearings
[[Page 37]]
and see if we could come up with a bipartisan approach to see
if we could move something forward.
Mr. KELLY. Absolutely.
Well, you know what I want to have. I don't want Ms. Colvin
or anybody that works for you to walk out of here thinking, you
know, these people just want to beat the living daylights out
of us every time they get a chance. That is not the case. We
both work for the same person: That is the American taxpayer.
So if we can help you, I would love to do it.
And, Mr. Chairman and Ranking Member, let's work together
and get this fixed for the American people.
Chairman JOHNSON. Oh, who have we got left? Mr. Crowley.
Wait. Mr. Thompson I think is ahead of you.
Go ahead.
Mr. THOMPSON. Thank you, Mr. Chairman.
And I want to just chime in with the folks who have
expressed an interest in working together on fixing these
issues. I think it is extremely important.
And I want to say that, you know, I have represented just
about every county in northern California at one time or
another. And there are Social Security employees and offices
all over northern California, and your employees are an
absolute joy to work with. I have found that every one of them
is there to do the right thing.
Ms. COLVIN. Thank you so much, Mr. Thompson.
Mr. THOMPSON. They work hard. They work well with my
different offices. And I am sure it is terribly frustrating for
them when these issues are pointed out.
And so I would like to--I am proud to be a co-author of Mr.
Becerra's bill, but I am proud to hear that folks on both sides
of the aisle want to work it out.
And I would suggest, Mr. Chairman and Mr. Ranking Member,
if we could do it with the cooperation of the folks at Social
Security. It is terribly frustrating, my time here in
Congress--and I just had another go-around at this last year
with USDA on a huge problem, and I wanted to sit down and work
out a solution, and there was just no interest in that agency
working with Congress. They thought that they had it dialed in
and that all we were going to be is a problem for them. And I
hope that is not the same with Social Security.
Ms. COLVIN. You will find that it is not. I think the
chairman will tell you that we have been very interested in
working with this committee. The chairman and Mr. Becerra have
been very supportive. We understand your concerns about the
problem. We are as concerned.
And we welcome the fact that you are proposing legislation.
Thank you, Mr. Becerra. We will provide technical assistance
and do anything else that you request that we can do.
Mr. THOMPSON. Well, my sense is that you know better the
issues and the obstacles than any of us do. So if we could do
that, if we could work collaboratively and collectively, I
think we could----
Ms. COLVIN. We welcome that.
Mr. THOMPSON. I am interested in one issue. You have
mentioned all of the fraud that you stop from happening. And I
know
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that errors are also a problem. How do you differentiate
between fraud and error? Because some people aren't frauds;
they just make mistakes.
Ms. COLVIN. Absolutely.
Mr. THOMPSON. Are you able to break that out, as well?
Ms. COLVIN. We are. One piece of overpayments is fraud, and
that is a very, very small percent, as identified by the
Inspector General. But it means that the person has taken
action or given misleading information designed to get a
benefit to which they are not entitled, and that is fraud.
But we have a large amount of overpayments due to the
complexity of the program, individuals not reporting their
wages timely. Or, in some instances, we cannot get it processed
fast enough, so that the benefit goes out and then we have to
try to get it back.
But even with the shortage of staff--and I need to
emphasize this--our accuracy rate increased this year. So we
didn't just say, oh, my goodness, we don't have resources and
we let it go. SSI is one of our most complex programs, and we
still had an increase of 1 percent accuracy right in that
program.
So we live this every day, and we are always looking for
ways to improve it. And we aggressively pursue going after the
money, whether it has been paid out by error or if it were
deliberate.
Mr. THOMPSON. And your recovery rate is what?
Ms. COLVIN. Less than I would like, 58 percent. But we have
a very aggressive----
Mr. THOMPSON. What percent?
Ms. COLVIN. Fifty-eight percent.
We have a very aggressive debt-collection process. Of
course, we can do the offset if the person is receiving a
benefit. We know we can do the Treasury offset if they are
getting a Federal check for any reason, taxes or anything else.
But if we have to do our external collections, then that is the
regular process of collecting a debt. That is more problematic,
but we also do that.
And one of the things we have done recently is taken the
time limit off when a debt can no longer be collected, so that
if someone is not in pay status but they come in pay status
later, we can go back and get that money.
Mr. THOMPSON. And I would like to see if you could submit
it to the committee or maybe part of the working group, however
it is going to be set up, a list of things that you think that
we could do that would help you both defray the errors, error
rate, as well as prevent fraud, but also go after these guys or
make it so the IG can better go after them. Anything at all
that you could give us that would help us do that I think would
be important.
Ms. COLVIN. In the next panel, you are going to hear from
Bill Zielinski, who is our CIO and our deputy for systems. We
have done, I think, some incredibly good work in that area, and
he will talk about that more.
The chairman has been very supportive of IT. And, of
course, we have been able to continue to do the kind of
production that we have because of our investment in IT. And we
need to be able to continue to do that.
Chairman JOHNSON. Thank you.
Mr. Crowley.
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Mr. CROWLEY. Thank you, Mr. Chairman.
Thank you again for holding this hearing, and Commissioner,
thank you.
The alleged wrongdoing we have all seen in the media,
including people claiming fake ailments due to September 11th
to Social Security disability payments, it sickens me to say
the least. I want to thank the district attorney of New York
county, Mr. Vance, for his work in terms of prosecuting those
cases.
I myself am from New York City, I am the son and grandson
of New York City police officers. My father was a detective. I
have cousins both in the fire department and the police
department. I had a first cousin who was killed on 9/11.
Ms. COLVIN. I'm sorry.
Mr. CROWLEY. His brother Michael continues to work as a
fireman, lost 12 men in his house that day.
Ms. COLVIN. I'm sorry.
Mr. CROWLEY. He happened to be off duty that day, otherwise
he would have perished as well. So I need to begin by
highlighting that there are far too many brave men and women
who put their lives on the line every day, and they do that
ofttimes injured and they do it ofttimes not feeling well.
Ms. COLVIN. Absolutely.
Mr. CROWLEY. We were all damaged by 9/11. Anyone who lived
in New York and beyond, our country was damaged
psychologically. We have all, I am sure have some effect from
that.
Ms. COLVIN. Absolutely.
Mr. CROWLEY. But what these individuals have done--and
three-fourths of the people who are being prosecuted so far are
former police officers and firefighters. They are traitors to
their brothers and sisters in those departments. I would even
suggest that they are borderline traitors to our country
because they erode the confidence that people have in their
government, when they believe they can get away with this, and
it is not only perceived but they actually in many cases are
getting away with this.
And so what they do is also they not only dishonor their
uniform or their former uniform, they are really, really eating
away at the fabric of responsibility of our government to
provide for those who need help.
These men and women are legitimate recipients, many of them
are----
Ms. COLVIN. Absolutely.
Mr. CROWLEY [continuing]. Who have suffered of the Federal
Social Security Disability Insurance program, and we should not
and cannot let the few ruin a necessary program for the many,
or a few ruin the good name of thousands of heroes who work for
the NYPD and the FDNY.
Commissioner Colvin, I would like to ask you a few
questions, and just yes or no answers if I could from you
please.
Wasn't it a Social Security administrative frontline
caseworker who detected the fraud there? Fraud that was not
detected by the City of New York when it awarded disability pay
and benefits to officers who were alleged to have committed
this fraud against the Social Security system?
Ms. COLVIN. Yes, it was.
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Mr. CROWLEY. When the Social Security Administration
invested in your special fraud busting teams known as CDIs,
does that save taxpayers' money and reduce fraud in the Social
Security program?
Ms. COLVIN. Yes, it does.
Mr. CROWLEY. Thank you, Commissioner Colvin.
Social Security is a bedrock principle of America and we
must do everything we can to protect and strengthen the program
for future generations. This includes cracking down on
criminals and fraudsters. It was the Social Security
Administration staff that detected the fraud in the disability
program. The frontline workers there are our best defense
against criminals.
But I am concerned about some of the jargon that would
malign their work in the name of maligning government services.
I think there are far too many antigovernment groups out there
that would use this to further malign the Social Security
Administration.
Congress must stop the attacks on Social Security,
including the over $1.2 billion in cuts that many of my
Republican colleagues put forward and have taken away from
Social Security programs, with more planned if that is not
stopped.
Democrats have a plan to protect the integrity of the
Social Security system. Protect taxpayers' money, and send
these ripping off Social Security individuals to prison, and
that is why I am pleased to join my colleague, Mr. Becerra, and
I am very happy Mr. Kelly has indicated his desire to work in
conjunction in a bipartisan way with the Chairman as well. I
would like to see that bill come to the floor. A bill that will
go after those individuals and put them behind bars for a very,
very, very long time and make this a non-profitable scheme.
I am concerned that many on the far, far right in terms of
the Tea Party aspect are again using this as an opportunity to
attack our Government itself. But I do think that support of a
bipartisan bill to put these people behind bars will go a long
way to curtailing that.
Finally, recognizing that we can't stop every criminal act
at the front end, this bill will send those caught ripping off
the Social Security system to prison. The bill makes clear that
conspiracy to defraud Social Security is a felony and
authorizes a higher penalty of up to 10 years in prison for
conspiracy for ring leaders and corrupted sources who recruit
others to commit fraud, coach witnesses, and multiply the
losses of Social Security and its trust fund.
I am hopeful, Mr. Chairman, that the Social Security Fraud
and Error Prevention Act of 2014, as you can work out the
details of that bill, can be one of those bills that can come
to the floor in a bipartisan way in a bipartisan spirit to
bolster the people at Social Security, a valued program, to
help those who are suffering continue to get the services they
need, and to capture those who would defraud the system for
their own personal gain--it doesn't get much worse than that in
my opinion--and put them to jail for many, many years to come.
With that, I yield back the balance of my time.
Chairman JOHNSON. Thank you for your comments.
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Commissioner, our witnesses on the next panel have some
ideas on how to prevent fraud. If you are able to stay, we
invite you to stay and listen.
Ms. COLVIN. I will stay. Thank you, Mr. Chairman.
Chairman JOHNSON. Thank you for being here.
We now proceed to the second panel. Please move forward.
Thank you all for sticking around, I appreciate it. Maybe
you learned something. We did.
Seated at the table we have J. Matthew Royal, Vice
President and Chief Auditor, Unum Group, Chattanooga,
Tennessee; William Zielinski, Deputy Commissioner of Systems
and Chief Information Officer, Social Security Administration;
and Allen Shark, Fellow, National Academy of Public
Administration. I welcome you all to the hearing this morning.
Thank you so much for being here.
Mr. Royal, welcome. Please go ahead.
STATEMENT OF J. MATTHEW ROYAL, VICE PRESIDENT AND CHIEF
AUDITOR, UNUM GROUP, CHATTANOOGA, TENNESSEE
Mr. ROYAL. Thank you, Mr. Chairman, and Members of the
Subcommittee.
We are pleased to be here today and we appreciate the
opportunity to share some of our aspects of our fraud risk
management program at Unum.
Unum is a market leader in disability, life, critical
illness, and accident insurance with more than 160 years of
experience. We work with more than 175,000 businesses
worldwide, from Fortune 500 to small businesses covering more
than 22 million people. In 2013, we paid more than 6 billion in
benefits. We are a U.S.-based company with approximately 10,000
employees with major operations in California, Maine,
Massachusetts, South Carolina, Tennessee, and in the UK.
Insurance fraud is the second most costly white collar
crime in America, exceeded only by tax evasion. Nearly 80
billion in fraudulent claims are processed each year in the
United States. This may be a conservative figure based on known
acts of insurance fraud and not the unknown, undetected, or
unreported acts.
To effectively combat insurance fraud insurers must be
capable of quickly identifying potential fraud, have the proper
infrastructure in place to adequately manage and respond to
fraud risk, and frequently monitor and test antifraud control
effectiveness.
At Unum, the significant investment we have made in our
antifraud program has helped position our company as an
industry leader in detecting and preventing fraudulent
disability claims.
While the total amount of fraud is undeterminable, we
estimate less than 1 percent of the approximately 400,000
disability claims received by Unum each year are fraudulent.
From Unum's perspective, strong fraud risk management is
critical to successfully managing our business and offering
affordable financial protection to our customers. Unum's fraud
risk management program is managed by the SIU, the Special
Investigative Unit, led by Jeff Connor, Vice President, who
joins me here today.
The SIU conducts investigations into potentially fraudulent
claims and promotes corporate antifraud strategies and
initiatives.
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The following summarizes key aspects of Unum's fraud detection
and prevention program.
The foundation consists of our policies and procedures.
Unum maintains policies which help ensure compliance with
applicable insurance fraud laws and regulations. The SIU makes
a fraud detection and response guide available to all employees
to help them recognize and report suspicious claims. The
company also maintains a toll-free fraud reporting hotline and
encourages anyone with information about insurance fraud to
report the information, allowing them to do so anonymously and
confidentially.
Strong training and education reinforces our policies and
procedures. Unum's comprehensive antifraud training program
ensures employees possess the requisite skills to identify and
report insurance fraud. Unum also designates certain employees
based on job function as integral antifraud personnel. These
employees, including claims processors, underwriters, and
certain corporate personnel, receive mandatory antifraud
awareness training at regular intervals.
Now, complementing our front line is the use of advanced
technology. Unum uses predictive analytics to continuously
monitor disability claims for potential fraud. We developed our
model using data from our own historical fraudulent claims. The
model analyzes our claims inventory daily, scoring each claim
based on how closely it resembles customized fraud attributes.
Higher scores indicate greater fraud potential and claims
exceeding a baseline score are reviewed by a trained analysts.
About 1 out of five high scoring claims that are reviewed
result in additional investigation and that accounted for 30
percent of the total amount of potential fraudulent loss
activity detected and reported in 2013.
Unum works closely with law enforcement to ensure that
those who commit insurance fraud are held accountable. The SIU
reports all suspected fraud to law enforcement and/or the
appropriately designated regulatory agency responsible for the
investigation and prosecution of insurance fraud. We frequently
provide disability fraud training to key law enforcement
agencies and actively assist in investigations and
prosecutions.
Our antifraud initiatives are focused on maintaining a
strong public-private partnership to combat fraud and share
information about emerging fraud trends and risks.
In conclusion, while the overwhelming majority of claims
Unum receives are legitimate, there are bad actors that seek to
game the system and file over facilitate fraudulent claims.
Unum has a comprehensive approach to fraud prevention which
includes establishing effective policies, continuous employee
training, and the use of advanced technology and modern
information sources. There is a strong business case for our
approach to fraud prevention and it plays a role in keeping
group disability insurance policies affordable.
Unum stands ready to work with this committee and the
Social Security Administration to share our best practices and
our experience. Thank you.
[The prepared statement of Mr. Royal follows:]
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Chairman JOHNSON. Thank you, sir, appreciate that.
Mr. Zielinski, welcome. Please go ahead.
STATEMENT OF WILLIAM B. ZIELINSKI, DEPUTY COMMISSIONER FOR
SYSTEMS AND CHIEF INFORMATION OFFICER, SOCIAL SECURITY
ADMINISTRATION
Mr. ZIELINSKI. Chairman Johnson, Ranking Member Becerra,
Members of the Subcommittee, I want to thank you for this
opportunity to discuss Social Security's use of information
technology to administer our programs and to detect and prevent
improper payments and support antifraud initiatives. My name is
Bill Zielinski and I am Social Security's Chief Information
Officer and Deputy Commissioner for Systems.
I am responsible for all aspects of our information
technology program from planning new IT projects to overseeing
their implementation and managing their day-to-day operation
and upkeep.
Every year, we pay $850 billion in benefits to 63 million
people. The vast majority of these payments are accurate and
timely. We owe this record of success to a highly skilled and
dedicated workforce that is supported by IT. IT is behind
everything that we do. Our employees work with electronic
claims files using applications
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that enhance the productivity, automate many routine tasks, and
enforce the program laws and policies. Without the productivity
increases gained from our strategic IT investments, we would
not have been able to keep pace considering our growing
workloads and limited resources.
In addition to supporting our programs through IT, we have
built on-line services for the public that are easy to use,
secure, and highly rated. For example, our customers can use
on-line services to apply for benefits, change their address,
request a benefits statements. These services allow our
customers to choose their preferred method of doing business
with us and allows us to keep up pace with our ever growing
workloads.
I do want to stress that productivity increases do not come
at the expense of quality. In fact, our applications are
designed to ensure quality work products and payment accuracy.
For example, in my written testimony I highlight the eCAT
program which helps State disability examiners apply policies
correctly throughout the entire decision-making process.
Our applications also enable our employees to gather third
party data that may reveal when a beneficiary has been
overpaid. Without IT supporting it, this type of investigation
is labor intensive and impractical. For example, regarding the
means test SSI program in fiscal year 2012 we fully implemented
the Access to Financial Institutions program which allows our
employees to obtain electronic bank information directly from
the banks and we are currently testing a similar process for
obtaining information on ownership of non-home real property.
We do not rely solely on our employees to discover on or
beneficiaries to report all the changes that may affect their
benefits. We have the largest data exchange program in the
Federal Government. Our exchanges provide us with a wealth of
information that we use to pay benefits accurately and
efficiently administer our programs. We get information that
varies across the board from income and asset data to
incarceration data and medical information. We take seriously
our responsibility to be effective stewards of our programs.
Each year we complete periodic medical reevaluations to
determine whether beneficiaries are still disabled and SSI
redeterminations to review the nonmedical factors of
eligibility. These reviews save billions of program dollars
with only a small investment of administrative funds, yet we do
not receive the resources to complete all of them. Instead, we
have long used predictive models to prioritize the cases with
the best chance of finding improper payments. These models have
allowed us to achieve an impressive return on the taxpayers'
investment. For example, we estimate that our SSI
redetermination model helped us recover or prevent $3.4 billion
in SSI overpayments in fiscal year 2013 alone.
As we move forward we are developing additional models such
as the representative payee misuse model that will allow us to
target fraud specifically. The next area we are looking at is
data analytics. We expect these diagnostic tools to increase
our ability to find questionable patterns of activity in
disability claims and prevent fraudulent claims from being
processed. We will spend the rest of this fiscal year
developing and testing some of these tools.
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We have a long history of delivering results and
administering our vital programs in an efficient and cost
effective manner. We have been successful in large part due to
our highly trained and dedicated employees and because we have
made significant and strategic investments in IT that have
allowed us to keep up with the ever-increasing workloads.
However, these investments in IT and staffing come with a cost.
Reduced budgets in recent years have meant less and less
available for IT development and training.
And while we appreciate the resources that have been
provided for the current fiscal year, we hope you will continue
to make that investment in our programs. And as Commissioner
Colvin expressed this morning, only with that sustained funding
can we build upon our efforts to stop those who would steal
from the American people.
Thank you for the opportunity to update you on our
programs, and I will be willing and happy to answer any
questions you may have.
[The prepared statement of Mr. Zielinski follows:]
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Chairman JOHNSON. Thank you, sir.
Dr. Shark, you are welcome.
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STATEMENT OF ALLEN SHARK, FELLOW, NATIONAL ACADEMY OF PUBLIC
ADMINISTRATION
Mr. SHARK. Good morning, Chairman Johnson, Ranking Member
Becerra and Members of the Subcommittee. I guess I am the
outsider looking in, so I guess I have a different perspective.
I wanted to thank you for the invitation to testify today
to discuss high impact, viable and feasible recommendations
that can assist the Social Security Administration preventing
and detecting conspiracy fraud in the disability insurance
program. It is an honor to contribute to this important
discussion.
My name is Alan Shark. I am a fellow and chair of the
technology leadership standing panel of the National Academy of
Public Administration. I also serve as the exec director of the
Public Technology Institute and an associate professor of
practice at Rutgers University School of Public Affairs and
Administration.
I need to say that my comments today represent my own views
from the outside looking in and also derive in part from the
recommendations issued by an independent panel of our academy
to the Recovery Accountability and Transportation Board
following the results of a national dialogue on innovative
tools to detect and prevent fraud, waste, and abuse.
Unchecked, we know that conspiracy fraud in the disability
insurance program illustrates the importance of leveraging
technology to strengthen SSA's capacity to intercept suspicious
activity at its inception. Absent more sophisticated adaptable
measures, the problems recently uncovered will only repeat
themselves in some form or fashion and likely worsen. SSA must
focus its efforts on implementing the newest analytic tools for
fraud detection used by the private sector and develop an
agency wide culture of fraud prevention that emphasizes the
need for advanced technology, provides the leadership and
training to support it. Towards this end I offer six
recommendations.
The first in the process, is for SSA to develop an IT
system that incorporates textual analysis tools and predictive
analytics technology to maximize its ability to detect fraud.
They can no longer rely on the integrity of the participants
and the complex benefits application process. SSA needs to
acquire technology-driven detection methods capable of flagging
fraudulent activity more consistently, systematically and
accurately. In other words, it needs to be further integrated
into the system more so than it is today.
Today's technology allows for unstructured data stored by
SSA regarding disability claims to find patterns indicative of
fraudulent activity. These tools offer the potential to prevent
and detect fraud by automating the scanning of lengthy
government documents thus using structured data with
unstructured data with the ability to flag suspected fraudulent
activities.
Predictive analytics is another tool that including pattern
recognition among data sources, and is used for techniques such
as heat mapping, which presents a visual influx of
commonalities such as sudden increases in claims with common
diagnoses or claim representatives.
The second is SS needs to develop and maintain a culture of
collaboration and information sharing, which provides another
level of protection against fraud. Technology-driven detection
methods will
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enable SSA to better leverage data sources, including State and
local government data, proprietary business data to improve
data validation and predicting potential fraud.
Number 3, SSA should also explore potential partnerships
with other government agencies that are coordinating efforts to
combat fraud, waste, and abuse. They are highlighted in my
prepared remarks.
Number 4, SSA must improve its current IT infrastructure to
accommodate this new fraud detection technology. SSA Office of
Disability Adjudication, ODAR, has already paved the way for
these changes through its use of similar technology. As part of
this effort, SSA should determine how databases throughout the
Administration, regional offices, field offices, and state DDDS
offices can be integrated.
Number 5, SSA must develop a culture of prevention and
detection that extends to all employees. This effort should
include fraud detection training for all SSA employees;
educating employees about data analysis tools and other
technologies, which is kind of a new part here; rewarding,
which is something I haven't heard yet, rewarding vigilance
among employees through recognition and performance appraisal
system, so that they are not just doing their job, they are
getting rewarded for doing these things that go beyond and
finding these things; additional ethics training for
supervisors and employees.
Consideration should also be given to creating a senior
level executive position whose primary responsibility is
overseeing and managing SSA's fraud detection and prevention
efforts.
And finally number 6, early in the application process SSA
should incorporate clear warnings, stronger warnings to
claimants and their representatives about the measures being
taken to detect fraud and the consequences of defrauding the
disability insurance program.
Mr. Chairman, an operation of this magnitude will always be
a target of fraud and abuse. We know that. Investing in new
analytic tools, integrating and expanding its data sources,
fostering a culture of fraud prevention among all employees,
and increasing applicant awareness of SSA fraud prevention
efforts and the consequences for defrauding the Federal
Government will assist SSA in achieving its stated goals and
strengthen its antifraud activities and securing the public's
trust.
Mr. Chairman, this concludes my oral testimony and I would
be pleased to answer any questions you might have.
[The prepared statement of Mr. Shark follows:]
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Chairman JOHNSON. Thank you. Have you provided those
suggestions to the administration?
Mr. SHARK. In my testimony I have.
Chairman JOHNSON. I see.
Mr. SHARK. Yes.
Chairman JOHNSON. Were you paying attention, Ma'am?
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Ms. COLVIN. Yes.
Mr. SHARK. She was kicking me in the back.
Chairman JOHNSON. Thank you.
Mr. Royal, how does Unum identify claimants who may be
faking illness, particularly mental illness?
Mr. ROYAL. Well, Mr. Chairman, I think that the first line
of defense, which is our people who are handling the claims, is
key to identifying those fraudulent activities. Our fraud
training program, managed by the SIU that I referenced, arms
those frontline employees with the education to identify red
flags as they are processing claims. And each of the processes
that they follow, which do vary by type of disability that you
mentioned, is designed to support a fair and thorough analysis
of the claim.
So for mental illness or behavior health type illnesses,
some of those activities might include objective tests for
malingering or fabrication, activities check and verification.
We also perform records review by our in-house physicians. And
so through that process if red flags are identified, there is
encouragement to reach out and refer those claims to the SIU
early as possible, because these claims are hard to
substantiate at times, they are hard to disprove at times.
But it might be worth noting to the committee that
behavioral health fraud accounted for about 15 percent of our
total fraud last year. The most common is musculoskeletal
disease, or neck pain, back pain, joint pain, that accounted
for somewhere in the mid-30 percent.
Chairman JOHNSON. That is the stuff you can't identify,
isn't it? How do you screen for bad doctors?
Mr. ROYAL. Well, you don't want to go----
Chairman JOHNSON. I don't want to go to one.
Mr. ROYAL. Our going-in position is that there are not bad
doctors, but we know that there are cases of where there are
facilitators of fraud. It is a sensitive issue because the
escalation of the impact that a facilitator can have is much
greater than an individual perpetrator or fraud that is
conducting that fraud for one claim over a period of time.
So the way that we first prevent against identification of
the doctors, for example, would be back to those treating
physicians that I mentioned in our claims processes. Those
folks are identified as integral antifraud personnel, so they
receive the training that we give them to identify those red
flags. And what they do in the handling of the claim will have
a doc-to-doc call. Our own doctors that are educated in fraud
awareness, and have the expertise in the field, will reach out
and have conversations with treating physicians and discuss the
claim and the situation. That puts them in a unique position to
identify suspected fraud, and particularly where there is some
suspicion around the doctors.
And they are trained, the physicians are, to make the
referral to the SIU. That has happened, and when we have a
referral on a facilitator claim it gets priority. When we will
put that doctor into a database. We will search our claims for
doctors, common doctors, commonality of doctors, and will allow
resources to quickly look at those claims to see if there is
additional concern.
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Chairman JOHNSON. Thank you. You know, I think using the
computers probably helps, doesn't it?
Mr. ROYAL. It does. All the information that we receive on
a claim--again our process is designed to provide a fair but
thorough review of the claim--but the information we do receive
gets put into our databases. The model, the predictive model
that we have developed, considers many attributes when it looks
at and daily evaluates these claims.
So while the fraud model doesn't necessarily reports on
batches of claims, it is designed to look at individual claims
in the likelihood that they have potential fraudulent activity.
Our fraud analysts that review those high scoring claims are in
a much better position than our claims handlers to look across
these highly suspicious claims that are being indicated by the
model, because that is all they are doing, is they are looking
at that and looking for that commonality across those claims.
Chairman JOHNSON. Mr. Zielinski, you all are trying to
develop some similar type plan for Social Security, I
understand. When will that tool be available for frontline
employees?
Mr. ZIELINSKI. So, Chairman Johnson, we already have some
tools that are available right now. Commissioner Colvin
mentioned that for the direct deposit fraud, she was talking
about those instances in which we have been able to prevent
those through the door. So we already have a number of those
tools available.
But she also specifically mentioned that utilizing the
information from these cases that have already been established
in a similar fashion to, as Mr. Royal described, we are going
to be doing the same things. We are going to be proving out
that model in a short window of time. And we could provide you
with specifics for the record as to exactly when we are going
to do those things.
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Chairman JOHNSON. Thank you. Mr. Becerra, you are
recognized.
Mr. BECERRA. Thank you, Mr. Chairman.
And thank you to all of you for your testimony. Mr. Royal,
let me ask this, do you find the way Social Security has found
that if you invest money on fraud detection, that you have a
greater return on the money you spent in having to pay for
those fraud busters?
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Mr. ROYAL. Congressman, I don't know the specifics of how
the Social Security Administration approaches and uses their
dollars in terms of their IT spend or predictive analytic
spend, but what has worked for us is a model that does
continuously screen our claims to identify those that have
likely or suspicious fraudulent activity. And while proprietary
in specific number, we find that the rate of return on that is
very high.
And in fact, the referrals that are made to our
investigators that come from the model have a much greater
likelihood of resulting in the identification of fraudulent
activity than the referrals from the front line.
But don't get me wrong, the front line is extremely
important. They are still the majority of the referrals and
account for 70 percent of the ultimate fraud that we detect and
report, but that 30 percent that comes from the model those
referrals that result in that 30 percent, high likelihood of
potential fraud.
Mr. BECERRA. So, I know that Social Security has indicated
in the past that they have a 17 to 1 return, a 9 to 1 return on
some of their fraud busting techniques. Sounds like you are
seeing similar type results with whatever your techniques are.
Mr. ROYAL. Yes, sir.
Mr. BECERRA. Great.
Mr. Zielinski, can you tell us a little bit more about what
the Social Security Administration is doing to prevent the
fraud. Because I know there is always the concern that if you
don't try to detect it early you have to chase it later on and
it is tougher and costs a lot more money. I wonder if you could
tell us what you are doing that is similar to the private
sector is doing to try to prevent the fraud before it ever
occurs.
Mr. ZIELINSKI. You bet. Congressman Becerra, there are a
few things. Commissioner Colvin mentioned some things already
that are more on the business side in terms of the training and
other things, so I am going to stick to the IT pieces that we
are undertaking.
Again, we mentioned the direct deposit fraud. In a very
similar fashion as we have identified these cases coming
through, we have analysts, and you really do have to rely on
those analysts to be able to tell you what they are seeing from
the data. We use the data to create scenarios that allow us to
recognize those scenarios coming through, and we have prevented
very many cases from being paid at all in the first place.
Mr. BECERRA. That is the predictive technology?
Mr. ZIELINSKI. That is the predictive technology,
absolutely. What we are also doing from a technology standpoint
is we are also working with partners from across the Federal
Government. We have met with a number of sources and what we
are looking to do is a few things there. We are looking for
best practices, but we are also looking for sources of
information that are there and readily available.
Commissioner Colvin mentioned that we do use information
from CMS that we use to recognize for doctors, where there is
already a pattern there. So we are looking for those types of
data sources. And as we build our models, again we utilize our
frontline folks
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who have knowledge of this to be able to tweak and improve
those models over time.
We also have prepayment reviews for our disability claims.
So we mentioned the CDI units and recognizing those patterns.
But even as we are making those medical decisions, there is an
additional review that takes place before any payment is
issued.
So, those are just some of the things that we have done
utilizing technology and being able to select and sample and
score for the probability of error or problem to prevent those
cases from taking place.
Mr. BECERRA. And I had posed the question to Commissioner
Colvin previously, but I wonder if you could give us your take.
In the legislation that we introduced today, we do call for an
increase in financial penalties that would be assessed by
Social Security for fraud committed by people who should know
better than to engage in that activity. Do you think that would
be helpful to SSA as it goes about the process of detecting
fraud?
Mr. ZIELINSKI. Well certainly, sir, any tools that we have
in our tool belt that would help us to combat and deter, and
Commissioner Colvin mentioned that once people see the
strengths of those penalties it is something that serves as
additional deterrent, and I echo what she told you earlier.
Mr. BECERRA. What about the issue of banning practitioners
who engage in these bad practices, a doctor who knowingly
submits fraudulent medical documentation so that someone can
qualify to receive these disability benefits? Should we ban
those doctors from being able to participate in giving us
evidence that helps determine whether someone is disabled or
not?
Mr. ZIELINSKI. Well, certainly from the IT perspective, the
more information that we have in and about any of the players
that are in the process, it is a valuable and valid
information. And that sort of information really allows us to
be able to stop some of those things at the front door. So
those are effective deterrents and can be used in an IT model
to help prevent those things.
Mr. BECERRA. Thank you all for your testimony.
And by the way, because I have referenced that bad doctor,
but it is not just doctors, and the Chairman and I were
discussing this. We should go after anyone along that chain of
the process who engages in this type of activity that
ultimately takes money away from the taxpayers. I wouldn't use
as colorful language as the Chairman has used, but I think we
all agree, every one of us agree that we should descend on any
of these folks who are perpetrating this kind of fraudulent
activity to folks who paid their tax dollars to get these
benefits in the future.
Thank you all for your testimony.
Mr. Renacci, you are recognized.
Mr. RENACCI. Thank you, Mr. Chairman.
And I would to thank you all for your testimony today. Dr.
Shark, you mentioned six recommendations. Can you narrow those
down to maybe two or three which would cover the low-hanging
fruit that maybe the Social Security could be doing?
Mr. SHARK. Well, I think they are moving in the right
direction. I can narrow it down to two. One is the human factor
and the ability for that frontline person, which has been I
think well described
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as the gatekeeper who is going to see something coming in, they
are going to see the most suspicious thing at the very
beginning.
The second part is more problematic, and that is the
technology piece. You know we are talking about where we really
want to be, and to me it is how do we get to a point, and at
what point will that be? Will it be in the year 2015, will it
be this year? In other words, what is the ultimate road map?
To me every application should be screened and tested based
on these different models. They should not be flagged red. They
should be done green, red, yellow, different kind of things for
different kind of deficiencies that may be found and to be
totally integrated into the culture.
And so what I am hearing is these fixes, but I am not
hearing this timeline of when this will happen, whether it will
be a totally integrated system that will review things. In the
report I read there are 54 databases that is being consolidated
into one. That will go a long way in helping.
But ultimately I think it is, like, what is this vision?
And the technology vision is we have to use predictive
analytics. We have to use things to plot what is going on and
where, to look at the chain of interactions so that technology
can help us and pinpoint things before they occur or slightly
thereafter. And it is that blueprint that I am not seeing yet.
I am seeing some really good fixes, but I am not seeing that
longer term this is where we want to be and this is what it is
going to look like.
Mr. RENACCI. Mr. Zielinski, I know you have talked about
more money and I want to remind you what happened with Social
Security concerning IT money. Since fiscal year 2001, Social
Security stockpiled over $1.3 billion in an information
technology reserve fund of unspent money. The Congress agreed
on a bipartisan basis to rescind $500 million.
And again, that might predate you and might predate the
Acting Commissioner, so I am trying to find out--it appears
back then there was not this push for IT. Why weren't those
dollars spent? And what would make us believe that if you had
those dollars you would spend them today, since you already had
them?
Mr. ZIELINSKI. So Congressman, I appreciate the question. I
don't have specifics as to why those funds were not spent. I
was not involved in the discussions or the decisions, so
unfortunately, I can't answer that question for you.
I will say that Commissioner Colvin has taken a much more
specific approach towards strategic planning, and I think as we
are moving forward the types of plans that Mr. Shark talks
about in putting in place, those are the things on which we are
focused so that we will be able to show and demonstrate
precisely where we are making those investments and how we are
going to spend those dollars and to what purposes, which areas
within our mission those are going to be spent.
So Commissioner Colvin has mentioned in her written
testimony about the strategic planning that we are doing now,
and in fact we are engaged with NAPA in some of that strategic
planning. And those are the sorts of things that we will see in
that plan. So, you know I have confidence and I believe that we
have--the commissioner is really pushing forward with that
strategic planning.
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Mr. RENACCI. Okay. One of the thing I noted in an audit
raised some questions about the data, Social Security's data,
including the fact that you have multiple databases. How many
databases does Social Security have? How connected are they and
what challenge do you have in creating and implementing, you
know, data analytics based on all of that?
Mr. ZIELINSKI. So I can't answer the specific question. I
don't have the exact number of databases. We have a series of
databases. Some are called master files. Those are ones from
which we issue payments and maintain systems programs. And then
there are other databases specifically to processing the
workloads.
In terms of being able to bring data together, there is a
lot of technology that is available today that allows us to be
able to bring data from multiple sources together to be able to
combine that in ways for specifically these reasons.
So, we are using tools today, pulling data from many
different locations, bringing that together to be able to do
the data analytics. So, the challenge isn't necessarily in and
around the number of databases, it is really again getting back
to having the analytical support, really knowing what patterns
we are looking for and being able to implement that, sir.
Mr. RENACCI. Dr. Shark, one last question. Looking from the
outside in, are we doing enough for training of our frontline
staff to detect this fraud?
Mr. SHARK. Well, absent technology, probably not. I think
they are doing the best they can with the tools they have
today. The only thing I would add to that is kind of think in a
creative way some better rewards for those people up front
because they are so important. Everyone acknowledges that. And
the question is what can we do more to empower them to really
feel emboldened, to look for things to be very, very vigilant
and careful. Because they are our first line.
So the missing piece is what kind of reward can we give
them? We are not talking about money here, but we are talking
about recognition. Part of their review process, maybe
something on their wall. But something to really show how
important these people are to us.
Mr. RENACCI. Thank you.
I yield back, Mr. Chairman.
Chairman JOHNSON. Thank you.
Mr. Kelly.
Mr. KELLY. Thank you, Mr. Chairman, thank you.
Chairman JOHNSON. Do you care to question?
Mr. KELLY. Yeah, just real quick, because I am really
interested how it happens in the private sector. And I know
there is quite an incentive to do it differently in the private
sector, because it really determines whether you continue in
the private sector or go and change direction with what you are
going to do with the rest of the your life.
Mr. Shark, you made a references to it, and I think Mr.
Royal. I was looking at the size of your company. You work with
175,000 businesses worldwide and you cover more than 22 million
people. I am looking at how you do that. I mean, I think
because we are talking now about do we need to increase funding
to SSA to help
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them do their job or can we somehow slim it down to a point
where they are actually more effective. And I know there are
things we can talk about later on about how we are going to do
that.
But from a private sector, what you do see? Mr. Renacci
just said from the outside in. What do you see that if you were
taking over and you were the CEO just walking into this
business, what would be the first thing that you would look at?
And I think data analytics are absolutely critical. What would
be the number one thing? I don't think we need to keep throwing
money at it. I think we need to learn to live with less, do
more with less, but technology is the answer to that, is it
not?
Mr. ROYAL. Congressman Kelly, I think that is a big
opportunity. I think that we are all asked to do more with
less. I am asked that every year, every quarter when I meet
with folks, and I think the predictive analytics tool, while it
requires investment, does provide that broad coverage of
looking at claims. It looks at the subtle changes in claims as
information comes in. Things that the claims handlers can't
necessarily see. There are some things that they can see that a
computer model can't, and vice versa.
So I think that there is an opportunity that with the use
of that technology to get that broader coverage.
Mr. KELLY. So when you make an investment, you are going to
make an investment but you want to get a real positive return
on the investment, could Social Security do the same thing?
Every year you go into a bid process and you have to earn the
people who work with you, the people that you contract with,
you have to earn their business.
But we don't have that same model and this is not a knock
at SSA, this is just the way it works. But we do have the
ability to really cull this down, make it more effective and
more efficient. There is no reason why we can't do this, is
there?
Mr. ROYAL. Well, the profile obviously of the business is
different. We offer a number of different products and that
carries different challenges in them. I think that there are
opportunities to take those opportunities, and one of those
opportunities is maintaining a healthy collaboration between
the public and the private sector.
Private disability has an opportunity to take some of the
burden off of governmental programs by providing income
replacement early on in the process so they are not having to
look for other safety net programs, and the private disability
insurance companies also help to promote return to work so that
they actually get on--they are on the rolls less of a time.
So not only is there efficiencies in the organization, but
efficiencies working together from a industry, public and
private, that will increase the overall economic welfare
valuable of disability insurance.
Mr. KELLY. Mr. Shark, then, how do you incentivize from the
Social Security level? How would you incentivize the people
that are on the staff? What you would use? I know for Mr. Royal
it is you keep your job. But for people in SSA how do you do
that? What makes that person come to work every day, throw
their feet out over of the bed, getting up and getting dressed
and going to work
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and want to go to work, and know that there is a light at the
end of the tunnel? How would SSA do that?
Mr. SHARK. Well, I think they are in a better position to
answer that than I would. But from the outside looking in, I
would say that--you know, people love recognition. If I can't
get a raise, how can I be recognized? And if that is part of
your job description, that is what they are supposed to be
doing to begin with. So there is an expectation.
But going beyond the norm, there could be some levels of
recognition that might be an award, some kind of thing they
would put on their wall, some kind of thing that goes into
their review process, it could lead to a promotion, and they
should be the champions, also the ones training others when
they have found something. So it is kind of giving them the
incentive through ego recognition for their performance.
Mr. KELLY. That is the answer. It is ego.
Mr. SHARK. Yes.
Mr. KELLY. I mean, compensation is one thing.
Mr. SHARK. Yes.
Mr. KELLY. But recognition for doing a good job is a lot
more important.
Mr. SHARK. And we take that for granted, because we know
what we can't do. We know we cannot give them a financial
raise, but this is something that can be done.
Mr. KELLY. My experience since I have been here 3 years, we
bring these folks in here. We all work together. We work for
the same people.
Mr. SHARK. Yeah.
Mr. KELLY. And all of a sudden we get out this hammer and
start beating them: You are not doing the right job, you are
not doing the right job.
Mr. SHARK. Yeah.
Mr. KELLY. So whenever they commit like we are doing today,
how can we work with you?
Mr. SHARK. Yeah.
Mr. KELLY. What can we do to help you be better at what you
do? Because if we do that, then the American people win.
Mr. SHARK. Yes.
Mr. KELLY. It has nothing to do with Congress beating down
the SSA or taking people who we think are doing a fraudulent
thing. It is a matter of getting it to a point where the
taxpayer gets the best return on his or her investment. It is
incredibly important.
Mr. SHARK. Right.
Mr. KELLY. So I agree with you. In my business, recognition
by far.
Mr. SHARK. I do the same.
Mr. KELLY. Compensation only goes so far.
Mr. SHARK. Yes.
Mr. KELLY. Recognition lasts a lot longer.
Mr. SHARK. Yes.
Mr. KELLY. So that is one of the things that perhaps SSA
could take out of this meeting, or could talk with you.
But I do, I want to thank you all for being here. This is
incredibly important. What I always keep going back to, I think
there is
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a disconnect when it comes to the Government. The people I
represent back home say the Government needs to do this. Well,
the Government works for you. You have to switch that around
and understand the revenue comes from hard-working American
taxpayers. That is who funds everything. We have to give them a
better return on their investment.
So, Mr. Chairman, thanks for having this meeting and all of
you, thanks so much for what you do. SSA, good to have you here
again with us today.
Thank you.
Chairman JOHNSON. I think this was a good meeting and I
appreciate you staying here.
And you too, Commissioner. You have heard these panels and
we appreciate the testimony. I think now that the subcommittee
has examined and provided feedback to Social Security's plans
to stop crimes against the taxpayers, I think the Commissioner
will make her plan implementation one of her top priorities,
which she already has done. I think the American people deserve
nothing less.
I hope we can stop the fraud that goes on in this agency
and grab it by its roots. And I appreciate you being here
today, all of you. Thank you.
And the committee stand adjourned.
[Whereupon, at 11:49 a.m., the subcommittee was adjourned.]
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