[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
SOCIAL SECURITY DISABILITY FRAUD SCHEME
IN NEW YORK
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 16, 2014
Serial No. 113-SS09
__________
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 SOCIAL SECURITY
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 January 16, 2014 announcing the hearing.............. 2
WITNESSES
The Honorable Patrick P. O'Carroll Jr., Inspector General, Social
Security Administration, accompanied by Edward Ryan, Special
Agent-in-Charge, New York Field Division, Office of the
Inspector General, Social Security Administration.............. 9
The Honorable Carolyn Colvin, Acting Commissioner, Social
Security Administration, accompanied by Beatrice M. Disman,
Regional Commissioner, New York Region, Social Security
Administration................................................. 18
SUBMISSIONS FOR THE RECORD
Consortium for Citizens with Disabilities, statement............. 59
Elsibeth Brandee McCoy, letter................................... 64
Larry Butler, statement.......................................... 66
Michael Gilbert, statement....................................... 70
National Organization of Social Security Claimants'
Representatives, statement..................................... 74
Veronica Mayer, letter........................................... 76
QUESTIONS FOR THE RECORD
The Honorable Patrick P. O'Carroll Jr............................ 50
The Honorable Carolyn Colvin..................................... 55
SOCIAL SECURITY DISABILITY FRAUD SCHEME IN NEW YORK
----------
THURSDAY, JANUARY 16, 2014
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:00 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:]
HEARING ADVISORY
Chairman Johnson Announces Hearing on Social Security Disability Fraud
Scheme in New York
Washington, Jan 9, 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 a massive Social Security Disability Insurance
fraud scheme in New York that could cost taxpayers hundreds of millions
of dollars. The hearing will take place on Thursday, January 16, 2014
in B-318 Rayburn House Office Building, beginning at 9:00 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:
On January 7, 2014, the New York County District Attorney's Office
announced the indictment of 106 defendants for their alleged
involvement in a criminal conspiracy to defraud taxpayers. The
defendants, who include many retirees of the New York Police and Fire
Departments, are accused of massive fraud against the Social Security
Disability Insurance (SSDI) program. The 102 beneficiaries, along with
four facilitators who assisted them, are accused of collecting
approximately $22 million in fraudulent benefits.
According to the District Attorney, from approximately January 1988
to December 2013, the four principal defendants in the case coached
applicants on how to falsely demonstrate symptoms of mental disorders
in order to obtain disability benefits in exchange for a cash payment
of up to $50,000. The remaining 102 defendants are charged with lying
about their mental health and ability to work in order to receive SSDI
benefits to which they were not entitled. Each claimant collected an
average of $210,000 in total fraudulent SSDI payments, though for some
the total amount obtained was close to $500,000. Many defendants
falsely claimed to suffer from post-traumatic stress disorder and other
mental illnesses as a result of their experience with the September 11,
2001 terrorist attacks.
According to the Social Security Administration (SSA) Office of
Inspector General (OIG), the investigation dates back to 2008, when New
York Disability Determination Service employees noticed that many
applications had the same handwriting and contained identical
descriptions of their ailments. These claims were referred to the SSA
OIG's New York Cooperative Disability Investigations unit. In 2011, the
SSA OIG and the New York County District Attorney's Office launched an
undercover operation that led to the indictments.
The announcement of these indictments follows revelations of
similar abuse in August 2013, when authorities arrested more than 70
individuals involved in a disability fraud conspiracy in Puerto Rico.
Also, in October of 2013, the Senate Homeland Security and Governmental
Affairs Committee released the results of their bipartisan
investigation detailing inappropriate conduct and collusion between a
West Virginia law firm, a Social Security Administrative Law Judge and
some local doctors in approving benefits while outlining the
ineffective oversight by the SSA.
With the 2013 Social Security Trustees report projecting that the
SSDI program will only be able to pay 80 percent of benefits beginning
in 2016, losses to the system from fraud is an issue of increasing
concern. According to the SSA, 11 million beneficiaries received $139.4
billion in SSDI benefits in Fiscal Year 2013.
In announcing the hearing, Social Security Subcommittee Chairman
Sam Johnson (R-TX) said, ``The widespread disability fraud uncovered in
Puerto Rico and most recently in New York is deeply troubling and
unacceptable. Scandal after scandal proves the Social Security
Administration is failing to protect precious taxpayer dollars and
undermines Americans' confidence in this vital program. With the
Disability Insurance program unable to pay full benefits as early as
2016, my number one priority has been to keep this program strong for
those who truly need it and protect taxpayer dollars. It's time for
Social Security to make it their number one priority as well. On behalf
of hardworking American taxpayers, I am committed to getting answers
and rooting out waste, fraud and abuse. Social Security must be held
accountable for failing the American taxpayer and work to restore their
trust.''
FOCUS OF THE HEARING:
The hearing will focus on the details of the New York
investigation, how the fraud scheme was carried out, the estimated cost
to taxpayers, and what the SSA is doing to crack down on disability
fraud in the wake of this and other scandals in Puerto Rico and West
Virginia.
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Please Note: Any person(s) and/or organization(s) wishing to submit
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From the Committee homepage, http://waysandmeans.house.gov, select
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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
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Finally, please note that due to the change in House mail policy, the
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FORMATTING REQUIREMENTS:
The Committee relies on electronic submissions for printing the
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2. Copies of whole documents submitted as exhibit material will not
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3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental
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Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov.
Chairman JOHNSON. The meeting will come to order. Let me
begin by saying to all my colleagues on this Subcommittee that
it is with deep regret that we had to call this hearing today.
Last week we were greeted with shocking headlines. The New
York Times led with, ``Charges for 106 in a Huge Fraud Over
Disability.'' And ABC News led with the ``New York cops,
firefighters, in massive 9/11 fraud, the indictment says.'' I
am outraged. But, more importantly, the American people are
outraged. Law-abiding Americans woke up to learn that the taxes
they paid to Social Security had been stolen.
Today's hearing follows September's hearing on the scandal
in Puerto Rico, which, according to the Inspector General, who
is with us today, was at that time the largest fraud in the
history of Social Security. Now, less than six months later, we
have another even more shocking scandal in New York, where 106
people have been arrested. Not only the size of the fraud that
is shocking, but those who committed it: former policemen,
firemen, and a former FBI employee.
Worse, some of the defendants falsely claim that their
disability was caused as a result of the 9/11 terrorist
attacks, while many had never even worked at Ground Zero. It is
truly a sad day in America when people who once held positions
of public trust betray the public confidence. These individuals
are accused of stealing from a vital program that serves those
who can no longer work, due to disability.
In Fiscal Year 2013, Social Security paid out $139 billion
in disability benefits to 11 million beneficiaries. Also in
that same year, Social Security paid out retirement benefits to
57 million beneficiaries. This Subcommittee has held 11
hearings on the disability program, and three of them focused
specifically on disability fraud because preventing fraud is
essential to maintaining public confidence in the program.
The public is fast losing faith in Social Security, and I
don't blame them, because we all are. While I fully recognize
there will always be bad apples, what is going on these days is
very different. This is a program plagued by fraud conspiracy.
First, there was West Virginia. In October of 2013, the
Senate Homeland Security and Governmental Affairs Committee
released the results of their bipartisan investigation
detailing collusion between a West Virginia law firm, a Social
Security administrator, Administrative Law Judge, and some
local doctors in approving benefits. Then there was Puerto
Rico. And now, New York.
The initial cost to the system in New York is $22 million
initial cost. In Puerto Rico, the scandal initially alleged to
cost taxpayers $2.1 million. Amounts resulting from the
corruption in West Virginia are still under investigation.
Moreover, a total 181 individuals have been arrested in the New
York and Puerto Rico scandals.
I know that crooks don't care about the people who really
need their benefits, but I do. According to the Trustees, it is
only two years before Social Security can only pay reduced
benefits, unless Congress acts. The program can't afford more
fraud. It is only a matter of time when Congress may be asked
to bail out this program with the retirement side having to
come to the rescue. And, if that is the case, then all
taxpayers and beneficiaries will shoulder the burden of a crime
wave.
What is more troubling is that the cases are just the ones
we know about so far. As we will hear from the Inspector
General today, other similar investigations are underway. Like
organized crime, these recent scandals reveal fraud committed
by a network of professional crooks made up of doctors,
lawyers, and judges. It is the new get-rich-quick scheme worth
tens of thousands of dollars for every person who illegally
gets on the rolls. It is appalling. And in New York, it went on
for 25 years, starting in 1988.
With the shocking news of the disability scandal in New
York, Puerto Rico, and West Virginia, Americans and this
Subcommittee deserve answers, and we need them now. On behalf
of my colleagues and the taxpayers, I am asking how can this
happen time after time after time. Why is Social Security
failing to prevent these fraud conspiracies in the first place?
But it is more than answers that are needed. To restore
trust in the disability program, Social Security must be held
fully accountable for failing to prevent widespread fraud.
Accountability must be accompanied by action to prevent this
from happening ever again. I think the time for excuses is
over.
Let me make myself clear. I expect accountability at Social
Security for these crimes. It is time for real leadership. It
has been nearly a year to the day since Social Security had a
Commissioner. With the greatest respect to Mrs. Colvin, she has
been appointed on a temporary basis. These scandals send a
clear warning to the President that we need a Social Security
commissioner who will make it his or her six-year mission to
fight fraud and restore to the public confidence in this
program.
Further, not once has any Commissioner personally asked for
our help to fight fraud. The next Commissioner must set a bold,
new course, and be unafraid to reach out to us here in the
Congress.
Mr. O'Carroll, I am demanding a full investigation by your
office of Social Security's entire management and their failure
to prevent fraud and conspiracy. And it must be a full, top-to-
bottom investigation of Social Security. Leave no stone
unturned. Find out how this could happen, and what Social
Security can do to stop it in the future. You must make this
investigation your top priority. I want the investigation with
recommendations quickly. The rip-off of taxpayers by
professional fraudsters has to end, and it needs to end now.
I also would like a full report from you, Acting
Commissioner Colvin, telling Congress the immediate actions you
are taking to prevent these crimes from occurring again and
again, as well as any recommendations for legislation that
might help you. I want this report within 30 days.
Lastly, preventing fraud should not be and is not a
partisan issue. Ranking Member Becerra, I would like to work
with you on whatever legislative is needed.
Today we will hear from Acting Commissioner Carolyn Colvin
and the Social Security Inspector General Pat O'Carroll. Don't
just tell us about the facts of the scandal; we can read that
in the news. And don't just tell us about what you did; it is
clearly not enough. And don't just say you need more money,
when the fact is Social Security has utterly failed to protect
taxpayer dollars in the first place. Social Security must first
regain the trust of the American taxpayer before it can
credibly argue for more money.
Hard-working taxpayers want, need, and deserve answers and
action now to restore their confidence in Social Security. I
thank you all for being here today.
Chairman JOHNSON. I now recognize the Ranking Member, Mr.
Becerra, for his opening statement.
Mr. BECERRA. Mr. Chairman, thank you very much. And let me
join with you in saying that we must ask Social Security to do
everything possible, and certainly the Inspector General, to
give us the best sense of how to go about going after that
conspiracy, that fraud that does occur.
But let me differ a bit, Mr. Chairman, from the way you
have described it. The conspiracies in Puerto Rico, New York,
were not uncovered by some intrepid consumer or some truth-
seeking American or some law enforcement officer outside of
Social Security. It was uncovered by front-line Social Security
staff. And they are working day in and day out. In fact, they
have units, some fraud-busting units, that are doing exactly
what we want them to do.
So, it is more a matter of how do we work with the people
there busting fraud today within Social Security, whether in
the inspector general's office, or just the front-line staff of
Social Security, that we must work with. Because when you have
former police officers, former firefighters, when you have
doctors who are colluding, these are all people of trust.
And so, when a front-line Social Security representative
sees a report from a doctor, and sees in front of her or him a
former police officer who may have been involved in 9/11, or a
former firefighter who had saved people's lives saying, ``I am
disabled, and here is my documentation from a doctor saying I
deserve now to receive the disability insurance benefits that I
pay for,'' you could only do so much, unless you are going to
say we are not going to not trust people like former
firefighters, former police officers, and our doctors who care
for us every day.
And so, this is deep, because the collusion was heavy and
the conspiracy was dark. And so we have to get to the bottom of
this. But to say that this is the fault of Social Security is
to blame the wrong people who are working every day, and whose
trust we have put in for decades to make sure that Social
Security serves those who paid for it.
Remember, American workers pay for Social Security and
Social Security Disability Insurance. Over its lifetime of some
78 years, Social Security has received from American workers
some $14.5 trillion in taxes, Social Security contributions.
Because we haven't used that all up, and because some of that
money has earned interest by being stored away in bonds, we now
have more than $2.5 trillion in the Social Security trust fund
available for Americans who have paid for Social Security and
Social Security Disability Insurance.
Social Security Administration workers have diligently, day
in and day out, worked to protect Americans' Social Security.
And I believe we see that in the conspiracy that was uncovered
in Puerto Rico and in New York. Social Security provides a
lifeline to 58 million Americans each month, 58 million
Americans each month. Yet it has an overpayment rate of less
than one-half percent. Let me repeat that: less than half-a-
percent overpayment, meaning whether it was due to fraud or due
to error overpayment.
In fact, that error rate, if you compare it to the private
sector, is quite low. Private sector payrolls, which calculate
the paychecks that millions of Americans get every day, that--
the rate of error for the private sector payroll offices in
these companies, is probably about four times higher than
Social Security's. One out of every five consumers has an error
in their credit report that could keep them from getting a
loan, or force them to pay higher rates in interest than they
should.
Do I need to talk about Target and the recent privacy-
hacking there, or Neiman Marcus, or you name it? It happens,
because there are some bad people out there, and they are after
our money. And it shouldn't surprise people that they are after
Social Security's money, as well. So we have to work very hard,
Mr. Chairman. And I want to join you in calling forth this
investigation. But let's make sure we aim our fire at the bad
guys, not the front-line workers who are detecting the fraud,
not the front-line workers who are working so diligently to try
to protect Americans' money.
One of the most powerful fraud-busting teams that SSA has
is the cooperative disability investigations unit. It is--it
links with the inspector general, with local law enforcement,
and front-line SSA staff. They are highly effective. In 2012
alone, these fraud busters prevented $340 million in fraudulent
Social Security payments. Most importantly, fraud prevention is
built in to Social Security's day-to-day operations.
As I said--I ask again. Who was it that uncovered the fraud
conspiracy in New York? SSA front-line staff. Who was it that
uncovered the conspiracy in Puerto Rico? SSA front-line staff.
Day in, day out, Social Security workers are standing guard.
The recent fraud cases were sophisticated conspiracies,
involved recruiters who sought out individuals to willingly
falsify applications for benefits, colluding doctors willing to
provide fraudulent medical evidence. Defrauding the disability
insurance program, as in these conspiracies, requires criminal
collusion, criminal collusion from doctors and other persons in
positions of trust.
The New York City conspiracy, if you can believe it, again,
required former police officers who recruited others to lie, an
attorney willing to submit false claims, doctors willing to
provide fake evidence, and applicants willing to undergo fake
treatment for a year to make it look like they were genuinely
disabled.
Social Security's front-line employees are trained to spot
and prevent fraud. Every employee, from the newest hire to the
long-term veteran, attends fraud referral training every year,
and is alerted to potential fraud tip-offs via a monthly
bulletin. The vast majority of disability insurance
beneficiaries, let's remember, are honest, hard-working
Americans who earned their benefits through hard work, and now
they need them to live on.
To put it in perspective, last year, about 11 million
people received Social Security disability insurance, and about
1.8 million applied for disability benefits. That same year,
Social Security Administration front-line staff made over
22,500 referrals for suspected disability fraud. The IG opened
formal investigations on 5,300 cases, and referred 100 to the
attorney--a U.S. Attorney's office for prosecution. As you can
see from these statistics, the vast majority, 99.9 percent of
disability beneficiaries, are hard-working Americans who earned
their benefits.
So, Mr. Chairman, let me begin to close by saying this. We
know that the number of disability insurance recipients has
increased. But everyone who has looked at this has told us it
is not so much because of fraud, it is because the Baby
Boomers, we are retiring, and we are beginning to use our
Social Security or our Social Security disability benefits.
Women, over the last decades, have begun to join the workforce,
and now they are becoming Social Security recipients or
disability insurance recipients. So the chief actuary has told
us that you don't even calculate, in the reason for the growth
in the disability insurance population, the issue of fraud.
So, let's go full steam ahead to investigate fraud, but
let's not say that that is what is driving the fact that
honest, hard-working Americans are now using their disability
benefits. Let's go after the frauds, let's go after those who
are willing to take away the taxpayer dollar. But let's not
deprive those who have earned it, and now should receive it.
And finally, Mr. Chairman, as we go about deciding how to
go out there and detect this fraud before it can ever happen,
let's not under-staff the very people at the front lines who
detect it first. Let's not tie the hands of Social Security to
find the fraud by continuing to cut their budget over $1
billion in the last year or two. That New York City office that
detected the fraud, today they have fewer people on the front
lines working than they did back in 2008, when they detected
the fraud.
If we don't want to see fraud, we can't take the fraud
busters off the front line. And so, let us work together to
detect the fraud, but give Social Security the resources and
personnel it needs to continue to be the defenders of a good
working program for all Americans.
Mr. BECERRA. And, with that, Mr. Chairman, I yield back.
Chairman JOHNSON. Thank you, Mr. Becerra. As is customary,
any Member is welcome to submit a statement for the hearing
record. And, before we move on to our testimony today, I want
to remind our witnesses to please limit your oral statements to
five minutes. However, without objection, all of the written
testimony will be made part of the hearing record.
And before I introduce our witnesses, I want to recognize
two important people who are in our audience today from the
Manhattan District Attorney's office: Cyrus Vance, Jr., a
District Attorney; and David Szuchman, Executive Assistant,
District Attorney, and Chief of the Investigation. Thank you
all for being here.
On behalf of all Americans, I want to thank you and your
staffs, along with the federal agents from the Social Security
Inspector General's staff, the detectives from the New York
Police Department, the New York State Attorney General's
office, other state and local law enforcement agencies that
have assisted in the arrests, and the employees of the New York
State Disability Determination Services, and the Social
Security Administration. Thank you for your tireless work in
bringing these defendants to justice.
We will now return to our hearing. And I am suspending our
usual witness order protocol by asking the Honorable Patrick
O'Carroll, Jr., Inspector General, Social Security
Administration, to testify first, given the hearing's focus on
the New York fraud scheme, and the primary role of the
Inspector General and federal agents in this investigation. Mr.
O'Carroll is accompanied by Edward Ryan, Special Agent in
Charge, New York field division, Office of the Inspector
General, Social Security Administration. And next is--next to
him is Honorable Carolyn Colvin, Acting Commissioner of Social
Security Administration.
Mr. O'Carroll, welcome, and thanks for being here again.
Please go ahead.
STATEMENT OF PATRICK P. O'CARROLL, JR., INSPECTOR GENERAL,
SOCIAL SECURITY ADMINISTRATION, ACCOMPANIED BY EDWARD RYAN,
SPECIAL AGENT-IN-CHARGE, NEW YORK FIELD DIVISION, OFFICE OF THE
INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION
Mr. O'CARROLL. Good morning, Chairman Johnson, Ranking
Member Becerra, and Members of the Committee. Thank you for the
invitation to testify today. I am joined by Special Agent in
Charge Edward Ryan from our New York field division. I am also
joined here today with the district attorney for Manhattan,
Cyrus Vance, Jr., without whom this case may never fully have
come to light.
The man you see on the TV screen is Louis Hurtado. Mr.
Hurtado was an NYPD officer until 1988, when he left the force
on a disability pension. In 1990, he applied for Social
Security disability benefits, using a man named Raymond
Lavallee as his attorney. In 1991, he was awarded benefits,
including a lump sum retroactive payment of almost $19,000. He
continued to receive as much as $1,700 in benefits every month,
until they were suspended this week. In all, he received about
$475,000 from SSA. For much of this time, he owned and operated
the VIP Black Belt Champions Training Center. He taught and
performed martial arts, and you can see him in his activities
in this video.
While we have more evidence than this clip, I am sure you
will agree that running a business like this is inconsistent
with his claim that he can't perform any work in the national
economy. He is just one of 102 disability beneficiaries in this
case. You will see pictures of some of them appear as I talk,
who were recently indicted for fraud, and all but one has been
arrested.
It is alleged that these 102 beneficiaries, most of them
retired New York City public safety officials, were able to
fraudulently obtain disability with the help of four men:
Raymond Lavallee, an attorney; Thomas Hale, a disability
consultant; Joseph Esposito and John Minerva, who are retired
NYPD officers who acted as facilitators and recruiters.
The alleged scheme worked like this. A public employee on
disability pension would contact Esposito or Minerva, who
explained what the applicant needed to do to get SSDI for
mental impairment, including coaching them on dealing with
doctors, and then referred them to Hale. Hale further coached
the applicant on how to appear mentally disabled, how to act,
and what to say. About half of the applicants alleged stress
from their work on 9/11, which caused the impairment, then
referred them one of the two doctors and to Lavallee.
After a year of mental health treatment, Lavallee would
submit the disability application, and the person would be
awarded SSDI, including a large lump-sum check for the year
they were undergoing the treatment. Although the law generally
limits attorneys to a fee of no more than $6,000, Lavallee and
the other conspirators charged a fee equal to 14 months' worth
of benefits, often more than $40,000, and accepted only cash as
a payment. Esposito would instruct the clients to withdraw cash
from their banks in amounts under $10,000 to avoid IRS
detection, and then have them bring the cash to him. He would
then split the cash with his partners.
It was a lucrative business. When we executed search
warrants on these four men, we found large amounts of cash in
their homes and in their safety deposit boxes. For example, one
safety box alone--safety deposit box alone held $650,000.
Another one held $42,000 in cash, 28 gold coins, and 5 silver
platinum bars.
We began this investigation in 2008, after our New York CDI
unit received a number of allegations from the New York DDS. It
was a complex and lengthy investigation, but after a successful
undercover operation, court-ordered wire taps, search warrants
that I mentioned earlier, and working closely with the NYPD and
the Manhattan district attorney's office, we were able to
obtain all 106 indictments. This investigation is ongoing and
very active; there will be likely more arrests to come.
The SSDI program relies to some extent on honesty and
integrity of the applicant. When that fails, it relies on the
integrity of attorneys and doctors. When all those fails, fraud
becomes a real possibility. Luckily, there are lines of
defense, including the talented employees of SSA and the DDSs,
anti-fraud measures like the CDI program, which led to this
investigation, and law enforcement agents like the ones who put
countless--hundreds of hours into this investigation.
I can't say enough about them or the unflagging cooperation
and support of the Manhattan DA's office and the NYPD. It was
gratifying to sit in the courtroom in Lower Manhattan last week
and see those who defrauded SSA brought before a judge in the
first step of the judicial process. This is obviously a very
short version of a long and successful story.
SAC Ryan and I are happy to answer any questions that you
have. I thank you for this hearing.
[The prepared statement of Mr. O'Carroll follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman JOHNSON. Thank you. We appreciate your testimony.
Commissioner Colvin, I appreciate you being here. And I
didn't introduce your associate, Bea Disman; thank you for
being here, as well. You are recognized.
STATEMENT OF CAROLYN COLVIN, ACTING COMMISSIONER, SOCIAL
SECURITY ADMINISTRATION, ACCOMPANIED BY BEATRICE M. DISMAN,
REGIONAL COMMISSIONER, NEW YORK REGION, SOCIAL SECURITY
ADMINISTRATION
Ms. COLVIN. Chairman Johnson, Ranking Member Becerra,
Members of the Subcommittee, thank you so much for this
opportunity to discuss our front-line employees' role in
uncovering the disability fraud conspiracy in New York. My name
is Carolyn Colvin, and I am Social Security's Acting
Commissioner. I have served in this position since February of
2013. I am joined by Beatrice Disman, our Regional Commissioner
for the New York Region. Ms. Disman is available to answer
questions you may have about the case.
Like you, I am offended whenever anyone attempts to defraud
the government. I am especially outraged by the details of the
fraud conspiracy in New York. In this case, an attorney and
several others fabricated medical history to defraud the
government of millions of dollars in disability benefits. Most
of the false claims involved former firefighters and police
officers. Some even alleged disabilities that they said arose
from the tragic events of 9/11. Frankly, I am disgusted by this
betrayal of the public trust, and I applaud the Chairman for
shining a light on our work to root out fraud.
On behalf of every employee at SSA, I am putting the
criminals on notice. We will find you, we will prosecute you,
we will seek the maximum punishment allowable under the law,
and we will fight to recover the money that you have stolen.
Social Security has zero tolerance for fraud. Moreover,
this case in New York touches a very special nerve. As you can
imagine, criminals invoking the memory of 9/11 to masquerade as
disabled is deeply personal for our employees in the New York
Region. Not only are the New York Regional Office and the New
York DDS located within blocks of Ground Zero, but many of our
employees were working at the time of the attack, and were
fortunate to escape with their lives. Many of those same
employees also returned to work in emergency outposts
throughout the city to accept survivor claims from the families
of the deceased.
As the investigation unfolds, I could not be prouder of our
employees at SSA, the New York DDS, and the office of Inspector
General. They worked cooperatively to flag the fraudulent
cases, connect them to a criminal conspiracy, and build the
cases for prosecution. Partnership with state and federal law
enforcement has likewise been essential. We owe a special debt
of gratitude to the diligent employees of the New York DDS, who
are funded and trained by SSA to make disability determinations
and to identify fraud.
These employees originally referred fraudulent cases
involved in the conspiracy to the OIG. Over time, the OIG began
to notice patterns in the referrals. The New York Cooperative
Disability Investigation unit, one of the original five CDI
units established in 1998, was critical to connecting the
individual cases to a criminal conspiracy. To date, the
Manhattan District Attorney has indicted 106 individuals for
their crimes.
According to our estimates, the fraudulent payments totaled
$23.2 million to 102 disability beneficiaries and their
auxiliaries. We have already suspended these individuals'
benefits, and we will move aggressively to recover any
overpayments.
While our data show that the level of fraud in the
disability program is less than one percent, even one case of
fraud is too many. The best way to ensure we continue stopping
fraud is to invest in our employees. Last year, they made over
22,500 disability fraud referrals to OIG. Regrettably, Congress
has not fully funded our employees' good work. In fact, since
Fiscal Year 2012, Congress has appropriated $421 million less
for program integrity reviews than what it authorized for us in
the Budget Control Act.
Recent news that Congress may fully fund our program
integrity budget in 2014 is a step in the right direction.
These resources would help to ensure that only those persons
eligible for benefits receive them. However, I must caution
that eliminating the CDR backlog and reversing the negative
effects of past years of under-funding require a multi-year
commitment. The net effect of budget cuts over the past three
years has been the loss of about 11,000 employees. That means
drastically fewer people standing watch for the next attempted
theft, and drastically fewer people available to serve those
who truly need us. Fewer people to handle mounting workloads
also jeopardizes our exceptionally high payment accuracy, which
is 99 percent or better in the Social Security disability
program.
We are proud of these results, and we will continue
delivering them with your support. Thank you. Ms. Disman and I
will do our best to answer any questions you have, with the
understanding that the fraud case is an active investigation.
[The prepared statement of Ms. Colvin follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman JOHNSON. Thank you for your testimony. We will
turn to questions now. And I have one for Mr. O'Carroll.
The New York case is the latest of three disability fraud
cases in less than two years. Can the American people expect
more like this? Yes or no?
Mr. O'CARROLL. Chairman Johnson, we have got a number of
investigations going on now involving----
Chairman JOHNSON. The reason I ask is can we expect more
like this to surface, yes or no?
Mr. O'CARROLL. Probably.
Chairman JOHNSON. Okay. You are refusing to give me a yes
or----
Mr. O'CARROLL. If you want a yes on it, yes. We have other
investigations of----
Chairman JOHNSON. Okay.
Mr. O'CARROLL [continuing]. Magnitude.
Chairman JOHNSON. Thank you. Ms. Colvin, has anyone at your
agency been held accountable for fraud conspiracy in West
Virginia, Puerto Rico, or New York cases?
Ms. COLVIN. All of those cases are still open and active.
Chairman JOHNSON. You didn't answer my question, either.
Are you holding anybody in your agency accountable, yes or no?
Ms. COLVIN. I think that my answer has to be that those are
still open cases. We can certainly----
Chairman JOHNSON. So the answer is no. Has anyone been
fired or disciplined for these fraud schemes?
Ms. COLVIN. There have been significant organizational
changes in our West Virginia office. But, as I said before,
those----
Chairman JOHNSON. Well, you got West Virginia, Puerto Rico,
and New York now. Are you taking care of those areas, as well?
Ms. COLVIN. I think we need to let the investigation
continue.
Chairman JOHNSON. You are not making any changes in the
Administration. Is that true or false?
Ms. COLVIN. We are not making any changes in the
Administration at all. There is no suggestion in my
understanding that we need to do that at this time. I would
prefer to see the investigation concluded, and we will make our
decisions at that point.
Chairman JOHNSON. Well, you know it has been a long time
coming. Those investigations have been going on for many years.
It is not just something brand new.
Ms. COLVIN. We make the referral, Mr. Chairman. We don't
determine the fraud or do the investigation. We simply make the
referrals. And we make considerable referrals each year.
Chairman JOHNSON. Yes, but you are running the agency right
now. And you note on page two of your testimony, ``The
continued success'' of the fraud detection and referral
process--you call success three scandals in two years, with the
last two within six months of the same region?
Ms. COLVIN. Yes, I would call it success, because I think
that anti-fraud activities have been very successful. Remember
that it was our staff who uncovered those cases, and it was the
Inspector General who was able to note patterns in those
individual referrals that suggested conspiracy.
I still contend that the first line of defense are our
well-trained employees, the DDS as well as the field office.
They are trained to identify potential fraud, and they are
doing just that. And, clearly, the reduction in the number of
staff we have to watch the alert to potential fraud is a
concern for us, because the numbers have substantially
decreased.
Chairman JOHNSON. Well, it seems like it took an awful long
time to uncover this last one.
On page two you state you will move to recover any
overpayments from the New York fraudsters. You call these
overpayments, but aren't they illegal payments? Yes or no?
Ms. COLVIN. I am sorry, you----
Chairman JOHNSON. The payments you made to those people in
New York during all this, you call them overpayments. Weren't
they illegal payments?
Ms. COLVIN. Bea.
Ms. DISMAN. Chairman, as in Puerto Rico, we can't make that
determination now. I am actually waiting to get a release from
the Manhattan District Attorney to start the re-review on the
cases. As a result of the re-review, we will be able to make
that determination. As I told you in Puerto Rico, in some of
the cases that were involved, there is other medical evidence
and other disabilities.
So, yes, we will be taking the same process as Puerto Rico.
But right now you have the indictments and we have not been
able to do that re-review of the cases.
Chairman JOHNSON. But it has been going on for years. It
seems to me you should have been more aware of it.
Mr. O'Carroll, according to your testimony, U.S. Attorney
for the southern district of New York ultimately declined to
pursue the case. Thankfully, Manhattan's District Attorney
agreed to take it. Why aren't federal prosecutors going after
these crime rings?
Mr. O'CARROLL. Well, Chairman Johnson, we have taken a
review of presentations on our investigations to U.S.
Attorney's office. And I would say more than half of the time
that we present to them, they do accept. Many times, the U.S.
Attorney's offices have thresholds for the amount of fraud that
is involved before they will authorize on a prosecution. And
often times, with our cases, especially in the infancy of a
case, it isn't that much, in terms of the dollar amount, to
attract the prosecution of it.
And also, too, is that, with a lot of these things, it is
cooperation. In terms of if we are using undercover agents or
using other agencies to help us on an investigation, we will
then have somewhat of an obligation to stay with the
organization. In this case, here, it was a partnership with the
district attorney's office. They were working in one direction,
we were working another. We partnered, and we came up with a
result. And we did keep the southern district of New York
informed on it as we went along.
Chairman JOHNSON. Well, I appreciate that, and I thank you
all for helping us in those instances.
Why don't federal prosecutors want to go after these kinds
of crime rings?
Mr. O'CARROLL. Well, in terms of the--it is usually--it is
a long, involved, complex investigation, would be the example
of these, and----
Chairman JOHNSON. Too small a----
Mr. O'CARROLL. And the small ones, they are not interested
in--usually, on it. What they will do is, if we can package
them together, and make a presentation with a half-a-dozen or a
dozen of these investigations, they will go. But--and often
times, I guess when they are making a determination on, you
know, charging someone with bank robbery or a disability fraud,
it goes in--you know, they have their priorities.
And we--but I got to also tell you, Chairman Johnson, I go
out personally and interview or meet with U.S. Attorneys across
the country, discuss with them investigations that we have,
explain to them the advantage of--the deterrent factor of doing
it. And often times, it is just by talking to them we end up
with prosecutions. So I am personally out there, talking to
U.S. Attorneys, trying to get our prosecutions.
Chairman JOHNSON. Well, thank you for that. I think if we
don't go after these crime rings, you know, the federal
prosecutors are sending a message to professional crooks and
the phony disabled that committing fraud pays off. Thank you
for your testimony. I think we need to change that.
Mr. Becerra, do you have questions?
Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for
your testimony. And may I just say congratulations on the work
you have done to uncover this fraud, the conspiracies? And
especially, Ms. Disman, to you, can you please express to all
your front-line workers a sincere thank-you for stopping what
had been a conspiracy that had run for quite some time? Very
much appreciated. Very much appreciative of the fact that they
are the ones, your staff are the ones that discovered this.
They are the ones that moved forward.
And, Mr. O'Carroll, to the inspector general, I say thank
you to you and your folks, working with New York City's
district attorney and the local law enforcement authorities
there in New York, for doing everything possible to follow up
on the detection of the fraud, and now go after these folks.
And, as the commissioner just said, now to go out and get back
the money that taxpayers paid. That is very, very important.
I want to clarify something, as well. Ms. Disman, when the
chairman asked you questions about have you taken back the
money that some of these corrupt individuals got, and you are
saying that is under investigation, I think you are essentially
saying what we all know, is that, in America, you are presumed
innocent until proven guilty. And not that we want any of these
despicable people who held a position of trust, having been
former police officers or former firefighters, that we want
them to keep the money they don't deserve, it is just that,
like any other American, before you can say, ``You are a bad
guy,'' we have got to prove it in court.
Ms. DISMAN. I absolutely agree with you in two respects.
Number one, let me assure all of you, this is even more
despicable to me, because of my role in September 11th. Let me
also assure you that my people started to identify these cases
right after we set up the continuing disability investigations
unit in 1998. So, we were identifying individual cases in 1999,
and referring them to the Office of the Inspector General. That
is how they were able to put together the trail and the
patterns that actually came together in 2008.
But having said that, we have--are abided by due process,
we intend to do it. But make no mistake. As in Puerto Rico, we
will get the money back. Once we review and determine the
amount of the overpayment--and I also hope that, with the
Manhattan District Attorney present, that part of sentencing
after the trial will be to recover the money.
Mr. BECERRA. Yes, so----
Ms. DISMAN. So I think we have a dual approach to recover
the money.
Mr. BECERRA. So I want to make sure that, on the record, it
doesn't look like you are giving a bureaucratic response when
you say, ``The investigation is underway.'' It is just that you
can't go out there and say publicly, as a government official,
``Yes, these corrupt guys are guilty, and we're going to get
the money.'' You are judging them before they have had their
day in court. And we want them to be judged, and we want the
judgment to be severe if they are found guilty. But, until
then, we don't have a right to say you're guilty before we
prove it.
Ms. COLVIN. Mr. Becerra, we also are taking some actions in
the cases that Chairman Johnson raised. We would be happy to
brief you privately, but we don't want to say anything publicly
that is going to compromise the investigation, and that is why
I kept stressing that it is an open investigation.
Mr. BECERRA. I appreciate that.
Ms. COLVIN. But there have been some actions taken.
Mr. BECERRA. I appreciate that. Maybe the chairman will let
us take advantage of that.
Ms. Disman, again, you are in charge back there in New
York. So, tell me, how many of the--of your Social Security
employees were involved in the conspiracy that was discovered?
Ms. DISMAN. None. Unlike Puerto Rico, where you had a
former Social Security employee, the extensive investigation
and extensive analysis--and, let me just stress, my people
worked directly with the Office of the Inspector General over
the years. We helped do all the analytical work on the cases.
And let me reassure you on this New York case. It is a lot
different than Puerto Rico. This is an affinity group of people
that were involved in, most of them, New York City pensions
that actually committed this awful conspiracy.
Mr. BECERRA. So, Mr. O'Carroll, let me get this straight.
In New York City, not one Social Security employee was involved
in this conspiracy of what you found?
Mr. O'CARROLL. Correct, Mr. Becerra. It was facilitators in
this case, not SSA employees.
Mr. BECERRA. Not SSA employees. And in Puerto Rico, there
weren't any Social Security employees involved, or at least not
current. It was a former employee. But those that are on the
line, on the job, getting paid by the taxpayers, were not
involved in the conspiracies in New York or Puerto Rico.
Mr. O'CARROLL. Correct.
Mr. BECERRA. Okay. They are the ones that detected it. They
weren't involved in it.
Mr. O'CARROLL. Yes.
Mr. BECERRA. Okay. Let's be clear on that. I think all of
you know that this congress has continued to cut your funding
over the last several years. And, Ms. Colvin, you mentioned
that, as well. You mentioned $421 million less that you have
received to do the fraud busting that we are talking about
today.
Ms. COLVIN. We are very pleased that it appears that our
Fiscal Year 2014 appropriation may be approved. It has been
approved in the House.
I would just say that we are very aggressively involved in
anti-fraud activities. That is one of the reasons that we first
established the CDI units back in 1998. At that time I was in
charge of operations for all of the field offices. And we have
seen that the CDI units are effective. These cases are very
complex, so you need the cooperation of the DDSs and SSA, the
Inspector General, and local law enforcement. And that is what
we have under the CDI, we have those formal arrangements.
But because of the lack of resources, we only have 25 CDI
units. With the program integrity money, if we get it, one of
the things I want to do is expand some of those units, because
we only have 25 states right now that have a CDI unit.
Mr. BECERRA. So let me conclude with this, because I know
my time has expired. So, Mr. Chairman, let me just ask one
quick question that I hope Mr. O'Carroll and Ms. Disman can
both answer.
First, do you have enough of those fraud busters, these CDI
units, where you need them? And secondly, how many of the
staffers that you had in 2008, when you detected the
conspiracy, the fraudulent conspiracy in New York, how many do
you have now?
Ms. DISMAN. Well, if you are talking about how many people
are in the New York DDS now, I can just tell you, compared to
2010, that staff is down 22 percent. And so, when you look at
that, there are certainly less people on the line to do this
work, and to report the detection. But they are really focused
on fraud.
I will tell you this case and the Puerto Rico case made our
employees even more aware. And what is important is not only
will you report it, it will be investigated, but what the
Manhattan DA did and the U.S. Attorney in Puerto Rico allows us
to do more referrals, because they see results as a result of
their referrals.
Mr. BECERRA. Inspector General?
Mr. O'CARROLL. The CDI units, I have got to say, with the
support of you, the chairman, and every--the members of this
Committee, this is probably one of our best tools in terms of
fighting fraud. The best part of it, it gets the money and
identifies the money before it goes out the door. It is pre-
effectuation.
With the support of this Committee, we are anticipating
expanding them. We are adding people to the CDI units that we
have now, with just the purpose of identifying fraudulent
doctors, lawyers, and facilitators. And I think we have a
pretty good story. And, moving forward, that is going to be one
of our, you know, priorities, with any resources that we have.
Mr. BECERRA. Thank you. Thank you, Mr. Chairman----
Mr. O'CARROLL. And we would like to be in all 50 states, is
what we would like to do.
Mr. BECERRA. Thanks, Chairman.
Chairman JOHNSON. Thank you. Mr. Griffin, you are
recognized.
Mr. GRIFFIN. Thank you, Mr. Chairman. I want to talk a
little bit about this 99 percent accuracy, 1 percent inaccurate
payment of overpayments and underpayments. You hear that
general talking point or that factoid, whatever you want to
call it, and you think, well, hey, everything is cool. It
sounds like it is all great.
But correct me if I am wrong, Mr. O'Carroll. Until we
learned about the folks that you showed upon the screen, we
thought those were legitimate, correct?
Mr. O'CARROLL. Correct.
Mr. GRIFFIN. So how can anyone tell me what they don't
know? I mean the people that we saw on the screen were part of
your accuracy. Sure, you can guess. You can estimate. But you
have no idea what you don't know. That is the nature of fraud.
If you knew what the fraud was, the next question would be,
``Why are we allowing it to happen?''
So, the idea that we can sit here and say, ``Well, it is
only one percent,'' you have no idea what it is, it could be 5
percent, it could be 10 percent, unless you have got a crystal
ball that I am not familiar with. So, I know that makes for a
good sound bite to say, well, it was only one percent, you
know, let's go to the House.
But it is just not true. You don't know. You don't know. I
don't know. And I am sure you would say, if you had more money,
you would know more. I have never heard a federal agency say
they need less money, ever. It will never happen, I guess. So,
I just want to get that point out there.
I know there is a lot of hard-working people doing a good
job. And you are a great guy, and I have worked with you on
some stuff. But I just wanted to clarify that. That really--
that entire talking point just needs to be erased. I am sure it
won't be. But it just makes no sense.
The second thing I would say is--and I cannot speak for the
Chairman--he does a great job on his own--but getting to the
other cases of fraud, West Virginia and New York, and--the
Chairman asked about employees. I certainly understand innocent
until proven guilty in a court of law with regard to these
guys' jet skis, and all this nonsense. Gymnast? I mean, you
know.
But when you are talking about employees, civil servants
who may or may not have been involved--and only you all know
the details, you know, there is a lot of stuff you can't
probably talk about here--we all know that, in order to fire
someone, they do not have to be innocent until proven guilty in
a court of law applying a beyond-a-reasonable-doubt standard.
That is not the standard to fire people.
So, a lot of times, when things are discovered in an
agency--IRS, for example, elsewhere--people are fired long
before the case has made its way through the system fully,
because you get enough, as an employer, to say, ``Hey, this
person shouldn't be working for me.''
Now, I understand it takes a whole lot of bad action in the
Federal Government under the civil service rules to get rid of
somebody. I mean I have worked in those agencies, and sometimes
you think, short of a murder, we just got to move them around
to some other desk, right? I mean let's all--we are all
laughing, because we know it is true. If there are people
identified as potentially bad actors, what do we do with them?
We don't have to wait for courts to act to take action on that.
I will wait on an answer on that.
One more thing I want to mention. And, you know, there is
always a danger with anecdotal evidence. But anecdotal evidence
is important for Members of Congress, because we go back home
and we hear stories, right? And I can tell you. I don't know if
the rules that we have that a lot of people comply with make it
easy to commit fraud, I don't know exactly. But I could tell
you that almost every time I go home--and I am thinking right
now about the Christmas holidays.
There is a guy that I know, and I have talked with some
folks about him, and he is a former professional. He rides a
motorcycle, he is very active, he does all sorts of things. And
he is on full disability, Social Security disability. And I
don't think it is fraud like this. I think he went right
through the system. And I think they said, ``You know what?
There is nothing in the world that you can do. You must just
get a check. Now go ride your motorcycle.'' You know, there is
a lot of that that goes on. And I know that is not in your 1
percent, 99 percent calculus.
So, I am out of time. But, Mr. O'Carroll, if you could,
just speak to the issue of employees that might need to be
fired, even though they are not guilty in a court of law.
Mr. O'CARROLL. Mr. Griffin, I will try to get both of them,
real quick.
First one, on the employees one, it is--you--just as this
thing--you know, it is important when an SSA employee goes bad,
we watch very closely on it. I must tell you. I get a report
every day about every one of our employee investigations that
we are having.
And amongst them, kind of along your lines, I have two
columns. I have--one column is what has happened to that
employee now, meaning are they still working at SSA or are
they, you know, on--if they are not at SSA, are they on leave
with pay, or are they on leave without pay? And what we try to
do is put them immediately on leave without pay while we are
doing any of their criminal activities. Sometimes we will leave
them in place, because that is the only way we are going to be
able to catch any co-conspirators on it.
But I must assure you. First and foremost of all of our
priorities is employee fraud. And I must say that it is a small
percentage, as we talked before. But any percentage, when you
are talking about fraud, is unacceptable.
And on the other one, for the person who is riding the
motorcycle and looking very healthy, that is the reason why we
have the CDI units, that is why we bring the videos in, to show
you that we go out when there is a suspicion like that and do
it. We get 140,000 allegations a year in our hotline, and we
try to run out as many as we can.
Chairman JOHNSON. Mr. Renacci, you are recognized.
Mr. RENACCI. Thank you, Mr. Chairman, and I want to thank
all of the witnesses with their testimony.
You know, when I got here this morning and I heard the
Chairman's opening remarks, you know, I agree 100 percent. He
used words ``shocking,'' ``outrageous.'' And when I heard the
Ranking Member's remarks, I almost thought, well, there is no
problem. We ought to just go leave and--it is the bad guys,
those bad guys out there.
And, the truth of it is, there are bad guys. And we do have
a lot of good employees. The issue, though, isn't just the bad
guys, because there are always going to be bad guys, and we are
always going to have to deal with bad people. The issue,
really, is what are we doing to make sure we protect taxpayer
dollars?
You know, when I was mayor of my community, I didn't start
every Monday morning meeting by saying, ``We got bad guys out
there, we better be careful.'' What I started out every meeting
was, ``The number one goal of every one of us in this
Administration is to make sure we protect the taxpayers'
dollars.'' So, when I go home, I have to listen to my
constituents who aren't going to say, ``You guys are okay, it's
the bad guys.'' They are going to say, ``What are you doing to
fix the problem?''
So, when you hear some of these fraud cases, and you see
some of the pictures, yes, there are bad guys out there. But
the question is, what are we doing to fix the problem? So I am
going to go back to I know one question that the Chairman
asked. I have got a couple as follow-ups.
You know, we have some issues. And, of course, there are
some employees who were involved, because somebody approved a
disability payment. So, at that point in time--and I am not
saying that was fraudulent, I am not saying it was wrong. But
somebody had to approve a bad payment. So there is an employee
somewhere that was involved. I am not saying that is a bad
employee; that could be a good employee. The question is, do we
review our staff? And have we made any changes in staff since
Puerto Rico or, now, with New York? Any changes in staff
because of these fraudulent activities? Yes or no?
Ms. COLVIN. I am going to let Bea speak specifically to New
York. But I don't see a reason to change our staff. There is
nothing that has come to my attention that suggests that our
staff has done anything wrong.
Mr. RENACCI. I am not saying they did.
Ms. COLVIN. Remember that the cases were identified by our
staff. The medical information was fabricated, so there is no
way that staff would have known that it was not----
Mr. RENACCI. Okay, let's move past that. Let's hold on. Any
changes in policy, then? Let's move--we have great staff.
Let's----
Ms. COLVIN. All right.
Mr. RENACCI. We've got that one. Now, any changes in
policy?
Ms. COLVIN. We are looking at a number of policy areas. We
are working with the Institute of Medicine to----
Mr. RENACCI. How long ago was the Puerto Rico issue?
Ms. COLVIN. How many?
Ms. DISMAN. The Puerto Rico issue was investigated over a
period of years. And it actually came to fruition, as you know,
in August of this past year.
Mr. RENACCI. Okay. Any changes in policy since August,
because of the Puerto Rico incident?
Ms. DISMAN. Well, there has been a number of initiatives.
As we looked at Puerto Rico, over the years----
Mr. RENACCI. Any changes in policy----
Ms. DISMAN. Well, I am going to tell you. There has been--
our policy staff has been in touch with the Administrative
Conference of the United States, and the Institute of
Medicine----
Mr. RENACCI. You are not answering the question.
Ms. COLVIN. Mr. Renacci, we have to have data and research
to make----
Mr. RENACCI. I am just asking a simple yes-or-no question.
Have there been any changes in policies?
Ms. COLVIN. You don't make changes that quickly.
Mr. RENACCI. Okay.
Ms. COLVIN. You have to have time to----
Mr. RENACCI. All right. We will move to the next one. Any
changes in procedures?
Mr. BECERRA. You have to let them answer.
Mr. RENACCI. I am asking yes or no questions. I am trying
to move on. I have five minutes.
Mr. BECERRA. They are answering----
Mr. RENACCI. Any changes in procedures?
Ms. COLVIN. I am sorry. If you are looking for yes-or-no
questions--answers, I can't give them to you.
Mr. RENACCI. You can't answer whether there has been any
changes in policies and procedures, or--since the Puerto Rico
issue?
Ms. COLVIN. [No response.]
Mr. RENACCI. All right. Let me give you a policy, then, and
just see what your thoughts are on it. Because, clearly, we are
not getting anywhere.
And I got to tell you. The people back in my district, they
are concerned about this. They are concerned and they want to
see action, that is why I am saying, I am not saying this is
bad people, and I am not saying we are bad employees. I think
you probably have a lot of great employees. And I think you are
working as hard as you can. But I do think we have to move when
we have dollars being lost, taxpayer dollars.
You know, the Medicare program, doctors convicted of
defrauding Medicare are banned from serving Medicare
beneficiaries. Can you tell me if doctors that are kicked out
of the Medicare program for previous fraud convictions are
allowed to give medical advice in these situations, and are we
accepting medical advice?
Ms. COLVIN. They are not. We have a list of doctors that
have been barred, and we check against that now. For
information that is coming in from individual providers, we are
not able to determine that. But for anyone that we hire or
engage, they are not allowed to do that.
Mr. RENACCI. Well, that is good. That is----
Ms. COLVIN. And the local states and governments are very
careful in checking those people who have been disbarred, if
their attorneys have lost their medical license or been
disciplined.
Mr. RENACCI. Well, I just ran----
Ms. DISMAN. If I could add to that, all the DDSs have
professional relations people whose job it is to look at the
licensing, and to also be alert to all of this. So they
basically take them off any consultative panels and the medical
evidence.
Mr. RENACCI. I am out of time. But I know that I heard Mr.
O'Carroll say that there are additional cases coming down the
line.
I would just ask you one thing, if you could get to my
office. I would like to hear what policies and procedures you
are going to change and have changed, hopefully within the next
three to six months. I would like to hear some of those things
and get some ideas. Policies and procedures, that is all I am
asking for.
Ms. COLVIN. We would be very happy to do that. That is why
I said it couldn't be a yes-or-no answer, but there are a
number of things in the works that I would be very happy to
discuss.
We are also looking at more data and analytics, so that we
can look at the patterns. Because we knew these individual
cases would not stand up alone, but when you see the pattern,
the language pattern or whatever, and that is why the CDI units
have been so effective, because we are able to work together
and see those patterns.
Mr. RENACCI. Thank you.
Chairman JOHNSON. Thank you for your comments. Mr. Rangel,
you are recognized.
Mr. RANGEL. Thank you, Mr. Chairman. And let me thank you
for--I really came down to congratulate you for this fantastic
investigation. I had hoped that--an example of these terrible
frauds that are being committed at the expense of men and women
that put up their lives every day, and probably find it more
difficult to get the type of assistance they need.
The tone of the questions, I hope you understand, is
because we do have a Democratic president, and sometimes
anything that is done by the Administration is not appreciated.
But in this particular case, I think, more than just the fact
that you have indicted 100 people, you have sent a message to
every policeman, every fireman, that the government does not
intend to allow these things to happen.
My question would be, did this information--was it received
by the southern district of New York, United States Attorney's
office, before it was turned over to District Attorney Vance?
Mr. O'CARROLL. Yes. What happened in the early stages of
this investigation was our investigators went to the southern
district in New York and presented on it. And, in fact, I will
have--let Mr. Ryan here, who--our agent in charge, he can kind
of walk you through the two approaches, or the several attempts
that we did, or several discussions that we had with southern
district.
Mr. RANGEL. Well, before we get involved in that, did they
reject the evidence that was given to them as--whether or not
they would prosecute?
Mr. O'CARROLL. Yes. Early on in 2009, December of 2009, the
case coordinators went over to the southern district of New
York.
Mr. RANGEL. And then you presented it to the----
Mr. O'CARROLL. We presented it. They initially accepted it.
Nine months later, we went back. Nine months later--I believe
it was in September of 2010 we went back to them, explained
what happened in that 9-month period. They decided at that
point in time to decline the investigation, because they needed
additional evidence to prove more than making false statements.
Mr. RANGEL. Okay. I can't think of a program that has done
more to take people out of poverty and to bring a sense of
self-esteem and make such a tremendous contribution to our
great nation than Social Security.
You did turn it over to one of the greatest district
attorney's offices that we have in the country. But as a former
assistant U.S. Attorney it bothers me that, with the type of
evidence that you presented to the New York County DA, that the
U.S. Attorney's office did not see fit to follow through on
this.
In any event, I want to personally thank Ms. Disman for the
cooperation that you have given with the difficult cases I have
had in my congressional district. And I want to thank all of
you for recognizing that it is rough being on that side of the
table. But when you know that you are right, when you know that
you have done the right thing, when you know that you have made
a contribution to stop corruption, and when you can see 100
people have been indicted, I think this should serve as an
example for all of our federal agencies and Department as to
what can happen when the front-line troops are looking for
this.
No U.S. Attorney's office, no district attorney's office
can prosecute anything unless the evidence is presented to them
in a way that is probable cause that they did violate the law.
So I want you to know that it is appreciated. But these things
happen politically, and all of you are mature enough to
understand it. I do. And thank you so much for coming before
this Subcommittee.
And thank you so much, Mr. Chairman, for having this very
interesting hearing.
Chairman JOHNSON. Thank you. Mr. Kelly, you are recognized.
Mr. KELLY. Thank you, Chairman. First of all, I appreciate
you all being here. And, as you know, Mr. Renacci was talking
about, you know, when I go back home--and it doesn't matter
where I go--people come up to me and say, ``You know what? We
know this is going on. And why aren't you guys doing something
about it?'' They don't say to me, ``Listen, you need to get
with the SSA people and find out who is not doing a good job.''
They say, ``You need to do something about this.''
And all of us in this room today, both you testifying and
us up here, we all work for the American people. You don't work
for SSA and I don't work for the Republican Party. In fact,
this is not a Republican or Democrat issue, this is an American
issue. Because, as you know--and, Ms. Colvin, you can probably
state it better than anybody else--how is Social Security
funded?
Ms. COLVIN. Taxpayer dollars. We are funded through----
Mr. KELLY. Wage taxes.
Ms. COLVIN [continuing]. FICA taxes.
Mr. KELLY. Yes, wage taxes.
Ms. COLVIN. Absolutely.
Mr. KELLY. Wage taxes are paid by people who are working,
and their employer: 6.2 percent from the employer, 6.2 percent
from the associate. There is 12.4 percent of everybody's
payroll going into a fund to take care of Social Security
recipients. So when we talk about these things, it really isn't
Republican versus Democrat, us versus you, it is about us, as a
group, representing the American people. They sent us here to
do a job. Our job in Congress is oversight, investigate and
expose when we think there is something wrong.
Ms. Colvin, I was looking at your bio. You have an
incredible bio. And if you don't mind, I am just going to go
through it, because I don't know if people understand
everything that you do. Now, this is since 1995. You are a
Regional Commission. You have direct authority over Social
Security Administrations in New York, New Jersey, Puerto Rico--
--
Ms. COLVIN. Ms. Disman.
Mr. KELLY. Ms. Disman. But this is all in your region,
right?
Ms. COLVIN. I am the Acting Commissioner for the entire
country.
Mr. KELLY. Okay.
Ms. COLVIN. Ms. Disman----
Mr. KELLY. Ms. Disman.
Ms. COLVIN [continuing]. Has the New York Region.
Mr. KELLY. Okay, I am sorry. Ms. Disman, right. You are
doing all of these different things.
In addition to that--now, that is an administrative budget
of about $400 million. You have 3,900 employees, 113 field
offices, 4 teleservice centers, 4 Social Security card centers,
the northeast program service center, and the regional office
administrative staff. Throughout the region, more than 7
million beneficiaries receive more than $88 billion--that is
billion--in Social Security and supplemental Social Security
income benefits, annually.
Now, you are also--you were asked by the Commissioner of
the Social Security to chair the Agency's Medicare planning and
implementation task force. Right? You are responsible for
implementing the responsibilities given to Social Security in
the Medicare Modernization Act of 2003, the Medicare
Improvement Acts--for Patients and Providers Act of 2008, and
the Affordable Care Act of 2010.
I am looking at all the different hats you wear. Right
now--and correct me if I am wrong on this, because I don't know
how you do these things--the reason you are here today is about
this crime ring in New York. All right? You were here before
because of Puerto Rico. But you are also the executive in
charge of implementing the Affordable Care Act on behalf of the
Social Security Administration. I understand that Social
Security Administration must confirm the Social Security number
of everyone who signs up for Obamacare.
So, as you come here today, is your concern--has to be
split. Of all these different things--really? You can do all
these things? You are amazing.
Ms. COLVIN. Excellent staff.
Mr. KELLY. You are amazing.
Ms. DISMAN. I also--it is more than just me. I have to
credit it with all the employees that work for me, my executive
team, and certainly all my years of analytical and experience,
institutional knowledge.
Mr. KELLY. Okay, all right. How many people we talking
about getting Social Security numbers for, verifying?
Ms. DISMAN. Well, we are talking about--are you talking
about for the Affordable Care Act?
Mr. KELLY. Yes, ma'am.
Ms. DISMAN. Well, for the Affordable Care Act at this point
in time, we wait for the CMS hub to send us----
Mr. KELLY. Just ballpark it. I am not--listen, this is not
a gotcha, I am just trying to figure out how many people you
are trying----
Ms. DISMAN. Yes. We are basically over 30 million right
now.
Mr. KELLY. Thirty million?
Ms. DISMAN. Right.
Mr. KELLY. Okay. And you have all this fraud going on, too.
Ms. DISMAN. Well, this situation has not--has nothing to
do----
Mr. KELLY. You are a remarkable lady, then, for what you
are doing. A remarkable person--I will take the gender
specificity out of it. You are a remarkable person to be able
to do all of this.
Ms. Colvin, you said that you are underfunded, as an
agency.
Ms. COLVIN. That is correct.
Mr. KELLY. Okay. How do you define ``underfunded''? What do
you base that on?
Ms. COLVIN. We are able to identify in our budget what we
can do with the amount of dollars that you give us.
Mr. KELLY. Okay.
Ms. COLVIN. As a result of----
Mr. KELLY. If I were to give you, from the United States
taxpayers, $11.5 billion, would that be considered a sizeable
amount?
Ms. COLVIN. Our budget is----
Mr. KELLY. No, no. Is that a sizeable amount? Because, you
know, as Mr. Griffin said, there is never enough money for any
of the agencies. Do you know this year it is $11.5 billion, and
we are underfunding you?
Ms. COLVIN. Well, if you give us----
Mr. KELLY. And not ``we.'' I am talking about American
taxpayers.
Ms. COLVIN. If we receive the 2014 budget, we will
certainly be able to----
Mr. KELLY. Okay, all right. All right.
Ms. COLVIN [continuing]. Focus on that program----
Mr. KELLY. No, I just wanted to make sure that we are
talking the right way here, because sometimes we get confused
about who we are actually working for. I work for the people of
America, that is who I work for. Taxpayers is who I work for. I
got to tell you. What you are doing is fine. The work is noble.
I am not criticizing your work. And I know that the number is
absolutely incredible, the overpayments.
Now, Mr. Becerra said it is only a half-a-percent.
Ms. COLVIN. Well, as we said----
Mr. KELLY. A half-a-percent is--well, wait a minute, wait--
is $1.29 billion. Let's not minimize it by saying it is a half-
percent. You know the debt owed from these overpayments has
gone from $5.4 billion in 2010 to $6.1 billion in 2012? So I
don't want to identify it as ``only a half-a-percent.''
These are huge dollars. And what I don't want to do, I
don't want to minimize what we are talking about by reducing it
down to a percentage. A percentage, a small percentage of a
very large number is a very large number to the people I
represent in Western Pennsylvania. These are hard-working
American taxpayers that are funding Social Security. They are
putting 6.2 percent of every time they get paid, and their
employer is matching it. This is not government money. This is
taxpayer money.
And I really get aggravated. I have only been here for
three years. This is not Republicans versus Democrats. This is
Republicans and Democrats working together to serve the
American people. I get so damn mad when it becomes political,
but this is not a political issue. This is an issue we are
defrauding the American people. We are not defrauding Social
Security. And we better start to understand who we represent
here. I did not get elected by all Republicans or all
Democrats.
But, damn it, I will tell you what. I watch this--this is
not a criticism of you. We have raised a group of people that
look at a program and say, ``I think I can game this. I think I
can crawl under the wire here. I think I can do this and take
advantage of the government.'' No, no, no, no, no. You took
advantage of every woman and man who gets out of bed in the
morning, puts their feet on the floor, and goes to a job, and
every time they get paid, contributes 6.2 percent of their
paycheck, matched by their employer 6.2 percent, to fund this.
And if we think it is about defrauding the government, we are
really way off the line on this. We better wake up and smell
the coffee. No wonder the American people have such a low
opinion of us. We are not protecting them.
I don't want you to take the blame for anything. Listen.
You have a much higher approval rating than I do. But you know
what? I get blamed for anything that happens in this
government, because we didn't step up to do it. So the purpose
of us being here isn't to go after you, it is to make sure that
we protect the integrity of this system for the American
taxpayers.
Listen, I thank you all for being here. Mr. O'Carroll, I
know you have a great, great tour of duty. All you, I thank you
for what you do. It is not about you. It never will be about
you. It is about us, working with you, to get to where we need
to be. I just have a hard time, Ms. Colvin, when I look at
$11.5 billion and think, my God, we are underfunding? That is a
lot of money.
Chairman JOHNSON. The time of the gentleman has expired.
Thank you.
Mr. KELLY. I have expired.
[Laughter.]
Mr. KELLY. Thank you, Chairman. Thanks for bringing it up.
Chairman JOHNSON. Yes, sir. Thank you for your comments.
Mr. Tiberi.
Mr. TIBERI. Do I have to go next?
[Laughter.]
Mr. TIBERI. Wow.
Chairman JOHNSON. Only if you will talk for five minutes.
Mr. TIBERI. Well, thank you all. I think Mr. Kelly's tone
expresses the frustration that we have, and it is not personal
and it is not political. It is a frustration that we hear from
our constituents. And I know, particularly the three of you
that work for Social Security, share this concern that I am
going to raise, and that is any time there is fraud, it hurts
the integrity of the program. It hurts the integrity of the
truly disabled. The whole program gets a black eye.
And I would say that--to Mr. Griffin's point, when I go
back home, there is not a whole lot of confidence in the
program when they read stories like the New York story, because
they don't think that is the one percent. They think it is the
one that got caught. And so, while Mr. Rangel is correct--thank
you for helping identify this--a constituent of mine might ask
Mr. Ryan, ``Well, it is great that you caught it, but why did
it take 20 years to catch?''
Mr. Ryan, is it true that this goes back to 1988? And if
that is true, what took so long to allow these criminals to
operate for 20 years without getting caught?
Mr. RYAN. Well, there is a long, drawn-out answer to that.
But I will try to break it down----
Mr. TIBERI. Okay.
Mr. RYAN [continuing]. In segments. Number one, in 1998 it
was identified through the diligence of SSA and the DDS in
referring individual cases, individual referral, stating either
this person was an NYPD or FDNY, or they had Lavallee as an
attorney. Individual cases. We worked those individual CDI
cases, and returned it back with our report mechanism, video
surveillance, interviews, whatever. Went back to DDS. DDS, in
95 percent of the time, denied them at the application stage.
Subsequent to the application stage, there is the ODAR,
which is the administrative law judges. Some of those,
regardless of what was in the file, was placed on the rolls,
based on the definitions----
Mr. TIBERI. Outrageous.
Mr. RYAN [continuing]. Of mental disability, based on the
medical evidence in that file.
The second part of the question is that total number was
minuscule, and was not detected as a conspiracy, criminal
conspiracy case, until 2008. And there was a lot of reasons for
it. Automation. We were able to get in through the diligent
efforts of Social Security, into the individual files
electronically, and print that data, the analytics that Ms.
Disman mentioned. We were able to get that, and we were able to
identify the patterns then--Lavallee, et cetera--in this New
York case.
So, it is difficult to go back from 2008 to 1998, but in
2008 we went full boat with the investigation. We knew what we
had. It took us where we wanted to go with the prosecution, and
get that money back. And it now rests with the Manhattan
district attorney's office to get that money back to the
American taxpayers.
Mr. TIBERI. It does go back to 1988, though, right? With
the four facilitators?
Mr. RYAN. There was individual allegations.
Mr. TIBERI. Okay. Back to 1988.
Mr. RYAN. 1988.
Mr. TIBERI. Okay, thank you.
Mr. RYAN. And that was before--that was pension fraud. It
was before when OIG was even in existence, and it was before
CDI units were created----
Mr. TIBERI. And Ronald Reagan was president, so we can
blame him, too, right? Hey, but no one is trying to blame
anybody. The point is that this----
Mr. CROWLEY. I was in the other hearing room.
Mr. TIBERI. It was a joke. Ronald Reagan. You weren't here
when Mr. Rangel talked about the President.
So, you know, this is real in American people's minds. And
this is great that we caught this. But how much more of this is
going on? I mean that is a question that people ask me all the
time.
And so, I got a question, Ms. Colvin. Last year your agency
conducted 1.6 million continuing disability reviews.
Ms. COLVIN. Yes.
Mr. TIBERI. Three-quarters of which were completed through
self-reported questionnaires, my understanding----
Ms. COLVIN. Yes.
Mr. TIBERI [continuing]. Correct me if I am wrong--called
mailers. Were the reviews of these defendants in the New York
case, were they completed via mailers, or full medical reviews,
do you know?
Ms. COLVIN. Which ones?
Mr. TIBERI. The defendants in this particular case, the New
York case, with the 100 defendants.
Ms. DISMAN. Yes, these were not CDRs when they were
reported. These were initial claims. But in my just doing some
analysis on the 102, looking at it--remember, I can't look at
the files right now----
Mr. TIBERI. Yes, yes.
Ms. DISMAN [continuing]. There were a number that had CDRs
conducted on it. They were medical CDRs. As a matter of fact,
we used that also as part of the investigation.
So--but remember one thing. If you worked with your
facilitators and your coaching, you would have the continuance,
based on what the medical reports were.
Mr. TIBERI. Does it--last question, because my time has
expired. With respect to these mailers, if you are a criminal
and you have got this disability benefit illegally, three-
quarters of the recipients are getting mailers. How many--it
doesn't give me much comfort that if you are a criminal, that
you are going to answer a mailer honestly. Is that a concern
going back to the procedures that we have talked about earlier
that might be under review because of this? Because why would a
criminal answer a mailer?
Ms. DISMAN. If I could just address the mailing system,
because I was involved in disability, helping years ago. It is
a profiling system. And that is to be smart with the budget
that Congressman Kelly says, that you really want to identify
those that are more likely to have medical improvement, and
more likely to change.
So, in doing the mailers, those are the high-risk people
that are identified through a system, through analytics. And a
number of the mailers are also reviewed and become medical
CDRs, as well.
Mr. TIBERI. Okay. I look forward to those procedures that
Mr. Renacci talked about. I yield back.
Chairman JOHNSON. Thank you. I am not sure that answer
answered your question.
Mr. Crowley, you are recognized.
Mr. CROWLEY. Thank you, Mr. Chairman. I apologize I was not
here for Mr. Rangel's statement, nor did I get the joke.
Apparently, no one else got the joke, either. So I apologize,
Mr. Tiberi, for that.
Thank you, Mr. Chairman. I have tremendous respect for you,
and so I do appreciate your holding this hearing today. We all
know that we are people who will always try to--there are
always people who will try to game the system in all walks of
life. We see it throughout--it is throughout our society. What
we need to do as policy-makers is to hamper their abilities to
corrupt the system by putting into place systems to detect,
catch, and bring those who violate the law to justice.
From the standpoint of that test, what we are looking at
today is proof positive that we have put in place those
resources, both technical and human, to weed out, detect,
apprehend people trying to defraud the Social Security
disability program. We should commend the actions of the Social
Security Administration.
This hearing has been turned upside down on its head. This
panel before us should be lauded for the work that they have
done to uncover the fraud and corruption, and for bringing
these cases to light. We here in Congress must also ensure our
actions do not hinder their ability to continue these anti-
fraud programs.
Listened very closely to the chairman's opening statement.
I akin it to blaming the homeowner when their house is broken
into. The homeowner, in this case, cried foul, got the cops on
the beat, and brought those who invaded their home to justice.
And we ought to be lauding that.
I also want to laud the fact--in reference to the 1988
number, those cases, as I understand it, Mr. Ryan, go back to
1988 because they involved New York NYPD pension fraud. Is that
not correct?
Mr. RYAN. You are correct.
Mr. CROWLEY. In essence, people who are police officers--my
dad was a police officer, my grandfather before him--
individuals who are on the job, and then apply for what is
known as three-quarter pay, is that correct, for disability?
Mr. RYAN. That is correct, three-quarters.
Mr. CROWLEY. And they get that in perpetuity, isn't that
correct?
Mr. RYAN. Correct.
Mr. CROWLEY. And these are individuals who actually could
work that you have helped to uncover. That not only saves the
Social Security Administration dollars, but helps to save in
conjunction with Mr. Vance's work, the district attorney of
Manhattan, his work, millions and millions of dollars in New
York City's pensions. Is that correct?
Mr. RYAN. That is correct.
Mr. CROWLEY. I thank you, once again, for that work, as
well.
Let me be clear. The people accused of perpetrating fraud
on the American public under the guise of the worst terror
attacks in American history are an outlier among the brave
first responders in New York City. I come from a family of both
police and firefighters, so I defend the reputation of both
those departments and the men and women who serve in those
departments, and do not defend in any way, shape, or form those
outliers who would abuse the system.
But there are far too many brave firefighters and police
officers who are suffering today from real illnesses and real
disabilities as a result of their service on what was known as
The Pile, cleaning up Ground Zero after the horrific attack
upon our nation. Let's remember it was the Federal Government
that declared the air at Ground Zero safe and toxic free. But
that wasn't the case. And the air and the elements that they
were working in were not safe. Yet we allowed thousands of
first responders to search without the proper protective gear
for the remains of almost 3,000 victims. We did so to bring
some relief and closure to those victims' families.
We allowed thousands to work without protective gear to
extinguish the fire, a fire, by the way, that burned for three
months after the attack. We allowed those first responders to
run into harm's way when the rest of us ran away. As a result,
many of these heroes suffered and continue to suffer the after-
effects of this service. These men and women are legitimate
recipients of a federal Social Security disability insurance
program, and we should not and cannot let the few human nature,
the few, to ruin a necessary program for the many.
One of my proudest moments in Congress came when, under a
Democratic majority, we passed the 9/11 First Responders Health
Act. It came after years of obstruction and partisan delays,
delays that never should have occurred.
So, let me be clear. If any Member of Congress tries to use
the fraudulent activities to taint the sick and wounded first
responders of 9/11, they will have to deal with me directly.
Congress has oversight and responsibilities and obligations.
But we also have to make sure we don't actually hamper the
ability of federal investigators to do their job of fraud
detection. Some in Congress have tried to cut off the very
federal resources that stop fraud through budget cuts,
furloughs, and downsizing, taking the very cops off the beat
who are looking out for fraud and abuse in these programs.
Ultimately, this lack of resources encourages more, and not
less, fraud.
Thank you all again, each of you, for being here today.
And, Mr. Chairman, thank you for holding the hearing. I do
appreciate it. But I don't appreciate the tone of turning it
upside its head and blaming the victims in this case for the
work that they did to uncover this fraud and this abuse. There
is always more to be done.
I have news. There will be fraud for the rest of the
existence of the United States and the world, as long as human
beings exist on this planet. We are an inherently flawed
people, and we have to get used to that. Let's get beyond this.
Let's find--if we have--if there is an agenda of amendments
that can reduce fraud and abuse, I ask the Majority to hold a
hearing on your proposals. Bring them forward. If there is a
way we can mitigate and stop waste, fraud, and abuse in this
system, I am all for it. And, Mr. Chairman, I await your
agenda, and let me know when the meeting notice will be. I will
be here with bells on. I yield back the balance of my time.
Chairman JOHNSON. Thank you. Ms. Black, you are recognized.
Ms. BLACK. Thank you, Mr. Chairman. And, Mr. Chairman,
thank you for allowing me to sit in on this Committee, although
I am not a member of this hearing.
However, I was a member of the Subcommittee for the first
two years that I was here. And this issue has become one that I
have delved into pretty deeply. And I have also, as a result of
that, spent time when I was back in my district going through
the entire system, from my local office to the determination
unit to meeting with the ALJ's and also meeting with those who
are on the Social Security Advisory Board. So, this is an issue
that I feel like I have really spent a lot of time in trying to
understand.
As Mr. Renacci has said, how do we fix the problem? I thank
you all for what you do. It is not an easy place to be. And,
having gone through the entire system, I know that the
determinations are not easy to make. There are a lot of things
that we can fix, however, and I want to go to one of those.
Mr. O'Carroll, more than half of the defendants in the New
York case faked mental disabilities. Is that correct?
Mr. O'CARROLL. Yes, Ms. Black, that is correct.
Ms. BLACK. Okay. And then, following up on that, I am also
looking back at the defendants in the Puerto Rico case--also
faked mental disabilities. Is that correct?
Mr. O'CARROLL. Yes.
Ms. BLACK. Okay. Would you say that mental disabilities are
easier to fake than other conditions?
Mr. O'CARROLL. Yes. And the reason for it is, is that it is
so subjective. As you well know, from being in the medical
community, there aren't x-rays that will determine it, there
aren't CAT Scans that do it. There is no test. So it is pretty
much you are relying on the voracity of the patient, and then
you are relying on the voracity of the doctor. And that is
where our problem in Puerto Rico and New York was, is that
they--it was collusion.
Ms. BLACK. Okay. And so, let's go just another step
further, because we have discussed this in hearings previously,
that the criteria for awarding these benefits or medical
disabilities or mental illnesses has not been updated. The last
update was 1985.
So, if we talk about how do we fix the problem so that we
have better tools--not necessarily more money, but just better
tools, Ms. Colvin, can you help me with why we haven't updated
this? Is there a plan to update it? Are we working on that?
Because this is 30 years now since it has been updated.
Ms. COLVIN. That is an excellent question. Yes, we are. We
are working with the Institute of Medicine, and they are
reviewing more objective instruments that might be out there to
test----
Ms. BLACK. When do you expect something from this? I mean,
again, 30 years' worth, I think I would like to have some kind
of idea about what the plan is. You know, give us the timeline
of when you would expect that there is going to be an actual
update of looking at mental illnesses.
Ms. COLVIN. We have just given the task order to the
Institute of Medicine, so I don't have a date of when we will
get their report. I will be very happy, once I talk with staff,
to see what the timeline is there.
But we also have been updating our medical listings. As you
know, many of them had not been updated for many years. We have
gotten----
Ms. BLACK. You mean the grid? Are you talking about the
grid?
Ms. COLVIN. No, no, the listings, the medical listings that
we use----
Ms. BLACK. Oh, the listings, okay.
Ms. COLVIN. And, in fact, I think right now we have updated
10 of 15. The others are in the process of being updated. Our
goal is to have all of them updated and then have them reviewed
every three years.
Ms. BLACK. Okay. I am sorry, I am going to reclaim my time,
because I don't have very much time and I want to get to a
couple of other things--but this updating is something that I
have seen continuously throughout all of the departments that I
have walked through. We have not updated this, and we can't
wait for the medical community to say, ``Oh, we got to do
another five years of research.'' I want to hear a plan of
getting this done and getting it through.
Grids are another thing. And looking at updating what
currently jobs are available, we haven't updated that in years.
So my own disability determination unit tells me that their
hands are tied because there is not even computer skills that
are out there now to say that you can be retooled to work with
a computer skill if your knees are gone, or something where you
have to have a job where you are sitting, that has not even
been done. And it has been suggested for over 15 years now, so
that one needs to happen, as well.
So, when we talk about what can we do to fix the problem,
there are tools out there that would help you to be able to do
a better job, so that perhaps people wouldn't get on disability
that don't need to be on disability. And that is what I want to
hear back from you all, is when that is going to happen.
Now, I want to go to Mr. O'Carroll again about using the
Internet. So, Mr. O'Carroll, your agents were able to determine
many of the defendants were working. And how were you able to
do that? Did you use any of these more up-to-date kinds of
tools that you could possibly use?
Mr. O'CARROLL. Yes. We have been using social media. In
fact, that was some of the video that we showed at the
beginning on it. Normally, what we do with our CDI units is, as
soon as we get an allegation that somebody is riding a
motorcycle or doing something that is outside of the normal way
they portrayed their disability, first thing we do is we start
taking a look at probably public service type--not public--
public information, taking a look at licenses, see that type of
information on it.
Next step that we go to is we go to social media. And,
often times, these people that are claiming that they can't go
out in public, that they are afraid of crowds and things like
that, will show on their social media that they are, you know,
leading tours through rock concerts and things like that.
Ms. BLACK. Certainly. So----
Mr. O'CARROLL. So we use that, and we think it is a very
good lead, and it is something that should be considered when
people make an application.
Ms. BLACK. So, if I could just complete this, Mr.
Chairman--I know my time has run out, but going back to the
decision-makers, I understand the decision-makers are
prohibited from using these kinds of resources. Is that
correct, Ms. Colvin?
Ms. COLVIN. That is correct.
Ms. BLACK. And is there a reason for that?
Ms. COLVIN. Well, there are a number of reasons for it. We
believe that using those media, one, it opens up to having PII
data exposed. We also believe that it is an appropriate thing
for the investigators to use, not for the adjudicators to use.
Ms. BLACK. Well, I am going to suggest it is another tool.
When we say how can we fix this problem to give those who are
the decision-makers as much information as they possibly can,
why not use things that are right at their fingertips, to be
sure that they are getting all of the information, as well-
rounded a picture as they can?
And I will tell you that the disability determination unit
told me they would like to have the ability to be able to use
things at their fingertips, but they are prohibited from doing
so. I think this is something we should look into as a
subcommittee, in giving them the opportunity, and maybe the
ability to be able to use those.
Thank you again, Mr. Chairman, for allowing me to sit on
this Committee, and I yield back.
Chairman JOHNSON. Thank you, Ms. Black. And I want to thank
our witnesses for your testimony today, and thank the Members
that were here and are still here. And I, along with my
colleagues, are beyond outraged at this, and for good reason.
So it is up to you, Commissioner, or Acting Commissioner--I
will call you Commissioner--to take the actions you need to
restore Americans' trust.
And, with that, I thank you all for being here. The
committee stands adjourned.
[Whereupon, at 10:34 a.m., the subcommittee was adjourned.]
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Statement of Larry Butler
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