[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
FRAUD PREVENTION:
UNDERSTANDING FRAUD IN FEDERALLY
FUNDED PROGRAMS RUN BY THE STATES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT OPERATIONS
of the
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
APRIL 15, 2026
__________
Serial No. 119-61
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov, oversight.house.gov or docs.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
63-450 PDF WASHINGTON : 2026
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Robert Garcia, California, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Michael Cloud, Texas Raja Krishnamoorthi, Illinois
Gary Palmer, Alabama Ro Khanna, California
Clay Higgins, Louisiana Kweisi Mfume, Maryland
Pete Sessions, Texas Shontel Brown, Ohio
Andy Biggs, Arizona Melanie Stansbury, New Mexico
Nancy Mace, South Carolina Maxwell Frost, Florida
Pat Fallon, Texas Summer Lee, Pennsylvania
Byron Donalds, Florida Greg Casar, Texas
Scott Perry, Pennsylvania Jasmine Crockett, Texas
William Timmons, South Carolina Emily Randall, Washington
Tim Burchett, Tennessee Suhas Subramanyam, Virginia
Lauren Boebert, Colorado Yassamin Ansari, Arizona
Anna Paulina Luna, Florida Wesley Bell, Missouri
Nick Langworthy, New York Lateefah Simon, California
Eric Burlison, Missouri Dave Min, California
Elijah Crane, Arizona Ayanna Pressley, Massachusetts
Brian Jack, Georgia Rashida Tlaib, Michigan
John McGuire, Virginia
Brandon Gill, Texas
Richard McCormick, Georgia
------
Mark Marin, Staff Director
James Rust, Deputy Staff Director
Ryan Giachetti, Chief Counsel
Jennifer Kamara, Director of Strategic Initiatives
Mary Woodard, Senior Counsel
Emily Allen, Professional Staff Member
Bill Womack, Senior Advisor
Mallory Cogar, Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Robert Edmonson, Minority Staff Director
Contact Number: 202-225-5051
------
Subcommittee on Government Operations
Pete Sessions, Texas, Chairman
Virginia Foxx, North Carolina Kweisi Mfume, Maryland, Ranking
Gary Palmer, Alabama Member
Tim Burchett, Tennessee Eleanor Holmes Norton, District of
Brian Jack, Georgia Columbia
Brandon Gill, Texas Maxwell Frost, Florida
Emily Randall, Washington
C O N T E N T S
----------
OPENING STATEMENTS
Page
Hon. Pete Sessions, U.S. Representative, Chairman................ 1
WITNESSES
Mr. Seto Bagdoyan, Director, Forensic Audits and Investigative
Service, U.S. Government Accountability Office
Oral Statement................................................... 4
Dr. O.J. Oleka, Chief Executive Officer, State Financial Officers
Foundation
Oral Statement................................................... 6
Ms. Allison Ball, Auditor of Public Accounts, Commonwealth of
Kentucky
Oral Statement................................................... 7
Mr. Robert Westbrooks (Minority Witness), Former Executive
Director, Pandemic Response Accountability Committee
Oral Statement................................................... 9
Written opening statements and bios are available on the U.S.
House of Representatives Document Repository at:
docs.house.gov.
INDEX OF DOCUMENTS
* Letter, from Dr. Stack to Auditor Ball re Medicaid Concurrent
Enrollment; submitted by Rep. Mfume.
* Letter for the Record, from AV SFR; submitted by Rep.
Sessions.
* Letter for the Record, from Program Integrity Alliance;
submitted by Rep. Sessions.
* Letter to Cheryl Mason of CIGIE; submitted by Rep.
Walkinshaw.
The documents listed above are available at: docs.house.gov.
ADDITIONAL DOCUMENTS
* Questions for the Record: Mr. Seto Bagdoyan; submitted by
Rep. Sessions.
* Questions for the Record: Mr. Robert Westbrooks; submitted by
Rep. Mfume.
These documents were submitted after the hearing, and may be
available upon request.
FRAUD PREVENTION:
UNDERSTANDING FRAUD IN FEDERALLY
FUNDED PROGRAMS RUN BY THE STATES
----------
WEDNESDAY, APRIL 15, 2026
U.S. House of Representatives
Committee on Oversight and Government Reform
Subcommittee on Government Operations
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:06 a.m.,
Room 2154, Rayburn House Office Building, Hon. Pete Sessions,
[Chairman of the Subcommittee] presiding.
Present: Representatives Sessions, Comer, Foxx, Burchett,
Norton, Frost, and Randall.
Also present: Representative Walkinshaw.
Mr. Sessions. The Subcommittee on Government Operations
will come to order.
And I would like to welcome everyone. This is a room that
we have been without for about a year, and so this is the first
Subcommittee or Committee meeting that we have held. And I
would like to say, Mr. Chairman, great job.
Chairman Comer. On time, on budget. Not really, but pretty
close. Thank you, Mr. Chairman.
Mr. Sessions. Well, I think that this is a beautiful room,
has always served as an opportunity for the American people to
be a part of it, and they will now see that we have new and
improved things on this side, TVs, ability to see things, and I
am very happy.
So, without objection, as the Chair, I may declare recess
at any time. And I recognize myself for the purpose of making
an opening statement.
OPENING STATEMENT OF CHAIRMAN PETE SESSIONS
REPRESENTATIVE FROM TEXAS
Good morning, and welcome back to the freshly refurbished
main Committee hearing room for the Government Reform and
Oversight Committee [sic]. For the past three years, Ranking
Member Mfume and I have worked together to understand and to
piece together the basic elements of fraud in Federal programs.
We work together. We see the problem together, but his insight
and my insight leads us to where we have to understand by
associating ourselves with government agencies and outside
people of what they see the fraud problem is.
So, how does it happen? How can we fix it? How do we look
ahead about what may be next? How do we get the experts and
people who are in Federal Government and state government and
outside to know that we will not allow this to continue? We are
here to do something about it.
So, I am pleased to announce that this work provides the
foundation for the Fraud Prevention and Accountability Act,
which I will be introducing today. We think it is a piece of
legislation that addresses leading-edge ideas to have the
Federal Government more accountable. For too long, too little
emphasis has been placed on preventing fraud. This legislation
changes the paradigm from pay-and-chase to prevention by
ensuring Treasury financial service can stop fraudulent
payments from ever going out in the first place.
This is more than an idea. It is a concept that had to be
worked on by the Federal agencies who would be involved, and
they have provided their input. Just as important, if not more
so, it ensures the money intended for those who need it now
stand a better chance to get it.
My bill also creates the Inspector General for fraud,
accountability, and recovery piece, which, in essence, creates
a permanent home for the anti-fraud, analytic, and
investigative capacities developed by the Pandemic Response
Accountability Committee, known as PRAC, that was established
at the end of COVID. I am hopeful that the provisions of this
bill will mark an important step in showing fraud is not just a
cost of doing business and something we are going to live with.
We need to be able to take the ideas and issues that we have
learned much from and put it into a piece of legislation
whereby our partners, including the Federal Government and
state governments, know that we are serious.
Regardless, our work is far from over, and we will hear
that today. Today, we will focus on fraud that occurs in
Federal assistance programs that are administered by states
such as Medicaid, SNAP, and unemployment insurance.
I want to make one thing perfectly clear, and that is that
while we are fresh off the heels of a full Committee
investigation in the hearings into fraud, this is not about one
state. This is not about Minnesota. It is not about any one
particular area. It is about where the Federal Government has
programs that work with the states, making sure we see the
alignment of who is responsible for what, who does the follow-
up, and who is accountable for--if the word whistleblower is
correct--to at least make sure that we are all aware where we
have a problem.
So, we know that we have problems, however, not just
Minnesota. There is also Mississippi in which the state
auditor, Shad White, identified waste and fraud in Temporary
Assistance for Needy Families (TANF). TANF is a necessary
program and one that must be available to those who need it,
but the integrity of that program is at risk.
So, while I am hoping to clearly identify today our prime
factors about why this happens, it is also who is responsible
for pinpointing these. At what point do we follow up, and who
is actually responsible for working to fix the things that we
have seen? Is there enough evidence in it for states to
aggressively prevent fraud? Do states feel like they can get
back to the Federal Government? Is the Federal Government
listening, or does the Federal Government turn a blind eye?
We are going to vet these ideas, and today, we have an
opportunity to have people who bring real-life examples and
ideas, including, you will hear today, about one state where
the auditor has done over 400 audits in a year. That means that
you have got your hands on to programs and the incentives that
are associated with those to create good behavior.
What changes are necessary in transparency in communities
is very important to us. So, we are going to hear from a
controller today who sees the effectiveness of the program but
also the things we need to do. Today's witnesses will help us
understand the root causes of state-level fraud and lay the
groundwork for additional action to ensure that taxpayer
dollars are appropriately used.
So, today, we will move directly to the opportunity for
Members of Congress who are finding themselves today stretched
as they have their duties done, but I am going to waive on
several Members who have asked on a bipartisan basis to be here
today, without objection, Representative Boebert, Lauren
Boebert of Colorado, and Representative Walkinshaw of Virginia,
who finds himself here on a regular basis. I think he likes
this Committee, would be the assumption that I would make. So,
welcome on the Committee for the purpose of questioning the
witnesses at today's hearing, without objection.
So, I am pleased to welcome our witnesses for today's
hearing. We spent a good bit of time yesterday in my office
listening to you, understanding that the things which you need
to bring to us need to be stated.
Mr. Chairman, you understand that I do not have a quick
gavel. I want our witnesses to make their points, to feel like
that they can engage this Committee. This Committee is on a
bipartisan basis, very, very close to an association with each
other where we believe each other asks good questions. We
believe each other are after the same answers. We believe each
other has a goal in mind, and that is something that Mr. Mfume
and I have worked at for a number of years. So, each of our
witnesses today that I am getting ready to introduce should
feel like that they are in not just friendly territory but they
are in territory where we are asking them to make sure that
their words are clearly understood.
So, I would first welcome Mr. Seto Bagdoyan, who is
Director for Audit Services in the U.S. Government
Accountability Office, Forensic Audits and Investigation
Services at GAO. He leads audits of major Federal programs
focusing on a range of programs and the integrity of those
programs and risk management, including fraud. We are delighted
he is with us.
We then welcome Dr. O.J. Oleka, who is the Chief Executive
Officer of the State Financial Officers Foundation, a national
organization dedicated to advancing fiscal responsibility for
public policy, protecting taxpayer dollars, and promoting
economic freedom. Doctor, welcome.
We also welcome Allison Ball. She is the elected Auditor of
Public Accounts for the Commonwealth of Kentucky. In this role,
she leads an independent office charged with auditing the
accounts and financial transaction of all spending agencies of
Kentucky and protecting taxpayer dollars from waste, fraud, and
abuse.
And we add Mr. Robert Westbrooks, who is currently an
independent consultant. Until 2022, he served as Director of
the Pandemic Response Accountability Committee. He previously
served as Inspector General at the Pension Benefit Guarantee
Corporation and the U.S. Small Business Administration.
Welcome, Mr. Westbrooks. We are delighted that you are with us
today. So, thank you to each of you for joining us.
I would now ask that each of you would rise for the
administration of the oath to our witnesses, raising your right
hand. Pursuant to Committee Rule 9(g), the witnesses will raise
their right hand and answer the following.
Do you solemnly swear or affirm that the testimony that you
are about to give is the truth, the whole truth, and nothing
but the truth, so help you God?
Mr. Bagdoyan. Yes.
Dr. Oleka. Yes.
Ms. Ball. Yes.
Mr. Westbrooks. Yes.
Mr. Sessions. Let the record reflect that each of the
witnesses--you may be seated--each of the witnesses answered in
the affirmative.
And we welcome each of you. We are remembering that this
Subcommittee does mean it when we say all of the truth to where
you should not be bound by anything of a time constraint. We
want you to make your points made. So, we appreciate you being
here today.
Let me remind the witnesses that while we have read your
written testimony, feel free to go well beyond that because I
think that as we get your oral statements on the record, you
will recognize that we are here to listen and learn from you.
So, please remember that we have got a system here that
goes green light, yellow light, red light. As you get to the
red light, as you are able to effectively move your comments, I
understand that.
So, I would now recognize Mr. Bagdoyan for his opening
statement. The gentleman is recognized.
STATEMENT OF SETO BAGDOYAN
DIRECTOR, FORENSIC AUDITS AND INVESTIGATIVE SERVICE
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Bagdoyan. Thank you. Chairman Comer, Chairman Sessions,
distinguished Members of the Subcommittee, I am pleased to
discuss today at a high level the fraud risk landscape facing
state-administered, federally funded assistance programs. This
landscape has changed significantly and is evolving rapidly and
not in a good way in the long aftermath of the COVID pandemic.
Massive spending during that period exposed significant
weaknesses, which persist today in Federal and state capacity
to preemptively identify and manage fraud risks in multiple
joint programs.
Illustrating this, GAO estimated a while ago that up to
$135 billion in pandemic-era unemployment insurance benefits,
or 15 percent of the total spending, was lost due to fraud
resulting from poor controls. Most of these losses were never
recovered.
Spending on Federal assistance programs administered by
states exceeds about $1 trillion annually, rendering them
inherently at risk of fraud. In this regard, two such programs,
unemployment insurance and Medicaid, are on GAO's high-risk
list for significant program integrity weaknesses. Other
programs such as SNAP and TANF face substantial fraud risks and
have experienced actual fraud.
What underscores the present state of the fraud risk
landscape is a fundamental failure by Federal and state
agencies to acknowledge that they exist, are significant, and
require decisive response. This mentality must change, and
quickly, to mitigate both the present and future risk
landscapes.
As symptoms of the failure to acknowledge their existence,
principal factors contributing to fraud risks at the Federal
and state levels include absence of leadership priority to
drive effective responses; weak fraud risk management capacity
such as superficial risk assessments and counter-fraud
strategies; inadequate preventative front and backend controls,
especially regarding verifying identity, determining
eligibility, calculating benefit amounts and tracking their
duration; averting duplicate benefits across multiple
jurisdictions; and recovering financial losses. As I mentioned,
pandemic losses were recouped only at a cents-on-the-dollar
rate.
Then, there is fund-and-forget postures regarding Federal
oversight of state activities, as well as restrictive program
design. It is very important to make note of precluding
stringent controls or allowing loose rules that exacerbate
risk, including the signal bane of auditors--unquestioned
program applicant self-attestation and certification.
In a landscape that offers numerous opportunities for
exploiting risks, fraudsters are innovative and fast moving,
taking full advantage of technology, including artificial
intelligence to pursue their schemes. However, due to the
aforementioned lack of acknowledgement, Federal and state
agencies are not keeping up with cascading risk effects.
I will close by stressing that the current fraud risk
landscape facing state-administered Federal programs involving
potentially significant financial losses is of great concern.
Of equal concern is the absence of decisive, comprehensive
Federal and state responses. This must be rectified, beginning
with an acknowledgement that this is a significant problem.
Sustained congressional oversight and comprehensive action,
such as that contemplated by the Oversight Committee, are
essential to eliciting an effective response.
Mr. Chairman, this concludes my remarks. I look forward to
the Subcommittee's questions. Thank you.
Mr. Sessions. Sorry, we are getting used to this. They
think I ought to be able to speak into a microphone.
Thank you very much. We have much to speak about. Your
presentation opened up a lot of issues. Dr. Oleka, you are now
recognized.
STATEMENT OF O.J. OLEKA
CHIEF EXECUTIVE OFFICER
STATE FINANCIAL OFFICERS FOUNDATION
Dr. Oleka. Thank you, Mr. Chairman. Chairman Comer,
Chairman Sessions, and distinguished Members of the
Subcommittee, thank you for the opportunity to testify today.
My name is Dr. O.J. Oleka, and I serve as the Chief Executive
Officer of the State Financial Officers Foundation. SFOF is a
nonpartisan national network of 41 statewide elected financial
officers across 28 states who collectively oversee roughly $1.5
trillion in public assets. We equip these officers to promote
fiscally responsible policy and protect taxpayer dollars.
I am also the son of Nigerian immigrants who came to this
country with nothing. Through hard work, faith, and the
opportunities that this great country provides, my parents
lived the American dream. That dream is why I have dedicated my
career to public service in ensuring that government works for
the people who pay for it and that American generosity is not
taken advantage of by fraudsters, foreign or domestic.
In our inaugural oversight report released on February 27
of this year, we showed how state financial officers are
already saving taxpayers billions of dollars by stopping waste,
fraud, and abuse. Examples include Florida CFO Blaise Ingoglia,
who identified $1.86 billion in excessive local government
spending; North Carolina auditor Dave Boliek, who exposed over
$1.4 billion in lapsed salaries across 46 state agencies; and
Kentucky auditor Allison Ball, who you will hear from next, who
uncovered more than $836 million in wasted Medicaid payments;
and Utah auditor Tina Cannon, who uncovered nearly half a
billion dollars in inappropriate hospital payments.
These are not isolated successes. State treasurers play a
critical role in stopping waste, fraud, and abuse before it
occurs. State auditors complement this work by exposing waste,
fraud, and abuse after the fact. Together, these elected
officials serve as the frontline guardians of public funds.
Fraud and waste in Federal and state benefit programs are
not abstract problems. They drive up costs for American
families. New polling shows that 87 percent of voters express
concern about fraud or misuse of taxpayer dollars, and 83
percent say fraud contributes to higher taxes and rising costs
for families. Every dollar lost to fraud is a dollar that could
have gone to education or to infrastructure or tax relief.
Defrauding the American taxpayer has become a multi-billion-
dollar industry. It is a feature in our system, not a bug.
Thankfully, President Trump's task force to eliminate
fraud, led by Vice President Vance, is fully committed to
ending the fraud industrial complex and restoring public trust
back in the government benefits system. SFOF and our 41 state
financial officers are fully committed to supporting Vice
President Vance and the Administration's initiative to root out
fraud. SFOF stands ready to serve as a resource.
I would like to offer five specific recommendations that
can help the Vice President, the task force, and Congress be as
successful as possible.
Number one, state financial officers routinely identify
fraud, waste, and abuse in federally funded programs
administered at the state level, but there is no formal
mechanism to share that information with Federal Inspectors
General. Amend the Inspector General Act to require every
Federal inspector general to establish standing liaisons with
state financial officers, mandatory data-sharing protocols, and
joint task forces.
Number two, Federal benefit programs such as Medicaid,
SNAP, and unemployment insurance still rely heavily on self-
attestation, as was just mentioned, or periodic checks rather
than real-time verification of income, residency, and
citizenship status before payments are issued. Mandate truly
real-time nationwide cross-checking of income, residency, and
citizenship status before benefits are issued.
Number three, Federal agencies are still catching most
fraud after payments have been made rather than preventing it
in real time, even though advanced tools already exist.
Accelerate adoption of modern fraud detection technologies
across all Federal benefit programs.
Number four, many Federal benefit programs administered by
states continue to experience high rates of improper payments
and fraud despite existing Federal rules. Under the current
system, states receive full Federal matching funds regardless
of how effectively they verify eligibility, detect fraud, or
reduce waste. Expand performance-based funding across Federal
benefit programs administered by states to help resolve that
problem.
And number five, taxpayers and elected officials currently
lack a single accessible real-time view of fraud, waste, and
improper payments across Federal programs. Create a single
real-time public dashboard so taxpayers can see exactly where
their money is going and how much is lost to fraud and waste.
And in conclusion, Mr. Chairman, as a policy leader, as the
son of immigrants, and the father of three young children who
loves this country, I believe we have a moral and fiscal duty
to protect American taxpayers and their hard-earned dollars.
SFOF stands ready to support this Committee, this Congress, the
President, the Vice President, and the task force to eliminate
fraud and to defend our Nation's treasure, defeat corruption,
and deliver real results worthy of the American people's trust.
Thank you, Mr. Chairman.
Mr. Sessions. Dr. Oleka, thank you very much; very, very
nice.
We next go to Auditor Ball. Welcome.
STATEMENT OF ALLISON BALL
AUDITOR OF PUBLIC ACCOUNTS
COMMONWEALTH OF KENTUCKY
Ms. Ball. Thank you very much, Chairman Comer, Chairman
Sessions, Democratic and Republican Members of the
Subcommittee. It is an honor to be here today, and I thank you
very much for this invitation.
The topic of waste, fraud, and abuse is not necessarily the
most pleasant one to discuss, but I hope to set a positive and
hopeful tone while speaking about this nonpartisan issue.
In just a little over two years since I was elected as
State Auditor, my office has uncovered over $1 billion of
waste, fraud, and abuse within Kentucky's executive branch.
Fraud is obviously what makes the headlines, and I am more than
happy to talk about how we discovered fraud such as a state
employee's embezzlement of $400,000. But I also want to make
sure that we talk about the more prevalent, and I think
monetarily impactful, problem of waste. This is a problem that
my office encounters every day, but it is one that is easily
fixable. And because unfettered waste ultimately creates an
environment where fraud can flourish, we must do all we can to
combat both.
In August 2023, my predecessor began a special examination
at the request of the Biden Administration's Health and Human
Services (HHS) Office of Inspector General (OIG), in
conjunction with three other states. When I took office, I saw
this examination through both under the Biden Administration
and the Trump Administration. This exam revealed that Kentucky
paid $836 million to managed care organizations for the same
Medicaid beneficiaries whose coverage was also being paid for
by another state.
To be clear, this is definitively waste because one state's
payment to a Managed Care Organization (MCO) covers all
healthcare of all Medicaid recipients, so when two or more
states are paying MCOs for the same person, only the MCO, not
the Medicaid recipient, benefits.
But that is not all we found. In conducting the last three
audits required by the Single Audit Act, we have revealed a
plethora of problems that show Kentucky is a target-rich
environment for waste, fraud, and abuse in the executive
branch. These problems include dead people remaining on
Kentucky Medicaid, multiple people using the same Social
Security number to obtain Medicaid, ineligible non-citizens
receiving Medicaid benefits. An executive branch data system
housing Kentucky's taxpayers' personal info was hacked in five
minutes during a security test. And Medicaid-funded long-term
care facilities, like nursing homes, in Kentucky were not being
inspected every 15 months as required by law, and some had not
received an inspection since 2019.
And that is not all. My office of the Ombudsman Unit, which
reviews Kentucky's processing of SNAP, Medicaid, Medicare, and
TANF benefits, performs a variety of error reviews, one of them
being payment error reviews. In just one year, we have been
able to assist the Commonwealth in dropping its SNAP payment
error rates from 9.1 percent to 3.5 percent.
But there is still more work to be done because Federal
rules for other programs have been more relaxed until the
passage of the One Big Beautiful Bill last year. Kentucky's
executive branch simply has not paid as much attention to the
other programs as it should. That is why Kentucky has a payment
error rate of 47.5 percent for Medicaid long-term care program,
28.5 percent for the Medicare Savings Program, 9.7 percent for
the TANF program, and 5.3 percent of the MAGI Medicaid program.
These error rates likely implicate hundreds of millions of
dollars in Federal funding.
I could go on and on about waste, fraud, and abuse my
office has uncovered, but it is more productive to talk about
solutions. I recognize that auditors across the country are
structured differently. In Kentucky, I am an independent,
statewide elected official that is constitutionally separate
from every other office and branch of government, beholden to
no one but the people of Kentucky. In my view, it is crucial
for every state auditor to bring this mentality of independence
to their jobs.
In doing so, state auditors must go beyond just doing
legally mandated audits. To do this, I have instructed my
office to complete a number of what we call special
examinations, like what we did to uncover the $836 million of
Medicaid waste. Special examinations are essentially
investigations that are not bound by traditional auditing rules
that can be too constraining to root out the problem of waste
in particular. As an example, the traditional auditing rule of
materiality sometimes allows wasteful expenditures that do not
have a material impact on an entity's finances to go
undetected.
So, I have employed a multidisciplinary group of auditors,
lawyers, investigators, and analysts who understand how to
tackle waste, fraud, and abuse from every angle. And those
people need to be well-equipped. That is why my office has an
AI task force to determine how to implement the use of AI in
all the aspects of our work. AI can help us look at whole
populations of data versus traditional sampling methods in
auditing and will drastically cut down the amount of time it
takes to audit, allowing us to tackle more issues than ever
before.
Another part of being well-equipped is having the right
data access. For the Medicaid capitation exam I discussed
earlier, HHS OIG gave us safeguarded special access to a
Federal data base, housing far better information than what
states normally have access to.
And finally, the unfortunate reality is that some people
simply will not change their ways unless the harm they are
causing to their state is exposed. Congress is well-suited to
hold accountable the nefarious and incompetent state actors who
waste taxpayer money and defraud the American people. And like
today, state auditors' offices can assist Congress in doing so.
This is a nonpartisan issue. If we take waste, fraud, and
abuse seriously, we can ensure that every family gets needed
assistance without breaking the backs of American taxpayers.
Thank you very much for your time, and I am happy to answer
any questions the Subcommittee has.
Mr. Sessions. Auditor Ball, thank you very much.
Mr. Westbrooks, welcome to the Subcommittee today. The
gentleman is recognized.
STATEMENT OF ROBERT WESTBROOKS (MINORITY WITNESS)
FORMER EXECUTIVE DIRECTOR
PANDEMIC RESPONSE ACCOUNTABILITY COMMITTEE
Mr. Westbrooks. Thank you, Mr. Chairman. Chairman Sessions,
Chairman Comer, distinguished Members, thank you for this
opportunity to testify today. My name is Bob Westbrooks. I
spent the last 30 years in public service investigating fraud
cases and auditing fraud controls. I am a retired Inspector
General and a former Executive Director of the PRAC.
I authored the book titled Left Holding the Bag about the
pandemic fraud aid experience and the gaps in fraud prevention
and detection efforts and how we can be better prepared for the
next emergency crisis.
I would like to highlight a few points from my written
testimony.
Is there fraud in federally funded state-run programs?
Absolutely. Why? It is because it is where the money is. It is
relatively easy to steal, and fraudsters do not sufficiently
fear getting caught and punished.
The prevalence of fraud and the underlying root cause vary
among programs. Is there too much fraud? Absolutely. But we do
not really know, in my view, the true amount of fraud--a true
amount of lost--the true amount that we have lost to fraud.
Whatever the amount, headlines involving large dollar loss
fraud cases erode public trust and can adversely impact those
in need.
So, what do we know about this type of fraud? Government
benefit fraud, unfortunately, happens, and no program and no
state is immune. My written testimony contains data from the
U.S. Sentencing Commission and some illustrative cases. The
past few years have given us two prominent case studies, one,
of course, the $250 million Minnesota Feeding Our Future
Scheme, which has resulted in over 60 convictions; and two, the
$100 million Mississippi TANF scandal, which has resulted in
the conviction of the former Executive Director of the State
Department of Human Resources and others.
Unfortunately, federally funded state-run programs, like
most Federal programs, are big, soft targets for individuals in
international fraud rings. The internet has reduced barriers to
fraud. Offenders can find free fraud tutorials online, can
purchase stolen identities for the price of a Happy Meal, and
can file claims from anywhere in the world. With automation
tools, they can simultaneously file multiple claims in multiple
states. The prevalence of fraud discussions online normalizes
this behavior, in my view, and reduces the fear of getting
caught and punished.
So, what can we do to reduce fraud? It is as simple as
making it harder to steal. We can do that a couple of different
ways. I am a big supporter of the fact that we do not have all
the answers here, and sometimes, we can look at the
international community for some of the answers. And I am a big
fan of the U.K. Public Fraud Authority, which is a great model
that would need to be adopted in the United States, but in
terms of consolidating the best practices, guides, and
standardization of counter-fraud activities, not the
enforcement side, but counter-fraud activities, I think there
is a lot to be gained by looking at that model.
We can also employ appropriate controls to deter fraudsters
from even attempting to file a fraudulent claim, prevent
fraudsters from consummating the claim, promptly detect those
claims that successfully pass, and then correct and respond to
fraudulent claims through prompt enforcement action, target
hardening, disruption, and recovery.
There is no one-size-fits-all solution. Officials must
consider relevant risk factors and weigh program objectives and
the operating environment to design fit-for-purpose fraud
controls. To be frank, it is simply impossible or impracticable
to design a 100 percent fraud-proof program. The cost of
controls and the impact on the delivery of public benefits
would be too great. Whether you are running a mom-and-pop
store, Amazon, or a government program, fraud risk management
always involves very difficult tradeoff decisions.
This is not to suggest in any way that we should tolerate
fraud. The American public should reasonably expect that public
moneys are not used to pay dead people, they are not used to
pay incarcerated individuals, or to pay duplicate claims in the
same state or across states, and that public funds are
otherwise appropriately safeguarded. Officials should
aggressively but responsibly adopt new technology tools in the
fight against fraud.
Finally, safeguarding public money should be supported by a
coordinated and comprehensive risk-and data-driven approach,
leveraging our existing Inspector General structure and other
accountability partners to both reduce losses and restore
public trust.
I look forward to your questions.
Mr. Sessions. Mr. Westbrooks, thank you very much, very
interesting.
I will move now to the young Chairman of the full
Committee, the gentleman, Mr. Comer, is recognized.
Chairman Comer. Thank you, Mr. Chairman, for always having
good, substantive subcommittees here, always bipartisan. This
is a very important subject to this Committee--waste, fraud,
abuse, and mismanagement. I cannot think of a better panel.
And I am going to start with our great Auditor in Kentucky,
Allison Ball. Auditor Ball, you have done a tremendous job
exposing waste and fraud in Kentucky. In your quest to
determine all of this Medicaid fraud, which I have been
screaming about for years in Kentucky--we support Medicaid in
Kentucky. You are from a poor Medicaid-dependent region in the
state, just like I am. We want to support the program, but
there is so much fraud and mismanagement, in my opinion, in the
Medicaid program in Kentucky, and we are just trying to get the
backs of the taxpayers. And your work has been phenomenal.
Out of curiosity, has Governor Beshear worked with you any
during your audit? Were they helpful in turning over
information or anything to help come to the conclusions that
you came to with respect to the amount of fraud?
Ms. Ball. That is a good question because I really do
believe these are nonpartisan issues, and we should be able to
work together. Unfortunately, I have to say, it has not been a
great system of cooperation. Boots-on-the-ground people have
been helpful. When it comes to rising levels of leadership, it
does get to be more difficult to get information from them, and
it is only--actually only gotten more difficult as time has
gone by. So, the unfortunate answer is no, it has actually been
disappointing that I have not had good cooperation from the top
level of the Beshear Administration.
Chairman Comer. Do they dispute the findings? I know you
came out with this a few weeks ago. Has there been any
communication between the Beshear Administration and the
Auditor's office?
Ms. Ball. So that is a good question. Their response was
mostly that it is not unique to Kentucky, that this happens in
other places as well, which in my view--and that is true, it
actually does happen in other places as well, but I think that
that attitude makes it less likely to be addressed. Just
because it happens somewhere else does not mean that it is not
serious and not important.
Chairman Comer. And you are exactly right, and the Governor
is right. It is happening everywhere. We are trying to do
something about it. We are serious about it. Dr. Oleka
mentioned the task force that J.D. Vance will lead. We are
serious about trying to do something about this, and there is
just an attitude among a lot of politicians--and I am not going
to be partisan in here, Mr. Chairman, because you want this to
be a good bipartisan hearing, but there is just an attitude
among a lot of Governors and a lot of big city mayors that,
well, it is okay. It happens everywhere. It is no big deal. You
know, why do you care? It is just government money. It comes
down like manna from heaven. I mean, that is the attitude that
a lot of these officials have.
So, I just want to publicly thank you for the work you are
doing. It is so essential. We have an independently elected
Auditor in Kentucky. Not every state does. I am glad that we
do. It has worked out well in this instance, and I hope that
the Kentucky General Assembly will take some of your findings
and work to reform Medicaid in Kentucky because I do not think
it is going to happen administratively, at least over the next
two years.
So, my next question is to Dr. Oleka, my constituent, real
proud of the work that you do. Your organization, the State
Financial Officers Association, can play a huge role in
fighting fraud. Can you give us some examples of how your
organization can work with Congress to help not only identify
fraud but to try to hold people accountable for fraudulent
behavior?
Dr. Oleka. Absolutely. Well, one of the things that we try
to do, Mr. Chairman, is provide good ideas for good public
policy. As a 501(c)(3), we provide educational resources. And
we think that if Congress is able to put some frameworks in
place where the state elected officials, again, Auditor Ball
and her colleagues, can effectively work directly with
inspectors general, work directly with these folks in the
Federal Government, you will see some real reforms.
One of the things that is incredibly important, I think,
for a framework--and you touched on it--you need leaders who
have good policy information. They also need the statutory
authority. But they also need the political incentive or, in a
word, courage. You need good leadership. We have that
leadership, obviously, in Kentucky with Auditor Ball. We also
have it in other states as well, with Auditor Foley in
Nebraska, Auditor Cannon in Utah, and so many different places.
If you have got leaders like that, who are then able to work
with Congress directly, to work with the Inspectors General on
the executive side, then you can start to see some real
reforms.
Also, if you have got a transparency website here at the
Federal level where the American people can see where their
taxpayer dollars are going, especially with fraud, that will
help.
And one last thing, our financial officers actually have
trust among the people, so when they respond to these issues,
people listen to them.
Chairman Comer. Well, thank you. Do not ever hesitate to
reach out to this Committee. We are serious about trying to
prevent fraud. We would love to claw back money. We would love
to hold people accountable. But at the end of the day, we have
got to reform programs and put more guardrails.
When there are duplicate payments in Medicaid, when there
are people that have been deceased that are still, for some
reason, getting Medicaid benefits, or providers like we are
seeing in Los Angeles County with hospice are still billing
people that are no longer alive, that is a problem. And there
is just an attitude that is breathtaking to me among a lot of
government officials, they do not care.
Well, some of us do care on this Committee, and I know you
all care, and we thank you for your great work. We look forward
to working with you in the future.
Mr. Chairman, I yield back.
Mr. Sessions. The gentleman yields back. Mr. Chairman,
thank you very much.
For the record, I think that we need to make sure that we
support you. You have given Mr. Mfume and I an open hand, an
open opportunity with staff, with the opportunities to have
hearings, and we are trying to take full advantage of that. And
I believe that your words are matched by the effectiveness of
what Mr. Mfume and I are attempting to do, but----
Chairman Comer. Thank you.
Mr. Sessions [continuing]. We are going to have to move
more legislation. And I sent a note to Mr. Womack, our staff
director [sic], that is associated with me, and we have to find
a way to come together on bipartisan legislation. So, expect me
to be at your doorstep----
Chairman Comer. Absolutely.
Mr. Sessions [continuing]. With that also. And when we do
it together, I think that speaks volumes about matching what
has happened here.
Chairman Comer. Absolutely.
Mr. Sessions. Thank you very much.
The gentlewoman, Ms. Norton, is recognized.
Ms. Norton. Thank you.
Millions of Americans rely on Social Security net programs
like the Supplemental Nutrition Assistance Program and
Medicare. We must ensure that these critical programs run
efficiently with minimal disruption. To that end, it is crucial
that agencies conduct their fraud prevention activities
efficiently so that funding and services can reach people
without unnecessary delays. Effective oversight requires highly
skilled personnel and adequate resources.
Mr. Bagdoyan, what tools and resources do agencies need to
prevent unnecessarily delaying benefits?
Mr. Bagdoyan. Thank you for your question, Ms. Norton. That
is a tricky proposition, to be frank. You have to thread the
needle on this. You cannot obviously delay important benefit
delivery, but on the other hand, you have to ensure a certain
amount of integrity in that delivery. So, technology is part of
the solution. Expedited reviews that fit within the delivery
timeline is important, access to vital data. I think as Dr.
Oleka mentioned earlier, it has to be done in real or near real
time to make sure that deceased individuals, incarcerated
individuals, and other ineligible individuals do not receive
that payment.
But also, I would go back to a point I made earlier. It is
the culture, the acknowledgement, that fraud is a problem that
has to drive the response and make considerations of fairness
and speed of delivery versus the program integrity, fraud risk
management tradeoff. So that would be my high-level response to
your question. Thank you.
Ms. Norton. Inspectors General are a key part of detecting
and preventing fraud. However, the Trump Administration has
fired 19 Inspectors General, robbing their offices of
leadership expertise and institutional knowledge. Mr.
Westbrooks, how do these firings harm people who need
government assistance the most?
Mr. Westbrooks. Well, firings certainly have an impact on
the effectiveness of the Offices of Inspectors General. With
the absence of top-level leadership, you have instances where
there may be a lack of strategic direction or commitment to
oversee certain programs with the rigor that Congress and the
American people should expect.
As probably more problematic in my view, just as
problematic or more than the firings, is actually the proposed
budget cuts, which are crippling. There was a study that was
put out, I believe yesterday, from the Partnership for Public
Service that the IGs on average are being asked to take a 13
percent budget cut over Fiscal Year 2024. GAO similarly was
facing some budget cuts.
And when you look at the return on investment, I mean, they
are the best thing I think the government has got going. I know
I am biased in that regard, but I think on average IGs have
about an $18 to $1 return on investment. And I believe GAO has
in the nature of over $100--I think it is $120 per dollar spent
for those budgets. So, it is money well spent.
So, we do need the leadership positions filled with the
right people that are independent in fact, in appearance, and
those offices need to be funded to do their job effectively.
Thank you.
Ms. Norton. We must work together to ensure that Inspectors
General offices are not only fully staffed but also fully
funded. We cannot expect these offices to do the work we need
them to do when we do not give them the proper resources. I
hope my colleagues will join me in supporting full funding for
Inspectors General offices to ensure that Federal assistance
goes to those who need it most.
And I yield back.
Mr. Sessions. The gentlewoman yields back her time. Thank
you very much.
The distinguished gentleman from Tennessee, Mr. Burchett,
is recognized.
Mr. Burchett. Thank you, Mr. Chairman.
It just seems to matter who is in charge. Everybody wants
to point the finger at the other side, but when they are in
charge, it just does not seem it is the same case.
I always have said that if we could just eliminate the
fraud in these systems, that it would provide for the least
amongst us, more of us. And so, you know, I have been in--as
Mayor of Knox County and things, some things did not go right,
and I had to stand up and take the hit and admit to it. And I
am afraid that is kind of what is lacking all over the place up
here.
And saying that, I want this to just go down the line. What
issues do the state and Federal agencies face in addressing
fraud risk in their program? And I guess I mean to say what
issues that stop them from addressing it? Start with you, sir.
How do you say your name?
Mr. Bagdoyan. It is Bagdoyan, Mr. Burchett.
Mr. Burchett. Well, you got my name right, so Bagdoyan. I
got yours right, too. There you go.
Mr. Bagdoyan. Absolutely. Thank you.
Mr. Burchett. That is a first----
Mr. Bagdoyan. Thank you.
Mr. Burchett [continuing]. For both of us, probably.
Mr. Bagdoyan. Thank you.
Mr. Burchett. Go ahead.
Mr. Bagdoyan. I am glad we have that understanding. So, as
I mentioned, you know, the culture is very important, so that
drives whatever happens below. But it is essential to have a
robust fraud risk management capacity. You have to have the
leadership, you have to have the strategy, you have to have the
controls and execute those effectively.
But at the Federal, state level, many times, as I mentioned
in my opening remarks, you have this issue of program design,
either statutory and/or regulatory restrictions on what a state
and a Federal Government can do, or a permissive attitude as
well, which allows extensive reliance on self-attestation,
which, as I described, is the bane of any auditor. So, that is
something that really needs to be looked at.
I think you have a question, a follow-up.
Mr. Burchett. Well, actually, I just go down the line and
ask that, and then I will come back on my follow-up. But thank
you for that.
Yes, sir.
Dr. Oleka. I might offer, actually, the same response.
There is a challenge sometimes where state elected officials
are not aware of all the resources available to them. For
example, the Do Not Pay list, it is a great resource that has
the Federal Government's support effectively outlining----
Mr. Burchett. What is the Do Not Pay--I know what it is,
but I am sure the rest of the Committee does not.
Dr. Oleka [continuing]. It as a resource.
Mr. Burchett. That is a joke. I do not know what it is. Go
ahead and tell me.
Dr. Oleka. Well, it is a resource that allows states--it is
compiled by the Federal Government, and it is a resource that
allows states to effectively look through folks that they
should not give benefits to, that they can actually review it
to make sure that there is no implication of fraud if you were
to give some folks some resources. You can utilize that tool,
and it can be expansive, based on the data that is given to it
from states, so you pass data back and forth.
When you have got a policy response in that way, it
increases, it makes more robust, the resources that are
available. So, if state financial officers in particular had
access and knowledge to that, that can help things, as well as
the statutory authority. There is a Single Audit Act for
Medicaid that effectively puts state financial officers,
auditors in particular, in a position where they have got to
audit Medicaid. If you had--once a year. If you had that for
every program, then you are more likely to find fraud. So,
those are some instances, as well.
Mr. Burchett. Ma'am?
Ms. Ball. So, I am going to piggyback a little bit on the
culture issue because we found that on this $836 million of
waste that we discovered--because when we started doing
interviews with boots on the ground and then with leadership,
we found out that people that were actually doing the work were
told, hey, this is not that big of a deal, it is low priority.
If you get to checking somebody's residency, you know, that is
good, but it is really not that big of a deal. So, it really
did expose that the attitude at the top really does make a
difference.
I think that is why it is really important today that we
are here because you are indicating to all the American people,
hey, this really matters. And that has a cultural response and
a cultural change. So, I would say the culture is important.
I also think that we need to be reviewing things at all
levels. So, as we have started to get more aggressive on
reviewing the error rates, those error rates have begun to go
down. We saw that with SNAP. We went from 9.1 percent to 3.5
percent error rates just because we were actually involved in
the process, and we were identifying particular errors. I think
that has to be part of it.
And then another thing--actually, this piggybacks on what
O.J. was just saying--the real-time review was a serious
problem on this particular audit that we did because they were
doing what was called Public Assistance Reporting Information
System (PARIS) alerts--we were getting from the Federal
Government from a program, but it only happened like once a
quarter. So, it was not real time by any means whatsoever.
People were also being told, hey, just ignore it for the most
part. So, we need a greater level of access to as close to real
time as we can get.
There is a program called Transformed Medicaid Statistical
Information System (T-MSIS). We were able to use that in our
audit. Normally, we cannot, but we were permitted to use it.
HHS OIG gave us special access, and that gave us much closer to
real time, and it was much fuller information. So, we were able
to look and see, do they actually live in Kentucky or not? That
kind of access is a gamechanger.
Mr. Burchett. Ma'am, thank you.
Mr. Chairman, I am out of time, but if I could yield, let
Mr. Westbrooks say something. I saw him making some notes, and
he is sort of got an orange tie on, and I am from Tennessee, so
if I could let him just say something if that would be all
right. Go ahead, brother.
Mr. Sessions. The gentleman is recognized.
Mr. Westbrooks. Well, thank you for that. A couple of
comments from my experience in government, generally, and then
during the pandemic emergency, is there are eligibility data
bases that are out there, and it is very frustrating for
anybody to say, why aren't we catching dead people,
incarcerated individuals, et cetera, and duplicate payments?
So, food stamps or the SNAP program has the National
Accuracy Center. You have--with unemployment insurance, there
is an employment data hub. The problem is the 50 states and the
different--and territories, they have got different information
systems, so sometimes it is very challenging for them, for the
data systems to talk to each other. They do not have the
funding or the resources to connect in real time that we would
like for them to have. So, that is one of the challenges is why
these tools are not being fully implemented.
The other thing I would say is, you are--and I do not think
this can be overstated--is the level of sophistication with
international fraudsters and organized crime rings is a
significant drain on states. I give an example in the pandemic,
the one that sticks with me, my home state of Maryland,
Governor Hogan announced in July of 2020, when--the heat of the
pandemic when they were completing all these claims, there was
an international fraud ring that had submitted 46,000
fraudulent UI claims for $500 million. So, while the agency is
busy making sure people have unemployment insurance to put food
on the table, they are also getting hit by these very
sophisticated fraud rings that they have to deal with as well.
So, that is why I think we really need a much more coordinated
approach.
Thank you.
Mr. Burchett. Real quick, are they mob-related or are they
international terrorists?
Mr. Westbrooks. You have both. You have got state-
sponsored----
Mr. Burchett. Oh, okay.
Mr. Westbrooks [continuing]. Bad actors----
Mr. Burchett. Thank you.
Mr. Westbrooks [continuing]. And you have got fraudsters,
yep.
Mr. Burchett. Thank you, Mr. Chairman, for your indulgence.
Mr. Sessions. The gentleman----
Mr. Burchett. And my friends across the aisle, I appreciate
you all's indulgence. Thank you all.
Mr. Sessions. Thank you very much, Chairman Burchett.
Ms. Randall, you are recognized.
Ms. Randall. Thank you, Mr. Chair, and thank you to our
witnesses for being here today.
Combating fraud where it exists and ensuring proper
stewardship of taxpayer funds is a shared responsibility
amongst all elected officials at the state, local, and Federal
level, and a responsibility I wish was shared by this
Presidential Administration. I would like to quickly point out
that the United States is currently spending $1 billion
taxpayer dollars a day for a war in Iran that the President
chose to start. Not to mention that Trump has personally
profited $4 billion in his first year back in office through
crypto schemes, shady property deals, and selling products like
Trump Bibles and watches.
Some of my colleagues on the other side of the aisle and
this Administration are quick to demonize so-called blue
states, but it is important for the record to reflect that blue
states like Washington are taking fraud issues incredibly
seriously. For example, when it comes to Medicaid improper
payments and potential fraud, Washington has moved from a
reactive system to a proactive data-driven integrity model.
As a state senator, I voted to codify oversight
expectations for the healthcare authority in their
administration of Medicaid, and I also supported funding for
Washington's fraud abuse detection system. This law, combined
with elevating program integrity into a dedicated division,
established focused leadership and accountability. And
integrating audit and program integrity functions has led to a
178 percent increase in fraud referrals and over $300 million
recovered across two years.
Another example of the work Washington State is doing can
be seen within the long-term services and supports programs,
where the states recovered over 99 percent of improper
payments. When it comes to childcare programs, of the over
63,000 families who received a subsidy in Washington, 2.6
percent of those families who were ultimately investigated, 13
individuals were prosecuted through the state's rigorous audit
process. These are just a few examples of how Washington State,
a blue state, is being very thorough and intentional in
continuously improving and evolving their best practices to
make sure that not only is fraud being addressed but that fraud
is also being prevented. One example of 50, like some that we
have heard here today, of how our states play such an important
role in maintaining the integrity of taxpayer dollars.
What I want to make sure we are all very clear about,
though, is that when there is an overpayment or an improper
payment, that does not automatically equate to fraud. Mr.
Westbrooks, is it fair to say that most improper payments are
paperwork issues rather than fraud?
Mr. Westbrooks. It varies by program, but absolutely. That
is the very challenging thing about when we use improper
payment as the error rate is that includes overpayment and
underpayment, and it includes situations where the claim was
actually valid, but there is no documentation in the file.
Fraud is a part of that.
And one of the things that frustrates me in the SNAP
program in particular is where we are seeing a lot of the fraud
is on the retailer side, retailer trafficking of fraud, and
then stolen benefits. Neither of those are captured in the
error rate that we have when we talk about improper payment.
Improper payment is just a payment that on the surface,
somebody looks at it, should not have been paid, or is in the
improper amount.
Ms. Randall. Thank you, Mr. Westbrooks.
I have mentioned before in Committee that I had a sister
with really complex disabilities who relied on Washington
State's Medicaid program, and I can think of a number of times
where my mom did not submit paperwork in time because Olivia
was in the hospital or had another bout of pneumonia or had any
number of health complications that meant that her stack of
paperwork on the kitchen counter just got bigger and bigger and
bigger. And those improper payments sometimes are just a
struggling family trying to keep their kid or family member
alive and healthy.
Mr. Westbrooks, it seems to me that one of the underlying
premises of many of our hearings on fraud is that states are
not incentivized to properly oversee federally funded programs.
Given that states share in the cost of improper payments, what
evidence suggests that states are not incentivized to oversee
their programs?
Mr. Westbrooks. You know, I have not seen any evidence, and
I cannot say that it does not exist. I will say, just frankly,
30 years in government in this business, I do not find many or
any state, local, or Federal officials that do not seem to care
about fraud. They seem to care about fraud. It is the fact that
they do not have the tools available. And I think that the
Federal--there are opportunities for the Federal Government to
standardize and make these tools available, whether it is
making sure that data systems talk to each other or just
providing guidance and enhancing the general workforce and
skillset of counter-fraud professionals across government,
state and Federal.
Ms. Randall. Absolutely.
Thank you so much, Mr. Chairman. I yield back.
Mr. Sessions. The gentlewoman yields back her time. I just
might make a note that the gentlewoman very appropriately has
her substance as she chooses to speak, but we are trying to
address today Federal and state programs not related to any
political section necessarily, that we believe that this is a
nationwide problem, that we believe this is not a blue versus
red state, but rather things that we can accomplish by working
together, and so I want to thank the gentlewoman, who has a
strong record of not only working for that benefit, but today,
once again, we are highlighting some successes that can be made
by states that they have in contact.
Ms. Randall. We should learn lessons wherever we can.
Mr. Sessions. And we will continue to do that, and I thank
the gentlewoman very much. I now would yield to the
distinguished gentlewoman, the Chairwoman of the Rules
Committee, Ms. Foxx.
Ms. Foxx. Thank you very much, Mr. Chairman.
Mr. Bagdoyan--am I saying that? Bagdoyan, got it. Bagdoyan,
got it, sorry. One of the biggest problems with federally
funded programs funded by the taxpayers, run by the states,
lack of incentives for states to be good stewards of taxpayers'
hard-earned money, and I am building on comments that have been
made already. It is all too easy, I think, for states to treat
the Federal Government as a piggybank that pays for the lion's
share of programs which allow states to tolerate a much higher
amount of fraud than if their own money was at stake. And I
think this applies to government agencies as well as the
individuals involved. It is wrong. These programs are all
funded by the same taxpayers.
Here we are on tax day, and we are reminded that nobody
gets to choose to pay taxes to their state or their Federal
Government. The same taxpayers must forfeit their pay to both
levels of government. There is no ``Federal'' money or
``state'' money, but rather taxpayer money. Therefore, all
levels of government have the same obligation to be good
stewards of taxpayers' money.
So, what prevents state agencies from implementing stronger
guardrails for detecting and preventing fraud in programs that
receive Federal funds such as eligibility and identity checks?
What kinds of checks could state agencies implement quickly to
help verify eligibility and identify as part of these programs?
Mr. Bagdoyan. Thank you for your question. So, the response
is multifold. I think I will keep going back to the culture of
accountability, which drives everything else. You can have very
elegant fraud risk management systems, but if you do not have
the leadership to make that happen, nothing is going to work.
So, that is an important thing.
The other one which was manifested during the pandemic is
unemployment insurance, where states were just overwhelmed, I
think as one of my fellow witnesses mentioned, with massive
claims for benefits. They did not have the systems, they did
not have the expertise, they did not have the data to respond
to that onslaught. But what happened, unfortunately after much
of the benefits were dispensed, the Federal Government provided
funding as well as expertise, called Tiger Teams from the
Department of Labor that helped stem some of the more egregious
problems, including the self-attestation issue that I mentioned
earlier. So, that showed success during the pandemic, but I do
not think it is being sustained at this present time.
Ms. Foxx. But we could have had, in the law, you could not
self-attest. We could have put that into legislationc----
Mr. Bagdoyan. Right.
Ms. Foxx [continuing]. That you could not do that, correct?
Mr. Bagdoyan. You can, but it has to be verified.
Ms. Foxx. Right.
Mr. Bagdoyan. That is where states fell short. You know----
Ms. Foxx. Right.
Mr. Bagdoyan [continuing]. I attested myself as being
eligible for unemployment insurance. I signed my name, but, you
know, who is going to verify that? And then data analytics is
very important, real-time data analytics, but you also have to
respond to the results of those data analytics.
Ms. Foxx. Thank you.
Ms. Ball, you talked about the culture, and I think that is
a very important issue. I do think there is a culture of, well,
it does not matter. So, how can we do more here to prevent the
improper payments from being made in the first place without
the Federal Government having to take all the responsibility
for making sure that this happens?
Ms. Ball. So, that is a great question. I really do think
there is a partnership element with somebody at the Federal
level and then somebody at the state level. So, I like to use
my example because I think it has worked pretty well. I have
myself as State Auditor. I am responsible to the people of
Kentucky. I am independent, and I am very interested in
accountability, transparency, and exposure. So, that kind of
exposure, that impacts the culture. I think that people that
were working on this were embarrassed to find out that suddenly
it is reported. There were actually comments made, this is not
a high priority, it is a low priority. You know, if you get to
it, great, but it is really not something we are that
interested in. And once the public becomes aware of that, then
there is a desire and incentive for a cultural change.
So, I really do think there has got to be somebody at the
state level who is keeping an eye on these things, who is
incentivized to do that. I think auditors work well for that.
We have an ombudsman as part of our office, and I think that
has really added a lot to us because we are checking error
rates all the time, and we check what type of error rate it is.
So, I would think it would be a partnership like that.
Ms. Foxx. One quick question, excuse me, Mr. Chairman.
North Carolina has an independently elected auditor. How many
states have independently elected auditors who should be held
accountable and can be held accountable?
Ms. Ball. That is a great question. I know not every state
has elected auditors or somebody who functions like that. It is
actually probably more a question that Dr. Oleka would be more
well-versed to answer than me. I know kind of here and there
who is. He might know the full body if you want to do it that
way.
Ms. Foxx. Do you mind, Mr. Chairman?
Mr. Sessions. The gentlemen is recognized. This is why we
are here, and the gentlewoman is actually moving in on a very
important subject, so the gentleman is recognized.
Ms. Foxx. Thank you.
Dr. Oleka. Thank you for the opportunity to answer that
question. It is a tricky question in the sense of the names
have different titles. You could have a comptroller in Texas,
which is extremely powerful, but does not have the title of
auditor.
What we have seen in terms of our 41 state financial
officers across 28 states, we have got roughly a dozen or so
that are auditors. Probably a little less than half than that
have the type of authority that Auditor Ball has, that Auditor
Boliek has in his state. Pennsylvania has a strong auditor in
Auditor General DeFoor. Utah Auditor Tina Cannon is very strong
in that regard. So, there are a few. One of the things that
could make this issue a little bit better is if you had
stronger auditors, as you just pointed out.
I also quickly want to touch on the culture issue that you
mentioned because while people say this is not a big deal,
obviously this body knows, this auditor knows. Let me tell you
why this is such a big deal in terms of the American people.
When you have a culture that defers to fraud and allows it to
stand, then you spend more money. When you spend more money,
that then mandates, based on your political philosophy, an
increase in taxes. So, if you increase taxes on hardworking
families, now they are faced with the choice of putting gas in
their car, paying for diapers for their children. This is a
real cost that families have to go through, all because fraud
was not detected.
And it also sows distrust because you have people who are
trying to survive on Special Supplemental Nutrition Program for
Women, Infants and Children (WIC) or Supplemental Nutrition
Assistance Program (SNAP) or government benefits, and they look
to their left and they see one of their neighbors who is a
fraudster riding around in a Benz buying as much food as they
can.
So, when you do not have a culture of accountability, when
you do not have the type of leadership that Auditor Ball and
her colleagues across the country have, you sow distrust, you
have discord in the public, and you also have a culture of tax
increases, which takes money out of the hands of the American
people.
Ms. Foxx. Thank you.
Thank you, Mr. Chairman.
Mr. Sessions. The gentlewoman yields back her time. Thank
you very much.
The gentleman, Mr. Walkinshaw.
Mr. Walkinshaw. Thank you, Mr. Chairman, and thank you for
your indulgence again in allowing me to join the Subcommittee.
And thank you to our witnesses.
Mr. Bagdoyan, the GAO testimony includes five principles of
fraud. Probably all four of you are familiar with this from the
International Public Sector Fraud Forum's Guide to Managing
Fraud for Public Bodies, really wonderful five principles
there. I would add a sixth that I think the Chairman has
demonstrated today. A fraud prevention effort has to be
apolitical and nonpartisan if it is going to get the kind of
buy-in necessary to succeed.
And Dr. Oleka, I really appreciate you and your
organization and your commitment to this work, your commitment
to working on the Vice President's initiative, which I
sincerely hope is successful in accomplishing its stated goal.
I do think we have to just speak the truth here and say
that the President of the United States in describing that
initiative--this is a direct quote--said it would ``focus
primarily in blue states.'' And I think that would violate the
principles of everything that we are discussing here. I hope
that is not the direction that it goes.
Auditor Ball, you made a very powerful comment. You said
that it is crucial for every state auditor to bring their
mentality of independence. And you probably would agree that if
Governor Beshear were here today, he maybe would have a
slightly different response to the question that Chairman Comer
gave about his work. And that is okay, that is good. You are
independent, you have your own perspective. He cannot fire you
if you say something that he does not like.
I want to just reiterate concerns that some of my
colleagues have shared about the diminution of the independence
of our Federal IGs. And one aspect of that, that has not been
specifically addressed, is with the mass firing of 17 of them,
many have been replaced by acting IGs who do not have the same
statutory protections that those fired IGs have. Three-
quarters, three-quarters of the Federal IG positions are vacant
today, so the very people who are helping to do this work. Mr.
Westbrooks has laid out the savings are not on the job anymore.
And we have talked about the budget. Just the HHS IG is facing
in the President's budget a potential $13.7 million cut.
My concern, Auditor Ball, is if those kind of cuts to the
HHS IG and others are put into effect, the next time a state
auditor like yourself wants to partner with the HHS IG to
identify and reduce $800 million of fraud in Kentucky, they
will not have the capacity or the resources to partner with you
or one of your colleagues around the country.
Mr. Westbrooks, based on your experience as a Federal IG,
what kind of operational impact would it have if you were told
that your office was going to face a 12 percent budget cut in
one year? What would you have to do? What would you have to
scale back in terms of your work to prevent fraud?
Mr. Westbrooks. As an immediate impact, the immediate
impact on your audit operations are on prospective engagements.
You have to look at what you are going to be able to audit in
the future in the short term. On ongoing engagements, now you
have to rescope--potentially and most likely rescope those
audits because you are not going to have the staffing or
resources to do the field work that you need to do. You know,
our Federal audits, particularly the big agencies, you are
doing field work around the country. It is not--they are not
desk audits.
And then the really difficult thing and the challenging
thing is when you have this disruption in the community, you
have very experienced OIG auditors that are leaving government,
and so the brain drain from what we have experienced in the
last year, it is very hard to overstate. Some of the most
experienced auditors that I have worked with are no longer with
us but had still plenty of years left in Federal service that
they should still be in the job, but now they are in the
private sector.
Mr. Walkinshaw. Thank you.
And Mr. Chairman, this morning, I sent a letter to Cheryl
Mason, who is the relatively new, I think, Chair of the Council
of the Inspectors General on Integrity and Efficiency (CIGIE),
asking for clarity on how these vacancies, firings, and budget
constraints on the IG community are affecting our ability to
prevent and detect fraud, waste, and abuse. And without
objection, I would like to submit that letter for the record.
Mr. Sessions. Without objection.
Mr. Walkinshaw. Thank you, Mr. Chairman. If you will
indulge me, it is just me and you, I wanted to just ask Mr.
Bagdoyan one question. Your testimony noted the many
recommendations GAO has made. I think you said that maybe 40
percent are open. Forty percent of 215 recommendations you all
have made to Federal agencies are not open. One of those--or
maybe this is, maybe a number of them are in this category--
that an agency designate an entity to lead fraud risk
management. You cite that as a recommendation. Maybe that is a
recurring recommendation.
Mr. Bagdoyan. It is.
Mr. Walkinshaw. I think that would surprise most Members of
Congress that an agency does not have an entity designated to
lead fraud risk management. I mean, if the Secretary of HHS
were here and we asked them that question, would they say, no,
we do not have any entity that leads fraud risk management?
Mr. Bagdoyan. Yes. Well, for HHS, they do have the Center
for Program Integrity. But again, fraud risk management is a
huge agency. It is rather dispersed. But yes, that is a very
important thing to have in place. Dedicated entity, that
implies dedicated to fraud risk management. What we do find
often is that that responsibility is devolved to existing units
based on as other duties as assigned. They do not have
necessarily the expertise, the bandwidth to do true fraud risk
management. And that is apparent when, I mentioned earlier in
my remarks, that the capacity to manage fraud risks is on the
softer side, and that means you do not have the right controls
in place. And that, in part, might explain, might explain why
some of these agencies are still lagging in implementing our
recommendations. So, I hope that----
Mr. Walkinshaw. Thank you.
Mr. Bagdoyan [continuing]. Is responsive to your question.
Mr. Walkinshaw. Thank you. Thank you, Mr. Chairman.
Mr. Sessions. The gentleman yields back his time. I am
going to yield to myself now.
I want to thank each of you for being here. Yesterday, we
received a rather in-depth and robust opportunity to allow you
to speak. And I have thought about this overnight and have
obviously a number of questions that we do want to make sure we
approach by asking questions and getting answers and moving to
that. And I do accept the responsibility that primarily this
falls on Mr. Mfume and myself to make sure that we talk with
each other, that we look at things.
But it is a robust, robust marketplace of ideas of things
we do not do. And I think that perhaps we tend to think that we
inhibit ourselves based upon either the law or common courtesy.
And a prime example is perhaps how we identify people. The
Internal Revenue Service has a heck of a time knowing who they
are talking to, who they are going to meet with. And of course,
you and I do not have to agree, but I think that we have ways
to identify people, biometrics, our eyes, our fingerprints.
Look, we have got a lot of other things to get into, but
Mr. Westbrooks, tell me about leading-edge techniques and some
pushback or your view as an auditor about utilizing technology
as opposed to just data that is gleaned from a sheet of paper
or personal information.
Mr. Westbrooks. Yes, on identity verification, there are a
lot of tools out there. And it is not my personal view but my
experience in the community was there is a lot of public
debate. There are some privacy issues related to that where
things that might be common sense, people object to. You know,
and some European countries have a national digital ID card,
which would go a long way if we had a similar concept here in
the United States It would go a long way to reducing identity
fraud, but that was just ``dead on arrival'' for whatever
reason beyond my comprehension.
The other thing it is important to note is, you know, these
international fraud rings utilize AI and other tools, and they
can afford to make mistakes, right? The government has less
opportunity. There is less forgiveness if the government
aggressively utilizes AI and makes mistakes and people's
benefits get cutoff. And there was a big scandal in the
Netherlands related to this where they very aggressively used
this algorithm and many, many, many people were cutoff from
benefits. Some included--committed suicide as a result of it.
So, you know, we talk about ethical or responsible use of
these tools. Unfortunately, I think that is the reality. I
think government may always be a step behind the fraudsters who
can afford to make mistakes. It does not cost them anything.
Mr. Sessions. Well, let us see where we end on that.
Perhaps, Auditor Ball, you can get closer to this. One of the
things I learned from you yesterday is I asked the question,
how do you find a lot of these problems? And you said,
whistleblowers. People call us. No one likes to see that,
whether they are sitting in a room with other people or that
they see things that happen, that they want these things to
happen where fraud would be involved. But we just vetted out
and heard maybe some European models might be something good to
look at.
What is wrong with requiring or having a data base where
you have to present your finger? And I know we have talked
about this with voting. And that is where we get into the
states are responsible for that. But Federal benefits, we have
got a robust amount of data with fingerprints. What would that
seemingly do to this issue?
Ms. Ball. So, honestly, I have to say, it is not something
that I have analyzed very deeply. So that is kind of a brave
new world looking at that kind of information. And from a
personal perspective, I get a little bit nervous about
presenting biometric information to a database, and it is
housed somewhere and the kind of security issues that you have.
But it does not----
Mr. Sessions. Well, you go to the airport.
Ms. Ball. That is true. That is true.
Mr. Sessions. You go to the airport, and they take your
picture. And it is true that they agree then not to keep that
picture.
Ms. Ball. Right.
Mr. Sessions. But it presented itself as a way to identify
yourself. And I think we have got to--I am asking the
questions, wanting you to give the answer, but you ought to
present evidence who you are----
Ms. Ball. Right. You do need----
Mr. Sessions [continuing]. That is certifiable before you
gain these benefits, not show up and self-report.
Ms. Ball. Right. I do think there needs to be a secure,
reliable identification process. What that is at this point, I
do not necessarily have the answer. There are so many
technological advances that are occurring rapidly right now.
And there are confidentiality and security issues that kind of
coexist with those type of situations.
I will say for us in our experience, it is not always
proving that somebody is who they say they are that is the
problem. It is other kinds of breakdowns. So, my focus has been
on the problems of, well, we know this person is dead, but they
are still listed as eligible and issues like that. So, I would
say you are correct, that is part of the problem, but my focus
has been on a lot of other problems, duplicative payments for
one person, issues like that. And I would say those may be the
greater issues of concern right now rather than someone
pretending to be somebody that they are not.
Mr. Sessions. Well, we have got to certainly go back and
cobble together the information we have got. All four of you, I
could just ask a question. I am not trying to get you to jam
into all the answers at the same time, but the PRAC, the PRAC
has a billion, 700 million pieces of data that is not
indicative that--it is broad, but it is indicative that you
need to ask or gain more information. You need to know that
this is--the term red flag may or may not be appropriate, but
an indication, please go look at this. And that should be an
indication perhaps where we would start with wandering into the
world. Do we know who you are? Do you need to come and present
yourself?
And I have just gone through Social Security issues, and
they vetted me to make sure they knew who I was. It would have
been nice if they had said, please come in Waco, Texas, to the
Social Security office, but not everybody likes that. And there
is a line between what is required and what is requested. I
just think we have got to get closer to understanding. So, talk
to me about the use of PRAC data and information as this helps
itself to get closer.
Mr. Westbrooks?
Mr. Westbrooks. Yes, thank you for that question. So, the
PRAC has an enormous amount of data, as does the Treasury's Do
Not Pay or Payment Integrity Center. The way the system is
structured, though, the states would really connect with
Treasury's Do Not Pay to do--that is where the connection point
should be, where you would check eligibility against the
various data bases.
I think the PRAC needs to be and is working toward being
closer aligned with Do Not Pay and the Department of Treasury
so it is not a pay-and-chase after the fact. It is on a much
more real-time basis. But I do think it is critical that we
have that centralized government data system.
The other thing I will say related to this, and it is
something you should be thinking about is as bad of a job as we
do in preventing fraud, I submit to you, we do just as bad of a
job in protecting information. You know, my, like probably many
people in this room and many Federal employees, you know, my
top-secret security clearance information was all stolen by a
hostile nation-state, and I was on, you know, credit check
monitoring for several years, paid for by the government. So,
that is one of the things that we need to look at when we
balance this idea of centralized repositories for
identification is who is going to be holding it and how secure
is it? Because it can do irreparable harm.
That is why we are seeing these international--what are the
repercussions? These bad--these international fraud rings are
literally buying personal information for the cost of a Happy
Meal on the dark web because of these hacking of government
systems. So, that is the thing that concerns me as much as
fraud is the information of personal--protection of personal
information. Thank you.
Mr. Sessions. I agree. Mr. Bagdoyan?
Mr. Bagdoyan. Yes, I would echo much of what Mr. Westbrooks
said. There are a lot of datasets out there that can be
crunched to yield results. We look for indicators of potential
fraud. That is how GAO does its data analytics. But once we
present our findings to agencies, we expect them to respond to
the results. And many of them, unfortunately, do not do that,
so that is a huge problem.
And I will use one example from the VA's Community Care
program where there are a lot of providers from outside the VA
who tend to veterans' health needs. And we flagged several
thousands of them several years ago that posed problems based
on their background. They were convicted of fraud. They were
convicted of patient neglect and abuse, things that would be
disqualifying. We made the referral to the VA, and they
promptly lost the referral. So, when we followed up with them,
they had never heard of the referral, so they had not done
anything with it. So, that is a huge problem.
Mr. Sessions. You act like we are busy. I would now yield
to the gentleman, Mr. Walkinshaw, who is requesting this
opportunity. The gentleman is recognized.
Mr. Walkinshaw. Thank you, Mr. Chairman.
Mr. Westbrooks, I want to just ask you to go back to your
PRAC experience. And I apologize for asking a question that
perhaps is answered in your book. I will have to get a copy of
it. You know, talk to us about, from your perspective, the
future of PRAC. Do we still need PRAC? The pandemic is over.
What role did PRAC's relative independence, being constituted
of IGs, hosted by CIGIE, play in its success? Is it important
that that independence continue if we should continue PRAC?
Just give us your answers to those questions or thoughts on
those, please.
Mr. Westbrooks. Thank you for your question. When the PRAC
was created, it was created--you know, the pandemic hit, and in
a very--in a matter of a couple of days, the Senate drafted a
bill which included the CARES Act, which included the PRAC
provisions. They took the PRAC provisions from the Recovery Act
and just dropped it into the bill. So, there are a lot of
lessons learned from the experiences that I had from April 27,
2020, when I first got appointed, through December 2022. If you
look at the CARES Act, there are a lot of things, lessons
learned on how we can improve.
It is absolutely critical that we have got a centralized
repository for government information that has the authorities,
legal authorities, to share that data with state and local
partners. I think that was the secret sauce that we had with
the PRAC was we could aggressively use our legal authorities to
share with state and locals and Federal law enforcement
partners data without entering into complex data sharing,
matching agreements. So, it is critical that there be this
repository, that they have the appropriate legal authorities,
that they have the independence to do their work, they are
appropriately funded, they are tied to Treasury's Do Not Pay
system, they do not operate independently. That is not much
government value to me. And I think those are the keys for
success.
I do not know--this is my personal opinion. I am retired
from government so, and I can speak freely on it, but I do not
know to what extent they--it needs independent investigative
and audit authority. I think the analytic data center of
excellence authority is a prominent role. But unfortunately, it
is the investigative authorities that give you the special
legal rights to share data with your law enforcement partners,
so there needs to be some smart lawyering and legislative
counsel thinking on how to write the law on that. But I do
think it is critical that there be a center of excellence that
can share not just with the Feds, but with the state and
locals. And it would be somewhere where the state and locals
feel like they are--or GAO feels like referrals are going to be
taken seriously and not lost in a file somewhere. Thank you.
Mr. Walkinshaw. Thank you. I want to just shift gears to IT
systems and IT modernization. And Mr. Bagdoyan, your testimony
highlights some of the challenges states face, especially with
respect to UI programs being implemented by legacy IT systems
or outdated IT systems. And I am curious, Auditor Ball, I mean,
is that something you have experienced in Kentucky where maybe
you say there is fraud in this program and we need X, Y, and Z
controls, and you talk to the IT folks and they say, sorry, we
have a legacy system that just cannot do it. Have you
experienced that?
Ms. Ball. That is definitely an aspect that we deal with.
We actually have a division that deals with IT audits, so we
look to see all the time, this legacy software program that you
have available, is it up to speed? Does it do the work we need
it to do? Actually, lately, what we have seen breakdowns,
though, has been when they have been eliminating a legacy
program and incorporating a new one, it is the switch that has
created the opportunities for breakdowns. And we actually just
saw this with our Department of Revenue. We have had just all
sorts of problems with bringing on a new program on every
level, so that is its own problem.
Mr. Walkinshaw. Okay. Great. And then for Mr. Bagdoyan,
what is it that the Federal Government or Congress can do to
better incentivize or support states who are trying to get
their IT systems in a position where they can do fraud
prevention in the way it needs to be done?
Mr. Bagdoyan. Yes, thanks for your question, Mr.
Walkinshaw. Again, going back to the UI experience, we
designated that out of cycle as a high-risk area in the midst
of the pandemic, in large part driven by data and technology
issues, among others like service delivery and so forth. And
what worked during that time was that the Federal Government
provided funding and expertise to, among other things, states'
technology system upgrades, which relatedly eventually caught
up with the integrity issues and helped mitigate them. But as I
mentioned, by the time that happened, most of the money had
already been dispersed. So, something like that is--should
warrant close consideration so that, you know, the states can
have skin in the game but also have some Federal support to
make things happen.
Mr. Walkinshaw. Thank you. Dr. Oleka, anything? I apologize
for going over my time, but you are literally itching to jump
in on this question, I can tell there.
Dr. Oleka. Well, just to echo what Auditor Ball was saying
in particular, I think there is an opportunity for states to
utilize the new technologies that you were talking about as
well to make sure that they have all the tools and the
resources that they need.
One of the things that the Chairman was mentioning in terms
of potential new technologies, I would offer if you have a
stronger, deeper relationship between state leaders, the state
treasurers and auditors in particular, treasurers obviously on
the front end in terms of verification, eligibility,
transparency of how money is being spent, and the auditors on
the back end with regard to investigation, examination, and
obviously audits, then I think you can see a lot of that
cooperation.
Also, I wanted to respond earlier mentioning that you hope
that the Vice President's task force is successful, and of
course, so do I. I was able to meet with some of that
leadership last week. Now, again, it was not an in-depth
conversation. I do not want to certainly suggest that there was
more discussed than there was, but I can say that that team is
very serious, very focused on these types of conversations. How
do we get better with technology? How do we get better with
cooperation and partnerships between the state and the Federal
level? And it was not from a partisan perspective. So there, I
think, is a great deal of opportunity here from this Committee,
state leaders, and also this task force led by the Vice
President to get really good, serious, systemic change done on
the fraud issue.
Mr. Walkinshaw. Thank you.
Mr. Sessions. He yields back. Before he leaves, I would
like to, if I can, do a follow-up to what the gentleman was
asking because I think it is a valid point.
So, Mr. Westbrooks, probably I would ask this. We began
discussing a little bit more in depth PRAC. We discussed a
little bit more in depth about its existence, its seemingly
integration into the law and how it has become effective. Do we
want to keep PRAC? Do we want to expand its knowledge and use
it and to make sure it is still ready to go, maybe made
permanent?
Mr. Westbrooks. Thank you for your question, Chairman
Sessions. And this is the central premise of my book, quite
honestly, was the frustrations in the early days of the
pandemic to reinvent the Recovery Board's data analytics
capability. You cannot just flip a switch and create something.
It needs to be on standby. It may not need to be as big as it
was during the pandemic, but it was incredibly, incredibly
challenging to get the, hey--it is called the PACE, the
Pandemic Analytics Center of Excellence--and unbelievably
challenging to get that stood up in a very short period of
time. So, I would hate to see that capacity gone because there
will be--not only will there be another emergency crisis that
we will deal with, but just on normal operations, you need that
capacity. We want that capacity. And it is a relatively low
cost for it. Thank you.
Mr. Sessions. Well, I think the main point I would say is
it exists, day one. And the last part, which I am not here to
shill for, but I have a piece of legislation that I am dropping
today that makes it permanent. So, thank you very much for
amplifying that. And of course, we need to pass it out to
Members of this Subcommittee also.
I will yield back my time now, go to this distinguished
gentleman from Florida, the gentleman, Mr. Frost.
Mr. Frost. Thank you very much, Mr. Chairman.
In the Fiscal Year 2024, over $10 billion of Federal
Government spending on SNAP was lost due to improper payments.
The One Big Beautiful Bill Act included a SNAP provision that
is nicknamed the Alaska carveout. This was a political move
that was made to get the One Big Beautiful Bill passed over on
the Senate. The Alaska carveout delays the cost-sharing
requirement for states with high improper payment rates, like
my state, the State of Florida. It makes absolutely no sense.
Essentially, it penalizes the states that make good-faith
efforts to improve integrity and reduce their errors, and it
rewards the worst-performing states in the entire nation.
We are already seeing people take advantage of this
loophole. In Maryland, a whistleblower claimed that senior
officials were trying to leave correctable errors uncorrected
to keep the error rates up. It also kicked the problem for the
worst-performing states down the line by creating a two year
delay. And this is important to me because I am from the State
of Florida, which has some of the highest rates of improper
payments on SNAP in the entire nation.
Mr. Westbrooks, how does the Alaska carveout discourage
low-performing states with high improper payments, like my
State of Florida, from making the necessary improvements and
actually fixing the problems?
Mr. Westbrooks. Thank you for your question. I cannot speak
specifically for Florida officials and what any state official
might be thinking. You know, I would look at it from an audit
perspective. I would look at the effectiveness of any
intervention. When we are talking about penalties and
incentives, are they closely tied to the behavior to drive the
desired results?
Just on a personal level, I am a proud father of five, and
it strikes me as giving my D student, dinging their allowance,
my D student, but then letting my F student pass and say--just
with a finger wag to say, well, next year, I am going to cut
your allowance. So, in terms of the tie, direct tie to the
behavior, I think that is going to be a challenge. And I look
forward to auditors, GAO, and other officials looking at how
effective that carveout is in practice in reducing fraud, which
is the ultimate goal.
Mr. Frost. Yes. I doubt it is going to be effective. I
mean, it was not a move made to fix anything. It was a
political move. It was, you know, pretty reported on. We all
knew about it when it was going on the Senate. You know, my
state, our Governor, Governor DeSantis, has allowed the program
to essentially crash and burn. I mean, the Florida payment
error is over 15 percent. It is unacceptable. And because of
carveouts like the Alaska carveout, states like Florida are
getting rewarded for running a horrible program. There is no
reason to believe that even with a delay, that states like mine
can get their act together and finally turn things around. And
this is important because it really impacts working families
and the commitment we have made to them.
Mr. Westbrooks, do you have any indication that states that
are receiving this carveout are actually moving toward
compliance? Is there any indication of that?
Mr. Westbrooks. No, I cannot speak to that. No, I have not
seen anything on that. Thank you.
Mr. Frost. And how do high error rates impact Floridians
and just Americans in general who depend on the vital programs?
Mr. Westbrooks. Well, as you know, in the Act, depending on
the level of the error rates, there is a certain percentage of
cost sharing that has shifted. I guess some of the criticism
that I have seen of it is that, you know, you are relying on an
error rate that includes overpayments and underpayments and
includes what we talked about earlier about documentation
errors. So, there is a cost implication or a penalty associated
with a, one could argue, an imperfect measurement. It is the
best that we have, right? It is--the improper payment rates,
error rates, is the best measure that we have, but when you tie
it directly to financial penalties in a different timeframe, I
think that is where some of the debate has been on whether it
will be effective or not. Thank you.
Mr. Frost. What do these errors mean for, like, a working
family? I mean, I think we can all understand what, like, an
underpayment can mean for a family. What does an overpayment
mean for somebody?
Mr. Westbrooks. Well, an overpayment just means that the
state made an error in the calculation, and so they overpaid.
And the way the SNAP program--data quality program works, if
the error is under, I think it is $58, then it is deemed as not
material, so it is not factored in. So that--so, you might have
instances where there are a large number of under $58 errors,
overpayment or underpayment, but there is a systemic issue
underneath that that will never be addressed because it does
not meet the error.
But, you know, all of the error rates ultimately, like I
said, affects--as you know, affects the state cost share
amount. And any time that there are, this is any government
program, whenever there are penalties associated with anything,
you always have to worry as an auditor that people are going to
game the system in terms of their statistics. And that is
always going to be a risk, and data quality is always going to
be a risk in that program and I think any other Federal
program. Thank you.
Mr. Frost. Thank you. I yield back.
Mr. Sessions. The gentleman yields back his time.
You have given us not only a laundry list, but I think some
good direction that we need to go. I am interested in making
sure that I follow up with each of you on not just your ideas
but that I provide you feedback about how we are getting there.
We cannot fix this without each of you, auditors who see
things and direction we go, but I think that you see some sense
of opportunity that lies within the Members here that are truly
concerned about over and underpayments. Perhaps an underpayment
is very difficult for us always to quantify. I am not sure we
pay as much attention to those, even though our congressional
offices have to fight many times with people who want to be
recipients on those matters. We can consume ourselves if we do
not fix this problem. We can take away from the availability of
money, and we see that when we look at the national debt.
This chance that we have, however, I think, Dr. Oleka,
needs to be brought front and center to people who are like
you, who are auditors, who then openly express their delight or
their problems with what we are doing.
I am very much interested, and Mr. Mfume and I in this
Subcommittee, getting closer to this, but we have to start with
more than just looking at the PRAC or looking at making
legislation permanent to save it. And I think Mr. Westbrooks'
point that I took under advisement that I wholly agree with is,
why would we do away with the data we have? Why would we not
move forward on that?
But I think the question is--and we have vetted that here.
This staff and I have spent a great deal of time of wondering
what is that key word? Is it fraud that we need to focus on
that says because of a question of fraud--not fraud, but a
question of fraud--will that allow us to receive information
across the board and other agencies to where they could do
business with each other, where they could verify things? And I
think it is our hope that weakens my last question to you
today.
I think if we were to ask a question, not assuming we know
the answer, us asking a question, would that mean that the
entities, no matter Small Business Administration (SBA),
Department of Veterans Affairs (VA), wherever it is, they could
then go and vet that question a little bit better and ask for
data to certify who people are? Is that really the answer to
where we would ask people and take the 15 minutes and vet them
and then have the tools to where we could go and double check
what they said, death certificate, voter registration, license
information? There is a lot of information that is out there
that they should have access to, even if it is to their own
state. Help lead me down that pathway, anyone.
Mr. Westbrooks?
Mr. Westbrooks. I can share my experience as IG of the
Pension Benefit Guarantee Corporation. We had--and it is a very
imperfect analogy and model, but with Death Master File data,
you have currently existing matching capabilities, right? And
you want to build a system because that data is very imperfect,
right? So, you build the system so that if there is a match of
two or three elements, I think our agreement with them was,
they are two elements match, that is a flag. You cannot take
action unilaterally on a flag. The flag has to be adjudicated
and resolved, but it is at least a flag.
What you do not want are agencies taking action. And this
is sometimes--I think folks act too precipitously if they have
not been working fraud cases. A flag is just a flag, and there
are many, many, many false positives, many false positives,
so--but you want to system and build an environment where the
flags are identified very quickly and adjudicated very quickly.
You do not want, you know, an adverse impact on a claimant, but
you do not want to get into a pay-and-chase situation. So, that
is how it worked with the Death Master File data. It cannot
just be one--you know, a misspelling on, you know, you did not
put the ``s'' on the end of my last name. It has got to match
two elements. Then you adjudicate.
Mr. Sessions. I think you make my point very eloquently,
and this is the point that whether you are going on veteran's
benefits, whether you are taking out an SBA loan, whether you
are going in Social Security, the mistake that if it is not
vetted properly up front over long term becomes a huge issue.
Auditor Ball?
Ms. Ball. Absolutely, there needs to be a thorough and
accurate vetting process. I do not know that it means that you
have 15 minutes with each person who reaches out to you because
a lot of times what we find is, it is a red flag, it is a
notification, it is an alert, that then gets ignored. When we
start to dig into our systems, a lot of times we actually know
someone has passed away, they are a deceased person because it
says it in their file, but it also says that they are eligible.
So, I think a lot of it really does boil down to making sure
that you are acting on red flags. There is a good system in
place for what you are supposed to do when there is a red flag.
It really is having those controls and then following through
on those controls.
Mr. Sessions. Is there a timeframe associated with that? Is
there a limitation associated with that? Is there one red flag
does not indicate something, but it might indicate a question,
and you keep going? Certainly, someone who is committing fraud
has multiple failures across questions and challenges that
would be asked----
Ms. Ball. Right. Sometimes----
Mr. Sessions [continuing]. Correct?
Ms. Ball [continuing]. That is the case where there are
multiple red flags, and sometimes they are not acted upon. So,
I think you need to have very, very clear guidelines and
controls to ensure that you are treating those things seriously
and you are doing the things in the timeframe that you are
supposed to do them.
Mr. Sessions. Do we need to help with that and say these
need to be cleared?
Ms. Ball. That is a good question. I think the work that we
have done is starting to highlight the breakdowns, and it is
going to be good to see in the next year and the year after
that, okay, we have highlighted the problems at the state
level. Are they fixing them? I do not know that it needs to be
spelled out at a greater level at the Federal level. In some
instances it may. Sometimes it just needs to be the oversight
on the front end to just make sure they are actually doing it.
Mr. Sessions. Yes, because I can envision circumstances
where multiple failures were recognized and someone gave up on
it thinking maybe they had pushed too hard. We generally expect
someone, when challenged, to go, whoops, I got caught. I do not
think that happens. I think that there is a continuation of
this. Dr. Oleka?
Dr. Oleka. Yes, I think what the Auditor is saying is
exactly correct. There is obviously a belief in federalism, I
think, among this crowd. Allow the states to figure out what
would make the most sense in terms of a lot of the controls,
and then potentially what could happen is that you and your
colleagues set a baseline. And I will give you an example. In
Mississippi, Treasurer David McCrae, he was able to figure out
an issue regarding citizenship for unclaimed property.
Unclaimed property is a financial asset that you can give back
to the people if they have lost it. A lot of treasurers have
that authority. So, he was able to put in some guardrails to
effectively make sure that there was not a lot of fraud based
on citizenship. So, he was able to do that.
Now, you couple that with a lot of the new technologies
that we have been discussing, it becomes iterative. So then
when you have continued types of fraud, if it is verification
or eligibility, now, because of technology, you can actually
batch different queries where if the red flag, as you were
mentioning, is a set of issues that regards to paperwork, you
are able to answer those in a lot different ways if it is a
couple of red flags that it results to very clear out and
outright fraud.
So, based on what Auditor Ball and her colleagues are able
to do within their states, then again working in a continual
relationship with the Federal Government, the necessary
partners, you can figure out a lot of that stuff without having
to mandate it. Some things, obviously, though, it needs to be a
clear, compelling mechanism, but I think that is where the
conversation can go back and forth to figure out what that
ought to be.
Mr. Sessions. And we ought to drive that to a conversation
of common sense.
Mr. Bagdoyan?
Mr. Bagdoyan. Yes, thank you, Mr. Chairman. I would agree
with all the comments that we just heard. Data analytics is at
the heart of this. You have to look for those red flags. And as
I kept saying throughout my presence here today, you have to
act on the results. Back in December of last year, we issued an
interim report on our review of the Affordable Care Act, the
Federal exchange. We flagged--the most egregious flag was a
single Social Security number that had 127 ACA policies
associated with it. When we presented that example to the
Centers for Medicare and Medicaid Services (CMS) for an
explanation, they told us that they did not perform that sort
of analytics. They were surprised by the result, but they were
not planning on doing anything about it because they were
concerned about kicking the wrong person off that policy.
So, you know, that is a pretty significant example of a
massive red flag that, at least for now, that particular agency
is not going to take any action on. You have to act on those
red flags. You cannot say, oh, it is a red flag. Well, okay,
but, you know, we are good with it. And that is the temperament
that has to change.
Mr. Sessions. I know you are right because I, early in my
career, had an opportunity to have people who collected money,
offered service, and if you did not give them the available
answers, they quit vetting things. It is no different than a
police officer that arrests a criminal and the judge lets them
out by the time the nighttime shift is done and they see them
back on the street. There have to be ways that are common
sense, cost effective, reasonable to where people can
understand the system and the outcomes. But it does mean that I
and this Subcommittee have to do our job.
And I found out yesterday--Mr. Westbrooks, I did not have a
chance to meet with you yesterday, but I did the other three
witnesses that are here today. I found out that they have
placed a great deal of confidence that we can make progress and
work together.
I asked Dr. Oleka a question yesterday and again this
morning about the follow-up, about how we are going to come and
actually engage on this issue properly. And certainly, we
recognize the Vice President is engaging, walking in this
shadow also of making sure that what we do is bipartisan, is
not political, is driven by data that can be sustained. And
this is where we are moving.
So, I want to thank each of you for taking time not just to
get on a flight and come here but to take your very important
time away from the duties that you have that help save this
country the embarrassment of systems that are frail or do not
work properly. I look forward to touching base with each of you
on future activities and how we can best work together.
So, with that and without objection, all Members have five
legislative days within to submit materials and additional
written questions for witnesses, which will be forwarded to the
witnesses.
If there is no further business, without objection, this
Subcommittee is now adjourned.
[Whereupon, at 11:58 a.m., the Subcommittee was adjourned.]
[all]