[Senate Report 116-56]
[From the U.S. Government Publishing Office]
Calendar No. 148
116th Congress } { Report
SENATE
1st Session } { 116-56
_______________________________________________________________________
REPRESENTATIVE PAYEE FRAUD
PREVENTION ACT OF 2019
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1430
TO AMEND TITLE 5, UNITED STATES CODE, TO PREVENT FRAUD BY
REPRESENTATIVE PAYEES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
July 15, 2019.--Ordered to be printed
______
U.S. GOVERNMENT PUBLISHING OFFICE
89-010 WASHINGTON : 2019
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio GARY C. PETERS, Michigan
RAND PAUL, Kentucky THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah KAMALA D. HARRIS, California
RICK SCOTT, Florida KYRSTEN SINEMA, Arizona
MICHAEL B. ENZI, Wyoming JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri
Gabrielle D'Adamo Singer, Staff Director
Joseph C. Folio, III, Chief Counsel
Helen M. Heiden, Senior Professional Staff Member
David M. Weinberg, Minority Staff Director
Zachary I. Schram, Minority Chief Counsel
Ashley E. Poling, Minority Director of Governmental Affairs
Annika W. Christensen, Minority Professional Staff Member
Laura W. Kilbride, Chief Clerk
Calendar No. 148
116th Congress } { Report
SENATE
1st Session } { 116-56
======================================================================
REPRESENTATIVE PAYEE FRAUD PREVENTION
ACT OF 2019
_______
July 15, 2019.--Ordered to be printed
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 1430]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1430) to amend
title 5, United States Code, to prevent fraud by representative
payees, having considered the same, reports favorably thereon
with amendments and recommends that the bill, as amended, do
pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................4
V. Evaluation of Regulatory Impact..................................5
VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............6
I. Purpose and Summary
The purpose of S. 1430, the Representative Payee Fraud
Prevention Act of 2019, is to protect recipients of Federal
retiree benefits from unscrupulous caretakers who take the
retiree's payments and use them not for the retiree's benefit,
but for their own. S. 1430 closes a loophole that currently
exists in statute whereby the embezzlement or conversion of
Social Security and Veterans' benefits by representative payees
is a Federal felony, but the same embezzlement or conversion of
benefits provided to Federal retirees through the Federal
retirement system is not.\1\
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\1\On July 27, 2015, the Committee approved S. 1576, the
Representative Payee Fraud Prevention Act of 2015. That bill is
substantially similar to S. 1430. Accordingly, this committee report is
in large part a reproduction of Chairman Johnson's committee report for
S. 1576, S. Rep. No 114-95.
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II. Background and the Need for Legislation
In addition to other Federal benefits, Federal employees
may be eligible for Federal retiree benefits processed through
the Office of Personnel and Management (OPM): Federal Employees
Retirement System (FERS) benefits,\2\ and Civil Service
Retirement System (CSRS) benefits.\3\ Under Federal statute,
individuals who are minors, mentally incompetent, or under some
other qualifying legal disability can have their benefits paid
on their behalf through a court-appointed or agency-approved
representative.\4\ Such individuals authorized to receive the
payments under these circumstances are frequently referred to
as ``representative payees.''
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\2\5 U.S.C. Sec. 8401, et seq.
\3\5 U.S.C. Sec. 8331, et seq.
\4\ 5 U.S.C. Sec. 8466(c); 5 U.S.C. 8345(e).
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The OPM Office of Inspector General (OIG) has reported to
Congress an increase during recent years in the number of
representative payees who take advantage of their position and
use the money they receive for purposes other than to benefit
the Federal retiree.\5\ The OPM OIG has further reported that
OPM has an antiquated paper system for tracking representative
payees.\6\
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\5\Meetings and written communication between OPM IG staff and
Committee staff in May, June, and July, 2015.
\6\Meetings between OPM IG staff and Committee staff in May, June,
and July, 2015.
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From 2004 to 2005, Congress created penalties for anyone
who takes funds from Social Security Disability Insurance
Benefits,\7\ Social Security Supplemental Income,\8\ or
Veterans' Benefits\9\ and fraudulently uses the funds for their
own purposes, rather than on behalf of the intended recipient.
These statutes criminalize such misuse of government benefits
as a felony, punishable by a fine of up to $250,000, up to five
years in prison, or both.\10\
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\7\42 U.S.C. Sec. 408 (characterizing the conversion of another's
Social Security benefit payments as a felony, punishable by fine
pursuant to title 18 and/or up to five years in prison).
\8\8 42 U.S.C. Sec. 1383a.
\9\38 U.S.C. Sec. 6101 (criminalizing fiduciary misuse of money or
property intended for the veteran's use).
\10\18 U.S.C. Sec. 3571(b)(3).
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No similar penalty was created for those represenatives who
misuse or embezzle CSRS or FERS benefits distributed by OPM.
The absence of Federal statutory authority often dissuades U.S.
Attorneys from bringing to justice those appointed to take care
of government retirees' benefits when they use these funds for
any purpose other than for the benefit of the retiree that they
represent.\11\
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\11\Meetings between OPM IG staff and Committee staff in May, June,
and July, 2015.
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In one example provided by the OPM OIG, Sakina Park
represented that she was running a personal care facility out
of her home in Philadelphia, housing at least seven people with
mental-health problems.\12\ However, Ms. Park did not have a
license to do so.\13\ At least one of the individuals alleged
to be under her care was an annuitant entitled to OPM benefits,
but mentally incompetent and unable to accept Federal payments
for herself.\14\ Ms. Park was listed as that individual's
represenative payee, authorized to collect OPM benefits on the
annuitant's behalf.\15\ In 2009, investigators arrived with
police at the home and removed the occupants.\16\ At that time,
it was discovered that the annuitant was not present--Ms. Park
stated that the retiree was ``always running away'' and
investigators found she had been admitted to another facility
after being found on a street unconscious.\17\ The OPM OIG
determined that Ms. Park had received just under $8,000 from
OPM on the annuitant's behalf and did not use any of those
funds to care for the annuitant.\18\
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\12\Information provided to Committee staff by the OPM IG; see also
Court shuts down West Philly mental health facility, Philly.com (Jan.
18, 2008).
\13\See Court shuts down West Philly mental health facility,
Philly.com (Jan. 18, 2008).
\14\Information provided to Committee staff by the OPM OIG; see
also Court shuts down West Philly mental health facility, Philly.com
(Jan. 18, 2008).
\15\Information provided to Committee staff by the OPM OIG.
\16\Information provided to Committee staff by the OPM OIG; see
also Court shuts down West Philly mental health facility, Philly.com
(Jan. 18, 2008).
\17\Information provided to Committee staff by the OPM OIG.
\18\Id.
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The local district attorney prosecuted Ms. Park in 2013
because she also embezzled Social Security benefits from other
individuals that were supposed to be in her care. Federal
prosecutors may be reluctant to prosecute the misuse of OPM
benefit payments alone because while such conduct may violate
state embezzlement or conversion laws, it is not a specific
Federal crime.\19\
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\19\Meetings between OPM OIG staff and Committee staff in May,
June, and July, 2015.
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The Committee believes this lack of Federal penalty leaves
some of its most vulnerable civil servants, including those who
may be mentally incompetent, with less legal recourse when they
are taken advantage of and their retirement funds are misused.
This legislation criminalizes the misuse of CSRS and FERS funds
in the same manner that already exists for Social Security and
Veterans' benefits. In addition to prosecuting those who
abscond with benefits intended for government retirees, S. 1430
prevents those who have committed this crime before (whether
for CSRS, FERS, Social Security, or Veterans' benefits) from
serving in the future as a representative payee.
III. Legislative History
Senators James Lankford, Gary Peters, and Kyrsten Sinema
introduced S. 1430 on May 13, 2019. The bill was referred to
the Committee on Homeland Security and Governmental Affairs.
The Committee considered S. 1430 at a business meeting on
May 15, 2019. The Committee ordered the bill reported favorably
en bloc by voice vote as amended. Senators present for the vote
on the bill were Senators Johnson, Paul, Lankford, Scott,
Peters, Carper, Hassan, and Rosen. For the record only,
Senators Portman, Romney, Hawley, and Sinema later asked to be
recorded as a ``yes'' by unanimous consent.
Consistent with Committee rules, the Committee reports the
bill with a technical amendment by mutual agreement of the
Chairman and Ranking Member.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section provides the bill's short title, the
``Representative Payee Fraud Prevention Act of 2019.''
Section 2. Representative payee fraud
Paragraphs (a)(1) and (a)(2) of this section amend Title 5,
chapter 83, subchapter III of the United States Code to include
the definition of a ``representative payee'' as an individual
appointed under section 8345(e)(1) and 8466(c)(1) to receive
payments on behalf of a minor or an individual mentally
incompetent or under other legal disability.
Paragraphs (b)(1) and (b)(2) of this section amend Title 5,
chapter 83, subchapter III of the United States Code to add a
new section 8345a following section 8345, and Title 5, chapter
84, subchapter VI of the United States Code to add a new
section 8466a following section 8466, respectively.
New section 8345a makes it unlawful for any person
authorized by OPM to receive CSRS payments on behalf of a minor
or other qualifying individual (a representative payee) to
embezzle or in any manner convert any portion of the amount
received from such payments to a use other than for the use and
benefit of such individual. If it is determined that a
representative payee has embezzled or converted such payments,
OPM is required to revoke the payments promptly and certify
payment to another representative payee, or to the individual
should it serve their best interest. Such conduct is punishable
by a fine under Title 18 of the United States Code or
imprisonment for not more than 5 years, or both.
New section 8466a makes it unlawful for any person
authorized by OPM to receive FERS payments on behalf of a minor
or other qualifying individual (a representative payee) to
embezzle or in any manner convert any portion of the amount
received from such payments to a use other than for the use and
benefit of such individual. If it is determined that a
representative payee has embezzled or converted such payments,
OPM is required to revoke the payments promptly and certify
payment to another representative payee, or to the individual
should it serve their best interest. Such conduct is punishable
by a fine under Title 18 of the United States Code or
imprisonment for not more than 5 years, or both.
Paragraph (b)(3) makes technical and conforming amendments
to the table of sections of chapters 83 and 84 of Title 5,
United States Code, to reflect the new sections added in
paragraphs (b)(1) and (b)(2).
Subsection (c) clarifies that in the case that OPM suspends
payment to a mentally incompetent or legally disabled
individual until a representative payee is appointed, payments
should resume as soon as practicable and include all amounts
due.
Subsection (d) prohibits an individual from being appointed
as a representative payee to receive CSRS or FERS payments on
behalf of a minor or individual with a legal disability if he
or she has been convicted of violating the new sections 8345a
or 8466a created by this bill, 42 U.S.C. 408 or 1383a (similar
prohibitions on embezzlement of Social Security benefits), or
38 U.S.C. 6101 (similar prohibitions on embezzlement of
Veterans' benefits).
Section 3. Implementation
Paragraph (a) amends section 8348(a)(1)(B) of Title 5
(Civil Service Retirement and Disability Fund) to include
administering fraud prevention under sections 8345, 8345a,
8466, 8466a as an eligible use of the funds.
Paragraph (b) requires OPM to issue regulations necessary
to carry out the changes in law made by this bill within one
year of the date of enactment. This subsection also authorizes
OPM to issue additional regulations related to the
administration of the representative payee program.
Section 4. Effective date
This section requires the legislation to take effect on the
date of enactment and to apply on the effective date of the
regulations promulgated under section 3(b)(1) of the bill.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 13, 2019.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs,
United States Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1430, the
Representative Payee Fraud Prevention Act of 2019.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Amber
Marcellino.
Sincerely,
Phillip L. Swagel,
Director.
Enclosure.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
S. 1430 would establish new federal crimes related to
representative payees who misuse payments received from the
Federal Employees Retirement System and the Civil Service
Retirement System. (A representative payee is a person or an
organization that manages federal retirement benefits for
recipients who are unable to do so themselves.) Enacting S.
1430 would enable the government to pursue cases that it
otherwise would not be able to prosecute. CBO expects that only
a relatively small number of offenders would be affected,
however, so any increase in costs for law enforcement, court
proceedings, or prison operations would not be significant. Any
such costs would be subject to the availability of appropriated
funds.
Because those prosecuted and convicted under S. 1430 could
be subject to civil and criminal fines, the federal government
might collect additional amounts. Civil fines are recorded in
the budget as revenues. Criminal fines also are recorded as
revenues, deposited in the Crime Victims Fund, and later spent
without future appropriation action. CBO estimates that the
revenues and spending associated with those penalties would not
be significant in any year because of the relatively small
number of cases likely to be affected.
The CBO staff contact for this estimate is Amber
Marcellino. The estimate was reviewed by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 1430 as reported are shown as follows (existing law proposed
to be omitted is enclosed in brackets, new matter is printed in
italic, and existing law in which no change is proposed is
shown in roman):
UNITED STATES CODE
* * * * * * *
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart G--Insurance and Annuities
* * * * * * *
Chapter 83--Retirement
* * * * * * *
Subchapter III--Civil Service Retirement
* * * * * * *
SEC. 8331. DEFINITIONS
(1) * * *
* * * * * * *
(31) ``customs and border protection officer'' means
an employee in the Department of Homeland Security (A)
who holds a position within the GS-1895 job series
(determined applying the criteria in effect as of
September 1, 2007) or any successor position, and (B)
whose duties include activities relating to the arrival
and departure of persons, conveyances, and merchandise
at ports of entry, including any such employee who is
transferred directly to a supervisory or administrative
position in the Department of Homeland Security after
performing such duties (as described in subparagraph
(B)) in 1 or more positions (as described in
subparagraph (A)) for at least 3 years; [and]
(32) ``Director'' means the Director of the Office of
Personnel Management[.]; and
(33) ``representative payee'' means a person
(including an organization) appointed under section
8345(e)(1) to receive payments on behalf of a minor or
an individual mentally incompetent or under other legal
disability.
SEC. 8345. PAYMENTS OF BENEFITS; COMMENCEMENT, TERMINATION, AND WAIVER
OF ANNUITY
(a) * * *
* * * * * * *
(e)(1) Payment due a minor, or an individual mentally
incompetent or under other legal disability, may be made to the
person (including an organization) who is constituted guardian
or other fiduciary by the law of the State of residence of the
claimant or is otherwise legally vested with the care of the
claimant or his estate. If a guardian or other fiduciary of the
individual under legal disability has not been appointed under
the law of the State of residence of the claimant, payment may
be made to any person (including an organization) who, in the
judgment of the Office, is responsible for the care of the
claimant and may appropriately receive such payments on behalf
of the claimant, and the payment bars recovery by any other
person. If the office determines that direct payment of a
benefit to an individual mentally incompetent or under other
legal disability would cause substantial harm to the
individual, the Office may defer or suspend direct payment of
the benefit until such time as the appointment of a
representative payee is made. The office shall resume payment
as soon as practicable, including all amounts due.
(f) The Office may not authorize a person to receive
payments on behalf of a minor or individual of legal disability
under subsection (e) if that person has been convicted of a
violation of--
(1) section 8345a or 8466a;
(2) section 208 or 1632 of the Social Security Act
(42 U.S.C. 408, 1383a); or
(3) section 6101 of title 38, United States Code.
* * * * * * *
SEC. 8345A. EMBEZZLEMENT OR CONVERSION OF PAYMENTS
(a) Embezzling and Conversion Generally
(1) In general.--It shall be unlawful for a
representative payee to embezzle or in any manner
convert all or any part of the amounts received from
payments received as a representative payee to a use
other than for the use and benefit of the minor or
individual on whose behalf such payments were received.
(2) Revocation.--If the Office determines that a
representative payee has embezzled or converted
payments as described in paragraph (1), the Office
shall promptly--
(A) revoke the certification for payment of
benefits to the representative payee; and
(B) certify payment--
(i) to another representative payee;
or
(ii) if the interest of the
individual under this title would be
served thereby, to the individual.
(b) Penalty.--Any person who violates subsection (a)(1)
shall be fined under title 18, imprisoned for not more than 5
years, or both.
* * * * * * *
SEC. 8348. CIVIL SERVICE RETIREMENT AND DISABILITY FUND
(a) There is a Civil Service Retirement and Disability
Fund. The Fund--
(1) is appropriated for the payment of--
(A) * * *
(B) administrative expenses incurred by the
Office of Personnel Management in placing in
effect each annuity adjustment granted under
section 8340 or 8462 of this title, in
administering survivor annuities and elections
providing therefor under sections 8339 and 8341
of this title or subchapters II and IV of
chapter 84 of this title, in administering
alternative forms of annuities under sections
8343a and 8420a (and related provisions of
law), in making an allotment or assignment made
by an individual under section 8345(h) or
8465(b) of this title, in administering fraud
prevention under sections 8345, 8345a, 8466,
8466a of this title, and in withholding taxes
pursuant to section 3405 of title 26 or section
8345(k) or 8469 of this title;
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
Subchapter I--General Provisions
* * * * * * *
SEC. 8401. DEFINITIONS
(1) * * *
* * * * * * *
(37) the term ``revised annuity employee'' means any
individual who--
(A) * * *
(B) after December 31, 2012, and before
January 1, 2014, becomes employed as an
employee or becomes a Member covered under this
chapter performing service which is creditable
service under section 8411; [and]
(38) the term ``further revised annuity employee
means any individual who--
(A) * * *
(i) * * *
(ii) * * *
(iii) * * *
(B) after December 31, 2013, becomes employed
as an employee or becomes a Member covered
under this chapter performing service which is
creditable service under section 8411[.]; and
(39) ``representative payee'' means a person
(including an organization) appointed under section
8466(c)(1) to receive payments on behalf of a minor or
an individual mentally incompetent or under other legal
disability.
* * * * * * *
Subchapter VI--General and Administrative Provisions
* * * * * * *
SEC. 8466. APPLICATION FOR BENEFITS
(a) * * *
(b) * * *
(c)
(1) Payment due a minor, or an individual mentally
incompetent or under other legal disability, may be
made to the person (including an organization) who is
constituted guardian or other fiduciary by the law of
the State of residence of the claimant or is otherwise
legally vested with the care of the claimant or his
estate. If a guardian or other fiduciary of the
individual under legal disability has not been
appointed under the law of the State of residence of
the claimant, payment may be made to any person
(including an organization) who, in the judgment of the
Office, is responsible for the care of the claimant,
and may appropriately receive such payments on behalf
of the claimant, and the payment bars recovery by any
other person. If the office determines that direct
payment of a benefit to an individual mentally
incompetent or under other legal disability would cause
substantial harm to the individual, the Office may
defer or suspend direct payment of the benefit until
such time as the appointment of a representative payee
is made. The office shall resume payment as soon as
practicable, including all amounts due.
(d) The Office may not authorize a person to receive
payments on behalf of a minor or individual of legal disability
under subsection (c) if that person has been convicted of a
violation of--
(1) section 8345a or 8466a;
(2) section 208 or 1632 of the Social Security Act
(42 U.S.C. 408, 1383a); or
(3) section 6101 of title 38, United States Code.
SEC. 8466A. EMBEZZLEMENT OR CONVERSION OF PAYMENTS
(a) Embezzling and Conversion Generally.--
(1) In general.--It shall be unlawful for a
representative payee to embezzle or in any manner
convert all or any part of the amounts received from
payments received as a representative payee to a use
other than for the use and benefit of the minor or
individual on whose behalf such payments were received.
(2) Revocation.--If the Office determines that a
representative payee has embezzled or converted
payments as described in paragraph (1), the Office
shall promptly--
(A) revoke the certification for payment of
benefits to the representative payee; and
(B) certify payment--
(i) to another representative payee;
or
(ii) if the interest of the
individual under this title would be
served thereby, to the individual.
(b) Penalty.--Any person who violates subsection (a)(1)
shall be fined under title 18, imprisoned for not more than 5
years, or both.
* * * * * * *
[all]