Skip to content

Second in a Hearing Series on Securing the Future of the Social Security Disability Insurance Program

January 24, 2012











January 24, 2012


Printed for the use of the Committee on Ways and Means



SAM JOHNSON, Texas, Chairman

PATRICK J. TIBERI, Ohio               
RICK BERG, North Dakota


JON TRAUB, Staff Director
JANICE MAYS, Minority Staff Director





Carolyn Colvin
Deputy Commissioner, Social Security Administration

Patrick P. O’Carroll
Jr., Inspector General, Social Security Administration

Thomas Brady
Special Agent, Office of the Inspector General, Social Security
Administration, Kansas City Field Division, St. Louis, Missouri
Paul Neske, Detective, St. Louis County Police Department, St. Louis, Missouri
Shared Testimony

Steve Clifton
President, National Council of Social Security Management Associations



Tuesday, January 24, 2012
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.


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

[The  advisory of the hearing follows:]


     *Chairman Johnson.  Welcome to our second hearing in our hearing series on Securing the Future of the Social Security Disability Insurance Program.  Today our focus is on combating waste, fraud, and abuse.

     In our first hearing, we talked about the important milestone set in 1956 by the creation of this cash benefit program for those who could no longer work due to disability.  From the beginning, there was a great deal of concern about the high risk for fraud, waste, and abuse because of the changing nature of disability and the inherent subjectivity of determining whether a person was truly disabled.

     Today, the disability insurance program pays benefits to individuals with disabilities that meet certain medical criteria, so long as they work long enough and paid Social Security taxes.

     Over the past four decades, disability program costs have soared from $18 billion to $124 billion as the number of those receiving benefits has more than tripled from 2.7 to 9.7 million people.  The size of the overall workforce, more women in the workforce, the aging of the Baby Boomers into their disability‑prone years, and relaxed eligibility requirements have all contributed to this growth.

     That continued growth is putting a massive strain on the program.  According to the 2011 Trustees’ Report, without Congressional action, the Disability Insurance program will be unable to pay full benefits beginning in 2018.  That’s just a few years from now. And as the size, cost, and complexity of the disability insurance program has increased, so has the program’s exposure to waste, fraud, and abuse.

     In fiscal year 2011, Social Security paid $130 billion  ‑‑ that’s with a “b” ‑‑ in disability benefits.  That’s about what it costs to run three federal agencies, believe it or not:  the Department of Homeland Security, NASA, and the Department of Housing and Urban Development.  In that same year Social Security’s disability overpayments were 1.4 percent of total benefits paid.  That percentage may sound small, but 1.4 percent of benefits equals $1.8 billion in overpayments.

     In fact, according to Social Security, each tenth of one percent point in payment accuracy represents 706 million in outlays for the retirement and disability program.  Said another way, for every 1/10 of 1 percent Social Security improves its payment accuracy, it can pay disability benefits for a full year to close to 5,300 people.  That’s real money for those who can’t work and who count on these benefits to keep a roof over their head and food on the table.

     Finally, while Social Security collected $839 million in overpayments in fiscal year 2010, cumulative overpayment debts still reached $5.4 billion that same year.

     Continuing disability reviews also protect the disability program by making sure those receiving disability benefits are still disabled.  Every $1 spent on the reviews results in $10 of program savings, including both Medicare and Medicaid.  There is a growing backlog of medical continuing disability reviews, and in the Budget Control Act, Congress authorized $13 billion in additional funding over the next 10 years exclusively for these and other reviews.

     The best way to protect the disability program is to prevent fraud before it occurs.  The Cooperative Disability Investigation program does just that.  This program is a joint effort between Social Security, the Office of Inspector General, working with the state disability determination services and state or local law enforcement.  Since 1998, efforts by these units nationwide have resulted in $3.1 billion in disability savings. As impressive as some of these anti‑fraud efforts appear, their very success raises questions about how many other examples of abuse are yet undetected.

     The disability program is of vital importance to millions of Americans whose lives are changed forever by the onset of a disability.  We need to protect that program for those who truly need its benefits.  Waste, fraud, and abuse in the disability insurance program cheat honest, hardworking American taxpayers.  As we work to secure the future of this program, we need to protect taxpayers from con artists who are stealing from the system by making sure benefits are paid only to those who deserve them, an undertaking I know all of us on the Subcommittee stand firmly behind.  And I thank the IG for working that program.

     Everybody says it’s just a minor amount.  But billions of dollars is not minor, in my view, regardless of how you compare it to other programs.

     With that, I yield to Mr. Becerra for his comments.

     *Mr. Becerra.  Thank you, Mr. Chairman.  Nearly 157 million Americans contribute to Social Security with every paycheck.  In return, these workers and their families earn guaranteed protection against the devastating consequences of disappearing pensions and retirement savings, premature death, and career‑ending disability.

     The vast majority of American workers never have to use the disability insurance in Social Security.  But for those who become so disabled that they can’t work at all, it is a lifeline.  We owe it to American workers to safeguard their contributions to the Social Security trust fund, whether against the Wall Street privatizers who would raid the trust fund, or from erroneous payment of disability benefits to those who have not earned them.

     That is why it’s crucial that the Social Security Administration receive the funding it needs to fight waste, fraud, abuse, and to prevent simple errors.  The increased funding for program integrity within the SSA, which was authorized in last fall’s bipartisan Budget Control Act, is a very good step in that direction.

     The Congressional Budget Office estimates that the increased resources will prevent about $11 billion in overpayments within the decade, and even more later.  That’s because the eligibility reviews that SSA is able to conduct as a result of this special funding will generate $10 to $12 in savings for every dollar we invest.

     It sure would be nice, though, to see more consistency in Congress’s commitment to payment accuracy.  A little more than a decade ago, the Clinton Administration, working with Congress, completely eliminated the backlog of benefit payment cases that needed review.  Devastating subsequently, we saw that Congress has let the funding drop by almost 75 percent by the year 2007.  And the backlog came back with a vengeance.

     In 2009 and 2010, working with President Obama, we restored some of SSA’s budget, and succeeded in reducing the backlog.  But then last year was a disaster.  Congress’s continuing resolution for 2011 froze the Agency’s funding once again, and at a time when over 13,000 Baby Boomers are starting to collect their Social Security benefits every day.  This funding roller coaster has real consequences for the Social Security trust fund.

     We also need to put the program integrity funding, which is about six percent of Social Security’s overall operating budget, in context.  One of our witnesses, Mr. Steven Clifton, will let us know a little bit more about that.  He will indicate that most of SSA’s quality control efforts, including program integrity, are performed on the front lines by regular office staff, not by some special cadre of employees.

     Preventing and correcting errors is a day‑to‑day responsibility.  It falls on the same field offices and the same state disability determination workers who process the initial claims, who answer questions for the public, who track down lost checks, who assign Social Security numbers, and who do everything to provide other services Americans need under Social Security.  It’s up to them to do the program integrity, as well.

     So, when Congress decides to limit SSA to a smaller actual operating budget than what SSA had the year before, that has real consequences for payment accuracy.  When you force SSA to operate under a hiring freeze, as it had to last year, and continues to this year, that means SSA can’t replace retiring or departing employees who are the experienced and hard‑working members of the force.  They are the very people who we rely on to prevent mistakes on the front end, so we don’t have to correct them on the back end.

     One final point.  As important as it is to make sure Social Security payments are accurate, and as significant as the savings can be when SSA has the resources to do the job well, I want to make sure we keep SSA’s overpayments in perspective.  In 2010, Social Security, which had 72 million field office visits and phone calls, processed over 8 million benefit applications, and paid out benefits to over 54 million seniors, survivors, and disabled workers, had a 4/10ths of 1 percent overall overpayment rate.

     More specifically, Social Security’s disability insurance program, which handles a complicated eligibility process and requires applicants to provide specialized medical and vocational evidence, had an overpayment rate of 7/10ths of 1 percent.  Most of this was due to simple error.

     I refer you to charts that you see on the screens.  For comparison, the cost overrun for 98 of the Department of Defense’s major weapons systems was 31 percent.  Not 31/100ths of 1 percent, 31 percent.  What makes this a glaring statistic and makes it even worse and more staggering is the fact that DoD continues to do business with hundreds of contractors which the Pentagon knows were involved in fraud against the taxpayers.

[The insert of The Honorable Xavier Becerra follows:]

     So, Mr. Chairman, I look forward to working together with you and our colleagues to safeguard the investment American workers make in Social Security.  And let’s keep the big picture in mind.  Tens of millions of Americans and their families rely on Social Security to be there when they need it.  That means having a Social Security office open and fully staffed to help them.  It means getting back every penny in Social Security overpayments.  And for the sake of fairness and integrity, it means applying the same rigor and standard of accountability for all programs within the federal budget, from Social Security to national security.

     I yield back, Mr. Chairman.

     *Chairman Johnson.  Yes.  I might remind you this is not the Armed Services Committee.

     *Mr. Becerra.  But Mr. Chairman, we always are looking for ways to collect any overpayments.

     *Chairman Johnson.  I know, I know.

     *Mr. Becerra.  National security or Social Security.

     *Chairman Johnson.  Thank you.

     Ms. Colvin, I understand Social Security is going to resume making benefit estimate statements available, but only to certain groups.  I look forward to being briefed by your staff and holding a future hearing on this.  The statements are an essential tool for helping Americans prepare for their retirement.  But you can tell your Chief he should have told us about it before he did that.

     As is customary, any Member is welcome to submit a statement for the hearing record.  Before we move on to our testimony today I want to remind our witnesses to please limit their oral statement to five minutes.  However, without objection, all the written testimony will be made a part of the hearing record.

     We have one panel today, and our witnesses who are seated at the table are Carolyn Colvin, Deputy Commissioner of Social Security Administration; Patrick O’Carroll, Jr., who is the Social Security Administration’s Inspector General; Thomas Brady, who is Special Agent, Office of the Inspector General, Social Security Administration, from the Kansas City field division in St. Louis.  He is joined by Paul Neske, Detective, St. Louis County Police Department, St. Louis.  Steve Clifton is President, National Council of Social Security Management Associations.

     I appreciate you all being here.  And, Ms. Colvin, you are welcome to proceed for five minutes.


     *Ms. Colvin.  Chairman Johnson, Ranking Member Becerra, Members of the Subcommittee, thank you for inviting me to discuss our efforts to preserve the integrity of our disability programs.  I am the Social Security Administration’s Accountable Official for improper payments.

     I want to thank Congress for getting our budget to us early this year.  It helps us minimize disruptions in serving the American public.  Our dedicated employees continue to improve our efforts to prevent, detect, and recover improper payments, making the Social Security program the most accurate in Federal Government.

     Throughout my career I have worked closely with the vulnerable individuals who benefit from Social Security’s programs.  They look to the disability program for assistance, a program they have contributed to through their payroll taxes.

     The payments we make under the SSDI program are exceptionally accurate.  In fiscal year 2010, 99.31 percent of all SSDI payments were free of an overpayment, and 98.97 percent were free of an underpayment.  While we are proud of these results, we still look for ways to do better, because we realize that even a small error rate represents sizeable incorrect payments.

     Funding for our program integrity work is key to ensuring that we continue proper payments to those individuals who are entitled to benefits.  Continuing disability reviews play an especially important role.  CDRs are re‑evaluations of beneficiaries’ medical conditions and earnings to determine whether they should continue to receive benefits.  Medical CDRs yield $10 in savings for every $1 invested.

     In 1996 we received a 7‑year commitment of special funds to conduct medical CDRs.  At the end of the 7 years, we had processed 4.7 million full medical reviews.  Over the subsequent five years, inadequate funding meant that we had to reduce the number of medical CDRs we completed.  Now we have a backlog of about 1.3 million cases.  We are doing 90,000 more medical CDRs this year.  But because we did not receive full funding for program integrity, as authorized under the Budget Control Act, we will complete about 130,000 fewer full medical reviews than we could have done.  Given the high return on investment of medical CDRs, full funding of this workload is a smart investment.

     We are focusing resources on our work CDRs.  We are taking actions more timely, and addressing overpayments more quickly.  Our workloads are growing at the same time we are losing experienced staff, increasing the strain on our front‑line employees, the same employees who conduct CDRs and perform core duties, including getting out that first payment to deserving beneficiaries.  We must balance quality and quantity.  Thus, we are forced to do less with less.

     The SSDI work activity rules are extremely complex and difficult to implement.  The President’s fiscal year 2012 budget included a work incentive simplification proposal that we believe could simplify SSDI program rules, and address a significant disincentive to work that occurs under the current rules:  the fear of losing benefits due to work activity.  We urge Congress to consider the work incentive simplification policy proposal.

     We would not be good stewards of our programs if we did not have a comprehensive debt collection program in place to recover program dollars.  We do.  Across all of our programs we recovered $3.2 billion in debt in fiscal year 2011, and $14.7 billion over the previous 5‑year period at an administrative cost of $.08 for every dollar collected.

     We make every effort to identify and collect that as soon as possible, so we can arrange a repayment plan with the beneficiary.  If the overpaid person no longer receives benefits, we arrange for debt collection through installment payments.  If this is unsuccessful, we turn to authorized external debt collection tools.

     Our employees are vigilant and, when they suspect someone is receiving benefits through fraudulent means, make referrals to our Office of Inspector General.  Last year we made 19,000 referrals.  OIG opened 4,600 of these cases for investigation and possible criminal prosecution.  We have a low incidence of fraud in our programs.

     We are committed to preserving the integrity of our programs.  I must emphasize that just because a benefit payment is improper does not mean there was fraud.  Our programs are complicated.  And we work to ensure that our beneficiaries understand the reporting requirements.  We take pride in our ability to protect and manage the resources and programs entrusted to us.  We have earned the public’s trust, and we intend to keep it.

     Congressional support is vital.  To complete all of the work for which we are responsible, we need Congress to fully fund our workloads in future appropriation cycles.

     Thank you very much.  I am happy to answer your questions.

     [The statement of Ms. Colvin follows:]

     *Chairman Johnson.  Thank you, ma’am.

     Mr. O’Carroll, welcome.  Please go ahead.


     *Mr. O’Carroll.  Good morning, Chairman Johnson, Ranking Member Becerra, and members of the subcommittee.  Thank you for the invitation to testify today.

     SSA provides about $10 billion in disability insurance payment to more than 10 million citizens every month.  More and more Americans are turning to SSA as Baby Boomers reach their most disability‑prone years.  The Agency received an all‑time high 3.2 million initial applications for disability benefits in fiscal year 2011.  Thus, it is a critical time to focus on the future of the disability program.

     My office’s efforts to secure the disability program focus on investigating individuals suspected of committing Social Security fraud, completing audit reviews, and recommending ways for SSA to improve disability program integrity and efficiency.  Last year OIG agents reported more than $410 million in investigative accomplishments.  That includes more than $80 million in SSA recoveries and restitutions, and about $330 million in projected savings from programs such as the Cooperative Disability Investigations effort, which we will hear about more shortly.

     Last year our office received more than 103,000 fraud allegations and 43 percent of all allegations were disability‑related.  We have also made many recommendations to SSA in recent years that support OIG’s focus on disability program integrity.

     SSA projected a backlog of about 1.4 million continuing disability reviews at the end of Fiscal Year 2011.  Our audit work has found the Agency would have avoided paying hundreds of millions of dollars to ineligible beneficiaries if CDRs were conducted when they were due.  SSA estimates that every dollar spent on CDRs yields at least $10 in SSA program savings.  The Agency has requested additional funds this year for program integrity efforts.  SSA has a goal of conducting more than 1.4 million CDRs.  However, this amount will not significantly reduce the CDR backlog.

     We also believe reducing the complexity of SSA’s disability programs would help prevent millions of dollars in overpayments that occur each year.

     SSA has had to evaluate earnings and work incentives before stopping benefits.  So simplifying these provisions could have a positive effect.

     Our support for stewardship activities has never waivered.  My written statement for the record includes other recommendations we have made to SSA.  We continue to pursue the establishment of self‑supporting fund for integrity initiatives, such as CDRs and our CDI program.

     The CDI program has received tremendous support from your subcommittee.  In late August, Chairman Johnson was kind enough to visit our Dallas CDI unit.  And Congressman Brady and I toured the Houston CDI unit, and we greatly appreciate all of your interest.

     I am also pleased the subcommittee invited OIG Special Agent Tom Brady and St. Louis County Detective Paul Neske to be here today.  They are members of our CDI unit in St. Louis.

     To highlight our anti‑fraud efforts, I would like to share with you a CDI surveillance video.  We currently have 25 CDI units across the country, and this case comes from our Tampa CDI unit.


     *Mr. O’Carroll.  The unit investigated a 54‑year‑old man.  He said he used a cane for walking for assistance, and he could not perform household chores.  The Tampa disability examiners referred the case to the CDI unit, due to medical inconsistencies.  And here you see him limping into the local SSA office.

     The investigation revealed that the man was hardly incapable of performing household chores.  Surveillance showed the man, as you can see here, lifting a large piece of wooden furniture, and sweeping debris from the roof of his home.  With this information, the DDS denied the claim, preventing an improper SSA payment.

     I have also available additional case example videos from Chairman Johnson’s district that we showed during a CDI unit visit last summer.  Special Agent Brady and Detective Neske will provide more details on the CDI program in their testimony.

     And thank you, again, for this opportunity to testify.  And I will be happy to answer any questions.

     [The statement of Mr. O’Carroll follows:]

     *Chairman Johnson.  Thank you, sir.  Keep up the good work.

     Special Agent Brady and Detective Neske, welcome.  Please proceed.

     *Mr. Brady.  Thank you, sir. 


     *Mr. Brady.  Good morning, Chairman Johnson, Ranking Member Becerra, and members of the subcommittee.  My name is Tom Brady, and I’m a special agent with the SSA office of the inspector general.  I serve as the team leader for the cooperative disability investigations unit in St. Louis, Missouri.  I am joined today by Detective Paul Neske of the St. Louis County Police Department, one of the St. Louis CDI unit’s local law enforcement partners.  Thank you for the invitation to testify.

     We believe program integrity is a critical element in the Agency’s efforts to secure the future of its disability insurance program.  For the past 12 years, our unit has been extremely successful in detecting abuse in SSA’s disability programs, and preventing payment on disability cases involving potential fraud.

     CDI was established in 1998 with 5 units.  There are currently 25 units covering 22 states, with the most recent unit opening in Jackson, Mississippi in November.  Since the program was established, the program’s work nationwide has resulted in approximately $1.9 in projected SSA savings.  Our St. Louis CDI unit includes two detectives and an intelligence analyst from the St. Louis County police department, one detective from the Sikeston, Missouri police department, an SSA operations supervisor, and a DDS hearings officer.

     I now introduce Detective Neske, who will provide more information on the CDI process.

     *Mr. Neske.  Thank you, Tom.  The process typically begins with the fraud referral from the state’s DDS or SSA to the CDI unit.  The referrals are benefit applications or reviews that have been identified as suspicious by DDS.

     Types of disability fraud can involve malingering, filing multiple applications, exaggerating or lying about disabilities, and concealing work or other activities.  The CDI unit team leader screens the allegations and works with the team members to investigate.  Upon completion of the investigation, a report detailing our findings is sent to DDS, which determines whether a person is eligible for benefits.  Some of our cases may result in criminal prosecution or civil penalties.


     *Mr. Neske.  For example, in this video you see a 45‑year‑old woman who had been collecting Social Security disability benefits since 2009.  She alleged chronic back pain, and said she used the cane for assistance.  But during our continuing disability review by the Missouri DDS in 2011, the disability examiner noticed that the woman walked without a limp.  The case was referred to the St. Louis CDI unit for further investigation.

     As you can see at her home, she was able to walk down the front steps and carry her cane under her arm.  But on the day ‑‑ but on that day, outside of the medical office, she struggled to climb the steps to the office door.  After her appointment, the woman is seen climbing her front steps without the use of the cane, and she is even carrying a child’s playseat.

     We forwarded this information to Missouri DDS and they seized the woman’s Social Security benefits.

     *Mr. Brady.  Thank you, Paul.  Since 1999, the St. Louis CDI unit has closed more than 1,900 cases, resulting in more than $84 million in projected SSA program savings.  The Government Accountability Office has advocated expansion of the CDI program to all 50 states.  We in the OIG share that enthusiasm.  We look forward to continuing to assist SSA in this vitally important and growing initiative, doing our part in maintaining the integrity of Agency programs, and protecting the taxpayers of this great nation.

     Thank you again for the invitation to testify.  Detective Neske and I would be happy to answer any questions.

     [The statements of Mr. Brady and Mr. Neske follow:]

     *Chairman Johnson.  Thank you so much for your testimony.  I appreciate it.

     Mr. Clifton, welcome.  Please go ahead.


     *Mr. Clifton.  Chairman Johnson, Ranking Member Becerra, and members of the subcommittee, I am Steve Clifton, president of the National Council of Social Security Management Associations, NCSSMA, and the district manager of the Social Security office in Greeley, Colorado.  Thank you for the opportunity to speak on behalf of the 3,500 NCSSMA members across the country.  We share your concern about the disability program and combating waste, fraud, and abuse.

     First, let me thank you for the fiscal year 2012 appropriation SSA received, which included specific funding for program integrity initiatives such as medical continuing disability reviews.  This funding is critical to process core workloads, and to improve payment accuracy.  NCSSMA considers it a top priority to deliver quality service to the American public, and to be good stewards of the taxpayers’ monies.  SSA completed 1.4 million medical CDRs in fiscal year 2011.  But a backlog of 1.3 million still exists.

     The fiscal year 2012 program integrity funding could allow SSA to complete 592,000 full medical CDRs, an 82 percent increase over fiscal year 2010.  This is a program integrity workload that saves at least $10 in lifetime program savings for every $1 invested.

     In addition to conducting program integrity workloads after benefits have been paid, we believe that it is equally critical to prevent improper payments before claims are processed.  While this hearing is taking place, the American public is calling or walking in to Social Security field offices all across the country to discuss retirement, the loss of a loved one, or the onset of their disability, frequently with a sense of urgency or even desperation, as they look to us for assistance.

     Last fiscal year, we assisted almost 45 million visitors.  We also received 3.2 million initial disability claims and nearly 860,000 hearing requests.  Both were the highest volume in our history.

     The same employees that process program integrity workloads also answer public telephone calls, take initial applications for disability and retirement benefits, and process claims, core workloads that are not program integrity funded, but do ensure the accuracy of payments.  To this end, having adequate staffing levels in SSA field offices to process workloads, sufficient time to address complex issues, answer questions, and educate the public on their reporting responsibilities is essential to saving taxpayer dollars.

     SSA employees want to do quality work and prevent overpayments at all points of contact with the public.  Adequate resources to conduct training and to perform quality reviews for claims accuracy are also imperative to discharging SSA’s stewardship responsibilities.  Even with the fiscal year 2012 appropriation enacted, SSA field offices have been operating for over 15 months under a continuing hiring freeze, with very little overtime.  Geographic staffing imbalances are occurring, due to uneven attrition across the country.  These all detract from the efficiency of operations and serve to compromise efforts to improve payment accuracy.

     We also see areas to improve efficiency and to prevent improper payments by expanding electronic services available to the public, simplifying disability rules such as enacting WISP legislation, implementing federal wage reporting, and expanding data exchanges such as workers compensation information.  This would allow SSA to address payment accuracy and ensure program integrity, both before and after claims are processed.

     We ask that Congress give thoughtful consideration regarding the future of SSA to ensure the preservation of this valued program.  We sincerely appreciate the subcommittee’s interest in the vital services Social Security provides, and your ongoing support.  A strong Social Security program equates to a strong America.  And it must be maintained as such for future generations.

     On behalf of NCSSMA members nationwide, thank you for the opportunity to present our testimony.

     [The statement of Mr. Clifton follows:]

     *Chairman Johnson.  Thank you, sir.  I appreciate all your testimony.

     Mr. Brady is not here yet.  He had an illness in the family so he had to leave town.  But we appreciate his support.  And he is behind everything that you all are doing.  And I thank the IG for getting out there where the action is.

     As is customary, for each round of questions I will limit my time to five minutes and ask my colleagues also to limit their time to five minutes.

     Mr. O’Carroll, I want the Subcommittee to hear about the cases I saw when I visited your office in Dallas.  Would you walk us through that video, and then I’ll ask questions on the other side of it?

     *Mr. O’Carroll.  Yes, Mr. Chairman.  Thank you for your interest in this.  If you remember when you were in our Dallas CDI unit, we showed three videos.  The first one was a person conducting some business that ‑‑ we had a video camera with us and were showing that he was actively engaged in business.  And then there was another one with a lot of driving and other things which really wouldn’t lend themselves too good for this ‑‑ you know, for showing here today.

     This one I did bring with me today, is one of the ones you saw.  And it’s about a 53‑year‑old woman who alleges chronic back pain, headaches, loss of vision, and she says she uses a walker for mobility and is incapable of driving.  She says she falls down often because her legs give out.


     *Mr. O’Carroll.  I think this one is going to speak well for itself.  You can see her getting into a taxi without the walker.  Now she comes back to her car or her truck, and heads to a convenience store.  Then, when she goes to the convenience store she purchases three cases of soda, which you can see her carrying here.  And as a result of that, obviously, we turned this information over to the DDS and they turned down her application.

     *Chairman Johnson.  I wonder how many of those go on that we don’t know about?

     *Mr. O’Carroll.  Yes, these are the ones that we actually see ‑‑

     *Chairman Johnson.  Yes.

     *Mr. O’Carroll.  ‑‑ and can record.  There are thousands more out there that we just don’t have the opportunity to investigate.

     *Chairman Johnson.  Are the states working with you pretty well?

     *Mr. O’Carroll.  Yes, sir.  The states are working with us very well.  We have very good cooperation with the states.  It’s getting a little more difficult with funding in some of the states where they’re not as ready to help us as they used to be in the past.  And I can give you details on that.

     *Chairman Johnson.  Thank you.  Ms. Colvin, according to the GAO, in fiscal year 2010 Social Security failed to collect $5.4 billion in cumulative disability overpayments.  GAO also told us Social Security has no performance goal for debt collection.  Is collecting the debt not a priority for Social Security?

     *Ms. Colvin.  I think that we ‑‑ yes.  Collecting the debt is absolutely one of our highest priorities.  I believe that we have a very excellent debt collection program.  I will say that our cumulative debt is about $15 billion.  Last year we had newly established debt of about $5.6 billion.  But last year we also collected $3.2 billion in debt.

     It is easier for us to collect the debt when the beneficiary is on the rolls.  We can simply deduct the monthly payment that’s been determined from the monthly benefit.  It becomes much more difficult when the individual is no longer on the rolls.  However, we have a number of tools that we use to collect the debt.  We have the tax offset, we have regular billings where we attempt to collect and have the ability to report debt to the credit reporting agencies.  We have numerous tools and we’re always looking at additional tools.  So it does remain a high priority.

     I do want to point out that many of these individuals who receive an overpayment are most vulnerable.  They are probably our most destitute.  And therefore, the amount that we are able to collect on a monthly basis is small.

     But we are very aggressive.  The debt now, with the new rule with IRS, we are no longer limited to 10 years.  So we are implementing a system that will allow us to continue to go after that indefinitely.  And then, if someone leaves the rolls and come back on the rolls again, we use a process that would allow us to reduce the amount.  If they receive another Federal benefit, we can also offset that against the amount.

     So, I believe that we have a very strong debt collection process in place.  We have to balance what we are able to do with other resources.  And so we are always looking at what is the most cost‑effective way of doing this.

     *Chairman Johnson.  Thank you.  Mr. Brady and Detective Neske, what’s the most common way people commit disability fraud and what tools do you have to use for your investigations?

     *Mr. Brady.  Some of the most common areas that we see are individuals that are malingering, exaggerating their symptoms, or just outright, straight‑out lying about their disabilities.

     We also find that there is information out there in the public about steps to take to get on disability.  In fact, recently we became aware of a document that prisoners had created ‑‑ a prisoner had created called “15 Steps to SSI.”  And basically, it explains to them the process of trying to get on disability.

     *Chairman Johnson.  Well, thank you for the work you all do.

     My time is expired.  Mr. Becerra, you are recognized for five minutes.

     *Mr. Becerra.  Thank you, Mr. Chairman.  And thank you all for your testimony.  And to those of you who do the work out there, thank you so much for the effort.  And I suspect you would love to have a few additional folks on your team to be able to do some of this, because we all know that that’s not the only person out there that you could videotape.

     A few questions.  Mr. Brady, let me ask you first.  How do you ‑‑ what’s the source of the information that you get that allows you to move on that tip and start the investigation?

     *Mr. Brady.  The majority of our allegations come in from either DDS or the Social Security Administration.  But we also receive tips from the general public, anonymous sources.  Also ODAR, part of Social Security.  And, based on that information, we will have our ‑‑ do an extensive background history on that person.

     *Mr. Becerra.  Okay.  So you can actually ‑‑ we can encourage the public to submit those complaints or that information, those tips, directly to you?

     *Mr. Brady.  Absolutely.

     *Ms. Colvin.  Yes.

     *Mr. Becerra.  I suspect they also can give them directly to the Social Security office, and they would then send that to you.

     *Mr. Brady.  Yes, they do.

     *Mr. Becerra.  So the majority of your cases come through your ‑‑ the Social Security system itself, through the personnel at the Social Security offices.

     *Mr. Brady.  Correct.

     *Mr. Becerra.  Okay.  And give me a sense.  What’s the typical case of fraud?  A case like this, where it’s clear that somebody was abusing the system, what’s a typical punishment that someone like that would face?

     *Mr. Brady.  Well, generally, in most of the CDI cases, since ‑‑ and in the example we gave today, it was an initial claim.  And DDS subsequently denied that person’s claim.

So ‑‑

     *Mr. Becerra.  Okay.  Give me a sense ‑‑ not someone who hasn’t been collecting, because we just deny them and I suspect they go away, unless they’re crazy enough to try again.  What about someone who has actually been collecting for some time?  Give me a sense of the typical penalty that they’re going to face?

     *Mr. Brady.  In those cases that we present to the U.S. Attorney’s Office for prosecution, it could range from anywhere to probation to some time in prison, depending on what the loss is to the government.

     *Mr. Becerra.  Okay.  So let me ask you now ‑‑ and also to Officer Neske, Mr. Neske ‑‑ that particular question.  Are the penalties severe enough for those that we prove defrauded the Social Security system and the taxpayers?

     *Mr. Brady.  That’s ‑‑ if you’re asking my personal opinion ‑‑

     *Mr. Becerra.  I am.

     *Mr. Brady.  ‑‑ I think in some respects they need to be more severe or they need to ‑‑ there needs to be more of a penalty as far as ‑‑ what we see, what frustrates us, is that a person will apply for benefits, they will get denied, and then the next day they’re applying ‑‑

     *Mr. Becerra.  They’re right at it again.  Mr. Neske, would you like to comment?  Is the penalty severe enough for those who commit that kind of fraud?

     *Mr. Neske.  Some of it is desperation.

     *Mr. Becerra.  Your microphone.

     *Mr. Neske.  Can you hear me now?

     *Mr. Becerra.  Yes.

     *Mr. Neske.  A lot of it’s desperation.  They don’t have anywhere to turn to for income.

     *Mr. Becerra.  Yes.

     *Mr. Neske.  You can kind of sympathize with them and understand, but it doesn’t make it right.

     *Mr. Becerra.  And I suspect in those cases where there is some desperation involved, the prosecutor or the judge is probably going to have some empathy there, and try to make the punishment fit the crime.

     But to my thinking, we should descend on folks who do this.  Because if you don’t, then it only encourages neighbors and others who see this and say, “Hey, you can do it?  I can do it.”  And I would hope that in the clear cases that we make ‑‑ these are the poster child cases, where you put them out there and say, “Do this, and you’re in trouble.  So if you’re close to getting a disability benefit, don’t mess around because you may deprive yourself of, in the future, being able to get it.”

     Now, Mr. O’Carroll, let me ask this.  You mentioned that if we reduce the CDR backlog, we reduce overpayments.  So let me ask you this.  If we had more personnel to conduct these CDRs so they could more quickly reduce the backlog of CDRs, would we reduce the level of overpayment?

     *Mr. O’Carroll.  The easy answer on that is yes, which  ‑‑ but in a little bit more definition to it is that they are very ‑‑

     *Mr. Becerra.  And give it to me in 20 seconds, because otherwise I won’t get to ask other questions.

     *Mr. O’Carroll.  Okay, okay.  Real quick on it is that they’re very difficult labor‑intensive to do.  The more people doing it, the better on it.  The more resources that are put towards doing the CDRs, the better for it.  And it’s decisions that have to be made on prioritizing.

     *Mr. Becerra.  Okay.  So you can’t just do a CDR quickly, or with just one or two individuals.  That takes time.  And I suspect Mr. Clifton would say you ‑‑ it takes a lot of his personnel moving away from providing someone the assistance they need to apply for a Social Security number or apply for retirement benefits to do these CDRs, which are essential to make sure that we’re not giving money to people who don’t deserve it.

     But that means unless we’re going to increase the backlog of people who are applying for their benefits appropriately, we need to have the personnel who can do this very important work, because we know the return, 10 to 1 on the dollar, is excellent.

     So, it’s all pointing to me that no one is telling me that Social Security personnel are sitting on their duff, doing nothing.  It’s that we found out that if we pursue some of these ‑‑ I would call some of these folks crooks ‑‑ we can get some results.  And in many cases, it’s not that they’re crooks, it’s that they’re desperate.  Or, as we find ‑‑ and, Ms. Colvin, I know my time is up, but I suspect you would say to me that the majority of cases where there has been an overpayment to an individual aren’t the case of fraud, it’s a case of mistake, either by the individual, who had a very complicated case, or maybe the Agency missed something.  But it was more an error, and then once you correct it you try to see if you could collect the overpayment.

     *Ms. Colvin.  Absolutely.  I couldn’t say that better.

     *Mr. Becerra.  Well, I hope we continue to give you the resources.  I’m glad that after ‑‑ at the beginning of the year the Congress cut, or essentially left flat, the funding for that program integrity work ‑‑ that we were able to get the money last month to actually beef it up.  But the more we can do this ‑‑ and I think the more we can hang it out there like a poster child, that if you do this stuff, you know, you do the crime, you pay the fine ‑‑ I think the better off we’ll be, and let only those who legitimately deserve the benefits get them.

     So, Mr. Chairman, I thank you for this hearing, and thank you for the time.

     *Chairman Johnson.  Thank you.  Mr. Smith, you’re recognized for five minutes.

     *Mr. Smith.  Thank you, Mr. Chairman.  And Mr. O’Carroll, we have heard a little bit about the penalties.  Sometimes it is just denial of benefits.  Other times it is jail time, perhaps more.  Can you elaborate?

     *Mr. O’Carroll.  Yes, sir.  It’s pretty much what we’re ‑‑ again, with the CDI units we’re talking about here is the deterrent at the beginning of it.  We are trying to keep the money from being spent.

     Then, the other one there was some discussions on is that we do have a lot of tools out there in terms of jurisdictions that we can use for people defrauding the United States Government.  Unfortunately, what we’re up against with a lot of these things is that the amount of fraud, in terms of the dollars, when we go to a U.S. Attorney’s office for a prosecution on these things, is so much less than, you know, bank robbers or whatever it is.  In the priorities of the jurisdiction, it’s difficult to get prosecutions for a lot of the disability fraud that we have.

     So, for that reason, on it ‑‑ is that we use ‑‑ you know, we do try to bundle them, to get U.S. Attorney’s offices to prosecute on it.  As Mr. Brady said on it, the range of prosecution or penance ‑‑ penalty of it goes anywhere from probation to prison time.  But I got to admit, it’s usually going to be the more egregious ones that are going to be getting the prison time on it.

     Another tool that we are using is civil monetary penalties, so that if we can’t get them prosecuted, at least we’re going after any of the resources that they have.

     *Mr. Smith.  Do you have the authority to do that already?

     *Mr. O’Carroll.  Yes, we do.

     *Mr. Smith.  Okay.  So, in terms of resource allocation, because I mean, that’s kind of what this boils down to, can you share kind of the cost benefit analysis of, I mean, what kind of resources it takes?  You know, savings ‑‑ of course we’ve got the bigger issue of wanting to send a message that this is not good, and prevent others from even trying.  Can you elaborate on that?

     *Mr. O’Carroll.  Yes, I can.  Usually on the cost of doing this thing ‑‑ for example, CDRs that we were talking about, there is sort of a range on them.  To do a medical CDR, where somebody is coming in, where we believe that they are feigning a medical issue or whatever, they cost about $1,000, and they take a, you know, series of months.

     The next one down on it is that when we do the worker ‑‑ SSA does a work CDR on it type of thing, there is ‑‑ that’s the next one down.  That’s about $400 per one that they do, to give you an idea of the cost on it.  And then a mailer that goes out is about $20.

     So, those are pretty much the costs going into it.  And just to kind of use the flip side of it is that the savings that we have on the back end that we’re experiencing on this thing is that we’re seeing about a $90,000 savings for every person that doesn’t come ‑‑ get on to benefits is what we’ve been figuring out on our adjustment for that.

     And then, when we’re also figuring is anybody who is in pay, we’re going to be taking whatever they would have been getting for that percentage, or a percentage of what they’re getting on their pay, and then multiplying that for it by ‑‑ we’re usually throwing them off the benefits for about five years.  So we can include that into it.

     And then, the other one that’s not seen on this thing is it’s sort of a waterfall effect on different ones with state supplements that are put into it.  We’re taking a look at other benefits that are coming for ‑‑ you know, that are out there on it.  And then all those get thrown in that are savings to the government, too.

     *Mr. Smith.  How much review is there, in terms of the supporting witnesses?  Is there review of that situation or that process, where someone may have erred, or even worse than that, in terms of providing supporting information?

     *Mr. O’Carroll.  Yes, again, that is significant.  I don’t really have a good figure on how much time would go into the prepping on something like that.  But in terms of, you know, the witness interviews and all the other ones that, you know, pretty much we’re talking about today are all very time‑consuming and all go into the length of time it takes us to do an investigation.

     *Mr. Smith.  Thank you.  I yield back.

     *Chairman Johnson.  Thank you.  You care to question Mr. Stark?

     *Mr. Stark.  May I?

     *Chairman Johnson.  Yes, sir.  Mr. Stark, you are recognized.

     *Mr. Stark.  Well, thank you, Mr. Chairman.  And thank you for this exceptional hearing.  Let it be known that the scooter store called me this morning and I said no, I wouldn’t ride their scooter to the hearing.


     *Mr. Stark.  And also, this hearing is a first ‑‑

     *Chairman Johnson.  You had the IG watching you.

     *Mr. Stark.  The hearing is really a first for me, because it is the first time I have ever been in a room with a detective where I get to ask the questions.


     *Mr. Stark.  But I want to congratulate Ms. Colvin on the excellent record that SSA has had under your leadership in these areas.  How many claims a day does ‑‑ do you have any idea ‑‑ that SSA has to process under this program?

     *Ms. Colvin.  I don’t know that I can give you ‑‑

     *Mr. Stark.  Thousands?

     *Ms. Colvin.  Thousands, yes.  The staff do both initial claims, as well as CDRs, et cetera.  I can certainly provide you the specifics ‑‑

     *Mr. Stark.  No, I just ‑‑

     *Ms. Colvin.  But it is significant.

     *Mr. Stark.  It is many thousands, I would ‑‑

     *Ms. Colvin.  It is many thousands.  And ‑‑

     *Mr. Stark.  And wouldn’t it ‑‑ isn’t it correct that most of the overpayments or incorrect payments, if you will, are not fraud?  They are mistakes?

     *Ms. Colvin.  I am really pleased that you raised that.  Most of the improper payments are not fraud.  In fact, improper payments are overpayments.  The reason for most of the overpayments are directly related to the work activities, like the substantial gainful activity.  People are confused about when they report and how ‑‑ and the other pieces of that legislation.

     For instance, they have a nine‑month trial work period.  They have an extended eligibility period.  They can earn up to the substantial gainful activity amount, which I believe in 2012 is $1,010.  So, even when we get a work report, we still have to review all of those things to determine whether or not the payment is impacted.  And that’s why it takes us so long to do a work CDR.

     Also, no one has mentioned that improper payments are also underpayments, which means that we have made some errors and people are entitled to a higher benefit.  And I think focusing on underpayments is just as important as focusing on overpayments.

     *Mr. Stark.  It is important to get it right.  If the system ‑‑

     *Ms. Colvin.  It’s important to get the right check to the right person the right time.  And we take very seriously fraud.  As was mentioned, our team referred over 19,000 suspicious activities last year.  They do not want to see the program jeopardized by individuals getting a benefit to which they are not entitled.  And this is something we focus on daily, with everything we do.

     *Mr. Stark.  And I thought that guy following me around with a camera was just interviewing me for a political ad.


     *Mr. Stark.  I wanted to suggest to my colleagues, if they don’t already know ‑‑ but I will bet that for all of us sitting here on the dais, certainly in my office ‑‑ next to immigration cases, the most case work, as we call it in our district office, comes in regard to people with questions about Social Security or disability benefits.

     And, Mr. Clifton, I just have to congratulate your colleagues, or the people you work with.  We ‑‑ our office goes to the San Jose office.  And they have just been ‑‑ over the years, I am talking 20 years ‑‑ this office has just been more than helpful.  And I hope you will extend to them our gratitude from Fremont, California, for all the help they give us.  Because we couldn’t handle it all.  Many of them take special expertise, which the people that work in your department enjoy.  And we really appreciate it.

     So I wanted to just, in all seriousness, thank those of you who are working to make this system work.  We have to ‑‑ the public has to make sure that they think it is on the level.  And Sam, I just ‑‑ I think you are heading in the right direction.  We have got to see ‑‑ we want to see the program continue.  A few years, you will be old enough to get into it, but don’t rush.  And I will let you know what it is like.

     Then, as I say, it is an important ‑‑ one of the most important social policies that we have in this country, is taking care of seniors and children.  And I just appreciate all of our witnesses’ efforts in the direction of making the program secure, fair, accurate.  And I know that you need help.

     *Ms. Colvin.  We do.

     *Mr. Stark.  I think we all know that.  And you can’t cut ‑‑ what did you have to lay off, 4,000 employees?  Something like that?

     *Ms. Colvin.  Not layoff, but they retired and ‑‑

     *Mr. Stark.  You couldn’t rehire.

     *Ms. Colvin.  We could not rehire them, yes.

     *Mr. Stark.  And you probably need more than that.  And I hope that we can find a way to get the necessary resources.

     *Ms. Colvin.  We need adequate sustained funding.

     *Mr. Stark.  Okay, thank you.  We will try and see what we can do to do that.

     *Ms. Colvin.  Thank you.

     *Mr. Stark.  Thank you again, Mr. Chairman.

     *Chairman Johnson.  Thank you, Mr. Stark.

     *Mr. Stark.  Yield back the balance of my time.

     *Chairman Johnson.  The time frame on the continuing review is what that CDR is.  We use acronyms around here, and a lot of people don’t know what we are talking about.  Are the time frames that are set for CDRs okay, or do we need to look at them?

     *Ms. Colvin.  I believe that the reviews that we have done indicate they are adequate.  Depending upon the disability, it could be within one to three years, if medical improvement is expected.  If medical improvement is not expected rapidly, it could be three to five years.  And then, of course, there are some conditions where medical improvement is not expected at all, a terminal illness or something of that nature.

     And we have a profiling system that allows us to select the CDRs that would have the highest return on investment, and that’s a very elaborate matrix.  I am not able to explain that here, but I could provide that to you later.  But I think that the time line works.  In fact, we have got a backlog because we can’t get to them within the time frame that we should be.  We have about 100 ‑‑

     *Chairman Johnson.  Yes, more than you can handle.

     *Ms. Colvin.  ‑‑ 1.3 million ‑‑

     *Chairman Johnson.  Yes, okay.

     *Ms. Colvin.  ‑‑ that we can’t handle.

[The insert of Ms. Colvin follow:]

     *Chairman Johnson.  Thank you.  Mr. Marchant, you are recognized.

     *Mr. Marchant.  Thank you, Mr. Chairman.  For clarification, the CDIs and CDRs, they don’t involve overpayments, do they?

     *Mr. O’Carroll.  The CDRs and CDI, what they are involved with is preventing overpayments.

     *Mr. Marchant.  So the actual overpayments that Ms. Colvin is talking about are not really in the CDR and CDI backlog.  Is that correct?

     *Ms. Colvin.  Go ahead, you want to answer?

     *Mr. O’Carroll.  No.

     *Ms. Colvin.  Some of them could be.  The CDI program was really set up as a joint effort between OIG and SSA to prevent people from actually coming on the rolls to begin with, so you wouldn’t have an overpayment there.

     But if we get information that suggests that someone who is on the rolls is, in fact, not disabled, that would be the type of referral that we would send to OIG.  And that could be reviewed by the CDI unit.  If, in fact, that person then is found not to be disabled, has been getting a benefit, that’s an overpayment.  It’s a fraudulent payment, though, and that person ‑‑

     *Mr. Marchant.  Are inadvertent overpayments or mistakes or any of those things ever referred over to the CDI/CDR units?

     *Ms. Colvin.  Not if there is no instance of or suspicion of fraud.

     We have some overpayments inherent in the system.  For instance, if someone is on the rolls and they file an appeal, they are entitled to stay on the rolls until such time as that appeal is adjudicated.  If we ‑‑ if the appeal is denied, then all of that money that they have been getting is an overpayment.  So then we have to start a collection process to get that money back.

     *Mr. Clifton.  And Congressman, if I may add too, there are overpayments ‑‑ as we are developing work CDRs, we discover that they have worked, perhaps not told us.  We determine that they are not due benefits, determine that they are overpaid.  Those can be referred not necessarily to the CDI unit, but to OIG for possible prosecution.  Because they did something perhaps in our investigation where we felt like they were fraudulent.  So it may not go to CDI, but it could go to OIG.

     *Ms. Colvin.  Yes.

     *Mr. Marchant.  I would like to go down a little different line of questioning.  In many instances, a claimant will hire an attorney.  And in many of those instances, that trial or that process will take months and sometimes it could take as long as a year.

     Many times there is a pretty large lump sum payment made at the end of that.  And at the end of that period, I have heard of people getting $20,000, $30,000, of which, in many instances, a third of that or 40 percent of that is going to the attorney.  When it gets to an investigation for fraud later down the road, do you have recourse against anyone that assists the person that might have committed the fraud in the repayment system?

     *Mr. O’Carroll.  That’s the first time that one has come up, where we’d be looking for anybody who helped somebody or facilitated them getting on the rolls when they shouldn’t have been on it, and then do we have the recourse to penalize that person ‑‑

     *Mr. Marchant.  Do you have legal recourse to go and bring them into the suit or into the recovery?  Say there was $20,000 recovered, of which you got $8,000.  The person that you assisted in committing this fraud, as you have determined fraud, are we making a demand on all $20,000 for them?  Does their recourse then go against the person that assisted them in that fraud, or do you have the right to go straight to anyone that assisted?  Maybe it would be a doctor, maybe it would be somebody who gave false testimony.  Maybe it would be somebody who had a Yellow Pages ad.

     *Chairman Johnson.  Good question.

     *Mr. O’Carroll.  I guess probably the easiest way on that one is ‑‑ which ties into the CDIs that we’re talking about ‑‑ is that we are looking for third‑party facilitators, anybody else that is assisting a person to fraudulently get on benefits.  And we do go after them both criminally, when we have that evidence on it.

     On your question of if we are assessing an overpayment and trying to recalculate it, we have, to my knowledge, have not gone after a third ‑‑

     *Mr. Marchant. I am off of overpayment.  I am on to just direct fraud.

*Mr. O’Carroll.  Right, fraudulent.  Well, fraudulent overpayment.

     *Mr. Marchant.  Yes, fraudulent overpayment.  And I am really more targeted towards the large, lump sum payments that are made which, in many times, much of that goes to pay for the expense of getting on the roll itself.

     *Mr. O’Carroll.  I will have to tell you, Mr. Marchant, I am not familiar with us going after anybody, you know, kind of concurrently as we are going after somebody who is defrauding us.  But let me check on that and get back to you if we’ve had any other examples of that.

     *Mr. Marchant.  A lot of newspaper articles that have been written in the last few months have been about this kind of fraud.  And I think the public is interested in it, and it may be a way that we can make a higher recovery.  Thank you.

     *Chairman Johnson.  That is an interesting question you guys ought to take a look at.  Are there lawyers that help these people when they come to you?  Do you know?

     *Mr. O’Carroll.  I am sure there are.  I don’t have any specific examples of it.

     *Chairman Johnson.  You don’t know if they have?

     *Mr. O’Carroll.  But let me take a look at it and get back to you formally on that one.

     *Chairman Johnson.  Thank you.  Mr. Tiberi, you are recognized.

     *Mr. Tiberi.  Mr. Chairman, I would just like to provide some information for the record, if I may.  Social Security’s fiscal year 2012 total operating budget, which was encompassed in 2 pieces of legislation that passed the House, the Senate, and signed by the President, is 22 million more dollars than the fiscal year 2011 appropriation.  It was H.R. 2055 and H.R. 3672.  They were supported equally by both parties, including the President, the Chairman of the Committee, the Ranking Member of the Committee, the Chairman of the Subcommittee, the Ranking Member of the Subcommittee, as well.

     Social Security continues to receive an increase in dollars, despite a 1.5 percent decrease in the discretionary cap.  In fact, while Social Security is subject to the same long‑term domestic spending caps that were in the Budget Control Act, which was mentioned at the beginning of the hearing, that same bill gives the Social Security Administration an additional $11 million from fiscal year 2012 to fiscal year 2021 over the budget caps to increase continuing eligibility reviews and its Disability Insurance and Supplemental Security Income programs.

     With respect to employees, I think it is important to note that Social Security increased its overall staff by 3,269 employees in fiscal year 2009 and by 2,346 in Fiscal Year 2010.  The Social Security Administration continued to hire during fiscal year 2011 at a lower rate.  It was mentioned, and it is true, that retirements and resignations reduced Social Security Administration’s employee level by 2,791 in fiscal year 2011 to a total staff of 64,176 employees.  It is important to note that that exceeds the number of employees by 2,824 that began fiscal year 2009.

     And a final note, Mr. Chairman.  According to a recent Commissioner’s broadcast, funding levels near the House or Senate fiscal year 2012 Labor HHS level will enable Social Security to hire replacements this year.  I just want to put that in for the record.

     And I do have a question for Mr. O’Carroll or Mr. Clifton.  As Mr. Stark said, we have a lot of Social Security activity in our district office as well.  I have a constituent who was notified that she was overpaid by $100,000 between 2003 and 2009.  And it was a CDR that caught this.  My understanding, however, is by law there needs to be a review every three years.  And apparently in her case there was not a review.

     My question is, is there a better way to do this?  Maybe matching IRS records?  Working with the Internal Revenue Service?  Are there a number of reviews that aren’t done timely, according to the law, as was this case?  Or did this happen to be maybe just one that fell through the cracks?

     *Mr. Clifton.  If I can, I will start.

     *Mr. Tiberi.  Sure.

     *Mr. Clifton.  There is some confusion about continuing disability reviews.  There are medical ones and there are work ones.  I don’t know the particulars of your case, but I would venture to guess it was not a medical CDR.  Medical CDRs, when DDS determines that a person is no longer eligible for disability benefits because they have medically improved, those are not retroactive.

     *Ms. Colvin.  Right.

     *Mr. Clifton.  So if I decide today that you have medically improved, typically not retroactive, so it would be extremely unusual we would go back three years and say you were not disabled clear back here.

     So I would venture to guess that was probably a work CDR.  So it wasn’t a diary, like a three‑year or a five‑year or a seven‑year diary.  Those are medical CDRs.  So I would suspect, without knowing the specifics, but based upon what you said, we probably discovered earnings on her record and said at that point, “In the past, your benefits should have stopped.”  And so it created a very large overpayment.

     But going back to your question ‑‑ it’s a very good one ‑‑ what kind of tools can we use to catch those quicker?  There are a couple of things.  Of course it’s a resource issue in the sense that if I have a work CDR and she reported her work, I’ve got to have the time to get to it.  Those are time‑consuming, because they are complicated.  I send out information to an employer, they reply back to me.  It takes a while to develop those.

     We get information on earnings once a year, based upon W‑2s.  Things that could help is if we got earnings reported quarterly, much quicker than the earnings that they already get.

     Patrick, any further things?

     *Mr. O’Carroll.  Yes, just to follow up on it, as you were saying, it is a work CDR.  And one of our concerns ‑‑ and we’ve mentioned it a few times already ‑‑ is the backlog on it.  And that is probably what happened with this one.  It was identified, went into the backlog, and it took a while for it to be addressed.

     So, the two things.  One, if they were getting the wages quicker, the alerts quicker on it, and then getting to the work CDR and addressing it with the claimant quicker, would have avoided all this.  And that’s where we keep going back to here, is trying to reduce the backlog on CDRs.  And this is obviously an example of that.

     *Mr. Tiberi.  Thank you.

     *Chairman Johnson.  Thank you.  What is the backlog, do you know?

     *Mr. O’Carroll.  The backlog is about 1.2 million CDRs.

     *Ms. Colvin.  No, that’s not work ‑‑

     *Mr. O’Carroll.  Oh, oh ‑‑

     *Ms. Colvin.  That’s not work CDRs.

     *Mr. O’Carroll.  Oh, that was all CDRs.

     *Ms. Colvin.  We really don’t have what is considered a backlog on work CDRs.  We have 1.3 million for medical CDRs.  The work CDRs is a rolling workload.  Whenever we get a report of work, we try ‑‑ if it’s a self‑report, we try to get to that report within 30 days.  It generally takes us about 270 days to process that because of the complexity of what we have to go through.  We have to look at every month that the individual has had work reported.  We have to see if it exceeded the SGA, which is $1,010.  We have to see if they have finished their trial work period.  We have to see if they are finished their extended eligibility period.  We have to see if they have any impairment‑related expenses.

     That is why we are hoping that this committee will support the work simplification proposal that we have in the President’s budget, WISP, the work incentive simplification proposal, to help simplify this.

     Also, there are a number of other proposals, such as the workman’s compensation proposal, that would allow us to get this information directly from the administrator of the compensation program, rather than the individual.

     So it is the complexity of the program.  And the reason it takes so long ‑‑ right now we ‑‑ last year we did about 312,000 work CDRs.  We are ‑‑ that was in 2010.  And in 2011 we did 324,000.  This year so far we have done 80,000.  We hope we can do as many.  But it really is a resource issue, because the same people who do this work, this program integrity work, are the ones who do the initial work to get these checks out, et cetera.

     But we are devoting attention to this.  I have set goals, and we are monitoring the progress in that area.  We have dedicated more staff to process the work CDRs, so they can get them timely.  We triage the work so that we address those that have the highest earnings first.  And we have drastically improved our processing time.  Less than six percent of the work CDRs are now over 270 days old.  And the work CDR is at the end of the process.  You have to do all these other things to determine.

     The other thing I need to mention is that probably about less than a third of the work issues that we review actually result in work CDRs, because the people are falling within those other categories that I talked about.  And so their benefit is not yet impacted.

     *Chairman Johnson.  You know what?  You guys convinced us that if we upgraded your computer system you could do all of this faster.  You got 18,000 computers over there now, and you ought to be able to get it done.

     Mr. Berg, you are recognized.

     *Mr. Berg.  I am not sure if I want to go after that.


     *Mr. Berg.  We are running late here, but I hopefully will be able to catch a ride back with Mr. Stark, I am sure.


     *Mr. Berg.  I do want to thank you for being here.  And, Mr. Clifton, thank you for your help and your office’s help with all the constituents that we have.  It is frustrating for me.  It is such a huge, complicated thing.  I know there are people that don’t understand all the rules and legitimately make mistakes.  I am sure there is people on the other spectrum that they know the rules are complicated and they know they always have an out, because they can say, “We didn’t understand that.”

     Ms. Colvin, I think in your testimony you mentioned there were 4,000 new cases a year.

     *Ms. Colvin.  No, I indicated that we made 19,000 referrals to the OIG for suspected fraud, and ‑‑

     *Mr. Berg.  Well, let me back up.

     *Ms. Colvin.  Oh.

     *Mr. Berg.  My question is, just in the big picture, how many cases do we have per year?  And if you can’t answer this, maybe you could provide the Committee with that information.  But the number of cases that you have, and then ultimately how those things play out.  Has 4,000 a year been typical?  Are we having 400 people that end up doing jail time?  If that is information we get later, I would appreciate it.

     *Mr. O’Carroll.  Since you’re talking cases ‑‑ I guess that’s where we got confused ‑‑ cases, investigative cases on that ‑‑

     *Mr. Berg.  Yes, I am sorry.

     *Mr. O’Carroll.  What we are doing with our investigative cases every year is we are getting ‑‑ we get about 150,000 referrals every year, which end up being about 7,000 investigations.  And on that, our ‑‑ I guess their conviction rate on that one is probably about 20 percent of those investigations end up in ‑‑ with convictions.  But I can give you all those specifics on it.  They are in our semi‑annual report.

     *Mr. Berg.  What I am trying to do is to somehow very quickly drill down to the questions that Mr. Becerra addressed on if the penalties are appropriate.  Certainly if someone walked into a store and stole something out of a store, we have pretty clear penalties for that

     The other question ‑‑ probably even the bigger question this is to you, Mr. O’Carroll ‑‑ is there a way we can reduce the complexity of this program?  You mentioned that in your testimony.  What would you do to reduce this complexity?

     *Mr. O’Carroll.  A lot of the complexity on it that we are concerned with is that ‑‑ and I guess in general the program is very complex.  What I was talking about in my testimony was the complexity of the CDRs, and that it’s so hard to do the continuing disability reviews.

     As the Deputy Commissioner said, one of the big issues of it is we are trying to figure out when a person is working, get that information right away.  But the other part that Mr. Clifton I am sure will go into is that then the claimant’s rep has to go in and be taking a look at any bonuses that a person made, any severance pay that they got, any sick pay that they got.  There is a lot of calculations that all go into this thing, many of which would probably, if they could simplify whether or not ‑‑ could simplify the process of it ‑‑ would make it a bit easier.

     But right now, in order to give all the benefits to the beneficiary on it, there is so many different steps, it takes a lot to do it.  So that is part of the complexity, is all the calculations that go in it.  Mr. Clifton?

     *Mr. Clifton.  I would echo that.  It’s a very complicated workload.  And you hit the nail on the head when you say the ability of the public to understand the disability program and what they’re allowed to do ‑‑ they are allowed to work, but there is just certain levels when that work will stop their benefits.

     So, one, if you’re talking about incentives for people to work, they’re scared at times because they’re not sure what the outcome will be.  As they mentioned, they’re afraid if they work, three years later someone will discover that they owe the government $100,000.  Now, that’s different than the out and out fraud that they mentioned before in there.

     So, program simplicity, simplifying the program, would go a long way towards the public understanding what effect the work would have.  It would also go a long way towards processing a very complicated workload.  As you mentioned, they could get severance pay, they could get things that are not going to affect their disability, but it will show up as work and earnings that you have to investigate.  I hope that helps.

     *Mr. Berg.  Good luck.


     *Mr. Berg.  Thank you, Mr. Chairman.

     *Chairman Johnson.  Thank you.  I appreciate you all being here.  We visited a Wal‑Mart down in Texas that had disability workers as part of their program, and they were doing a good job.  They really were.

     *Mr. Becerra.  Mr. Chairman, can I add something?

     *Chairman Johnson.  Yes?

     *Mr. Becerra.  Mr. Chairman, I just wanted to add something.  I think Pete did a good job of acknowledging the work that you all do.  I hope that in no part of this hearing we leave the impression that we don’t believe that each and every one of you, wherever you are, whether you are a detective, with the local police department, whether you are in the investigative offices, or you’re in the shop day to day in Social Security doing the work, I hope we don’t leave the impression that we don’t think you are working hard.

     And I would like to echo what Mr. Stark said, that we want to thank each and every one of your people ‑‑ I don’t care what office it is ‑‑ for the work that you are doing.  Because, at the end of the day, what we are trying to do is make sure that millions of Americans who every day are paying through their paycheck for Social Security to be there, have an opportunity to see it there for them, because they legitimately earned it, not for folks who are trying to abuse it.

     So, thank you for the work.  Convey that message to all the folks back home.  Because we hope we can give you the tools you need to do this better so that everyone agrees that the program works for them the way it should.  Thank you.

     *Chairman Johnson.  Again I want to thank you all for being here today and for your testimony.  And I look forward to working with you and all my colleagues, as we continue to examine ways to secure the future of Social Security and this vital program.

     With that, this Subcommittee stands adjourned.

     [Whereupon, at 12:05 p.m., the Subcommittee was adjourned.]


The Honorable Sam Johnson
The Honorable Xavier Becerra


Ms. Colvin
Mr. O’Carroll
Mr. Brady
Mr. Clifton


Consortium for Citizens with Disabilities
National Council of Disability Determination Directors