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Johnson Opening Statement: Hearing on the Disability Fraud Conspiracy in Puerto Rico

September 19, 2013

Good afternoon and welcome to our hearing on the Social Security disability fraud conspiracy in Puerto Rico.

On August 21st, the United States Attorney for the District of Puerto Rico announced the arrest and indictment of 75 individuals for Social Security fraud.  Let me repeat that number; 75 arrested for allegedly seeking to defraud Social Security.  So we’re not talking about a few bad apples here.

Those arrested include a claimant representative, who was a former Social Security employee, three physicians, and 71 beneficiaries.   My understanding is that the investigation is ongoing and that there could be additional arrests.

Under the alleged scheme, the former Social Security worker would help a claimant file an application for disability benefits and with the assistance of a conspiring doctor, provide fraudulent medical evidence that would result in taxpayer-funded benefits that should never have been paid out in the first place.

The representative would collect a fee from the claimant of 25 percent of any past-due benefits owed, up to a cap of $6,000.  The doctors would receive a kick back of $150 to $500 by the claimant for their submission of false reports to Social Security.

The investigation began back in November 2009, after medical consultants in the Puerto Rico Disability Determination Services reported a suspicious pattern of benefit claims involving nearly identical medical evidence. Social Security and the Office of the Inspector General then began an extensive review of the medical information.  Later, the FBI and the Puerto Rico Police Department joined the investigation.  

Social Security has now suspended benefits claimed by the indicted beneficiaries.  It has also begun reviewing the files of over 6,000 beneficiaries that included medical evidence from the indicted physicians or representative.  

Unless beneficiaries are able to prove their disability with non-tainted medical information, they will be required to pay back to Social Security the benefits they should not have received in the first place.  

So the bottom-line is that at a time when the Disability Insurance program will be unable to pay full benefits beginning in 2016, Social Security has been doling out millions of dollars in fraudulent taxpayer-funded payments.   

This is simply unacceptable.  

And on the heels of the Puerto Rico case, GAO reported last week that Social Security paid $1.3 billion in overpayments to disability beneficiaries.  Moreover the debt owed to the Disability Insurance Trust Fund from those who need to pay back overpayments is now $6 billion.  

In this particular case, the problem occurred before beneficiaries even got their first check.  So they may have been awarded benefits when they shouldn’t have, all because Social Security’s enforcement operation doesn’t generate earnings alerts in all cases when earnings occur during the 5-month waiting period.  

In other words Social Security wasn’t doing its job.  

The Puerto Rico case along with GAO’s report raises serious and troubling questions about Social Security’s management of the disability program.  The American taxpayer is right to wonder whether Social Security is fully committed to rooting out waste, fraud and abuse.  

Let me be clear that Social Security should not try to downplay the Puerto Rico case and GAO’s report by spinning the numbers to try to minimize the loss of taxpayers’ dollars.  To do so would be an insult to taxpayers.  

Waste, fraud, and abuse in the disability insurance program cheat honest, hardworking American taxpayers and those who truly need benefits.  The best way to protect the disability program is to prevent waste, fraud and abuse before it occurs.

The American people want, need and deserve answers.  Social Security’s leadership needs to get serious about better protecting this program paid for by American’s hard earned wages.