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Johnson Opening Statement: Hearing on the Social Security Disability Insurance Fraud Scheme in New York

January 16, 2014

 Let me begin by saying to all my colleagues on the Subcommittee that it is with deep regret that I had to call this hearing today.

Last week we were greeted with shocking headlines. The New York Times led with, “Charges for 106 in Huge Fraud Over Disability,” and ABC News led with “New York Cops, Firefighters in Massive 9/11 Fraud, Indictment Says.”  

I am outraged, but more importantly the American people are outraged —law-abiding Americans woke up to learn that the taxes they pay to Social Security had been stolen.

Today’s hearing follows September’s hearing on the scandal in Puerto Rico, which according to the Inspector General was at that time, the largest fraud in the history of Social Security.  

Now, less than six months later we have another, even more shocking scandal in New York where 106 people have been arrested.  

It’s not only the size of the fraud that is shocking but those who committed it:  former policemen, firemen, and even a former FBI employee.

Worse, some of the defendants falsely claimed that their “disability” was caused as a result of the 9-11 terrorist attacks; while many had never even worked at Ground Zero.  It’s truly a sad day in America when people who once held positions of public trust betray the public’s confidence.

These individuals are accused of stealing from a vital program that serves those who can no longer work due to a disability.  

In Fiscal Year 2013, Social Security paid out $139 billion in disability benefits to 11 million beneficiaries.  Also in that same year, Social Security paid out retirement benefits to 57 million beneficiaries.

This Subcommittee has held 11 hearings on the disability program, and three focused specifically on disability fraud, because preventing fraud is essential to maintaining the public’s confidence in the program.  

The public is fast losing faith in Social Security, and I don’t blame them, because I have too.  And while I fully recognize that there will always be bad apples, what is going on these days is very different.  This is a program plagued by fraud conspiracies.

First there was West Virginia.  In October of 2013, the Senate Homeland Security and Governmental Affairs Committee released the results of their bipartisan investigation detailing collusion between a West Virginia law firm, a Social Security Administrative Law Judge and some local doctors in approving benefits.  

Then there was Puerto Rico and now New York.  

The initial cost to the system in New York is $22 million.  The Puerto Rico scandal was initially alleged to cost taxpayers $2.1 million.  Amounts resulting from the corruption in West Virginia are still under investigation.  

Moreover, a total of 181 have been arrested in the New York and Puerto Rico scandals.  

I know the crooks don’t care about the people who really need their benefits, but I do. According to the Trustees, it’s only two years before Social Security can only pay reduced benefits, unless Congress acts.    

This program cannot afford more fraud.   It is only a matter of time when Congress may be asked to bailout this program with the retirement side having to come to the rescue.  And if that is the case then all taxpayers and beneficiaries will shoulder the burden of this crime wave.

What is more troubling is that these cases are just the ones we know about….so far.  As we will hear from the Inspector General today, other similar investigations are underway.  

Like organized crime – these recent scandals reveal fraud committed by a network of professional crooks made up of doctors, lawyers and judges.  It’s the new get rich quick scheme worth tens of thousands of dollars for every person who illegally gets on the rolls.

It’s appalling!  And in New York, it went on for twenty five years starting in 1988.  

With the shocking news of the disability scandal in New York, Puerto Rico and West Virginia, Americans and this Subcommittee deserve answers and we need them now.   

On behalf of my colleagues and the taxpayers, I am asking “How can this happen time after time?  Why is Social Security Administration failing to prevent these fraud conspiracies in the first place?”

But it’s more than answers that are needed.  

To restore trust in the disability program Social Security must be held fully accountable for failing to prevent widespread fraud.   Accountability must be accompanied by action to prevent this from happening again.  

The time for excuses is over.

Let me make myself clear: I expect accountability at Social Security for these crimes.  

It’s time for real leadership.

It has been nearly a year to the day since Social Security had a Commissioner.  With the greatest respect to Ms. Colvin, she has been appointed on a temporary basis.  These scandals send a clear warning to the President that we need a Social Security Commissioner who will make it his or her six-year mission to fight fraud and restore the public’s confidence in this program.  

Further, not once has any Commissioner personally asked for our help to fight fraud.  The next Commissioner must set a bold new course and be unafraid to reach out to us, here in the Congress.      

Further, Mr. O’Carroll, I am demanding a full investigation by your office of Social Security’s entire management and their failure to prevent fraud conspiracies.  This must be a full, top-to-bottom investigation of Social Security.  

Leave no stone unturned.  Find out how this could happen and what Social Security can do to stop it.  You must make this investigation your top priority. I want the investigation with recommendations quickly.  The rip-off of taxpayers by professional fraudsters has to end, and it must end now.

I also want a full report from you, Acting Commissioner Colvin, telling Congress the immediate actions you are taking to prevent these crimes from occurring again, and again, as well as any recommendations for legislation.  I want this report within 30 days.

Lastly, preventing fraud should not be and is not a partisan issue.  Ranking-Member Becerra, I would like to work with you on much-needed legislation.

Today we will hear from Acting Commissioner Carolyn Colvin and the Social Security’s Inspector General Pat O’Carroll.  

Don’t just tell us about the facts of the scandal.  We can read that in the news.  Don’t just tell us about what you did.  It’s clearly not been enough.  And do not just say you need more money when the fact is that Social Security has utterly failed to protect taxpayer dollars in the first place. Social Security must first regain the trust of the American taxpayer before it can credibly argue for more money.  

Hard working taxpayers want, need and deserve answers and action now to restore their confidence in Social Security.