OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

FOLLOW UP ON THE
SOCIAL SECURITY ADMINISTRATION’S
PROCEDURES TO IDENTIFY
REPRESENTATIVE PAYEES
WHO ARE DECEASED

October 2006      A-01-06-16054

AUDIT REPORT

Mission

We improve SSA programs and operations and protect them against fraud, waste, and abuse by conducting independent and objective audits, evaluations, and investigations. We provide timely, useful, and reliable information and advice to Administration officials, the Congress, and the public.

Authority

The Inspector General Act created independent audit and investigative units, called the Office of Inspector General (OIG). The mission of the OIG, as spelled out in the Act, is to:

Conduct and supervise independent and objective audits and investigations relating to agency programs and operations.
Promote economy, effectiveness, and efficiency within the agency.
Prevent and detect fraud, waste, and abuse in agency programs and operations.
Review and make recommendations regarding existing and proposed legislation and regulations relating to agency programs and operations.
Keep the agency head and the Congress fully and currently informed of problems in agency programs and operations.

To ensure objectivity, the IG Act empowers the IG with:

Independence to determine what reviews to perform.
Access to all information necessary for the reviews.
Authority to publish findings and recommendations based on the reviews.

Vision

By conducting independent and objective audits, investigations, and evaluations, we are agents of positive change striving for continuous improvement in the Social Security Administration's programs, operations, and management and in our own office.

SOCIAL SECURITY

Date:     October 27, 2006                                                                              Refer To:

To:       The Commissioner

From:     Inspector General

Subject: Follow up on the Social Security Administration’s Procedures to Identify Representative Payees Who Are Deceased (A-01-06-16054)

OBJECTIVE

Our objective was to determine whether the Social Security Administration (SSA) identifies all cases in which a new representative payee is needed when a current payee dies.

BACKGROUND

Some individuals are not able to manage or direct the management of their finances because of their age or mental and/or physical impairments.  For such individuals, Congress provided for payment to be made through representative payees who receive and manage the benefit payments for these beneficiaries and recipients.  When a representative payee dies, applicable regulations indicate that SSA will select a new payee. 

In our September 1999 report, The Social Security Administration’s Procedures to Identify Representative Payees Who Are Deceased, we determined that SSA's procedures did not ensure that new representative payees were selected when the current payees died.  This situation occurred for several reasons, including:

• incorrect death information was recorded on SSA’s Death Master File (DMF),
• erroneous Social Security numbers (SSN) were recorded in SSA's data files for representative payees, and
• 'the Master Representative Payee File (MRPF) was incomplete with regard to representative payees for Supplemental Security Income (SSI) recipients.

(See Appendix B for the recommendations from our prior audit.)

Congress mandated that SSA establish a system of accountability monitoring of representative payees and requested regular updates on the results of on-site and other reviews of payees.  If payees die and are not replaced, SSA cannot be sure the funds are being used to meet the beneficiaries’ needs, such as food, clothing, shelter, and medical care.  Additionally, if another individual acts as a de facto payee, that person is not subject to SSA’s financial oversight and reporting responsibilities—such as reporting events to SSA that may affect the individual’s entitlement or benefit payment amount.  In prior audits, we found instances where de facto payees did not properly perform their responsibilities and other instances where there was a significant risk for the potential misuse of benefits.  (See Appendix C for prior audits on representative payees.)

To conduct our review, we identified—through computer matching of data from the DMF, Master Beneficiary Record (MBR) and Supplemental Security Record (SSR)—2,700 Old-Age, Survivors and Disability Insurance (OASDI) beneficiaries and 1,116 SSI recipients with representative payees who were deceased per the DMF as of January 2006.  From our match results, we reviewed 100 sample cases from the MBR and 100 sample cases from the SSR.  Additionally, we reviewed 200 sampled SSI records from a population of recipients with representative payees who appeared to be missing in the MRPF.  (See Appendix D for additional information on our audit scope and sampling methodology.)

RESULTS OF REVIEW

SSA’s existing procedures still do not ensure that new representative payees are selected when current payees die.  However, SSA has taken steps to improve its performance in this area and has plans to update its computer systems in March 2007 to further address this issue.  Based on the results of our samples, we estimate that 2,025 deceased payees received $20.9 million in OASDI benefits and 837 deceased payees received $4.6 million in SSI payments.

Deceased Representative Payees

Of the 100 sampled representative payees managing funds for OASDI beneficiaries:

• 75 were issued $773,170 in benefits to manage after their dates of death;
• 14 were replaced with new payees and no benefits were issued to the deceased payees;
• 6 were replaced with new payees but their SSNs were incorrectly recorded on the MBRs; and
• 5 were alive but had erroneous dates of death on the DMF.

-- IMAGE OMITTED IN THIS TEXT-ONLY VERSION --

Of the 100 sampled representative payees managing funds for SSI recipients:

  
• 75 were issued $414,791 in SSI payments to manage after their dates of death;
  
• 13 were replaced    with new payees and no SSI payments were issued to the deceased payees; and
  
• 12    were alive but had erroneous dates of death on the DMF.
  

--IMAGE OMITTED IN THIS TEXT-ONLY VERSION --

Based on the 75  payees who received OASDI funds after death and the 75 payees who received SSI funds after death, we estimate that 2,025 deceased payees (from our population of 2,700) received $20.9 million in OASDI payments and 837 deceased payees (from our population of 1,116) received $4.6 million in SSI payments.

The funds for beneficiaries in our population who have deceased payees may be at risk for being misused.  SSA referred one case to our Office of Investigations for possible fraud and misuse of funds.

We also found instances where payees’ own benefits were terminated, but they continued to be paid as representative payees for an extended period of time on behalf other beneficiaries.  For example,

• One payee died on April 2, 2004, and her death was recorded on the DMF on April 23, 2004.  SSA promptly stopped the payee’s benefits, and no payments were issued after April 2004.  However, SSA continued to pay her $17,639 in benefits as a payee for 26 months after her death until—upon our request—SSA selected a new payee in July 2006.  Despite payments being made to a deceased payee from April 2004 until July 2006, the beneficiary’s needs were met because her sister obtained a court order to access her bank account and used the funds to take care of her needs. 
• Another payee died on January 6, 2004 and her death was recorded on the DMF on February 11, 2004.  SSA promptly stopped the payee’s benefits, and no payments were issued after February 2004.  However, SSA continued to pay her $16,770 in SSI payments as a payee for 29 months after her death until—upon our request—SSA selected a new payee in June 2006.  In June 2006, the recipient provided documentation that she had been successfully managing her own funds since her payee’s death in January 2004.  SSA determined that she was capable of handling her own finances and began paying her directly.

The following two tables show that, for our sample cases, SSA paid most deceased payees more than three benefit checks after their dates of death.  Additionally, SSA knew about most payees’ deaths for more than 3 months before taking action to replace them with new payees.

SSA plans to release a systems update in March 2007 that will send death information received by SSA to the MBR and/or SSR and will automatically suspend any benefits paid to deceased payees.  These changes should assist the Agency in identifying and replacing deceased payees timely.

Consistency of Data between MRPF and SSR

SSA’s MRPF does not contain all representative payees for SSI recipients.  Based on our match between payees listed on the SSR with SSA’s MRPF, we initially identified cases where payees were recorded on the SSR but appeared to be omitted from the MRPF.  We randomly selected 200 cases for review and found:

• 6 were not in the MRPF but were managing $3,746 in SSI payments for the month of April 2006.  Projecting these results to the population, we estimate SSA paid approximately $23.7 million in annual SSI payments to about 3,157 payees who were not included in the MRPF.
• 6 did not match because the payees’ SSNs on the SSR were  incorrect (even though these payees were in the MRPF under their correct SSNs).  Projecting these results to the 105,240 payees in our population, we estimate that about 3,157 payees were recorded on the SSR with incorrect SSNs—which compromises SSA’s data.
• 188 were in the MRPF and had no problems. 

CONCLUSION AND RECOMMENDATIONS 

We acknowledge that SSA has taken steps to identify and replace representative payees when they die and has plans for a systems upgrade next year.  However, the Agency’s current procedures and processes still do not ensure that new payees are selected timely when the existing payees die.  Even though SSA indicated to us that most of our sampled beneficiaries and recipients had their needs met while their benefits were being paid to deceased payees, the benefits for the remaining beneficiaries and recipients in the population could be at risk for being misused and/or a de facto payee may not be adhering to SSA’s guidelines for being a payee.

Therefore, we recommend SSA:

1. Ensure the needs of the remaining beneficiaries and recipients in our population are being met and that all deceased payees are replaced with new payees.
2. Continue its efforts to upgrade systems to ensure deceased payees are identified and replaced in a timely manner.

AGENCY COMMENTS

SSA agreed with our recommendations.  (See Appendix E.)

Patrick P. O’Carroll, Jr.

Appendices

APPENDIX A – Acronyms
APPENDIX B – Status of Recommendations from Prior Audit
APPENDIX C – Prior OIG Audits on Representative Payees
APPENDIX D – Scope, Sampling Methodology and Results

APPENDIX E – Agency Comments
APPENDIX F – OIG Contacts and Staff Acknowledgments

Appendix X -- Acronyms

Appendix B -- Status of Recommendations from Prior Audit

In September 1999, the Office of the Inspector General issued a report The Social Security Administration’s Procedures to Identify Representative Payees Who Are Deceased (A-01-98-61009).  This report included six recommendations to improve the Social Security Administration’s (SSA) procedures for ensuring that representative payees are replaced when they die.  The table below lists the recommendations from the prior report, SSA’s proposed actions at the time the report was issued, and the current status as of June 2006. 

Appendix C -- Prior OIG Audits on Representative Payees

The Social Security Administration (SSA) requires representative payees to ensure the beneficiaries they serve have their needs met.  Payee responsibilities and requirements include:

• Using the benefit payments only for the use and benefit of the beneficiary in a manner and for the purposes he or she determines, under SSA guidelines, to be in the best interests of the beneficiary;
• Notifying SSA of any event that will affect the amount of benefits the beneficiary receives or the right of the beneficiary to receive benefits;
• Submitting to SSA, upon request, a written report accounting for the benefits received.

The following table lists some of our audits on payees where we found indications that beneficiaries’ needs might not be met.

Appendix D -- Scope, Sampling Methodology and Results

To accomplish our objective, we:

1. Reviewed applicable sections of the Social Security Act and the Social Security Administration’s (SSA) regulations, rules, policies and procedures.
2. Obtained data files of SSA’s Death Master File (DMF) showing deceased individuals as of September 2005.
3. Obtained Master Beneficiary Records (MBR) for all Old-Age, Survivors and Disability Insurance (OASDI) beneficiaries and Supplemental Security Records (SSR) for all Supplemental Security Income (SSI) recipients who received benefits in June 2005. 
4. Obtained an extract from SSA’s Master Representative Payee File (MRPF) showing all active representative payees as of January 2006.
5. Compared the Social Security numbers (SSN) on the MBR and SSR against SSNs in the DMF to identify potentially deceased representative payees.
6. Randomly sampled and reviewed:
7. 100 cases from the 2,700 OASDI beneficiaries with representative payees who were deceased per the DMF.
8. 100 cases from the 1,116 SSI recipients with representative payees who were deceased per the DMF.
9. 200 cases from 105,240 SSI recipients with representative payees on the SSR who appeared not to be included in the MRPF.
10. Tested the completeness of the MBR representative payee data in the MRPF by randomly sampling and reviewing 25 cases from the 359,612 OASDI beneficiaries with representative payees on the MBR who appeared not to be included in the MRPF.  For these cases, we found that the MBR payee data only differed with MRPF due to timing differences between the dates our files were extracted.

• Referred cases where it appeared that deceased representative payees were still receiving benefits to SSA to: (a) take appropriate action to replace any deceased payees; (b) refer any instances of possible fraud to our Office of Investigations; and (c) ensure that the beneficiaries’ needs were being met even though their payees were deceased.
• Quantified the amount of benefits paid to deceased representative payees after their dates of death.
• Estimated the number of deceased OASDI and SSI representative payees and the amount of benefits SSA paid them based on our sample results.  We also estimated the number of SSI recipients with representative payees who were not included in the MRPF and the amount of benefits SSA paid them annually.

We conducted our audit between May and October 2006 in Boston, Massachusetts.  We found the data used for this audit were sufficiently reliable to meet our audit objective.  The entities audited were the Office of Retirement and Survivors Insurance Systems and the Office of Disability and Supplemental Security Income Systems, both under the Deputy Commissioner of Systems, and SSA’s Field Offices and Program Service Centers under the Deputy Commissioner for Operations.  We conducted our audit in accordance with generally accepted government auditing standards.

SAMPLE RESULTS AND PROJECTIONS

Note: All projections are at the 90-percent confidence level.

Note: All projections are at the 90-percent confidence level.

Note: All projections are at the 90-percent confidence level.

Note: All projections are at the 90-percent confidence level.

Note: All projections are at the 90-percent confidence level.

Note: All projections are at the 90-percent confidence level.

Appendix E -- Agency Comments

We appreciate OIG’s efforts in conducting this review.  Our comments on the draft report content and recommendations are attached.

Please let me know if we can be of further assistance.  Staff inquiries may be directed to
Ms. Candace Skurnik, Director, Audit Management and Liaison Staff, at extension 54636.

Attachment:
SSA Response

COMMENTS ON THE OFFICE OF THE INSPECTOR GENERAL (OIG) DRAFT REPORT, “FOLLOW UP ON THE SOCIAL SECURITY ADMINISTRATION’S PROCEDURES TO IDENTIFY REPRESENTATIVE PAYEES WHO ARE DECEASED” (A-01-06-16054)

Thank you for the opportunity to review and comment on the draft report.  We appreciate your conducting this follow up audit of the Social Security Administration’s (SSA) procedures to identify representative payees (Rep Payees) who are deceased.  The report acknowledges that we have taken efforts to identify and replace Rep Payees when they die and that the Agency has plans for a systems upgrade in 2007.  However, the report concludes that our current procedures and processes still do not ensure that new payees are selected timely when existing payees die.  Although we indicated that the needs of most of the beneficiaries and recipients sampled were met while their benefits were being paid to deceased payees, the report concluded that benefits for the remaining beneficiaries and recipients in the population could be at risk for being misused and/or a de facto payee may not be adhering to SSA guidelines for being a payee. 

Recommendation 1

SSA should ensure the needs of the remaining beneficiaries and recipients in OIG’s population are being met and that all deceased payees are replaced with new payees.

Comment

We agree.  It is vital to establish a new payee as quickly as possible upon the current payee’s death.  This is essential to ensure that the beneficiary's needs are met.  To meet this recommendation, we are forwarding the list of remaining beneficiaries to the appropriate regional offices so that staff can review each case and take the necessary action. 

Recommendation 2

SSA should continue its efforts to upgrade systems to ensure deceased payees are identified and replaced in a timely manner.

Comment

We agree.  We are currently working on the Death Alert Control and Update System (DACUS) Release 2.0, which will route Electronic Death Record Reports to Title II (T2) and Title XVI (T16) systems.  This release is scheduled for implementation on
March 30, 2007. 

In March 2004, software was released that enabled DACUS to send termination records for deceased individuals to the T2 and T16 systems.  With this upcoming DACUS enhancement, suspension records will be sent to the T2 and T16 systems for the beneficiaries/recipients for whom the payee had served if the deceased is a Rep Payee. 

The T2 and T16 systems will then send alerts to the appropriate field office to contact the beneficiary/recipient to select a new rep payee.

[In addition to the items listed above, SSA also provided technical comments which have been addressed, where appropriate, in this report.]

Appendix F -- OIG Contacts and Staff Acknowledgments

OIG Contacts

Judith Oliveira, Director, Boston Audit Division, (617) 565-1765

David Mazzola, Audit Manager, (617) 565-1807

Acknowledgments

In addition to those named above:

Phillip Hanvy, Senior Program Analyst

Kevin Joyce, IT Specialist

For additional copies of this report, please visit our web site at www.socialsecurity.gov/oig or contact the Office of the Inspector General’s Public Affairs Specialist at (410) 965-3218.  Refer to Common Identification Number
A-01-06-16054.

DISTRIBUTION SCHEDULE

Commissioner of Social Security                                                                                                  
Office of Management and Budget, Income Maintenance Branch                                             
Chairman and Ranking Member, Committee on Ways and Means                                          
Chief of Staff, Committee on Ways and Means                                                                           
Chairman and Ranking Minority Member, Subcommittee on Social Security                          
Majority and Minority Staff Director, Subcommittee on Social Security                                    
Chairman and Ranking Minority Member, Subcommittee on Human Resources                    
Chairman and Ranking Minority Member, Committee on Budget, House of Representatives           
Chairman and Ranking Minority Member, Committee on Government Reform and Oversight          
Chairman and Ranking Minority Member, Committee on Governmental Affairs                      
Chairman and Ranking Minority Member, Committee on Appropriations, House of Representatives         
Chairman and Ranking Minority, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations,
   House of Representatives                                                                                                           
Chairman and Ranking Minority Member, Committee on Appropriations, U.S. Senate         
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Chairman and Ranking Minority Member, Committee on Finance                                            
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Chairman and Ranking Minority Member, Senate Special Committee on Aging                    
Social Security Advisory Board                                                                                                     

Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of our Office of Investigations (OI), Office of Audit (OA), Office of the Chief Counsel to the Inspector General (OCCIG), and Office of Resource Management (ORM).  To ensure compliance with policies and procedures, internal controls, and professional standards, we also have a comprehensive Professional Responsibility and Quality Assurance program.

Office of Audit
OA conducts and/or supervises financial and performance audits of the Social Security Administration’s (SSA) programs and operations and makes recommendations to ensure program objectives are achieved effectively and efficiently.  Financial audits assess whether SSA’s financial statements fairly present SSA’s financial position, results of operations, and cash flow.  Performance audits review the economy, efficiency, and effectiveness of SSA’s programs and operations.  OA also conducts short-term management and program evaluations and projects on issues of concern to SSA, Congress, and the general public.

Office of Investigations
OI conducts and coordinates investigative activity related to fraud, waste, abuse, and mismanagement in SSA programs and operations.  This includes wrongdoing by applicants, beneficiaries, contractors, third parties, or SSA employees performing their official duties.  This office serves as OIG liaison to the Department of Justice on all matters relating to the investigations of SSA programs and personnel.  OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.

Office of the Chief Counsel to the Inspector General
OCCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives.  OCCIG also advises the IG on investigative procedures and techniques, as well as on legal implications and conclusions to be drawn from audit and investigative material.  Finally, OCCIG administers the Civil Monetary Penalty program.

Office of Resource Management
ORM supports OIG by providing information resource management and systems security.  ORM also coordinates OIG’s budget, procurement, telecommunications, facilities, and human resources.  In addition, ORM is the focal point for OIG’s strategic planning function and the development and implementation of performance measures required by the Government Performance and Results Act of 1993.

-- FOOTNOTES FOLLOW --

The Social Security Act §§ 205(j) and 1631(a)(2), 42 United States Code (U.S.C.) §§ 405(j) and 1383(a)(2).