SSA OIG Hosts Annual PCIE/ECIE Training Conference and Retreat
Together with it's co-host, the Smithsonian Institution's
Office of Inspector General, SSA's OIG planned and hosted the 2006
Annual President's
Council on Integrity and Efficiency/Executive Council on Integrity and Efficiency
Annual Training Conference and Retreat on May 1-4, 2006 at the Renaissance Waterfront
Hotel and Conference Center in Portsmouth, Virginia. The theme of this year's
conference was "Adapting to Change - The Changing Role of the Inspector
General Community." The meeting was attended by approximately 90 individuals
with representation from each of the 57 PCIE and ECIE member organizations.
Speakers were drawn from both the public and private sectors to
address the changes in traditional IG workloads as well as to discuss
how more contemporary issues like hurricane disaster relief and global
terrorism are affecting IGs' work. Guest speakers included Dateline
NBC's Chris Hansen, Sam Kharoba of First Capital Technologies, Frank
Vogl of Vogl Communications and Joe Mancusi from the Center for Organizational
Excellence. Among others, government speakers included Clay Johnson
from OMB, Andre Hurtubise from Service Canada and Marilyn Glynn from
the Office of Government Ethics. Several IG employees participated
on two panels addressing their best practices in preventing fraud,
waste and abuse.
The tidewater area of Virginia provided the perfect setting for
this annual retreat. On the evening of Wednesday, May 3 attendees
had the option of touring the U.S.S. Bataan, an amphibious assault
ship stationed at the Norfolk Naval Base. The U.S.S. Bataan was the
first Navy vessel to arrive in the hurricane-ravaged Gulf Coast shortly
after Katrina's landfall in Louisiana. In addition to learning about
the ship's primary mission and structure, tour attendees received
a firsthand accounting of the humanitarian relief rendered to the
victims of the Gulf Coast hurricanes. OIG is proud of its success
in hosting this annual meeting. Attendees gave high marks to every
session with an overall conference evaluation score of 4.42 on a
scale of 1 to 5.
Office of Investigations (OI) Case
Highlights
Postal Service Employee Sentenced to 30 Months in
Prison for Theft of Disability Benefits
Our New Haven office investigated a woman employed by the United States Postal
Service who fraudulently received $137,591 in disability benefits from both
SSA and the Office of Personnel Management (OPM) between 1996 and 2005. She
left the Postal Service in 1996, and filed claims for disability benefits in
April and September 1999, alleging that she was unable to work because of various
physical ailments that precluded her from gainful employment. The woman was
awarded SSA disability benefits retroactive to September 1996 and received
benefits until her conviction in August 2005. The United States Postal Inspection
Service obtained extensive video surveillance footage of the woman between
August 2000 and April 2001 which showed her engaging in activities inconsistent
with her alleged disabilities. Our subsequent investigation determined that
she had made misleading and fraudulent statements and representations about
her medical condition to SSA during the benefit application process.
Our investigation led to indictments of both the woman
and her husband for wire fraud, mail fraud, and conspiracy
to commit wire fraud, and in August 2005, she was found
guilty after a jury trial. She was sentenced in March 2006
to 30 months’ incarceration and 3 years of supervised release.
Also, she was ordered to pay a $6,000 fine and $137,591
in restitution to SSA and OPM. The woman’s husband was
acquitted of all charges.
Bar Owner Convicted of Social Security Fraud for
Receiving More Than $84,000 in Benefits
Our OI office in Omaha, Nebraska opened an investigation after receiving information
indicating that the owner and manager of a bar was fraudulently receiving Social
Security disability benefits. The information also indicated that the man employed
another disability recipient under her daughter’s identity. Our investigation,
and a subsequent search warrant served at the owner’s residence and bar, confirmed
the allegations. Social Security records indicate that the man repeatedly lied
to SSA about his work activities. For example, he stated on his initial disability
application that he owned the bar but did not engage in any active work there.
As a result of his deception, SSA determined that the man had been overpaid
$84,218 in benefits for which he was never eligible.
In September 2005, the bar owner was indicted on conspiracy
to defraud the United States, mail fraud, Social Security
fraud, and false statements. The indictment on mail fraud
was later dropped, but the bar owner was found guilty on
all of the remaining charges at trial. He was sentenced
in March 2006 to serve 12 months and 1 day in prison and
3 years’ probation, and ordered to pay full restitution
to SSA.
$2 M ID Theft Scheme Nets Man 63 Months in Prison
Our Seattle office undertook a four-year investigation which identified an
identity theft ring across four States. The scheme consisted of two stages:
first, the suspects obtained genuine government identification cards using
fraudulent documents; then used the fictitious identities to defraud numerous
financial institutions and merchants. The investigation identified that the
scheme’s ringleader and his daughter provided false supporting documentation
to several State licensing agencies, which issued identification documents
to co-conspirators in aliases using other individuals’ SSNs. Our agents recovered
approximately 200 false supporting documents, including birth certificates,
military discharge documentation, rental agreements and marriage licenses.
Using the victims’ SSNs and false identification, these individuals were able
to open bank accounts, write bad checks to merchants, and withdraw cash from
victims’ banks. The estimated fraud loss from this scheme is $2,000,000 in
bank fraud and merchant fraud.
While our agents were executing a search warrant on the
ringleader’s public storage locker, he arrived to drop
off more stolen merchandise. He fled, but was subsequently
arrested. The man and his daughter were indicted for conspiracy
to commit, and the actual commission of, both bank fraud
and SSN misuse. The man pled guilty to the SSN misuse charge
and was sentenced to 63 months in prison and 3 years’ supervised
release, and ordered to pay $172,122 in restitution to
various businesses. Most of the other individuals involved
in this scheme have also been indicted on various Federal
charges.
Disability Recipient Concealed Earnings and Firearms
An investigation by our Phoenix office revealed that that a man who had been
collecting Title II disability benefits for himself and his daughter since
1990 had, in fact, been self-employed as an insurance salesman from September
1994 forward, and had worked continuously since 1991. Various work documents
seized during the execution of a search warrant on the man’s residence showed
that he had worked various jobs from the time he began receiving SSDI. In all
instances, however, the man had failed to report his work activity to SSA from
1991–1998. In addition, our investigation revealed that an Order of Protection
was issued against the man in 2001, which prohibited him from possessing a
firearm. During the execution of the search warrant, two firearms were discovered.
The man was indicted for theft of Government funds and concealing or failing
to disclose information. He was found guilty by a jury and sentenced in March
2006 to 18 months’ incarceration followed by 2 years’ supervised release, and
ordered to pay restitution to SSA of $88,800.
OCCIG
Activities
Supreme Court Declines To Hear Misleading Advertising Case
On May 30, 2006, the U.S. Supreme Court declined to
consider constitutional challenges to Section 1140 of the Social
Security Act raised by the United Seniors Association, Inc. (USA),
now doing business as USANext. Section 1140 protects Social Security
program words and symbols from being used in a manner that conveys
a false sense of affiliation with SSA. OIG had earlier proposed a
$554,196 penalty against USA for violating Section 1140 through its
mailing of communications in envelopes that misled recipients into
believing the mailing had some connection with SSA. A three-judge
panel of the 4th U.S. Circuit Court of Appeals upheld the original
hearing decision which found that USA consistently refused to cooperate
with OIG’s compliance efforts and deliberately contravened
the law. The decision found that USA’s envelopes created a “serious
threat to the ability of the Social Security Administration to communicate
freely with the public”and that the proposed penalty was reasonable.
This case sends a clear message to companies who would seek to cloak
their misleading intentions in Constitutional protections
Illinois Siblings Conceal Nearly $1,000,000 to
Obtain SSI Benefits
In order to continue receiving SSI benefits, a Chicago woman concealed
nearly $1,000,000 in resources (including retirement accounts, stocks, and
real estate, as well as approximately $1,000 per month in income she received
for cleaning the medical offices of a relative), and falsely reported to SSA
that her only income consisted of her Social Security benefits. Moreover,
while acting as her translator, the subject's brother provided false information
to SSA regarding her resources, despite the fact that he knew or should
have known about his sister's resources. As a result of the concealed income
and assets, the subject improperly received $14,445 in benefits. SSA is
currently collecting the overpayment. OCCIG imposed a Civil
Monetary Penalty (CMP) of $35,000 upon the subject and $15,000 upon her
brother for their false statements and misrepresentations, for a total of $50,000.
New York Car Salesman Conceals Work Activity
to Collect Disability Benefits
A successful New York car salesman, who owned and managed three separate car
dealerships, concealed his work activity to collect Disability Insurance Benefits.
Although he returned to work a few weeks after surgery, he told SSA that he
was unable to return to work. Pursuant to a Joint Investigation with the New
York State Attorney General’s Office regarding fraudulent schemes in
car dealerships, OIG learned that the subject owned and managed three business
ventures despite his allegation of disability to SSA. The subject’s employees
reported that the subject sold vehicles himself and directly supervised the
staff. Additionally, he maintained an office at the car dealership where he
met with customers, bank representatives and sales managers on a daily basis.
In a CMP action, OCCIG identified seven individual false statements that the
subject provided to SSA to facilitate the improper receipt of benefits. During
the course of the negotiation, the subject maintained that he did not return
to work although the evidence documents that he worked at the car dealership
on a full-time basis each day. Ultimately, OCCIG imposed $25,000 in CMPs against
the subject.
New York Limo Driver Conceals Work to Collect
SSI
A New York limousine driver misrepresented his living arrangements and concealed
his work activity to collect SSI benefits. Although he was working at the time
of his application for SSI benefits, he falsely stated that he was unable to
work. Additionally, he concealed his true living arrangements to maximize his
receipt of benefits and avoid ineligibility as his wife’s income, if
deemed to him, would have made him ineligible for SSI. During an SSI Redetermination,
the local field office was alerted to a fraudulent living arrangements scam
as the subject, along with several other SSI recipients, purported to reside
alone at the same address. An OIG investigation also revealed that the subject
had concealed work activity for 6 years. In a CMP action, OCCIG identified
eight individual false statements that the subject provided to SSA to facilitate
the improper receipt of benefits. Ultimately, OCCIG recovered $20,000 pursuant
to a settlement agreement after the subject appealed this matter to the Departmental
Appeals Board.
OA Activities
Congressional
Response Report: Overpayments in the Social Security Administration’s
Disability
Program (View
Report A-01-04-24065)
We responded to a request from United States Senator Charles Grassley.
Senator Grassley requested (1) an audit to focus on producing an
improper payment rate for SSA’s disability programs and (2) an analysis
of the improper payment prevalence in four diagnosis groups (mental
disorders; musculoskeletal system diseases; endocrine, nutritional
and metabolic diseases; and injuries). Usually when SSA calculates
payment accuracy rates, it follows the Office of Management and Budget
(OMB) guidance. However, the Senator requested a statistically valid
improper payment rate for SSA’s disability programs without regard
to OMB guidance. Therefore, we developed overpayment rates on the
basis that—for any medical or non-medical reason—the Agency assessed
an overpayment, would have assessed an overpayment, or would not
have issued a payment given perfect knowledge of all the facts. To
analyze SSA’s data, we (1) quantified overpayments; (2) developed
overpayment rates; (3) analyzed payments in four diagnosis groups;
and (4) quantified benefits to potentially ineligible beneficiaries—such
as those no longer disabled because of medical improvement. First,
we estimated overpayments occurring between October 2003 – November
2005 as a result of conditions that existed as of October 2003 or
earlier. Using OMB guidance, SSA:
Detected overpayments totaling about $1.9 billion; and
Had not yet detected overpayments totaling approximately $3.2
billion.
Second, we developed overpayment rates. Although we believe the
overpayment rate is between 3.2 and 3.6 percent of benefits paid,
the rate could be as high as 5.2 percent—taking into account the
benefits the Agency would not have paid if it had perfect knowledge
of all conditions affecting eligibility at the time the payments
were issued. Third, when SSA did not already have information indicating
possible payment issues, we conducted further analysis. We found
55 percent of the overpayments and payments issued to ineligible
beneficiaries were in the four diagnosis groups in the Senator’s
request. Similarly, in SSA’s general disability population, 54 percent
of beneficiaries were in these same four diagnosis groups. Finally,
we estimated about $2.1 billion in benefits were paid to potentially
ineligible beneficiaries. This estimate was based on our sample cases
where SSA stopped benefits during our review because of continuing
disability reviews, income, prison/fugitive status, failure to cooperate,
inability to locate, etc. Although our review of medical and non-medical
factors could not provide a perfectly developed statistically valid
overpayment rate, our analysis provided a point-of-time estimate
of the amount of overpayments and payments SSA should not have made
to ineligible disability beneficiaries. Further, it provided Congress,
SSA and other decision-makers valuable information for making policy
decisions—such as whether to provide additional resources for activities
related to preventing overpayments and stopping benefit payments
to individuals who are no longer eligible for them.
Concurrent Title II
and Title XVI Beneficiaries Receiving Representative Payee and
Direct Payments (View
Report A-09-05-15144)
In this report, we examined whether SSA had adequate controls to prevent the
direct payment of concurrent benefits to individuals who have been appointed
a representative payee. As of April 2005, there were 11,399 concurrently entitled
Title II and Title XVI beneficiaries receiving both representative payee and
direct payments. We estimate these beneficiaries received $166 million in direct
payments while the representative payees received $175 million on behalf of
the beneficiaries. This included an estimated $49.7 million in benefit payments
that SSA sent to different addresses or bank accounts for approximately 1,100
beneficiaries. Further, we found that if SSA does not determine whether the
11,399 concurrent beneficiaries should be paid directly or through a representative
payee, an estimated $81.8 million in additional benefit payments will be paid
over the next 12 months.SSA needs to improve its controls to prevent concurrent
Title II and XVI beneficiaries from receiving representative payee and direct
payments. We provided SSA with the 11,399 cases to take corrective actions.
Also, we recommended and SSA agreed to: (1) determine whether potential representative
payee misuse exists for the 1,100 cases where payments were sent to different
addresses, post office boxes, or bank accounts; (2) develop a systems edit/alert
to prevent and/or detect instances in which concurrent payments are made directly
to a beneficiary and a representative payee; and (3) remind SSA technicians
to verify whether beneficiaries are concurrently entitled when making representative
payee determinations.
Payments Resulting from
Disability Insurance Actions Processed via SSA’s Manual Adjustment,
Credit and Award Processes (MADCAP) System (View
Report A-04-05-15042)
Section 223 of The Act requires that SSA provide monthly DI benefits
to eligible individuals who meet specific disability requirements.
SSA’s automated systems process monthly DI payments. However, when
SSA’s automated or direct input systems cannot completely process
an action, authorized technicians at SSA’s program service centers
must manually process the actions through the MADCAP system and MADCAP
completes certain actions that result in payments. From July 1 through
September 30, 2004, SSA issued about $578.4 million in MADCAP payments,
with single payments ranging from $1,000 to $29,999.99 to Disability
Insurance (DI) beneficiaries. We determined whether DI payments completed
through the MADCAP system were accurate and approved. We reviewed
a random sample of 250 DI MADCAP payments issued between July 1 and
September 30, 2004 that were $1,000 or greater. Also, because payments
of $30,000 or more are not paid through the MADCAP system, but through
SSA’s Single Payment System (SPS), we judgmentally selected and reviewed
six MADCAP payments equal to or greater than $29,999 to ensure their
accuracy and to make certain the payments through the MADCAP system
were appropriate. MADCAP payments of $3,000 or more did not always
have documentation for the required approvals. Of the 250 sampled
MADCAP payments, 166 were for $3,000 or more. Of those, 112 payments
lacked evidence of such approval. The six additional MADCAP payments
reviewed exceeded $3,000. However, we could not find evidence of
approval for one of these six payments. Also, we determined that
five of the six DI MADCAP payments equal to or greater than $29,999
were multiple payments involving one benefit action to the same individual.
Although the total benefits paid for each of the actions was correct,
we believe the payment for these benefit actions would have been
more appropriately made through the Single Payment System. We recommended
and SSA agreed to: (1) remind staff to verify supporting documentation;
(2) provide guidance on documenting approval of MADCAP payments of
$3,000 or more; and (3) ensure payments of $30,000 or more are processed
through the SPS.
Impact of Statutory
Benefit Continuation on SSI Payments Made during the Appeals Process (View
Report A-07-05-15095)
Our objective was to evaluate the financial impact when recipients
continue to receive SSI payments while appealing a medical decision
to have payments stopped. A determination to stop benefits is made
when a continuing disability review reveals that the beneficiary
no longer meets the requirements for disability benefits. These decisions
are made by disability examiners in SSA’s Office of Central Operations
and the Disability Determination Services, as well as by disability
specialists in the program service centers. The average Office of
Disability Adjudication and Review (ODAR) processing time is 420
days for the SSI program. Benefit payments made during the ODAR appeal
process are considered overpayments if the decision to stop benefits
is upheld. SSA waives the overpayment when the beneficiary did not
cause the overpayment. We estimate SSA paid over $199 million in
SSI payments to recipients who received an appeal decision from ODAR
between October 1, 2002 – September 30, 2004. Of this amount, about
$146 million became overpayments when ODAR reached the decision that
the recipient was no longer eligible to receive SSI payments. These
large overpayments were increased because SSA has an inefficient
process for making decisions on medical cessation appeals. Medical
cessation appeals should not be processed in the same manner as cases
that are not receiving payments. Therefore, appeals that involve
benefit payments should be processed separately from those that do
not involve payments to avoid or minimize overpayments. The President’s
Management Agenda introduced the initiative of improved financial
performance throughout Government agencies. SSA’s inefficient process
for medical cessation determinations is not in line with the president’s
vision. If SSA would develop a process for making decisions in medical
cessation appeals in a timely manner, financial performance of the
SSI program could be greatly increased. For example, if SSA decreased
the processing time on the reconsideration and ODAR medical cessation
appeals to 60 and 90 days respectively, overpayments of $106 million
could have been avoided for FYs 2003 and 2004. Assuming all things
remained equal in FY 2005, SSA could have avoided an additional $53
million in overpayments. Furthermore, SSA could have avoided overpayments
of approximately $14 million if payments were stopped timely between
levels of appeal. We recommended and SSA agreed to 1) enhance the
business process to allow more timely decisions on medical cessation
appeals; and 2) remind SSA components of the proper procedures for
terminating SSI benefits following medical cessation appeals.
Around OIG
Annual OIG Managers Conference Held in Gettysburg, PA
The annual OIG Managers Conference was held the week of May 22 – 26, 2006,
in historic Gettysburg, Pennsylvania. The conference was comprised of three
segments; OA held its Annual Mission-Critical Work Planning session from May
22 – 24, while OI managers met on May 24. On May 25, both OI and OA were joined
by the Offices of Resource Management and Chief Counsel for the annual OIG
Managers’ Meeting.
During the 3-day OA session, Inspector General O’Carroll spoke with audit managers
on his vision for OA, as well as the OIG as a whole. In addition, Walt Fennell
of PricewaterhouseCoopers, LLC addressed the OA planning conference on the
Committee of Sponsoring Organizations. At this meeting, OA drafted what it
believes are the major management challenges facing SSA for FY 2007: SSN Integrity
and Protection, Management of the Disability Process, Improper Payments, Internal
Control Environment, Systems Security, and Service Delivery. These six areas
will provide the structure for OA’s FY 2007 Work Plan. The Work Plan meeting
closed with OA planning to complete 100 reviews and begin 76 reviews in FY
2007. During the OIG Managers’ Meeting, Mr. O’Carroll addressed the managers
on the OIG’s growth and plans for future endeavors. Also, Kelly Croft, Chief
Quality Officer, addressed the managers. The Office of Resource Management
provided information on the new appraisal system. Finally, the Offices of Investigations,
Audit, Chief Counsel to the Inspector General, and Quality Assurance provided
valuable information on th events that had occurred within their components
during the prior year, and discussed issues that would impact the OIG during
the year to come. The meeting closed with a dinner at which the Inspector General
presented the Annual Inspector General Awards (details below).
2006 Inspector General’s Awards
We are pleased to announce the recipients of the 2006 Inspector General's Award.
The Inspector General's Award is OIG's most prestigious honor award and is
presented each year to individuals and teams whose contributions and accomplishments
have had a significant positive impact on OIG's ability to achieve its goals
and objectives. All of these awardees have demonstrated an exceptional level
of accomplishment and are worthy of the high commendation this award confers.
The individual awardees are:
Kimberly A. Byrd – Office of Audit, Birmingham Audit Division – Ms. Byrd is
recognized for her outstanding leadership of the Birmingham and Atlanta Audit
Divisions, her role in the SSN Integrity and Protection Team and focus group,
and her participation in workgroups related to the Immigration Reform and Terrorism
Prevention Act of 2004.
Sarai D. Fenton – Office of Investigations, Kansas City Field Division, Des
Moines Office – Special Agent Fenton is recognized for her outstanding investigative
efforts during fiscal year 2005 resulting in savings and recoveries totaling
more than $2 million.
Phillip W. Hanvy – Office of Audit, Boston Audit Division – Mr.
Hanvy is recognized for his outstanding efforts to address improper
payments and fraud in SSA’s programs, resulting in significant monetary
savings and recoveries for the Agency.
Michael C. McCole – Office of Investigations, New York Field Division,
Batavia Office- Special Agent McCole is recognized for the key role
he played in the Help the Needy investigation, which was one of the
largest terrorist-funded, money-laundering, national security investigations
ever initiated by the Federal Government.
Belinda J. Robinson – Office of Investigations, Allegation Management
Division – Ms. Robinson is recognized for her exceptional efforts
to ensure the successful implementation of the National Investigative
Case Management System and her role in training Allegation Management
Division staff on the use of the new system.
Stephen L. Vaughan – Office of Investigations, Fugitive Enforcement
Division – Mr. Vaughan is recognized for his efforts to ensure the
successful creation of the Fugitive Enforcement Division and the
expansion of OIG’s Fugitive Felon Program, and for his role in training
Fugitive Enforcement Division staff to become certified NCIC terminal
operators.
The team awardees are:
Dallas and Atlanta OI Field Divisions Hurricane Katrina Response
Team – Ronald R. Jesz, Pamelia M. Koss, Robert S. Latimer, Joseph
J. Luna, Wade V. Walters (Dallas Field Division); Mark L. Barnes,
Christopher H. Cave, Oswaldo J. Fong (Dallas Field Division, Baton
Rouge Office); Carol C. Conner, Gary W. Dickens, Suzanne E. Guenin,
David W. Hubbard, Arthur R. Trevino (Dallas Field Division, Houston
Office); Roland H. Maye (Atlanta Field Division); Rebecca A. Hart,
Steven W. Wood (Atlanta Field Division, Jackson Office); Traci VaLaine
Jones (Atlanta Field Division, Birmingham Office) – This award is
given in appreciation of the outstanding assistance and coordination
these employees provided to the Agency’s post-Hurricane relief efforts
in Louisiana, Texas, Mississippi, and Alabama.
Department of Defense Employee Verification Audit Team – Walter
E. Bayer, Jr., Richard W. Devers, Cylinda McCloud-Keal, Virginia
E. Montelpare (Office of Audit, Philadelphia Audit Division) – The
team is recognized for their work on two audits of DOD – Department
of Defense Wage Items in the Earnings Suspense File (A-03-04-14041)
and Unauthorized Work Social Security Numbers at the Department of
Defense (A-03-05-25127) – which should enhance the integrity of DOD’s
payroll systems and ensure improved controls related to programs
involving Homeland Security.
Please join us in congratulating our colleagues on their significant
accomplishments.
SSA
OIG Fraud Hotline Stats
From June 26 - 30, 2006, the SSA OIG Fraud Hotline reported
the following:
Allegation numbers issued: 1,495
Total allegations received this fiscal year: 74,216
Our website provides guidelines for reporting fraud and a way to
submit an allegation to our Fraud Hotline. For more information,
visit www.socialsecurity.gov/oig.
Eye
on OIG is published by the Office of Communication,
Valerie
Wood, Editor.
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Room.