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94–393 2016

SOCIAL SECURITY DISABILITY FRAUD SCHEME 

IN NEW YORK 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JANUARY 16, 2014

Serial No. 113–SS09 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON SOCIAL SECURITY 

SAM JOHNSON, Texas, Chairman 

PATRICK J. TIBERI, Ohio 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

AARON SCHOCK, Illinois 

MIKE KELLY, Pennsylvania 

KEVIN BRADY, Texas 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

ALLYSON SCHWARTZ, Pennsylvania 


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C O N T E N T S 

Page 

Advisory of January 16, 2014 announcing the hearing ........................................ 2 

WITNESSES 

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

Administration, accompanied by Edward Ryan, Special Agent-in-Charge, 

New York Field Division, Office of the Inspector General, Social Security 

Administration ..................................................................................................... 9 

The Honorable Carolyn Colvin, Acting Commissioner, Social Security Administration, accompanied by Beatrice M. Disman, Regional Commissioner, 

New York Region, Social Security Administration ............................................ 18 

SUBMISSIONS FOR THE RECORD 

Consortium for Citizens with Disabilities, statement .......................................... 59 

Elsibeth Brandee McCoy, letter .............................................................................. 64 

Larry Butler, statement .......................................................................................... 66 

Michael Gilbert, statement ..................................................................................... 70 

National Organization of Social Security Claimants’ Representatives, statement ...................................................................................................................... 74 

Veronica Mayer, letter ............................................................................................. 76 

QUESTIONS FOR THE RECORD 

The Honorable Patrick P. O’Carroll Jr. ................................................................. 50 

The Honorable Carolyn Colvin ............................................................................... 55 


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SOCIAL SECURITY DISABILITY FRAUD 

SCHEME IN NEW YORK 

THURSDAY, JANUARY 16, 2014 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON SOCIAL SECURITY, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 9:00 a.m., in Room 

B–318, Rayburn House Office Building, the Honorable Sam Johnson [chairman of the subcommittee] presiding. 

[The advisory of the hearing follows:] 


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HEARING ADVISORY 

Chairman Johnson Announces Hearing on Social 

Security Disability Fraud Scheme in New York 

Washington, Jan 9, 2014 

U.S. Congressman Sam Johnson (R–TX), Chairman of the House Committee on 

Ways and Means Subcommittee on Social Security, today announced a hearing on 

a massive Social Security Disability Insurance fraud scheme in New York that could 

cost taxpayers hundreds of millions of dollars. The hearing will take place on 

Thursday, January 16, 2014 in B–318 Rayburn House Office Building, beginning at 9:00 a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

On January 7, 2014, the New York County District Attorney’s Office announced 

the indictment of 106 defendants for their alleged involvement in a criminal conspiracy to defraud taxpayers. The defendants, who include many retirees of the New 

York Police and Fire Departments, are accused of massive fraud against the Social 

Security Disability Insurance (SSDI) program. The 102 beneficiaries, along with 

four facilitators who assisted them, are accused of collecting approximately $22 million in fraudulent benefits. 

According to the District Attorney, from approximately January 1988 to December 

2013, the four principal defendants in the case coached applicants on how to falsely 

demonstrate symptoms of mental disorders in order to obtain disability benefits in 

exchange for a cash payment of up to $50,000. The remaining 102 defendants are 

charged with lying about their mental health and ability to work in order to receive 

SSDI benefits to which they were not entitled. Each claimant collected an average 

of $210,000 in total fraudulent SSDI payments, though for some the total amount 

obtained was close to $500,000. Many defendants falsely claimed to suffer from posttraumatic stress disorder and other mental illnesses as a result of their experience 

with the September 11, 2001 terrorist attacks. 

According to the Social Security Administration (SSA) Office of Inspector General 

(OIG), the investigation dates back to 2008, when New York Disability Determination Service employees noticed that many applications had the same handwriting 

and contained identical descriptions of their ailments. These claims were referred 

to the SSA OIG’s New York Cooperative Disability Investigations unit. In 2011, the 

SSA OIG and the New York County District Attorney’s Office launched an undercover operation that led to the indictments. 

The announcement of these indictments follows revelations of similar abuse in 

August 2013, when authorities arrested more than 70 individuals involved in a disability fraud conspiracy in Puerto Rico. Also, in October of 2013, the Senate Homeland Security and Governmental Affairs Committee released the results of their bipartisan investigation detailing inappropriate conduct and collusion between a West 

Virginia law firm, a Social Security Administrative Law Judge and some local doctors in approving benefits while outlining the ineffective oversight by the SSA. 

With the 2013 Social Security Trustees report projecting that the SSDI program 

will only be able to pay 80 percent of benefits beginning in 2016, losses to the system from fraud is an issue of increasing concern. According to the SSA, 11 million 

beneficiaries received $139.4 billion in SSDI benefits in Fiscal Year 2013. 

In announcing the hearing, Social Security Subcommittee Chairman Sam Johnson 

(R–TX) said, ‘‘The widespread disability fraud uncovered in Puerto Rico and 

most recently in New York is deeply troubling and unacceptable. Scandal 

after scandal proves the Social Security Administration is failing to protect 

precious taxpayer dollars and undermines Americans’ confidence in this 

vital program. With the Disability Insurance program unable to pay full 

benefits as early as 2016, my number one priority has been to keep this proVerDate Sep 11 2014 14:19 Jul 05, 2016 Jkt 094393 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\94393.XXX 94393

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gram strong for those who truly need it and protect taxpayer dollars. It’s 

time for Social Security to make it their number one priority as well. On 

behalf of hardworking American taxpayers, I am committed to getting answers and rooting out waste, fraud and abuse. Social Security must be held 

accountable for failing the American taxpayer and work to restore their 

trust.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on the details of the New York investigation, how the fraud 

scheme was carried out, the estimated cost to taxpayers, and what the SSA is doing 

to crack down on disability fraud in the wake of this and other scandals in Puerto 

Rico and West Virginia. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by the close 

of business on Thursday, January 30, 2014. Finally, please note that due to the 

change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical 

problems, please call (202) 225–1721 or (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any supplementary materials submitted for 

the printed record, and any written comments in response to a request for written 

comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will 

be maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days’ notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov

f 

. 


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Chairman JOHNSON. The meeting will come to order. Let me 

begin by saying to all my colleagues on this Subcommittee that it 

is with deep regret that we had to call this hearing today. 

Last week we were greeted with shocking headlines. The New 

York Times led with, ‘‘Charges for 106 in a Huge Fraud Over Disability.’’ And ABC News led with the ‘‘New York cops, firefighters, 

in massive 9/11 fraud, the indictment says.’’ I am outraged. But, 

more importantly, the American people are outraged. Law-abiding 

Americans woke up to learn that the taxes they paid 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, who is with 

us today, 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. Not only the size of the fraud that is shocking, but those 

who committed it: former policemen, firemen, and a former FBI 

employee. 

Worse, some of the defendants falsely claim that their disability 

was caused as a result of the 9/11 terrorist attacks, while many 

had never even worked at Ground Zero. It is truly a sad day in 

America when people who once held positions of public trust betray 

the public confidence. These individuals are accused of stealing 

from a vital program that serves those who can no longer work, 

due to 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 of them focused specifically on disability fraud 

because preventing fraud is essential to maintaining public confidence in the program. 

The public is fast losing faith in Social Security, and I don’t 

blame them, because we all are. While I fully recognize there will 

always be bad apples, what is going on these days is very different. 

This is a program plagued by fraud conspiracy. 

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 administrator, 

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 initial 

cost. In Puerto Rico, the scandal initially alleged to cost taxpayers 

$2.1 million. Amounts resulting from the corruption in West Virginia are still under investigation. Moreover, a total 181 individuals have been arrested in the New York and Puerto Rico scandals. 

I know that crooks don’t care about the people who really need 

their benefits, but I do. According to the Trustees, it is only two 

years before Social Security can only pay reduced benefits, unless 

Congress acts. The program can’t afford more fraud. It is only a 

matter of time when Congress may be asked to bail out this program with the retirement side having to come to the rescue. And, 


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if that is the case, then all taxpayers and beneficiaries will shoulder the burden of a crime wave. 

What is more troubling is that the 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 

is the new get-rich-quick scheme worth tens of thousands of dollars 

for every person who illegally gets on the rolls. It is appalling. And 

in New York, it went on for 25 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 after time. Why is Social Security failing to prevent 

these fraud conspiracies in the first place? 

But it is 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 ever again. 

I think the time for excuses is over. 

Let me make myself clear. I expect accountability at Social Security for these crimes. It is time for real leadership. It has been 

nearly a year to the day since Social Security had a Commissioner. 

With the greatest respect to Mrs. 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 to the 

public 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. 

Mr. O’Carroll, I am demanding a full investigation by your office 

of Social Security’s entire management and their failure to prevent 

fraud and conspiracy. And it 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 in the 

future. 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 needs to end 

now. 

I also would like 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 that might help you. 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 

whatever legislative is needed. 

Today we will hear from Acting Commissioner Carolyn Colvin 

and the Social Security Inspector General Pat O’Carroll. Don’t just 

tell us about the facts of the scandal; we can read that in the news. 

And don’t just tell us about what you did; it is clearly not enough. 

And don’t just say you need more money, when the fact is Social 


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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. I thank 

you all for being here today. 

Chairman JOHNSON. I now recognize the Ranking Member, Mr. 

Becerra, for his opening statement. 

Mr. BECERRA. Mr. Chairman, thank you very much. And let me 

join with you in saying that we must ask Social Security to do everything possible, and certainly the Inspector General, to give us 

the best sense of how to go about going after that conspiracy, that 

fraud that does occur. 

But let me differ a bit, Mr. Chairman, from the way you have 

described it. The conspiracies in Puerto Rico, New York, were not 

uncovered by some intrepid consumer or some truth-seeking American or some law enforcement officer outside of Social Security. It 

was uncovered by front-line Social Security staff. And they are 

working day in and day out. In fact, they have units, some fraudbusting units, that are doing exactly what we want them to do. 

So, it is more a matter of how do we work with the people there 

busting fraud today within Social Security, whether in the inspector general’s office, or just the front-line staff of Social Security, 

that we must work with. Because when you have former police officers, former firefighters, when you have doctors who are colluding, 

these are all people of trust. 

And so, when a front-line Social Security representative sees a 

report from a doctor, and sees in front of her or him a former police 

officer who may have been involved in 9/11, or a former firefighter 

who had saved people’s lives saying, ‘‘I am disabled, and here is my 

documentation from a doctor saying I deserve now to receive the 

disability insurance benefits that I pay for,’’ you could only do so 

much, unless you are going to say we are not going to not trust 

people like former firefighters, former police officers, and our doctors who care for us every day. 

And so, this is deep, because the collusion was heavy and the 

conspiracy was dark. And so we have to get to the bottom of this. 

But to say that this is the fault of Social Security is to blame the 

wrong people who are working every day, and whose trust we have 

put in for decades to make sure that Social Security serves those 

who paid for it. 

Remember, American workers pay for Social Security and Social 

Security Disability Insurance. Over its lifetime of some 78 years, 

Social Security has received from American workers some $14.5 

trillion in taxes, Social Security contributions. Because we haven’t 

used that all up, and because some of that money has earned interest by being stored away in bonds, we now have more than $2.5 

trillion in the Social Security trust fund available for Americans 

who have paid for Social Security and Social Security Disability Insurance. 

Social Security Administration workers have diligently, day in 

and day out, worked to protect Americans’ Social Security. And I 

believe we see that in the conspiracy that was uncovered in Puerto 

Rico and in New York. Social Security provides a lifeline to 58 milVerDate Sep 11 2014 14:19 Jul 05, 2016 Jkt 094393 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\94393.XXX 94393

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lion Americans each month, 58 million Americans each month. Yet 

it has an overpayment rate of less than one-half percent. Let me 

repeat that: less than half-a-percent overpayment, meaning whether it was due to fraud or due to error overpayment. 

In fact, that error rate, if you compare it to the private sector, 

is quite low. Private sector payrolls, which calculate the paychecks 

that millions of Americans get every day, that—the rate of error for 

the private sector payroll offices in these companies, is probably 

about four times higher than Social Security’s. One out of every 

five consumers has an error in their credit report that could keep 

them from getting a loan, or force them to pay higher rates in interest than they should. 

Do I need to talk about Target and the recent privacy-hacking 

there, or Neiman Marcus, or you name it? It happens, because 

there are some bad people out there, and they are after our money. 

And it shouldn’t surprise people that they are after Social Security’s money, as well. So we have to work very hard, Mr. Chairman. 

And I want to join you in calling forth this investigation. But let’s 

make sure we aim our fire at the bad guys, not the front-line workers who are detecting the fraud, not the front-line workers who are 

working so diligently to try to protect Americans’ money. 

One of the most powerful fraud-busting teams that SSA has is 

the cooperative disability investigations unit. It is—it links with 

the inspector general, with local law enforcement, and front-line 

SSA staff. They are highly effective. In 2012 alone, these fraud 

busters prevented $340 million in fraudulent Social Security payments. Most importantly, fraud prevention is built in to Social Security’s day-to-day operations. 

As I said—I ask again. Who was it that uncovered the fraud conspiracy in New York? SSA front-line staff. Who was it that uncovered the conspiracy in Puerto Rico? SSA front-line staff. Day in, 

day out, Social Security workers are standing guard. 

The recent fraud cases were sophisticated conspiracies, involved 

recruiters who sought out individuals to willingly falsify applications for benefits, colluding doctors willing to provide fraudulent 

medical evidence. Defrauding the disability insurance program, as 

in these conspiracies, requires criminal collusion, criminal collusion 

from doctors and other persons in positions of trust. 

The New York City conspiracy, if you can believe it, again, required former police officers who recruited others to lie, an attorney 

willing to submit false claims, doctors willing to provide fake evidence, and applicants willing to undergo fake treatment for a year 

to make it look like they were genuinely disabled. 

Social Security’s front-line employees are trained to spot and prevent fraud. Every employee, from the newest hire to the long-term 

veteran, attends fraud referral training every year, and is alerted 

to potential fraud tip-offs via a monthly bulletin. The vast majority 

of disability insurance beneficiaries, let’s remember, are honest, 

hard-working Americans who earned their benefits through hard 

work, and now they need them to live on. 

To put it in perspective, last year, about 11 million people received Social Security disability insurance, and about 1.8 million 

applied for disability benefits. That same year, Social Security Administration front-line staff made over 22,500 referrals for susVerDate Sep 11 2014 14:19 Jul 05, 2016 Jkt 094393 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\94393.XXX 94393

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pected disability fraud. The IG opened formal investigations on 

5,300 cases, and referred 100 to the attorney—a U.S. Attorney’s office for prosecution. As you can see from these statistics, the vast 

majority, 99.9 percent of disability beneficiaries, are hard-working 

Americans who earned their benefits. 

So, Mr. Chairman, let me begin to close by saying this. We know 

that the number of disability insurance recipients has increased. 

But everyone who has looked at this has told us it is not so much 

because of fraud, it is because the Baby Boomers, we are retiring, 

and we are beginning to use our Social Security or our Social Security disability benefits. Women, over the last decades, have begun 

to join the workforce, and now they are becoming Social Security 

recipients or disability insurance recipients. So the chief actuary 

has told us that you don’t even calculate, in the reason for the 

growth in the disability insurance population, the issue of fraud. 

So, let’s go full steam ahead to investigate fraud, but let’s not say 

that that is what is driving the fact that honest, hard-working 

Americans are now using their disability benefits. Let’s go after the 

frauds, let’s go after those who are willing to take away the taxpayer dollar. But let’s not deprive those who have earned it, and 

now should receive it. 

And finally, Mr. Chairman, as we go about deciding how to go 

out there and detect this fraud before it can ever happen, let’s not 

under-staff the very people at the front lines who detect it first. 

Let’s not tie the hands of Social Security to find the fraud by continuing to cut their budget over $1 billion in the last year or two. 

That New York City office that detected the fraud, today they have 

fewer people on the front lines working than they did back in 2008, 

when they detected the fraud. 

If we don’t want to see fraud, we can’t take the fraud busters off 

the front line. And so, let us work together to detect the fraud, but 

give Social Security the resources and personnel it needs to continue to be the defenders of a good working program for all Americans. 

Mr. BECERRA. And, with that, Mr. Chairman, I yield back. 

Chairman JOHNSON. Thank you, Mr. Becerra. As is customary, 

any Member is welcome to submit a statement for the hearing 

record. And, before we move on to our testimony today, I want to 

remind our witnesses to please limit your oral statements to five 

minutes. However, without objection, all of the written testimony 

will be made part of the hearing record. 

And before I introduce our witnesses, I want to recognize two important people who are in our audience today from the Manhattan 

District Attorney’s office: Cyrus Vance, Jr., a District Attorney; and 

David Szuchman, Executive Assistant, District Attorney, and Chief 

of the Investigation. Thank you all for being here. 

On behalf of all Americans, I want to thank you and your staffs, 

along with the federal agents from the Social Security Inspector 

General’s staff, the detectives from the New York Police Department, the New York State Attorney General’s office, other state 

and local law enforcement agencies that have assisted in the arrests, and the employees of the New York State Disability Determination Services, and the Social Security Administration. Thank 

you for your tireless work in bringing these defendants to justice. 


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We will now return to our hearing. And I am suspending our 

usual witness order protocol by asking the Honorable Patrick 

O’Carroll, Jr., Inspector General, Social Security Administration, to 

testify first, given the hearing’s focus on the New York fraud 

scheme, and the primary role of the Inspector General and federal 

agents in this investigation. Mr. O’Carroll is accompanied by Edward Ryan, Special Agent in Charge, New York field division, Office of the Inspector General, Social Security Administration. And 

next is—next to him is Honorable Carolyn Colvin, Acting Commissioner of Social Security Administration. 

Mr. O’Carroll, welcome, and thanks for being here again. Please 

go ahead. 

STATEMENT OF PATRICK P. O’CARROLL, JR., INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION, ACCOMPANIED 

BY EDWARD RYAN, SPECIAL AGENT–IN–CHARGE, NEW YORK 

FIELD DIVISION, OFFICE OF THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION 

Mr. O’CARROLL. Good morning, Chairman Johnson, Ranking 

Member Becerra, and Members of the Committee. Thank you for 

the invitation to testify today. I am joined by Special Agent in 

Charge Edward Ryan from our New York field division. I am also 

joined here today with the district attorney for Manhattan, Cyrus 

Vance, Jr., without whom this case may never fully have come to 

light. 

The man you see on the TV screen is Louis Hurtado. Mr. 

Hurtado was an NYPD officer until 1988, when he left the force on 

a disability pension. In 1990, he applied for Social Security disability benefits, using a man named Raymond Lavallee as his attorney. In 1991, he was awarded benefits, including a lump sum 

retroactive payment of almost $19,000. He continued to receive as 

much as $1,700 in benefits every month, until they were suspended 

this week. In all, he received about $475,000 from SSA. For much 

of this time, he owned and operated the VIP Black Belt Champions 

Training Center. He taught and performed martial arts, and you 

can see him in his activities in this video. 

While we have more evidence than this clip, I am sure you will 

agree that running a business like this is inconsistent with his 

claim that he can’t perform any work in the national economy. He 

is just one of 102 disability beneficiaries in this case. You will see 

pictures of some of them appear as I talk, who were recently indicted for fraud, and all but one has been arrested. 

It is alleged that these 102 beneficiaries, most of them retired 

New York City public safety officials, were able to fraudulently obtain disability with the help of four men: Raymond Lavallee, an attorney; Thomas Hale, a disability consultant; Joseph Esposito and 

John Minerva, who are retired NYPD officers who acted as 

facilitators and recruiters. 

The alleged scheme worked like this. A public employee on disability pension would contact Esposito or Minerva, who explained 

what the applicant needed to do to get SSDI for mental impairment, including coaching them on dealing with doctors, and then 

referred them to Hale. Hale further coached the applicant on how 

to appear mentally disabled, how to act, and what to say. About 


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half of the applicants alleged stress from their work on 9/11, which 

caused the impairment, then referred them one of the two doctors 

and to Lavallee. 

After a year of mental health treatment, Lavallee would submit 

the disability application, and the person would be awarded SSDI, 

including a large lump-sum check for the year they were undergoing the treatment. Although the law generally limits attorneys to 

a fee of no more than $6,000, Lavallee and the other conspirators 

charged a fee equal to 14 months’ worth of benefits, often more 

than $40,000, and accepted only cash as a payment. Esposito would 

instruct the clients to withdraw cash from their banks in amounts 

under $10,000 to avoid IRS detection, and then have them bring 

the cash to him. He would then split the cash with his partners. 

It was a lucrative business. When we executed search warrants 

on these four men, we found large amounts of cash in their homes 

and in their safety deposit boxes. For example, one safety box 

alone—safety deposit box alone held $650,000. Another one held 

$42,000 in cash, 28 gold coins, and 5 silver platinum bars. 

We began this investigation in 2008, after our New York CDI 

unit received a number of allegations from the New York DDS. It 

was a complex and lengthy investigation, but after a successful undercover operation, court-ordered wire taps, search warrants that 

I mentioned earlier, and working closely with the NYPD and the 

Manhattan district attorney’s office, we were able to obtain all 106 

indictments. This investigation is ongoing and very active; there 

will be likely more arrests to come. 

The SSDI program relies to some extent on honesty and integrity 

of the applicant. When that fails, it relies on the integrity of attorneys and doctors. When all those fails, fraud becomes a real possibility. Luckily, there are lines of defense, including the talented 

employees of SSA and the DDSs, anti-fraud measures like the CDI 

program, which led to this investigation, and law enforcement 

agents like the ones who put countless—hundreds of hours into 

this investigation. 

I can’t say enough about them or the unflagging cooperation and 

support of the Manhattan DA’s office and the NYPD. It was gratifying to sit in the courtroom in Lower Manhattan last week and 

see those who defrauded SSA brought before a judge in the first 

step of the judicial process. This is obviously a very short version 

of a long and successful story. 

SAC Ryan and I are happy to answer any questions that you 

have. I thank you for this hearing. 

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


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Chairman JOHNSON. Thank you. We appreciate your testimony. 

Commissioner Colvin, I appreciate you being here. And I didn’t 

introduce your associate, Bea Disman; thank you for being here, as 

well. You are recognized. 

STATEMENT OF CAROLYN COLVIN, ACTING COMMISSIONER, 

SOCIAL SECURITY ADMINISTRATION, ACCOMPANIED BY BEATRICE M. DISMAN, REGIONAL COMMISSIONER, NEW YORK 

REGION, SOCIAL SECURITY ADMINISTRATION 

Ms. COLVIN. Chairman Johnson, Ranking Member Becerra, 

Members of the Subcommittee, thank you so much for this opportunity to discuss our front-line employees’ role in uncovering the 

disability fraud conspiracy in New York. My name is Carolyn 

Colvin, and I am Social Security’s Acting Commissioner. I have 

served in this position since February of 2013. I am joined by Beatrice Disman, our Regional Commissioner for the New York Region. 

Ms. Disman is available to answer questions you may have about 

the case. 

Like you, I am offended whenever anyone attempts to defraud 

the government. I am especially outraged by the details of the 

fraud conspiracy in New York. In this case, an attorney and several 

others fabricated medical history to defraud the government of millions of dollars in disability benefits. Most of the false claims involved former firefighters and police officers. Some even alleged 

disabilities that they said arose from the tragic events of 9/11. 

Frankly, I am disgusted by this betrayal of the public trust, and 

I applaud the Chairman for shining a light on our work to root out 

fraud. 

On behalf of every employee at SSA, I am putting the criminals 

on notice. We will find you, we will prosecute you, we will seek the 

maximum punishment allowable under the law, and we will fight 

to recover the money that you have stolen. 

Social Security has zero tolerance for fraud. Moreover, this case 

in New York touches a very special nerve. As you can imagine, 

criminals invoking the memory of 9/11 to masquerade as disabled 

is deeply personal for our employees in the New York Region. Not 

only are the New York Regional Office and the New York DDS located within blocks of Ground Zero, but many of our employees 

were working at the time of the attack, and were fortunate to escape with their lives. Many of those same employees also returned 

to work in emergency outposts throughout the city to accept survivor claims from the families of the deceased. 

As the investigation unfolds, I could not be prouder of our employees at SSA, the New York DDS, and the office of Inspector 

General. They worked cooperatively to flag the fraudulent cases, 

connect them to a criminal conspiracy, and build the cases for prosecution. Partnership with state and federal law enforcement has 

likewise been essential. We owe a special debt of gratitude to the 

diligent employees of the New York DDS, who are funded and 

trained by SSA to make disability determinations and to identify 

fraud. 

These employees originally referred fraudulent cases involved in 

the conspiracy to the OIG. Over time, the OIG began to notice patterns in the referrals. The New York Cooperative Disability InvesVerDate Sep 11 2014 14:19 Jul 05, 2016 Jkt 094393 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\94393.XXX 94393

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tigation unit, one of the original five CDI units established in 1998, 

was critical to connecting the individual cases to a criminal conspiracy. To date, the Manhattan District Attorney has indicted 106 

individuals for their crimes. 

According to our estimates, the fraudulent payments totaled $23.2 million to 102 disability beneficiaries and their auxiliaries. 

We have already suspended these individuals’ benefits, and we will 

move aggressively to recover any overpayments. 

While our data show that the level of fraud in the disability program is less than one percent, even one case of fraud is too many. 

The best way to ensure we continue stopping fraud is to invest in 

our employees. Last year, they made over 22,500 disability fraud 

referrals to OIG. Regrettably, Congress has not fully funded our 

employees’ good work. In fact, since Fiscal Year 2012, Congress has 

appropriated $421 million less for program integrity reviews than 

what it authorized for us in the Budget Control Act. 

Recent news that Congress may fully fund our program integrity 

budget in 2014 is a step in the right direction. These resources 

would help to ensure that only those persons eligible for benefits 

receive them. However, I must caution that eliminating the CDR 

backlog and reversing the negative effects of past years of underfunding require a multi-year commitment. The net effect of budget 

cuts over the past three years has been the loss of about 11,000 

employees. That means drastically fewer people standing watch for 

the next attempted theft, and drastically fewer people available to 

serve those who truly need us. Fewer people to handle mounting 

workloads also jeopardizes our exceptionally high payment accuracy, which is 99 percent or better in the Social Security disability 

program. 

We are proud of these results, and we will continue delivering 

them with your support. Thank you. Ms. Disman and I will do our 

best to answer any questions you have, with the understanding 

that the fraud case is an active investigation. 

[The prepared statement of Ms. Colvin follows:] 


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Chairman JOHNSON. Thank you for your testimony. We will 

turn to questions now. And I have one for Mr. O’Carroll. 

The New York case is the latest of three disability fraud cases 

in less than two years. Can the American people expect more like 

this? Yes or no? 

Mr. O’CARROLL. Chairman Johnson, we have got a number of 

investigations going on now involving—— 

Chairman JOHNSON. The reason I ask is can we expect more 

like this to surface, yes or no? 

Mr. O’CARROLL. Probably. 

Chairman JOHNSON. Okay. You are refusing to give me a yes 

or—— 

Mr. O’CARROLL. If you want a yes on it, yes. We have other investigations of—— 

Chairman JOHNSON. Okay. 

Mr. O’CARROLL [continuing]. Magnitude. 

Chairman JOHNSON. Thank you. Ms. Colvin, has anyone at 

your agency been held accountable for fraud conspiracy in West 

Virginia, Puerto Rico, or New York cases? 

Ms. COLVIN. All of those cases are still open and active. 

Chairman JOHNSON. You didn’t answer my question, either. 

Are you holding anybody in your agency accountable, yes or no? 

Ms. COLVIN. I think that my answer has to be that those are 

still open cases. We can certainly—— 

Chairman JOHNSON. So the answer is no. Has anyone been 

fired or disciplined for these fraud schemes? 

Ms. COLVIN. There have been significant organizational changes 

in our West Virginia office. But, as I said before, those—— 

Chairman JOHNSON. Well, you got West Virginia, Puerto Rico, 

and New York now. Are you taking care of those areas, as well? 

Ms. COLVIN. I think we need to let the investigation continue. 

Chairman JOHNSON. You are not making any changes in the 

Administration. Is that true or false? 

Ms. COLVIN. We are not making any changes in the Administration at all. There is no suggestion in my understanding that we 

need to do that at this time. I would prefer to see the investigation 

concluded, and we will make our decisions at that point. 

Chairman JOHNSON. Well, you know it has been a long time 

coming. Those investigations have been going on for many years. 

It is not just something brand new. 

Ms. COLVIN. We make the referral, Mr. Chairman. We don’t determine the fraud or do the investigation. We simply make the referrals. And we make considerable referrals each year. 

Chairman JOHNSON. Yes, but you are running the agency right 

now. And you note on page two of your testimony, ‘‘The continued 

success’’ of the fraud detection and referral process—you call success three scandals in two years, with the last two within six 

months of the same region? 

Ms. COLVIN. Yes, I would call it success, because I think that 

anti-fraud activities have been very successful. Remember that it 

was our staff who uncovered those cases, and it was the Inspector 

General who was able to note patterns in those individual referrals 

that suggested conspiracy. 


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I still contend that the first line of defense are our well-trained 

employees, the DDS as well as the field office. They are trained to 

identify potential fraud, and they are doing just that. And, clearly, 

the reduction in the number of staff we have to watch the alert to 

potential fraud is a concern for us, because the numbers have substantially decreased. 

Chairman JOHNSON. Well, it seems like it took an awful long 

time to uncover this last one. 

On page two you state you will move to recover any overpayments from the New York fraudsters. You call these overpayments, 

but aren’t they illegal payments? Yes or no? 

Ms. COLVIN. I am sorry, you—— 

Chairman JOHNSON. The payments you made to those people 

in New York during all this, you call them overpayments. Weren’t 

they illegal payments? 

Ms. COLVIN. Bea. 

Ms. DISMAN. Chairman, as in Puerto Rico, we can’t make that 

determination now. I am actually waiting to get a release from the 

Manhattan District Attorney to start the re-review on the cases. As 

a result of the re-review, we will be able to make that determination. As I told you in Puerto Rico, in some of the cases that were 

involved, there is other medical evidence and other disabilities. 

So, yes, we will be taking the same process as Puerto Rico. But 

right now you have the indictments and we have not been able to 

do that re-review of the cases. 

Chairman JOHNSON. But it has been going on for years. It 

seems to me you should have been more aware of it. 

Mr. O’Carroll, according to your testimony, U.S. Attorney for the 

southern district of New York ultimately declined to pursue the 

case. Thankfully, Manhattan’s District Attorney agreed to take it. 

Why aren’t federal prosecutors going after these crime rings? 

Mr. O’CARROLL. Well, Chairman Johnson, we have taken a review of presentations on our investigations to U.S. Attorney’s office. 

And I would say more than half of the time that we present to 

them, they do accept. Many times, the U.S. Attorney’s offices have 

thresholds for the amount of fraud that is involved before they will 

authorize on a prosecution. And often times, with our cases, especially in the infancy of a case, it isn’t that much, in terms of the 

dollar amount, to attract the prosecution of it. 

And also, too, is that, with a lot of these things, it is cooperation. 

In terms of if we are using undercover agents or using other agencies to help us on an investigation, we will then have somewhat of 

an obligation to stay with the organization. In this case, here, it 

was a partnership with the district attorney’s office. They were 

working in one direction, we were working another. We partnered, 

and we came up with a result. And we did keep the southern district of New York informed on it as we went along. 

Chairman JOHNSON. Well, I appreciate that, and I thank you 

all for helping us in those instances. 

Why don’t federal prosecutors want to go after these kinds of 

crime rings? 

Mr. O’CARROLL. Well, in terms of the—it is usually—it is a 

long, involved, complex investigation, would be the example of 

these, and—— 


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Chairman JOHNSON. Too small a—— 

Mr. O’CARROLL. And the small ones, they are not interested 

in—usually, on it. What they will do is, if we can package them together, and make a presentation with a half-a-dozen or a dozen of 

these investigations, they will go. But—and often times, I guess 

when they are making a determination on, you know, charging 

someone with bank robbery or a disability fraud, it goes in—you 

know, they have their priorities. 

And we—but I got to also tell you, Chairman Johnson, I go out 

personally and interview or meet with U.S. Attorneys across the 

country, discuss with them investigations that we have, explain to 

them the advantage of—the deterrent factor of doing it. And often 

times, it is just by talking to them we end up with prosecutions. 

So I am personally out there, talking to U.S. Attorneys, trying to 

get our prosecutions. 

Chairman JOHNSON. Well, thank you for that. I think if we 

don’t go after these crime rings, you know, the federal prosecutors 

are sending a message to professional crooks and the phony disabled that committing fraud pays off. Thank you for your testimony. I think we need to change that. 

Mr. Becerra, do you have questions? 

Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for 

your testimony. And may I just say congratulations on the work 

you have done to uncover this fraud, the conspiracies? And especially, Ms. Disman, to you, can you please express to all your frontline workers a sincere thank-you for stopping what had been a conspiracy that had run for quite some time? Very much appreciated. 

Very much appreciative of the fact that they are the ones, your 

staff are the ones that discovered this. They are the ones that 

moved forward. 

And, Mr. O’Carroll, to the inspector general, I say thank you to 

you and your folks, working with New York City’s district attorney 

and the local law enforcement authorities there in New York, for 

doing everything possible to follow up on the detection of the fraud, 

and now go after these folks. And, as the commissioner just said, 

now to go out and get back the money that taxpayers paid. That 

is very, very important. 

I want to clarify something, as well. Ms. Disman, when the chairman asked you questions about have you taken back the money 

that some of these corrupt individuals got, and you are saying that 

is under investigation, I think you are essentially saying what we 

all know, is that, in America, you are presumed innocent until 

proven guilty. And not that we want any of these despicable people 

who held a position of trust, having been former police officers or 

former firefighters, that we want them to keep the money they 

don’t deserve, it is just that, like any other American, before you 

can say, ‘‘You are a bad guy,’’ we have got to prove it in court. 

Ms. DISMAN. I absolutely agree with you in two respects. Number one, let me assure all of you, this is even more despicable to 

me, because of my role in September 11th. Let me also assure you 

that my people started to identify these cases right after we set up 

the continuing disability investigations unit in 1998. So, we were 

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gether the trail and the patterns that actually came together in 

2008. 

But having said that, we have—are abided by due process, we intend to do it. But make no mistake. As in Puerto Rico, we will get 

the money back. Once we review and determine the amount of the 

overpayment—and I also hope that, with the Manhattan District 

Attorney present, that part of sentencing after the trial will be to 

recover the money. 

Mr. BECERRA. Yes, so—— 

Ms. DISMAN. So I think we have a dual approach to recover the 

money. 

Mr. BECERRA. So I want to make sure that, on the record, it 

doesn’t look like you are giving a bureaucratic response when you 

say, ‘‘The investigation is underway.’’ It is just that you can’t go out 

there and say publicly, as a government official, ‘‘Yes, these corrupt 

guys are guilty, and we’re going to get the money.’’ You are judging 

them before they have had their day in court. And we want them 

to be judged, and we want the judgment to be severe if they are 

found guilty. But, until then, we don’t have a right to say you’re 

guilty before we prove it. 

Ms. COLVIN. Mr. Becerra, we also are taking some actions in 

the cases that Chairman Johnson raised. We would be happy to 

brief you privately, but we don’t want to say anything publicly that 

is going to compromise the investigation, and that is why I kept 

stressing that it is an open investigation. 

Mr. BECERRA. I appreciate that. 

Ms. COLVIN. But there have been some actions taken. 

Mr. BECERRA. I appreciate that. Maybe the chairman will let 

us take advantage of that. 

Ms. Disman, again, you are in charge back there in New York. 

So, tell me, how many of the—of your Social Security employees 

were involved in the conspiracy that was discovered? 

Ms. DISMAN. None. Unlike Puerto Rico, where you had a former 

Social Security employee, the extensive investigation and extensive 

analysis—and, let me just stress, my people worked directly with 

the Office of the Inspector General over the years. We helped do 

all the analytical work on the cases. 

And let me reassure you on this New York case. It is a lot different than Puerto Rico. This is an affinity group of people that 

were involved in, most of them, New York City pensions that actually committed this awful conspiracy. 

Mr. BECERRA. So, Mr. O’Carroll, let me get this straight. In 

New York City, not one Social Security employee was involved in 

this conspiracy of what you found? 

Mr. O’CARROLL. Correct, Mr. Becerra. It was facilitators in this 

case, not SSA employees. 

Mr. BECERRA. Not SSA employees. And in Puerto Rico, there 

weren’t any Social Security employees involved, or at least not current. It was a former employee. But those that are on the line, on 

the job, getting paid by the taxpayers, were not involved in the conspiracies in New York or Puerto Rico. 

Mr. O’CARROLL. Correct. 

Mr. BECERRA. Okay. They are the ones that detected it. They 

weren’t involved in it. 


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Mr. O’CARROLL. Yes. 

Mr. BECERRA. Okay. Let’s be clear on that. I think all of you 

know that this congress has continued to cut your funding over the 

last several years. And, Ms. Colvin, you mentioned that, as well. 

You mentioned $421 million less that you have received to do the 

fraud busting that we are talking about today. 

Ms. COLVIN. We are very pleased that it appears that our Fiscal 

Year 2014 appropriation may be approved. It has been approved in 

the House. 

I would just say that we are very aggressively involved in antifraud activities. That is one of the reasons that we first established 

the CDI units back in 1998. At that time I was in charge of operations for all of the field offices. And we have seen that the CDI 

units are effective. These cases are very complex, so you need the 

cooperation of the DDSs and SSA, the Inspector General, and local 

law enforcement. And that is what we have under the CDI, we 

have those formal arrangements. 

But because of the lack of resources, we only have 25 CDI units. 

With the program integrity money, if we get it, one of the things 

I want to do is expand some of those units, because we only have 

25 states right now that have a CDI unit. 

Mr. BECERRA. So let me conclude with this, because I know my 

time has expired. So, Mr. Chairman, let me just ask one quick 

question that I hope Mr. O’Carroll and Ms. Disman can both answer. 

First, do you have enough of those fraud busters, these CDI 

units, where you need them? And secondly, how many of the staffers that you had in 2008, when you detected the conspiracy, the 

fraudulent conspiracy in New York, how many do you have now? 

Ms. DISMAN. Well, if you are talking about how many people 

are in the New York DDS now, I can just tell you, compared to 

2010, that staff is down 22 percent. And so, when you look at that, 

there are certainly less people on the line to do this work, and to 

report the detection. But they are really focused on fraud. 

I will tell you this case and the Puerto Rico case made our employees even more aware. And what is important is not only will 

you report it, it will be investigated, but what the Manhattan DA 

did and the U.S. Attorney in Puerto Rico allows us to do more referrals, because they see results as a result of their referrals. 

Mr. BECERRA. Inspector General? 

Mr. O’CARROLL. The CDI units, I have got to say, with the support of you, the chairman, and every—the members of this Committee, this is probably one of our best tools in terms of fighting 

fraud. The best part of it, it gets the money and identifies the 

money before it goes out the door. It is pre-effectuation. 

With the support of this Committee, we are anticipating expanding them. We are adding people to the CDI units that we have now, 

with just the purpose of identifying fraudulent doctors, lawyers, 

and facilitators. And I think we have a pretty good story. And, 

moving forward, that is going to be one of our, you know, priorities, 

with any resources that we have. 

Mr. BECERRA. Thank you. Thank you, Mr. Chairman—— 

Mr. O’CARROLL. And we would like to be in all 50 states, is 

what we would like to do. 


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Mr. BECERRA. Thanks, Chairman. 

Chairman JOHNSON. Thank you. Mr. Griffin, you are recognized. 

Mr. GRIFFIN. Thank you, Mr. Chairman. I want to talk a little 

bit about this 99 percent accuracy, 1 percent inaccurate payment 

of overpayments and underpayments. You hear that general talking point or that factoid, whatever you want to call it, and you 

think, well, hey, everything is cool. It sounds like it is all great. 

But correct me if I am wrong, Mr. O’Carroll. Until we learned 

about the folks that you showed upon the screen, we thought those 

were legitimate, correct? 

Mr. O’CARROLL. Correct. 

Mr. GRIFFIN. So how can anyone tell me what they don’t know? 

I mean the people that we saw on the screen were part of your accuracy. Sure, you can guess. You can estimate. But you have no 

idea what you don’t know. That is the nature of fraud. If you knew 

what the fraud was, the next question would be, ‘‘Why are we allowing it to happen?’’ 

So, the idea that we can sit here and say, ‘‘Well, it is only one 

percent,’’ you have no idea what it is, it could be 5 percent, it could 

be 10 percent, unless you have got a crystal ball that I am not familiar with. So, I know that makes for a good sound bite to say, 

well, it was only one percent, you know, let’s go to the House. 

But it is just not true. You don’t know. You don’t know. I don’t 

know. And I am sure you would say, if you had more money, you 

would know more. I have never heard a federal agency say they 

need less money, ever. It will never happen, I guess. So, I just want 

to get that point out there. 

I know there is a lot of hard-working people doing a good job. 

And you are a great guy, and I have worked with you on some 

stuff. But I just wanted to clarify that. That really—that entire 

talking point just needs to be erased. I am sure it won’t be. But 

it just makes no sense. 

The second thing I would say is—and I cannot speak for the 

Chairman—he does a great job on his own—but getting to the 

other cases of fraud, West Virginia and New York, and—the Chairman asked about employees. I certainly understand innocent until 

proven guilty in a court of law with regard to these guys’ jet skis, 

and all this nonsense. Gymnast? I mean, you know. 

But when you are talking about employees, civil servants who 

may or may not have been involved—and only you all know the details, you know, there is a lot of stuff you can’t probably talk about 

here—we all know that, in order to fire someone, they do not have 

to be innocent until proven guilty in a court of law applying a beyond-a-reasonable-doubt standard. That is not the standard to fire 

people. 

So, a lot of times, when things are discovered in an agency—IRS, 

for example, elsewhere—people are fired long before the case has 

made its way through the system fully, because you get enough, as 

an employer, to say, ‘‘Hey, this person shouldn’t be working for 

me.’’ 

Now, I understand it takes a whole lot of bad action in the Federal Government under the civil service rules to get rid of somebody. I mean I have worked in those agencies, and sometimes you 


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think, short of a murder, we just got to move them around to some 

other desk, right? I mean let’s all—we are all laughing, because we 

know it is true. If there are people identified as potentially bad actors, what do we do with them? We don’t have to wait for courts 

to act to take action on that. I will wait on an answer on that. 

One more thing I want to mention. And, you know, there is always a danger with anecdotal evidence. But anecdotal evidence is 

important for Members of Congress, because we go back home and 

we hear stories, right? And I can tell you. I don’t know if the rules 

that we have that a lot of people comply with make it easy to commit fraud, I don’t know exactly. But I could tell you that almost 

every time I go home—and I am thinking right now about the 

Christmas holidays. 

There is a guy that I know, and I have talked with some folks 

about him, and he is a former professional. He rides a motorcycle, 

he is very active, he does all sorts of things. And he is on full disability, Social Security disability. And I don’t think it is fraud like 

this. I think he went right through the system. And I think they 

said, ‘‘You know what? There is nothing in the world that you can 

do. You must just get a check. Now go ride your motorcycle.’’ You 

know, there is a lot of that that goes on. And I know that is not 

in your 1 percent, 99 percent calculus. 

So, I am out of time. But, Mr. O’Carroll, if you could, just speak 

to the issue of employees that might need to be fired, even though 

they are not guilty in a court of law. 

Mr. O’CARROLL. Mr. Griffin, I will try to get both of them, real 

quick. 

First one, on the employees one, it is—you—just as this thing— 

you know, it is important when an SSA employee goes bad, we 

watch very closely on it. I must tell you. I get a report every day 

about every one of our employee investigations that we are having. 

And amongst them, kind of along your lines, I have two columns. 

I have—one column is what has happened to that employee now, 

meaning are they still working at SSA or are they, you know, on— 

if they are not at SSA, are they on leave with pay, or are they on 

leave without pay? And what we try to do is put them immediately 

on leave without pay while we are doing any of their criminal activities. Sometimes we will leave them in place, because that is the 

only way we are going to be able to catch any co-conspirators on 

it. 

But I must assure you. First and foremost of all of our priorities 

is employee fraud. And I must say that it is a small percentage, 

as we talked before. But any percentage, when you are talking 

about fraud, is unacceptable. 

And on the other one, for the person who is riding the motorcycle 

and looking very healthy, that is the reason why we have the CDI 

units, that is why we bring the videos in, to show you that we go 

out when there is a suspicion like that and do it. We get 140,000 

allegations a year in our hotline, and we try to run out as many 

as we can. 

Chairman JOHNSON. Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman, and I want to thank 

all of the witnesses with their testimony. 


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You know, when I got here this morning and I heard the Chairman’s opening remarks, you know, I agree 100 percent. He used 

words ‘‘shocking,’’ ‘‘outrageous.’’ And when I heard the Ranking 

Member’s remarks, I almost thought, well, there is no problem. We 

ought to just go leave and—it is the bad guys, those bad guys out 

there. 

And, the truth of it is, there are bad guys. And we do have a lot 

of good employees. The issue, though, isn’t just the bad guys, because there are always going to be bad guys, and we are always 

going to have to deal with bad people. The issue, really, is what 

are we doing to make sure we protect taxpayer dollars? 

You know, when I was mayor of my community, I didn’t start 

every Monday morning meeting by saying, ‘‘We got bad guys out 

there, we better be careful.’’ What I started out every meeting was, 

‘‘The number one goal of every one of us in this Administration is 

to make sure we protect the taxpayers’ dollars.’’ So, when I go 

home, I have to listen to my constituents who aren’t going to say, 

‘‘You guys are okay, it’s the bad guys.’’ They are going to say, 

‘‘What are you doing to fix the problem?’’ 

So, when you hear some of these fraud cases, and you see some 

of the pictures, yes, there are bad guys out there. But the question 

is, what are we doing to fix the problem? So I am going to go back 

to I know one question that the Chairman asked. I have got a couple as follow-ups. 

You know, we have some issues. And, of course, there are some 

employees who were involved, because somebody approved a disability payment. So, at that point in time—and I am not saying 

that was fraudulent, I am not saying it was wrong. But somebody 

had to approve a bad payment. So there is an employee somewhere 

that was involved. I am not saying that is a bad employee; that 

could be a good employee. The question is, do we review our staff? 

And have we made any changes in staff since Puerto Rico or, now, 

with New York? Any changes in staff because of these fraudulent 

activities? Yes or no? 

Ms. COLVIN. I am going to let Bea speak specifically to New 

York. But I don’t see a reason to change our staff. There is nothing 

that has come to my attention that suggests that our staff has done 

anything wrong. 

Mr. RENACCI. I am not saying they did. 

Ms. COLVIN. Remember that the cases were identified by our 

staff. The medical information was fabricated, so there is no way 

that staff would have known that it was not—— 

Mr. RENACCI. Okay, let’s move past that. Let’s hold on. Any 

changes in policy, then? Let’s move—we have great staff. Let’s—— 

Ms. COLVIN. All right. 

Mr. RENACCI. We’ve got that one. Now, any changes in policy? 

Ms. COLVIN. We are looking at a number of policy areas. We are 

working with the Institute of Medicine to—— 

Mr. RENACCI. How long ago was the Puerto Rico issue? 

Ms. COLVIN. How many? 

Ms. DISMAN. The Puerto Rico issue was investigated over a period of years. And it actually came to fruition, as you know, in August of this past year. 


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Mr. RENACCI. Okay. Any changes in policy since August, because of the Puerto Rico incident? 

Ms. DISMAN. Well, there has been a number of initiatives. As 

we looked at Puerto Rico, over the years—— 

Mr. RENACCI. Any changes in policy—— 

Ms. DISMAN. Well, I am going to tell you. There has been—our 

policy staff has been in touch with the Administrative Conference 

of the United States, and the Institute of Medicine—— 

Mr. RENACCI. You are not answering the question. 

Ms. COLVIN. Mr. Renacci, we have to have data and research 

to make—— 

Mr. RENACCI. I am just asking a simple yes-or-no question. 

Have there been any changes in policies? 

Ms. COLVIN. You don’t make changes that quickly. 

Mr. RENACCI. Okay. 

Ms. COLVIN. You have to have time to—— 

Mr. RENACCI. All right. We will move to the next one. Any 

changes in procedures? 

Mr. BECERRA. You have to let them answer. 

Mr. RENACCI. I am asking yes or no questions. I am trying to 

move on. I have five minutes. 

Mr. BECERRA. They are answering—— 

Mr. RENACCI. Any changes in procedures? 

Ms. COLVIN. I am sorry. If you are looking for yes-or-no questions—answers, I can’t give them to you. 

Mr. RENACCI. You can’t answer whether there has been any 

changes in policies and procedures, or—since the Puerto Rico issue? 

Ms. COLVIN. [No response.] 

Mr. RENACCI. All right. Let me give you a policy, then, and just 

see what your thoughts are on it. Because, clearly, we are not getting anywhere. 

And I got to tell you. The people back in my district, they are 

concerned about this. They are concerned and they want to see action, that is why I am saying, I am not saying this is bad people, 

and I am not saying we are bad employees. I think you probably 

have a lot of great employees. And I think you are working as hard 

as you can. But I do think we have to move when we have dollars 

being lost, taxpayer dollars. 

You know, the Medicare program, doctors convicted of defrauding 

Medicare are banned from serving Medicare beneficiaries. Can you 

tell me if doctors that are kicked out of the Medicare program for 

previous fraud convictions are allowed to give medical advice in 

these situations, and are we accepting medical advice? 

Ms. COLVIN. They are not. We have a list of doctors that have 

been barred, and we check against that now. For information that 

is coming in from individual providers, we are not able to determine that. But for anyone that we hire or engage, they are not allowed to do that. 

Mr. RENACCI. Well, that is good. That is—— 

Ms. COLVIN. And the local states and governments are very 

careful in checking those people who have been disbarred, if their 

attorneys have lost their medical license or been disciplined. 

Mr. RENACCI. Well, I just ran—— 


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Ms. DISMAN. If I could add to that, all the DDSs have professional relations people whose job it is to look at the licensing, and 

to also be alert to all of this. So they basically take them off any 

consultative panels and the medical evidence. 

Mr. RENACCI. I am out of time. But I know that I heard Mr. 

O’Carroll say that there are additional cases coming down the line. 

I would just ask you one thing, if you could get to my office. I 

would like to hear what policies and procedures you are going to 

change and have changed, hopefully within the next three to six 

months. I would like to hear some of those things and get some 

ideas. Policies and procedures, that is all I am asking for. 

Ms. COLVIN. We would be very happy to do that. That is why 

I said it couldn’t be a yes-or-no answer, but there are a number of 

things in the works that I would be very happy to discuss. 

We are also looking at more data and analytics, so that we can 

look at the patterns. Because we knew these individual cases would 

not stand up alone, but when you see the pattern, the language 

pattern or whatever, and that is why the CDI units have been so 

effective, because we are able to work together and see those patterns. 

Mr. RENACCI. Thank you. 

Chairman JOHNSON. Thank you for your comments. Mr. Rangel, you are recognized. 

Mr. RANGEL. Thank you, Mr. Chairman. And let me thank you 

for—I really came down to congratulate you for this fantastic investigation. I had hoped that—an example of these terrible frauds that 

are being committed at the expense of men and women that put 

up their lives every day, and probably find it more difficult to get 

the type of assistance they need. 

The tone of the questions, I hope you understand, is because we 

do have a Democratic president, and sometimes anything that is 

done by the Administration is not appreciated. But in this particular case, I think, more than just the fact that you have indicted 

100 people, you have sent a message to every policeman, every fireman, that the government does not intend to allow these things to 

happen. 

My question would be, did this information—was it received by 

the southern district of New York, United States Attorney’s office, 

before it was turned over to District Attorney Vance? 

Mr. O’CARROLL. Yes. What happened in the early stages of this 

investigation was our investigators went to the southern district in 

New York and presented on it. And, in fact, I will have—let Mr. 

Ryan here, who—our agent in charge, he can kind of walk you 

through the two approaches, or the several attempts that we did, 

or several discussions that we had with southern district. 

Mr. RANGEL. Well, before we get involved in that, did they reject the evidence that was given to them as—whether or not they 

would prosecute? 

Mr. O’CARROLL. Yes. Early on in 2009, December of 2009, the 

case coordinators went over to the southern district of New York. 

Mr. RANGEL. And then you presented it to the—— 

Mr. O’CARROLL. We presented it. They initially accepted it. 

Nine months later, we went back. Nine months later—I believe it 

was in September of 2010 we went back to them, explained what 


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happened in that 9-month period. They decided at that point in 

time to decline the investigation, because they needed additional 

evidence to prove more than making false statements. 

Mr. RANGEL. Okay. I can’t think of a program that has done 

more to take people out of poverty and to bring a sense of self-esteem and make such a tremendous contribution to our great nation 

than Social Security. 

You did turn it over to one of the greatest district attorney’s offices that we have in the country. But as a former assistant U.S. 

Attorney it bothers me that, with the type of evidence that you presented to the New York County DA, that the U.S. Attorney’s office 

did not see fit to follow through on this. 

In any event, I want to personally thank Ms. Disman for the cooperation that you have given with the difficult cases I have had 

in my congressional district. And I want to thank all of you for recognizing that it is rough being on that side of the table. But when 

you know that you are right, when you know that you have done 

the right thing, when you know that you have made a contribution 

to stop corruption, and when you can see 100 people have been indicted, I think this should serve as an example for all of our federal 

agencies and Department as to what can happen when the frontline troops are looking for this. 

No U.S. Attorney’s office, no district attorney’s office can prosecute anything unless the evidence is presented to them in a way 

that is probable cause that they did violate the law. So I want you 

to know that it is appreciated. But these things happen politically, 

and all of you are mature enough to understand it. I do. And thank 

you so much for coming before this Subcommittee. 

And thank you so much, Mr. Chairman, for having this very interesting hearing. 

Chairman JOHNSON. Thank you. Mr. Kelly, you are recognized. 

Mr. KELLY. Thank you, Chairman. First of all, I appreciate you 

all being here. And, as you know, Mr. Renacci was talking about, 

you know, when I go back home—and it doesn’t matter where I 

go—people come up to me and say, ‘‘You know what? We know this 

is going on. And why aren’t you guys doing something about it?’’ 

They don’t say to me, ‘‘Listen, you need to get with the SSA people 

and find out who is not doing a good job.’’ They say, ‘‘You need to 

do something about this.’’ 

And all of us in this room today, both you testifying and us up 

here, we all work for the American people. You don’t work for SSA 

and I don’t work for the Republican Party. In fact, this is not a Republican or Democrat issue, this is an American issue. Because, as 

you know—and, Ms. Colvin, you can probably state it better than 

anybody else—how is Social Security funded? 

Ms. COLVIN. Taxpayer dollars. We are funded through—— 

Mr. KELLY. Wage taxes. 

Ms. COLVIN [continuing]. FICA taxes. 

Mr. KELLY. Yes, wage taxes. 

Ms. COLVIN. Absolutely. 

Mr. KELLY. Wage taxes are paid by people who are working, 

and their employer: 6.2 percent from the employer, 6.2 percent 

from the associate. There is 12.4 percent of everybody’s payroll 

going into a fund to take care of Social Security recipients. So when 


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we talk about these things, it really isn’t Republican versus Democrat, us versus you, it is about us, as a group, representing the 

American people. They sent us here to do a job. Our job in Congress is oversight, investigate and expose when we think there is 

something wrong. 

Ms. Colvin, I was looking at your bio. You have an incredible bio. 

And if you don’t mind, I am just going to go through it, because 

I don’t know if people understand everything that you do. Now, 

this is since 1995. You are a Regional Commission. You have direct 

authority over Social Security Administrations in New York, New 

Jersey, Puerto Rico—— 

Ms. COLVIN. Ms. Disman. 

Mr. KELLY. Ms. Disman. But this is all in your region, right? 

Ms. COLVIN. I am the Acting Commissioner for the entire country. 

Mr. KELLY. Okay. 

Ms. COLVIN. Ms. Disman—— 

Mr. KELLY. Ms. Disman. 

Ms. COLVIN [continuing]. Has the New York Region. 

Mr. KELLY. Okay, I am sorry. Ms. Disman, right. You are doing 

all of these different things. 

In addition to that—now, that is an administrative budget of 

about $400 million. You have 3,900 employees, 113 field offices, 4 

teleservice centers, 4 Social Security card centers, the northeast 

program service center, and the regional office administrative staff. 

Throughout the region, more than 7 million beneficiaries receive 

more than $88 billion—that is billion—in Social Security and supplemental Social Security income benefits, annually. 

Now, you are also—you were asked by the Commissioner of the 

Social Security to chair the Agency’s Medicare planning and implementation task force. Right? You are responsible for implementing 

the responsibilities given to Social Security in the Medicare Modernization Act of 2003, the Medicare Improvement Acts—for Patients and Providers Act of 2008, and the Affordable Care Act of 

2010. 

I am looking at all the different hats you wear. Right now—and 

correct me if I am wrong on this, because I don’t know how you 

do these things—the reason you are here today is about this crime 

ring in New York. All right? You were here before because of Puerto Rico. But you are also the executive in charge of implementing 

the Affordable Care Act on behalf of the Social Security Administration. I understand that Social Security Administration must confirm the Social Security number of everyone who signs up for 

Obamacare. 

So, as you come here today, is your concern—has to be split. Of 

all these different things—really? You can do all these things? You 

are amazing. 

Ms. COLVIN. Excellent staff. 

Mr. KELLY. You are amazing. 

Ms. DISMAN. I also—it is more than just me. I have to credit 

it with all the employees that work for me, my executive team, and 

certainly all my years of analytical and experience, institutional 

knowledge. 


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Mr. KELLY. Okay, all right. How many people we talking about 

getting Social Security numbers for, verifying? 

Ms. DISMAN. Well, we are talking about—are you talking about 

for the Affordable Care Act? 

Mr. KELLY. Yes, ma’am. 

Ms. DISMAN. Well, for the Affordable Care Act at this point in 

time, we wait for the CMS hub to send us—— 

Mr. KELLY. Just ballpark it. I am not—listen, this is not a 

gotcha, I am just trying to figure out how many people you are trying—— 

Ms. DISMAN. Yes. We are basically over 30 million right now. 

Mr. KELLY. Thirty million? 

Ms. DISMAN. Right. 

Mr. KELLY. Okay. And you have all this fraud going on, too. 

Ms. DISMAN. Well, this situation has not—has nothing to 

do—— 

Mr. KELLY. You are a remarkable lady, then, for what you are 

doing. A remarkable person—I will take the gender specificity out 

of it. You are a remarkable person to be able to do all of this. 

Ms. Colvin, you said that you are underfunded, as an agency. 

Ms. COLVIN. That is correct. 

Mr. KELLY. Okay. How do you define ‘‘underfunded’’? What do 

you base that on? 

Ms. COLVIN. We are able to identify in our budget what we can 

do with the amount of dollars that you give us. 

Mr. KELLY. Okay. 

Ms. COLVIN. As a result of—— 

Mr. KELLY. If I were to give you, from the United States taxpayers, $11.5 billion, would that be considered a sizeable amount? 

Ms. COLVIN. Our budget is—— 

Mr. KELLY. No, no. Is that a sizeable amount? Because, you 

know, as Mr. Griffin said, there is never enough money for any of 

the agencies. Do you know this year it is $11.5 billion, and we are 

underfunding you? 

Ms. COLVIN. Well, if you give us—— 

Mr. KELLY. And not ‘‘we.’’ I am talking about American taxpayers. 

Ms. COLVIN. If we receive the 2014 budget, we will certainly be 

able to—— 

Mr. KELLY. Okay, all right. All right. 

Ms. COLVIN [continuing]. Focus on that program—— 

Mr. KELLY. No, I just wanted to make sure that we are talking 

the right way here, because sometimes we get confused about who 

we are actually working for. I work for the people of America, that 

is who I work for. Taxpayers is who I work for. I got to tell you. 

What you are doing is fine. The work is noble. I am not criticizing 

your work. And I know that the number is absolutely incredible, 

the overpayments. 

Now, Mr. Becerra said it is only a half-a-percent. 

Ms. COLVIN. Well, as we said—— 

Mr. KELLY. A half-a-percent is—well, wait a minute, wait—is 

$1.29 billion. Let’s not minimize it by saying it is a half-percent. 

You know the debt owed from these overpayments has gone from 


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$5.4 billion in 2010 to $6.1 billion in 2012? So I don’t want to identify it as ‘‘only a half-a-percent.’’ 

These are huge dollars. And what I don’t want to do, I don’t want 

to minimize what we are talking about by reducing it down to a 

percentage. A percentage, a small percentage of a very large number is a very large number to the people I represent in Western 

Pennsylvania. These are hard-working American taxpayers that 

are funding Social Security. They are putting 6.2 percent of every 

time they get paid, and their employer is matching it. This is not 

government money. This is taxpayer money. 

And I really get aggravated. I have only been here for three 

years. This is not Republicans versus Democrats. This is Republicans and Democrats working together to serve the American people. I get so damn mad when it becomes political, but this is not 

a political issue. This is an issue we are defrauding the American 

people. We are not defrauding Social Security. And we better start 

to understand who we represent here. I did not get elected by all 

Republicans or all Democrats. 

But, damn it, I will tell you what. I watch this—this is not a criticism of you. We have raised a group of people that look at a program and say, ‘‘I think I can game this. I think I can crawl under 

the wire here. I think I can do this and take advantage of the government.’’ No, no, no, no, no. You took advantage of every woman 

and man who gets out of bed in the morning, puts their feet on the 

floor, and goes to a job, and every time they get paid, contributes 

6.2 percent of their paycheck, matched by their employer 6.2 percent, to fund this. And if we think it is about defrauding the government, we are really way off the line on this. We better wake up 

and smell the coffee. No wonder the American people have such a 

low opinion of us. We are not protecting them. 

I don’t want you to take the blame for anything. Listen. You 

have a much higher approval rating than I do. But you know what? 

I get blamed for anything that happens in this government, because we didn’t step up to do it. So the purpose of us being here 

isn’t to go after you, it is to make sure that we protect the integrity 

of this system for the American taxpayers. 

Listen, I thank you all for being here. Mr. O’Carroll, I know you 

have a great, great tour of duty. All you, I thank you for what you 

do. It is not about you. It never will be about you. It is about us, 

working with you, to get to where we need to be. I just have a hard 

time, Ms. Colvin, when I look at $11.5 billion and think, my God, 

we are underfunding? That is a lot of money. 

Chairman JOHNSON. The time of the gentleman has expired. 

Thank you. 

Mr. KELLY. I have expired. 

[Laughter.] 

Mr. KELLY. Thank you, Chairman. Thanks for bringing it up. 

Chairman JOHNSON. Yes, sir. Thank you for your comments. 

Mr. Tiberi. 

Mr. TIBERI. Do I have to go next? 

[Laughter.] 

Mr. TIBERI. Wow. 

Chairman JOHNSON. Only if you will talk for five minutes. 


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Mr. TIBERI. Well, thank you all. I think Mr. Kelly’s tone expresses the frustration that we have, and it is not personal and it 

is not political. It is a frustration that we hear from our constituents. And I know, particularly the three of you that work for Social 

Security, share this concern that I am going to raise, and that is 

any time there is fraud, it hurts the integrity of the program. It 

hurts the integrity of the truly disabled. The whole program gets 

a black eye. 

And I would say that—to Mr. Griffin’s point, when I go back 

home, there is not a whole lot of confidence in the program when 

they read stories like the New York story, because they don’t think 

that is the one percent. They think it is the one that got caught. 

And so, while Mr. Rangel is correct—thank you for helping identify 

this—a constituent of mine might ask Mr. Ryan, ‘‘Well, it is great 

that you caught it, but why did it take 20 years to catch?’’ 

Mr. Ryan, is it true that this goes back to 1988? And if that is 

true, what took so long to allow these criminals to operate for 20 

years without getting caught? 

Mr. RYAN. Well, there is a long, drawn-out answer to that. But 

I will try to break it down—— 

Mr. TIBERI. Okay. 

Mr. RYAN [continuing]. In segments. Number one, in 1998 it 

was identified through the diligence of SSA and the DDS in referring individual cases, individual referral, stating either this person 

was an NYPD or FDNY, or they had Lavallee as an attorney. Individual cases. We worked those individual CDI cases, and returned 

it back with our report mechanism, video surveillance, interviews, 

whatever. Went back to DDS. DDS, in 95 percent of the time, denied them at the application stage. 

Subsequent to the application stage, there is the ODAR, which 

is the administrative law judges. Some of those, regardless of what 

was in the file, was placed on the rolls, based on the definitions—— 

Mr. TIBERI. Outrageous. 

Mr. RYAN [continuing]. Of mental disability, based on the medical evidence in that file. 

The second part of the question is that total number was minuscule, and was not detected as a conspiracy, criminal conspiracy 

case, until 2008. And there was a lot of reasons for it. Automation. 

We were able to get in through the diligent efforts of Social Security, into the individual files electronically, and print that data, the 

analytics that Ms. Disman mentioned. We were able to get that, 

and we were able to identify the patterns then—Lavallee, et 

cetera—in this New York case. 

So, it is difficult to go back from 2008 to 1998, but in 2008 we 

went full boat with the investigation. We knew what we had. It 

took us where we wanted to go with the prosecution, and get that 

money back. And it now rests with the Manhattan district attorney’s office to get that money back to the American taxpayers. 

Mr. TIBERI. It does go back to 1988, though, right? With the 

four facilitators? 

Mr. RYAN. There was individual allegations. 

Mr. TIBERI. Okay. Back to 1988. 

Mr. RYAN. 1988. 

Mr. TIBERI. Okay, thank you. 


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Mr. RYAN. And that was before—that was pension fraud. It was 

before when OIG was even in existence, and it was before CDI 

units were created—— 

Mr. TIBERI. And Ronald Reagan was president, so we can blame 

him, too, right? Hey, but no one is trying to blame anybody. The 

point is that this—— 

Mr. CROWLEY. I was in the other hearing room. 

Mr. TIBERI. It was a joke. Ronald Reagan. You weren’t here 

when Mr. Rangel talked about the President. 

So, you know, this is real in American people’s minds. And this 

is great that we caught this. But how much more of this is going 

on? I mean that is a question that people ask me all the time. 

And so, I got a question, Ms. Colvin. Last year your agency conducted 1.6 million continuing disability reviews. 

Ms. COLVIN. Yes. 

Mr. TIBERI. Three-quarters of which were completed through 

self-reported questionnaires, my understanding—— 

Ms. COLVIN. Yes. 

Mr. TIBERI [continuing]. Correct me if I am wrong—called mailers. Were the reviews of these defendants in the New York case, 

were they completed via mailers, or full medical reviews, do you 

know? 

Ms. COLVIN. Which ones? 

Mr. TIBERI. The defendants in this particular case, the New 

York case, with the 100 defendants. 

Ms. DISMAN. Yes, these were not CDRs when they were reported. These were initial claims. But in my just doing some analysis on the 102, looking at it—remember, I can’t look at the files 

right now—— 

Mr. TIBERI. Yes, yes. 

Ms. DISMAN [continuing]. There were a number that had CDRs 

conducted on it. They were medical CDRs. As a matter of fact, we 

used that also as part of the investigation. 

So—but remember one thing. If you worked with your facilitators 

and your coaching, you would have the continuance, based on what 

the medical reports were. 

Mr. TIBERI. Does it—last question, because my time has expired. With respect to these mailers, if you are a criminal and you 

have got this disability benefit illegally, three-quarters of the recipients are getting mailers. How many—it doesn’t give me much 

comfort that if you are a criminal, that you are going to answer a 

mailer honestly. Is that a concern going back to the procedures 

that we have talked about earlier that might be under review because of this? Because why would a criminal answer a mailer? 

Ms. DISMAN. If I could just address the mailing system, because 

I was involved in disability, helping years ago. It is a profiling system. And that is to be smart with the budget that Congressman 

Kelly says, that you really want to identify those that are more 

likely to have medical improvement, and more likely to change. 

So, in doing the mailers, those are the high-risk people that are 

identified through a system, through analytics. And a number of 

the mailers are also reviewed and become medical CDRs, as well. 

Mr. TIBERI. Okay. I look forward to those procedures that Mr. 

Renacci talked about. I yield back. 


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Chairman JOHNSON. Thank you. I am not sure that answer answered your question. 

Mr. Crowley, you are recognized. 

Mr. CROWLEY. Thank you, Mr. Chairman. I apologize I was not 

here for Mr. Rangel’s statement, nor did I get the joke. Apparently, 

no one else got the joke, either. So I apologize, Mr. Tiberi, for that. 

Thank you, Mr. Chairman. I have tremendous respect for you, 

and so I do appreciate your holding this hearing today. We all 

know that we are people who will always try to—there are always 

people who will try to game the system in all walks of life. We see 

it throughout—it is throughout our society. What we need to do as 

policy-makers is to hamper their abilities to corrupt the system by 

putting into place systems to detect, catch, and bring those who 

violate the law to justice. 

From the standpoint of that test, what we are looking at today 

is proof positive that we have put in place those resources, both 

technical and human, to weed out, detect, apprehend people trying 

to defraud the Social Security disability program. We should commend the actions of the Social Security Administration. 

This hearing has been turned upside down on its head. This 

panel before us should be lauded for the work that they have done 

to uncover the fraud and corruption, and for bringing these cases 

to light. We here in Congress must also ensure our actions do not 

hinder their ability to continue these anti-fraud programs. 

Listened very closely to the chairman’s opening statement. I akin 

it to blaming the homeowner when their house is broken into. The 

homeowner, in this case, cried foul, got the cops on the beat, and 

brought those who invaded their home to justice. And we ought to 

be lauding that. 

I also want to laud the fact—in reference to the 1988 number, 

those cases, as I understand it, Mr. Ryan, go back to 1988 because 

they involved New York NYPD pension fraud. Is that not correct? 

Mr. RYAN. You are correct. 

Mr. CROWLEY. In essence, people who are police officers—my 

dad was a police officer, my grandfather before him—individuals 

who are on the job, and then apply for what is known as threequarter pay, is that correct, for disability? 

Mr. RYAN. That is correct, three-quarters. 

Mr. CROWLEY. And they get that in perpetuity, isn’t that correct? 

Mr. RYAN. Correct. 

Mr. CROWLEY. And these are individuals who actually could 

work that you have helped to uncover. That not only saves the Social Security Administration dollars, but helps to save in conjunction with Mr. Vance’s work, the district attorney of Manhattan, his 

work, millions and millions of dollars in New York City’s pensions. 

Is that correct? 

Mr. RYAN. That is correct. 

Mr. CROWLEY. I thank you, once again, for that work, as well. 

Let me be clear. The people accused of perpetrating fraud on the 

American public under the guise of the worst terror attacks in 

American history are an outlier among the brave first responders 

in New York City. I come from a family of both police and firefighters, so I defend the reputation of both those departments and 


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the men and women who serve in those departments, and do not 

defend in any way, shape, or form those outliers who would abuse 

the system. 

But there are far too many brave firefighters and police officers 

who are suffering today from real illnesses and real disabilities as 

a result of their service on what was known as The Pile, cleaning 

up Ground Zero after the horrific attack upon our nation. Let’s remember it was the Federal Government that declared the air at 

Ground Zero safe and toxic free. But that wasn’t the case. And the 

air and the elements that they were working in were not safe. Yet 

we allowed thousands of first responders to search without the 

proper protective gear for the remains of almost 3,000 victims. We 

did so to bring some relief and closure to those victims’ families. 

We allowed thousands to work without protective gear to extinguish the fire, a fire, by the way, that burned for three months 

after the attack. We allowed those first responders to run into 

harm’s way when the rest of us ran away. As a result, many of 

these heroes suffered and continue to suffer the after-effects of this 

service. These men and women are legitimate recipients of a federal Social Security disability insurance program, and we should 

not and cannot let the few human nature, the few, to ruin a necessary program for the many. 

One of my proudest moments in Congress came when, under a 

Democratic majority, we passed the 9/11 First Responders Health 

Act. It came after years of obstruction and partisan delays, delays 

that never should have occurred. 

So, let me be clear. If any Member of Congress tries to use the 

fraudulent activities to taint the sick and wounded first responders 

of 9/11, they will have to deal with me directly. Congress has oversight and responsibilities and obligations. But we also have to 

make sure we don’t actually hamper the ability of federal investigators to do their job of fraud detection. Some in Congress have tried 

to cut off the very federal resources that stop fraud through budget 

cuts, furloughs, and downsizing, taking the very cops off the beat 

who are looking out for fraud and abuse in these programs. Ultimately, this lack of resources encourages more, and not less, fraud. 

Thank you all again, each of you, for being here today. And, Mr. 

Chairman, thank you for holding the hearing. I do appreciate it. 

But I don’t appreciate the tone of turning it upside its head and 

blaming the victims in this case for the work that they did to uncover this fraud and this abuse. There is always more to be done. 

I have news. There will be fraud for the rest of the existence of 

the United States and the world, as long as human beings exist on 

this planet. We are an inherently flawed people, and we have to 

get used to that. Let’s get beyond this. 

Let’s find—if we have—if there is an agenda of amendments that 

can reduce fraud and abuse, I ask the Majority to hold a hearing 

on your proposals. Bring them forward. If there is a way we can 

mitigate and stop waste, fraud, and abuse in this system, I am all 

for it. And, Mr. Chairman, I await your agenda, and let me know 

when the meeting notice will be. I will be here with bells on. I yield 

back the balance of my time. 

Chairman JOHNSON. Thank you. Ms. Black, you are recognized. 


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Ms. BLACK. Thank you, Mr. Chairman. And, Mr. Chairman, 

thank you for allowing me to sit in on this Committee, although 

I am not a member of this hearing. 

However, I was a member of the Subcommittee for the first two 

years that I was here. And this issue has become one that I have 

delved into pretty deeply. And I have also, as a result of that, spent 

time when I was back in my district going through the entire system, from my local office to the determination unit to meeting with 

the ALJ’s and also meeting with those who are on the Social Security Advisory Board. So, this is an issue that I feel like I have really spent a lot of time in trying to understand. 

As Mr. Renacci has said, how do we fix the problem? I thank you 

all for what you do. It is not an easy place to be. And, having gone 

through the entire system, I know that the determinations are not 

easy to make. There are a lot of things that we can fix, however, 

and I want to go to one of those. 

Mr. O’Carroll, more than half of the defendants in the New York 

case faked mental disabilities. Is that correct? 

Mr. O’CARROLL. Yes, Ms. Black, that is correct. 

Ms. BLACK. Okay. And then, following up on that, I am also 

looking back at the defendants in the Puerto Rico case—also faked 

mental disabilities. Is that correct? 

Mr. O’CARROLL. Yes. 

Ms. BLACK. Okay. Would you say that mental disabilities are 

easier to fake than other conditions? 

Mr. O’CARROLL. Yes. And the reason for it is, is that it is so 

subjective. As you well know, from being in the medical community, there aren’t x-rays that will determine it, there aren’t CAT 

Scans that do it. There is no test. So it is pretty much you are relying on the voracity of the patient, and then you are relying on the 

voracity of the doctor. And that is where our problem in Puerto 

Rico and New York was, is that they—it was collusion. 

Ms. BLACK. Okay. And so, let’s go just another step further, because we have discussed this in hearings previously, that the criteria for awarding these benefits or medical disabilities or mental 

illnesses has not been updated. The last update was 1985. 

So, if we talk about how do we fix the problem so that we have 

better tools—not necessarily more money, but just better tools, Ms. 

Colvin, can you help me with why we haven’t updated this? Is 

there a plan to update it? Are we working on that? Because this 

is 30 years now since it has been updated. 

Ms. COLVIN. That is an excellent question. Yes, we are. We are 

working with the Institute of Medicine, and they are reviewing 

more objective instruments that might be out there to test—— 

Ms. BLACK. When do you expect something from this? I mean, 

again, 30 years’ worth, I think I would like to have some kind of 

idea about what the plan is. You know, give us the timeline of 

when you would expect that there is going to be an actual update 

of looking at mental illnesses. 

Ms. COLVIN. We have just given the task order to the Institute 

of Medicine, so I don’t have a date of when we will get their report. 

I will be very happy, once I talk with staff, to see what the timeline 

is there. 


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But we also have been updating our medical listings. As you 

know, many of them had not been updated for many years. We 

have gotten—— 

Ms. BLACK. You mean the grid? Are you talking about the grid? 

Ms. COLVIN. No, no, the listings, the medical listings that we 

use—— 

Ms. BLACK. Oh, the listings, okay. 

Ms. COLVIN. And, in fact, I think right now we have updated 

10 of 15. The others are in the process of being updated. Our goal 

is to have all of them updated and then have them reviewed every 

three years. 

Ms. BLACK. Okay. I am sorry, I am going to reclaim my time, 

because I don’t have very much time and I want to get to a couple 

of other things—but this updating is something that I have seen 

continuously throughout all of the departments that I have walked 

through. We have not updated this, and we can’t wait for the medical community to say, ‘‘Oh, we got to do another five years of research.’’ I want to hear a plan of getting this done and getting it 

through. 

Grids are another thing. And looking at updating what currently 

jobs are available, we haven’t updated that in years. So my own 

disability determination unit tells me that their hands are tied because there is not even computer skills that are out there now to 

say that you can be retooled to work with a computer skill if your 

knees are gone, or something where you have to have a job where 

you are sitting, that has not even been done. And it has been suggested for over 15 years now, so that one needs to happen, as well. 

So, when we talk about what can we do to fix the problem, there 

are tools out there that would help you to be able to do a better 

job, so that perhaps people wouldn’t get on disability that don’t 

need to be on disability. And that is what I want to hear back from 

you all, is when that is going to happen. 

Now, I want to go to Mr. O’Carroll again about using the Internet. So, Mr. O’Carroll, your agents were able to determine many 

of the defendants were working. And how were you able to do that? 

Did you use any of these more up-to-date kinds of tools that you 

could possibly use? 

Mr. O’CARROLL. Yes. We have been using social media. In fact, 

that was some of the video that we showed at the beginning on it. 

Normally, what we do with our CDI units is, as soon as we get an 

allegation that somebody is riding a motorcycle or doing something 

that is outside of the normal way they portrayed their disability, 

first thing we do is we start taking a look at probably public service type—not public—public information, taking a look at licenses, 

see that type of information on it. 

Next step that we go to is we go to social media. And, often 

times, these people that are claiming that they can’t go out in public, that they are afraid of crowds and things like that, will show 

on their social media that they are, you know, leading tours 

through rock concerts and things like that. 

Ms. BLACK. Certainly. So—— 

Mr. O’CARROLL. So we use that, and we think it is a very good 

lead, and it is something that should be considered when people 

make an application. 


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Ms. BLACK. So, if I could just complete this, Mr. Chairman—I 

know my time has run out, but going back to the decision-makers, 

I understand the decision-makers are prohibited from using these 

kinds of resources. Is that correct, Ms. Colvin? 

Ms. COLVIN. That is correct. 

Ms. BLACK. And is there a reason for that? 

Ms. COLVIN. Well, there are a number of reasons for it. We believe that using those media, one, it opens up to having PII data 

exposed. We also believe that it is an appropriate thing for the investigators to use, not for the adjudicators to use. 

Ms. BLACK. Well, I am going to suggest it is another tool. When 

we say how can we fix this problem to give those who are the decision-makers as much information as they possibly can, why not use 

things that are right at their fingertips, to be sure that they are 

getting all of the information, as well-rounded a picture as they 

can? 

And I will tell you that the disability determination unit told me 

they would like to have the ability to be able to use things at their 

fingertips, but they are prohibited from doing so. I think this is 

something we should look into as a subcommittee, in giving them 

the opportunity, and maybe the ability to be able to use those. 

Thank you again, Mr. Chairman, for allowing me to sit on this 

Committee, and I yield back. 

Chairman JOHNSON. Thank you, Ms. Black. And I want to 

thank our witnesses for your testimony today, and thank the Members that were here and are still here. And I, along with my colleagues, are beyond outraged at this, and for good reason. So it is 

up to you, Commissioner, or Acting Commissioner—I will call you 

Commissioner—to take the actions you need to restore Americans’ 

trust. 

And, with that, I thank you all for being here. The committee 

stands adjourned. 

[Whereupon, at 10:34 a.m., the subcommittee was adjourned.] 

[Questions for the record follow:] 


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[Submissions for the record follow:] 


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Letter of Elsibeth Brandee McCoy 


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Statement of Larry Butler 


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Statement of Michael Gilbert 


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Letter of Veronica Mayer 

Æ 


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