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89–581 2016

SOCIAL SECURITY DISABILITY FRAUD 

CONSPIRACY IN PUERTO RICO 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 19, 2013 

Serial No. 113–SS8 

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 September 19, 2013 announcing the hearing .................................... 2 

WITNESSES 

The Honorable Patrick P. O’Carroll Jr., Inspector General, accompanied by 

the Honorable Paul C. Lillios, Associate Chief Administrative Law Judge, 

Social Security Administration ........................................................................... 8 

Beatrice M. Disman, Regional Commissioner, New York Region, Social Security Administration, New York, New York ........................................................ 17 

QUESTIONS FOR THE RECORD 

The Honorable Sam Johnson .................................................................................. 48 


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SOCIAL SECURITY DISABILITY FRAUD 

CONSPIRACY IN PUERTO RICO 

THURSDAY, SEPTEMBER 19, 2013 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON SOCIAL SECURITY, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2:30 p.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 

FROM THE COMMITTEE ON WAYS AND MEANS 

Chairman Johnson Announces Hearing on Social 

Security Disability Fraud Conspiracy in Puerto 

Rico 

Washington, Sep 2013 

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 

the Social Security Disability Insurance fraud conspiracy in Puerto Rico. The hearing will take place on Thursday, September 19, 2013, in B–318 Rayburn 

House Office Building beginning at 2:30 p.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 August 21, 2013, the United States Attorney for the District of Puerto Rico 

announced that a Federal Grand Jury in the District of Puerto Rico issued over 70 

indictments charging three doctors, one non-attorney representative (a former Social 

Security employee), and 71 Social Security claimants with fraud in the Social Security Disability Insurance (SSDI) program in Puerto Rico. 

Under the alleged scheme, the non-attorney representative would help a claimant 

file an SSDI application and, with the assistance of a conspiring doctor, provide 

fraudulent medical evidence that would result in benefits for individuals who did 

not, in fact, meet the legal eligibility standard for disability benefits. The representative would collect a fee from the claimant of 25 percent of any past-due benefits 

owed (up to a limit of $6,000). The doctors involved would be paid $150 to $500 by 

the claimant for their submission of false reports to the SSA. 

The multi-year investigation began when disability medical consultants in the 

Puerto Rico Disability Determination Services noticed and reported a suspicious pattern of benefit claims involving nearly identical medical evidence. As a result, the 

SSA and the SSA Office of Inspector General (OIG) conducted an extensive analysis 

of medical source documentation in SSDI files. The SSA OIG was joined in the investigation by the Federal Bureau of Investigation San Juan Office and the Puerto 

Rico Police Department, and included numerous interviews and surveillances. 

As a result of the federal indictments, the SSA was able to immediately suspend 

benefits to the indicted beneficiaries and has initiated internal reviews of over 6,000 

files of beneficiaries that included evidence provided by one or more of the indicted 

physicians or the indicted representative. During the internal review, should the remaining evidence not substantiate the disability finding, benefits will be suspended 

and the beneficiary must submit evidence to substantiate the disability. Should a 

beneficiary be unable to substantiate their disability without additional evidence, 

his or her benefits will be terminated after proper notice and they will be required 

to repay the Social Security Trust Fund for the benefits they improperly received. 

The responsibility for making initial disability determinations is shared by the 

States and the SSA. All 50 States, plus the District of Columbia and Puerto Rico, 

maintain fully federally-funded agencies, known as Disability Determination Services, which decide initial and continuing eligibility for benefits under rules established by the SSA. According to the SSA OIG, approximately 185,000 disabled workers in Puerto Rico and their eligible dependents receive about $2.4 million in SSDI 

benefits each year. 

According to the Congressional Budget Office, 10.9 million beneficiaries received 

$135 billion in SSDI benefits in fiscal year 2012. According to the 2013 Social Security Trustees report, SSDI program revenues will only be able to finance 80 percent 

of benefits beginning in 2016, unless Congress acts. 


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In announcing the hearing, Social Security Subcommittee Chairman Sam Johnson 

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

raises serious questions about Social Security’s management of the disability program. At a time when the Disability Insurance program will be 

unable to pay full benefits beginning in 2016, it is deeply troubling that Social Security is doling out millions of dollars in fraudulent taxpayer-funded 

payments. Americans deserve answers. On behalf of the American taxpayer, I am committed to getting the answers and rooting out waste, fraud 

and abuse so that we can help keep the program strong for those who truly 

need it.’’ 

FOCUS OF THE HEARING: 

The hearing will examine the investigation in Puerto Rico resulting in the arrest 

and indictment of individuals for Social Security disability fraud, Social Security’s 

oversight of the SSDI program in Puerto Rico, and Social Security’s overall efforts 

to detect, prevent and prosecute fraud. 

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, October 3, 2013. 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://www.waysandmeans.house.gov

f 

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Chairman JOHNSON. The hearing will come to order. 

This is the first subcommittee hearing since the passing of my 

friend and former subcommittee chairman Clay Shaw. We all remember him. Clay was one of the best, a great American, a diplomat, and a joy to work with regardless of your politics. I sat right 

next to Clay as he led the subcommittee during the 106th, 107th 

and 108th Congresses. 

Through his leadership the committee achieved a number of legislative accomplishments for America and its people. Chief among 

them were the Seniors Freedom to Work Act of 1999, which repealed the retirement earnings penalty for individuals who attained their full retirement age; the Ticket to Work and Work Incentives Improvement Act of 1999 to help those receiving disability 

benefits to return to work; and the Social Security Protection Act 

of 2003 to protect vulnerable Social Security recipients from representative payees who misused benefits and other program protections, including withholding benefits from fugitive felons and parole violators. I guess that is similar to what we are going to talk 

about today. 

Chairman Shaw believed in Social Security and worked tirelessly 

to secure its future by authoring legislation to keep the Social Security promise, protect Social Security finances, and enhance Social 

Security benefits for women. 

Clay’s instincts were to be bipartisan if possible and a gentleman 

legislator always. He joined efforts with then-Ways and Means 

Chairman Bill Archer in developing and promoting legislation to 

save Social Security for 75 years and beyond, the Social Security 

Guarantee Plus Act, a bill his Florida constituents and even some 

Democrats found thoughtful and possible. He was one of the earliest Members of Congress to lead the fight to protect Social Security numbers. 

Our hearts go out to Clay’s beloved wife Emilee and his family, 

and I ask that we bow our heads for a moment of silence to honor 

our former Chairman. 

[Moment of silence.] 

Chairman JOHNSON. Thank you. I appreciate that. 

You knew him, too. 

Mr. BECERRA. I did, Mr. Chairman. If I may say a word? 

Chairman JOHNSON. You may. 

Mr. BECERRA. Mr. Chairman, if I may associate myself with 

every single word that you just uttered with regard to our colleague and friend Mr. Shaw. There are people who understand this 

institution and who work hard to try to make it work. Mr. Shaw 

was one of those individuals. He would reach out to his friends, Republican and Democrat alike. 

It is tough when you hear about a colleague who passes on because you think that you never quite grow that old, and you still 

remember those memories, and it is almost as if it was yesterday 

that Clay was here with us. So I join you in remembering a dear 

colleague and friend, and I hope that we are able to see this House 

continue to make progress on behalf of people like Clay Shaw, who 

gave quite a bit of his life and his hard work to make it work. 

So with that, Mr. Chairman, I thank you for yielding some time. 

Chairman JOHNSON. Thank you. I appreciate your comments. 


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We now turn our hearing to Social Security disability fraud conspiracy in Puerto Rico. On August 21st, the United States Attorney 

for the District of Puerto Rico announced the arrest and indictment 

of 75 individuals for Social Security fraud. Let me repeat that number. Seventy-five arrested for allegedly seeking to defraud Social 

Security. So we are not talking about a few bad apples here. Those 

arrested include a claimant representative who was a former Social 

Security employee, three physicians, and 71 beneficiaries. My understanding is that the investigation is ongoing, and there could be 

additional arrests. 

Under the alleged scheme, the former Social Security worker 

would help a claimant file an application for disability benefits and, 

with the assistance of a conspiring doctor, provide fraudulent medical evidence that would result in taxpayer-funded benefits that 

should never have been paid in the first place. The representative 

would collect a fee from the claimant of 25 percent of any past-due 

benefits owed up to a cap of $6,000. The doctors would receive a 

kickback of $150 to $500 by the claimant for their submission of 

false reports to Social Security. 

The investigation began back in November 2009 after medical 

consultants in the Puerto Rico Disability Determination Services 

reported a suspicious pattern of benefit claims involving nearly 

identical medical evidence. Social Security and the Office of the Inspector General then began an extensive review of the medical information. Later the FBI and the Puerto Rico Police Department 

joined the investigation. 

Social Security has now suspended benefits claimed by the indicted beneficiaries. It has also begun reviewing the files of over 

6,000 beneficiaries that included medical evidence from the indicted physicians or representative. Unless beneficiaries are able to 

prove their disability with nontainted medical information, they 

will be required to pay back to Social Security the benefits they 

should not have received in the first place. 

So the bottom line is that at a time when the Disability Insurance program will be unable to pay full benefits beginning in 2016, 

Social Security has been doling out millions of dollars in fraudulent 

taxpayer-funded payments. This is unacceptable. And on the heels 

of the Puerto Rico case, GAO reported last week that Social Security paid $1.3 billion in overpayments to disability beneficiaries. 

Moreover, the debt owed to the Disability Insurance Trust Fund 

from those who need to pay back overpayments is now $6 billion. 

In this particular case, the problem occurred before beneficiaries 

even got their first check, so they may have been awarded benefits 

when they shouldn’t have, all because Social Security’s enforcement 

operations doesn’t generate earnings alerts in all cases when earnings occur during the 5-month waiting period. In other words, in 

my view, Social Security wasn’t doing its job. 

The Puerto Rico case along with GAO’s report raises serious and 

troubling questions about Social Security’s management of the disability program. The American taxpayer is right to wonder whether 

Social Security is fully committed to rooting out waste, fraud and 

abuse. 

Let me be clear that Social Security should not try to downplay 

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bers to try to minimize the loss of taxpayer dollars. To do so would 

be an insult to taxpayers. Waste, fraud and abuse in the Disability 

Insurance program cheat honest, hard-working American taxpayers 

and those who truly need benefits. The best way to protect the disability program is to prevent waste, fraud and abuse before it occurs. 

The American people want, need and deserve answers. Social Security’s leadership needs to get serious about better protecting this 

program paid for by America’s hard-working wage earners. 

Chairman JOHNSON. I now will recognize our ranking member 

Mr. Becerra for his opening statement. 

Mr. BECERRA. Mr. Chairman, thank you very much. 

American workers pay for Social Security, and we owe it to them 

to protect their investments by preventing fraud and stopping it 

where we can. Every month over 160 million American workers 

contribute part of their hard-earned paychecks to Social Security to 

prepare for retirement and to protect themselves and their families. 

To put it in context, over Social Security’s lifetime American workers have contributed $14.5 trillion to Social Security. During 

those 78 years, Social Security has safeguarded those contributions, 

it has invested surpluses in U.S. Treasury bonds, and it has paid 

American families their benefits on time and in full for 78 years. 

And in those 78 years today, there are some $2.5 trillion in reserve 

that has yet to be used to help cover the future benefits of Americans who paid into this system. We owe it to Americans, therefore, 

to do everything we can to protect their contributions from those 

looking to defraud Social Security, while still paying those honest 

workers their earned benefits when they need them. 

SSA does a good job of fighting fraud, as evidenced by this successful investigation that we will hear about more. Most Social Security fraud is reported or prevented by Social Security Administration employees, as was this conspiracy. It was frontline employees at the Puerto Rico office who first detected this conspiracy as 

part of their work reviewing benefit applications. They brought it 

to the attention of SSA’s regional leadership, and a referral was 

then made to the inspector general for investigation and potential 

prosecution. 

But SSA didn’t stop there. They continued to track the suspicious 

cases, subjecting them to additional scrutiny. And in light of the 

deepening investigation and the emergence of a conspiracy, SSA set 

up a process to quickly rereview all suspicious cases as soon as the 

Attorney General filed indictments. SSA has already suspended 

benefits to the 71 individual beneficiaries who were indicted on August 16th. 

The vast majority of disability insurance recipients are honest. 

They are hard-working Americans who became too disabled to 

work, and the disability insurance program has grown in recent 

years because of demographics and the aging population, not because of fraud. As Social Security’s chief actuary has testified, the 

disability program has grown primarily because there is a larger 

population, the baby boomers are hitting their most disabilityprone years, and the increase in the number of women in the workforce. These are factors that have nothing to do with fraud and 


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that the actuaries have actually known about and projected for 

many years. 

Finally, I would note for the record that fraud is not a driver of 

the growth of the DI program in and of itself. Last year, in 2012, 

SSA employees made over 26,000 fraud referrals to the inspector 

general, including disability fraud. Of these the inspector general 

found that 5,300 cases merited investigation and, of those, 236 rose 

to the level of criminal prosecution; 236 out of 26,000 fraud referrals. That is less than 1 percent. And that doesn’t even say that 

there was a conviction. That was a referral for a criminal prosecution. 

By the way, of those 236 cases that rose to the level of criminal 

prosecution, which represents 236 of the 26,000 fraud referrals, 

that is out of the 3.2 million applications that were received by the 

Social Security Administration for disability benefits out of the 57 

million people who are in the Social Security beneficiary population 

altogether. 

So I think it is very clear that SSA is working very hard to root 

out fraud, because no one wants to see the hard-earned benefits of 

any American used for other than the benefits that have been 

earned. 

A highly trained, well-staffed SSA is our best defense against 

fraud. When SSA’s disability examiners noticed this problem in 

Puerto Rico and reported it to the IG, SSA had more staff available 

to it than they have today. So we have to take a look. In 2012 reports from Social Security, employees were responsible for nearly 

two-thirds of the fraud investigations opened by the inspector general. They are not coming from the outside, folks. They are not 

coming from regular people. They are coming from the SSA employees themselves who are detecting this fraud. 

Unfortunately, SSA’s budget has been cut by about $1 billion a 

year since 2011, which has had real consequences for taxpayers, 

beneficiaries and the workers who are counting on Social Security 

in the future. It pains me to say, but this House has blocked $421 

million that the Budget Control Act provided for SSA to fight 

waste, fraud and abuse, costing taxpayers billions of dollars. SSA 

has lost nearly 11,000 highly trained employees to budget cuts over 

the past 2 years. As Ms. Disman says in her testimony, that leaves 

far fewer people to ‘‘stand watch over Social Security’’ and leaves 

them with far less time to document what they see and to report 

it to the inspector general. 

I am pleased that we have had a chance to come together for this 

hearing to see how SSA combats fraud, to learn more about what 

happened in this particular conspiracy and whether additional action is needed. At the same time we must keep in mind that in the 

overwhelming majority of cases, there is no fraud involved. 

SSA does a good job overall of detecting and preventing fraud, 

and the inspector general aggressively investigates reports of potential fraud. But without adequate resources, SSA cannot adequately police fraud while ensuring that individuals who have 

earned their benefits get paid on time and in the right amount. 

So we are very much interested in your testimony today, and 

with that, Mr. Chairman, I yield back my time. 


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Chairman JOHNSON. I think as a matter of record it took too 

long to get into this. 2009 until today is a long time. 

As is customary, any Member is welcome to submit a statement 

for the hearing record. 

Chairman JOHNSON. Before we move on to our testimony 

today, I want to remind our witnesses to please limit your oral 

statements to 5 minutes. However, without objection, all the written testimony will be made part of the hearing record. 

We have one witness panel today seated at the table, the Honorable Patrick O’Carroll, Inspector General, accompanied by the Honorable Paul Lillios, Associate Chief Administrative Law Judge, Social Security Administration; and Beatrice Disman, Regional Commissioner, New York Region, Social Security. You are the one that 

has responsibility for Puerto Rico, I guess. 

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

ahead with your testimony. 

STATEMENT OF THE HONORABLE PATRICK P. O’CARROLL, JR., 

INSPECTOR GENERAL, ACCOMPANIED BY THE HONORABLE 

PAUL C. LILLIOS, ASSOCIATE CHIEF ADMINISTRATIVE LAW 

JUDGE, SOCIAL SECURITY ADMINISTRATION 

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

Member Becerra, and Members of the Subcommittee. It is a pleasure to be here today to discuss our ongoing criminal investigation 

in Puerto Rico. 

About 4 weeks ago in the early morning hours, 19 OIG special 

agents with 125 FBI special agents and about 150 Puerto Rico Police Department officers successfully executed 69 arrest warrants 

within a few hours. The arrests were meticulously planned and accomplished without incident. 

The arrestees were taken to the Morales Basketball Coliseum in 

Guaynabo where the United States Marshals Service was standing 

by to process and fingerprint them. They were able to appear immediately before an on-site United States magistrate. In addition 

to the 69 arrested, 6 additional suspects were arrested or surrendered to authorities in the days that followed. 

These arrests were based on 75 indictments returned by a grand 

jury in Puerto Rico. Our investigation had revealed that these 75 

individuals took part in a massive scheme to defraud Social Security of millions of dollars in disability benefits. Seventy-one of the 

arrestees were disability beneficiaries, three were medical providers, and one was a nonattorney claimant representative named 

Samuel Torres Crespo, who was a former SSA employee. 

The scheme was simple enough. Word of mouth was all it took. 

Anyone looking to obtain disability benefits fraudulently, either because they had recently been laid off or because they saw what 

they thought was an easy mark, would go see Torres Crespo. He 

would, for 25 percent of the claimant’s accrued benefits, put together an application and send the claimants to one of three of the 

indicted doctors. The doctor would charge the claimant a fee between of $125 and $500 to produce a false medical report, and then 

the fraudulent claim would go forward. 

Over time, observant disability examiners noticed that nearly 

identical medical reports were coming across their desks, and the 


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OIG was notified. Over a period of months, from late 2009 to 2010, 

we received a series of such allegations. Each was carefully examined, and many required interviews or video surveillance before a 

decision could be made whether to conduct a criminal investigation. 

Some allegations proved unfounded, or, more often, the fraud could 

not be fully established. 

Finally, however, we were able to gain a foothold in early 2011 

thanks to an exhaustive review of records, tireless work by SSA analysts and our agents, and the timely cooperation of the FBI. Working with the U.S. Attorney for the District of Puerto Rico, the FBI 

and the Puerto Rico Police Department, we conducted scores of 

interviews, covert surveillances and undercover visits to doctors’ offices. We also executed search warrants and used other investigative techniques that slowly revealed the breadth and extent of this 

complex scheme. 

I cannot say enough about the level of cooperation amongst these 

agencies. This was truly government and law enforcement at its 

finest. 

The judicial process in this case will take time to unfold. Some 

of these people will likely go to jail. Many will be required to repay 

the money they stole, and the government has already seized about 

$1.7 million in assets from Torres Crespo. 

Meanwhile, this investigation continues, and other investigations 

are spinning off from it. Calls to the toll-free hotline number that 

we established are generating new leads. That number, 1–855– 

777–0821, is being contacted frequently. 

Our work in Puerto Rico is far from finished, and Puerto Rico is 

by no means the only place where our office is investigating doctors, lawyers, representatives, interpreters and others who facilitate disability fraud in large numbers. This type of fraud has long 

been a priority of our office. It was one of the inspirations for the 

CDI program, with which this subcommittee is very familiar, and 

the Puerto Rico CDI unit is now up and running. It was also the 

motivation behind the recent creation of the disability fraud pilot. 

We specifically designed this program to detect and investigate 

facilitator fraud such as that which we found in Puerto Rico. 

Judge Lillios, who is here with me today, will work with one of 

our deputy assistant inspector generals for investigation and audit 

and investigative staff to mine data, review past allegations and 

beat the bushes for leads. They will also be looking for professionals who have abused the government’s trust as paid participants in the disability process. Be they doctors, lawyers or representatives, they should know that we are looking long and hard 

at similar schemes. 

Of course, we will continue to advise this subcommittee as this 

work continues, and as always I appreciate your unflagging support, and I will be happy to answer any questions. 

Chairman JOHNSON. Thank you, sir. I appreciate that testimony. 

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


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Chairman JOHNSON. Ms. Disman, welcome. Please proceed. 

STATEMENT OF BEATRICE DISMAN, REGIONAL COMMISSIONER, NEW YORK REGION, SOCIAL SECURITY ADMINISTRATION 

Ms. DISMAN. Chairman Johnson, Ranking Member Becerra, 

Members of the Subcommittee, thank you for this opportunity to 

discuss Social Security’s role in uncovering the complex disability 

fraud conspiracy in Puerto Rico. My name is Bea Disman. I am Social Security’s Regional Commissioner for the New York Region. I 

have direct authority over the agency’s operations in New York, 

New Jersey, Puerto Rico and the U.S. Virgin Islands. I began my 

career at Social Security as a field office employee in 1965. While 

much has changed since then, the agency’s commitment to service 

and stewardship has never wavered. 

Like you, I am outraged whenever anyone attempts to defraud 

the government. I am especially chagrined that a former Social Security employee acting as a nonattorney claimant representative 

was an integral part of the conspiracy uncovered in Puerto Rico. 

This individual betrayed his former colleagues by violating the public trust, and, frankly, I am incensed by his actions. 

We applaud the recent news that law enforcement officials indicted the former employee, several physicians, and approximately 

70 disability claimants for allegedly defrauding the disability program. While the Federal grand jury investigation continues, evidence suggests that the involved parties conspired to submit fabricated or exaggerated medical evidence in order to fraudulently obtain benefits. This criminal behavior is unconscionable, and we do 

not tolerate it. 

In this case it was the diligent employees of the Puerto Rico 

DDS, funded and trained by Social Security, who first identified 

the fraudulent medical evidence. The DDS employees referred the 

allegation to us in March 2009 during an on-site visit by my regional office staff and the quality reviewers. 

In November 2009, after completing additional analysis and case 

development, we referred the allegation along with information 

about the nonattorney representative to the Office of the Inspector 

General. In addition to referring the case to the OIG, we took aggressive steps to identify any additional cases and develop a process for reviewing the cases. These steps ensured that we could reliably handle any high-volume review that might result from the investigation. 

We directed Federal resources to Puerto Rico to assist in the investigation, monitor the Puerto Rico DDS operations and help decide cases. We also redirected and trained staff on medical issues 

from our Puerto Rico field offices and our program service center 

in New York City. These additional staff resources were focused on 

Puerto Rico cases, including those involved in the investigation. 

In addition, we authorized the New Jersey DDS to hire bilingual 

disability examiners to assist with Puerto Rico. Other DDSs, both 

inside and outside the New York region, provided workload assistance to the Puerto Rico DDS, which added more outside eyes to the 

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ened our work with the Puerto Rico DDS and ensured their quality 

continued to remain strong and the fraud identified. 

Without question, our antifraud activities in Puerto Rico worked. 

They have shown that our frontline employees are the best defense 

against fraud. Over the years our emphasis on their role in the integrity of our programs and responsibilities for reporting fraud 

have strengthened our stewardship focus. We have suspended over $130,000 in monthly benefits to the indicted individuals and their auxiliaries. As of today we are reviewing at least 6,600 disability applications in which we awarded benefits based in part on the medical evidence supplied by the doctors. 

These reviews will occur in New York City and in New Jersey. In 

redetermining these cases, we will disregard the tainted medical 

evidence. If the remaining evidence does not support our original 

allowance, we will suspend the benefits, providing the opportunity 

to submit additional medical evidence prior to a final determination. Beneficiaries will receive notification if we terminate their 

benefits and assess an overpayment. 

If we suspect additional fraud of medical providers in any of 

these cases we review, we will refer that to the OIG for investigation and possible referral to the U.S. Attorney. Under a program 

we are considering for Puerto Rico based on success in other regions, our agency’s attorneys may pursue cases not accepted for 

criminal prosecution by the U.S. attorney. 

Looking ahead we know that it is critical that Congress fully 

fund our cost-saving program integrity activities while ensuring we 

have the resources to serve the deserving disability applicants who 

turn to us for help. Investigations are time-consuming and laborintensive. In Puerto Rico it required close coordination between Social Security, the Puerto Rico DDS, and multiple layers of law enforcement. We need your support to keep the disability program 

strong. 

Thank you, and I will do my best to answer any questions you 

may have, with the understanding that this is still an active grand 

jury investigation. 

Chairman JOHNSON. Thank you for your testimony. I appreciate it. 

[The prepared statement of Ms. Disman follows:] 


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Chairman JOHNSON. Mr. O’Carroll, let me ask you a quick 

question. Has there ever been a case as big as this in the history 

of Social Security, in your opinion? Yes or no. 

Mr. O’CARROLL. No, there has not been any one as big as this. 

Chairman JOHNSON. Okay. I am glad you and your Acting 

Commissioner are convinced that fraud conspiracy is not limited to 

Puerto Rico since you have set up disability fraud pilot programs 

here in the United States focusing on third-party facilitators, 

claimant representatives and medical providers. It seems like everybody wants some of our money. 

Ms. Disman, with respect to the Puerto Rico case, what is the 

total amount of fraudulent taxpayer-funded benefits paid out by 

Social Security? I expect it will reach millions of dollars. 

Ms. DISMAN. At this point in time, Mr. Chairman, I do not have 

that figure because we are rereviewing all these cases, and our initial review of the 6,600 cases, which we have already started, 

shows a number of these people will continue to receive benefits because there is other medical evidence in the file even after we remove the tainted evidence. So we will be able to—after we finish 

the review be able to tell you what was involved with the tainted 

medical evidence and the amount of the benefits. 

Chairman JOHNSON. Well, I know it is Social Security’s idea to 

get payments out as fast as they can. Do you think we are doing 

it too fast without checking what the status of the claimant is? 

Ms. DISMAN. In this situation it shows our frontline employees 

did their job and did the checking. What they uncovered was looking at template medical evidence, and they didn’t stop there. They 

went ahead and followed the procedures that we have and the operating procedures that we have trained them on. 

Chairman JOHNSON. Yes, but you already paid them. 

Ms. DISMAN. Right, because based on other evaluation of the 

medical evidence in file and other factors—remember, this was fabricated medical evidence—it appeared that these people were eligible to meet the definition of disability. 

Chairman JOHNSON. Do you think our taxpayers will be made 

whole? Yes or no. 

Ms. DISMAN. I think our taxpayers will be made whole for those 

people we determine that are no longer eligible to receive disability. 

Chairman JOHNSON. In other words, all that money that we 

put out is going to be paid back? 

Ms. DISMAN. We are going to be charging overpayments if those 

decisions were based on fabricated medical evidence and cannot be 

supported, and they will be required to pay back the overpayments. 

Chairman JOHNSON. How do you go about getting that? 

Ms. DISMAN. Well, basically you ask them to pay the money 

back. You go through a process that gives them their due rights. 

But ultimately there is a request for the money. 

Chairman JOHNSON. Okay. And how much is Social Security 

spending to deal with this fraud? 

Ms. DISMAN. Well, during the review itself we are in the midst 

of determining what we will be spending on the review. I can tell 

you right now that the medical evidence in Puerto Rico is in Spanish, so that in order to start this review and to have it done by peoVerDate Sep 11 2014 14:55 Jul 01, 2016 Jkt 089581 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89581.XXX 89581

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ple that are not just bilingual and biliterate, we have had to translate a number of the medical documents, and that is hard to do because you have to be more than bilingual, you have to be biliterate 

in medical. So we have already spent $3 million in a contract to 

do the translation. We are right now factoring all the costs, and I 

will provide that for the record as soon as we finish putting that 

together. 

[Transcript Insert 1 follows:] 

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Chairman JOHNSON. So usted no hable espanol? 

Ms. DISMAN. It is not just speaking Spanish, it is reading complex medical terms. And I do agree with you, because I know you 

have spent, Chairman Johnson, some time in Puerto Rico. 

Mr. BECERRA. But he is a Texan. He knows everything. 

Chairman JOHNSON. Ms. Disman, I want to turn to the findings of a GAO study released last week on overpayments. It found 

that Social Security paid out $1.3 billion in disability that were 

wrong mostly because the individuals earned over the legal limit 

during the 5-month waiting period before they received their first 

check. The problem was simple: Social Security did not catch the 

earnings if they occurred the year before the year benefits were 

first paid. 

Now, this seems like a problem that ought to be able to be solved 

by a high school computer student. Why hasn’t this been addressed, and can you give me an assurance it will be, and when? 

Ms. DISMAN. Well, Mr. Chairman, I read the GAO report as you 

did, and I have been involved in the enforcement operation as 

being Regional Commissioner for years. I can tell you that the enforcement operation is very complex, and it requires complicated 

work by our program service center employees as well as our field 

employees. 

In reading the GAO report, and also talking to our policy people, 

I know that we are going to have to go look behind the cases because GAO did not do any analysis. If someone has worked during 

a waiting period, it may be an unsuccessful work attempt, there 

needs to be a look at the cases itself. 

However, we agreed to look at those cases. We also agreed to 

look at GAO’s recommendation, that we take a look at what the 

cost would be and the resources for us to obtain this information 

during the waiting period, understanding that if we did this, we 

may not be able to do something else given our budgets and what 

we are dealing with. 

Also, there are two proposals in the President’s budget to deal 

with exactly this issue. One deals with going to a quarterly wage 

reporting. You know now it is yearly, so that by the time the data 

come to us, enforcement is already late. And the second is to continue and redelegate our demonstration authority to go ahead and 

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ability beneficiaries. And we have been experimenting with different demonstrations to see if we can simplify the program and 

still get at the heart of the issue of enforcement. 

Chairman JOHNSON. Have you been down there yourself? 

Ms. DISMAN. Where? 

Chairman JOHNSON. Puerto Rico. 

Ms. DISMAN. Oh, I have been down to Puerto Rico over the 

years. I must admit I go in August when it is 100 degrees. But having said that, you have very dedicated Social Security employees in 

Puerto Rico. They are really dedicated to the mission. I can tell you 

that this fraud investigation and this conspiracy, if you talk to my 

employees on the frontline, they are incensed and upset, and a 

number of them knew the retired Social Security employee, and 

they are beside themselves. 

Chairman JOHNSON. Well, GAO says it urged Social Security 

to use other verification sources since 2004, but you didn’t. In responding to the GAO report, Social Security referred to the, quote, 

‘‘strategic plan goal of preserving the public trust and improving 

payment accuracy’’ as one of your highest priorities. Is that true? 

Ms. DISMAN. Well, our highest priority is to ensure the public 

trust. I take stewardship responsibility personally. I have over the 

years been one of the foremost supporters of antifraud activities 

within Social Security. As a matter of fact, the inspector general 

and I set up antifraud committees in the regions, which are chaired 

by both of us. 

Chairman JOHNSON. When did you do that? 

Ms. DISMAN. We set that up a good 10 years ago that we have 

been working on that. We bring in line management. We identify 

various trends. 

So I will tell you, for a while I was the operations lead on antifraud—I want to say antifraud, not fraud—and I take this seriously 

and to heart, because when I was trained as a claims representative, that motto, we get the right check to the right person on time, 

is our foundation. 

Chairman JOHNSON. Well, you need to do both, and I am told 

that, you know, some people think you are more interested in cutting checks than trying to prevent fraud, and I hope that is not 

true. 

How can we believe the agency’s statement that payment accuracy is the highest-step priority when the actions here say something different? 

Ms. DISMAN. Well, Mr. Chairman, I think you can see the actions here were a complex conspiracy, and if you actually look at 

the information of our accuracy of the data of Puerto Rico, they are 

equal or better than the national average, and, you know, we have 

an independent quality organization that looks at that. 

Chairman JOHNSON. Well, as the New York Regional Commissioner, you are responsible for overseeing the Puerto Rico Disability 

Determination Program; is that correct? 

Ms. DISMAN. That is correct. 

Chairman JOHNSON. And I would like to get your attention to 

the slide, if they can put it up on the screen. I think the staff gave 

you a hard copy of that. 


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Ms. DISMAN. I don’t have it, and let me see if I can see it. I 

can’t see it, but I understand what it is showing. 

Chairman JOHNSON. Okay. You understand it just shows that 

the allowance rates in Puerto Rico are way above the national average anywhere else, like double and triple, and it was pointed out 

in a Wall Street Journal article from March of 2011, which we will 

insert in the record without objection. 

[The Wall Street Journal article follows:] 


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Chairman JOHNSON. And show the next slide, please. 

That table shows the percent of beneficiaries nationwide, and the 

percentage of beneficiaries diagnosed with a mental disorder in 

Puerto Rico is at least 10 percent higher than the national average 

for all years. The percentage with a mood disorder is more than 

double the national average. And this is important since we have 

been told back problems and affective disorders, including mood 

disorders, were alleged by most of the beneficiaries who were arrested. Assuming you saw both the award rate and the diagnosis 

trends when they happened, what action did you take and when, 

and what was the result? 

Ms. DISMAN. Well, we have taken multiple actions in Puerto 

Rico. We have actually had a multipronged approach. We have had 

our quality reviewers and my own disability staff visit Puerto Rico 

and do extensive training. As a matter of fact, when we found out 

about the allegation of the doctors, we were there training them on 

the medical documentation of the file, how to identify suspect medical evidence, going over the risk factors for fraud and similar 

faults. Two of the categories in those risk operations for operations 

deals with affective disorders as well as back disorders, going 

through what the factors are for them to look at. 

We did more than that. We did very special training in July of 

2011 where we brought together the ALJs and our DDS examiners. 

We had headquarters, we had our own people from the region, we 

had quality, going over again the characteristics of affective disorders, similar fault, and actually going through how you deal with 

the files for inconsistency when you see the types of trends. We do 

have very specific operating procedures for them to follow, and they 

have continued to do the referrals. 

But I do have to say allowance rates make up a total—a composite of a number of factors. It is not just what you are seeing 

with this conspiracy. It really does depend on the demographics of 

a population, it depends on the age, it depends on the education, 

it depends on the poverty level that exists, it depends on the jobs 

and the economy. 

So you can’t draw a conclusion just by looking at the allowance 

rate, but you have to look behind it. We also asked for a special 

study where they did a 1,000-case analysis of what the Disability 

Determination Service was doing, and when they looked at those 

cases, they also made special referrals to the OIG, but at the same 

time they determined that the quality and accuracy of the decision 

making was equal to or better than the national average. 

In addition, as I have said before, we have had help from outside 

my region as well as within the region. So I really established eyes 

and ears to look at these cases to see if we could pick up any special trends and analysis and continue with the reporting of fraud. 

In addition to that, I have taken my own Federal resources from 

my field offices in Puerto Rico, and I could ill afford it, to devote 

them to training them on medical decisions and looking at specific 

cases. 

So I actually looked at, in working with the OIG, cases from specific areas in Puerto Rico to try to identify patterns. We would 

move it to ZIP codes and establish information that the OIG could 

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Chairman JOHNSON. When did she first inform you of this effort? 

Mr. O’CARROLL. Well, Chairman, we have been working in conjunction with Regional Commissioner Disman and her office right 

from the beginning in 2009 when we heard about this. From there 

on we started referring cases to her for review. So we have been 

pretty much working united on this thing for the last few years. 

Chairman JOHNSON. Were you satisfied with what the answers 

were that you were getting? 

Mr. O’CARROLL. Yes. As we keep going with this, it is so complicated on it, and there are so many different tentacles to this situation, it has taken a lot of interaction back and forth and education on the part of our agents in terms of reviewing files, and I 

have got to say it has been a very good cooperation on this one. 

Chairman JOHNSON. Well, you know, if the Federal quality reviewers are saying the decisions are right, either we have got more 

fraudulent evidence out there, or we really need to take a good look 

at the statute defining disability. 

Mr. Becerra, do you wish to question? 

Mr. BECERRA. Yes, Mr. Chairman, thank you. 

And I think the admonishment that the Chairman just made is, 

I think, something all of us would agree with at this dais, and that 

is that we have to hunt this stuff down as quickly as we can. No 

one wants to see any kind of report of fraud, because it is what undermines the confidence that the people have that when they pay 

these Social Security contributions, these taxes to Social Security, 

that they will be used for the right purposes. 

So we appreciate, Ms. Disman, everything that your people have 

done, especially the line workers who often times don’t get to be 

here to explain exactly what they have done. Please tell them that 

we appreciate that they were the ones that detected this, and that 

we hope they have the resources they will need to continue to be 

able to continue to do that. By the way, I also hope that you are 

able to keep those experienced staff, who probably have the knowledge it takes to sort of understand when something looks a little 

fishy on those applications. 

So I think you answered the first question I was going to ask, 

and that is what are you doing today to try to make sure you can 

prevent this type of fraud from occurring again when the Chairman 

asked some questions. 

So let me ask this: It all seems to hinge on this former employee 

who knew how the office operated, who sort of understood what 

your reviewers are looking for to determine if an application passes 

that bar so that it goes to the next step of getting closer to being 

approved. 

I agree with you and your line workers that if you could descend 

on this guy with every tool you have, we should, because he 

breached a trust. He learned the system, and then once he left and 

probably took a decent retirement with him, he still went ahead 

and shafted the very system that helped him. Those kind of guys 

don’t even belong behind bars. 

Anyway, I would say that what you should do is give us a sense. 

There are probably several other people who have learned the system, understand what your disability reviewers are looking for, and 


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therefore could tailor this fabricated evidence to look like they 

qualify. And unless you are really good—it is like when Sam, the 

chairman, and I talk about these fake IDs that are used to do all 

sorts of things including getting employment, an employer looks at 

this thing, and this looks like a real Social Security or a real driver’s license, and, lo and behold, it is fake. 

How do you get to the point where you can prevent that from occurring? Because there are a whole bunch of former Social Security 

employees who are probably doing great work defending a lot or 

representing a lot of future beneficiaries or beneficiaries today. We 

don’t want to indict everyone who just happens to have done good 

work and knows the system, but how do you make sure that those 

who know how they might be able to game the system aren’t doing 

that? 

Ms. DISMAN. Well, I have to agree with your comments about 

the former employee, and one of the things that I hope is that this 

indictment and what has taken place in Puerto Rico serves as a notice to any former employee and anyone that we will find the fraud, 

we will investigate it, and you will face criminal charges and perhaps imprisonment. 

I will tell you we used this opportunity of the indictment to send 

out a message throughout Social Security to talk about what took 

place, to remind people about reporting it, how to report it, what 

to look for, and to continue to do it. How we really save this—and 

this hotline that the inspector general mentioned is bringing in information as to some other nonattorney reps that may exist. We do 

not know yet if they are former employees or just nonattorney reps. 

Having said that, I can’t say a lot more because there is a grand 

jury investigation, but I will tell you that we are looking very closely at cases. We are trying to come up with patterns. It takes resources. I can tell you my regional office that helped do all this 

analysis and is working with the inspector general is down 22 percent in the last 3 years. 

I have moved resources from doing other work that Social Security requires to focus on this investigation. And this investigation 

will take place, and others, by doing on-the-ground work, analytical 

work, hard work. But I do want to send a message to anyone that 

is out there: If you commit fraud against our programs, we will find 

it, and the Inspector General will find it, and you will serve the appropriate sentence. 

Mr. BECERRA. Well, I hope you can communicate to the U.S. attorney who is handling the prosecutions in this case that we hope 

that they throw not just the book, but the kitchen sink at these 

guys, including the doctors, because the doctors made it possible for 

this medical evidence to look real. And this former employee should 

be severely punished however the law allows it, but those doctors 

as well. Too often these professionals who abuse their own license 

to practice get off very easily, and before you know it, they are out 

there practicing again. 

I hope you can send a very clear message, especially, Mr. 

O’Carroll, as you said, this is the worst case of conspiracy and 

fraud that we have seen under SSA, that you will descend on these 

individuals as aggressively as you can. And if there is anything we 

can do to help by contacting the Department of Justice or the U.S. 


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attorney to say, we need you to set an example so you don’t have 

to come and testify in the future about these kinds of fraud cases, 

let us know, because this is—and I think this is a small, minute 

fraction, but it does spoil it for all those hard-working Americans 

who ultimately do qualify, are truly eligible for the benefit that 

they have paid for. 

So we urge you to continue to work. We thank you for what you 

are doing. And know that you have the support of, I think, this 

Congress to try to really go aggressively at any fraud that may 

occur out there. And I hope that we heed your guidance about resources; that you can only do so much and stretch a dollar so far 

in trying to get this done. And it is pound foolish to cut your resources and then find the fraud occurred because you don’t have 

the personnel available to sort of catch it, and then have to spend 

lots of money and a lot of your personnel resources to now try to 

go after the bad guys who defrauded the system. 

But thank you very much for being here and for all your testimony. 

Chairman JOHNSON. Thank you, Mr. Becerra. 

Mr. Renacci, would you care to question? 

Mr. RENACCI. Thank you, Mr. Chairman, and I thank the witnesses for their testimony. 

Ms. Disman, you sound sincere, and I heard you say one of your 

mottos was ‘‘right check to the right person,’’ and clearly there was 

some systematic failures that occurred. So let’s not talk about 

Puerto Rico as much as maybe you can help me with your office 

and other offices in the country. 

I guess I am concerned about uniform qualifications for DDS examiners. Can you tell me the qualifications of the examiners in the 

facilities that you oversee? And what I am asking is I understand 

some have high school educations, all the way to graduate school. 

What is their background and experience, because these are the 

frontline people. 

Ms. DISMAN. Well, I think to understand it, the DDSs are State 

employees or Commonwealth employees, and so they are not actually employed by Social Security. We pay the freight for it, the 

costs of it, and we train them. The States have different standards 

as to the qualifications for the employees. In most places it is a college graduate. For example, in the State of New York they have 

even nurses that are already come up and be disability examiners. 

So it varies by State. But we also do a very extensive disability 

training program for them. So they are not really considered proficient for about a 2-year period. They go through stage training. 

And we also—they are tested, they are mentored. So it is a very, 

very intense program for it. 

And, again, qualifications vary, but we have been looking at this 

on a national level in Social Security. There has been a task force 

looking at what type of standards should we try to set. And since 

I am not responsible for policy, there is a task force working on it, 

and I can get more information for the record for you. 

Mr. RENACCI. I would appreciate that. 

[Transcript Insert 2 follows:] 


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Mr. RENACCI. But you do agree there could be a high school 

graduate and a graduate student, and they are making some of the 

up-front decisions? 

Ms. DISMAN. It could be from high school through graduate or 

postgraduate. 

Mr. RENACCI. They have the training—you said they have a 2- 

year training, but they could be making decisions during that 

training process, correct? 

Ms. DISMAN. They make decisions, but there is a quality control 

in the DDSs. There is an internal quality. They don’t function on 

their own. They also have to pass a number of tests in order to succeed. So they are not left to their own devices, because we all collectively know that the medical decision that they make is a gateway, and we want to make sure that that medical decision is appropriate. 

Mr. RENACCI. Mr. O’Carroll, can you tell me, were video hearings used in some of the Puerto Rico cases? 

Mr. O’CARROLL. Mr. Renacci, no, I am not familiar with whether videos were used in those hearings. 

Mr. RENACCI. Do you know, Ms. Disman? 

Ms. DISMAN. I do not know, but I will tell you in looking at the 

universe of cases, very few of the 6,600 cases that we are looking 

at that are involved actually were made at the ALJ level. So it is 

a small amount. It is about 100. 

Mr. RENACCI. Do you know how much use we have of video 

hearings? Across the country I am talking about. 

Ms. DISMAN. Since that is not my area of responsibility, if I can 

get the information for the record, I would be glad to provide it. 

[Transcript Insert 3 follows:] 


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Mr. RENACCI. Mr. O’Carroll, do you know? Is there a backlog, 

and is there a reason we are using, or how many we are using? I 

am just trying to get systematic. 

Mr. O’CARROLL. I don’t have a number. I will get it to you. But 

we have done some work, and we are supportive of it. 

Mr. RENACCI. Mr. O’Carroll, can you tell me a little about the 

hurdles OIG has to overcome in order to prosecute those that defraud SSA? 

Mr. O’CARROLL. Yes, and this is—probably a good example of 

it is that in order to do a prosecution, it requires a lot of criminal 

evidence and a lot of background on it. And I guess, again, in this 

case here where we had the cooperation of the U.S. Attorney’s Office, and we were working with them, it was probably a little bit 

easier than we have it in any other districts on it in terms of that 

when we are making our presentations to U.S. Attorney’s Offices, 

we are kind of in line with all the other Federal agencies, and oftentimes the fraud against SSA is usually in smaller amounts of 

money than what U.S. Attorney’s Offices are looking to do their 

prosecutions on. 

So I guess the long answer to this thing is that it is very difficult 

to get prosecutions when you are competing against, you know, 

bank robbers or whatever on it, but we do do a lot. We use the 

State, we use local prosecutions as well as Federal, and we also use 

civil monetary penalties, again, to assert fines and penalties on 

people. 

Mr. RENACCI. I would just say in conclusion, and I am running 

out of time, that in the private sector—and, of course, I was in investigations from a CPA standpoint, many financial institutions— 

even though one person may have caused the problem, there are 

usually systematic issues that allowed that one person to cause 

that problem. So I am hoping that we are looking across the board 

at all our systems. And I thank you for your testimony. 

I yield back. 

Chairman JOHNSON. Mr. Kelly, do you care to question? 

Mr. BECERRA. Why don’t we just reduce the time for each of the 

two so that way we can make sure we make votes. 

Chairman JOHNSON. I will give you a minute. 

Mr. KELLY. All right. Just very quickly. Thank you. 

I think my concern is because when you look at the amount of 

money that we are talking about, and are we talking about very 

small percentages, but a very small percent on a very large sum 

is great. And I think the integrity of the program always does come 

down to there are certain people that just find a way, as Mr. 

Renacci said, with these systemic opportunities. 

I look at Puerto Rico that has an unemployment somewhere beyond 13, 14 percent, so they are going to find a way to make money 

somewhere or get revenue somewhere. So you look to where the 

low-hanging fruit is, and apparently they found a way to gain revenue. 

I know this is tough, and I know you are trying to do an awful 

lot of things, but I see you have done a good job of redeploying 

some of your funds and looking at prioritizing your spending, and 

in a time when things get tough and coming out of the private sector, sometimes you don’t have a choice, you just have to prioritize. 


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I think what you have done is quite wise, although the amount of 

this is staggering. 

The chances of us ever getting that money back, slim to none? 

I mean, seriously, how much—what is the total amount? I mean, 

it runs into the billions, right, in overpayments or fraudulent payments? 

Ms. DISMAN. At this point I cannot tell you that because we are 

reviewing our 6,600 cases, and from our initial review of some of 

the cases, we just started this review, people have other medical 

evidence that would sustain it. So, for example, I am seeing medical evidence from the Veterans Administration and other places. 

So you can’t make the assumption because we identified 6,600 

cases that had these medical providers, that ultimately it was 

based on that that made the decision. 

Mr. KELLY. But in my own business, having dealt with when 

you get to the situation of accounts payable and them being overdue, the longer they are overdue, the less chance you have of recovering. So the recovery process on this—and we are talking in the 

billions of dollars in overpayments; is that correct? 

Ms. DISMAN. I don’t think you are talking about billions. 

Mr. KELLY. Okay. All right. The chances of getting any of that 

money back? 

Ms. DISMAN. I think there is a good chance, because we have 

a very good debt process. And ultimately, remember, these people 

came on our rolls when they age. There is such a thing called retirement. There is offsets. There is a lot of other things we can do. 

I think the bottom line is we have to finish this rereview to see 

how many people really are involved and would no longer be eligible for benefits. And we intend to take the full action in recovering 

these overpayments. 

Mr. KELLY. My concern is always that, you know, there is a way 

of running out the clock on this stuff, and after a point the cost of 

recovery is greater than what you can possibly recover, because 

usually the recovery amount is very small. 

But I am going to yield back, Mr. Chairman, because we are running out of time, and I think Mr. Thompson has a question. Thank 

you all for being here. 

Chairman JOHNSON. Thank you all for your questions. 

Mr. Thompson, do you care to question? 

Mr. THOMPSON. Thank you, Mr. Chairman, and thank you to 

all of you for being here. Just a couple of things. 

You had mentioned, ma’am, that there is a policy part of this, 

and as you figure out what sort of policy is needed or needed to 

be changed, I would hope that you would consider our subcommittee so we can help facilitate that if any of that has to be 

done statutorily. 

In regard to getting the money, first, I couldn’t agree more with 

Mr. Becerra and his comments on the fact that there is a special 

place in hell for people who would cheat this critical system, a system that is important to so many people. So I would hope that you 

would take every effort to make sure that whatever punishment is 

available, that it is doled out, because that sends a strong message 

to other folks. And we have all seen too many times when people 


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who perpetrate this type of foul behavior walk. It is not right. So 

I hope you would do that. 

In regard to getting the money back, I think there is two kinds 

of money that we are talking about. There is the money that was 

paid out that shouldn’t have been paid out, and I trust that your 

comments about getting that back, that you are going to do everything you can. But how about the money that it is costing us to 

go after this? You have had to rearrange priorities. We are spending a lot of dough to track these guys down, to investigate this. Is 

there a policy in place that allows us to go back and capture that? 

Ms. DISMAN. Well, I think I would have to yield to that to the 

Inspector General since he is involved with the U.S. attorney on recovery of assets. 

Mr. O’CARROLL. Mr. Thompson, in fact we have been in touch 

with the U.S. Attorney’s Office a number of times over the last few 

weeks. But one of the issues that happened when we made the arrest on, in fact, the former SSA employee was we seized $1.7 million worth of assets from him. Those assets were turned over to the 

Justice Department as assets, and eventually what will happen is 

that if a judge in the case assesses that he has to repay money to 

SSA, SSA can petition Justice Department to get at those seized 

assets. 

Mr. THOMPSON. But what I am talking about is not just the 

money they took inappropriately, but the cost of figuring this out 

and trying to get that. Can we get payment for that? 

Mr. O’CARROLL. I would like to see a way that we can penalize 

them that way, and I think that we can probably put that before 

the judge. 

Mr. THOMPSON. I think we should look at that. I think that 

would be important to do. 

Mr. O’CARROLL. We will do that. 

Mr. THOMPSON. Thank you. 

Chairman JOHNSON. We have got votes going on. Mrs. Black, 

I am sorry. Have you got a quick question? 

Mrs. BLACK. They can get back to me on this. I am just curious 

about when we look at recovery, not in this particular incident, but 

in recovery across the board, I am very interested in what percentage—looking over maybe a 10-year period, what percentage do we 

actually recover? And in that I would also like the figure what is 

the cost of the recovery? That should be one area. And then the 

other is the actual dollars that were inappropriately committed to 

the client, how much of that do we actually get back? So two different areas. 

Thank you, Mr. Chairman. I appreciate it. 

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Chairman JOHNSON. You know, we have got to get serious 

about better protecting this program which is paid for by America’s 

hard-working wage earners, and Americans want, need and deserve no less. 

I thank you all for being here today. And we have votes, so we 

are going to call it a day. With that, the subcommittee stands adjourned. Thank you for being here. 

[Whereupon, at 3:30 p.m., the subcommittee was adjourned.] 

[Questions for the record follow:] 


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The Honorable Sam Johnson 


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Æ 


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