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2012

SECOND IN A HEARING SERIES ON SECURING THE 

FUTURE OF THE SOCIAL SECURITY DISABILITY 

INSURANCE PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JANUARY 24, 2012

Serial No. 112–SS12 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON SOCIAL SECURITY 

SAM JOHNSON, Texas, Chairman 

KEVIN BRADY, Texas 

PATRICK J. TIBERI, Ohio 

AARON SCHOCK, Illinois 

RICK BERG, North Dakota 

ADRIAN SMITH, Nebraska 

KENNY MARCHANT, Texas 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

SHELLEY BERKLEY, Nevada 

FORTNEY PETE STARK, California 

Jennifer Safavian, Staff Director 

Janice Mays, Minority Staff Director 


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C O N T E N T S 

Page 

Advisory of January 24, 2012, announcing the hearing ....................................... 2 

OPENING STATEMENTS 

The Honorable Sam Johnson .................................................................................. 63 

The Honorable Xavier Becerra ............................................................................... 65 

WITNESSES 

Carolyn Colvin, Deputy Commissioner, Social Security Administration, testimony ...................................................................................................................... 8 

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

testimony .............................................................................................................. 24 

Thomas Brady, Special Agent, Office of the Inspector General, Social Security 

Administration, Kansas City Field Division, St. Louis, Missouri .................... 31 

Paul Neske, Detective, St. Louis County Police Department, St. Louis, Missouri, shared testimony ....................................................................................... 31 

Steve Clifton, President, National Council of Social Security Management 

Associations, testimony ........................................................................................ 36 

SUBMISSIONS FOR THE RECORD 

Consortium for Citizens with Disabilities ............................................................. 87 

National Council of Disability Determination Directors ...................................... 91 

QUESTIONS FOR THE RECORD 

Ms. Colvin ................................................................................................................ 68 

Mr. O’Carroll ............................................................................................................ 73 

Mr. Brady ................................................................................................................. 79 

Mr. Clifton ................................................................................................................ 82 


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SECOND IN A HEARING SERIES ON SECURING 

THE FUTURE OF THE SOCIAL SECURITY 

DISABILITY INSURANCE PROGRAM 

TUESDAY, JANUARY 24, 2012 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON SOCIAL SECURITY

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:47 a.m., in 

Room B–318, Rayburn House Office Building, the Hon. 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 the Second in a 

Hearing Series on Securing the Future of the 

Social Security Disability Insurance Program 

Tuesday, January 24, 2012 

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 

combatting disability waste, fraud and abuse. The hearing will take place on 

Tuesday, January 24, 2012, in B–318 Rayburn House Office Building, beginning at 10:30 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: 

In December 2011, the Subcommittee began a hearing series focusing on the history of the Disability Insurance (DI) program, the income security it provides, and 

its financing challenges. DI benefits currently average $1,111 per month for disabled 

workers. According to the Social Security Administration (SSA), almost half of families receiving DI benefits rely on these benefits for the majority of their family income. On average, each disability benefit award is valued at $250,000 in DI and 

Medicare benefits over a beneficiary’s lifetime. Over the past four decades DI program annual costs have climbed from $18 billion to $124 billion as the number of those receiving benefits has more than tripled from 

2.7 to 9.7 million. Demographic changes also played an important role as during this 

same period the size of the overall workforce has grown, the large baby-boom generation has aged into its most disability-prone years, women have entered the workforce and become insured for benefits should they become severely disabled, and 

Congress has periodically reevaluated and revised eligibility guidelines. Wage levels, 

the basis for both the program’s financing and its benefit levels, have also risen. In 

their 2011 Annual Report, the Social Security Trustees project that the DI Trust 

Fund will become exhausted in 2018, at which point revenues will cover only 86 percent of benefits. 

As DI program enrollment has increased, so too has the potential cost of error, 

waste, fraud, and abuse. The DI program has an overpayment rate of 1.5 percent, 

but in fiscal year (FY) 2010, each tenth of a percentage point in payment accuracy 

represents about $706 million in retirement and disability program outlays, according to the SSA. DI medical and work-related overpayments detected by the SSA 

have grown from about $860 million in FY 2001 to about $1.4 billion in FY 2010, 

according to the Government Accountability Office. While the agency collected or recovered $839 million in overpayments in FY 2010, DI overpayment debt reached 

$5.4 billion. The SSA has no agency-wide performance goals for debt collection. 

One of the SSA’s FY 2012 Agency Performance Plan priority goals is to ‘‘ensure 

the effective stewardship of our programs by increasing our program integrity efforts.’’ In the Plan, the agency pledged to ‘‘continue to demonstrate an unyielding 

commitment to sound program integrity efforts by minimizing improper payments 

and strengthening efforts to protect program dollars from waste, fraud, and abuse.’’ 

FY 2012 goals include completing 592,000 full medical continuing disability reviews (CDRs), an increase of 82 percent over FY 2010. CDRs are a valuable tool 

in ensuring that disability beneficiaries continue to be eligible for the benefits they 

receive. Every dollar spent on CDRs results in at least $10 in lifetime program savings, including savings accruing to Medicare and Medicaid. At the beginning of FY 

2011, there was a backlog of 1.4 million medical CDR cases. In the Budget Control 

Act of 2011, Congress authorized $13 billion in additional funds above the discretionary budget caps over the next ten years exclusively for program integrity work. 


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According to the SSA, these funds will enable the agency to complete nearly 8 million full medical CDRs, eliminating the DI CDR backlog by 2016. 

Another important tool in combatting fraud is the Cooperative Disability Investigation (CDI) program. The FY 2012 Performance Plan identified a strategic goal 

to ‘‘preserve the public’s trust in our programs’’ with the objective to ‘‘protect our 

programs from waste, fraud, and abuse,’’ by expanding the CDI program as resources may permit. The CDI program was created in 1998 as a joint effort between 

the SSA and OIG, working with the State Disability Determination Services and 

State or local law enforcement, to pool resources for the purpose of preventing fraud 

in the SSA’s disability programs. Since the program’s inception, the CDI program 

efforts nationwide have resulted in savings of $1.9 billion in Social Security disability benefits and $1.2 billion in programs such as Medicare and Medicaid, for a 

total savings of approximately $3.1 billion. 

In announcing the hearing, Social Security Subcommittee Chairman Sam Johnson 

(R–TX) said, ‘‘Waste, fraud, and abuse in the disability insurance program 

cheat honest, hardworking American taxpayers. As we work to secure the 

future of this program, we need to protect the American taxpayer from con 

artists who are stealing from the system by making sure benefits are paid 

only to those who deserve them.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on the SSA’s efforts to minimize improper payments and 

protect taxpayers’ dollars from waste, fraud, and abuse. 

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, February 7, 2012. 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. 


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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 

/. 

Chairman JOHNSON. Welcome to our second hearing in our 

hearing series on Securing the Future of the Social Security Disability Insurance Program. Today our focus is on combating waste, 

fraud, and abuse. 

In our first hearing, we talked about the important milestone set 

in 1956 by the creation of this cash benefit program for those who 

could no longer work due to disability. From the beginning, there 

was a great deal of concern about the high risk for fraud, waste, 

and abuse because of the changing nature of disability and the inherent subjectivity of determining whether a person was truly disabled. 

Today, the disability insurance program pays benefits to individuals with disabilities that meet certain medical criteria, so long as 

they work long enough and paid Social Security taxes. 

Over the past four decades, disability program costs have soared 

from $18 billion to $124 billion as the number of those receiving 

benefits has more than tripled from 2.7 to 9.7 million people. The 

size of the overall workforce, more women in the workforce, the 

aging of the Baby Boomers into their disability-prone years, and relaxed eligibility requirements have all contributed to this growth. 

That continued growth is putting a massive strain on the program. According to the 2011 Trustees’ Report, without Congressional action, the Disability Insurance program will be unable to 

pay full benefits beginning in 2018. That’s just a few years from 

now. And as the size, cost, and complexity of the disability insurance program has increased, so has the program’s exposure to 

waste, fraud, and abuse. 

In fiscal year 2011, Social Security paid $130 billion—that’s with 

a ‘‘b’’—in disability benefits. That’s about what it costs to run three 

federal agencies, believe it or not: the Department of Homeland Security, NASA, and the Department of Housing and Urban Development. In that same year Social Security’s disability overpayments 

were 1.4 percent of total benefits paid. That percentage may sound 

small, but 1.4 percent of benefits equals $1.8 billion in overpayments. 

In fact, according to Social Security, each tenth of one percent 

point in payment accuracy represents 706 million in outlays for the 

retirement and disability program. Said another way, for every 

1/10 of 1 percent Social Security improves its payment accuracy, it 

can pay disability benefits for a full year to close to 5,300 people. 

That’s real money for those who can’t work and who count on these 

benefits to keep a roof over their head and food on the table. 

Finally, while Social Security collected $839 million in overpayments in fiscal year 2010, cumulative overpayment debts still 

reached $5.4 billion that same year. 


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Continuing disability reviews also protect the disability program 

by making sure those receiving disability benefits are still disabled. 

Every $1 spent on the reviews results in $10 of program savings, 

including both Medicare and Medicaid. There is a growing backlog 

of medical continuing disability reviews, and in the Budget Control 

Act, Congress authorized $13 billion in additional funding over the 

next 10 years exclusively for these and other reviews. 

The best way to protect the disability program is to prevent 

fraud before it occurs. The Cooperative Disability Investigation program does just that. This program is a joint effort between Social 

Security, the Office of Inspector General, working with the state 

disability determination services and state or local law enforcement. Since 1998, efforts by these units nationwide have resulted 

in $3.1 billion in disability savings. As impressive as some of these 

anti-fraud efforts appear, their very success raises questions about 

how many other examples of abuse are yet undetected. 

The disability program is of vital importance to millions of Americans whose lives are changed forever by the onset of a disability. 

We need to protect that program for those who truly need its benefits. Waste, fraud, and abuse in the disability insurance program 

cheat honest, hardworking American taxpayers. As we work to secure the future of this program, we need to protect taxpayers from 

con artists who are stealing from the system by making sure benefits are paid only to those who deserve them, an undertaking I 

know all of us on the Subcommittee stand firmly behind. And I 

thank the IG for working that program. 

Everybody says it’s just a minor amount. But billions of dollars 

is not minor, in my view, regardless of how you compare it to other 

programs. 

With that, I yield to Mr. Becerra for his comments. 

Mr. BECERRA. Thank you, Mr. Chairman. Nearly 157 million 

Americans contribute to Social Security with every paycheck. In return, these workers and their families earn guaranteed protection 

against the devastating consequences of disappearing pensions and 

retirement savings, premature death, and career-ending disability. 

The vast majority of American workers never have to use the disability insurance in Social Security. But for those who become so 

disabled that they can’t work at all, it is a lifeline. We owe it to 

American workers to safeguard their contributions to the Social Security trust fund, whether against the Wall Street privatizers who 

would raid the trust fund, or from erroneous payment of disability 

benefits to those who have not earned them. 

That is why it’s crucial that the Social Security Administration 

receive the funding it needs to fight waste, fraud, abuse, and to 

prevent simple errors. The increased funding for program integrity 

within the SSA, which was authorized in last fall’s bipartisan 

Budget Control Act, is a very good step in that direction. 

The Congressional Budget Office estimates that the increased resources will prevent about $11 billion in overpayments within the 

decade, and even more later. That’s because the eligibility reviews 

that SSA is able to conduct as a result of this special funding will 

generate $10 to $12 in savings for every dollar we invest. 

It sure would be nice, though, to see more consistency in 

Congress’s commitment to payment accuracy. A little more than a 


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decade ago, the Clinton Administration, working with Congress, 

completely eliminated the backlog of benefit payment cases that 

needed review. Devastating subsequently, we saw that Congress 

has let the funding drop by almost 75 percent by the year 2007. 

And the backlog came back with a vengeance. 

In 2009 and 2010, working with President Obama, we restored 

some of SSA’s budget, and succeeded in reducing the backlog. But 

then last year was a disaster. Congress’s continuing resolution for 

2011 froze the Agency’s funding once again, and at a time when 

over 13,000 Baby Boomers are starting to collect their Social Security benefits every day. This funding roller coaster has real consequences for the Social Security trust fund. 

We also need to put the program integrity funding, which is 

about six percent of Social Security’s overall operating budget, in 

context. One of our witnesses, Mr. Steven Clifton, will let us know 

a little bit more about that. He will indicate that most of SSA’s 

quality control efforts, including program integrity, are performed 

on the front lines by regular office staff, not by some special cadre 

of employees. 

Preventing and correcting errors is a day-to-day responsibility. It 

falls on the same field offices and the same state disability determination workers who process the initial claims, who answer questions for the public, who track down lost checks, who assign Social 

Security numbers, and who do everything to provide other services 

Americans need under Social Security. It’s up to them to do the 

program integrity, as well. 

So, when Congress decides to limit SSA to a smaller actual operating budget than what SSA had the year before, that has real consequences for payment accuracy. When you force SSA to operate 

under a hiring freeze, as it had to last year, and continues to this 

year, that means SSA can’t replace retiring or departing employees 

who are the experienced and hard-working members of the force. 

They are the very people who we rely on to prevent mistakes on 

the front end, so we don’t have to correct them on the back end. 

One final point. As important as it is to make sure Social Security payments are accurate, and as significant as the savings can 

be when SSA has the resources to do the job well, I want to make 

sure we keep SSA’s overpayments in perspective. In 2010, Social 

Security, which had 72 million field office visits and phone calls, 

processed over 8 million benefit applications, and paid out benefits 

to over 54 million seniors, survivors, and disabled workers, had a 

4/10ths of 1 percent overall overpayment rate. 

More specifically, Social Security’s disability insurance program, 

which handles a complicated eligibility process and requires applicants to provide specialized medical and vocational evidence, had 

an overpayment rate of 7/10ths of 1 percent. Most of this was due 

to simple error. 

I refer you to charts that you see on the screens. For comparison, 

the cost overrun for 98 of the Department of Defense’s major weapons systems was 31 percent. Not 31/100ths of 1 percent, 31 percent. 

What makes this a glaring statistic and makes it even worse and 

more staggering is the fact that DoD continues to do business with 

hundreds of contractors which the Pentagon knows were involved 

in fraud against the taxpayers. 


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[The insert of The Honorable Xavier Becerra follows:] 

f 

So, Mr. Chairman, I look forward to working together with you 

and our colleagues to safeguard the investment American workers 

make in Social Security. And let’s keep the big picture in mind. 

Tens of millions of Americans and their families rely on Social Security to be there when they need it. That means having a Social 

Security office open and fully staffed to help them. It means getting 

back every penny in Social Security overpayments. And for the 

sake of fairness and integrity, it means applying the same rigor 

and standard of accountability for all programs within the federal 

budget, from Social Security to national security. 

I yield back, Mr. Chairman. 

Chairman JOHNSON. Yes. I might remind you this is not the 

Armed Services Committee. 

Mr. BECERRA. But Mr. Chairman, we always are looking for 

ways to collect any overpayments. 

Chairman JOHNSON. I know, I know. 

Mr. BECERRA. National security or Social Security. 

Chairman JOHNSON. Thank you. 

Ms. Colvin, I understand Social Security is going to resume making benefit estimate statements available, but only to certain 

groups. I look forward to being briefed by your staff and holding 

a future hearing on this. The statements are an essential tool for 

helping Americans prepare for their retirement. But you can tell 

your Chief he should have told us about it before he did that. 

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

for the hearing record. Before we move on to our testimony today 

I want to remind our witnesses to please limit their oral statement 

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

We have one panel today, and our witnesses who are seated at 

the table are Carolyn Colvin, Deputy Commissioner of Social Security Administration; Patrick O’Carroll, Jr., who is the Social Security Administration’s Inspector General; Thomas Brady, who is 


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Special Agent, Office of the Inspector General, Social Security Administration, from the Kansas City field division in St. Louis. He 

is joined by Paul Neske, Detective, St. Louis County Police Department, St. Louis. Steve Clifton is President, National Council of Social Security Management Associations. 

I appreciate you all being here. And, Ms. Colvin, you are welcome 

to proceed for five minutes. 

STATEMENT OF CAROLYN W. COLVIN, DEPUTY 

COMMISSIONER, SOCIAL SECURITY ADMINISTRATION 

Ms. COLVIN. Chairman Johnson, Ranking Member Becerra, 

Members of the Subcommittee, thank you for inviting me to discuss 

our efforts to preserve the integrity of our disability programs. I am 

the Social Security Administration’s Accountable Official for improper payments. 

I want to thank Congress for getting our budget to us early this 

year. It helps us minimize disruptions in serving the American 

public. Our dedicated employees continue to improve our efforts to 

prevent, detect, and recover improper payments, making the Social 

Security program the most accurate in Federal Government. 

Throughout my career I have worked closely with the vulnerable 

individuals who benefit from Social Security’s programs. They look 

to the disability program for assistance, a program they have contributed to through their payroll taxes. 

The payments we make under the SSDI program are exceptionally accurate. In fiscal year 2010, 99.31 percent of all SSDI payments were free of an overpayment, and 98.97 percent were free 

of an underpayment. While we are proud of these results, we still 

look for ways to do better, because we realize that even a small 

error rate represents sizeable incorrect payments. 

Funding for our program integrity work is key to ensuring that 

we continue proper payments to those individuals who are entitled 

to benefits. Continuing disability reviews play an especially important role. CDRs are re-evaluations of beneficiaries’ medical conditions and earnings to determine whether they should continue to 

receive benefits. Medical CDRs yield $10 in savings for every $1 invested. 

In 1996 we received a 7-year commitment of special funds to conduct medical CDRs. At the end of the 7 years, we had processed 

4.7 million full medical reviews. Over the subsequent five years, inadequate funding meant that we had to reduce the number of medical CDRs we completed. Now we have a backlog of about 1.3 million cases. We are doing 90,000 more medical CDRs this year. But 

because we did not receive full funding for program integrity, as 

authorized under the Budget Control Act, we will complete about 

130,000 fewer full medical reviews than we could have done. Given 

the high return on investment of medical CDRs, full funding of this 

workload is a smart investment. 

We are focusing resources on our work CDRs. We are taking actions more timely, and addressing overpayments more quickly. Our 

workloads are growing at the same time we are losing experienced 

staff, increasing the strain on our front-line employees, the same 

employees who conduct CDRs and perform core duties, including 

getting out that first payment to deserving beneficiaries. We must 


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balance quality and quantity. Thus, we are forced to do less with 

less. 

The SSDI work activity rules are extremely complex and difficult 

to implement. The President’s fiscal year 2012 budget included a 

work incentive simplification proposal that we believe could simplify SSDI program rules, and address a significant disincentive to 

work that occurs under the current rules: the fear of losing benefits 

due to work activity. We urge Congress to consider the work incentive simplification policy proposal. 

We would not be good stewards of our programs if we did not 

have a comprehensive debt collection program in place to recover 

program dollars. We do. Across all of our programs we recovered 

$3.2 billion in debt in fiscal year 2011, and $14.7 billion over the 

previous 5-year period at an administrative cost of $.08 for every 

dollar collected. 

We make every effort to identify and collect that as soon as possible, so we can arrange a repayment plan with the beneficiary. If 

the overpaid person no longer receives benefits, we arrange for debt 

collection through installment payments. If this is unsuccessful, we 

turn to authorized external debt collection tools. 

Our employees are vigilant and, when they suspect someone is 

receiving benefits through fraudulent means, make referrals to our 

Office of Inspector General. Last year we made 19,000 referrals. 

OIG opened 4,600 of these cases for investigation and possible 

criminal prosecution. We have a low incidence of fraud in our programs. 

We are committed to preserving the integrity of our programs. I 

must emphasize that just because a benefit payment is improper 

does not mean there was fraud. Our programs are complicated. 

And we work to ensure that our beneficiaries understand the reporting requirements. We take pride in our ability to protect and 

manage the resources and programs entrusted to us. We have 

earned the public’s trust, and we intend to keep it. 

Congressional support is vital. To complete all of the work for 

which we are responsible, we need Congress to fully fund our workloads in future appropriation cycles. 

Thank you very much. I am happy to answer your questions. 

[The prepared statement of Ms. Colvin follows:] 


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HEARING BEFORE 

THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON SOCIAL SECURITY 

UNITED STATES HOUSE OF REPRESENTATIVES 

JANUARY 24, 2012 

STATEMENT 

OF 

CAROLYN W. COLVIN 

DEPUTY COMMISSIONER 

SOCIAL SECURITY ADMINISTRATION 
11 


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Chainnan Johnson, Ranking Member Becerra, and Members oflhe Subcommittee: 

Thank you for inviting me to discuss our efforts to preserve the integrity of our disability 

programs. I am the Social Security Administration's Deputy Commissioner, as well as the 

Accountable Official for improper payments. We make every effort to pay benefits to the 

right person in the right amount at the right time. Accordingly, one of our strategic goals is 

to preserve the public's trust in our programs. 

Due to tight budgets in fiscal years (FY) 2011 and 2012, we have suspended or postponed 

lower priority activities so that we can continue to achieve our most important goalseliminating the hearings backlog and focusing on program integrity work. Our available 

funding in FY 2012 is almost $400 million less than what we operated with in FY 2010. At 

the same time, our fixed costs and our workloads continued to increase. We lost over 4,000 

employees in FY 2011, and we expect to lose over 3,000 more employees this year that we 

cannot replace. We simply do not have enough stalfto complete all ofthe work for which 

we are responsible, and we made strategic decisions about the areas in which we must do less 

with less. 

Eliminating the hearings backlog remains our top priority. With the resources we received in 

FY 2012, we can still achieve our commitment to reduce the average hearings processing 

time to 270 days by the end of FY 2013 provided we are able to hire enough administrative 

law judges. It will be an extraordinary accomplishment because we have faced a significant 

increase in hearing requests due to the economic downturn. 

While we cannot afford to complete the level of program integrity work authorized under the 

Budget Control Act of2011 (BCA) because Congress did not appropriate the full amount, 

we will increase the number of program integrity reviews that we conduct by 90,000 more 

full medical continuing disability reviews (CDR) this year. 

I am pleased to report that our hard-working, dedicated employees continue to improve our 

efforts to prevent, detect, and recover improper payments. As a result, the Social Security 

program is the most accurate in the Federal Government. Our employees also are vigilant 

about protecting program dollars from waste, fraud, and abuse, and make referrals to our 

OtTice of the Inspector General (orG) as appropriate. Our orG has the agency lead for 

investigating cases of possible fraud and referring them for criminal prosecution and other 

penalties. We believe that our cooperative efforts with the GIG have resulted in an 

extremely low incidence of fraud in our programs. It is important to remember that not all 

overpayments are improper and not all improper payments are necessarily fraud. For 

example, beneficiaries whom we have determined have medically recovered have the right 

under the statute to request that their benefits continue while they are awaiting the appeal. 

While such continued benefits are not improper payments as they were correctly paid under 

the statute, if the appeal upholds our medical recovery detennination, they are considered 

overpayments subject to recovery. 
12 


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The Disability Programs We Administer and Our Payment Accuracy 

Social Security touches the lives of nearly every American, often during times of personal 

hardship, transition, and uncertainty. Our 80,000 Federal and State employees serve the 

public through a network of 1,5UU omces across the cOlIDtry. Each day, almost I~U,UUU 

people visit our field omces and more than 435,000 people call us for a variety of services 

such as filing claims, asking questions, and reporting changes in circumstances (including a 

retutu to work). 

The two disability programs we administer are the Social Security Disability Insurance 

(SSDI) program and the Supplemental Security Income (SSI) program. The ssm program 

protects against loss of earnings due to disability. The SSI disability program assists blind 

and disabled persons with limited income and resources. These two disability programs 

provided an average of 15 million beneficiaries with a total of approximately $175 billion in 

benetit payments in FY 20 II. 

Overall, our SSDT payments are highly accurate. Our most recent data show that, in FY 

2010,99.3 percent of all ssm payments were free of an overpayment, and 99.0 percent were 

free of an underpayment. While we are proud of our high accuracy rate for ssm payments, 

we recognize that our SSI overpayment accuracy rate falls short of that high standard. To a 

large extent, inaccuracy is inherent in the complex program rules and the delays in receiving 

income data. SST payments can change each month due to income and resource fluctuations 

and changes in living arrangements. Our overpayment accuracy rate, though improving, 

reflects that complexity. In the SSI program, 93.3 percent of all payments were tree of an 

overpayment, and 97.6 percent of all payments were free of an underpayment, a significant 

improvement from FY 2008 1 

The Complexitv of Our Disability Programs and the Causes of Payment Errors 

OUf disability programs are challenging to administer. Determining that an individual is 

eligible for SSDI or SSI benellts is a complex and generally time-consuming process. Cnder 

the SSDI program, we must evaluate an individual's mental and physical impairments to 

determine whether the impairments are so severe that they prevent the claimant from 

engaging in work that exists in the national economy. In the SSI program, we apply the 

same standard for adults but we must also consider an individual's often rapidly changing 

income and resources before awarding SSI benefits based on disability. When we consider a 

person's continued eligibility for ssm or SSI benefits, the law adds further complexity by 

requiring us to document medical improvement that relates to a person's ability to work, a 

higher standard. 

I These data include all categories orSSI beneficiaries. 
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The leading cause of overpayments in the ssm program is error in the application of 

substantial gainful activity (SGA). SGA refers to the level ofa beneficiary's work and 

earnings that can alTect benefit payments.' Beneficiaries are required to tell us if they return 

to work. However, because the statutory rules for return to work are complicated, 

beneficiaries are often unsure when they have to report work to us. Congress has created 

opportunities for beneficiaries to try to return to work. For example, under the SSDI 

program, beneficiaries can test their ability to work in a trial work period (TWP) without 

affecting their benefits. The TWP ends when a beneficiary completes 9 months with 

earnings over a threshold amount ($720 per month in 2012) within a rolling 5-year period. 

After the TWP, a beneficiary enters into the extended period of eligibility (EPE). The EPE is 

a 36-month period during which we pay benefits only in the months a beneficiary earns 

below SGA. Entitlement to benefits ends with the first month of SGA after the EPE. In 

many cases, beneficiaries fail to report that they have begun a TWP or have continued to 

work into the EPE. A beneliciary's failure to report can lead to an overpayment. 

Even when a beneficiary reports to us, we cannot always act immediately ifthe person is still 

working in a TWP. Determining whether a beneficiary's work and earnings are SGA takes 

considerable time and requires delays while we get the additional information we need to 

make the determination. We must get information about the beneficiary's return to work 

from the beneficiary or the beneficiary's employer. Each year we mllst address large 

volumes of work reports, and there are inevitable delays in receiving and processing this 

supplemental information. Our work-related activities require a lot of starting and stopping 

work on a case while we develop the case, answer necessary questions, review it, and finally 

have the right information to take action. This work also requires expertise, and we need to 

have enough trained employees to complete it timely. The same employees who help the 45 

million people who come into our oftlces each year must also handle this work. The longer it 

takes us to get to this work, the more likely the overpayment will be higher. 

SSI has a different set of work rules. For SSI disability, SGA is a test to detennine only 

initial eligibility rather than continuing eligibility. When an SSl disability beneliciary 

returns to work, we do not apply the SGA rules. Rather the law requires that SSI benefits be 

reduced by $1 for every $2 in earnings. 

Improper payments often occur when beneliciaries fail to timely report changes, such as an 

increase in the value of resources or an increase or decrease in wages. Failure to report these 

changes is the primary cause of improper payments in the SSI program. 

Given the complexity of the statutes governing our disability programs and the volume of 

work, some overpayments are unavoidable. The complexity of our return-ta-work provisions 

~ Generally, earnings averaging O\'er SI ,01 0 a month (in 2012) demonstrate an individual's ability to perfoml SGA. 

This amount is subject to modifications and exceptions based on other statutory incentives designed to encourage 

work, such as impairment-related work expenses, subsidies, and special (;ondilions. 
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is exacerbated when a beneficiary receives both SSDI and SSI, because the beneficiary is 

subject to two different sets of rules. For example, almost 30 percent ofSS! beneficiaries 

aged 18-64 also receive SSDI. 

The President's FY 2012 budget included two proposals that have the potential to reduce 

disability program overpayments by testing programmatic simpllfication and giving us 

access to important State, local government, and private insurer benetit information. 

The first proposal is the Work Incentives Simplification Pilot (WISP). We believe WISP 

could address a significant disincentive to work under the current SSD! rules: the fear of 

losing benefits due to work activity. The current set of work incentive policies and postentitlement procedures have become very difficult for the public to understand and for us to 

effectively administer. The goal of WISP is to conduct a test of simplified SSDI work rules, 

subject to rigorous evaluation protocols, that may encourage beneficiaries to work and 

reduce our administrative costs. WISP would eliminate complex rules on the TWP and EPE. 

It would also eliminate perfonning SGA as a reason to tenninate benetits. Further, we would 

count earnings when they are paid, rather than when earned, which would better align the 

rules of the SSD! and SS! programs. If a beneficiary's earnings fell below a certain 

threshold, we could reinstate monthly benefit payments as long as the person was still 

considered to be disabled. 

The second proposal would require State and local governments and private insurers that 

administer worker's compensation (WC) and public disability benetit (POB) plans to provide 

us with infonnation on WC and POB payments. By requiring plan administrators to provide 

payment information to us promptly, this proposal would improve the integrity of the WC 

and PDB reporting process, improve the accuracy of SSDI benefits and SS! payments, and 

lessen our reliance on the beneficiary to report this information in a timely manner. 

We urge Congress to consider both of these proposals. They hold significant promise to help 

us reduce improper payments in our disability programs and save taxpayer dollars. 

Our Primary Program Integrity Too!s 

"Curbing Improper Payments" is the first objective under our 2008-2013 Agency Strategic 

Plan Goal to "Preserve the Public's Trust in Gur Programs." When an individual applies for 

one of our disability programs, we have a system in place to ensure accurate decisions. Each 

year, we are statutorily required to review at least 50 percent of all State Disability 

Determination Services (DDS) initial and reconsideration allowances for SSD! and SS! 

disability for adults. Based on the results of these reviews in FY 2009-the most recent year 

for which data are available-the decision to allow or continue disability was correct in 98.9 

percent of all favorable SSDI detenninations and 99 percent of all favorable SS! disability 

determinations for adults. These reviews allow us to correct errors we tind before we issue a 
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final decision, resulting in an estimated $558 million in lifetime program savings, including 

savings accruing to Medicare and Medicaid. The return on investment has been roughly $11 

for every $1 of the total cost of the reviews. 

Once an individual is on the disability rolls, our primary program integrity tools are medical 

and work CDRs and SSI redeterminations. We periodically conduct medical CDRs to 

evaluate whether ssm and SSI beneficiaries continue to meet the medical criteria for 

disability. We also conduct medical CDRs when we receive a report of medical 

improvement from a beneficiary or third party. We complete medical CDRs in two ways, 

which together ensure that we are targeting our resources to the most problematic areas in the 

most cost-effective way. The medical CDR process uses a statistical modeling system that 

uses data from our records to determine the likelihood that a disabled beneficiary has 

improved medically. If the statistical modeling system indicates that the beneficiary has a 

high likelihood of medical improvement, we send the case to the State DDS for a full 

medical review, The remaining beneficiaries who are due for review but have a lower 

likelihood of medical improvement receive a questionnaire requesting updates on their 

impairments, medical treatment, and work activities. If the completed mailer indicates that 

there has been potential medical improvement, we send the case to the DDS for a full 

medical review. Otherwise, we reschedule the case for a future review. To date since 1996, 

we estimate that on average each dollar spent on medical CDRs yields at least $10 in lifetime 

program savings, including savings accruing to Medicare and Medicaid. 

We have shown that with adequate funding for medical CDRs, we are able to produce 

results. For example, in 1996 we received a 7-year commitment of special funds to conduct 

medical CDRs. By the time the funding commitment expired at the end of FY 2002, we had 

completed 9.4 million CDRs (including 4.7 million full medical reviews) and were current 

on all CDRs that were due. For all the medical CDRs completed during the period FYs 1996 

through 2002, we spent roughly $3.4 billion, with an estimated associated lifetime savings 

from this activity of approximately $36 billion. 

Unfortunately, trom FY 2003 through FY 2007, inadequate funding forced us to reduce the 

volume of medical CDRs we completed, and, as a result, we could not keep up with all the 

CDRs that were due. In recent years, additional timding for program integrity has allowed us 

to increase the volume of full medical CDRs though not to the level that the President has 

recommended. Last fiscal year, we completed about 345,000 full medical CDRs, a 66 

percent increase over the number we completed in FY 2007. Nevertheless, we still have a 

backlog of about 1.3 million medical CDRs. With full funding of the additional program 

integrity levels authorized under the BCA, we project that we could nearly eliminate the 

medical CDR backlog over the next decade, with the exception ofSSI adult medical CDRs, 

which have the lowest return on investment. However, in FY 2012 Congress did not fully 

fund the BCA level of program integrity resources. Therefore, we will complete about 

435,000 full medical CDRs, a significant increase over FY 2011 but 130,000 fewer than the 
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number authorized under BCA. Given the historically high return on investment of medical 

CDRs, we believe that fully funding this workload is a smart investment. 

900.000 

800,000 

~ 700.000 

8 e 600,000 

'5 

~ " 500,000 

'0 400.000 

" .c E 300000 

Z " 200,000 

100000 

We are Reversing the Decline In Medical CDRs, 

Saving Billions of Dollars 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY2008 FY2009 FY2010 FY2011 

Enacted 

A work CDR is a review of eligibility requirements regarding an SSDl beneficiary's earnings 

or ability to work. Work CDRs are triggered by reports of earnings from beneficiaries or 

third parties, systems alerts, and earnings posted to a beneficiary's record. For instance, after 

an SSDl beneficiary completes a TWP and continues to work, we would conduct a work 

CDR to determine if the beneficiary's earnings preclude entitlement to payment. We may 

also receive either a report of earnings or an earnings alert for unreported earnings. OUf 

Continuing Disability Review Enforcement Operation uses Internal Revenue SCIY'ice 

earnings data to identify possible work CDRs for SSDl beneficiaries. It generates about 

600,000 alerts annually, and we target the alerts with the highest identified earnings and 

work those cases first. In recent years, we have allocated additional staff resources to 

analyze the work reports we get from all sources and to conduct more work CDRs. We are 

also targeting the cases with the oldest work reports-those over 365 days old. 
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We handle work CDRs in field offices and processing centers. We use a program called 

eWork to automate work CDR processing. eWork collects necessary data from mainframe 

databases, preparcs forms, notices, and work report receipts, incorporates policy and decision 

logic, and adjusts benellts. 

Despite our budget constraints, we have focused resources 011 completing more work CDRs 

to minimize overpayments. [n FY 20 I 0, we completed 312,471 work CDRs.' Ofthese, 

105,279 resulted in a finding of cessation of disability, or a subsequent reinstatement or 

suspension of benellts in the EPE. In FY 20 II, we increased the number of work CDRs we 

completed to about 324,000.' While we are still IInaJizing our data regarding the outcome of 

those work CDRs, we estimate that about 130,000 resulted in a IInding of cessation of 

disability, or a subsequent reinstatement or suspension of benellts in the EPE. This IIscal 

year we are focusing our limited resources in a few key areas to reduce overpayments. We 

are dedicating resources to ensure that we handle actions related to work more timely and 

address overpayments quicker. Nevertheless, we simply do not have the resources to 

complete all of these cases. 

Redeterminations are reviews of all of the nonmedical tactors ofeJigibility to determine 

whether a beneficiary is still eligible for SSI and still receiving the correct payment amount. 

We focus on the most error-prone cases each year using a statistical model. In FY 2011, this 

statistical model allowed us to prevent $1.4 billion more in overpayments than what a 

random selection of cases would have prevented. Historically, every dollar spent on SSI 

redeterminations returns more than $7 in lifetime program savings, including savings 

accruing to Medicaid. 

Just like the number of medical CDRs from FY 2003 to FY 2007, the number ofSSI 

redeterminations we conducted over the same period dropped precipitously due to inadequate 

funding. Compared to FY 2007, we are now completing about 1.5 million more SS[ 

redeterminations each year due to increased funding for program integrity. We anticipate 

completing 2.6 million SS! redeterminations in FY 2012. The additional SS! 

redeterminations we have completed in recent years are the primary reason why we have 

been able to increase our SSI overpayment accuracy rate by 3.6 percentage points-a 

statistically significant amount-over the past 3 years. 

1 Because \ve reviewed somc beneficiaries more than once during the fiscal year. the number of completed work 

CDRs involves about 264,000 ssm beneticiaries. 

~The number of completed v.ork CDRs for FY 1011 likely includes some beneficiaries for whom wc completed 

reviews more than once. 
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3.000,000 

~2,500.000 

o 

., 

'" t: 

"§2,QOQ,QOO 

~ "C 

~1,500000 " 

'" '" '0 

~ 

~1000000 

E 

z " 500,000 

We Continue to Increase 551 Non-Disability 

Redeterminations, Saving Billions of Dollars 

i 

FY20Q8 FY2009 FY201Q FY2Q11 FY2012 

The same employees who complete CDRs and redetemlinations also have many other critical 

responsibilities, such as taking and adjudicating SSDT and SST applications. While our 

workloads continue to grow and expand, the number of people to do the work has decreased. 

Any workloads that we must defer due to inadequate funding-whether program integrity 

work or deciding initial claims-become only more complex and costly to complete the 

longer that the workload ages. For example, with a work CDR, we have to look at virtually 

every month over a specified period to determine if a person worked, the amoum of his or 

her earnings, and whether the person had impairment-related expenses or special subsidies. 

Ifwe do not get to the work CDR shortly after the person goes to work, we have more 

months in the period to analyze, more pay stubs to examine, and, generally, more variables to 

factor into our determination. As the time it takes to handle this workload increases, the 

likelihood of large overpayments in those cases also increases. 

The President's FY 2012 Budget included a legislative proposal to require employers to 

report wages quarterly. Increasing the timeliness of wage reporting would provide us more 

cun"cnt information on our beneficiaries' work activity, which could help to minimize the 
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amount of overpayments. Reverting to more frequent wage reporting would enhance 

program integrity in a variety of programs. 

In the past few years, we have developed and rolled out two initiatives further that improve 

our SSI accuracy rates. Those initiatives are the Access to Financial Institutions (AFI) 

project and the SSI Telephone Wage Reporting (SSITWR) system. 

AFI is an electronic process that allows us to identify financial accollnts ofSSI applicants 

and beneficiaries that exceed statlltory limits. As of June 2011, all 50 States use AFI, and we 

achieved this goal 3 months ahead of schedule. We will soon complete systems 

enhancements that will fiJrther automate the AFI process. 

The AFI project has proven very useful in identifying undisclosed accounts. For example, 

jllst last Slimmer, we had a case in which a claimant stated he had a bank account under the 

$2,000 SSllimit. The actual account balance verified through AFI was $200,000. In another 

case, a claimant said he had only one bank account under the resource limit. Using AFI to 

contact multiple banks, we uncovered six bank accollnts with balances of nearly $25,000 in 

each accollnt. We are looking at the possibility of expanding this successful program to real 

property. 

SSI beneficiaries can report wage data through the SSI Telephone Wage Reporting 

(SSITWR) system, which automatically processes the wage information into the SSI system. 

Tn FY 20 I I, we processed more than 325,000 monthly wage reports using this system. 

These reports generally are accurate and require no additional evidence, which saves time in 

our field offices. SSITWR has allowed liS to increase the volume of wage reports we 

receive, and therefore reduces wage-related errors. 

We are also expanding Ollr marketing of this service to the public. This fiscal year, we 

expect to conduct a targeted outreach to representative payees of working SSI beneficiaries, a 

population that has successfully adopted SSlTWR in prior testing. 

Data Exchanges and Other Systems Enhancements 

We rely on data exchanges to help us protect the integrity of our programs. Efficient, 

accurate, and timely exchanges of data promote good stewardship for all parties involved. 

We have over 1,500 exchanges with a wide-range of Federal, State, and local entities that 

provide us with information we need to stop benefits completely or to change the amount of 

benefits we pay. We also have about 2,300 exchanges with prisons that allow us to suspend 

benefits to prisoners quickly and efficiently. 
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Data exchanges are also a cost-effective way to prevent and detect improper payments. For 

example, in FY 2008, for every dollar spent on our pension match with the Department of 

Veterans Affairs, we saved nearly $39 in SS! benefits. Similarly, during the same timelrame, 

every dollar we spent on our match with Office of Personnel Management saved us almost 

$20 in Old-Age, Survivors, and Disability Insurance (OASDI) benefits. 

We also depend on advanced technology to help balance the need to keep up with growing 

workloads and to be effective stewards of the Social Security Trust Funds and taxpayer 

dollars. Technology and automation are keys to providing quality service to the public as our 

workloads continue to grow. For example, we recently introduced systems enhancements to 

the Returned Mailer System (RMS), which tracks the status of a medical CDR mailer from 

release until we receive a response from the beneficiary. The enhancements included 

implementing text-mining software that scans the mailer responses tor keyword matches, 

thereby eliminating the manual handling of mailers that meet certain criteria. In those cases, 

the RMS decides the appropriate action to take (full medical CDR, manual review of the 

mailer response, or no further action), thus expediting decisions. 

Tools to Recover Overpavments 

In addition to our efforts to prevent improper payments and improve our payment accuracy, 

we also have a comprehensive debt collection program. We recovered $3.2 billion in 

program debt in FY 2011 and $14.72 billion over the previous 5-year period (FYs 2007-

2011) at an administrative cost of $.08 for every dollar collected. 

We recover OASDI and SSI overpayments from overpaid beneficiaries and representative 

payees who are liable for the overpayment. To recover debt, we withhold current benefit 

payments from the debtor. It is harder to recoup a debt once benetits end; therefore, we 

make every effort to identify and collect debt as soon as possible. Ifthe overpaid person no 

longer receives benefits, we offer the opportunity to repay debt via monthly installment 

payments. 

When we cannot recover a debt on our own, we tum to authorized external debt collection 

tools. These tools include: 

• Tax Refund Offset; 

• Administrative Ollset (collection ofa delinquent debt from a Federal payment other 

than a tax refund); 

• Credit Bureau Reporting; 

• Administrative Wage Garnishment; 

• Non-Entitled Debtors Program (a system that facilitates recovery of debt owed by 

non-beneficiaries, such as representative payees); and 

• Federal Salary Offset. 

10 
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We plan to improve our debt collection programs by implementing several enhancements to 

allow us to take advantage of changes in the law that expand the availability of 

administrative offset. For example, we will make systems changes to allow us to collect 

delinquent debt via the Treasury Offset Program beyond the current I O-year statute of 

limitations. The Department of the Treasury removed the 10-year limitation to collect 

delinquent debts via the program and we amended our regulations in October 2011 to 

confonn to this change. As resources pennit, we will start using other existing debt 

collection authority such as private collection agencies, charging administrative fees and 

interest, or indexing a debt to reflect its current value. 

In providing us with these debt collection tools, Congress recognized that maximum debt 

collection is not the only consideration. We must balance our stewardship responsibilities 

with compassionate recognition of our benetlciaries' individual situations. For example, the 

law limits us to withholding no more than 10 percent of an SSI benetlciary's monthly income 

to recover an overpayment. Reducing the already minimal SSI payment too much could 

leave the beneficiary without enough money to meet basic living expenses. Similarly, the 

law prohibits recovery of overpayments from any benetlciary who is without fault ifthe 

recovery would defeat the purpose of the programs or be against equity and good 

conscience. 

However, we are considering regulatory changes that could potentially allow us to collect 

more of our programmatic debt. Such regulatory changes could include increasing the 

minimum monthly repayment amount for certain beneficiaries with overpayments. 

Our Cooperative Efforts with OIG 

We work with our OIG to operate investigative units-called Cooperative Disability 

Investigations (CDT) units-across the country. Each unit consists of an OIG special agent, 

State or local law enforcement investigators, State DDS examiners/analysts, and our 

management support specialists or similar employees. Our CDT units allow us to more 

quickly determine whether fraud has potentially taken place and move forward with deciding 

disability claims if we are satisfied that fraud has not occurred. By fostering an exchange of 

information between disability decision-makers and the CDI units, the CD! program 

increases our ability to identify and prevent overpayments, as well as deny potentially 

fraudulent initial applications. The program also ensures timely investigation and the 

termination of benefits when we detect fraud during work or medical CDRs. 

CDT units also investigate and support criminal prosecution of doctors, lawyers, and other 

third parties who commit fraud against the SSD! and SSI disability programs. The results of 

these investigations may also be presented to Federal and State prosecutors for consideration 

Il 
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of criminal or civil prosecution, as well as to the Office of the Counsel to the Inspector 

General for the possible imposition of civil monetary penalties. 

There are currently 25 CD! units operating throughout the United States, with a 26th unit 

expected to be operational before the end of this lIscal year. According to our OIG, since the 

program's inception in FY 1998 through September 2011, CDl efforts nationwide have 

resulted in $1.8 billion in savings to our disability programs and $1.1 billion in savings to 

non-Social Security programs, such as Medicare and Medicaid. 

These monetary achievements are the result of CD! units opening more than 34,700 cases 

and developing evidence to support approximately 26,270 actions, resulting in a denial, 

suspension, or termination of disability benellts. 

In cases where Federal prosecutors would be otherwise unable to take action on fraud cases 

referred by the 01G due to resource constraints, our agency attorneys may prosecute these 

cases in Federal CGlut instead. These attorneys serve as a Special Assistant to a United States 

Attorney's Office in eight of our regional offices. There are a total of nine attorneys who 

take on these cases. From FYs 2003 through 2010, our attorneys secured over $36.9 million 

in restitution orders and 717 convictions or guilty pleas. Tn FY 2011, we secured nearly $6.8 

million in restitution orders and 97 convictions for identity theft, program fraud, and Social 

Security number misuse. 

The law provides a wide-range of penalties for individuals who make false statements, or 

who misrepresent or omit material tacts used in determining eligibility for, or the amount at: 

OASDI or SS! benefits. We train our field employees to alert OIG to any cases of suspected 

fraud. We made nearly 19,000 such fraud referrals related to our disability programs in FY 

2011, from which the 01G opened about 4,600 cases. 

Conclusion 

We take pride in our ability to protect and carefully manage the resources, assets, and 

programs entrusted to us. We have earned the public's trust, and we intend to do everything 

we can to keep it. We are lIrmly committed to sound management practices, including using 

accurate metrics for evaluating our programs' integrity, and following up with appropriate 

enforcement and recovery actions. We know the continued success of our programs is 

inextricably linked to the public's trust in them. Properly managing our resources and 

program dollars is critical to that success. 

We also know that congressional support is vital. In order to complete all of the work for 

which we are responsible, we need Congress to fully fund those workloads in future 

appropriations cycles. We are doing what we can to target our program integrity efforts to 

12 
23 

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24 

Chairman JOHNSON. Thank you, ma’am. 

Mr. O’Carroll, welcome. Please go ahead. 

STATEMENT OF PATRICK P. O’CARROLL, JR., INSPECTOR 

GENERAL, SOCIAL SECURITY ADMINISTRATION 

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

Member Becerra, and Members of the Subcommittee. Thank you 

for the invitation to testify today. 

SSA provides about $10 billion in disability insurance payment 

to more than 10 million citizens every month. More and more 

Americans are turning to SSA as Baby Boomers reach their most 

disability-prone years. The Agency received an all-time high 3.2 

million initial applications for disability benefits in fiscal year 

2011. Thus, it is a critical time to focus on the future of the disability program. 

My office’s efforts to secure the disability program focus on investigating individuals suspected of committing Social Security fraud, 

completing audit reviews, and recommending ways for SSA to improve disability program integrity and efficiency. Last year OIG 

agents reported more than $410 million in investigative accomplishments. That includes more than $80 million in SSA recoveries 

and restitutions, and about $330 million in projected savings from 

programs such as the Cooperative Disability Investigations effort, 

which we will hear about more shortly. 

Last year our office received more than 103,000 fraud allegations 

and 43 percent of all allegations were disability-related. We have 

also made many recommendations to SSA in recent years that support OIG’s focus on disability program integrity. 

SSA projected a backlog of about 1.4 million continuing disability 

reviews at the end of Fiscal Year 2011. Our audit work has found 

the Agency would have avoided paying hundreds of millions of dollars to ineligible beneficiaries if CDRs were conducted when they 

were due. SSA estimates that every dollar spent on CDRs yields at 

least $10 in SSA program savings. The Agency has requested additional funds this year for program integrity efforts. SSA has a goal 

of conducting more than 1.4 million CDRs. However, this amount 

will not significantly reduce the CDR backlog. 

We also believe reducing the complexity of SSA’s disability programs would help prevent millions of dollars in overpayments that 

occur each year. 

SSA has had to evaluate earnings and work incentives before 

stopping benefits. So simplifying these provisions could have a positive effect. 

Our support for stewardship activities has never waivered. My 

written statement for the record includes other recommendations 

we have made to SSA. We continue to pursue the establishment of 

self-supporting fund for integrity initiatives, such as CDRs and our 

CDI program. 

The CDI program has received tremendous support from your 

subcommittee. In late August, Chairman Johnson was kind enough 

to visit our Dallas CDI unit. And Congressman Brady and I toured 

the Houston CDI unit, and we greatly appreciate all of your interest. 


ccoleman on DSK8P6SHH1PROD with HEARING
25 

I am also pleased the subcommittee invited OIG Special Agent 

Tom Brady and St. Louis County Detective Paul Neske to be here 

today. They are members of our CDI unit in St. Louis. 

To highlight our anti-fraud efforts, I would like to share with you 

a CDI surveillance video. We currently have 25 CDI units across 

the country, and this case comes from our Tampa CDI unit. 

[Video.] 

Mr. O’CARROLL. The unit investigated a 54-year-old man. He 

said he used a cane for walking for assistance, and he could not 

perform household chores. The Tampa disability examiners referred the case to the CDI unit, due to medical inconsistencies. And 

here you see him limping into the local SSA office. 

The investigation revealed that the man was hardly incapable of 

performing household chores. Surveillance showed the man, as you 

can see here, lifting a large piece of wooden furniture, and sweeping debris from the roof of his home. With this information, the 

DDS denied the claim, preventing an improper SSA payment. 

I have also available additional case example videos from Chairman Johnson’s district that we showed during a CDI unit visit last 

summer. Special Agent Brady and Detective Neske will provide 

more details on the CDI program in their testimony. 

And thank you, again, for this opportunity to testify. And I will 

be happy to answer any questions. 

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


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U.S. House of Representatives 

Committee on Ways and Means 

Subcommittee on Social Security 

Statement for the Record 

Hearing on Combating Disability Waste, Fraud, and Abuse 

The Honorable Patrick P. O'Carroll, Jr. 

Inspector General, Social Security Administration 

January 24, 2012 
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Good morning, Chainnan lohnson, Ranking Member Becerra, and members of the Subcommittee. It is a 

pleasure to appear before you, and I thank you for the invitation to testify today. I have appeared before 

Congress many times to discuss issues critical to the Social Security Administration (SSA) and the 

services the Agency provides to American citizens. Today, we are discussing SSA's Disability 

Insurance (01) program, focusing on efforts to secure the program's future and safeguard it from fraud, 

waste, and abuse. 

SSA 01 is the nation's primary Federal disability program. According to the most recent data from SSA, 

in November 2011, the Agency provided about S9.8 billion in DI payments to more than 10.5 million 

citizens across the country (more than 8.S million disabled workers, along with 2 million spouses and 

children). As baby boomers reach their most disability-prone years, more Americans have turned to 

SSA. Since FY 2007-when the Agency received 2.5 million initial applications for disability and the 

economy began its downturn-initial applications to SSA for disability have increased each year, with 

SSA receiving more than 3.2 million initial applications for disability in FY 2011. Thus, it is a critical 

time for the Agency to focus on the luture of the DI program. 

Ensuring the stability of the DI program is also an important undertaking for SSA because Agencies 

across the Federal government are working to reduce improper payments and to develop new solutions 

to eliminate and prevent wasteful spending, as President Obama signed into law the Improper Payments 

Elimination and RecovelY Act in July 20 I O. SSA has reported about $1.8 billion in overpayments in its 

DI program for FY 2011; SSA paid about $130 billion total in DI in FY 2011. As Federal employees, 

we must ensure that taxpayer dollars are spent wisely and efficiently, and that government benefits are 

administered correctly. Improper payments cover a number of financial transactions, but in SSA's case, 

they are largely benefit payments made to ineligible program participants. They can be the result of 

documentation and administrative elTors or fraudulent activity. ~iG's involvement in the effort to 

reduce overpayments in SSA's 01 program focuses on investigating individuals suspected of committing 

Social Security fraud, completing audit reviews, and recommending \vays for SSA to improve OJ 

program integrity and efficiency. 

According to SSA, as reported in its March 20 II Improper Payment Report, there are three major causes 

of elTors and improper disability payments: 

Substantial Gainful Activity (SGA): An adult is considered disabled ifhe or she is unable to 

engage in SGA because of a medically determinable physical or mental impairment. The SGA 

for Calendar Year (CY) 2012 is earnings above $1,0 I 0 per month for non-blind individuals, and 

earnings above $1,690 per month for blind individuals. Errors occur when beneficiaries fail to 

report earnings timely, or SSA does not timely withhold monthly benefit payments from those 

engaging in SGA. 

Government Pension Offset: SSA may offset benefits for a spouse or a surviving spouse ifhe 

or she receives a Federal, State, or local government pension based on work on which the spouse 

did not pay Social Security taxes. Errors occur ifreceipt of these types of pensions is not 

reported to SSA. 

Wages/Self-Employment Income: When an individual's earnings record does not accurately 

reflect the worker's actual earnings, there may be errors tfthe mistake goes undetected when the 

worker applies for benefits. 
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From FY 2005 to FY 2009, according to SSA, SGA errors resulted in an average of$975 million in 

overpayments per year, government pension offset errors resulted in an average 0[$240 million in 

overpayments per year, and wages/self-employment income errors resulted in an average of $195 

million in overpayments per year. 

SGA is strictly an issue with DI cases, according to SSA. From FYs 2005 to 2009, 64 percent of the 

improper payments associated with SGA errors resulted from the beneficiaries' failure to fepOli their 

work activity, while the remaining 36 percent of elTors were associated with SSA's failure to schedule a 

work continuing disability review (CDR) after the beneficiary notified SSA that he or she had returned 

to work. 

We know there are individuals who will purposely withhold or fabricate information to collect 

government benefits that they are not entitled to receive. Our agents investigate those who aim to 

defraud SSA and the Federal government. In FY 2011, our investigators reported more than $410 

million in investigative accomplishments, including about $82 million in SSA recoveries and restitutions 

and about $329 million in projected savings from programs such as the Cooperative Disability 

Investigations (CDI) initiative. CD! detects potential fraud and limits improper SSA disability payments. 

Members of the CDI Unit in St. Louis, Missouri, are with us today to discuss the program in detail. 

In addition, OIG agents opened and closed nearly 7,200 cases in FY 201 I, leading to 1,374 criminal 

prosecutions. OIG received more than 103,000 allegations offraud, waste, or abuse in FY 20 II, and 

while the majority of those allegations are related to SSA's disability programs. 43 percent of all 

allegations were specifically related to the 01 program. 

To give you an example of the types ofDI fraud cases our agents pursue, an investigation by our Seattle 

agents recently led to prison sentences for a Washington couple that defrauded SSA and other State and 

Federal assistance programs out of almost $300,000. 

Anthony George, 37, of Washington, reportedly obtained a second Social Security Number under a 

fictitious name in 1982, and, in 1993, he used the fake identity to apply for disability benefits, claiming 

he could not work. During multiple medical interviews over the years, George, using the fake identity, 

pretended he was profoundly disabled and unable to work. George's wife, Roxanne, 35, accompanied 

her husband at an interview and pretended to be his neighbor, claiming George never worked and could 

not work. 

However, an OIG investigation revealed Anthony George bought and sold used cars, lived in a $430,000 

house, and had more than $ I 0,000 in his bank account. Roxanne George reportedly fUlther defrauded 

State and Federal assistance programs by failing to report that she lived with her husband and claiming 

to be a single mother with three children. During in-home visits and written statements, Anthony and 

Roxanne George pretended to be brother and sister, rather than husband and wife. 

Both Anthony and Roxanne George pleaded guilty to Social Security fraud in September 20 II. Earlier 

this month, Anthony George was sentenced to 27 months in prison and ordered full restitution of 

$198,148 to State and Federal disability programs. Roxanne George was sentenced to six 1110nths in 

prison, six months in a halfway house and has agreed to pay $9 I ,527 for her fraudulent use of State and 
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Federal assistance programs. According to reports, when he addressed the court, Anthony George said, 

"I am a liar. It's all there in black and white." 

In addition to our ongoing investigative work, we have made many recommendations to SSA in recent 

years that support OIG"s focus on 01 program integrity. Although disabled beneficiaries are required to 

report their work activity to SSA. they do not always do so. In a September 20 I 0 Congressional 

Response Report, SSA 's Process for Jdent(/yinf; and Preventing lrnproper Payments to Individuals Who 

Return to Work, we said the Agency should devote additional resources to effectively make 

improvements to identify and prevent DI overpayments, because reviewing work activity and earnings is 

a complex process that requires staff to consider all of the retum-to-work provisions of the Social 

Security Act. 

The OIG's work has shown that SSA identifies beneficiaries who return to work through employer 

reports, computer matching with other Federal and State agencies, and other Agency projects. However, 

SSA must balance service initiatives, such as processing new claims, with stewardship responsibilities, 

such as conducting timely CORso Therefore, the Agency has not reviewed work activity for all 

beneficiaries and recipients who have earnings that may be substantial enough to affect their benefit 

payments. 

For example, in an April 2009 review, Follow-up on Disabled Title II Beneficiaries with Earnings 

Reported on the Master Earnings File, we found that SSA did not evaluate all beneficiary earnings, and 

overpayments resulted from work activity. We estimatcd that about $1.3 billion in improper payments 

went undetected by the Agency to about 49,000 disabled beneficiaries. 

Also, in a March 20 I 0 report, Full Medical Continuing Disability Reviews, we determined SSA's 

number of completed medical CDRs declined by 65 percent from FY 2004 to FY 2008, resulting in a 

significant CDR backlog. We estimated SSA would have avoided paying at a minimum $556 million 

during CY 2011 if the medical CDRs in the backlog had been conducted when they were due. 

Medical CDRs are effective in reducing overpayments in the DI program. SSA estimates that every $1 

spent on medical CDRs yields at least $10 in SSA program savings and Medicare and Medicaid. In FY 

2011, SSA conducted more than 345,000 full medical CDRs, up from 325,000 in FY 2010. In FY 2012, 

it is intended the Agency will receive $896 million for program integrity efforts like medical CDRs, and 

SSA has a goal of conducting 1.44 million CDRs total, including a proposed 592,000 full medical 

CDRs. 

SSA estimates that meeting the goals for medical CDRs and other integrity efforts will result in about $9 

billion in savings over 10 years, including Medicare and Medicaid savings. However, SSA's Office of 

Quality PerfOlmance projects that at the end of FY 2012, SSA will still have a backlog of 1.2 million 

medical CDRs. 

Additionally, SSA has said it would make the following improvements to its work CDR efforts: 

Dedicate staff to target the oldest CDR cases-initially, cases over 365 days old, then a gradual 

reduction of the age threshold; 

Prioritize earnings alerts by amount of earnings and work cases with highest earnings to 

minimize overpayments; 
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Improve communication between operational components; 

Allocate additional staff resources to conduct work CDRs; and 

Provide additional information in disability publications on when, where, and how to submit 

work reports to SSA. 

Also, SSA has developed a legislative proposal-the Work Incentive Simplification Pilot-to simplify 

work policies in the DI program, which would reduce administrative complexity and workloads, 

enhance con-elation of program rules among SSA 's disability programs, and encourage DJ beneficiaries 

to return to work because they would not face a permanent loss of benefits and Medicare. 

We in the OIG believe reducing the complexity ofSSA's disability programs would help reduce 

millions of dollars in overpayments that occur each year. For example, because SSA has to evaluate 

earnings and work incentives before stopping benefits-and cannot simply stop paying benefits because 

wages are reported-simplifying these provisions could have a positive effect. A proposal exists to 

change the Federal wage-reporting process from annual to quarterly reporting. A change of this nature 

would increase the frequency that employers report wages to SSA, improving the timeliness of the work 

CDR process. 

We also encourage SSA to support any legislative proposals that would improve the identification and 

prevention of improper payments in its programs. The OIG community is pursuing an exemption to the 

Computer Motching ond Privacy Prolection Acl 0/1988 (CMPPA), which would exempt OIGs Irom 

certain restrictions of the Privacy Act that forbid the use of matching programs to compare Federal 

records against other Federal and non-Federal records. The CMPPA restrictions weaken DIG efforts to 

detect improper payments and identify weaknesses that make Federal programs vulnerable to fraud. In 

2010, the Department of Health and Human Services (HHS) and HHS OIG obtained an exemption for 

data matches designed to identify fraud, waste, and abuse. SSA and SSA OIG are not exempt trom the 

CMPPA. 

Finally, we continue to pursue the establishment ofa self-supporting program fund for activities, such as 

CDRs, to ensure payment accuracy-that applicants and beneficiaries are eligible at the time they apply 

and as long as they remain in payment status. The proposal would provide for indefinite appropriations 

to make available to SSA 25 percent, and to OIG 2.5 percent, of actual overpayments collected based on 

detection of erroneous overpayments SSA collects. These funds would be available until spent for 

stewardship activities. 

The DIG has conducted, and continues to conduct, significant audit and investigative work to identify 

areas where SSA's 01 program can be vulnerable to improper payments, and to recommend actions to 

reduce and eliminate those errors. We will continue to provide information to SSA's decision-makers 

and to this Subcommittee, and we look forward to assisting in these and future efforts. 

I would like to conclude with a CD! case example, as the CD! program continues to be SSA and OIG's 

most successful anti-fraud initiative. The CDI Program has received tremendolls support from Congress. 

In late August 2011, Chairman Johnson was kind enough to visit the Dallas CD! Unit to learn more 

about the program and tour the Unit's office, and Congressman Brady and I previously toured the 

Houston COl Unit. We greatly appreciate your interest in the program. I'm also very happy the 

Subcommittee invited OIG Special Agent Tom Brady and SI. Louis County Detective Paul Neske, 

members of the St. Louis CD! Unit, here today to discuss, in detail, the CD! program. 

4 
31 

f 

Chairman JOHNSON. Thank you, sir. Keep up the good work. 

Special Agent Brady and Detective Neske, welcome. Please proceed. 

Mr. BRADY. Thank you, sir. 

STATEMENT OF THOMAS BRADY, SPECIAL AGENT, OFFICE OF 

THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION, KANSAS CITY FIELD DIVISION, ST. LOUIS, MISSOURI, 

ACCOMPANIED BY PAUL NESKE, DETECTIVE, ST. LOUIS 

COUNTY POLICE DEPARTMENT, ST. LOUIS, MISSOURI 

Mr. BRADY. Good morning, Chairman Johnson, Ranking Member Becerra, and Members of the Subcommittee. My name is Tom 

Brady, and I’m a special agent with the SSA office of the inspector 


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32 

general. I serve as the team leader for the cooperative disability investigations unit in St. Louis, Missouri. I am joined today by Detective Paul Neske of the St. Louis County Police Department, one of 

the St. Louis CDI unit’s local law enforcement partners. Thank you 

for the invitation to testify. 

We believe program integrity is a critical element in the Agency’s 

efforts to secure the future of its disability insurance program. For 

the past 12 years, our unit has been extremely successful in detecting abuse in SSA’s disability programs, and preventing payment on 

disability cases involving potential fraud. 

CDI was established in 1998 with 5 units. There are currently 

25 units covering 22 states, with the most recent unit opening in 

Jackson, Mississippi in November. Since the program was established, the program’s work nationwide has resulted in approximately $1.9 in projected SSA savings. Our St. Louis CDI unit includes two detectives and an intelligence analyst from the St. Louis 

County police department, one detective from the Sikeston, Missouri police department, an SSA operations supervisor, and a DDS 

hearings officer. 

I now introduce Detective Neske, who will provide more information on the CDI process. 

Mr. NESKE. Thank you, Tom. The process typically begins with 

the fraud referral from the state’s DDS or SSA to the CDI unit. 

The referrals are benefit applications or reviews that have been 

identified as suspicious by DDS. 

Types of disability fraud can involve malingering, filing multiple 

applications, exaggerating or lying about disabilities, and concealing work or other activities. The CDI unit team leader screens 

the allegations and works with the team members to investigate. 

Upon completion of the investigation, a report detailing our findings is sent to DDS, which determines whether a person is eligible 

for benefits. Some of our cases may result in criminal prosecution 

or civil penalties. 

[Video.] 

Mr. NESKE. For example, in this video you see a 45-year-old 

woman who had been collecting Social Security disability benefits 

since 2009. She alleged chronic back pain, and said she used the 

cane for assistance. But during our continuing disability review by 

the Missouri DDS in 2011, the disability examiner noticed that the 

woman walked without a limp. The case was referred to the St. 

Louis CDI unit for further investigation. 

As you can see at her home, she was able to walk down the front 

steps and carry her cane under her arm. But on the day—but on 

that day, outside of the medical office, she struggled to climb the 

steps to the office door. After her appointment, the woman is seen 

climbing her front steps without the use of the cane, and she is 

even carrying a child’s playseat. 

We forwarded this information to Missouri DDS and they seized 

the woman’s Social Security benefits. 

Mr. BRADY. Thank you, Paul. Since 1999, the St. Louis CDI unit 

has closed more than 1,900 cases, resulting in more than $84 million in projected SSA program savings. The Government Accountability Office has advocated expansion of the CDI program to all 

50 states. We in the OIG share that enthusiasm. We look forward 


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to continuing to assist SSA in this vitally important and growing 

initiative, doing our part in maintaining the integrity of Agency 

programs, and protecting the taxpayers of this great nation. 

Thank you again for the invitation to testify. Detective Neske 

and I would be happy to answer any questions. 

[The prepared statements of Mr. Brady and Mr. Neske follow:] 


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Good morning, Chainnan Johnson, Ranking Member Becerra, and members of the Subcommittee. It's a 

pleasure to appear before you, and I thank you for the invitation to be here today. My name is Tom 

Brady. I am a Special Agent with the Social Security Administration (SSA) Office of the Inspector 

General (OIG), and I serve as the Team Leader for the Cooperative Disability Investigations (CDI) Unit 

in st. Louis, Missouri. ['mjoined by Detective Paul Neske of the St. Louis County Police Department, 

one of our local law enforcement partners in SI. Louis, to speak to you about the CDI program, a 

collaborative anti-fraud effort between SSA and the O[G. Today, we're discussing SSA's Disability 

Insurance (DI) program and SSA's effOlts to secure the program's future. The CDI program has been 

extremely successful in detecting abuse in SSA's disability programs, specifically in preventing 

payment on disability cases involving potential fraud. The work of CDI Units across the country is a 

critical piece of the OIG and SSA's cooperative efforts to limit improper payments in SSA's disability 

programs. 

As Americans continue to adjust their lives as the economy recovers, more and more people are turning 

to SSA. [n Fiscal Year (FY) 2011, SSA received more than 3.2 million initial disability claims. Also, 

SSA paid about $130 billion in disability benefits in FY 2011. These numbers challenge SSA's ability to 

provide world-class service delivery, creating workloads that strain resources, causing delays and 

backlogs, and leaving the Agency susceptible to fraud and abuse. As more individuals apply for benefits, 

allegations of unlawful disability claims will also increase across the country, challenging the O[G with 

regard to stewardship in SSA programs. The CD! Units playa key role in ensuring that SSA and the 

State Disability Determination Services (DDS) have an avenue to further explore disability claims that 

appear suspicious. The CDr program helps maintain the level of accuracy and integrity in these 

programs that the American public deserves. 

SSA and OIG jointly established the CD! Program in FY 1998, in conjunction with State DDS and State 

or local law enforcement agencies, to effectively pool resources and prevent fraud in SSA's disability 

programs. The Units investigate disability claims under SSA's Title II and Title XVI programs that SSA 

employees believe are suspicious, and also investigate suspicious claims relating to other Federal and 

State programs. The CDI program's primary mission is to obtain evidence that can resolve questions of 

fraud before benefits are ever paid. COl Units also provide reports to DDS examiners during continuing 

disability reviews (CDRs) that can be used to cease benefits of in-payment beneficiaries. 

[n 1998, the CD! program launched with Units in five states. The program currently consists of25 Units 

covering 22 states, with the most recent Unit opening in Jackson, Mississippi, in November 2011. In FY 

2011, the CDr program reported 5281.2 million in projected savings to SSA's disability programs-the 

program's greatest single-year savings total-for a return-on-investment of$14-to-$1. Since the 

program was established, through December 2011, the CD! efforts have resulted in $1.9 billion in 

projected savings to SSA's disability programs and $1.2 billion in projected savings to non-SSA 

programs. 

Each CD! Unit comprises an OIG Special Agent who serves as the Team Leader, employees from that 

State's DDS and an SSA employee who act as programmatic experts, and State or local law enforcement 

officers. Tapping the skills of each member, the CD! Units receive benetit applications identified as 

suspicious by the DDS and, where appropriate, investigate these claims. In SI. Louis, [ have served as 

the Team Leader since February 2011, and I work side-by-side with Detective Neske, another detective 
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and an intelligence analyst from the St. Louis County Police Department, a third detective from the 

Sikeston (Missouri) Police Department, an SSA operations supervisor, and a DDS hearings officer. 

The process typically begins with a fraud referral from the DDS or SSA to the CD! Unit. We also 

receive fraud referrals from SSA's Office of Disability Adjudication and Review, private citizens, 

anonymous sources, and other law enforcement agencies. Disability fraud can involve malingering, 

filing multiple applications, concealing work or other activities, and exaggerating or lying about 

disabilities. The CD! Unit Team Leader screens the referral, and if it's accepted as a case, the Team 

Leader will work with the State or local law enforcement members of the team to investigate the 

allegation, either by interviewing the applicant and third parties andlor conducting surveillances ofthe 

applicant. Upon completion of the investigation, a report detailing the investigation is sent to the DDS, 

where DDS stall' serves as the ultimate decision-making entity in dctermining whether a person is 

eligible to receive a monthly disability benefit payment. If the claimant is already receiving henefits, 

DDS and/or SSA will detennine whether the person's benefits should be continued or terminated. There 

are also, in some cases, opportunities for criminal prosecution and the imposition of civil monetary 

penalties or administrative sanctions. 

In one recent case, our CD! Unit investigated a 45-year-old woman who had been collecting Social 

Security disability benefits since December 2009. At the time her disability claim was allowed, the 

woman alleged chronic back pain, and she said she was using a cane for assistance. During a CDR by 

the Missouri DDS in 2011, the woman alleged that she was unable to sit, stand, or walk for long periods, 

that she could not bend or squat, and that she spent "about 75 percent of her day in bed." She said she 

used a cane to move around, however, the DDS examiner noticed the woman had a normal gait, and her 

case was referred to the CD! Unit for further investigation. 

During a subsequent surveillance, Detective Neske observed the woman exit her house and carry a 

wooden cane in her left hand. The woman walked down several steps and on a sidewalk with a normal 

gait toward a parked car. She reached the vehicle, placed the cane in the vehicle's back seat through the 

open front passenger window, opened the front passenger door, and sat in the tront passenger seat. 

I later observed the vehicle arrive at a doctor's office, where the woman was scheduled to have a 

consultative examination. The woman exited the vehicle near the front door to the office, and then 

walked toward the door, using the cane in her right hand for assistance. She had a limp in her gait and 

her pace was very slow and lethargic. When she reached the steps leading to the front door, she took 

each step one by one. She later exited the building in the same slow and lethargic manner, using the cane 

to walk down the steps, one by one. She entered the same vehicle that brought her to the appointment. 

Detective Neske and I followed the vehicle, which stopped at a nearby gas station. The woman exited 

the vehicle and walked without a cane and with a nannal gait to the station's convenience store. She 

then purchased two drinks, carried them outside, and entered the vehicle. The vehicle traveled to another 

residence, which the woman entered without the assistance of a cane, and she soon len the residence 

with a child's play-seat. She entered the vehicle and returned to her residence, exiting the vehicle, 

walking with a normal gait, and carrying the child's play-seat and her cane into her residence. 

After receiving the CD! Unit's report, the Missouri DDS ceased the woman's disability benefits in June 

2011. The woman requested reconsideration from the DDS, and in October, the DDS issued a decision 

that confirmed its original decision to cease her benefits. She then requested an appeals hearing before 
36 

f 

Chairman JOHNSON. Thank you so much for your testimony. I 

appreciate it. 

Mr. Clifton, welcome. Please go ahead. 

STATEMENT OF STEVE CLIFTON, PRESIDENT, NATIONAL 

COUNCIL OF SOCIAL SECURITY MANAGEMENT ASSOCIATIONS 

Mr. CLIFTON. Chairman Johnson, Ranking Member Becerra, 

and Members of the Subcommittee, I am Steve Clifton, president 

of the National Council of Social Security Management Associations, NCSSMA, and the district manager of the Social Security office in Greeley, Colorado. Thank you for the opportunity to speak 

on behalf of the 3,500 NCSSMA members across the country. We 


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37 

share your concern about the disability program and combating 

waste, fraud, and abuse. 

First, let me thank you for the fiscal year 2012 appropriation 

SSA received, which included specific funding for program integrity 

initiatives such as medical continuing disability reviews. This funding is critical to process core workloads, and to improve payment 

accuracy. NCSSMA considers it a top priority to deliver quality 

service to the American public, and to be good stewards of the taxpayers’ monies. SSA completed 1.4 million medical CDRs in fiscal 

year 2011. But a backlog of 1.3 million still exists. 

The fiscal year 2012 program integrity funding could allow SSA 

to complete 592,000 full medical CDRs, an 82 percent increase over 

fiscal year 2010. This is a program integrity workload that saves 

at least $10 in lifetime program savings for every $1 invested. 

In addition to conducting program integrity workloads after benefits have been paid, we believe that it is equally critical to prevent 

improper payments before claims are processed. While this hearing 

is taking place, the American public is calling or walking in to Social Security field offices all across the country to discuss retirement, the loss of a loved one, or the onset of their disability, frequently with a sense of urgency or even desperation, as they look 

to us for assistance. 

Last fiscal year, we assisted almost 45 million visitors. We also 

received 3.2 million initial disability claims and nearly 860,000 

hearing requests. Both were the highest volume in our history. 

The same employees that process program integrity workloads 

also answer public telephone calls, take initial applications for disability and retirement benefits, and process claims, core workloads 

that are not program integrity funded, but do ensure the accuracy 

of payments. To this end, having adequate staffing levels in SSA 

field offices to process workloads, sufficient time to address complex 

issues, answer questions, and educate the public on their reporting 

responsibilities is essential to saving taxpayer dollars. 

SSA employees want to do quality work and prevent overpayments at all points of contact with the public. Adequate resources 

to conduct training and to perform quality reviews for claims accuracy are also imperative to discharging SSA’s stewardship responsibilities. Even with the fiscal year 2012 appropriation enacted, 

SSA field offices have been operating for over 15 months under a 

continuing hiring freeze, with very little overtime. Geographic staffing imbalances are occurring, due to uneven attrition across the 

country. These all detract from the efficiency of operations and 

serve to compromise efforts to improve payment accuracy. 

We also see areas to improve efficiency and to prevent improper 

payments by expanding electronic services available to the public, 

simplifying disability rules such as enacting WISP legislation, implementing federal wage reporting, and expanding data exchanges 

such as workers compensation information. This would allow SSA 

to address payment accuracy and ensure program integrity, both 

before and after claims are processed. 

We ask that Congress give thoughtful consideration regarding 

the future of SSA to ensure the preservation of this valued program. We sincerely appreciate the subcommittee’s interest in the 

vital services Social Security provides, and your ongoing support. 


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A strong Social Security program equates to a strong America. And 

it must be maintained as such for future generations. 

On behalf of NCSSMA members nationwide, thank you for the 

opportunity to present our testimony. 

[The prepared statement of Mr. Clifton follows:] 


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United States House of Representatives 

Hearing 

Subcommittee on Social Security 

Ofthe Committee on Ways and Means 

Testimony of 

Steve Clifton 

President 

National Council of Social Security 

Management Associations, Inc. 

Hearing Series on Securing the Future of the Social Security 

Disability Insurance Program 

January 24, 2012 

Chairman Johnson, Ranking Member Becerra, and members of the Subcommittee, on behalf of 

the National Council of Social Security Management Associations (NCSSMA), thank you for the 

opportunity to submit this written testimony regarding the future of the Social Security disability 

insurance program. We share your concem for combatting disability waste, fraud, and abuse and 

offer our perspective on the disability insurance program and the important work addressed by 

the dedicated employees o[the Social Security Administration (SSA). 

NCSSMA is a membership organization of nearly 3,500 SSA managers and supervisors who 

provide leadership in nearly 1,300 community-based Field Oftlces and Teleservice Centers 

throughout the country. We are the front-line service providers for SSA in communities all over 

the nation. 

In this role, our interactions with the American public often come at a time when they experience 

life-changing events such as retirement, loss of a loved one, or onset of disability. Oftentimes 

this translates into a sense of urgency or even desperation as they look to SSA for assistance. 

We are also the federal employees who work with your staff members to resolve problems and 

issues for your constituents who receive Social Security retirement, survivors and disability 

benefits (RSDl), and Supplemental Security Income payments (SSI). 

Since the founding of our organization over forty-two years ago, NCSSMA has considered our 

top priority to be a strong and stable SSA, which delivers quality and timely community-based 

service to the American public. We also consider it a top priority to be good stewards of the 

taxpayers' monies and the Social Security programs we administer. Our testimony provides a 

summary of the current state ofSSA operations, a review ofSSA's current funding situation, the 

many challenges confronting our agency, and our recommendations for improving payment 

accuracy and the disability insurance program. 
39 


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Despite SSA's enormous workloads and challenges, SSA's FY 2012 appropriation for 

administrative funding through the Limitation on Administrative Expenses (LAE) account was 

only slightly above the FY 2011 appropriation, While the dedicated funding to address program 

integrity workloads included in the FY 2012 appropriation is much needed and appreciated, the 

overall funding level docs not allow SSA to cover inflationary costs for fixed expenses, This has 

resulted in a hiring freeze and drastic reduction of overtime hours in our Field Omces, as well as 

the postponement of agency initiatives to improve efficiency-all of which will have major 

public service repercussions on payment accuracy and overall program integrity, 

SSA already has an acute stat1~to-workload imbalance and is over-extended in critical program 

areas as the agency struggles to keep up with rapidly increasing workloads and existing 

backlogs, Congress must give thoughtful consideration to future appropriations for SSA to 

ensure the preservation of this valued program, 

Preventing improper payments is important before claims are adjudicated as well as protecting 

tax payer dollars after claims are adjudicated, Properly funding SSA to process core workloads 

not eligible for specitk program integrity monies and investing in program integrity initiatives 

improve payment accuracy will save taxpayer dollars and is fiscally prudent in reducing the 

federal budget and deficit 

The Current State of SSA Operations 

NCSSMA has critical concerns about the dramatic growth in SSA workloads, and the need to 

receive necessary resources to maintain service levels vital to the 60 million Social Security 

beneficiaries and SSI recipients, Despite agency strategic planning, expansion of online 

services, significant productivity gains, and the best el10rts of management and employees, SSA 

still faces many challenges to providing the service that the American public has earned and 

deserves. 

Over the last several years, SSA has experienced a significant increase in Social Security claims, 

The additional claims receipts are driven by the initial wave of the nearly 80 million baby 

boomers who will be filing for Social Security benelits by 2030-an average of 10,000 per day, 

In addition, since 2008 there has been a surge in new initial elaims med due to poor economic 

conditions and rising unemployment levels, 

In FY 2011, SSA Field Offices assisted 44,9 million visitors, received 4,8 million retirement, 

survivor and Medicare applications, and 32 million initial disability claims-the highest number 

in SSA history, Also in FY 20 II, SSA completed 795,424 hearing requests-the largest annual 

total to date-and received 859,514 requests for hearings-an all-time high. 

During FY 2011, there were 16,4 million new and replacement Social Security cards issued, 

Over this same time period, benefit veritications, status inquiries and Social Security card 

applications accounted for nearly 50% of all transactions where the public walked into a Field 

Omce without an appointment 
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To address program integrity and reduce improper payments, SSA completed 2.4 million SS! 

non-disability redeterminations in FY 20 11, SS! redeterminations provide a return-oninvestment of more than $7 in program savings over 10 years for every $1 spent, including 

savings accrued to Medicaid. SSA also completed over 1.4 million medical continuing disability 

reviews (CDRs) in FY 2011. Every $1 spent on medical CDRs produces at least $10 in lifetime 

program savings. 

It is important to note that program integrity workloads are processed by the same SSA Field 

Office employees that answer public telephone calls, take initial applications for disability 

benelits, and develop and adjudicate benefit claims. In addition, it is also important to note, that 

while program integrity initiatives are vital in protecting taxpayer dollars after claims have been 

adjudicated, it is equally critical to prevent improper payments before they occur. 

To this end, having adequate staffing levels in SSA Field Offices to process workloads, answer 

questions and educate the public on their reporting responsibilities is essential to save taxpayer 

dollars. Adequate resources to conduct training and to perform quality reviews to ensure that 

claims are adjudicated accurately are also imperative to discharging SSA's stewardship 

responsibilities. 

Social Security Administration Funding 

SSA appropriations are an excellent investment and return on taxpayer dollars. The additional 

funding Congress provided SSA in FY 2008-20 I 0 helped significantly to prevent workloads 

from spiraling out of control, allowed the agency to accomplish its program integrity workloads, 

and assisted with improving service to the American public. 

Despite SSA's enormous workloads and challenges, SSA's FY 2011 appropriation for 

administrative funding through the Limitation on Administrative Expenses (LAE) account was 

below the FY 2010 enacted level and $275 million was rescinded Irom CalTyover Information 

Technology (IT) funds. While SSA's FY 2012 appropriation was slightly above the FY 2011 

amount and the dedicated funds lor program integrity workloads is appreciated, this funding 

level still does not allow SSA to cover inflationary costs for fixed expenses. This has resulted in 

noticeable public service repercussions in FY 2011 and the lirst quarter ofFY 2012, including a 

hiring freeze, drastic reduction of overtime hours in our Field Offices, closing all Field Offices to 

the public one-half hour earlier, and the postponement of agency initiatives to improve 

eftlciency. 

From the chart below, you can see the cumulative final appropriation levels SSA received from 

FY 2008 through FY 2011. 
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(Figures in Conunissioner's President's Final Final vs. Final vs. 

$Billions) Request Request Appropriation President Commissioner 

FY2008 $10.420 $9.597 $9.745 $0.14g (,>U,6/~ ) 

FY2009 $10.395 $10.327 $10.454 $0.059 $0.127 

FY2010 $11.793 $11.451 $11.447 (:3(1.004) (SO.l-H)) 

FY2011 $13.143 $12.379 $11.424 ~ ",(l.ll) ~) (~i "I \ 9) 

Total $45.751 $43.754 $43.070 (50.752) (,2.(>13) 

Assessment of SSA Challenges 

The FY 20 II and FY 2012 funding levels have impacted SSA and its dedicated employees. 

Field Onices across the country are struggling to address increased workloads without overtime 

while a hiring freeze remains in place. Employees, faced with these additional job stressors, 

frequently choose retirement in greater numbers, contributing to the loss of significant 

institutional knowledge, which exacerbates the problem. 

SSA has a highly skilled but aging workforce with about two-thirds of its employees involved in 

delivering direct service to the public. Of SSA 's 68,880 full-time and part-time permanent 

employees on duty as of October 1,2010,22.5% were eligible to retire in FY 2011. By 

FY 20 15,32.9% of SSA employees will be eligible to retire, and by FY 2020, this number will 

increase to 44.9%. 

In FY 2011, there were approximately 3,600 federal and DDS employee losses in SSA. In FY 

2012, it is estimated that another 4,400 federal and DDS employees will leave the agency for a 

total of nearly 8,000 losses in two years. As the chart below illustrates, through December 2011, 

there were 3,315 fewer employees in SSA Field Offices and DDS offices than in FY 2010. 

Field FO DDS 

Office Staffing Disability Staffing 

(FO) Change Determination Change 

+/- Service (ODS) +/-

This is an incredible loss of institutional knowledge considering that the agency is confronted 

with exploding workloads resulting from aging baby boomers, very complex programs to 

administer, and the volume of important program integrity work to be accomplished. With the 

hiring freeze in SSA Field Offices, there is no relief in sight, and the agency is quickly becoming 

severely understalIed. 

4 
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These resource reductions significantly compromise SSA's ability to provide complete attention 

to claims accuracy and properly discuss beneticiary reporting responsibilities. Managers and 

supervisors are frequently pressed into direct service duties such as answering public telephone 

calls, interviewing and adjudicating claims for benetits, and processing program integrity 

workloads. This prevents them from essential management responsibilities, including the 

oversight of quality initiatives, addressing critical on-going training, and ensuring efficient field 

operations. 

Geographical staffing disparities have occurred and will only increase as ongoing attrition 

spreads unevenly across the country. This leaves many otilces signiticantly understaffed. 

Managers report the following situations in their offices: 

We are down to 24 (Fom 30) employees and one of aliI' SRs just suffered a major heart 

attack. The other oflices in the state are at (or will soon be) in identical circumstances. 

It is a daily challenge to keep morale afloat. We struggle evelY day to make the hard 

choices of what we can and cannot get done. The staff is feeling disillusioned, given all 

of the negative discussions concerning thejillure of the federal workforce and the 

uncertainty regarding ollrfittllre. The other oflices in the state have indicated that they 

have losl staffas (/ direct result of this uncertainty. From a succession management 

standpoint, we are disenfranchising those who would carry the agencyfimvard into the 

future. 

The office had 27 employees but currently has 15 on duty. The office is receiving help 

with processing their internet claims and answering their phones. 

It is gelling more serious daily. My office is at a historically low staffing point as no 

doubt many offices are. Yet we are providing assistance to another office Ihal is down 

Fom 21 to 12 employees in the span of ahollt a year. 

A manager is expected to lose 60% of her stafl'early nexl year and with the hiringFeeze. 

she doesn'( expect to get any replacements. Even ilshe did. it would take at least a year 

h~fore those employees could really be productive. With the loss olovertime. the abilitv 

to process HJork has also been sign(jicantly impacted. 

We received ahout 150% increase in S5! redeterminations this year. Because oj'this. we 

have needed to shift all of the initial claims appointment over 10 our T2 unit. This has 

caused our appointment calendar to he extended and we are now receiving assistance 

with 0111' RSI appointments. In trying to keep our office wait time under 30 minules, we 

have been unahle to maintain adequate phone coverage. 

One ofSSA 's top priorities, and most significant challenges, is eliminating the disability 

hearings backlog. SSA has made a major resource investment to improve this situation and the 

goal is to eliminate the backlog by FY 2013 and to improve processing time to 270 days. The 

Commissioner has implemented several initiatives to achieve this goal, but this wil1 depend on 

the available resources provided by SSA tunding and the volume of new hearings received. 

SSA's efforts have resulted in significant progress in reducing the amount of time a claimant 

must wait for a hearing decision. In December 2011, the average processing time for a hearing 

was 343 days, a 171 day improvement over Fiscal Year 2008. Even though this is positive news, 

Hearing Omces are facing a significant wave of new hearings with approximately 140,000 more 
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hearings II led in FY 2011 than were tIled in FY 2010. This is attributable to the increased 

number of disability claims filed since the economic downturn that began in 2008. 

SSA Payment Accuracy and Program Integrity Investments 

SSA issues approximately $800 billion in benefit payments annually to 60 million people. 

Balancing service commitments with stewardship responsibilities is difficult given the 

complexity of the programs SSA administers, but the reduction of improper payments (both 

overpayments and underpayments) is one of SSA's key strategic objectives. 

In FY 2010, the accuracy rate for Old Age, Survivors, and Disability Insurance (OASDI) 

payments was 99.6 percent for overpayments. The comparable accuracy rate for FY 

2009 was 99.6 percent. 

In FY 2010, the SSI accuracy rate was 93.3 percent for overpayments. This represents an 

increase of 1.7 percentage points over the FY 2009 overpayment accuracy rate of91.6 

percent. 

These figures illustrate that SSA pays a very high percentage of benefits accurately. To 

adjudicate claims with an accurate payment amount and to ensure that claimants reporting 

responsibilities have been fully explained, an adequate number of trained SSA employees are of 

paramount importance to program integrity. 

Equally important is sufficient time to address these complex issues. The hiring freeze in SSA 

Field Offices, the higher attrition rate, and increasing workloads, all serve to compromise efforts 

to improve payment accuracy. SSA places a high priority on meeting workload goals, but 

meeting these goals and maintaining payment accuracy requires sufficient resources. 

One important initiative to provide relief to SSA Field Offices and to improve efficiency is 

increasing Internet services. In FY 2011, SSA received 999,203 retirement applications online 

and 289,418 Medicare-only applications online. The percentage of retirement applications filed 

online increased to nearly 41 percent, trom approximately 37 percent in FY 2010. In FY 2011, 

almost 33 percent of disability applications were tIled online compared to 27 percent in FY 2010. 

The expansion of electronic services available to the American public has helped to alleviate the 

number of visitors and telephone calls to SSA. NCSSMA believcs that SSA must be properly 

funded to continue to invest in improved user-friendly online services. Electronic services that 

are extended to benefit estimates, benetlt verifications, Social Security card replacements, claim 

status inquiries, and proccssing routine transactions (such as changc of address, change of direct 

deposit, etc.), in real time, would reduce contacts with Field Offices and allow employees to 

concentrate on efforts that would promote payment accuracy and program integrity. 

In the Budget Control Act of2011, Congress authorized $13 billion in additional funds above the 

discretionary budget caps over the next ten years exclusively for program integrity work. We 

appreciate this much needed support to cnsure the future viability of our disability and SSI 

programs. Once benefits are paid, two powerful tools for reducing improper payments and 

maximizing program integrity investments are conducting medical CDRs and SSI 

6 
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redctcnninations. 

Medical CDRs determine whether disability benefits should be ceased because of 

medical improvement. Every dollar spent on medical CDRs produces at least $10 in 

lifetime program savings. 

SSI redeterminations review nonmedical factors of eligibility, such as income and 

resources to identify payment errors. Every dollar spent on redeterminations produces at 

least $7 in lifetime program savings. 

SSA budgetary constraints have caused a shortfall between the number of medical CDRs due and 

the number conducted each year. Although SSA achieved its target for full medical CDRs by 

completing ovcr 345,000 in FY 2011, a backlog of approximately 1.4 million cases stiIJ exists. 

The SSA Omce of Inspector General has identified this as one of SSA 's most serious 

management chaIJenges. As a result of the additional program integrity funding, SSA's FY 2012 

goals include completing 592,000 full medical continuing disability reviews (CDRs), an increase 

of 82 percent over FY 20 I O. It is critical that SSA receives the necessary funds to eliminate this 

backlog by FY 2016. 

The chart below is based on data tram the Social Security Administration Office of Quality 

Performance. It illustrates the cost savings achieved from completing SSI redetermination 

program integrity workloads. 

Two major causes of improper payments for disability beneficiaries relate to return to work 

activities resulting in performing substantial gainful activity (SGA) and the detection of 

unreported financial accounts and wages. SGA is detennined during work CDRs and financial 

accounts affect SSI eligibility. 

SSA initiates work CDRs when earnings are reported to a disabled individual's record that could 

affect their benefit eligibility. Local SSA Field Offices handle selfCreported earnings as well as 

many third party earnings reports. The Office of Disability Operations (000) or Program 

Service Centers (PSCs) conduct reviews based on earnings repOlis posted on the disabled 

individual's earnings record. 

Regardless of the source of work reports, contact is required with the disabled beneficiary, 

employers, and often others providing support to the individual to determine if the earnings 

reported atJect disability. In addition to verifying the work activities, SSA must evaluate 

whether this work is SGA and consider such things as impairment related work expenses 

(IR WE), subsidies, extra assistance with duties and other special accommodations to detennine 
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continuing eligibility. This work is funded out of SSA's general operating budget, not the 

dedicated program integrity lunds. 

The work activity of disabled beneficiaries is a significant cause of overpayments. SSA 

identifies the majority of these cases through the current work CDR process, but a percentage arc 

undetected because either the wages were not identified or work CDRs were not completed on 

identified reports of wages. 

Prompt attention to this workload prevents or minimizes the amount of overpayments. The 

ability of SSA to promptly and etllciently address these workloads is a direct lunction of having 

sutllcient time and an adequate number of employees. Generally, the same employees who 

evaluate work CDRs are also the same employees that take and adjudicate initial claims, answer 

public telephone calls, and process other important agency workloads. NCSSMA believes a 

continued investment to address work CDRs would enhance SSA's program integrity efforts. 

SSA must improve work reporting mechanisms for disability beneficiaries to make this activity 

more "user friendly" and to ensure payment accuracy. While SSA has made significant strides in 

improving mechanisms for reporting work activity of disabled beneficiaries, additional 

investments in technology in this area would result in fewer overpayments. There are 

impediments to reporting work activity with the SSI wage reporting telephone number. 

Additionally, there is no SSA online tool for disabled beneliciaries to report work activity. 

NCSSMA recommends investing in technological improvements to improve wage reporting. 

Increasing the timeliness of wage reporting would enhance tax administration and improve 

program integrity for a range of programs, thereby improving payment accuracy. 

NCSSMA also supports legislative changes and/or regulatory proposals that improve the 

effective administration of the Social Security program with minimal effect on program dollars. 

We believe the following proposals have the potential to increase administrative efticiency, 

lower operational costs, and save taxpayer dollars. These proposals would increase the accuracy 

of SSA payments. 

Enact the Work Incentives Simplification Program (WISP): This proposal would 

replace the complex work provisions in the Social Security Disability Program, including 

the Trial Work Period, SGA Determinations, Extended Period of Eligibility and 

Expedited Reinstatement, and replace these provisions with an earnings test comparable 

to that of RSI beneficiaries under lull retirement age. This provision would simplify the 

entire work incentive process for the beneficiary and SSA. Work years saved by SSA 

currently spent in enforcing the prior provision could be redirected to other priority 

workloads. 

Federal Wage Reporting: This proposal would require employers to report wages 

quarterly; the proposal would not affect reporting of self-employment. Increasing the 

timeliness of wage reporting would enhance tax administration and improve program 

integrity for a range of programs. This program would give SSA more immediate access 

to earnings infonnation for the SSI program, thereby decreasing underpayments. 

Require that SSA be provided with Workers Compensation Information: Providing 

workers compensation data exchange infonnation, in an electronic fashion, to SSA would 
46 

f 

Chairman JOHNSON. Thank you, sir. I appreciate all your testimony. 

Mr. Brady is not here yet. He had an illness in the family so he 

had to leave town. But we appreciate his support. And he is behind 

everything that you all are doing. And I thank the IG for getting 

out there where the action is. 

As is customary, for each round of questions I will limit my time 

to five minutes and ask my colleagues also to limit their time to 

five minutes. 

Mr. O’Carroll, I want the Subcommittee to hear about the cases 

I saw when I visited your office in Dallas. Would you walk us 


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47 

through that video, and then I’ll ask questions on the other side 

of it? 

Mr. O’CARROLL. Yes, Mr. Chairman. Thank you for your interest in this. If you remember when you were in our Dallas CDI unit, 

we showed three videos. The first one was a person conducting 

some business that—we had a video camera with us and were 

showing that he was actively engaged in business. And then there 

was another one with a lot of driving and other things which really 

wouldn’t lend themselves too good for this—you know, for showing 

here today. 

This one I did bring with me today, is one of the ones you saw. 

And it’s about a 53-year-old woman who alleges chronic back pain, 

headaches, loss of vision, and she says she uses a walker for mobility and is incapable of driving. She says she falls down often because her legs give out. 

[Video.] 

Mr. O’CARROLL. I think this one is going to speak well for 

itself. You can see her getting into a taxi without the walker. Now 

she comes back to her car or her truck, and heads to a convenience 

store. Then, when she goes to the convenience store she purchases 

three cases of soda, which you can see her carrying here. And as 

a result of that, obviously, we turned this information over to the 

DDS and they turned down her application. 

Chairman JOHNSON. I wonder how many of those go on that 

we don’t know about? 

Mr. O’CARROLL. Yes, these are the ones that we actually 

see—— 

Chairman JOHNSON. Yes. 

Mr. O’CARROLL.—and can record. There are thousands more 

out there that we just don’t have the opportunity to investigate. 

Chairman JOHNSON. Are the states working with you pretty 

well? 

Mr. O’CARROLL. Yes, sir. The states are working with us very 

well. We have very good cooperation with the states. It’s getting a 

little more difficult with funding in some of the states where 

they’re not as ready to help us as they used to be in the past. And 

I can give you details on that. 

Chairman JOHNSON. Thank you. Ms. Colvin, according to the 

GAO, in fiscal year 2010 Social Security failed to collect $5.4 billion 

in cumulative disability overpayments. GAO also told us Social Security has no performance goal for debt collection. Is collecting the 

debt not a priority for Social Security? 

Ms. COLVIN. I think that we—yes. Collecting the debt is absolutely one of our highest priorities. I believe that we have a very 

excellent debt collection program. I will say that our cumulative 

debt is about $15 billion. Last year we had newly established debt 

of about $5.6 billion. But last year we also collected $3.2 billion in 

debt. 

It is easier for us to collect the debt when the beneficiary is on 

the rolls. We can simply deduct the monthly payment that’s been 

determined from the monthly benefit. It becomes much more difficult when the individual is no longer on the rolls. However, we 

have a number of tools that we use to collect the debt. We have 

the tax offset, we have regular billings where we attempt to collect 


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48 

and have the ability to report debt to the credit reporting agencies. 

We have numerous tools and we’re always looking at additional 

tools. So it does remain a high priority. 

I do want to point out that many of these individuals who receive 

an overpayment are most vulnerable. They are probably our most 

destitute. And therefore, the amount that we are able to collect on 

a monthly basis is small. 

But we are very aggressive. The debt now, with the new rule 

with IRS, we are no longer limited to 10 years. So we are implementing a system that will allow us to continue to go after that indefinitely. And then, if someone leaves the rolls and come back on 

the rolls again, we use a process that would allow us to reduce the 

amount. If they receive another Federal benefit, we can also offset 

that against the amount. 

So, I believe that we have a very strong debt collection process 

in place. We have to balance what we are able to do with other resources. And so we are always looking at what is the most cost-effective way of doing this. 

Chairman JOHNSON. Thank you. Mr. Brady and Detective 

Neske, what’s the most common way people commit disability fraud 

and what tools do you have to use for your investigations? 

Mr. BRADY. Some of the most common areas that we see are individuals that are malingering, exaggerating their symptoms, or 

just outright, straight-out lying about their disabilities. 

We also find that there is information out there in the public 

about steps to take to get on disability. In fact, recently we became 

aware of a document that prisoners had created—a prisoner had 

created called ‘‘15 Steps to SSI.’’ And basically, it explains to them 

the process of trying to get on disability. 

Chairman JOHNSON. Well, thank you for the work you all do. 

My time is expired. Mr. Becerra, you are recognized for five minutes. 

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

your testimony. And to those of you who do the work out there, 

thank you so much for the effort. And I suspect you would love to 

have a few additional folks on your team to be able to do some of 

this, because we all know that that’s not the only person out there 

that you could videotape. 

A few questions. Mr. Brady, let me ask you first. How do you— 

what’s the source of the information that you get that allows you 

to move on that tip and start the investigation? 

Mr. BRADY. The majority of our allegations come in from either 

DDS or the Social Security Administration. But we also receive tips 

from the general public, anonymous sources. Also ODAR, part of 

Social Security. And, based on that information, we will have our— 

do an extensive background history on that person. 

Mr. BECERRA. Okay. So you can actually—we can encourage 

the public to submit those complaints or that information, those 

tips, directly to you? 

Mr. BRADY. Absolutely. 

Ms. COLVIN. Yes. 

Mr. BECERRA. I suspect they also can give them directly to the 

Social Security office, and they would then send that to you. 

Mr. BRADY. Yes, they do. 


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Mr. BECERRA. So the majority of your cases come through 

your—the Social Security system itself, through the personnel at 

the Social Security offices. 

Mr. BRADY. Correct. 

Mr. BECERRA. Okay. And give me a sense. What’s the typical 

case of fraud? A case like this, where it’s clear that somebody was 

abusing the system, what’s a typical punishment that someone like 

that would face? 

Mr. BRADY. Well, generally, in most of the CDI cases, since— 

and in the example we gave today, it was an initial claim. And 

DDS subsequently denied that person’s claim. So—— 

Mr. BECERRA. Okay. Give me a sense—not someone who hasn’t 

been collecting, because we just deny them and I suspect they go 

away, unless they’re crazy enough to try again. What about someone who has actually been collecting for some time? Give me a 

sense of the typical penalty that they’re going to face? 

Mr. BRADY. In those cases that we present to the U.S. Attorney’s Office for prosecution, it could range from anywhere to probation to some time in prison, depending on what the loss is to the 

government. 

Mr. BECERRA. Okay. So let me ask you now—and also to Officer Neske, Mr. Neske—that particular question. Are the penalties 

severe enough for those that we prove defrauded the Social Security system and the taxpayers? 

Mr. BRADY. That’s—if you’re asking my personal opinion—— 

Mr. BECERRA. I am. 

Mr. BRADY [continuing]. I think in some respects they need to 

be more severe or they need to—there needs to be more of a penalty as far as—what we see, what frustrates us, is that a person 

will apply for benefits, they will get denied, and then the next day 

they’re applying—— 

Mr. BECERRA. They’re right at it again. Mr. Neske, would you 

like to comment? Is the penalty severe enough for those who commit that kind of fraud? 

Mr. NESKE. Some of it is desperation. 

Mr. BECERRA. Your microphone. 

Mr. NESKE. Can you hear me now? 

Mr. BECERRA. Yes. 

Mr. NESKE. A lot of it’s desperation. They don’t have anywhere 

to turn to for income. 

Mr. BECERRA. Yes. 

Mr. NESKE. You can kind of sympathize with them and understand, but it doesn’t make it right. 

Mr. BECERRA. And I suspect in those cases where there is some 

desperation involved, the prosecutor or the judge is probably going 

to have some empathy there, and try to make the punishment fit 

the crime. 

But to my thinking, we should descend on folks who do this. Because if you don’t, then it only encourages neighbors and others 

who see this and say, ‘‘Hey, you can do it? I can do it.’’ And I would 

hope that in the clear cases that we make—these are the poster 

child cases, where you put them out there and say, ‘‘Do this, and 

you’re in trouble. So if you’re close to getting a disability benefit, 


ccoleman on DSK8P6SHH1PROD with HEARING
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don’t mess around because you may deprive yourself of, in the future, being able to get it.’’ 

Now, Mr. O’Carroll, let me ask this. You mentioned that if we 

reduce the CDR backlog, we reduce overpayments. So let me ask 

you this. If we had more personnel to conduct these CDRs so they 

could more quickly reduce the backlog of CDRs, would we reduce 

the level of overpayment? 

Mr. O’CARROLL. The easy answer on that is yes, which—but in 

a little bit more definition to it is that they are very—— 

Mr. BECERRA. And give it to me in 20 seconds, because otherwise I won’t get to ask other questions. 

Mr. O’CARROLL. Okay, okay. Real quick on it is that they’re 

very difficult labor-intensive to do. The more people doing it, the 

better on it. The more resources that are put towards doing the 

CDRs, the better for it. And it’s decisions that have to be made on 

prioritizing. 

Mr. BECERRA. Okay. So you can’t just do a CDR quickly, or 

with just one or two individuals. That takes time. And I suspect 

Mr. Clifton would say you—it takes a lot of his personnel moving 

away from providing someone the assistance they need to apply for 

a Social Security number or apply for retirement benefits to do 

these CDRs, which are essential to make sure that we’re not giving 

money to people who don’t deserve it. 

But that means unless we’re going to increase the backlog of people who are applying for their benefits appropriately, we need to 

have the personnel who can do this very important work, because 

we know the return, 10 to 1 on the dollar, is excellent. 

So, it’s all pointing to me that no one is telling me that Social 

Security personnel are sitting on their duff, doing nothing. It’s that 

we found out that if we pursue some of these—I would call some 

of these folks crooks—we can get some results. And in many cases, 

it’s not that they’re crooks, it’s that they’re desperate. Or, as we 

find—and, Ms. Colvin, I know my time is up, but I suspect you 

would say to me that the majority of cases where there has been 

an overpayment to an individual aren’t the case of fraud, it’s a case 

of mistake, either by the individual, who had a very complicated 

case, or maybe the Agency missed something. But it was more an 

error, and then once you correct it you try to see if you could collect 

the overpayment. 

Ms. COLVIN. Absolutely. I couldn’t say that better. 

Mr. BECERRA. Well, I hope we continue to give you the resources. I’m glad that after—at the beginning of the year the Congress cut, or essentially left flat, the funding for that program integrity work—that we were able to get the money last month to actually beef it up. But the more we can do this—and I think the 

more we can hang it out there like a poster child, that if you do 

this stuff, you know, you do the crime, you pay the fine—I think 

the better off we’ll be, and let only those who legitimately deserve 

the benefits get them. 

So, Mr. Chairman, I thank you for this hearing, and thank you 

for the time. 

Chairman JOHNSON. Thank you. Mr. Smith, you’re recognized 

for five minutes. 


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51 

Mr. SMITH. Thank you, Mr. Chairman. And Mr. O’Carroll, we 

have heard a little bit about the penalties. Sometimes it is just denial of benefits. Other times it is jail time, perhaps more. Can you 

elaborate? 

Mr. O’CARROLL. Yes, sir. It’s pretty much what we’re—again, 

with the CDI units we’re talking about here is the deterrent at the 

beginning of it. We are trying to keep the money from being spent. 

Then, the other one there was some discussions on is that we do 

have a lot of tools out there in terms of jurisdictions that we can 

use for people defrauding the United States Government. Unfortunately, what we’re up against with a lot of these things is that the 

amount of fraud, in terms of the dollars, when we go to a U.S. Attorney’s office for a prosecution on these things, is so much less 

than, you know, bank robbers or whatever it is. In the priorities 

of the jurisdiction, it’s difficult to get prosecutions for a lot of the 

disability fraud that we have. 

So, for that reason, on it—is that we use—you know, we do try 

to bundle them, to get U.S. Attorney’s offices to prosecute on it. As 

Mr. Brady said on it, the range of prosecution or penance—penalty 

of it goes anywhere from probation to prison time. But I got to 

admit, it’s usually going to be the more egregious ones that are 

going to be getting the prison time on it. 

Another tool that we are using is civil monetary penalties, so 

that if we can’t get them prosecuted, at least we’re going after any 

of the resources that they have. 

Mr. SMITH. Do you have the authority to do that already? 

Mr. O’CARROLL. Yes, we do. 

Mr. SMITH. Okay. So, in terms of resource allocation, because I 

mean, that’s kind of what this boils down to, can you share kind 

of the cost benefit analysis of, I mean, what kind of resources it 

takes? You know, savings—of course we’ve got the bigger issue of 

wanting to send a message that this is not good, and prevent others from even trying. Can you elaborate on that? 

Mr. O’CARROLL. Yes, I can. Usually on the cost of doing this 

thing—for example, CDRs that we were talking about, there is sort 

of a range on them. To do a medical CDR, where somebody is coming in, where we believe that they are feigning a medical issue or 

whatever, they cost about $1,000, and they take a, you know, series 

of months. 

The next one down on it is that when we do the worker—SSA 

does a work CDR on it type of thing, there is—that’s the next one 

down. That’s about $400 per one that they do, to give you an idea 

of the cost on it. And then a mailer that goes out is about $20. 

So, those are pretty much the costs going into it. And just to kind 

of use the flip side of it is that the savings that we have on the 

back end that we’re experiencing on this thing is that we’re seeing 

about a $90,000 savings for every person that doesn’t come—get on 

to benefits is what we’ve been figuring out on our adjustment for 

that. 

And then, when we’re also figuring is anybody who is in pay, 

we’re going to be taking whatever they would have been getting for 

that percentage, or a percentage of what they’re getting on their 

pay, and then multiplying that for it by—we’re usually throwing 


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them off the benefits for about five years. So we can include that 

into it. 

And then, the other one that’s not seen on this thing is it’s sort 

of a waterfall effect on different ones with state supplements that 

are put into it. We’re taking a look at other benefits that are coming for—you know, that are out there on it. And then all those get 

thrown in that are savings to the government, too. 

Mr. SMITH. How much review is there, in terms of the supporting witnesses? Is there review of that situation or that process, 

where someone may have erred, or even worse than that, in terms 

of providing supporting information? 

Mr. O’CARROLL. Yes, again, that is significant. I don’t really 

have a good figure on how much time would go into the prepping 

on something like that. But in terms of, you know, the witness 

interviews and all the other ones that, you know, pretty much 

we’re talking about today are all very time-consuming and all go 

into the length of time it takes us to do an investigation. 

Mr. SMITH. Thank you. I yield back. 

Chairman JOHNSON. Thank you. You care to question Mr. 

Stark? 

Mr. STARK. May I? 

Chairman JOHNSON. Yes, sir. Mr. Stark, you are recognized. 

Mr. STARK. Well, thank you, Mr. Chairman. And thank you for 

this exceptional hearing. Let it be known that the scooter store 

called me this morning and I said no, I wouldn’t ride their scooter 

to the hearing. 

[Laughter.] 

Mr. STARK. And also, this hearing is a first—— 

Chairman JOHNSON. You had the IG watching you. 

Mr. STARK. The hearing is really a first for me, because it is the 

first time I have ever been in a room with a detective where I get 

to ask the questions. 

[Laughter.] 

Mr. STARK. But I want to congratulate Ms. Colvin on the excellent record that SSA has had under your leadership in these areas. 

How many claims a day does—do you have any idea—that SSA has 

to process under this program? 

Ms. COLVIN. I don’t know that I can give you—— 

Mr. STARK. Thousands? 

Ms. COLVIN. Thousands, yes. The staff do both initial claims, as 

well as CDRs, et cetera. I can certainly provide you the specifics—— 

Mr. STARK. No, I just—— 

Ms. COLVIN. But it is significant. 

Mr. STARK. It is many thousands, I would—— 

Ms. COLVIN. It is many thousands. And—— 

Mr. STARK. And wouldn’t it—isn’t it correct that most of the 

overpayments or incorrect payments, if you will, are not fraud? 

They are mistakes? 

Ms. COLVIN. I am really pleased that you raised that. Most of 

the improper payments are not fraud. In fact, improper payments 

are overpayments. The reason for most of the overpayments are directly related to the work activities, like the substantial gainful acVerDate Mar 15 2010 04:38 Nov 16, 2012 Jkt 076450 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\76450.XXX GPO1 PsN: 76450

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tivity. People are confused about when they report and how—and 

the other pieces of that legislation. 

For instance, they have a nine-month trial work period. They 

have an extended eligibility period. They can earn up to the substantial gainful activity amount, which I believe in 2012 is $1,010. 

So, even when we get a work report, we still have to review all of 

those things to determine whether or not the payment is impacted. 

And that’s why it takes us so long to do a work CDR. 

Also, no one has mentioned that improper payments are also underpayments, which means that we have made some errors and 

people are entitled to a higher benefit. And I think focusing on underpayments is just as important as focusing on overpayments. 

Mr. STARK. It is important to get it right. If the system—— 

Ms. COLVIN. It’s important to get the right check to the right 

person the right time. And we take very seriously fraud. As was 

mentioned, our team referred over 19,000 suspicious activities last 

year. They do not want to see the program jeopardized by individuals getting a benefit to which they are not entitled. And this is 

something we focus on daily, with everything we do. 

Mr. STARK. And I thought that guy following me around with 

a camera was just interviewing me for a political ad. 

[Laughter.] 

Mr. STARK. I wanted to suggest to my colleagues, if they don’t 

already know—but I will bet that for all of us sitting here on the 

dais, certainly in my office—next to immigration cases, the most 

case work, as we call it in our district office, comes in regard to 

people with questions about Social Security or disability benefits. 

And, Mr. Clifton, I just have to congratulate your colleagues, or 

the people you work with. We—our office goes to the San Jose office. And they have just been—over the years, I am talking 20 

years—this office has just been more than helpful. And I hope you 

will extend to them our gratitude from Fremont, California, for all 

the help they give us. Because we couldn’t handle it all. Many of 

them take special expertise, which the people that work in your department enjoy. And we really appreciate it. 

So I wanted to just, in all seriousness, thank those of you who 

are working to make this system work. We have to—the public has 

to make sure that they think it is on the level. And Sam, I just— 

I think you are heading in the right direction. We have got to see— 

we want to see the program continue. A few years, you will be old 

enough to get into it, but don’t rush. And I will let you know what 

it is like. 

Then, as I say, it is an important—one of the most important social policies that we have in this country, is taking care of seniors 

and children. And I just appreciate all of our witnesses’ efforts in 

the direction of making the program secure, fair, accurate. And I 

know that you need help. 

Ms. COLVIN. We do. 

Mr. STARK. I think we all know that. And you can’t cut—what 

did you have to lay off, 4,000 employees? Something like that? 

Ms. COLVIN. Not layoff, but they retired and—— 

Mr. STARK. You couldn’t rehire. 

Ms. COLVIN. We could not rehire them, yes. 


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Mr. STARK. And you probably need more than that. And I hope 

that we can find a way to get the necessary resources. 

Ms. COLVIN. We need adequate sustained funding. 

Mr. STARK. Okay, thank you. We will try and see what we can 

do to do that. 

Ms. COLVIN. Thank you. 

Mr. STARK. Thank you again, Mr. Chairman. 

Chairman JOHNSON. Thank you, Mr. Stark. 

Mr. STARK. I yield back the balance of my time. 

Chairman JOHNSON. The time frame on the continuing review 

is what that CDR is. We use acronyms around here, and a lot of 

people don’t know what we are talking about. Are the time frames 

that are set for CDRs okay, or do we need to look at them? 

Ms. COLVIN. I believe that the reviews that we have done indicate they are adequate. Depending upon the disability, it could be 

within one to three years, if medical improvement is expected. If 

medical improvement is not expected rapidly, it could be three to 

five years. And then, of course, there are some conditions where 

medical improvement is not expected at all, a terminal illness or 

something of that nature. 

And we have a profiling system that allows us to select the CDRs 

that would have the highest return on investment, and that’s a 

very elaborate matrix. I am not able to explain that here, but I 

could provide that to you later. But I think that the time line 

works. In fact, we have got a backlog because we can’t get to them 

within the time frame that we should be. We have about 100—— 

Chairman JOHNSON. Yes, more than you can handle. 

Ms. COLVIN [continuing]. 1.3 million—— 

Chairman JOHNSON. Yes, okay. 

Ms. COLVIN [continuing]. that we can’t handle. 

[The insert of Ms. Colvin follows:] 


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f 

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

Mr. MARCHANT. Thank you, Mr. Chairman. For clarification, 

the CDIs and CDRs, they don’t involve overpayments, do they? 

Mr. O’CARROLL. The CDRs and CDI, what they are involved 

with is preventing overpayments. 

Mr. MARCHANT. So the actual overpayments that Ms. Colvin is 

talking about are not really in the CDR and CDI backlog. Is that 

correct? 

Ms. COLVIN. Go ahead, you want to answer? 

Mr. O’CARROLL. No. 


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Ms. COLVIN. Some of them could be. The CDI program was really set up as a joint effort between OIG and SSA to prevent people 

from actually coming on the rolls to begin with, so you wouldn’t 

have an overpayment there. 

But if we get information that suggests that someone who is on 

the rolls is, in fact, not disabled, that would be the type of referral 

that we would send to OIG. And that could be reviewed by the CDI 

unit. If, in fact, that person then is found not to be disabled, has 

been getting a benefit, that’s an overpayment. It’s a fraudulent 

payment, though, and that person—— 

Mr. MARCHANT. Are inadvertent overpayments or mistakes or 

any of those things ever referred over to the CDI/CDR units? 

Ms. COLVIN. Not if there is no instance of or suspicion of fraud. 

We have some overpayments inherent in the system. For instance, if someone is on the rolls and they file an appeal, they are 

entitled to stay on the rolls until such time as that appeal is adjudicated. If we—if the appeal is denied, then all of that money that 

they have been getting is an overpayment. So then we have to start 

a collection process to get that money back. 

Mr. CLIFTON. And Congressman, if I may add too, there are 

overpayments—as we are developing work CDRs, we discover that 

they have worked, perhaps not told us. We determine that they are 

not due benefits, determine that they are overpaid. Those can be 

referred not necessarily to the CDI unit, but to OIG for possible 

prosecution. Because they did something perhaps in our investigation where we felt like they were fraudulent. So it may not go to 

CDI, but it could go to OIG. 

Ms. COLVIN. Yes. 

Mr. MARCHANT. I would like to go down a little different line 

of questioning. In many instances, a claimant will hire an attorney. 

And in many of those instances, that trial or that process will take 

months and sometimes it could take as long as a year. 

Many times there is a pretty large lump sum payment made at 

the end of that. And at the end of that period, I have heard of people getting $20,000, $30,000, of which, in many instances, a third 

of that or 40 percent of that is going to the attorney. When it gets 

to an investigation for fraud later down the road, do you have recourse against anyone that assists the person that might have committed the fraud in the repayment system? 

Mr. O’CARROLL. That’s the first time that one has come up, 

where we’d be looking for anybody who helped somebody or facilitated them getting on the rolls when they shouldn’t have been on 

it, and then do we have the recourse to penalize that person—— 

Mr. MARCHANT. Do you have legal recourse to go and bring 

them into the suit or into the recovery? Say there was $20,000 recovered, of which you got $8,000. The person that you assisted in 

committing this fraud, as you have determined fraud, are we making a demand on all $20,000 for them? Does their recourse then go 

against the person that assisted them in that fraud, or do you have 

the right to go straight to anyone that assisted? Maybe it would be 

a doctor, maybe it would be somebody who gave false testimony. 

Maybe it would be somebody who had a Yellow Pages ad. 

Chairman JOHNSON. Good question. 


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Mr. O’CARROLL. I guess probably the easiest way on that one 

is—which ties into the CDIs that we’re talking about—is that we 

are looking for third-party facilitators, anybody else that is assisting a person to fraudulently get on benefits. And we do go after 

them both criminally, when we have that evidence on it. 

On your question of if we are assessing an overpayment and trying to recalculate it, we have, to my knowledge, have not gone after 

a third—— 

Mr. MARCHANT. I am off of overpayment. I am on to just direct 

fraud. 

Mr. O’CARROLL. Right, fraudulent. Well, fraudulent overpayment. 

Mr. MARCHANT. Yes, fraudulent overpayment. And I am really 

more targeted towards the large, lump sum payments that are 

made which, in many times, much of that goes to pay for the expense of getting on the roll itself. 

Mr. O’CARROLL. I will have to tell you, Mr. Marchant, I am not 

familiar with us going after anybody, you know, kind of concurrently as we are going after somebody who is defrauding us. But 

let me check on that and get back to you if we’ve had any other 

examples of that. 

Mr. MARCHANT. A lot of newspaper articles that have been 

written in the last few months have been about this kind of fraud. 

And I think the public is interested in it, and it may be a way that 

we can make a higher recovery. Thank you. 

Chairman JOHNSON. That is an interesting question you guys 

ought to take a look at. Are there lawyers that help these people 

when they come to you? Do you know? 

Mr. O’CARROLL. I am sure there are. I don’t have any specific 

examples of it. 

Chairman JOHNSON. You don’t know if they have? 

Mr. O’CARROLL. But let me take a look at it and get back to 

you formally on that one. 

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

Mr. TIBERI. Mr. Chairman, I would just like to provide some information for the record, if I may. Social Security’s fiscal year 2012 

total operating budget, which was encompassed in 2 pieces of legislation that passed the House, the Senate, and signed by the President, is 22 million more dollars than the fiscal year 2011 appropriation. It was H.R. 2055 and H.R. 3672. They were supported 

equally by both parties, including the President, the Chairman of 

the Committee, the Ranking Member of the Committee, the Chairman of the Subcommittee, the Ranking Member of the Subcommittee, as well. 

Social Security continues to receive an increase in dollars, despite a 1.5 percent decrease in the discretionary cap. In fact, while 

Social Security is subject to the same long-term domestic spending 

caps that were in the Budget Control Act, which was mentioned at 

the beginning of the hearing, that same bill gives the Social Security Administration an additional $11 million from fiscal year 2012 

to fiscal year 2021 over the budget caps to increase continuing eligibility reviews and its Disability Insurance and Supplemental Security Income programs. 


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With respect to employees, I think it is important to note that 

Social Security increased its overall staff by 3,269 employees in fiscal year 2009 and by 2,346 in Fiscal Year 2010. The Social Security 

Administration continued to hire during fiscal year 2011 at a lower 

rate. It was mentioned, and it is true, that retirements and resignations reduced Social Security Administration’s employee level 

by 2,791 in fiscal year 2011 to a total staff of 64,176 employees. It 

is important to note that that exceeds the number of employees by 

2,824 that began fiscal year 2009. 

And a final note, Mr. Chairman. According to a recent Commissioner’s broadcast, funding levels near the House or Senate fiscal 

year 2012 Labor HHS level will enable Social Security to hire replacements this year. I just want to put that in for the record. 

And I do have a question for Mr. O’Carroll or Mr. Clifton. As Mr. 

Stark said, we have a lot of Social Security activity in our district 

office as well. I have a constituent who was notified that she was 

overpaid by $100,000 between 2003 and 2009. And it was a CDR 

that caught this. My understanding, however, is by law there needs 

to be a review every three years. And apparently in her case there 

was not a review. 

My question is, is there a better way to do this? Maybe matching 

IRS records? Working with the Internal Revenue Service? Are 

there a number of reviews that aren’t done timely, according to the 

law, as was this case? Or did this happen to be maybe just one that 

fell through the cracks? 

Mr. CLIFTON. If I can, I will start. 

Mr. TIBERI. Sure. 

Mr. CLIFTON. There is some confusion about continuing disability reviews. There are medical ones and there are work ones. 

I don’t know the particulars of your case, but I would venture to 

guess it was not a medical CDR. Medical CDRs, when DDS determines that a person is no longer eligible for disability benefits because they have medically improved, those are not retroactive. 

Ms. COLVIN. Right. 

Mr. CLIFTON. So if I decide today that you have medically improved, typically not retroactive, so it would be extremely unusual 

we would go back three years and say you were not disabled clear 

back here. 

So I would venture to guess that was probably a work CDR. So 

it wasn’t a diary, like a three-year or a five-year or a seven-year 

diary. Those are medical CDRs. So I would suspect, without knowing the specifics, but based upon what you said, we probably discovered earnings on her record and said at that point, ‘‘In the past, 

your benefits should have stopped.’’ And so it created a very large 

overpayment. 

But going back to your question—it’s a very good one—what kind 

of tools can we use to catch those quicker? There are a couple of 

things. Of course it’s a resource issue in the sense that if I have 

a work CDR and she reported her work, I’ve got to have the time 

to get to it. Those are time-consuming, because they are complicated. I send out information to an employer, they reply back to 

me. It takes a while to develop those. 


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We get information on earnings once a year, based upon W–2s. 

Things that could help is if we got earnings reported quarterly, 

much quicker than the earnings that they already get. 

Patrick, any further things? 

Mr. O’CARROLL. Yes, just to follow up on it, as you were saying, 

it is a work CDR. And one of our concerns—and we’ve mentioned 

it a few times already—is the backlog on it. And that is probably 

what happened with this one. It was identified, went into the backlog, and it took a while for it to be addressed. 

So, the two things. One, if they were getting the wages quicker, 

the alerts quicker on it, and then getting to the work CDR and addressing it with the claimant quicker, would have avoided all this. 

And that’s where we keep going back to here, is trying to reduce 

the backlog on CDRs. And this is obviously an example of that. 

Mr. TIBERI. Thank you. 

Chairman JOHNSON. Thank you. What is the backlog, do you 

know? 

Mr. O’CARROLL. The backlog is about 1.2 million CDRs. 

Ms. COLVIN. No, that’s not work—— 

Mr. O’CARROLL. Oh, oh—— 

Ms. COLVIN. That’s not work CDRs. 

Mr. O’CARROLL. Oh, that was all CDRs. 

Ms. COLVIN. We really don’t have what is considered a backlog 

on work CDRs. We have 1.3 million for medical CDRs. The work 

CDRs is a rolling workload. Whenever we get a report of work, we 

try—if it’s a self-report, we try to get to that report within 30 days. 

It generally takes us about 270 days to process that because of the 

complexity of what we have to go through. We have to look at every 

month that the individual has had work reported. We have to see 

if it exceeded the SGA, which is $1,010. We have to see if they 

have finished their trial work period. We have to see if they are 

finished their extended eligibility period. We have to see if they 

have any impairment-related expenses. 

That is why we are hoping that this committee will support the 

work simplification proposal that we have in the President’s budget, WISP, the work incentive simplification proposal, to help simplify this. 

Also, there are a number of other proposals, such as the workman’s compensation proposal, that would allow us to get this information directly from the administrator of the compensation program, rather than the individual. 

So it is the complexity of the program. And the reason it takes 

so long—right now we—last year we did about 312,000 work CDRs. 

We are—that was in 2010. And in 2011 we did 324,000. This year 

so far we have done 80,000. We hope we can do as many. But it 

really is a resource issue, because the same people who do this 

work, this program integrity work, are the ones who do the initial 

work to get these checks out, et cetera. 

But we are devoting attention to this. I have set goals, and we 

are monitoring the progress in that area. We have dedicated more 

staff to process the work CDRs, so they can get them timely. We 

triage the work so that we address those that have the highest 

earnings first. And we have drastically improved our processing 

time. Less than six percent of the work CDRs are now over 270 


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days old. And the work CDR is at the end of the process. You have 

to do all these other things to determine. 

The other thing I need to mention is that probably about less 

than a third of the work issues that we review actually result in 

work CDRs, because the people are falling within those other categories that I talked about. And so their benefit is not yet impacted. 

Chairman JOHNSON. You know what? You guys convinced us 

that if we upgraded your computer system you could do all of this 

faster. You got 18,000 computers over there now, and you ought to 

be able to get it done. 

Mr. Berg, you are recognized. 

Mr. BERG. I am not sure if I want to go after that. 

[Laughter.] 

Mr. BERG. We are running late here, but I hopefully will be able 

to catch a ride back with Mr. Stark, I am sure. 

[Laughter.] 

Mr. BERG. I do want to thank you for being here. And, Mr. Clifton, thank you for your help and your office’s help with all the constituents that we have. It is frustrating for me. It is such a huge, 

complicated thing. I know there are people that don’t understand 

all the rules and legitimately make mistakes. I am sure there is 

people on the other spectrum that they know the rules are complicated and they know they always have an out, because they can 

say, ‘‘We didn’t understand that.’’ 

Ms. Colvin, I think in your testimony you mentioned there were 

4,000 new cases a year. 

Ms. COLVIN. No, I indicated that we made 19,000 referrals to 

the OIG for suspected fraud, and—— 

Mr. BERG. Well, let me back up. 

Ms. COLVIN. Oh. 

Mr. BERG. My question is, just in the big picture, how many 

cases do we have per year? And if you can’t answer this, maybe you 

could provide the Committee with that information. But the number of cases that you have, and then ultimately how those things 

play out. Has 4,000 a year been typical? Are we having 400 people 

that end up doing jail time? If that is information we get later, I 

would appreciate it. 

Mr. O’CARROLL. Since you’re talking cases—I guess that’s 

where we got confused—cases, investigative cases on that—— 

Mr. BERG. Yes, I am sorry. 

Mr. O’CARROLL. What we are doing with our investigative cases 

every year is we are getting—we get about 150,000 referrals every 

year, which end up being about 7,000 investigations. And on that, 

our—I guess their conviction rate on that one is probably about 20 

percent of those investigations end up in—with convictions. But I 

can give you all those specifics on it. They are in our semi-annual 

report. 

Mr. BERG. What I am trying to do is to somehow very quickly 

drill down to the questions that Mr. Becerra addressed on if the 

penalties are appropriate. Certainly if someone walked into a store 

and stole something out of a store, we have pretty clear penalties 

for that. 


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The other question—probably even the bigger question this is to 

you, Mr. O’Carroll—is there a way we can reduce the complexity 

of this program? You mentioned that in your testimony. What 

would you do to reduce this complexity? 

Mr. O’CARROLL. A lot of the complexity on it that we are concerned with is that—and I guess in general the program is very 

complex. What I was talking about in my testimony was the complexity of the CDRs, and that it’s so hard to do the continuing disability reviews. 

As the Deputy Commissioner said, one of the big issues of it is 

we are trying to figure out when a person is working, get that information right away. But the other part that Mr. Clifton I am sure 

will go into is that then the claimant’s rep has to go in and be taking a look at any bonuses that a person made, any severance pay 

that they got, any sick pay that they got. There is a lot of calculations that all go into this thing, many of which would probably, if 

they could simplify whether or not—could simplify the process of 

it—would make it a bit easier. 

But right now, in order to give all the benefits to the beneficiary 

on it, there is so many different steps, it takes a lot to do it. So 

that is part of the complexity, is all the calculations that go in it. 

Mr. Clifton? 

Mr. CLIFTON. I would echo that. It’s a very complicated workload. And you hit the nail on the head when you say the ability 

of the public to understand the disability program and what they’re 

allowed to do—they are allowed to work, but there is just certain 

levels when that work will stop their benefits. 

So, one, if you’re talking about incentives for people to work, 

they’re scared at times because they’re not sure what the outcome 

will be. As they mentioned, they’re afraid if they work, three years 

later someone will discover that they owe the government 

$100,000. Now, that’s different than the out and out fraud that 

they mentioned before in there. 

So, program simplicity, simplifying the program, would go a long 

way towards the public understanding what effect the work would 

have. It would also go a long way towards processing a very complicated workload. As you mentioned, they could get severance pay, 

they could get things that are not going to affect their disability, 

but it will show up as work and earnings that you have to investigate. I hope that helps. 

Mr. BERG. Good luck. 

[Laughter.] 

Mr. BERG. Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you. I appreciate you all being 

here. We visited a Wal-Mart down in Texas that had disability 

workers as part of their program, and they were doing a good job. 

They really were. 

Mr. BECERRA. Mr. Chairman, can I add something? 

Chairman JOHNSON. Yes? 

Mr. BECERRA. Mr. Chairman, I just wanted to add something. 

I think Pete did a good job of acknowledging the work that you all 

do. I hope that in no part of this hearing we leave the impression 

that we don’t believe that each and every one of you, wherever you 

are, whether you are a detective, with the local police department, 


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62 

whether you are in the investigative offices, or you’re in the shop 

day to day in Social Security doing the work, I hope we don’t leave 

the impression that we don’t think you are working hard. 

And I would like to echo what Mr. Stark said, that we want to 

thank each and every one of your people—I don’t care what office 

it is—for the work that you are doing. Because, at the end of the 

day, what we are trying to do is make sure that millions of Americans who every day are paying through their paycheck for Social 

Security to be there, have an opportunity to see it there for them, 

because they legitimately earned it, not for folks who are trying to 

abuse it. 

So, thank you for the work. Convey that message to all the folks 

back home. Because we hope we can give you the tools you need 

to do this better so that everyone agrees that the program works 

for them the way it should. Thank you. 

Chairman JOHNSON. Again I want to thank you all for being 

here today and for your testimony. And I look forward to working 

with you and all my colleagues, as we continue to examine ways 

to secure the future of Social Security and this vital program. 

With that, this Subcommittee stands adjourned. 

[Whereupon, at 12:05 p.m., the Subcommittee was adjourned.] 

[Submissions for the Record follow:] 


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OPENING STATEMENTS 

Statement of The Honorable Sam Johnson 


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Hearing on Securing the Future of the Social Security Disability Insurance Program 

Subcommittee on Social Security 

Chairman Sam Johnson 

Open ing Statement 

January 24, 2011 

Good morning and welcome to our second hearing in our hearing series on Securing the 

Future of the Social Security Disability Insurance Program. Today our focus is on combating 

waste, fraud and abuse, 

In our first hearing we talked about the important milestone set in 1956 by the creation of 

this cash benefit program for those who could no longer work due to a disability. From the 

beginning, there was a great deal of concern about the high risk for fraud, waste, and abuse 

because of the changing nature of disability and the inherent subjectivity of determining whether 

a person was truly disabled. 

Today, the disability insurance program pays benefits to individuals with disabilities that 

meet certain medical criteria, as long as they worked long enough and paid Social Security taxes. 

Over the past four decades, disability program costs have soared from $18 billion to $124 

billion as the number of those receiving benefits has more than tripled from 2.7 to 9.7 million. 

The size of the overall workforce, more women in the workforce, the aging of the baby boomers 

into their disability-prone years, and relaxed eligibility requirements have all contributed to this 

growth. 

That continued growth is putting a massive strain on the program. According to the 2011 

Trustees' Report, without Congressional action, the Disability Insurance Trust Fund will be 

unable to pay full benefits beginning in 2018, only a few years from now. 

And as the size, cost and complexity of the disability insurance program have increased, 

so has the program's exposure to waste, fraud, and abuse, 

According to the Government Accountability Office, medical and work-related 

overpayments grew from about $860 million in FY 2001 to about $1.4 billion in FY 2010. Social 

Security collected $839 million in overpayments in FY 2010, but cumulative overpayment debt 

reached $5.4 billion. 

Continuing disability reviews are a valuable tool in making sure that those receiving 

disability benefits are still eligible. Every $1 spent on the reviews results in at least $10 of 

program savings, including both Medicare and Medicaid, There is a growing backlog of medical 

continuing disability reviews, and in the Budget Control Act, Congress authorized $13 billion in 

additional funding over the next ten years exclusively for these and other revie\vs, 

The Cooperative Disability Investigation program is ajoint effort between Social 

Security and the Office of Inspector General, working with the State Disability Determination 

Page 1 of2 
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65 

Statement of Honorable Xavier Becerra 


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Social Security Subcommittee 

Hearing Series on Securing the Future of the 

Social Security Disability Insurance 

The Hon. Xavier Becerra 

(Remarks as Prepared for Delivery) 

Mr. Chairman, thank you for calling this hearing. 

Nearly 157 million Americans contribute to Social Security with every 

paycheck. In return, these workers and their families earn guaranteed 

protection against the devastating consequences of (1) disappearing pension 

and retirement savings, (2) premature death and (3) career-ending disability. 

The vast majority of American workers never have to use the disability 

insurance in Social Security. But, for those who become so disabled that they 

can't work at all, it is a lifeline. 

We owe it to America's workers to safeguard their contributions to the 

Social Security Trust Fund, whether against the Wall Street privatizers who 

would raid the Trust Fund or from erroneous payment of disability benefits to 

those who have not earned them. That's why it is crucial that the Social 

Security Administration (SSA) receive the funding it needs to fight waste, fraud, 

and abuse, and to prevent simple errors. 

The increased funding for "program integrity" within SSA which was 

authorized in last fall's bipartisan Budget Control Act is a very good step in 

that direction. The Congressional Budget Office (CBO) estimates that the 

increased resources will prevent about $11 billion in overpayments within the 

decade, and even more later. That's because the eligibility reviews that SSA is 

able to conduct as a result of this special funding will generate $10-$12 in 

savings for every dollar we invest. 

It sure would be nice to see more consistency in Congress' commitment 

to payment accuracy. A little more than a decade ago, the Clinton 

Administration, working with Congress, completely eliminated the backlog of 

benefit payment cases that needed review. Devastatingly, subsequent 

Congresses let the funding drop by almost 75% by 2007, and the backlog came 

back with a vengeance. 

In 2009 and 2010, working with President Obama, we restored some of 
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SSA's budget and succeeded in reducing the backlog. But then last year was a 

disaster. Congress' Continuing Resolution for 2011 froze the agency's funding 

once again -- at a time when over 13,000 baby boomers are starting to collect 

their Social Security benefits EVERY DAY! This funding roller coaster has real 

consequences for the Social Security Trust Fund. 

We also need to put the program integrity funding -- which is about six 

percent of Social Security's overall operating budget -- in context. One of our 

witnesses, Mr. Steve Clifton, runs a Social Security field office in Greeley, 

Colorado. He also represents the men and women who manage Social 

Security's offices across the country. As we'll hear from Mr. Clifton, most of 

SSA's quality control efforts -- including "program integrity" -- are performed on 

the front lines, by regular office staff, not by a special cadre of employees. 

Preventing and correcting errors is a day-to-day responsibility. It falls on 

the same Social Security field offices and the same State Disability 

Determination workers who process initial claims, answer questions for the 

public, track down lost checks, assign Social Security Numbers, and provide 

every other service Americans need from Social Security. 

So when my colleagues across the aisle make the choice, as they did in 

early 2011 and then again last month, to limit SSA to a smaller ACTUAL 

operating budget than SSA had the year before, that has REAL consequences 

for payment accuracy. When you force SSA to operate under a hiring freeze, as 

it had to last year and continues to this year, that means SSA can't replace 

retiring or departing employees who are experienced and hard-working. They 

are the very people we rely on to prevent mistakes on the front end so we don't 

have to correct them on the back end. Put another way: the boost in "program 

integrity" funding was a step forward. But the overall cut in SSA's funding 

which hits the very people expected to perform the "program integrity" work 

amounts to several steps backwards. 

One final point. As important as it is to make sure Social Security 

payments are accurate, and as significant as the savings can be when SSA has 

the resources to do the job well, I want to make sure we keep SSA's 

overpayments in perspective. 

In 2010, Social Security -- which had 72 million field office visits and 

phone calls, processed over 8 million benefit applications, and paid out benefits 

to over 54 million seniors, survivors and disabled workers -- had a four tenths 

of one percent overall overpayment rate. More specifically, Social Security's 

disability insurance program, which handles a complicated eligibility process 

and requires applicants to provide specialized medical and vocational evidence, 

had an overpayment rate of seven tenths of one percent. Most of this was due 

to simple errors. 
67 

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[Questions for the Record follow:] 


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Questions for the Record Ms. Colvin 


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Questions for the Record 

For the January 24, 2012 Hearing 

On Combating Disability Waste, Fraud, and Abuse 

1. In August, Congress authorized $896 million in additional funds for FY 2012 so that the 

agency could perform Continuing Disability Reviews (CDRs) and redeterminations. In 

December, Congress appropriated $758 million for this work. In response to questions 

for the record on September 16, 2011, you stated that you had a backlog of 1.4 million 

medical CDRs, but that you anticipated that with the appropriated money ""we would 

be able to catch up on Title II CDRs by 2016." As you were able to make this 

projection last September, you must have had projections and plans on the drawing 

board to get started on the integrity work. Has the money been allocated to the front 

lines to get this work started? The growing backlogs of CDRs, including full medical 

CDRs, needs to be reduced as soon as possible. Please submit to this Subcommittee a 

full detailed plan for how this will be accomplished. 

The Administration strongly supports the program integrity cap adjustments authorized by 

the Budget Control Act, \vhich would put us on a ten-year path to essentially eliminate the 

backlog in program integrity reviews. In fact, the President's 2013 Budget urges Congress to 

appropriate the remaining $140 million in program integrity funding authorir-ed under the 

BCA for 2012. which would save taxpayers an additional estimated $800 million. 

We plan to complete 435,000 full medical CDRs with our fiscal year (FY) 20]2 appropriated 

program integrity funding--about 90,000 more than we completed in FY 2011. We began 

ramping up our program integrity work at the beginning of the fiscal year; we have allocated 

the necessary resources and are on track to achieve our CDR and Supplemental Security 

Income (SSI) redetermination targets for the appropriated funding level. 

While we will complete significantly more full medical CDRs than we did last year, we will 

not be able to complete as many as we would have with the level offunding authorized in the 

Budget Control Act (!f2011 (BCA). lr"e had received rull BCA runding-- $896 million ror 

FY 20 1 2--we would have been able to complete a projected 568,000 full medical CDRs. 

Adequate funding is critical to the reduction of the CDR backlog. The BCA allows increases 

to the Government's annual spending caps through FY 2021 for program integrity spending, 

and these increases would allow us to complete substantially more CDRs at considerable 

savings to the taxpayers. It is important to understand that the same people \\'ho handle 

CDRs also handle initial disability claims. Therefore, "ve need an adequate number of 

trained employees to complete both workloads. (fwe do not receive increased funding for 

our program integrity work, it will be virtually impossible to reduce the CDR backlog. 

The FY 20 \3 President's Budget includes S 1.024 billion for our program integrity work, 

consistent with the BCA. Ifwc receive this funding on a timely basis, we plan to complete 

650,000 full medical CDRs--about 215,000 more than we expect to complete in FY 2012. In 
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Enclosure - Page 2 - The Honorable Sam 10hnson - Qucstions for the Record 

FY 2013, we estimate that every dollar spent on CORs will yield about S9 in program 

savings over to years, including Medicare and Medicaid program effects. 

Our Office of the Chief Actuary has updated its estimates based on our current CDR review 

and profile processes. If we recciycd the full amounts authorized under BCA, we could 

become current on title II medical CDRs in 2014, two years earlier than our prior estimate. 

2. How aware are agency personnel of the Cooperative Disability Investigation program 

and its successes? How does the agency make sure that front line employees know 

about their I"esponsibilities to tind and report fraud'! 

We promote awareness of the Cooperative Disability Investigations (COl) program in several 

different ways. The COl units conduct regular training with our field offices and the 

disability determination services (DDS) to make them aware of the CDI program and to 

instruct them on how to report fraud. To raise awareness of the COl program and its 

accomplishments, we distribute to our field offices a monthly fact sheet that the Office of the 

Inspector General (OIG) publishes. Due to these efforts, the CD! program received 

6,208 allegations ofpotentiai fraud in FY 2011. Of this number, approximately 64 percent 

came from the DOSs, 23 percent from our field office employees, and 13 perccnt from other 

sources, such as our Office of Disability Adjudication and Review, OIG, and the fraud 

hotline. 

Our frontline employees are often the first to identify potential fraud. Field office employees 

routinely assess the authenticity of evidentiary documents, scrutinize statements made by 

applicants, use our databases and Internet tools to find discrepancies, and follow up on 

complaints or tips from the public. 

3. Your own policies require CDRs for 60 percent ofbeneticiaries within three years. 

\Vhat kinds of disabilities are included in this 3-year category? 

We set the three-year review, otherwise known as the Medical Improvement Possible (MIP) 

diary, for adult beneficiaries whose medical conditions may improve and allow them to be 

able to work. While the timeframe for a review depends on individual case facts, generally, 

the majority of beneficiaries receive a MIP diary. Although MIP diaries have historically 

comprised 60 percent of our diaries, our policy does not require that 60 percent of 

beneficiaries receive a review in three years. Examples of impainnents that can fall within 

this category include heart failure and severe diabetes with end organ damage. By contrast, 

we sct a seven-year review for impainnents where medical improvcment is not expected duc 

to the nature of the impairment(s), such as some intellectual disabilities. Regardless of when 

we schedule the review, we will need the full level of program integrity funding authorized 

under the BCA to keep up with all of the cases that are due for a medical review. 
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Enclosure - Page 3 ~ The Honorable Sam Johnson - Questions for the Record 

4. I understand about five percent of beneficiaries are scheduled for a review in a 

6 to 18 month time period; this is the medical improvement expected category. What 

conditions are scheduled for reviews within these timeframes? 

We set the Medical Improvement EApected (MIE) diary lor adult beneficiaries whose 

medical conditions will probably improve and allow them to be able to \vork. Whether \ve 

set an MIE diary depends on individual case facts. Examples of impairments that can faH 

within this category include traumatic injuries and severe bone fracture. 

5. In the FY 2012 Annual Performance Plan, your message states, "We will use technology 

to reduce our back logs, improve service, and target our program integrity efi'orts. For 

example, we are capitalizing on advances in video technology and electronic processes." 

Can you elaborate on what kinds of "electronic processes" are being utilized, and how 

they have helped improve program integrity efforts? 

We use an array of electronic processes to improve our program integrity efforts. For 

example, we created the Access to Financial Institutions (AFI) electronic process to 

automatically verify fimmcial account balances of claimants and recipients during the SSI 

claims and redeterminations process. We developed AFI to address the leading cause ofSSI 

overpayment errors--excess resources in financial accounts. We also use an electronic 

process to track all allegations of benefit misuse by representative payees. 

We have much more work than we can complete in one year. Technology has allo\ved us to 

develop tools to prioritize our program integrity work to focus on the cases that give us the 

greatest return for our limited administrative dollars. We use these tools to select the most 

cost-effective medical and work CORs, as well as the SSI redeterminations we should 

complete. As a result of these types of tools, we expect that the SSI redeterminations that we 

conduct in FY 2012 will save about $3.2 billion in total lifetime SSt overpayments compared 

to only $1.8 billion in savings if we had selected the cases randomly. 

Moreover, we strive to provide the DOSs with the tools they need to quickly and accurately 

decide disability cases to help ensure that we pay disability benefits to those applicants who 

qualify. Our Compassionate Allowances initiative allows us to identify claimants who are 

clearly disablcd because the nature of their disease or condition meets the statutory standard 

ror disability. With the help or sophisticated new information technology, we can quickly 

identify potential Compassionate Allowances and then swiftly make decisions. Our Quick 

Disability Determination initiative uses a computer-based predictive model in the earliest 

stages of the disability process to identify and fast-track claims \vhere a favorable disability 

determination is highly likely and medical evidence is readily available. 

We are developing other new electronic tools. For example, we are developing the Veterans 

Affairs (VA) Supplemental Security Record Pension Calculation for the Medicare 

Modernization Act, which \vill help prevent improper payments by ensuring veterans 

receiving VA pensions \vho apply ror Part D Lo\\- Income Subsidy receive the most 

advantageous subsidy amount possible. 
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Enclosure - Page 4 - The Honorable Sam Johnson - Questions for the Record 

6, Why has the number ofCDRs performed by the SSA declined recently? Hmo\' 

significant has the decline been? What are the lost savings as a result'! 

We have steadily increased the number of full medical CDRs we complete every year since 

FY 2007. In FY 2012, \ve are completing more than double the number of full medical 

CDRS \\e completed in FY 2007. We have saved significantly more program dol!ars by 

completing more CDRs. Sustained, adequate funding is critical for us to continue this costelTective work, because the same employees ""ho do this work also handle initial claims and 

other program integrity activities. 

7, What are the future projected numbers ofCDRs the Social Security Administration 

(SSA) expects to schedule and complete? 

In FY 2012, \\-e expect to complete 435,000 ful! medical CDRs and 850,000 mailer CDRs. 

The FY 2013 President's Budget includes $1.024 bil!ion for program integrity work, 

consistent v,ith the BeA. With funding at this level, we plan to complete 650,000 full 

medical CDRs. In FY 2013, we estimate that every dol!ar spent on CDRs \\-ill yield about $9 

in program savings over 10 years, including Medicare and Medicaid program effects. 

8, How does the SSA select which medical CDRs are conducted each year and the 

percentage that are mailers'! 

The number of periodic CDRs \\e complete each yeur depends on the level of funding we 

receive. Our annual budget request includes the number and type ofCDRs we plan to 

complete. For cases \ve initiate centrally, we use one of two methods. We send some cases 

to the DDSs for a ful! medical review; others we complete using the mailer process. 

We decide whether to initiate a ful! medical review or send a mailer aller identifying those 

cases with a higher likelihood of medical improvement. We send cases v,ith a higher 

likelihood of medical improvement to the DDS for a full medical review. We send a mailer 

for those cases \\-ith a lower likelihood of medical improvement to obtain more information 

from beneficiaries; we evaluate the information we receive to determine if there is any 

indication of medical improvement. If there is, \\-e send the case to the DDS for a full 

medical reviev,.'. Otherwise, we do not initiate a full medical review, and we schedule the 

case for a future CDR. 

9. The Disability pl'ogram provides an essential income safety net for those who cannot 

work. But we also know there are those receiving disability benefits who want to work 

and believe they can work. Given the increase in applications for benefits during the 

recession and with so few coming off the rolls is the disability insurance program 

becoming a long term unemployment pmgram for these people? 

The changing age distribution of the population is the main driver of long-term Disability 

Insurance (Dl) program grmvth. For example, the aging of the baby boom generation into 

more disability prone ages accounts for a large portion of the growth in DJ awards, and that 
72 

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73 

Questions for the Record for Mr. O’Carroll 


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,.., ",,;, {!; 

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omceofthe IMpectorGeneral 

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W •• h~. D.C. lOS.S 

Atln: Kim Hildml 

April S. 2012 

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tile OIG. I!ld tile local DDS. Vld lindi", a .Ub\e law """""'men! p:utJI<'r. 

With 1CSpc<t 10 _ .....,h froW <wkl be ptev""lcd if we!la<l • uni. in ~ .......... D IG <an only 

in.uript" 0I1eprioo. of fraud 'hat "'" ,,"i'e .-.d !hot .... ......,.,.....,. In Iocotionl ... hcK.ll><rn i. no CDI 

Uni •• I.hc 10<11 000. do not ho"" ... ,,,,,,,,,,,to mer ..... with """'bIe ~ ind~. oslllese ""'" .ff"" ... lioII ..... do !lOt hove. mona..,. 10 .. 10 ,ho ""'''"'ment. In ldcIi.ion, _ .... limited by ou, 

; ..... rip ... """"""'" os .o whi<:/l oIl<pti<ln$ ...., ;"ve<ti,-. Eodt olleg .. ion is r<view«i md tri0tred ., 

tile IoolI I<.'d, In FY 2011. .... OIG reui.'..! 44.440ollopli<ln$ ~ .. «i 10 ~iSlbili,y f",,,,,. Tho OfG 

opened 7.196 <as<$ in I'Y 2011: of lheoe. ln4 ~ 111 d~li'y fraud elSe> OB.$S pm:cn<), In our 

COl ptOIBIft, for FY 201 1, we cloo<d 3,885 c ..... 3.383 of ... hich (S7 P""=') ..... _ .. d ..... 

""""not..! or den!ed. 

Tho "'~ <tMt up W<1 for . oew COl Uni' ...... dcp<ndi., 00 whaher CUr=l' off'oce opo<e <xi .. OJII\ 

_ much """,v .. ion .he .pee"""". The IYtnge <OS! to run • un;, 1. oppro. 1r" .. ely $821.000 ".. 

••• 

So I. ) .......... monJ. y .... I'ft,,,,,,,,, ... d'" !bo. on< .. oy '0 COIIIho. ___ • I'h n.d ...... obtto< In 

.... 01 Protram .",,,Id "" '0 ........... " .. oomplui" ol.ho Sod, 1 SKuri41 Administ .... _·. 

(SSA) prognms. withou. -nlldng .IId, fn .. ... ~ lOU ~ ................ pia "'who' 

«H>1d be oimplir,.., ........... ? 
76 


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!'aBC 4 - Tho H(lOIO<2bI< S..., Jo/Inwn 

Doeoompk inti ..... """"if yin, Ihe rules fOO' dt<cmIinina if <li<abloil bcntflci1lies III"" .."ina' LII .. 

affect dn.bi~l, bcnrii". Ii ..... if SS'" ~i.cd umin&< daI.--o""h as I'<:da'1ol poyrnll illfOO'm&liM-

_ frequmdy. "'aeocy"ofT "iU neood, to "'view .... """;np. 55A CM""" 'imply ""p boooIi, 

PO)"""" t>«;..,. ~ i, """,rled 'IW a benof"ociory i • ..".t;i .... For i""""",. becau .. 02ntin" reponed to 

5SA ""'y inthl6< lInOItl>1$ thai .~ not ",1_'0 <:unftI, """"~h as bon...,.. ""mi ..... ;."., poy. ond 

.itIc poy--SS" .......... I~ .... oami"" 10 drlormino """""'" lboy "'."..,.... ...."inp r""" 

,ulla!anual gain'u, "",i.ity pnf"","",,, afte,mtilltmenl 10 disabili,y ..... ro" bogan. '" ... hoU>er tile 

• .,rung'eJlcOO<!od ,be -countable earnin,,-~. SS" ""' .. 01003 ...... trial ... oct and 0!/I0I" work 

iDtenuve ""'i,i"",. Tbi. ~~ wort CDR or Suwlomoot.ll Sccwi'y I.....,..,. (SS I) 

redetennillO'iOll--"io , labOO'·inwnsi"" """""'" and lbe ".rr ....... tta requi~ ~ .pi"" tho 

A""",y·, DKd '0 a>mpk:lc Olha priori'y ~ •. 

AII<JCher .U. """,Id be 10 """"I" tile SSA OIG 'rnm ,be C~~, IJaJdt.·.., tJN! Primq 

p"",="", A(1" (CMPI'A). Tho CMrP" «IItOain, .. verol u .. ',,1 and proctkol ""cqlIion ... ptCiflCally 

...,~ng malO .... perf""""" rOO' " •. nlne _. 1' ,.. ... _ Pu'J"l'd. ruti<tiatl ""lew •• and 

Congreuional in • ..,;I .. ' ..... """"'1 othtrJ. However .... ith ..,pnllO ,."computer ""''''''"' 11111 "'" performed !hat prin'Iorily ofTC<"1 b<udi, dt-tc:rmir>OtiooI. a fonna! <>IlqI<It<r ... ,donr qre<mmt (CMII) 

pu"uanl 10 tho o,' I'PA ,.. "ill f<q\IifCll. Tho main objcai"" of "",nr of our oudil, and in"",",tplion. i. 

10 onf\tl"O IiI&t ""Iy c",ib!< indi.idutI • ....,.,"" poy"""'" 'rnm 55A: th" .. Ibo CMI'PII ""Iuu... 0 

CO<I1puter matcbina.~ durin& many of our _ c(forlS. All ~tcr "",,,,hinl '"""",",,IS 

""'" 10 thrntrgb an ....... inJ and knglhy """" ... 1 prtlO<'OS "';!hin the AFJk"Y befor< ....,.,.",. final 

Ipprn\"al from SSA·, 0.... 1nlevity BoW. Thil prtlO<'OS ,ypiCllly lUes more tIwl 0 ~ ... (ond 

..,."..;"... yen) 10 compl<l .. "",.........rune., to CMI'PA will i....-.ease tile dT<rti.OIId. of ,be OIG in 

<lejeclinl fraud. wa>lc. and abu .. by oUlhoriLin, COIIlP"tcr rnrtdIes w,lOOuI lbe """'" f()l • CM". 

Ihon/>y. rociliwjns .... ings of l&opo)U ....... tta 'krough the: pre_;"'" and reco.ay of impr<>per 

po}"rnon1l of SSA p«>grvn bonefi ... 

Tho o.panm.IlI of fkalth and Ituman Serv~ (HHS) and ito OKl """i.cd on eurnpIi<>n .. .,.., of .... 

er>OCIOd hell' ....... ref""" Iqi. laoon; i.~. the Pal;,,,, P",,,criOfl surd -'./frmlabl, Car< ACI. I'trb. l 111 _ 

148. SecI"", 64Ol(b)(1) ofth< legiwtioo .......,.!ed the Pri""'1 ...... toe.<~mpt -rnaICheJ perl<>m>ed by 

the S<c<ewy of llealth and lIuman Servi<es Of tile 1",pc<:tOr Gmerll of tile D<-partment of Ilcollh and 

lIutIWI Servi<a with ""poc1 '0 polmIi.l , ...... , ~ and abu ... ;""Iudi", .... Ie"., of, '},>Icm 01 

~ofnon-Fedonol1Kords.- ~.5 U.S.c. t 5520(0)(8)( 8)(" ... ). 

Bot~ SS" OKl and lUIS OIG ....,dlargcd "illl<:om1:w,nl ........ r....,d. and ..,..'" in .i ... and importanl 

FaIeral benefi. p!"I>tranU. JUOI .. C008 ..... delermincd 'hal on ""cmptioo 10 the CMFPII would be 

in .. l ... bIe '" ,be HilS and its OIG in ito e/fOfU'" COf'IlIIa, ....... 'raud. and abu", in HilS·, p«lJI2mS 

md openolioru: so, 100. """,,'d 'Jirnil .. =~"" oniJI the S5A OKllo comI>oI (mod. WOOl .. and 

lhusc """" cffocionUy and c(fecli.-ely "';lbin 5S"·, programs and """,,,lion!.. 

'" Vou abo ......... rntDd<d .,...,bfuhI"!IlIII in10Kri'1 fund. II"", •· .... Id on in,""ri'y ful>(l 

..... taIC In """ .. 10 I~ IlIe fu ...... ""10" for 1,,'""ri'1 .... ~ 

Doe propoul i. ",........J 11M: S«iaI S<t:~n·" A<t,a llrltoori", S5A and ;IS OIG I<> """".e 0 prn:rntsoje 

01"'" ovapay" ..... " colltc1ed yeIIly by 5SA 10 fund pnJI1Int imc&riIY ",1_ "",i.i,"". TbCIe 

OCIivilie< iocl. bu, ..., '"" limi,ed to, CDR. (both raH>di< medial ""'''' .... and Ihose lriuercd by 
77 


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"""" octi~ity). f~1I and limited i ..... S5! ............ inMions. CDt Un ......... orr,.,. of tile Gtn=1 

eou .... 1 pn;>OeCU1on. TOg<:lhtr. liIIx oc:tivi,"" h.", ~Itod iD pre .... Ii"!: i""""""," pl~'" as "",II 

.. ....:ovenna milliono of 4oIJoro in Social 5<ruri'y _r", i....,.."....-Jy paid. 

U ... Ihi. Prot;ram llII<grl,y fund ~, SSA would ....,.;'" up '0 ~ pen;ent ODd SSA OJO up to 

Ii ... pen;ent of,~ """l'")1!lOI'U ~ durinal Ii",", y .. /. (I'« ~"Y 2010. SSA «IlIccttd 

Ipp"'.i..-Iy $1.1 44 bin;.,., in """l'"ymrnU.) Thi, fWldiD, WOUld be"""! '0 "'pp\tm<lIt. II(lt 

"'WI""I. "",.,..,t fundina and woukll'f"OViok oo:I<6.ionlI ~'"'" 10 bot/I SSA an<! OIOlOtombot wale. 

"->d. and ... "" ... '!hin SSA· . prOaram$ mil 0perI'i<Jns. Arn«lnl> pn>VHlod for liIIx .-onh/Iip octivilia from Ihi. fund would beotf-... ond II(lt scored. 

An .11 ....... tned>od for fund", ... inlegrity fund would be 10 Ule. pen:e<>(Oge of plymenu pre_ted 

l" 0W0$<d to o""'P' Y"""'" «11_). SSA mil its DIG """Id ...,h m%i"". porrem"l" of "",onted 

p&ymcI1ts or ... ings from I .l.oimafllll(lt gelling 0/1 tile 1011 . durinl\he Ipplicllion 1If"CUO. Pot 

.. ampIo. COl Urlito fucu. on I'"",,,,,'in, dailtllnu from r<t'in, "" \he di,ability 10110. 10 FY lOll. <>." 

Invo:sripoOfS fq>OII«I-.' 5329 minion in pnIjccIed .. vinp from pt"OJfJII\S .... h .. \he CUI progrom. 

Finally. SSA C<IIIduCU COl(o. which """II in .. vings by talOn, di .... ility btndiciaries "" flO "'""" 

"""" SSA·. rnlfti. for btnri"1I$ off .... ralls. In SSA ',1'tO:>ruary IS. 2011 ... ...aI CDR rq>OrIlO 

Coog<ess for FY lOO9. lhe Aaency e>li:nated the preset>! val .. of ''"ute baldiu llIuo "'~ for \he Old· 

A&e. SuM"""- mil DUabOlj,y InSllIUoCe(OASDI). SSL Mrda,.. ond Mcdiaid pn;>gramo to be $4.6 

bim"" 

7. Do '.0<1 b .... OD! "" ~ for f • ...n.., mo ... tff"oru ,. p ..... n' fnoud . ... :uI . ...... obuo< In Ut<1)1 __ ",? 

w. belie"" .... 1'fI'I">'«I inl<grit)" fund would 011<> .. for more dJ9'U to p=enI ff2lld. .... I<e, ond "'K In SSA'o PfOII1Imo. See ... _ 6 obooe. 

A.oI Fd><u..-y 1011. SSA hod • 97.!1 1"<"""" ~y ..... """"",inl \O lI><.'I"oIity .... fIIICe RView of 

full m«Ikol CDlt.. I"'-v .... hi.tori<oUy. SSA .. ,i_ obau. 25 f'<R'UI' of I,,;lial CDIt ","",lion • ..., 

c .............. ",,:appeal. We 110"" ... audi, p1lllnod thai ",II onoIyu .... ~ ~lCiaries...,<:eUed 

Iflu • C~ but ..., .' .. n"med .flu orpul or ~umt<l to llie rail. "". _ . pplkalion for d;""bil~y . 

We ",II . .......... teO"l .. of , •• ,. ",.;"w with )"" ooce;, i. «>mpI<oed. 

II. Your om.". ~~Ur JKlbll_ . ... port .... hlRh-dolla, ",' • .,...,._nlf in .. kl'lda , , ••• 2010 

_I>d d io;<o, ..... h<VftI ~ "'.''' .. f .... nU .. · ... , ...... 1(10 ,he.ss,!. did ..... ... port ""1. Why 

..... )"CU,..n-_ .bIt to kl<n1111 hl&hodollar Ovn"p&) ..... nlll .. ·bon ,lit SSA dld ..... ~ Whot 

.. _ "'wid the SSA m .... to < ........ !h., . H 1U&h-dollor "'· • ."., .... nu ... ki<n,illtd? 

Tho. 010 w .. oble to i&t>lify hi&h-dolllI "'"'1>11_ ",i"l • dirr...,.,t IPPfCICh f""" .... ~. 

SSA ",lied on .... ....,. !d«:kd durin, i!$ " "'I'lm& ~ for it$ S'eonrdihip ~ •. E.:h _b. 

tho orr"", of Quali,y Pfti()l'JlllllOl: (DQP) ~I<ru • .,lIlsli<:a1ly valid natiooW wnpkolTi'k II and Ti,1e 

XVI beneficiaries who r=ived • poymenC in ,Iu.! mon<h ,<> mIe"""'" lbe cue Ind <:ruU'" the plymen .. 
78 

f 


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79 

Questions for the Record for Mr. BRADY 


ccoleman on DSK8P6SHH1PROD with HEARINGInsert offset folio 52 here 76450.052

1fA''' '' 

SOCIAL ~ SECURITY Olli.,. of t he I"specto. General 

The II_I. Sam Johnooo 

tlWrmon. SuboommitlO< 011 Soda! Security 

C""""il1<c 0" WI,., ond MW'I' U.S. II ...... ofRcprqen~1'ft 

B·]]7 Ro~bum 11_ Offrce B..ildil1ll 

w .... ;"aton. D.C. 20S1S 

AItn: Kim Hildrtd 

Onr ClWrman John"",: 

April 2<1, 2<1]2 

Thi, ;, in .. 5pO<ISC \0 y<>ur 1ol1e! ,,"led MOtth 22. 2012. in ",bkh )'01' ~ .... ed infonna,"", ",1-'"<1 '0 

Iho Soda! Security Admini""'Kln', (SSA) Off",. of Ibo IruptCIOt Onteral', (OIG) Coopenli,. 

o;_lity 1"..utill"li_ (COl) prog!"lIII. followina your SuboommitlO<', Jon""'Y 24. 2012 lI"';n& on 

Combotinl Diso\lility Wast<. rna<!. ond Abuse. ] opprcc-i ... Ibo opponunity \0 pro..;,s., illfornutiOll 

",111ed 10 thi. <rilioaJ i ...... Iklow Ott responses \0 )'0<11" spocifoc q ...... ions. 

Yeo. Our CD! Unil ;"""111",10<'1 UK _iOJ mediI ond additional third.part)" doabase! \0 obtain 

.. much io_ "" clalmoo, ODd beneficiaries tha< till,. been ref...-red 10 Ibo CD! Unit> for 

in..utixotion. 

For ... mpl~ Iho K.mu City CDI Unit in'OSIipt«l • man ,..110 Ipplied for di .. bility brncr." ODd 5Uttd tha< he could noI swd for """" than five '0 10 minu<cs. n.. o;Slbility 

DeI....,i,,",iOll S<rvke (DDS) in T<>pcka, Kon ........ p<ct«Ilbo man .... malcina "'"l1li<,,,,«1 ....., .. 1 ond pb,.,ital ..... mp1';"" ond .. r...-red Ibo cue to Ibo COl UniL 

A ",.kw oflbo man', F_book -...ur, i..,lud«! .. _ photos oflbo man NOdi.a "ilk 

friends II." ooAdorl. m",ic rOSlin! "tc, ond !be ICCOWI' iDilicoted the roan worked for OIl on .. il. 

festin! WI • ..",.ioe. COl i.,· ... i'"'0<'1 turned the pbotos ond oth<r.\'idenu O>'ft \0 the DDS. 

and !be DDS oIcnied Ihe man', claims ror disability benefi". 

1. Wh Intt.. p<rp<1 ... to", .ftbef .... d JO.' nit nod.? WII. , is ' •• I,\o->'o-t of 

oopbisU .. Uo.1 An 'IoeyO"l".iLtd K1I"' . ..... do 'bey ..-orlr lloae? A"I~ey fin',"""",,,, ... pnt ofl •• d.",? 

SOCIAL SECURITY ADMlN!!STI!ATlON IlALTIMORl!:.MD 2tlSft-OOOI 

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ccoleman on DSK8P6SHH1PROD with HEARINGInsert offset folio 54 here 76450.054
82 

Questions for the Record for Mr. Clifton 


ccoleman on DSK8P6SHH1PROD with HEARINGInsert offset folio 55 here 76450.055

Pre~ident 

~rel'lIE!'>.l'LlFIOI\ 

(heo:le~.CO 

Vice Prt'~ident 

Sl'OJ I tJALc 

Mobilc,AI 

Secretar) 

PAlTI. (jlJ.rTJ I.AN 

:VkmJcn,CT 

Trea~nrer 

T:-'CRejlrcsentath·c 

ANDRrA WAlll.E 

Aubum,WA 

Ewcuti\eOflicer 

l3lLLIEARMb'.J"!A 

Phoenh .. A7 

Immcdiate I'ast President 

JO[ OIR.t\GO 

:-<c\\hurgh,NY 

EXECUTIVE COMMITTEE 

DONNA ArmOTT 

La'\l~n<:e. MA 

DEBBY BANIKOWSKI 

S:laube, NY 

CllARL!:.Nc MORALE~ 

N<:"'porl N<:\\~, VA 

MARY \\ JLLlAM:-' 

Durham,N( 

[)A[UUN SALLMAN 

Wool.h\()<:k.ll 

PeGGY HUl'llANAN 

l.utkin. TX 

CLAY IIAYO!:!'>. 

Colllmbin.MO 

KA"IHYVA1'-iNArlA 

MmOl,ND 

BECKY ARCHER 

Rcno,NV 

JARI rRASSENFl 

Pocatclio.1D 

WASIlIN(;TON 

Rf:./,IU:.Sf-~N l"ld IVl:: 

RACIIEI. FMMONS 

NATIONAL COUNCIL OF SOCIAL SECURITY 

MANAGEMENT ASSOCIATIONS, INC. 

April 4, 2012 

The Honorable Sam Johnson 

Chairman 

418 C STRHT, NE 

WASHINGTON. DC 20002 

TELEPIIONI--: (202) 547·1{S30 

FAX: (202) 547-g532 

""ww.nC~l!la.org 

United States House of Representatives 

Committee on Ways and Means 

Subcommittee on Social Security 

B-317 Rayburn House Onice Building 

Washington, DC 205 I 5 

Dear Chairman Johnson: 

Thank you for providing the National Council of Social Security Management 

Associations (NCSSMA) with the opportunity to answer written questions resulting 

from the January 24, 2012 oversight hearing on the Social Security Administration, 

Combating Disability Waste, Fraud and Abuse. The responses to the two questions 

you posed are attached below. 

Please feel free to contact me if you would like additional information. Thank you 

again for the opportunity to appear before the Subcommittee, your interest in the 

vital services Social Security provides. and for your ongoing support ofSSA. 

Sincerely, 

/s/ 

Stephen Clifton 

NCSSMA President 
83 


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United States House of Representatives 

Subcommittee on Social Security 

of the Committee on Ways and Means 

Responses Submitted for the Record 

Stephen Clifton, President 

National Council of Social Security Management Associations, Inc. 

Hearing on Combating Disability Waste, Fraud and Abuse 

January 24, 2012 

1. In your experience as a local office manager, what are the kinds of behavior you and 

your employees see in certain applicants that provide clues to possible fraud? 

In SSA Field Omces, the possibility offraud is pursued both at the time a claim for Social 

Security Disability (SSDl) or Supplemental Security Income (SSI) is filed, and after a claimant is 

receiving benefits. The following are some specific circumstances that may alert an SSA 

representative to possible fraud: 

During the initial application for SSDl or SSI benefits, a Claims Representative may 

record observations that arc inconsistent with an alleged disability. For example, a 

claimant is observed walking without any assistance, has no complaints afpain, sat 

through a lengthy interview without complaint, and their alleged disability is severe back 

problems. These observations are recorded for the Disability Determination Services 

(DDS) to consider while gathering medical evidence to make their medical decision. 

Also during the initial application for disability benefits, the DDS may receive 

information from a medical source that the claimant is currently working. The DDS 

would refer this information to the Field Omce to investigate and resolve possible work 

issues. 

For SS! eligibility, in addition to a claimant being found medically disabled, they must 

also have income and resources below certain statutory limits. The individual's living 

arrangement (such as where they live, who they live with, and whether they are living 

with a spouse), non-liquid resources that they own (such as property), and liquid 

resources (such as bank accounts) all affect eligibility for SSI payments. The complexity 

of SSI rules and regulations provide many opportunities for potential fraud. Examples of 

where fraud may appear include: recipients alleging they pay rent when they do not, 

statements that they are separated from their spouse who works, when they are not, and 

statements that they do not have property or financial accounts when they do. 

• An SSDI beneficiary or SSI recipient may return to work and fail to report their earnings 

or conceal their earnings from work, which may indicate possible fraud. This work may 

demonstrate they have medically improved or are engaging in substantial gainful activity 

2 
84 


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that would cease or reduce the amount of their payments, Their SST eligibility may also 

be affected due to receipt of income, acquiring resources, or living arrangement changes, 

To identify and combat potential fraud, SSA employees use the Access to Financial 

Income (AFI) program to discover resources. The AFI program allows our offices to 

electronically request and receive financial account information for S8I recipients. By 

automatically checking an applicant's or recipient's known bank accounts, and by 

systematically checking for unknown accounts with financial institutions in a given area, 

the AFT program helps the agency reduce many payment errors that were common in the 

past. 

Referrals of potential fj-aud from the public are received by SSA and OIG and sometimes 

yield determinations that affect eligibility to SSDI or SSI benefits. 

One of the most effective means of determining the accuracy of benefit payments and 

identifying possible fraud is the processing of program integrity workloads. This 

includes processing medical continuing disability reviews (medical CDRs) and SS! 

redeterminations (identifying SS! eligibility changes). These program integrity initiatives 

reduce opportunities for overpayments and fraud. 

Program simplification such as the Work Incentives Simplification Pilot (WISP) and SSI 

simplification would significantly improve program administration and allow for greater 

understanding by SSDI beneficiaries and SSI recipients. 

Finally, having a sufficient number of Field Office personnel allows sufficient time to 

explain complex program rules, develop, investigate and accurately process claims, and 

greatly reduces overpayments and program fraud and abuse. 

2. The Commissioner has been focused on reducing the hearings backlog and progress has 

been made. In a 2009 report, the Government Accountability Omce found that the 

Social Security Administration (SSA) did not have a systematic approach to identify 

and address unintended effects of the hearings backlog reduction plan. One of these 

effects is that the resources available for front line operations have not kept up with 

growing workloads. Has some relief been provided to those on the front lines in Social 

Security offices after receiving the agency's appropriation? 

SSA is challenged by ever-increasing workloads resulting fI-om aging baby boomers, complex 

programs to administer, and increased program integrity work with diminished staffing and 

resources. The resources available for front line operations in SSA Field Offices have eroded 

significantly. 

SSA has lost more than 4,000 SSA and State Disability Detennination Services employees in FY 

2011, expects to lose more than 3.000 employees in FY 2012. and expects to lose more than 

2,000 employees in FY 2013-3 total loss or more than 9,000 employees in just three years. In 

FY 2013, the agency will have about the same number of employees as it did in FY 2007, even 

though workloads have increased dramatically, 
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By FY 2013, retirement and survivor claims will have increased by 30 percent and disability 

claims by 25 percent from FY 2007. The number of initial disability claims pending rose Irom 

581,929 in FY 2007 to 759,023 in FY 2011. The number of pending initial disability claims is 

expected to increase to 861,000 in FY 2012 and to over 1.1 million in FY 2013. 

Overall Field Office staffing has gone from about 31,000 employees in June 2010 to around 

28,300 employees in February 2012-a nearly 9 percent decrease. Since SSA received its FY 

2012 appropriation, some rehefhas been provided to those on the front lines in SSA Field 

Offices. This has been largely in the allocation of overtime hours to address critical program 

integrity workloads. Overtime in FY 2012 is being worked at a reduced level of approximately 

2,125 work years. 

SSA Field Offices operated under a hiring freeze in FY 2011. In FY 2012 minimal SSA hiring 

of 175 positions has been authorized for locations outside ofODAR. Of these new hires, 100 

positions will be directed to the most stressed SSA Field Offices. This translates to a 1:27 

replacement ratio for SSA Field Offices, which is insufficient to maintain adequate service levels 

to the public. The same employees that process program integrity workloads, also answer public 

telephone calls, take initial applications for disability and retirement benefits and process 

claims----core \vorkloads that are not program integrity funded but do cnsure the accuracy of 

payments. 

There are a number of public service repercussions that are occurring due to the insufficient 

staffing levels in SSA Field Offices: 

Service to thc public is deteriorating because ofinadequatc Ficld Office stafTing levels. 

This manifests itself in increased waiting times in reception arcas, higher telephone busy 

rates or unanswered calls, delays in claims processing, and backlogs in less visible postentitlement workloads. 

As a result of this erosion ofSSA service, public frustration continues to grow. This has 

translated into increased security incidents, and an increase in their severity, in SSA Field 

Offices. This includes personal threats against employees, physical violence in reception 

areas, verbal abuse, and threats against the government. 

Geographical staffing disparities have occurred and will increase as ongoing attrition 

spreads unevenly across the country. This leaves many offices significantly understaffed 

and targets for closure or consolidation. 

SSA has a highly skilled but aging workforce with more than 22 percent of its employees 

eligible for retirement. With offices struggling to address increased workloads with 

diminished resources, employees are choosing to retire in greater numbers. This loss of 

experienced personnel with institutional knowledge exacerbates the problem. 

Reduced SSA Field Office resources have a negative effect on program integrity and 

stewardship responsibilities. Resource constraints compromise SSA's ability to provide 

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[Submissions for the Record follow:] 


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Consortium for Citizens with Disabilities 


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CONSORTIUM FOR CITIZENS 

WITH DISABILITIES 

Statement for the Record 

Hearing on Securing the Future of the 

Social Security Disability Insurance Program: 

Combating Waste, Fraud, and Abuse 

Subcommittee on Social Security 

House Committee on Ways and Means 

January 24, 2012 

Submitted on behalf of the undersigned members of the Consortium for Citizens with 

Disabilities Social Security Task Force: 

American Council of the Blind 

Association of University Centers on Disabilities 

Bazelon Center for Mental Health Law 

Easter Seals 

Epilepsy Foundation 

Health and Disability Advocates 

National Alliance on Mentallllness 

National Association of Councils on Developmental Disabilities 

National Association of Disability Representatives 

National Disability Rights Nehvork 

National Down Syndrome Congress 

National Multiple Sclerosis Society 

National Organization of Social Security Claimants' Representatives 

Paralyzed Veterans of America 

The Arc of the United States 

United Spinal Association 

The Consortium for Citizens with Disabilities (CCD) is a working coalition of national 

organizations working together to advocate for national public policy that ensures the selfdetennination, independence, empowelment, integration and inclusion of the 54 million 

children and adults with disabilities in all aspects of society. The CCO Social Security Task 

1825 K Street, NW, Suite 1200· Washington, DC 20006· PH 202/783-2229· FAX 783-8250 -Info@c-c-d.org·www.c-c-dorg 
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Force focuses on disability policy issues in the Title II disability programs and the Title XVI 

Supplemental Security Income (SSI) program. 

The undersigned members of the CCD Social Security Task Force submit this Statement for 

the Record of the January 24, 2012, House Ways and Means Social Security Subcommittee 

hearing on Securing the Future of the Social Security Disability Insurance (SSDJ) Program. 

The SSDJ program I provides vital and much-needed economic security and access to health 

care for individuals whose impainnellts are so severe that they preclude substantial work. 

This income support program is an integral component of our nation '5 safety net, reflecting 

the core American value of assisting those in need. vVe appreciate Chairman Johnson's and 

Ranking Member Becerra's interest and attention to this critical program for people with 

disabilities and their families. The undersigned organizations recognize the importance of 

ensuring that Social Security disability payments are only made to people who are entitled to 

receive them and that the amount of the payments are accurate. The Social Security 

Administration (SSA) does a good job of ensuring that payments are accurate. As Deputy 

Commissioner Colvin points out in her testimony, SSA has one of the lowest error rates in 

the government, with a less than 1 % rate of inaccurate payments for the SSDI program. 

Although this low error rate is good compared to other government agencies and programs, 

the undersigned organizations of the CCD Social Security Task Force believe that more 

needs to be done to prevent overpayments and are concerned that recent appropriations 

decisions will undermine these efforts. 

The Social Security Administration Requires Adequate Resources for Program 

Integrity 

Adequate resources and staffing are essential to ensuring that all payments made to SSDI 

beneficiaries are accurate and that SSA can perform necessary program integrity functions 

(e.g. medical and work continuing disability reviews (CDRs), redeterminations). 

Unfortunately, recent appropriations to SSA's limitation on administrative funding (LAE) 

have not been adequate to allow SSA to complete these vital tasks. In fact, by the end of 

FY2012, inadequate lunding and reductions in statUng through attrition will result in the loss 

of nearly 8000 SSA staff members (see testimony of Steve Clifton, President, National 

Council of Social Security Management Associations, Inc). This staffing reduction, 

prohibition of overtime hours, and hiring freeze threaten SSA's ability to fully perform its 

program integrity functions. 

SSA Deputy Commissioner Colvin specifically addressed the impact of reduced funding over 

the past several years on program integrity efforts in her testimony. Deputy Commissioner 

Colvin reported, for example, that SSA currently has a backlog of about 1.3 million medical 

CDRs due to inadequate funding and the lack of staff available to complete the reviews as a 

result. Medical CDRs save S I 0 for every $1 spent and are vital to SSA program integrity 

effOl1s. Based the overall LAE level, as staffing levels continue to be reduced in field offices, 

these backlogs will only increase. As Deputy Commissioner Colvin stated "The same 

employees who complete CDRs and redeterminations also have many other critical 

responsibilities, such as taking and adjudicating SSDI and SSI applications. While our 

1 This includes all individuals \ .. ith disabilities receiving benefits through the Old-Age, Survivors, and Disability 

programs, including disabled \\orkers, surviving disabled spouses, and disabled adult children,. 

2 
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workloads continue to grow and expand, the number of people to do the work has 

decreased." (p.8). 

Delay in Processing Work CDRs Due to Inadequate Staffing Results in Significant 

Overpayments and Hurts People with Disabilities 

When an SSDI beneficiary goes to work, she is required to report her earnings to SSA so that 

a work CDR can be performed and benefits can be adjusted when appropriate. [fthe earnings 

report is processed in a timely manner, the benefits are adjusted and no overpayment results. 

However, ifSSA lacks the staff to process earnings reports in a timely manner, the 

beneficiary is likely to receive an overpayment. The longer the delay in processing, the larger 

the overpayment will be. According to Deputy Commissioner Colvin's testimony, SSA has 

allocated additional resources to work CDRs, targeting cases with the oldest earnings reports 

- those more than a year old (p.6). During the hearing, Deputy Commissioner Colvin stated 

that it takes more than 270 days on average for SSA to complete a work CDR. Every month 

that passes from the time that a beneficiary reports earnings before a work CDR is completed 

increases the likelihood of a large overpayment. 

This deJay in processing of earnings repOlis often has a very detrimental impact on people 

with disabilities. When beneficiaries faithfully notify SSA of earnings or other changes that 

may reduce their benefit payment amounts, as noted above, it may be months or years before 

SSA sends an overpayment notice to the beneficiary. demanding repayment of sometimes 

tens of thousands of dollars of accrued overpayments. It is shocking to heneficiaries to 

receive these notices, when they reasonably assumed that SSA had processed the infonnation 

they submitted, and it is challenging, if not impossible, for someone subsisting on benefits 

alone to repay the overpayments. Many individuals with disabilities are wary of attempting a 

return to work out of fear that this may give rise to an overpayment, resulting in a loss of 

economic stability and health care coverage upon which they rely. 

SSA needs to develop a better reporting and recording system and promptly adjust benefit 

payments -thus preventing these overpayments. It is important to note that, in and of 

themselves, overpayments do not indicate fraud or abuse as beneficiaries are 

encouraged to work if they are able. The problems arise when reported earnings are not 

properly recorded and monthly overpayments are not properly adjusted. SSA must have 

adequate resources and staffing to allow the agency to reduce both the backlog and 

processing time of earnings reports. 
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91 

National Council of Disability Determination Directors 


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STATEMENT OF 

VICKI L. JOHNSON, PRESIDENT 

NA TlONAL COUNCIL OF DISABILITY DETERMINATION DIRECTORS 

to the 

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE 

COMMITTEE ON WAYS AND MEANS 

UNITED STATES HOUSE OF REPRESENTATIVES 

February 6, 2012 
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Chairman Johnson, Ranking Member Becerra, and Members of the Subcommittee: 

Thank you for the opportunity to present a statement on behalf of the National Council of Disability 

Detennination Directors (NeDDD). We appreciate the opportunity to comment on the specific concerns of the 

Committee, raised at the Second in a Hearing Series on Securing the Future of the Social Security Disability 

Insurance Program, which took place on January 24, 2012. 

The National Council of Disability Determination Directors (NeDDD) is a professional association composed 

of the Directors and managers of the Disability Determination Services (DDS) agencies located in each state, 

the District of Columbia, and Puerto Rico. Collectively, members of the NCDDD are responsible for directing 

the activities of approximately 14,600 employees who processed nearly 4.8 million claims last fiscal year for 

disability benefits under the Social Security Act. NCDDD goals focus on establishing, maintaining and 

improving fair, accurate, timely, and cost-efficient decisions to persons applying for disability benefits. The 

mission of NeDDO is to provide the highest possible level of service to persons with disabilities, to promote 

the interests of the state operated DOSs and to represent DDS directors, their management teams and staff 

The DOSs work in partnership with the Social Security Administration (SSA) to provide public service to 

individuals applying for disability benefits and to help ensure the integrity of the disability program. The DDSs 

make complex medical detenninations for the Social Security disability programs pursuant to Federal 

Regulations. The majority of DDS staffs are state employees subject to the individual state personnel rules, 

governor initiatives and state mandates, with the remainder of staff under state contract to provide services to 

the ~~S. The DDSs adjudicate various disability claims including initial applications, reconsiderations, 

continuing disability reviews «(,DRs), and disability hearings. 

The DDSs' role in helping SSA curb improper payments includes processing CDRs (to ensure that only those 

individuals who continue to be medically eligible remain on benefits), identifying potential fraud in the 

disability application process, and contributing statf and expertise to SSA's Cooperative Disability Investigation 

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(eDI) Units. Other ways that DDSs prevent improper payments include their internal training and mentoring 

programs, quality assurance, the examiner-doctor adjudicative team, and proper supervisory/managerial 

oversight. 

Impact of Funding/Staffing Shortfalls 

SSA determines the DOSs' funding levels and workload targets. Funding the various workloads to provide 

good program service and stewardship is challenging at best, and even more so nO\v, as \ve experience difficult 

economic times, with increasing disability applications and fewer resources. While staffing did increase in FY 

2009 and 20 lOin response to higher workloads, since early FY 20 II, SSA has imposed a hiring freeze on all 

DDSs due to funding limitations. At the end of the first quarter ofFY 2012, DDSs were only 3% above the 

staffing level at the end of FY 2008 (total full time equivalents including overtime), while total receipts from 

FY 2008 to 2011 increased by 32.5%. 

DDS staffing is critical to the processing of all disability claims and CDRs. DOSs also contribute staff to the 

CDI units. Inability to replace staff losses over time will erode the DDSs' ability to process applications 

promptly, to complete sutlicient numbers ofCORs in a timely manner, and to contribute to COl unit fraud 

investigations. 

Nationally, the DDS examiner attrition was 13.5% for FY 2011 (a loss of 1195 examiners) and continues at 

13.3% (with an additiona1266 in examiner losses) in the first quarter ofFY 2012. Currently, the DDS is still 

managing to maintain high productivity, as the remaining staff does a short-term push to keep up with the 

workload, and some critical support resources are temporarily shifted to production. However, the DOSs 

cannot sustain these resource shifts for the long term without serious detriment to important program integrity 

areas. such as quality assurance, training, supervision, and consultative examination oversight. 
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Ultimately, the loss of examiner staff equates directly to fewer cases completed. For as long as it can, DOSs 

will do whatever it takes to keep the cases moving and meet workload targets. DDS staffs are extremely elastic 

and expand their work ethic to meet the need. However, continued attrition without replacement will eventually 

reach a tipping point with burgeoning backlogs and case processing delays. 

The longer the time before DOSs can resume replacement hiring, the harder and longer the recovery will be. 

DDS examiners are not quickly replaceable cogs in a wheel. It takes time and resources to hire the right 

employees for the job and then several years and considerable traininglmentoring before those employees have 

the knowledge and expertise to handle all case types independently at full production levels. DDSs need to keep 

a steady pipeline of trainees and a strong support infrastructure to keep the workload well managed while 

training the successors, not only for the examiners that have already left, but also for those that will leave in the 

next two years. 

The DDSs continue to seek SSA support and funding for proactive, strategic replacement hiring as soon as 

possible, to mitigate the long-term negative effects of attrition. As each DDS gets closer to its tipping point, 

those negative effects include lessening capacity to process all types of cases including CDRs. As backlogs 

develop and worsen, the progress made over the past few years to reduce pending \vorkloads, complete more 

CDRs, and staff up CD! units will be lost. 

Since beneficiaries may continue to receive benefits during the appeal process, the full benefit ofCDRs in the 

conservation of program dollars will not be realized as long as there are delays at any of the appeal levels. We 

appreciate that the Budget Control Act of2011 directs SSA to increase the number of medical CDRs that the 

agency completes FY 2012. Although all the funding was not ultimately appropriated, we will still complete 

more CDRs this year than last. SSA determines the number of CDR cases to be worked by the DDSs each year. 

In preparation for the higher workload target, SSA began sending higher numbers of CDR cases to the DOSs at 

the beginning of the fiscal year. 

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Money alone is not sufficient to ensure that the DDSs can process these cases accurately and timely. CDR case 

processing requires experienced examiners with the capacity for expert judgment in comparing medical findings 

and function over different periods of time and determining medical improvement following complex legal 

guidelines. Appeals of CDR cessations require hearings with disability hearing officers, the highest level of 

DDS adjudicator, requiring many years experience and specialized training in holding administrative hearings 

and deciding legal findings of fact and conclusions of law. The DOSs also need to use these experienced 

examiner resources for other aspects of program stewardship, including ensuring the quality of adjudication and 

providing case\vork guidance for less experienced examiners. As veteran DDS staff continues to leave, while 

the pipeline of new examiners remains dry, we foresee increasing difficulty with processing CDRs and their 

appeals this year and beyond. 

The DDSs also face the challenge of managing the initial (and reconsideration) workloads with insufficient 

funding. Many states consider the adjudication of initial claims (including the associated eligibility for health 

care benefits) a top priority, as these claimants have not had the "first bite of the apple." While stewardship 

through completion of a large number ofCDRs is important, it is unlikely that all states will be willing to keep 

prioritizing them over the initial/reconsideration workloads if those workloads start to develop serious delays. 

Delays are now even more likely to occur, as SSA has decided to redeploy its federal case processing units, 

which have been assisting with DDS case backlogs, to assistance work for the Office of Disability Adjudication 

and Review (ODAR). While we appreciate the additional funding for program integrity work and are eager to 

eliminate the delays in CDR reviews by 2016, lack of sufficient funding for all workloads results in insufficient 

replacement hiring, which will have the unintended consequence of impeding DDSs' ability to do the CDR 

workload, even with the additional funding. 
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Cooperative Disability Investigation Units 

The Cooperative Disability Investigation (COl) program is a promising initiative for fraud prevention. In the 

states with COl units, the ODSs contribute experienced adjudicative staff (usually senior examiners or hearing 

officers) to help assess fraud referrals and investigations. The DDSs that work with CDI units are pleased with 

the results and find the investigation reports very helpful. 

The COl unit's very presence, if publicized, can be a deterrent to fraud. We recommend a standard process for 

communicating to claimants and beneficiaries the potential repercussions of committing fraud. We also 

recommend additional funding and staffing so that all appropriate referrals can be investigated and the 

investigations completed in a timely manner. 

Expansion of the COl units must be done strategically. Some large states need more units for adequate statewide coverage. Some states, on the other hand, are too small to warrant a dedicated COl unit. Currently, DOSs 

in states without COl units make fraud referrals to the Office of Inspector General (OIG) or to COl units in 

neighboring states. However, many of the COl (and OIG) units need to be better staffed and funded to enable 

them to investigate all appropriate referrals and to provide reports in a timely manner. 

With initial claims, a timely investigation that proves fraud prevents incorrect benefit payments. Without such a 

report, the DDS is left to make a judgment about the claimant's credibility and the appropriate weight to give 

the available evidence. Even if a denial determination results, this decision is more easily reversed on appeal 

than is a decision based on a clear report of fraudulent behavior. Even when there is no prosecution, the fraud 

investigation itself may serve as a deterrent to appeal. In the altemate scenario where an investigation disproves 

fraud, a timely report enables the DDS and SSA to make an accurate determination and grant benefits to the 

eligible claimant quickly. 
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Investigation of fraud referrals on CDR cases is also recommended, with appropriate funding and staffing. 

Determining medical improvement is a very complex process often involving difficult judgments about the 

person's ability to function, and taking away a person's benefits must clear a high bar of assurance that the 

person is no longer disabled. Even when beneficiaries are found no longer disabled, they may continue 

receiving benefits throughout the appeal process, greatly increasing the overpayment SSA will attempt to 

collect if the final decision is unchanged. Appropriate fraud referrals accepted and expeditiously investigated 

would be a significant help in detennining continued eligibility and limiting overpayments. 

Conclusion 

In summary, the stewardship initiatives that the DDS is primarily involved in - CDR case processing and COl 

unit referral and staffing - are critical for insuring appropriate payments and eliminating fraud in the disability 

program. Neither has yet reached its full potential because of under funding and understaffing. Both are laborintensive but ultimately cost-effective in achieving their goals, based on SSA's reports of the program savings 

in relation to administrative costs. To achieve the best cost benefit ratio, the approach to both CDR processing 

and COl unit expansion should be strategic. It is shortsighted not to invest the necessary funds and staffing for 

the expansion of these initiatives. Inadequate funding results, as we have seen, in priorities and resources 

bouncing back and forth between initial cases and CDRs, between DOSs and ODAR, between service 

workloads and integrity workloads. Ultimately, for the investment to be successful there must also be 

commitment to a long range strategic plan that supplies all areas of the disability program with sufficient 

resources and deploys them in a carefully balanced, steady manner, so that both program integrity and high 

quality service to people with disabilities can be realized. 

Mr. Chainllan, on behalf ofNCDDD, [thank you again for the opportunity to provide this statement. NCDDD 

has a long record of accomplishment working with SSA to provide the highest level of service and careful 
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