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94–392 2016

PREVENTING DISABILITY SCAMS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 26, 2014 

Serial 113–SS010 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HUMAN RESOURCES 

SAM JOHNSON, Texas, Chairman 

PATRICK J. TIBERI, Ohio 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

AARON SCHOCK, Illinois 

MIKE KELLY, Pennsylvania 

KEVIN BRADY, Texas 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

ALLYSON SCHWARTZ, Pennsylvania 


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C O N T E N T S 

Page 

Advisory of February 26, 2014 announcing the hearing ...................................... 2 

WITNESSES 

PANEL 1: 

The Honorable Carolyn Colvin, Acting Commissioner, Social Security Administration, Testimony ............................................................................................. 11 

PANEL 2: 

J. Matthew Royal, Vice President and Chief Auditor, Unum Group, Chattanooga, Tennessee, Testimony ........................................................................... 43 

William B. Zielinski, Deputy Commissioner of Systems and Chief Information 

Officer, Social Security Administration, Testimony .......................................... 48 

Alan R. Shark, Fellow, National Academy of Public Administration, Testimony ...................................................................................................................... 58 

MEMBER QUESTIONS FOR THE RECORD 

The Honorable Carolyn Colvin ............................................................................... 82 

PUBLIC SUBMISSIONS FOR THE RECORD 

Coalition Against Insurance Fraud ........................................................................ 89 

Consortium for Citizens with Disabilities ............................................................. 91 

IBM ........................................................................................................................... 96 

James Goodman ....................................................................................................... 106 

Michael Gilbert ........................................................................................................ 109 

National Organization of Social Security Claimants’ Representatives ............... 113 


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PREVENTING DISABILITY SCAMS 

WEDNESDAY, FEBRUARY 26, 2014 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON SOCIAL SECURITY, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:01 a.m., in Room 

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

[The advisory of the hearing follows:] 


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HEARING ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

Chairman Johnson Announces Hearing on 

Preventing Disability Scams 

B–318 Rayburn House Office Building at 10:00 AM 

Washington, Feb 19, 2014 

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

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

ways to prevent conspiracy fraud in the Social Security Disability Insurance program. The hearing will take place on Wednesday, February 26, 2014 in B– 

318 Rayburn House Office Building, beginning at 10:00 a.m. 

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

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

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

BACKGROUND: 

According to the Social Security Administration (SSA), 11 million beneficiaries received $139.4 billion in Social Security Disability Insurance (SSDI) benefits in fiscal 

year 2013. Currently, 160 million workers contribute to Social Security. The 2013 

Social Security Trustees report projects that revenues will be sufficient to pay only 

80 percent of SSDI benefits beginning in 2016. The SSDI program is under increased scrutiny after a Senate investigation and two investigations uncovered significant incidents of fraud costing taxpayers millions. 

On September 19, 2013, the Subcommittee on Social Security held a hearing on 

an SSDI fraud conspiracy in Puerto Rico. In August of 2013, authorities in Puerto 

Rico arrested more than 70 individuals charged in the conspiracy, including several 

doctors and a former SSA employee. Under the alleged scheme, the former SSA employee would help a claimant file an SSDI application and, with the assistance of 

a conspiring doctor, provide fraudulent medical evidence that would result in benefits for individuals who did not, in fact, meet the legal eligibility standard for disability benefits. The hearing examined the details of the scheme, the SSA’s oversight of the SSDI program in Puerto Rico, as well as the agency’s overall efforts to 

detect, prevent and prosecute fraud. 

In October of 2013, the Senate Homeland Security and Governmental Affairs 

Committee released the results of a bipartisan investigation detailing inappropriate 

conduct and collusion between a Kentucky law firm, an SSA Administrative Law 

Judge in Huntington, West Virginia and local doctors. The investigation revealed 

that inappropriate collusive actions were taken to approve disability benefits and 

highlighted years of ineffective oversight by the SSA. 

Following an announcement by the New York County District Attorney’s Office 

regarding the indictment of 106 defendants for their alleged involvement in a criminal conspiracy, the Subcommittee held a hearing on January 16, 2014, focusing on 

the details of the New York scheme that cost taxpayers approximately $23.2 million. 

In exchange for individual cash payments of up to $50,000, four facilitators helped 

coach 102 SSDI applicants, including many retired police officers and firefighters, 

on how to falsely demonstrate symptoms of mental disorders in order to fraudulently obtain disability benefits. At the hearing, Subcommittee Chairman Johnson 

asked the Acting Commissioner of Social Security to present Congress with a full 

report, within 30 days, detailing the agency’s efforts to combat fraud conspiracies 

targeting the SSDI program, plans for future initiatives and recommendations for 

legislation. 


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In announcing the hearing, Social Security Subcommittee Chairman Sam Johnson 

said, ‘‘When criminals are able to take advantage of Social Security’s disability program due to its outdated policies and pay-first chase-later culture, taxpayers and those who count on the vital program end up paying 

the price. That’s wrong! If Social Security wants to regain the public’s confidence, it must commit itself to preventing fraud from happening in the 

first place. It’s time for Social Security to protect precious taxpayer dollars. 

That’s why last month, I asked Acting Commissioner Colvin for a plan detailing the immediate actions Social Security is taking to prevent further 

disability fraud. Hardworking taxpayers want, need, and deserve real action. I look forward to hearing her ideas and those of our other experts.’’ 

FOCUS OF THE HEARING: 

The hearing will examine the Acting Commissioner’s plan and legislative recommendations for preventing conspiracy fraud. The Subcommittee will also hear the 

recommendations of public and private sector experts to stop disability fraud 

schemes before benefits are awarded and to deter criminals from attempting to 

cheat the system. 

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 Wednesday, March 12, 2014. Finally, please note that due to the 

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

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

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

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

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

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

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

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

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

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

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

hearing record. 

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

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

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

by the Committee. 

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

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

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

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

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

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

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


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

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

f 

/. 

Chairman JOHNSON. Good morning. Appreciate you all being 

here today. 

As part of my ongoing efforts as chairman to rout out fraud, 

waste, and abuse in the Social Security Disability Insurance program, we are here on behalf of the 11 million people with disabilities and their families and hardworking taxpayers, Americans demanding action now from Social Security. We need answers on how 

it will prevent conspiracy fraud in the Social Security Disability Insurance program. 

In September 2013 and more recently in January, this subcommittee held two hearings on disability conspiracy fraud occurring in Puerto Rico and New York City. Just yesterday, we learned 

about 28 more indictments in the ongoing New York conspiracy investigation, including 16 former New York police officers and 5 

New York firefighters. To date, almost $30 million has been stolen 

from taxpayers in this case alone. 

Last October, the Senate Homeland Security and Governmental 

Affairs Committee released the shocking results of their bipartisan 

investigation detailing abusive conduct and collusion between a law 

firm, a Social Security Administrative Law Judge, and local doctors 

in West Virginia in approving benefits. 

Two themes run through all these alarming cases. First, these 

cases involve professionals, a shadowy industry of doctors, lawyers, 

and enablers, such as former Social Security employees, who know 

it pays to break the law, some of them. 

I hope you got rid of them. 

Second, while frontline employees ultimately detected these conspiracies, preventing fraud from occurring in the first place was not 

a priority for Social Security’s leadership. Catching bank robbers 

before they get the cash is a lot easier than trying to recover stolen 

money later. That is just common sense. 

During last month’s hearing, Commissioner Colvin told us that 

she considered it a success that Social Security staff discovered the 

fraud in Puerto Rico and New York. And we appreciate that. Let 

me be clear: That is not how I define success. More importantly, 

I don’t think that is how those who count on these benefits or the 

taxpayers who support the program would define success either. 

Success is not discovering massive fraud; success is preventing it 

in the first place. Preventing fraud is what Social Security has to 

start doing right now. 

And at the January 16th hearing, I asked Acting Commissioner 

Colvin to give us a plan on ways to help stop organized fraudsters. 

I have since met with the Acting Commissioner and appreciate that 

she delivered that plan to us before the 30-day deadline and look 

forward to discussing it today. 

Further, I have asked the Social Security Inspector General to do 

a full investigation of Social Security’s management and their failure to prevent fraud conspiracies, such as Puerto Rico and New 

York. The IG’s report will be important in determining whether Social Security is truly committed to preventing fraud conspiracy. 


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Also with us today is a panel of public- and private-sector experts 

with their recommendations on preventing fraud. 

In the past, Congress has sent Social Security billions of taxpayer dollars in extra funding to make sure those on the rolls deserve to be there. That is not only expensive but also an ineffective 

and inefficient way to find the fraudsters on the dole. It also 

doesn’t find the crooks that help them get their illegal checks. 

Enough is enough. Money alone won’t change Social Security’s culture of pay first and chase later. Social Security’s credibility is on 

the line. 

Further, how can Social Security even begin to ask for bigger 

budgets from hardworking, struggling taxpayers when, since the 

recession began in 2008, it paid out $244 million in employee bonuses, when it spends close to $15 million each year for employees 

to do union work instead of Social Security work, and when it is 

spending over $5 million fixing the damage of the Puerto Rico case, 

with more spending to follow in the New York case? 

I would like to add for the record that Social Security will receive 

full funding to conduct continuing disability reviews. But the bottom line is that preventing fraudsters from getting on the rolls in 

the first place will only happen if Social Security makes a complete 

and genuine commitment to end this pay-first-and-chase-later culture. Crimes against the program cheat hardworking Americans 

and honest beneficiaries. It must stop now. Americans want, need, 

and deserve no less. 

I now recognize our Ranking Member, Mr. Becerra, and my 

friend for his opening statement. 

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

And I note that this is our third hearing about conspiracies to 

steal from Social Security. 

In our first two hearings, we heard what the Social Security Administration did to stop fraud. Their frontline employees detected 

the suspicious pattern, their investigators followed up, and hundreds of people have now been indicted. 

Today, we need to talk about what Congress should be doing to 

support the Social Security Administration and to protect Social 

Security. 

I hope, Commissioner, that you will be blunt with us about what 

we in Congress need to do about the fraud and errors that SSA 

can’t prevent unless Congress steps up to the plate. 

At our hearing on the New York conspiracy, we learned that over 

100 people have been indicted for fraud, partly because SSA Special Agent Peter Dowd came up with a creative idea. He thought 

of checking to see whether the retired police officers who SSA suspected had submitted fraudulent evidence still had licenses to carry 

concealed weapons—licenses which would not be issued if the applicant suffered from mental impairments. 

Special Agent Dowd worked for SSA’s Cooperative Disability Investigations Unit in New York. Since this CDI program began, 

CDIs have successfully pursued over 30,000 fraud cases, saving 

taxpayers over $31⁄2 billion. But what if the New York scheme had 

unfolded in 1 of the 29 States that don’t have a Special Agent 

Dowd because SSA can’t afford to staff a CDI unit in those States? 


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At our hearing on the Puerto Rico conspiracy, we learned that 

the ringleaders were caught because of the vigilance of frontline 

staff who evaluate applications. Medical consultant Dr. Vicente 

Sa ́nchez was the first to report the suspicious medical evidence to 

SSA, and program analyst Susan Palais and Maria Lora conducted 

numerous case reviews to spot the trends that helped SSA find the 

fraud. 

Tips from frontline SSA workers account for nearly two-thirds of 

fraud investigations and most successful prosecutions. But what if 

the Puerto Rico scheme happened now, after Republican budget 

cuts significantly reduced the number of trained examiners like 

Susan Palais and Maria Lora? 

Mr. Chairman, too many frontline SSA employees and investigators played key roles in exposing fraud in New York and Puerto 

Rico for me to name them all during my 5 minutes. I ask unanimous consent, however, to include their names in our hearing 

record. 

Chairman JOHNSON. Without objection. 

[The information follows:] 


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Mr. BECERRA. SSA is required to periodically review whether 

beneficiaries are too disabled to work. In 2011, SSA reviewed about 

350,000 targeted beneficiaries to see if they were still medically eligible for disability benefits and found that a small percentage were 

not. Social Security’s Chief Actuary estimates that those reviews 

will eventually save taxpayers $5.4 billion, a return on our investment of $13 for every $1 spent. 

But what about the 1.3 million cases SSA couldn’t review? Since 

2011, our colleagues on the Republican side in the House have preVerDate Sep 11 2014 15:42 Jun 29, 2016 Jkt 094392 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\94392.XXX 94392

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vented over a million case reviews by blocking program integrity 

funding authorized by the Budget Control Act. 

Let me be clear: Those failures to protect Social Security aren’t 

the SSA’s fault. In 2012, Social Security paid 56 million Americans 

over $600 billion in earned benefits. SSA had a 0.22 percent overpayment rate. That is less than one-half of 1 percent overpayment 

rate. 

This low error rate didn’t happen by accident. It happened because the SSA has conscientious, well-trained staff. But since 2011, 

Social Security has lost thousands of highly trained employees to 

budget cuts. Ultimately, Congress is responsible for protecting Social Security, and Congress needs to do its job. 

Over Social Security’s lifetime, American workers have contributed over $14 trillion to Social Security. The Social Security Trust 

Fund currently has a $2.7-trillion surplus—money American workers have contributed and that they will need when they retire. In 

exchange for their contributions to Social Security, American workers get real economic security. They know that they and their families will be protected when they can no longer work. 

For 77 years and through 13 recessions, including the 2008 Wall 

Street recession, Social Security has paid Americans their benefits 

that they have earned on time and in full. That means it is vitally 

important that we prevent fraud, waste, and errors that could 

drain the trust funds and prevent us from paying Americans the 

benefits they earned and depend on to pay their bills. 

Mr. Chairman, today, I am introducing legislation to help SSA 

protect Social Security while still paying every American his or her 

earned benefits on time and in full. I am pleased to be joined by 

my colleagues on the Democratic side of this subcommittee. My 

proposal provides SSA with the new tools it needs to fight fraud 

and prevent errors. 

As our recent experience demonstrates, there is no getting 

around the hard fact that one of those tools has to be adequate resources. SSA needs more tools to go after the people who violate 

positions of trust and rob Social Security, whether they are doctors, 

lawyers, translators, or even Social Security employees. 

Mr. Chairman, you and I have discussed working together to 

fight fraud, prevent errors, and support the Social Security Administration, and I want to continue that process. We have worked on 

some tough issues together in the past, and I believe we can solve 

this one too. And for that reason, I am pleased that we are doing 

this hearing, and I appreciate that you are helping us move forward this issue of fighting fraud within Social Security. 

With that, I will yield back the balance of my time. 

Chairman JOHNSON. Thank you. 

Chairman JOHNSON. As I said in our last hearing, I would like 

to work with you. Preventing fraud ought not to be a partisan 

issue, and I don’t think it is, at least the way you and I see it. I 

look forward to reviewing the provisions in your bill. 

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

for the hearing record. 

Chairman JOHNSON. Before we move on to our testimony 

today, I want to remind our witness to please limit your oral stateVerDate Sep 11 2014 15:42 Jun 29, 2016 Jkt 094392 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\94392.XXX 94392

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

We have two witness panels today. In the first panel, we have 

the Honorable Carolyn Colvin, Commissioner of Social Security Administration. 

And they call you Acting, but I think you are Commissioner. 

Ms. COLVIN. Thank you. 

Chairman JOHNSON. So, welcome. Please go ahead. 

STATEMENT OF THE HONORABLE CAROLYN COLVIN, ACTING 

COMMISSIONER, SOCIAL SECURITY ADMINISTRATION 

Ms. COLVIN. Thank you. Chairman Johnson, Ranking Member 

Becerra, Members of the Subcommittee, good morning. I am Carolyn Colvin, the Acting Commissioner of the Social Security Administration. I thank you for continuing the conversation about our 

antifraud efforts. 

Like you, Mr. Chairman, I am outraged and personally offended 

whenever anyone attempts to defraud the American people. We 

strive to preserve the public’s trust in our programs, and we have 

no tolerance for fraud. Every day, our employees honor these principles, and I am very proud of them. 

To those who would cheat us, let me emphasize: We will find 

you, we will seek the maximum punishment allowable under the 

law, and we will fight to recover the money you have stolen from 

the American people. 

Regrettably, there will always be people who try to steal. Recognizing this, we comprehensively train our field office and disability 

determination services employees to detect fraud. Because of this 

training, our dedicated DDS employees in New York City and 

Puerto Rico identified suspicious patterns in some disability claims 

and referred these cases to our OIG for investigation. Our employees remain our first and best line of defense against cheats. Last 

fiscal year, they referred almost 23,000 cases to the Office of the 

Inspector General. 

We know that we cannot prevent all fraud schemes any more 

than we can stop all crime. We can, however, deter and prosecute 

fraud. As the recent cases show, we tirelessly seek to bring to justice anyone who tries to cheat American taxpayers. While any level 

of fraud is unacceptable, the low level of fraud in our disability program speaks to our efforts. The best available evidence from OIG 

shows that the level of actual disability fraud is below 1 percent. 

We recognize that criminals continuously devise more complex 

and sophisticated methods to steal. Thus, with new tools now available, we are expanding our use of data analytics to enhance our 

ability to detect possible fraud. Data analytics should increase our 

ability to find questionable patterns in disability claims and prevent payment of fraudulent claims. 

Even the post powerful data analytics, though, will only produce 

leads that employees still must investigate. We are also collaborating with private insurers and other Federal agencies to learn 

new ways to combat complex and sophisticated fraud schemes. We 

will expand our successful antifraud training to all SSA employees, 

specifically focusing on lessons learned from real-life examples. 


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Time and time again, this training has paid off. To illustrate, a 

field office employee in Texas suspected that a disability beneficiary was working but not reporting his income. The employee referred the case to OIG, who determined that the beneficiary concealed his employment and conspired with his company to pay his 

wages in his wife’s name. The beneficiary, his wife, and the company were all sentenced. 

The Cooperative Disability Investigation, or CDI, program is our 

best disability fraud prevention tool. For instance, a man in his 30s 

alleged a mental impairment that made him nervous around others. A CDI unit investigated after receiving a tip that the man 

worked as a model and actor. The CDI unit discovered that he was 

working as a model and regularly appeared on a television show. 

The casting director described the man as happy, upbeat, and very 

sociable. His claim was denied. 

We will add seven CDI units by the next fiscal year. We will also 

expand the capacity of a number of current CDI units by increasing 

the number of law enforcement investigators in them. According to 

the OIG, for every dollar spent on a CDI unit, we save $17. 

We are also establishing a central and specialized fraud unit, 

which will consist of disability examiners with considerable experience in potential fraud cases. They will review suspect cases and 

help develop further analytical tools. 

Additionally, we will expand our fraud prosecution unit. We have 

placed a number of our own attorneys in U.S. attorneys’ offices to 

serve as fraud prosecutors. Since fiscal year 2003, they have secured over $60 million in restitution and more than 1,000 convictions. We are doubling the number of fraud prosecutors. 

As I have noted, all of these efforts require additional resources. 

We appreciate the additional funding that you gave us this fiscal 

year; however, without adequate sustained funding going forward, 

we may be unable to achieve all that we can in our antifraud activities. We need your support to ensure that we can continue to 

enhance our antifraud efforts. 

In short, we have long been committed to combating fraud. Although the level of fraud in our disability program is low, no 

amount of fraud is tolerable. Fighting fraud is an ongoing and 

evolving process, and we continue to adapt our antifraud strategies. 

Routing out fraud is a team effort. We need people who suspect 

something to say something. If you suspect fraud, please call OIG 

at 1–800–269–0271. 

Thank you. I am very happy to answer any questions you may 

have. 

Chairman JOHNSON. Thank you, ma’am. Appreciate your testimony. 

[The prepared statement of Ms. Colvin follows:] 


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Chairman JOHNSON. Ms. Colvin, Social Security’s budget increased by 27 percent from 2006 to 2014 at the same time that 

major fraud scandals were going on. That is nearly double the 

growth rate of the entire Labor-HHS appropriations bill, which 

funds Social Security. 

As you know, the stimulus provided Social Security $1 billion 

that was used, in part, to reduce disability backlogs and hire 2,115 


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workers. Clearly, more money and manpower did not help prevent 

fraud from happening in Puerto Rico, New York, and West Virginia. 

During the period Social Security received special funding to 

handle the surge in disability applications, how was this funding 

used to prevent fraud rings from getting claimants on the rolls? 

And the continuing disability reviews don’t count. That happens 

after they are getting paid. 

Ms. COLVIN. Mr. Chairman, we take fraud very seriously in the 

agency. We have a culture where we are training people, if they see 

something, say something; if they hear something, do something 

about it. So every step of our process, there are antifraud activities. 

There are many, many cases that you will never see, that will 

never come to the media, where we prevent fraud every day. We 

mentioned that last year we referred 22,500 cases of suspected 

fraud. So this is something where we are vigilant, where we are 

always looking. 

There are going to be cases that we are not going to detect before 

it happens, but I need to reemphasize that there are thousands and 

thousands of cases that we do not pay because we have, in fact, detected fraud. And I think that is why the Office of the Inspector 

General has indicated that our fraud rate is so low. 

But when we detect fraud, we very aggressively pursue it. We 

refer it to the Inspector General, who makes that determination. 

We prosecute to the full extent of the law. And we actively seek 

reimbursement or restitution. 

One of the things that we would like to do is be able to expand 

some of those efforts nationwide. I have directed considerable resources away from our direct services in order to address this issue. 

And that is one of the reasons we had to take some of the drastic 

actions, like reducing the number of hours that our offices were 

open to the public, because we wanted our staff to have time to do 

those things. 

Remember, we lost over 11,000 employees in the last 3 years. So 

that means we have 11,000 less employees who are being vigilant 

and looking for fraud. 

Chairman JOHNSON. Yeah, you have said that several times. 

How much did you spend from your operating budget last year 

to prevent fraud? 

Ms. COLVIN. I don’t know that I can pull that out specifically 

because each stage of the process there are antifraud activities involved. For instance, at the front level, when the first application 

is taken, the individual is looking for whether or not there are any 

credibility issues based on the actual interview with the individual. 

And then we have a quality assurance review to make sure that 

that process has been handled right. 

When it moves from the front line of the field office and goes into 

the DDS, we have an in-line quality review that is even more important and more difficult than at the first level. And then when 

it moves from there, it goes to the hearing level. 

So a part of all of the work that our staff is involved in is also 

antifraud activity. I can give you the cost of our CDI units, which 

are specifically our fraud units, the cost of our prosecutors. But 


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when we look at our staff, because fraud is one piece of what they 

do, it is somewhat difficult to tease that out. 

Chairman JOHNSON. Well, how many dollars are you spending 

on fraud? 

Ms. COLVIN. Again, I have to give you that for the record, because what I will have to do is give you the costs for the CDI units 

and the prosecution units, which are for specifically fraud. 

But, for instance, the dollars that we are spending now just to 

deal with the cases that have been identified in Puerto Rico and 

New York are dollars that are being redirected, and we would have 

to tally what those costs are. And then, of course, the training that 

we provide that is focused on antifraud, that is another cost. 

So I would like to try to pull that together and provide it to you 

for the record. 

[The information follows:] 


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Chairman JOHNSON. Okay. I appreciate you getting your plan 

to us. Unfortunately, there aren’t a lot of details. Will you provide 

the subcommittee a detailed timeline for the implementation of 

each initiative in your plan? 

Ms. COLVIN. I would be happy to do that. 

[The information follows:] 


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Ms. COLVIN. Most of the things that we identified in the plan 

are ongoing. Some of them are going to be expanded in 2015. We 

are very fortunate that, with the fiscal year 2014 appropriations, 

we are able to expand our CDI units. We were able to establish a 

special fraud unit in Ms. Disman’s area in New York, where those 

individuals will have specialized experience in dealing with these 

types of cases. We want to expand that and bring in some additional skills. We are doing a number of things as a result of the 

2014 budget, and then, depending upon a sustained budget for 

2015, we would expand that further. 


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But I can certainly give you a breakdown. But right now the 

things that we are doing in 2014 include more hiring on the front 

line, so we are bringing in more staff as a result of our 2014 budget 

to replace some of the losses. It won’t make us whole. 

We are increasing the number of CDRs. Now, even though CDRs 

are not designed specifically to deal with fraud, when we do those 

medical reviews, we may find situations where there is conflicting 

information or whatever, and then we can refer those cases. So the 

fact that we have 1.3 million CDRs in our backlog does not help 

our program integrity efforts. 

We are in the process of developing and testing our predictive 

analytic tools. You have seen the things that we are doing with 

Judge Ray in ODAR. We would like to be able to expand that. So 

we are looking at our ability to do some expansion in 2014, and, 

again, with additional funding, we would like to do that more. But 

remember, even though data analytics has some real potential for 

us, it still requires human intervention. We have to have staff to 

analyze the data and to identify the patterns that exist and to develop the cases. 

The specialized fraud unit is already in existence in New York. 

We are looking at all of those cases, the lessons learned. Bea 

Disman has experience with this as a result of what has happened 

in Puerto Rico and New York. She will be taking cases from all 

over the country so that we will have a specialized unit. We would 

like to be able to fully staff that unit, and as it perfects its work 

there, we would like to expand that. 

We want to double the number of fraud prosecutors. We want to 

reestablish the antifraud committee. Bea Disman established an 

antifraud committee back in the 1990s when I was here; it was 

highly successful. But for the last 10 years, it has been dormant. 

We are reestablishing that. That has already been reestablished. 

And with that committee, I think—I mean, with that antifraud 

committee, we will use that to benchmark what is happening in the 

industry, because fraud is not just an SSA problem. We will look 

at what is happening in other Federal agencies, and what is happening in the private sector. We have already had a meeting with 

eight Federal agencies to look at what they are doing with data exchange and data analysis so that we can develop a community of 

practice that will allow us to try to tackle this problem. 

Fraud is a social problem. It exists everywhere. The fraudsters 

are becoming more sophisticated, and we want to be able to get out 

in front of them. And so that is why data analytics is important. 

Chairman JOHNSON. So you have brought back the national 

antifraud committee? 

Ms. COLVIN. Yes, we did. 

Chairman JOHNSON. Why was that dismantled in the first 

place? 

Ms. COLVIN. I have only been in this position for 1 year this 

month—— 

Chairman JOHNSON. Yeah, but they probably told you about it. 

Ms. COLVIN. It was obviously determined not to be as high a 

priority as some of the other work. 

One of the things I did when I first assumed this role a year ago 

was say we had to balance our direct services with our antifraud 


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services and other program integrity activities. So that meant redirecting the resources, but we had to make tough decisions there. 

As a result, I closed offices and consolidated. I mentioned that we 

had to stop—a lot of the training previously had been stopped because of the budget. I reinstituted training. 

So what we are trying to do is just balance the need to provide 

services to people who have earned these benefits. We have very 

long waiting times, very long processing times. We were making 

progress, and now, with the funding, because we have had $1 billion less per year than the President’s budget, we have had to cut 

those things, Mr. Chairman. 

I know you don’t want me to talk about resources, but SSA is one 

of the most efficient organizations I have ever worked with. Our 

overhead is 1.4 percent of our outlays—1.4 percent. I am not sure 

that even Unum, the insurance company here, has that number. I 

certainly have checked with other private agencies. 

So SSA is an efficient organization, but we can’t do everything 

that we were able to do when we had 11,000 more employees at 

the same time that our workload is increasing. 

Chairman JOHNSON. Mr. Becerra, you are recognized. 

Mr. BECERRA. Thank you, Mr. Chairman. 

Commissioner, thank you again for being here. 

Let me begin by asking a question that I posed in my opening 

statement. New York, you had a Cooperative Disability Investigations Unit. You found this fraud committed by people that we typically trust—— 

Ms. COLVIN. Absolutely. 

Mr. BECERRA [continuing]. Former police officers, firefighters, 

people that we hold in high regard. But in 29 States you don’t have 

a CDI unit. 

Ms. COLVIN. Absolutely. 

Mr. BECERRA. If this same fraud had occurred in 1 of those 29 

States, would we have detected it? 

Ms. COLVIN. Maybe. We refer cases to the Office of the Inspector General. But unlikely, because we would not have had the 

strong coordination. 

The CDI unit, for those who may not know, is comprised of SSA 

staff, DDS staff, OIG staff, and local law enforcement, so it is a coordinated effort. And they are able then to look very carefully at 

the cases that come in and use the data. We spend a lot of time 

developing those cases for OIG. So when you don’t have that, you 

don’t have the same level of coordination. 

I am very proud that the first CDI unit was developed when I 

was here in 1998 as the Deputy Commissioner. And, again, that 

was because we had a culture where we wanted to make sure the 

right check got to the right person at the right time. We are not 

an organization that pays first and chases later. I want to stress 

that. 

And so all the kinds of things that we are doing that have been 

effective could be much more effective if we had the resources. 

And I want to reemphasize again that you don’t hear of the cases 

that we don’t pay. There are hundreds, thousands of cases that we 

don’t pay because we do see that there is something fraudulent, 

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Mr. BECERRA. Could you use this coordination of the different 

agencies and offices so you would have more fraud busters in these 

29 States? 

Ms. COLVIN. Yes, Mr. Becerra, we certainly could. We would 

double what we are doing in the other areas with new money. 

Mr. BECERRA. And would you expect to have the same type of 

return on investment—— 

Ms. COLVIN. Absolutely. 

Mr. BECERRA [continuing]. Where you would return far more 

money in savings of not having fraud committed than the money 

you use to pay these fraudbusters? Ms. COLVIN. Absolutely, sir. We would still be looking at $17 for every dollar we spend in our CDI unit, $9 for every $1 we spend 

in our CDRs. 

We have demonstrated that if you give us the resources, we 

produce what we say we are going to produce. We are a production 

agency, a service agency, and it is very easy to show you how we 

spend that money. And I think you will find that we have always 

had good financial audits that show that we spend that money 

wisely. We are good stewards of the American taxpayers’ dollars. 

Mr. BECERRA. Yeah. Any investor on Wall Street would love those types of returns, $17 for every dollar invested, $9 for every 

dollar invested. 

Let me ask you this. Would it help the Social Security Administration if Congress increased the financial penalties that we assess 

for Social Security fraud committed by people who should know 

better? 

Ms. COLVIN. Absolutely. When there is a conviction, it acts as 

a deterrent. If others see that they can commit fraud and they are 

going to get a slap on the hand, why wouldn’t others be encouraged 

to do it? So, yes, a deterrent would help us. 

Mr. BECERRA. Would it help the Social Security Administration 

if we gave you the ability to ban doctors who have committed fraud 

from participating in the determination of eligibility for benefits? 

Ms. COLVIN. Yes. We do have that, to some degree. We do not 

use physicians who are on the do-not-pay list as maintained by 

Medicare. But certainly there would be others that perhaps we 

could find, and we would benefit from that. 

Mr. BECERRA. Those are some of the provisions that we have 

in our legislation that we are introducing today to give you more 

tools to try to fight this fraud. 

Let me go back to something with regard to your budget. Again, 

recognizing that you serve 56 million Americans who are receiving 

benefits from you, not here and there—56 million Americans. One 

in every six Americans receives Social Security benefits, having 

paid for them, having earned them. Now it is up to you to make 

sure one in six Americans gets what he or she earned on time and 

in full. 

Yet, with that number—and I think any business in America 

would love to say that their error rate is less than one-half of 1 percent. Having said that, it is a growing population that you serve, 

because all those baby boomers are beginning to retire. 

Now, on the budget, your budget today is about $800 million 

lower than it was 4 years ago. 


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Ms. COLVIN. Yes, that is correct. 

Mr. BECERRA. So, even though more and more baby boomers 

are retiring and going on to Social Security to collect their benefits 

that they earned, you are receiving less money today than you received 4 years ago. In 2011, this Congress, under Republican leadership, cut your budget and rescinded most of your reserve funds 

that you had. In 2012, they left the budget as it was, at that low 

2011 number, despite your growing number of beneficiaries. And in 

2013, your budget was cut again by the autopilot, across-the-board, 

insane sequester cuts. 

So this year’s budget only restored part of those 2013 losses that 

you suffered, and none of the other cuts were restored, except for 

providing program integrity money after a 2-year delay. And that 

program integrity money is what helps us go after the fraud; it is 

those fraudbusters. 

And so I think we have to recognize that you have work to do, 

but we have work to do here in Congress, as well. And the worst 

thing that we can do is shackle your ability to do your job with a 

growing number of beneficiaries so that you can go after the fraud 

to protect the money that people have earned and put into Social 

Security. 

And so it is a tango; you have to dance, we have to dance. I hope 

you will continue to be honest with us, about what we have to do. 

Because we have to help you make sure that the money that people 

send to Social Security is there for them when they need it and 

they have retired and have to pay their bills. 

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

Chairman JOHNSON. The gentleman’s time has expired. 

Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. 

And thank you, Acting Commissioner Colvin, for being here. 

You know, it is interesting because, coming from the private sector, we always had to learn to live with less. And, you know, I hear 

the Ranking Member talk about your budget being cut, and I don’t 

know whether your budget 4 years ago was already too high, so we 

don’t know that. But what I really know is that the best way to 

fix things is fixing them early on and having you have the ability 

to prevent this early on. 

And I think, again, a couple of the ideas the Ranking Member 

brought up I think are good ideas, and I would like to hear some 

of those from you, as I think we in Congress should be hearing 

what you believe are some of the ways we can help you. 

But I would really like to find out, what are we doing with all 

this information to train those employees? I mean, I know you have 

a lot of good employees, but are they being trained properly? I will 

give you an example. How much time do your regional managers 

and executives really spend with the frontline staff? And then all 

these areas that we are finding problems, are we fixing them at the 

frontline staff? 

Can you kind of go into that a little bit? Because I think that 

is so important. 

Ms. COLVIN. Thank you, sir. 

We have always said that the strength of our organization is our 

employees. So we spend tremendous time and resources in training 


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them. It has often been said that it takes longer to train one of our 

staff than it does to train an astronaut. 

And we have very comprehensive training, both how to do the 

work as well as how to identify fraud. This is done when they first 

come in. It is done on an ongoing basis, on a yearly basis. If we 

identify that there are specific problems, then there is special 

training so that they are prepared to address that. 

The managers assign mentors to the employees to work with 

them. There are quality reviews to see if the training that we have 

given them has benefited them and that they are learning it and 

doing the work right. 

So I believe that the training is key to the success of what we 

do. We have a highly competent group of staff. They have mentors. 

And our managers are very committed to ensuring that they get 

the job done. There is a lot of pride in the organization in providing 

good customer service but more pride in being good stewards of the 

tax dollars. So I think we do that. 

And I would reemphasize that, unfortunately for us, you don’t 

see all the good things we do, so you don’t see all the fraud that 

is prevented. 

Mr. RENACCI. All right. Well, and I do believe that there are 

cases that aren’t being paid. I heard you say that. The question is, 

for the people back in my district, they are concerned about the 

dollars that do get paid out and trying to avoid those. And I realize 

you have a low percentage, but any percentage—— 

Ms. COLVIN. Any percentage is too much. 

Mr. RENACCI [continuing]. Any percentage is too much. 

Ms. COLVIN. Absolutely. 

Mr. RENACCI. So when you find problems like we find in Puerto 

Rico or West Virginia or New York, when you found issues that 

was fraud-related, what is process of taking some of those issues 

and bringing them back to the frontline staff to stop it? 

Ms. COLVIN. Absolutely. That is what Ms. Disman is doing. I 

mentioned that we have established a special fraud unit, so we 

have individuals who have a great deal of experience in dealing 

with these types of cases. So we identify lessons learned, and then 

we come back and we incorporate that in the new training for the 

staff on the front line. 

We are really problem solvers in SSA. I will give you a good example. When Treasury decided that all benefits had to be through 

direct deposit, we had a significant number of fraudsters who were 

attempting to redirect those direct deposits. At one time, we were 

looking at as many as 3,000 attempted fraud activities in a week. 

We are now down to fewer than, around 400. And that is because 

we identified what was happening, and we put things in place to 

ensure that it would not continue to happen. 

But, even more importantly, I would say 75 percent of the attempts we were able to prevent from even happening before a benefit is redirected. And the 25 percent of the cases where there may 

be a benefit directed, we are talking about 1 month, and then we 

aggressively go back to pursue that. 

So whenever we see a situation occur, we do a careful analysis 

of what happened and what we need to do to prevent it from happening again. Fraudsters have become very sophisticated, and that 


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is why we are turning to data analytics and looking at what tools 

can be addressed. Because when you have a third-party person facilitating the fraud, like a physician or a firefighter or someone 

who are persons of trust, it becomes more difficult. 

Mr. RENACCI. Real quickly, I know my time has run out, but 

how quickly does that process get put back into the front line? 

Ms. COLVIN. Immediately. Immediately. 

Mr. RENACCI. All right. 

Ms. COLVIN. We have ongoing training. It is not one-time. It is 

ongoing. 

Mr. RENACCI. All right. Thank you. I thank you for your testimony. 

I yield back. 

Chairman JOHNSON. Thank you. 

Mr. Kelly, you are recognized. 

Mr. KELLY. Thank you, Mr. Chairman. 

Ms. Colvin—— 

Chairman JOHNSON. Oh, excuse me. I skipped over my Democrat friend, Doggett. And he is from Texas. How could I miss him? 

Mr. DOGGETT. Well, Mr. Chairman, I want to join with you particularly in your concluding remarks, that crimes against Social Security cheat hardworking Americans and honest beneficiaries. And 

I think that there is strong bipartisan support, as we have looked 

at these various instances of fraud, about our need to ferret them 

out. 

And I think, just as your statement and all of our comments is 

not directed at attacking all police and firefighters around the 

country because of the wrongdoing of a handful, but a significant 

handful, of firefighters and police officers, retired officers in New 

York City, that it is important as we look at this overall system 

that we not attack all advocates on behalf of the disabled because 

there may be some wrongdoing or misconduct by a handful of 

them. It is important when these individuals with disabilities go 

before the Social Security Administration that they have the opportunity to be represented by honest advocates, as many of them are. 

Similarly, it is important to recognize that, while not every employee in the Social Security Administration or every administrative judge working on Social Security cases is doing a good job, that 

the vast majority of them are. And as we find examples of individuals that are not up to the task, that needs to be dealt with. But 

we need to recognize that we basically have a system that works. 

And what we are trying to do is ferret out the crimes, just as 

though law enforcement officers around the country dealing with 

other kind of crimes and fraud are trying to ferret that out. Even 

though we never get to 100 percent in preventing burglaries, robberies, other kinds of fraudulent conduct, we won’t get to 100 percent of fraud of Social Security, but that ought to be our goal. 

Now, how do we accomplish that goal? Well, I think we have to 

have adequate resources, as the Acting Commissioner has indicated, and adequate tools to address fraud. 

And without doing a lot of finger-pointing about the cuts and the 

inadequacies of the Social Security budget, Mr. Chairman, I think 

it would be constructive—I know that in our full committee we 

have Secretary Sebelius and Secretary Lew coming to testify about 


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aspects of the President’s budget; I don’t know what will be in the 

budget concerning fraud reduction and the Social Security Administration generally—but to have a hearing in this subcommittee on 

the budget for Social Security and its adequacy. 

When you hear that a dollar spent on OIG generates such significant returns, I think we need to scrutinize carefully the entire 

budget for Social Security and ensure that it is up to the task of 

fulfilling our bipartisan commitment to reducing crime. 

And then, in addition to just the dollars that are available, we 

need to be sure that we have the tools available. I joined with Mr. 

Becerra in his legislation. I realize that this is recently filed legislation, but I think it is the first specific legislative steps that have 

been presented to this subcommittee for how to deal with this problem. 

And I would hope that we could have a hearing on the proposal 

that you have advanced. I am sure that there are many other ideas 

that can be advanced about the best way to deal with fraud. But 

instead of our just talking and having an expose about fraud that 

some may feel is designed to kind of tarnish the whole Social Security disability system, let’s focus on what we can do about it in the 

dollars and the specific tools. 

I think you have some good ideas. I am sure you are open to getting other specific legislative proposals. But we are not short of 

time in this Congress. We have the opportunity for constructive action and a prompt hearing on the Social Security budget and on the 

Becerra proposal and any other ideas that Members have for addressing fraud. Seems to me to be the most specific and constructive way forward to put a stop as much as we possibly can to the 

abuse we have seen in New York and Puerto Rico and some other 

parts of the country. 

I thank you, and I yield back. 

Chairman JOHNSON. Thank you, Mr. Doggett. 

Mr. Kelly, you want to speak? 

Mr. KELLY. Thank you, Mr. Chairman. 

Ms. Colvin, thanks for coming in to see us again. 

What I always wonder about in these things, how big is your 

agency right now, when you take total people on staff? 

Ms. COLVIN. We have about 62,000 employees throughout the 

country. 

Mr. KELLY. And your budget? 

Ms. COLVIN. $11.7 billion? Yes, $11.7 billion. 

Mr. KELLY. Okay, so it is 66,000, did you say? 

Ms. COLVIN. No, 62,000. 

Mr. KELLY. Sixty-two thousand staff. 

Ms. COLVIN. We have lost 12,000. 

Mr. KELLY. Okay. And, again, the budget is what? 

Ms. COLVIN. $11.7 billion is about right. 

Mr. KELLY. $11.7 billion. Okay. 

And the reason I bring it up, because I think there is always confusion that says, well, if the government would just give us more 

money—listen, this is not an indictment on Social Security people. 

Ms. COLVIN. I understand. 

Mr. KELLY. But in my life and in what I have done for a living 

up until the last 3 years, it is employers and employees paying in 


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together into this fund. And if I am reading the notes right, we say 

that by 2016 the revenues will be sufficient to pay only 80 percent 

of SSDI benefits beginning in 2016. 

So we are on a trajectory that doesn’t look good. And what you 

are doing, you are trying to get this fraud eliminated. Early detection is always the best type of correction, right? You are going to 

minimize your loss if you get it early enough. 

And I am interested to hear Mr. Royal from Unum, because I 

know from the private sector it is not a matter of whether you 

want to do it or not. It is you either do it or you don’t survive. You 

have to get it in line. 

What else can you do? Because it seems to me, in a country that 

leads the world in technology and being able to derive tendencies— 

and in my business, I am an automobile dealer, we have something 

called warranty reimbursement. That is where something goes 

wrong with your car and they say, well, it is the result of either 

poor workmanship or something didn’t work right. But I have to 

tell you, the factories are all over me all the time when they look 

at the number of dollars we are claiming for doing warranty work. 

And we are doing the same thing with the Social Security Disability system. You are saying, okay, this is fraudulent, we want 

to go back and collect it. 

Mr. Becerra made some points. What are the penalties for people 

who do these fraudulent things? 

Ms. COLVIN. Unfortunately, we don’t control the penalties. That 

is in the law, in the judicial system. I have always been concerned 

that they get off rather lightly, but, you know, that is white-collar 

crime. And it always has been a light sentence. We would like to 

see the maximum sentence under the law, but we don’t control 

that. Once it goes to the Office of the Inspector General and then 

gets—— 

Mr. KELLY. But that is something we could help you with, 

right? I am assuming Mr. Becerra is making some suggestions 

about how to change. 

Ms. COLVIN. I would certainly hope that you can. 

Mr. KELLY. Because if the time doesn’t fit the crime, I mean, 

what is the reason for not doing it? Too many of these people are 

making a great living off it. 

Ms. COLVIN. Well, you are aware that in many States the U.S. 

Attorneys will not even accept our cases because they don’t come 

up to the dollar value that they are interested in pursuing. That 

is one of the reasons we began to use Social Security dollars to use 

our own attorneys in the 12 States where we are, where the U.S. 

attorneys were willing to work with us. But many States will not 

accept these cases for prosecution because they don’t rise to the 

dollar level, so that is a big issue for us. 

Mr. KELLY. Yeah, I am sure it is. That is difficult. If you really 

aren’t going to hit them in the wallet, they are going to say, well, 

no big deal, I will just keep doing what I am doing, it is not that 

big of a deal. 

Ms. COLVIN. Well, we are still aggressive in identifying them. 

Unfortunately, we don’t control the outcome, but we are very aggressive. As I mentioned, last year we referred 22,500 cases. 


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Mr. KELLY. And so, of those 22,500, how many were actually 

looked at? 

Ms. COLVIN. I think about 100 were accepted for prosecution. 

Mr. KELLY. One hundred? 

Ms. COLVIN. One hundred. 

Mr. KELLY. Out of how many? 

Ms. COLVIN. Twenty-two thousand, five hundred. 

Mr. KELLY. That is incredible. 

Ms. COLVIN. I don’t control that, sir. 

Mr. KELLY. I know. I am not saying you do. Whenever employers and employees put this money into this fund—this isn’t government-funded, this is wage-tax funded, and I think sometimes we 

forget about this. And so when people start saying, if we just put 

more money into it—if you are going back to these people to pay 

this and saying, if you just put more money in, maybe it will stay— 

but it has always bothered me that sometimes there is a disconnect 

about who actually funds all this stuff. 

If you are telling me that you come up with 22,000-some cases 

and they accepted 100, that has to be very frustrating for the people that are out there doing that work. 

Ms. COLVIN. It absolutely is, but fortunately we have a dedicated team who still refer the cases. 

Now, we have been able to do some things. For instance, the Office of Inspector General has increased the number of civil penalties that they are able to impose. I don’t think I have the dollar 

here, but they are doing more. We strengthened our administrative 

sanctions process. 

But, basically, the prosecution is the thing that would deter folk, 

and the prosecutions are not that successful. 

Mr. KELLY. All right. Well, then I would think, though, for us, 

for both sides, if we would help you, if we would put more teeth 

into these things, it would help you to win. So it does come back 

to the, you know, help us to help you. 

I am glad you are here. I am glad you are telling us all about 

that. I am concerned about it, because I do know where the funding 

comes from. I know it is not from the government; I know it is from 

people who paid wage taxes. I would like to see more people get 

back to work, quite frankly. 

Ms. COLVIN. Right. 

Mr. KELLY. That would help, too. But we don’t see that happening as quickly as we would like to see it happen. 

But, again, stay in touch with us on this, and let us know how 

we can help you. 

Ms. COLVIN. Absolutely. 

Mr. KELLY. Mr. Becerra, I would like to take a look at your 

piece. I think that we are on the right track, but we got to make 

sure—throwing money at a problem isn’t the answer. We have to 

get more bang for the bucks. And I know we talk about the percentage, but a small percent of a big number is a big number. And 

it is all taxpayer-funded. 

Mr. BECERRA. Will the gentleman yield? 

Mr. KELLY. Yes, certainly. 

Mr. BECERRA. The chairman and I were just chatting about 

how what we could try to do is move forward from these hearings 


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and see if we could come up with a bipartisan approach to see if 

we could move something forward. 

Mr. KELLY. Absolutely. 

Well, you know what I want to have. I don’t want Ms. Colvin or 

anybody that works for you to walk out of here thinking, you know, 

these people just want to beat the living daylights out of us every 

time they get a chance. That is not the case. We both work for the 

same person: That is the American taxpayer. So if we can help you, 

I would love to do it. 

And, Mr. Chairman and Ranking Member, let’s work together 

and get this fixed for the American people. 

Chairman JOHNSON. Oh, who have we got left? Mr. Crowley. 

Wait. Mr. Thompson I think is ahead of you. 

Go ahead. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

And I want to just chime in with the folks who have expressed 

an interest in working together on fixing these issues. I think it is 

extremely important. 

And I want to say that, you know, I have represented just about 

every county in northern California at one time or another. And 

there are Social Security employees and offices all over northern 

California, and your employees are an absolute joy to work with. 

I have found that every one of them is there to do the right thing. 

Ms. COLVIN. Thank you so much, Mr. Thompson. 

Mr. THOMPSON. They work hard. They work well with my different offices. And I am sure it is terribly frustrating for them 

when these issues are pointed out. 

And so I would like to—I am proud to be a co-author of Mr. 

Becerra’s bill, but I am proud to hear that folks on both sides of 

the aisle want to work it out. 

And I would suggest, Mr. Chairman and Mr. Ranking Member, 

if we could do it with the cooperation of the folks at Social Security. 

It is terribly frustrating, my time here in Congress—and I just had 

another go-around at this last year with USDA on a huge problem, 

and I wanted to sit down and work out a solution, and there was 

just no interest in that agency working with Congress. They 

thought that they had it dialed in and that all we were going to 

be is a problem for them. And I hope that is not the same with Social Security. 

Ms. COLVIN. You will find that it is not. I think the chairman 

will tell you that we have been very interested in working with this 

committee. The chairman and Mr. Becerra have been very supportive. We understand your concerns about the problem. We are 

as concerned. 

And we welcome the fact that you are proposing legislation. 

Thank you, Mr. Becerra. We will provide technical assistance and 

do anything else that you request that we can do. 

Mr. THOMPSON. Well, my sense is that you know better the 

issues and the obstacles than any of us do. So if we could do that, 

if we could work collaboratively and collectively, I think we 

could—— 

Ms. COLVIN. We welcome that. 

Mr. THOMPSON. I am interested in one issue. You have mentioned all of the fraud that you stop from happening. And I know 


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that errors are also a problem. How do you differentiate between 

fraud and error? Because some people aren’t frauds; they just make 

mistakes. 

Ms. COLVIN. Absolutely. 

Mr. THOMPSON. Are you able to break that out, as well? 

Ms. COLVIN. We are. One piece of overpayments is fraud, and 

that is a very, very small percent, as identified by the Inspector 

General. But it means that the person has taken action or given 

misleading information designed to get a benefit to which they are 

not entitled, and that is fraud. 

But we have a large amount of overpayments due to the complexity of the program, individuals not reporting their wages timely. Or, in some instances, we cannot get it processed fast enough, 

so that the benefit goes out and then we have to try to get it back. 

But even with the shortage of staff—and I need to emphasize 

this—our accuracy rate increased this year. So we didn’t just say, 

oh, my goodness, we don’t have resources and we let it go. SSI is 

one of our most complex programs, and we still had an increase of 

1 percent accuracy right in that program. 

So we live this every day, and we are always looking for ways 

to improve it. And we aggressively pursue going after the money, 

whether it has been paid out by error or if it were deliberate. 

Mr. THOMPSON. And your recovery rate is what? 

Ms. COLVIN. Less than I would like, 58 percent. But we have 

a very aggressive—— 

Mr. THOMPSON. What percent? 

Ms. COLVIN. Fifty-eight percent. 

We have a very aggressive debt-collection process. Of course, we 

can do the offset if the person is receiving a benefit. We know we 

can do the Treasury offset if they are getting a Federal check for 

any reason, taxes or anything else. But if we have to do our external collections, then that is the regular process of collecting a debt. 

That is more problematic, but we also do that. 

And one of the things we have done recently is taken the time 

limit off when a debt can no longer be collected, so that if someone 

is not in pay status but they come in pay status later, we can go 

back and get that money. 

Mr. THOMPSON. And I would like to see if you could submit it 

to the committee or maybe part of the working group, however it 

is going to be set up, a list of things that you think that we could 

do that would help you both defray the errors, error rate, as well 

as prevent fraud, but also go after these guys or make it so the IG 

can better go after them. Anything at all that you could give us 

that would help us do that I think would be important. 

Ms. COLVIN. In the next panel, you are going to hear from Bill 

Zielinski, who is our CIO and our deputy for systems. We have 

done, I think, some incredibly good work in that area, and he will 

talk about that more. 

The chairman has been very supportive of IT. And, of course, we 

have been able to continue to do the kind of production that we 

have because of our investment in IT. And we need to be able to 

continue to do that. 

Chairman JOHNSON. Thank you. 

Mr. Crowley. 


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Mr. CROWLEY. Thank you, Mr. Chairman. 

Thank you again for holding this hearing, and Commissioner, 

thank you. 

The alleged wrongdoing we have all seen in the media, including 

people claiming fake ailments due to September 11th to Social Security disability payments, it sickens me to say the least. I want 

to thank the district attorney of New York county, Mr. Vance, for 

his work in terms of prosecuting those cases. 

I myself am from New York City, I am the son and grandson of 

New York City police officers. My father was a detective. I have 

cousins both in the fire department and the police department. I 

had a first cousin who was killed on 9/11. 

Ms. COLVIN. I’m sorry. 

Mr. CROWLEY. His brother Michael continues to work as a fireman, lost 12 men in his house that day. 

Ms. COLVIN. I’m sorry. 

Mr. CROWLEY. He happened to be off duty that day, otherwise 

he would have perished as well. So I need to begin by highlighting 

that there are far too many brave men and women who put their 

lives on the line every day, and they do that ofttimes injured and 

they do it ofttimes not feeling well. 

Ms. COLVIN. Absolutely. 

Mr. CROWLEY. We were all damaged by 9/11. Anyone who lived 

in New York and beyond, our country was damaged psychologically. We have all, I am sure have some effect from that. 

Ms. COLVIN. Absolutely. 

Mr. CROWLEY. But what these individuals have done—and 

three-fourths of the people who are being prosecuted so far are 

former police officers and firefighters. They are traitors to their 

brothers and sisters in those departments. I would even suggest 

that they are borderline traitors to our country because they erode 

the confidence that people have in their government, when they believe they can get away with this, and it is not only perceived but 

they actually in many cases are getting away with this. 

And so what they do is also they not only dishonor their uniform 

or their former uniform, they are really, really eating away at the 

fabric of responsibility of our government to provide for those who 

need help. 

These men and women are legitimate recipients, many of them 

are—— 

Ms. COLVIN. Absolutely. 

Mr. CROWLEY [continuing]. Who have suffered of the Federal 

Social Security Disability Insurance program, and we should not 

and cannot let the few ruin a necessary program for the many, or 

a few ruin the good name of thousands of heroes who work for the 

NYPD and the FDNY. 

Commissioner Colvin, I would like to ask you a few questions, 

and just yes or no answers if I could from you please. 

Wasn’t it a Social Security administrative frontline caseworker 

who detected the fraud there? Fraud that was not detected by the 

City of New York when it awarded disability pay and benefits to 

officers who were alleged to have committed this fraud against the 

Social Security system? 

Ms. COLVIN. Yes, it was. 


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Mr. CROWLEY. When the Social Security Administration invested in your special fraud busting teams known as CDIs, does 

that save taxpayers’ money and reduce fraud in the Social Security 

program? 

Ms. COLVIN. Yes, it does. 

Mr. CROWLEY. Thank you, Commissioner Colvin. 

Social Security is a bedrock principle of America and we must do 

everything we can to protect and strengthen the program for future 

generations. This includes cracking down on criminals and 

fraudsters. It was the Social Security Administration staff that detected the fraud in the disability program. The frontline workers 

there are our best defense against criminals. 

But I am concerned about some of the jargon that would malign 

their work in the name of maligning government services. I think 

there are far too many antigovernment groups out there that would 

use this to further malign the Social Security Administration. 

Congress must stop the attacks on Social Security, including the 

over $1.2 billion in cuts that many of my Republican colleagues put 

forward and have taken away from Social Security programs, with 

more planned if that is not stopped. 

Democrats have a plan to protect the integrity of the Social Security system. Protect taxpayers’ money, and send these ripping off 

Social Security individuals to prison, and that is why I am pleased 

to join my colleague, Mr. Becerra, and I am very happy Mr. Kelly 

has indicated his desire to work in conjunction in a bipartisan way 

with the Chairman as well. I would like to see that bill come to 

the floor. A bill that will go after those individuals and put them 

behind bars for a very, very, very long time and make this a nonprofitable scheme. 

I am concerned that many on the far, far right in terms of the 

Tea Party aspect are again using this as an opportunity to attack 

our Government itself. But I do think that support of a bipartisan 

bill to put these people behind bars will go a long way to curtailing 

that. 

Finally, recognizing that we can’t stop every criminal act at the 

front end, this bill will send those caught ripping off the Social Security system to prison. The bill makes clear that conspiracy to defraud Social Security is a felony and authorizes a higher penalty 

of up to 10 years in prison for conspiracy for ring leaders and corrupted sources who recruit others to commit fraud, coach witnesses, and multiply the losses of Social Security and its trust 

fund. 

I am hopeful, Mr. Chairman, that the Social Security Fraud and 

Error Prevention Act of 2014, as you can work out the details of 

that bill, can be one of those bills that can come to the floor in a 

bipartisan way in a bipartisan spirit to bolster the people at Social 

Security, a valued program, to help those who are suffering continue to get the services they need, and to capture those who would 

defraud the system for their own personal gain—it doesn’t get 

much worse than that in my opinion—and put them to jail for 

many, many years to come. 

With that, I yield back the balance of my time. 

Chairman JOHNSON. Thank you for your comments. 


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Commissioner, our witnesses on the next panel have some ideas 

on how to prevent fraud. If you are able to stay, we invite you to 

stay and listen. 

Ms. COLVIN. I will stay. Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you for being here. 

We now proceed to the second panel. Please move forward. 

Thank you all for sticking around, I appreciate it. Maybe you 

learned something. We did. 

Seated at the table we have J. Matthew Royal, Vice President 

and Chief Auditor, Unum Group, Chattanooga, Tennessee; William 

Zielinski, Deputy Commissioner of Systems and Chief Information 

Officer, Social Security Administration; and Allen Shark, Fellow, 

National Academy of Public Administration. I welcome you all to 

the hearing this morning. Thank you so much for being here. 

Mr. Royal, welcome. Please go ahead. 

STATEMENT OF J. MATTHEW ROYAL, VICE PRESIDENT AND 

CHIEF AUDITOR, UNUM GROUP, CHATTANOOGA, TENNESSEE 

Mr. ROYAL. Thank you, Mr. Chairman, and Members of the 

Subcommittee. 

We are pleased to be here today and we appreciate the opportunity to share some of our aspects of our fraud risk management 

program at Unum. 

Unum is a market leader in disability, life, critical illness, and 

accident insurance with more than 160 years of experience. We 

work with more than 175,000 businesses worldwide, from Fortune 

500 to small businesses covering more than 22 million people. In 

2013, we paid more than 6 billion in benefits. We are a U.S.-based 

company with approximately 10,000 employees with major operations in California, Maine, Massachusetts, South Carolina, Tennessee, and in the UK. 

Insurance fraud is the second most costly white collar crime in 

America, exceeded only by tax evasion. Nearly 80 billion in fraudulent claims are processed each year in the United States. This may 

be a conservative figure based on known acts of insurance fraud 

and not the unknown, undetected, or unreported acts. 

To effectively combat insurance fraud insurers must be capable 

of quickly identifying potential fraud, have the proper infrastructure in place to adequately manage and respond to fraud risk, and 

frequently monitor and test antifraud control effectiveness. 

At Unum, the significant investment we have made in our antifraud program has helped position our company as an industry 

leader in detecting and preventing fraudulent disability claims. 

While the total amount of fraud is undeterminable, we estimate 

less than 1 percent of the approximately 400,000 disability claims 

received by Unum each year are fraudulent. 

From Unum’s perspective, strong fraud risk management is critical to successfully managing our business and offering affordable 

financial protection to our customers. Unum’s fraud risk management program is managed by the SIU, the Special Investigative 

Unit, led by Jeff Connor, Vice President, who joins me here today. 

The SIU conducts investigations into potentially fraudulent 

claims and promotes corporate antifraud strategies and initiatives. 


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The following summarizes key aspects of Unum’s fraud detection 

and prevention program. 

The foundation consists of our policies and procedures. Unum 

maintains policies which help ensure compliance with applicable 

insurance fraud laws and regulations. The SIU makes a fraud detection and response guide available to all employees to help them 

recognize and report suspicious claims. The company also maintains a toll-free fraud reporting hotline and encourages anyone 

with information about insurance fraud to report the information, 

allowing them to do so anonymously and confidentially. 

Strong training and education reinforces our policies and procedures. Unum’s comprehensive antifraud training program ensures 

employees possess the requisite skills to identify and report insurance fraud. Unum also designates certain employees based on job 

function as integral antifraud personnel. These employees, including claims processors, underwriters, and certain corporate personnel, receive mandatory antifraud awareness training at regular 

intervals. 

Now, complementing our front line is the use of advanced technology. Unum uses predictive analytics to continuously monitor disability claims for potential fraud. We developed our model using 

data from our own historical fraudulent claims. The model analyzes 

our claims inventory daily, scoring each claim based on how closely 

it resembles customized fraud attributes. Higher scores indicate 

greater fraud potential and claims exceeding a baseline score are 

reviewed by a trained analysts. About 1 out of five high scoring 

claims that are reviewed result in additional investigation and that 

accounted for 30 percent of the total amount of potential fraudulent 

loss activity detected and reported in 2013. 

Unum works closely with law enforcement to ensure that those 

who commit insurance fraud are held accountable. The SIU reports 

all suspected fraud to law enforcement and/or the appropriately 

designated regulatory agency responsible for the investigation and 

prosecution of insurance fraud. We frequently provide disability 

fraud training to key law enforcement agencies and actively assist 

in investigations and prosecutions. 

Our antifraud initiatives are focused on maintaining a strong 

public-private partnership to combat fraud and share information 

about emerging fraud trends and risks. 

In conclusion, while the overwhelming majority of claims Unum 

receives are legitimate, there are bad actors that seek to game the 

system and file over facilitate fraudulent claims. Unum has a comprehensive approach to fraud prevention which includes establishing effective policies, continuous employee training, and the use 

of advanced technology and modern information sources. There is 

a strong business case for our approach to fraud prevention and it 

plays a role in keeping group disability insurance policies affordable. 

Unum stands ready to work with this committee and the Social 

Security Administration to share our best practices and our experience. Thank you. 

[The prepared statement of Mr. Royal follows:] 


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Chairman JOHNSON. Thank you, sir, appreciate that. 

Mr. Zielinski, welcome. Please go ahead. 

STATEMENT OF WILLIAM B. ZIELINSKI, DEPUTY COMMISSIONER FOR SYSTEMS AND CHIEF INFORMATION OFFICER, 

SOCIAL SECURITY ADMINISTRATION 

Mr. ZIELINSKI. Chairman Johnson, Ranking Member Becerra, 

Members of the Subcommittee, I want to thank you for this opportunity to discuss Social Security’s use of information technology to 

administer our programs and to detect and prevent improper payments and support antifraud initiatives. My name is Bill Zielinski 

and I am Social Security’s Chief Information Officer and Deputy 

Commissioner for Systems. 

I am responsible for all aspects of our information technology 

program from planning new IT projects to overseeing their implementation and managing their day-to-day operation and upkeep. 

Every year, we pay $850 billion in benefits to 63 million people. 

The vast majority of these payments are accurate and timely. We 

owe this record of success to a highly skilled and dedicated workforce that is supported by IT. IT is behind everything that we do. 

Our employees work with electronic claims files using applications 


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that enhance the productivity, automate many routine tasks, and 

enforce the program laws and policies. Without the productivity increases gained from our strategic IT investments, we would not 

have been able to keep pace considering our growing workloads and 

limited resources. 

In addition to supporting our programs through IT, we have built 

on-line services for the public that are easy to use, secure, and 

highly rated. For example, our customers can use on-line services 

to apply for benefits, change their address, request a benefits statements. These services allow our customers to choose their preferred 

method of doing business with us and allows us to keep up pace 

with our ever growing workloads. 

I do want to stress that productivity increases do not come at the 

expense of quality. In fact, our applications are designed to ensure 

quality work products and payment accuracy. For example, in my 

written testimony I highlight the eCAT program which helps State 

disability examiners apply policies correctly throughout the entire 

decision-making process. 

Our applications also enable our employees to gather third party 

data that may reveal when a beneficiary has been overpaid. Without IT supporting it, this type of investigation is labor intensive 

and impractical. For example, regarding the means test SSI program in fiscal year 2012 we fully implemented the Access to Financial Institutions program which allows our employees to obtain 

electronic bank information directly from the banks and we are 

currently testing a similar process for obtaining information on 

ownership of non-home real property. 

We do not rely solely on our employees to discover on or beneficiaries to report all the changes that may affect their benefits. We 

have the largest data exchange program in the Federal Government. Our exchanges provide us with a wealth of information that 

we use to pay benefits accurately and efficiently administer our 

programs. We get information that varies across the board from income and asset data to incarceration data and medical information. 

We take seriously our responsibility to be effective stewards of our 

programs. 

Each year we complete periodic medical reevaluations to determine whether beneficiaries are still disabled and SSI redeterminations to review the nonmedical factors of eligibility. These reviews 

save billions of program dollars with only a small investment of administrative funds, yet we do not receive the resources to complete 

all of them. Instead, we have long used predictive models to 

prioritize the cases with the best chance of finding improper payments. These models have allowed us to achieve an impressive return on the taxpayers’ investment. For example, we estimate that 

our SSI redetermination model helped us recover or prevent $3.4 

billion in SSI overpayments in fiscal year 2013 alone. 

As we move forward we are developing additional models such as 

the representative payee misuse model that will allow us to target 

fraud specifically. The next area we are looking at is data analytics. We expect these diagnostic tools to increase our ability to 

find questionable patterns of activity in disability claims and prevent fraudulent claims from being processed. We will spend the 

rest of this fiscal year developing and testing some of these tools. 


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We have a long history of delivering results and administering 

our vital programs in an efficient and cost effective manner. We 

have been successful in large part due to our highly trained and 

dedicated employees and because we have made significant and 

strategic investments in IT that have allowed us to keep up with 

the ever-increasing workloads. However, these investments in IT 

and staffing come with a cost. Reduced budgets in recent years 

have meant less and less available for IT development and training. 

And while we appreciate the resources that have been provided 

for the current fiscal year, we hope you will continue to make that 

investment in our programs. And as Commissioner Colvin expressed this morning, only with that sustained funding can we 

build upon our efforts to stop those who would steal from the 

American people. 

Thank you for the opportunity to update you on our programs, 

and I will be willing and happy to answer any questions you may 

have. 

[The prepared statement of Mr. Zielinski follows:] 


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Chairman JOHNSON. Thank you, sir. 

Dr. Shark, you are welcome. 


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STATEMENT OF ALLEN SHARK, FELLOW, NATIONAL ACADEMY 

OF PUBLIC ADMINISTRATION 

Mr. SHARK. Good morning, Chairman Johnson, Ranking Member Becerra and Members of the Subcommittee. I guess I am the 

outsider looking in, so I guess I have a different perspective. 

I wanted to thank you for the invitation to testify today to discuss high impact, viable and feasible recommendations that can assist the Social Security Administration preventing and detecting 

conspiracy fraud in the disability insurance program. It is an honor 

to contribute to this important discussion. 

My name is Alan Shark. I am a fellow and chair of the technology leadership standing panel of the National Academy of Public 

Administration. I also serve as the exec director of the Public Technology Institute and an associate professor of practice at Rutgers 

University School of Public Affairs and Administration. 

I need to say that my comments today represent my own views 

from the outside looking in and also derive in part from the recommendations issued by an independent panel of our academy to 

the Recovery Accountability and Transportation Board following 

the results of a national dialogue on innovative tools to detect and 

prevent fraud, waste, and abuse. 

Unchecked, we know that conspiracy fraud in the disability insurance program illustrates the importance of leveraging technology to strengthen SSA’s capacity to intercept suspicious activity 

at its inception. Absent more sophisticated adaptable measures, the 

problems recently uncovered will only repeat themselves in some 

form or fashion and likely worsen. SSA must focus its efforts on 

implementing the newest analytic tools for fraud detection used by 

the private sector and develop an agency wide culture of fraud prevention that emphasizes the need for advanced technology, provides the leadership and training to support it. Towards this end 

I offer six recommendations. 

The first in the process, is for SSA to develop an IT system that 

incorporates textual analysis tools and predictive analytics technology to maximize its ability to detect fraud. They can no longer 

rely on the integrity of the participants and the complex benefits 

application process. SSA needs to acquire technology-driven detection methods capable of flagging fraudulent activity more consistently, systematically and accurately. In other words, it needs to be 

further integrated into the system more so than it is today. 

Today’s technology allows for unstructured data stored by SSA 

regarding disability claims to find patterns indicative of fraudulent 

activity. These tools offer the potential to prevent and detect fraud 

by automating the scanning of lengthy government documents thus 

using structured data with unstructured data with the ability to 

flag suspected fraudulent activities. 

Predictive analytics is another tool that including pattern recognition among data sources, and is used for techniques such as 

heat mapping, which presents a visual influx of commonalities such 

as sudden increases in claims with common diagnoses or claim representatives. 

The second is SS needs to develop and maintain a culture of collaboration and information sharing, which provides another level of 

protection against fraud. Technology-driven detection methods will 


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enable SSA to better leverage data sources, including State and 

local government data, proprietary business data to improve data 

validation and predicting potential fraud. 

Number 3, SSA should also explore potential partnerships with 

other government agencies that are coordinating efforts to combat 

fraud, waste, and abuse. They are highlighted in my prepared remarks. 

Number 4, SSA must improve its current IT infrastructure to accommodate this new fraud detection technology. SSA Office of Disability Adjudication, ODAR, has already paved the way for these 

changes through its use of similar technology. As part of this effort, 

SSA should determine how databases throughout the Administration, regional offices, field offices, and state DDDS offices can be integrated. 

Number 5, SSA must develop a culture of prevention and detection that extends to all employees. This effort should include fraud 

detection training for all SSA employees; educating employees 

about data analysis tools and other technologies, which is kind of 

a new part here; rewarding, which is something I haven’t heard 

yet, rewarding vigilance among employees through recognition and 

performance appraisal system, so that they are not just doing their 

job, they are getting rewarded for doing these things that go beyond and finding these things; additional ethics training for supervisors and employees. 

Consideration should also be given to creating a senior level executive position whose primary responsibility is overseeing and 

managing SSA’s fraud detection and prevention efforts. 

And finally number 6, early in the application process SSA 

should incorporate clear warnings, stronger warnings to claimants 

and their representatives about the measures being taken to detect 

fraud and the consequences of defrauding the disability insurance 

program. 

Mr. Chairman, an operation of this magnitude will always be a 

target of fraud and abuse. We know that. Investing in new analytic 

tools, integrating and expanding its data sources, fostering a culture of fraud prevention among all employees, and increasing applicant awareness of SSA fraud prevention efforts and the consequences for defrauding the Federal Government will assist SSA 

in achieving its stated goals and strengthen its antifraud activities 

and securing the public’s trust. 

Mr. Chairman, this concludes my oral testimony and I would be 

pleased to answer any questions you might have. 

[The prepared statement of Mr. Shark follows:] 


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Chairman JOHNSON. Thank you. Have you provided those suggestions to the administration? 

Mr. SHARK. In my testimony I have. 

Chairman JOHNSON. I see. 

Mr. SHARK. Yes. 

Chairman JOHNSON. Were you paying attention, Ma’am? 


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Ms. COLVIN. Yes. 

Mr. SHARK. She was kicking me in the back. 

Chairman JOHNSON. Thank you. 

Mr. Royal, how does Unum identify claimants who may be faking 

illness, particularly mental illness? 

Mr. ROYAL. Well, Mr. Chairman, I think that the first line of 

defense, which is our people who are handling the claims, is key 

to identifying those fraudulent activities. Our fraud training program, managed by the SIU that I referenced, arms those frontline 

employees with the education to identify red flags as they are processing claims. And each of the processes that they follow, which do 

vary by type of disability that you mentioned, is designed to support a fair and thorough analysis of the claim. 

So for mental illness or behavior health type illnesses, some of 

those activities might include objective tests for malingering or fabrication, activities check and verification. We also perform records 

review by our in-house physicians. And so through that process if 

red flags are identified, there is encouragement to reach out and 

refer those claims to the SIU early as possible, because these 

claims are hard to substantiate at times, they are hard to disprove 

at times. 

But it might be worth noting to the committee that behavioral 

health fraud accounted for about 15 percent of our total fraud last 

year. The most common is musculoskeletal disease, or neck pain, 

back pain, joint pain, that accounted for somewhere in the mid-30 

percent. 

Chairman JOHNSON. That is the stuff you can’t identify, isn’t 

it? How do you screen for bad doctors? 

Mr. ROYAL. Well, you don’t want to go—— 

Chairman JOHNSON. I don’t want to go to one. 

Mr. ROYAL. Our going-in position is that there are not bad doctors, but we know that there are cases of where there are 

facilitators of fraud. It is a sensitive issue because the escalation 

of the impact that a facilitator can have is much greater than an 

individual perpetrator or fraud that is conducting that fraud for 

one claim over a period of time. 

So the way that we first prevent against identification of the doctors, for example, would be back to those treating physicians that 

I mentioned in our claims processes. Those folks are identified as 

integral antifraud personnel, so they receive the training that we 

give them to identify those red flags. And what they do in the handling of the claim will have a doc-to-doc call. Our own doctors that 

are educated in fraud awareness, and have the expertise in the 

field, will reach out and have conversations with treating physicians and discuss the claim and the situation. That puts them in 

a unique position to identify suspected fraud, and particularly 

where there is some suspicion around the doctors. 

And they are trained, the physicians are, to make the referral to 

the SIU. That has happened, and when we have a referral on a 

facilitator claim it gets priority. When we will put that doctor into 

a database. We will search our claims for doctors, common doctors, 

commonality of doctors, and will allow resources to quickly look at 

those claims to see if there is additional concern. 


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Chairman JOHNSON. Thank you. You know, I think using the 

computers probably helps, doesn’t it? 

Mr. ROYAL. It does. All the information that we receive on a 

claim—again our process is designed to provide a fair but thorough 

review of the claim—but the information we do receive gets put 

into our databases. The model, the predictive model that we have 

developed, considers many attributes when it looks at and daily 

evaluates these claims. 

So while the fraud model doesn’t necessarily reports on batches 

of claims, it is designed to look at individual claims in the likelihood that they have potential fraudulent activity. Our fraud analysts that review those high scoring claims are in a much better position than our claims handlers to look across these highly suspicious claims that are being indicated by the model, because that 

is all they are doing, is they are looking at that and looking for 

that commonality across those claims. 

Chairman JOHNSON. Mr. Zielinski, you all are trying to develop 

some similar type plan for Social Security, I understand. When will 

that tool be available for frontline employees? 

Mr. ZIELINSKI. So, Chairman Johnson, we already have some 

tools that are available right now. Commissioner Colvin mentioned 

that for the direct deposit fraud, she was talking about those instances in which we have been able to prevent those through the 

door. So we already have a number of those tools available. 

But she also specifically mentioned that utilizing the information 

from these cases that have already been established in a similar 

fashion to, as Mr. Royal described, we are going to be doing the 

same things. We are going to be proving out that model in a short 

window of time. And we could provide you with specifics for the 

record as to exactly when we are going to do those things. 

[The information follows:] 


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

Mr. BECERRA. Thank you, Mr. Chairman. 

And thank you to all of you for your testimony. Mr. Royal, let 

me ask this, do you find the way Social Security has found that if 

you invest money on fraud detection, that you have a greater return on the money you spent in having to pay for those fraud busters? 


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Mr. ROYAL. Congressman, I don’t know the specifics of how the 

Social Security Administration approaches and uses their dollars in 

terms of their IT spend or predictive analytic spend, but what has 

worked for us is a model that does continuously screen our claims 

to identify those that have likely or suspicious fraudulent activity. 

And while proprietary in specific number, we find that the rate of 

return on that is very high. 

And in fact, the referrals that are made to our investigators that 

come from the model have a much greater likelihood of resulting 

in the identification of fraudulent activity than the referrals from 

the front line. 

But don’t get me wrong, the front line is extremely important. 

They are still the majority of the referrals and account for 70 percent of the ultimate fraud that we detect and report, but that 30 

percent that comes from the model those referrals that result in 

that 30 percent, high likelihood of potential fraud. 

Mr. BECERRA. So, I know that Social Security has indicated in 

the past that they have a 17 to 1 return, a 9 to 1 return on some 

of their fraud busting techniques. Sounds like you are seeing similar type results with whatever your techniques are. 

Mr. ROYAL. Yes, sir. 

Mr. BECERRA. Great. 

Mr. Zielinski, can you tell us a little bit more about what the Social Security Administration is doing to prevent the fraud. Because 

I know there is always the concern that if you don’t try to detect 

it early you have to chase it later on and it is tougher and costs 

a lot more money. I wonder if you could tell us what you are doing 

that is similar to the private sector is doing to try to prevent the 

fraud before it ever occurs. 

Mr. ZIELINSKI. You bet. Congressman Becerra, there are a few 

things. Commissioner Colvin mentioned some things already that 

are more on the business side in terms of the training and other 

things, so I am going to stick to the IT pieces that we are undertaking. 

Again, we mentioned the direct deposit fraud. In a very similar 

fashion as we have identified these cases coming through, we have 

analysts, and you really do have to rely on those analysts to be 

able to tell you what they are seeing from the data. We use the 

data to create scenarios that allow us to recognize those scenarios 

coming through, and we have prevented very many cases from 

being paid at all in the first place. 

Mr. BECERRA. That is the predictive technology? 

Mr. ZIELINSKI. That is the predictive technology, absolutely. 

What we are also doing from a technology standpoint is we are also 

working with partners from across the Federal Government. We 

have met with a number of sources and what we are looking to do 

is a few things there. We are looking for best practices, but we are 

also looking for sources of information that are there and readily 

available. 

Commissioner Colvin mentioned that we do use information from 

CMS that we use to recognize for doctors, where there is already 

a pattern there. So we are looking for those types of data sources. 

And as we build our models, again we utilize our frontline folks 


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who have knowledge of this to be able to tweak and improve those 

models over time. 

We also have prepayment reviews for our disability claims. So we 

mentioned the CDI units and recognizing those patterns. But even 

as we are making those medical decisions, there is an additional 

review that takes place before any payment is issued. 

So, those are just some of the things that we have done utilizing 

technology and being able to select and sample and score for the 

probability of error or problem to prevent those cases from taking 

place. 

Mr. BECERRA. And I had posed the question to Commissioner 

Colvin previously, but I wonder if you could give us your take. In 

the legislation that we introduced today, we do call for an increase 

in financial penalties that would be assessed by Social Security for 

fraud committed by people who should know better than to engage 

in that activity. Do you think that would be helpful to SSA as it 

goes about the process of detecting fraud? 

Mr. ZIELINSKI. Well certainly, sir, any tools that we have in our 

tool belt that would help us to combat and deter, and Commissioner Colvin mentioned that once people see the strengths of those 

penalties it is something that serves as additional deterrent, and 

I echo what she told you earlier. 

Mr. BECERRA. What about the issue of banning practitioners 

who engage in these bad practices, a doctor who knowingly submits 

fraudulent medical documentation so that someone can qualify to 

receive these disability benefits? Should we ban those doctors from 

being able to participate in giving us evidence that helps determine 

whether someone is disabled or not? 

Mr. ZIELINSKI. Well, certainly from the IT perspective, the 

more information that we have in and about any of the players 

that are in the process, it is a valuable and valid information. And 

that sort of information really allows us to be able to stop some of 

those things at the front door. So those are effective deterrents and 

can be used in an IT model to help prevent those things. 

Mr. BECERRA. Thank you all for your testimony. 

And by the way, because I have referenced that bad doctor, but 

it is not just doctors, and the Chairman and I were discussing this. 

We should go after anyone along that chain of the process who engages in this type of activity that ultimately takes money away 

from the taxpayers. I wouldn’t use as colorful language as the 

Chairman has used, but I think we all agree, every one of us agree 

that we should descend on any of these folks who are perpetrating 

this kind of fraudulent activity to folks who paid their tax dollars 

to get these benefits in the future. 

Thank you all for your testimony. 

Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. 

And I would to thank you all for your testimony today. Dr. 

Shark, you mentioned six recommendations. Can you narrow those 

down to maybe two or three which would cover the low-hanging 

fruit that maybe the Social Security could be doing? 

Mr. SHARK. Well, I think they are moving in the right direction. 

I can narrow it down to two. One is the human factor and the ability for that frontline person, which has been I think well described 


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as the gatekeeper who is going to see something coming in, they 

are going to see the most suspicious thing at the very beginning. 

The second part is more problematic, and that is the technology 

piece. You know we are talking about where we really want to be, 

and to me it is how do we get to a point, and at what point will 

that be? Will it be in the year 2015, will it be this year? In other 

words, what is the ultimate road map? 

To me every application should be screened and tested based on 

these different models. They should not be flagged red. They should 

be done green, red, yellow, different kind of things for different 

kind of deficiencies that may be found and to be totally integrated 

into the culture. 

And so what I am hearing is these fixes, but I am not hearing 

this timeline of when this will happen, whether it will be a totally 

integrated system that will review things. In the report I read 

there are 54 databases that is being consolidated into one. That 

will go a long way in helping. 

But ultimately I think it is, like, what is this vision? And the 

technology vision is we have to use predictive analytics. We have 

to use things to plot what is going on and where, to look at the 

chain of interactions so that technology can help us and pinpoint 

things before they occur or slightly thereafter. And it is that blueprint that I am not seeing yet. I am seeing some really good fixes, 

but I am not seeing that longer term this is where we want to be 

and this is what it is going to look like. 

Mr. RENACCI. Mr. Zielinski, I know you have talked about more 

money and I want to remind you what happened with Social Security concerning IT money. Since fiscal year 2001, Social Security 

stockpiled over $1.3 billion in an information technology reserve 

fund of unspent money. The Congress agreed on a bipartisan basis 

to rescind $500 million. 

And again, that might predate you and might predate the Acting 

Commissioner, so I am trying to find out—it appears back then 

there was not this push for IT. Why weren’t those dollars spent? 

And what would make us believe that if you had those dollars you 

would spend them today, since you already had them? 

Mr. ZIELINSKI. So Congressman, I appreciate the question. I 

don’t have specifics as to why those funds were not spent. I was 

not involved in the discussions or the decisions, so unfortunately, 

I can’t answer that question for you. 

I will say that Commissioner Colvin has taken a much more specific approach towards strategic planning, and I think as we are 

moving forward the types of plans that Mr. Shark talks about in 

putting in place, those are the things on which we are focused so 

that we will be able to show and demonstrate precisely where we 

are making those investments and how we are going to spend those 

dollars and to what purposes, which areas within our mission those 

are going to be spent. 

So Commissioner Colvin has mentioned in her written testimony 

about the strategic planning that we are doing now, and in fact we 

are engaged with NAPA in some of that strategic planning. And 

those are the sorts of things that we will see in that plan. So, you 

know I have confidence and I believe that we have—the commissioner is really pushing forward with that strategic planning. 


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Mr. RENACCI. Okay. One of the thing I noted in an audit raised 

some questions about the data, Social Security’s data, including the 

fact that you have multiple databases. How many databases does 

Social Security have? How connected are they and what challenge 

do you have in creating and implementing, you know, data analytics based on all of that? 

Mr. ZIELINSKI. So I can’t answer the specific question. I don’t 

have the exact number of databases. We have a series of databases. 

Some are called master files. Those are ones from which we issue 

payments and maintain systems programs. And then there are 

other databases specifically to processing the workloads. 

In terms of being able to bring data together, there is a lot of 

technology that is available today that allows us to be able to bring 

data from multiple sources together to be able to combine that in 

ways for specifically these reasons. 

So, we are using tools today, pulling data from many different locations, bringing that together to be able to do the data analytics. 

So, the challenge isn’t necessarily in and around the number of 

databases, it is really again getting back to having the analytical 

support, really knowing what patterns we are looking for and being 

able to implement that, sir. 

Mr. RENACCI. Dr. Shark, one last question. Looking from the 

outside in, are we doing enough for training of our frontline staff 

to detect this fraud? 

Mr. SHARK. Well, absent technology, probably not. I think they 

are doing the best they can with the tools they have today. The 

only thing I would add to that is kind of think in a creative way 

some better rewards for those people up front because they are so 

important. Everyone acknowledges that. And the question is what 

can we do more to empower them to really feel emboldened, to look 

for things to be very, very vigilant and careful. Because they are 

our first line. 

So the missing piece is what kind of reward can we give them? 

We are not talking about money here, but we are talking about recognition. Part of their review process, maybe something on their 

wall. But something to really show how important these people are 

to us. 

Mr. RENACCI. Thank you. 

I yield back, Mr. Chairman. 

Chairman JOHNSON. Thank you. 

Mr. Kelly. 

Mr. KELLY. Thank you, Mr. Chairman, thank you. 

Chairman JOHNSON. Do you care to question? 

Mr. KELLY. Yeah, just real quick, because I am really interested 

how it happens in the private sector. And I know there is quite an 

incentive to do it differently in the private sector, because it really 

determines whether you continue in the private sector or go and 

change direction with what you are going to do with the rest of the 

your life. 

Mr. Shark, you made a references to it, and I think Mr. Royal. 

I was looking at the size of your company. You work with 175,000 

businesses worldwide and you cover more than 22 million people. 

I am looking at how you do that. I mean, I think because we are 

talking now about do we need to increase funding to SSA to help 


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them do their job or can we somehow slim it down to a point where 

they are actually more effective. And I know there are things we 

can talk about later on about how we are going to do that. 

But from a private sector, what you do see? Mr. Renacci just said 

from the outside in. What do you see that if you were taking over 

and you were the CEO just walking into this business, what would 

be the first thing that you would look at? And I think data analytics are absolutely critical. What would be the number one thing? 

I don’t think we need to keep throwing money at it. I think we 

need to learn to live with less, do more with less, but technology 

is the answer to that, is it not? 

Mr. ROYAL. Congressman Kelly, I think that is a big opportunity. I think that we are all asked to do more with less. I am 

asked that every year, every quarter when I meet with folks, and 

I think the predictive analytics tool, while it requires investment, 

does provide that broad coverage of looking at claims. It looks at 

the subtle changes in claims as information comes in. Things that 

the claims handlers can’t necessarily see. There are some things 

that they can see that a computer model can’t, and vice versa. 

So I think that there is an opportunity that with the use of that 

technology to get that broader coverage. 

Mr. KELLY. So when you make an investment, you are going to 

make an investment but you want to get a real positive return on 

the investment, could Social Security do the same thing? Every 

year you go into a bid process and you have to earn the people who 

work with you, the people that you contract with, you have to earn 

their business. 

But we don’t have that same model and this is not a knock at 

SSA, this is just the way it works. But we do have the ability to 

really cull this down, make it more effective and more efficient. 

There is no reason why we can’t do this, is there? 

Mr. ROYAL. Well, the profile obviously of the business is different. We offer a number of different products and that carries different challenges in them. I think that there are opportunities to 

take those opportunities, and one of those opportunities is maintaining a healthy collaboration between the public and the private 

sector. 

Private disability has an opportunity to take some of the burden 

off of governmental programs by providing income replacement 

early on in the process so they are not having to look for other safety net programs, and the private disability insurance companies 

also help to promote return to work so that they actually get on— 

they are on the rolls less of a time. 

So not only is there efficiencies in the organization, but efficiencies working together from a industry, public and private, that 

will increase the overall economic welfare valuable of disability insurance. 

Mr. KELLY. Mr. Shark, then, how do you incentivize from the 

Social Security level? How would you incentivize the people that 

are on the staff? What you would use? I know for Mr. Royal it is 

you keep your job. But for people in SSA how do you do that? What 

makes that person come to work every day, throw their feet out 

over of the bed, getting up and getting dressed and going to work 


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and want to go to work, and know that there is a light at the end 

of the tunnel? How would SSA do that? 

Mr. SHARK. Well, I think they are in a better position to answer 

that than I would. But from the outside looking in, I would say 

that—you know, people love recognition. If I can’t get a raise, how 

can I be recognized? And if that is part of your job description, that 

is what they are supposed to be doing to begin with. So there is 

an expectation. 

But going beyond the norm, there could be some levels of recognition that might be an award, some kind of thing they would put 

on their wall, some kind of thing that goes into their review process, it could lead to a promotion, and they should be the champions, also the ones training others when they have found something. So it is kind of giving them the incentive through ego recognition for their performance. 

Mr. KELLY. That is the answer. It is ego. 

Mr. SHARK. Yes. 

Mr. KELLY. I mean, compensation is one thing. 

Mr. SHARK. Yes. 

Mr. KELLY. But recognition for doing a good job is a lot more 

important. 

Mr. SHARK. And we take that for granted, because we know 

what we can’t do. We know we cannot give them a financial raise, 

but this is something that can be done. 

Mr. KELLY. My experience since I have been here 3 years, we 

bring these folks in here. We all work together. We work for the 

same people. 

Mr. SHARK. Yeah. 

Mr. KELLY. And all of a sudden we get out this hammer and 

start beating them: You are not doing the right job, you are not 

doing the right job. 

Mr. SHARK. Yeah. 

Mr. KELLY. So whenever they commit like we are doing today, 

how can we work with you? 

Mr. SHARK. Yeah. 

Mr. KELLY. What can we do to help you be better at what you 

do? Because if we do that, then the American people win. 

Mr. SHARK. Yes. 

Mr. KELLY. It has nothing to do with Congress beating down 

the SSA or taking people who we think are doing a fraudulent 

thing. It is a matter of getting it to a point where the taxpayer gets 

the best return on his or her investment. It is incredibly important. 

Mr. SHARK. Right. 

Mr. KELLY. So I agree with you. In my business, recognition by 

far. 

Mr. SHARK. I do the same. 

Mr. KELLY. Compensation only goes so far. 

Mr. SHARK. Yes. 

Mr. KELLY. Recognition lasts a lot longer. 

Mr. SHARK. Yes. 

Mr. KELLY. So that is one of the things that perhaps SSA could 

take out of this meeting, or could talk with you. 

But I do, I want to thank you all for being here. This is incredibly important. What I always keep going back to, I think there is 


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a disconnect when it comes to the Government. The people I represent back home say the Government needs to do this. Well, the 

Government works for you. You have to switch that around and 

understand the revenue comes from hard-working American taxpayers. That is who funds everything. We have to give them a better return on their investment. 

So, Mr. Chairman, thanks for having this meeting and all of you, 

thanks so much for what you do. SSA, good to have you here again 

with us today. 

Thank you. 

Chairman JOHNSON. I think this was a good meeting and I appreciate you staying here. 

And you too, Commissioner. You have heard these panels and we 

appreciate the testimony. I think now that the subcommittee has 

examined and provided feedback to Social Security’s plans to stop 

crimes against the taxpayers, I think the Commissioner will make 

her plan implementation one of her top priorities, which she already has done. I think the American people deserve nothing less. 

I hope we can stop the fraud that goes on in this agency and 

grab it by its roots. And I appreciate you being here today, all of 

you. Thank you. 

And the committee stand adjourned. 

[Whereupon, at 11:49 a.m., the subcommittee was adjourned.] 

[Member Questions for the Record follows:] 

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The Honorable Carolyn Colvin 


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[Public Submissions for the Record follows:] 


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Coalition Against Insurance Fraud 


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Consortium for Citizens with Disabilities 


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James Goodman 


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Michael Gilbert 


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National Organization of Social Security Claimants’ 

Representatives 


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