U.S. RAILROAD RETIREMENT BOARD

OFFICE OF INSPECTOR GENERAL 

The Railroad Retirement Board 

Disability Programs Do Not 

Effectively Consider Fraud Risk 

Indicators in the Disability 

Decision Process

Report No. 19-16 September 27, 2019
OFFICE OF INSPECTOR GENERAL

U.S. RAILROAD RETIREMENT BOARD

The Railroad Retirement Board Disability Programs Do Not 

Effectively Consider Fraud Risk Indicators in the Disability Decision 

Process

Report Summary September 27, 2019 Report No. 19-16

What DP George & Company Found

DP George & Company (DP George) determined that the 

Railroad Retirement Board’s (RRB) disability programs do not 

effectively consider fraud risk indicators in the disability 

decision process. RRB has not designed a control process 

that effectively uses preventive control measures to mitigate 

the potential for fraud and abuse within the program.

What DP George Recommends

To address the weaknesses identified in this audit, DP 

George made three recommendations. The first 

recommendation was to define definitive fraud risks within 

the disability programs based on a comprehensive fraud risk 

assessment. The second recommendation was to use the 

fraud risks identified to establish a scoring or other process 

for determining those applications where a higher risk of 

fraud or abuse occurring exists, and the third 

recommendation was to establish additional supervisory 

review and documentation protocols to ensure that 

decisions for higher risk applications are sufficiently reviewed 

and consistently documented to reflect the basis for the 

decision.

RRB management did not concur with any of the three 

recommendations. 

What We Did

The Office of Inspector General (OIG) 

for the RRB engaged DP George to 

conduct a performance audit of a 

statistically valid sample of disability 

decisions in fiscal years 2016 to 2018.

This audit was conducted in accordance 

with the performance audit standards 

established by Generally Accepted 

Government Auditing Standards. DP 

George is responsible for the audit 

report and the conclusions expressed 

therein. RRB OIG does not express any 

assurance on the conclusions presented 

in DP George’s audit report.

The objective was to review a 

statistically valid sample of disability 

decisions in fiscal years 2016 to 2018 to 

assess the potential for fraud and 

abuse, and identify fraud indicators 

against the RRB’s disability programs. In 

order to complete this work, DP George

identified criteria in laws, regulations, 

and best practices, identified applicable 

RRB policies, procedures, and gained an 

understanding of types of disability

claims at the RRB. DP George also 

interviewed applicable agency staff, 

selected and tested a statistically valid 

sample of disability decisions.

The scope of the audit covered all 

approved and denied disability 

decisions in fiscal years 2016 to 2018.
The Railroad Retirement 

Board Disability Programs do 

not Effectively Consider 

Fraud Risk Indicators in the 

Disability Decision Process

 

 
TABLE OF CONTENTS

Executive Summary ......................................................................................................................... 1

Objective(s), Scope, and Methodology ........................................................................................... 2

Background...................................................................................................................................... 2

Audit Results.................................................................................................................................... 3

Finding #1: The RRB Disability Decision Process Lacks Preventive Controls to 

Adequately Address Fraud Risk Indicators....................................................................... 3

Appendix I Management Comments............................................................................................... 6

Appendix II Statistical Sampling – Disability Decisions.................................................................... 8
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EXECUTIVE SUMMARY

September 25, 2019

Mr. Martin Dickman, Inspector General

Railroad Retirement Board

Office of Inspector General

844 North Rush Street

Chicago, IL 60611-1275

Dear Mr. Dickman,

DP George & Company, LLC (DPG) audited a statistically valid sample of the Railroad Retirement Board’s (RRB’s) 

disability decisions against RRB’s policies, procedures, the General Accountability Office (GAO) internal controls 

guidance, and GAO’s A Framework for Managing Fraud Risks in Federal Programs to assess the potential for 

fraud and abuse and to identify fraud indicators against the RRB’s disability programs. Performance against 

these criteria is the responsibility of RRB’s management. DPG’s responsibility is to make a determination 

regarding RRB’s performance against the criteria.

DPG conducted the audit in accordance with Generally Accepted Government Auditing Standards (GAGAS) 

issued by the Comptroller General of the United States (2011 Revision, as amended). Those standards require 

that DPG plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for 

its findings, conclusions, and recommendations based on the audit objective. The stated objective for our audit 

was to:

Review a statistically valid sample of disability decisions in fiscal years 2016 to 2018 to assess the 

potential for fraud and abuse, and identify fraud indicators against the RRB’s disability programs.

The evidence obtained provides a reasonable basis for DPG’s findings, conclusions, and recommendations based 

on the audit objective. 

Based on the test work performed, our audit determined that the RRB’s disability programs do not effectively 

consider fraud risk indicators in the disability decision process. The detailed finding for the audit is presented in 

the Audit Results section of this report. 

We appreciate the cooperation and assistance extended by RRB and the OIG staff during the audit. 

Sincerely,

DP George & Company, LLC

Alexandria, Virginia
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OBJECTIVE(S), SCOPE, AND METHODOLOGY

The objective of the audit was to review a statistically valid sample of disability decisions in Fiscal Years (FYs) 

2016 to 2018 to assess the potential for fraud and abuse, and identify fraud indicators against the Railroad 

Retirement Board’s (RRB’s) disability programs. 

To accomplish our objective, we:

• identified criteria provided in applicable laws, regulations, and best practices related to RRB’s 

disability program;

• identified and reviewed applicable RRB policies and procedures related to RRB’s disability program

and disability determination process;

• gained an understanding of the four types of disability claims: Occupational Disability, Total & 

Permanent Disability, Disabled Widow, and Disabled Child;

• interviewed applicable RRB management and disability staff; and

• selected and tested a statistically valid sample of disability decisions to assess the potential for fraud 

and abuse, and indicators of fraud against the RRB’s disability programs.

We assessed the reliability of the disability decisions data received by: 1) gaining an understanding of how the 

data was generated and reviewing the corresponding data queries, 2) comparing the data received against 

comparable listings generated for each of the individual fiscal years tested, and 3) making inquiries of agency 

officials knowledgeable about the data. We determined that the data was sufficiently reliable for the purposes 

of our findings, conclusions, and recommendations.

The scope of our audit covered all approved and denied disability decisions in FY 2016 to FY 2018. 

We conducted this performance audit in accordance with Generally Accepted Government Auditing Standards 

(GAGAS). Those standards require that we plan and perform the audit to obtain sufficient appropriate evidence 

to provide a reasonable basis for our findings, conclusions and recommendations based on the audit objective. 

We believe that the evidence obtained provides a reasonable basis for our findings, conclusions and 

recommendations based on our audit objective.

We conducted our fieldwork from October 2018 through August 2019. During our audit, we performed site visits 

to RRB headquarters in Chicago, Illinois in October 2018, April 2019, and June 2019.

BACKGROUND

The RRB administers the retirement, survivor, unemployment, and sickness programs mandated by the Railroad 

Retirement Act (RRA) and the Railroad Unemployment Insurance Act (RUIA). The RRA provides for payment of 

retirement benefits based on age and service in the railroad industry and to those who are permanently 

disabled from work in their regular railroad occupation or who are totally disabled from any regular 

employment.

Under the RRB disability program, the RRB approves and processes payments in support of total and permanent,

and occupational disabilities. A total and permanent disability annuity is based on permanent disability for all 

employment and is payable at any age to employees with at least 10 years of railroad service, and under certain 

conditions to employees with 5 years of service after 1995. 
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An occupational disability annuity is based on disability for the employee’s regular railroad occupation and is 

payable at age 60 if the employee has 10 years of service, or at any age if the employee has at least 20 years of 

service. A “current connection with the railroad industry” is also required for an occupational disability annuity. 

The current connection requirement is normally met if the employee worked for a railroad in at least 12 of the 

last 30 consecutive months immediately preceding the annuity beginning date.

AUDIT RESULTS

Our audit determined that the RRB’s disability programs do not effectively consider fraud risk indicators in the 

disability decision process.

We provide three recommendations aimed at addressing this weakness.

Finding #1: The RRB Disability Decision Process Lacks Preventive Controls to Adequately Address 

Fraud Risk Indicators

We conducted a fraud risk assessment using statistical sampling methodologies of 97 total and permanent, 

occupational disability, disabled widow, and disabled child annuity applications approved between FY 2016 and 

FY 2018 (See Appendix II) and found that:

• 27 disability applications (6 total and permanent, 20 occupational, and 1 widow) contained one or 

more indicators that the application was at higher risk for fraud or abuse to occur. 

• 70 disability applications (30 total and permanent, 25 occupational, 1 widow, and 14 child 

applications) did not contain any fraud indicators or those indicators were reconciled prior to 

approval. In most instances, these applications were very clear, and the disability was well 

documented with consistent medical findings.

The fraud and abuse indicators identified by DPG consisted of: 

• medical conditions that were difficult to objectively diagnose (including decisions based on pain);

• discrepancies between the multiple medical reports in the file, particularly with respect to Residual 

Functional Capacity (RFC);

• medical opinions noting a lack of objective findings within one or more of the medical support files;

• inconsistencies in vocational information;

• files lacking appropriate medical support; and

• unusual circumstances such as unsatisfactory work performance or unethical behavior.

DPG also noted that the Disability Claims Manual (DCM), Chapter 8, Section 8.8.2 Elements of Fraud identifies an 

additional 17 indicators of potential fraud or abuse that should be considered when reviewing applications. The 

RRB also flags high risk doctors through its Disability Tracking of Physicians and Patterns (DTOPP) process.

DPG observed no risk scoring or checklist tools within the disability decision process that consider the indicators 

above or other fraud risk indicators as a means of assessing higher risk disability cases.

While RRB clearly understands that there are potential indicators to identify applications at higher risk for fraud 

and abuse, it has not designed a control process that effectively uses preventive control measures to mitigate 

the potential for fraud and abuse within the program. The process for reviewing and approving a disability 
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decision with no fraud risk indicators is essentially the same as it is for a decision with multiple risk indicators,

thereby increasing the opportunity for fraud or abuse to occur.

The Standards for Internal Control in the Federal Government require management to assess fraud risk to 

consider the types of fraud that can occur within the entity, identify potential fraud risk, and develop responses 

so that fraud risks are effectively mitigated. 

The GAO document, A Framework for Managing Fraud Risks in Federal Programs, also establishes leading 

practices for fraud risk management. Leading Practice 3.2 provides that agencies should focus on fraud 

prevention over detection and response to avoid a “pay-and-chase” model, to the extent possible.

RECOMMENDATIONS

We recommend that the Office of Programs/Disability Benefits Division:

1. define definitive fraud risks within the disability programs based on a comprehensive fraud risk 

assessment,

2. use the fraud risks identified to establish a scoring or other process for determining those 

applications where a higher risk of fraud or abuse occurring exists, and

3. establish additional supervisory review and documentation protocols to ensure that decisions for 

higher risk applications are sufficiently reviewed and consistently documented to reflect the basis 

for the decision.

MANAGEMENT’S COMMENTS 

The Office of Programs/Disability Benefits Division did not concur with the three recommendations resulting 

from our audit. While they agreed with the intent of Recommendation 1, they believe that the 17 fraud 

indicators listed in the DCM Chapter 8, best practices for examining disability claims contained in DCM 8.8.2, and 

additional guidance contained in the Code of Federal Regulations are sufficient to allow examiners to detect and 

prevent potential fraud during the disability adjudication process.

For Recommendation 2, the Office of Programs/ Disability Benefits Division indicated that it believes the Code of 

Federal Regulations guidance on the adjudication of disability claims combined with a list of potential scenarios 

in DCM 8, and fraud awareness training performed twice a year provide sufficient guidance for processing cases, 

including “high risk” cases. 

For Recommendation 3 the Office of Programs/Disability Benefits Division highlighted the review of all initial 

disability applications by a post examiner and instructions in DCM 8.8.2 regarding referral of cases to managers 

when there are questions about the elements of fraud. Management believes this guidance combined with 

instructions to examiners to notify management officials when they identify patterns of fraud allow for sufficient 

review within the existing process.

DPG RESPONSE

DPG disagrees with management’s responses to the recommendations. It was evident in our review of the 

disability decision files we sampled, that certain medical conditions are more difficult than others to objectively 

diagnose and therefore result in the use of greater judgement on the part of the disability examiner. It was also 

evident from our testing and our review of disability program procedures that indicators exist to identify cases 

that are at higher risk for fraud, waste, or abuse. Our recommendations focused on strengthening the existing 
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process by establishing a strong risk assessment and response structure within the disability decision process. 

The benefit of incorporating a better defined risk assessment structure within the disability decision process is 

that it defines for examiners which risks are more significant than others and establishes a consistent response 

process based on the severity of the risks identified. While the current process lists potential risks and advises 

how those should be handled, it does not establish required steps designed to continually identify and respond 

to the risk of fraud, waste, or abuse occurring within the disability programs.

DPG response regarding Recommendation 1. While the guidance listed by RRB provides procedures for 

processing disability decisions in accordance with the rules and identifies potential fraud indicators, it lacks an 

assessment as to the severity of each fraud indicator and does not address the potential for new risks. 

Identifying the indicators without providing context for which indicators may be more severe or create higher 

risk introduces additional judgement on the part of the examiner when making the determination as to whether 

upper management needs to review the case for fraud, waste, or abuse.

DPG response regarding Recommendation 2. Highlighting potential scenarios for fraud and providing fraud 

training, while an important starting point, are not the same as developing a consistent process for scoring and 

assessing cases where higher risk exists. An established scoring process based on an evaluated ranking of risks 

reduces the element of judgement involved with identifying higher risk cases and allows RRB to target those 

cases at higher risk by developing corresponding documentation and review procedures that are tailored to the 

risks identified.

DPG response regarding Recommendation 3. The existing post examiner review process is applied to all cases 

and relies on the judgement of both the examiner and reviewer to determine if there are higher fraud risk 

factors present in the case and how those should be considered. The instructions and guidance to raise fraud 

concerns to management officials still leave final determination to the examiner. Adding review procedures and 

documentation protocols that are designed to specifically address higher risk cases builds consistency into the 

review process and limits the influence of judgment by defining the highest risk scenarios and developing 

standard mitigation responses.
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APPENDIX I MANAGEMENT COMMENTS
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APPENDIX II STATISTICAL SAMPLING – DISABILITY DECISIONS

Appendix II: Statistical Sampling

Statistical Sampling Methodology and Results

Disability Decisions

Fiscal Year (FY) 2016 through FY 2018

This appendix presents the methodology and results for the sample testing of disability decisions from Fiscal 

Year (FY) 2016 through FY 2018. We selected a statically valid random sample of disability decisions. 

Sampling Objective

The sampling objective for the audit is to select a statistically valid sample of disability decisions in FY 2016 

through FY 2018 to assess the potential for fraud and abuse, and identify fraud indicators against the RRB’s four 

disability programs (Total and Permanent, Occupational, Disabled Widow, and Disabled Child).

Scope

Our sample was selected from all disability decisions in FY 2016 through FY 2018.

Universe/Sampling Unit

The sampling universe consisted of 6,409 disability decisions completed for FY 2016 through FY 2018. The

sampling unit was one disability decision. 

Sample Selection Methodology

We used attribute estimation sampling using a presumed universe error rate of 10 percent, desired maximum 

precision of 5 percent, and desired confidence level of 90 percent, which directed a sample size of 97 disability 

decisions. 

Sample Evaluation Methodology

For each disability decisions, we obtained and reviewed the following documents in order to accomplish our 

sampling objectives:

• Initial Application (Form AA-1 and AA-1D)

• Field Office Personal Observation Record (Form G-626A)

• Activities of Daily Living Form

• Completed Medical Assessment and related Medical Evidence (Form G-250)

• Vocational Report (Form G-251)

• Completed Job Information Form (Form G-251A)

• Medical Exam Order(s)

• Medical Exam Report(s)

• Medical Evidence

• Medical Consultant Opinion (Form G-137 SUP)

• Disability Briefing Document (Form G-325B)

• Disability Decision Rationale (Form G-325-1)

• Disability Claim Decision Letter (Form RL-121F), and

• Other Disability Claim File Documentation as Necessary.
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Results of Review

Our review identified 27 disability decisions (6 total and permanent, 20 occupational, and 1 widow) that 

contained one or more indicator that the application was at higher risk for fraud or abuse to occur. Table 1 

below presents the results in detail.

Table 1. Disability Sample Results

Identified Fraud Risk Factor

Sample 

Number 

Tested

Exceptions 

Observed 

in Sample*

Condition is Difficult to Objectively Diagnose. 97 25

Inconsistencies between Medical Reports and Opinions. 97 17

Lack of an Objective Medical Finding. 97 11

Inconsistencies with Vocational Information. 97 4

Files Lacking Appropriate Medical Support 97 1

Unusual circumstances. 97 8

Total Cases Reviewed with One or More Risk Factors - 27 66

*Some cases contained more than one risk factor