Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments
Published: 2010-06-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Social Security Administration (SSA) administers two of the nation's largest cash benefits programs for people with disabilities: the Social Security Disability Insurance (DI) program, which provides benefits to workers with disabilities and their family members, and the Supplemental Security Income (SSI) program, which provides income for individuals with disabilities who have limited income and resources. In 2008, SSA provided about $142 billion in financial benefits for these two programs. As part of the American Recovery and Reinvestment Act of 2009, the federal government also paid $250 to each SSA recipient, such as DI beneficiaries, SSI recipients, and old-age retirement beneficiaries. GAO was asked to (1) determine whether federal employees and commercial drivers and company owners may be improperly receiving disability benefits and (2) develop case study examples of individuals who fraudulently and/or improperly receive these benefits. To do this, GAO compared DI and SSI benefit data to civilian payroll records of certain federal agencies and carrier/driver records from the Department of Transportation (DOT) and 12 selected states. GAO also interviewed SSA disability beneficiaries and recipients.
section_title: What GAO Found
paragraphs: GAO analysis of SSA and federal salary data found that there are indications that about 1,500 federal civilian employees may have improperly received benefits. In addition, GAO obtained data from 12 selected states and found that 62,000 individuals received or had renewed commercial driver's licenses after SSA determined that the individuals met the federal requirements for full disability benefits. Under DOT regulations, these individuals' eligibility must be medically certified every 2 years. Lastly, GAO found about 7,900 individuals with registered transportation businesses who were receiving SSA disability benefits. SSA regulations allow certain recipients to work and still receive their disability benefits. Thus, each case would require an investigation to determine whether there were fraudulent payments, improper payments, or both. The GAO analyses provide an indicator of potentially improper and fraudulent activity related to SSA benefits for federal employees, commercial drivers, and registrants of commercial vehicle companies. SSA currently does not perform a federal payroll or DOT records match to identify individuals improperly receiving benefits. GAO nonrepresentatively selected and investigated 20 examples of individuals who improperly and in some cases fraudulently received disability payments. For these 20 cases, SSA did not have the processes to effectively prevent improper and/or fraudulent payments. To see video clips of three individuals working at their federal jobs, see http://www.gao.gov/products/GAO-10-444 . GAO identified several issues arising from the investigations. For example, SSA continued to improperly pay individuals who informed SSA of their employment. Using a process called Automated Earnings Reappraisal Operations (AERO), SSA examined the earnings for several individuals and automatically increased these individuals' disability payments because of raises in salary from their federal employment. SSA officials stated that they currently do not use AERO to identify individuals who have returned to work. In addition, 18 individuals received $250 stimulus payments while they were improperly receiving SSA disability payments.
section_title: What GAO Recommends
paragraphs: GAO makes two recommendations for SSA to detect and prevent fraudulent and improper payments. SSA agreed with our recommendations, but disagreed with some facts presented.

section_title: Letter
paragraphs: The Social Security Administration (SSA) administers two of the nation’s  largest cash benefit programs for people with disabilities: the Disability  Insurance (DI) program, which provides benefits to workers with  disabilities and their family members, and the Supplemental Security  Income (SSI) program, which provides income for aged, blind, or persons  with disabilities, and limited income and resources. In 2008, the DI  program provided about $104 billion in financial benefits to approximately  9 million beneficiaries, and the SSI program provided about $38 billion in  financial benefits to approximately 7.5 million recipients.
An individual is considered eligible for disability benefits under Social  Security’s regulations if he or she is unable to engage in any substantial  gainful activity (SGA) by reason of any medically determinable physical or  mental impairment that (1) can be expected to result in death or (2) has  lasted (or can be expected to last) for a continuous period of not less than  12 months. For DI, individuals are engaged in SGA if they have earnings  above $940 per month in calendar year 2008. DI also allows a 9-month  trial work period to test a beneficiary’s ability to resume employment.  After the 9-month trial work period, SSA beneficiaries are covered under  an extended period of eligibility. This is a 36-month period in which SSA  does not pay any benefit amounts (i.e., payments are suspended) if the  beneficiary has earnings above the maximum SSA SGA threshold. If  earnings are under SGA, the full benefit is paid. For SSI, every $2 of  earnings generally reduces the monthly benefit by $1 after an $85 monthly  deductible.
As part of the American Recovery and Reinvestment Act of 2009  (Recovery Act), the federal government also recently paid DI beneficiaries  and SSI recipients $250 each to stimulate the economy. Given the  magnitude of these cash benefit payments, it is important for SSA to have  effective fraud prevention controls in place to minimize fraudulent  payments, improper payments, or both.
In this context, you asked us to determine whether federal workers,  commercial drivers, and commercial vehicle company owners are  fraudulently receiving disability benefits, improperly receiving such  benefits, or both. Specifically, you asked us to (1) determine whether  federal employees and commercial vehicle drivers and company owners  may be improperly receiving disability benefits and (2) develop case study  examples of individuals who fraudulently and/or improperly receive these  benefits. We plan to conduct subsequent investigations to determine  whether other employment-related databases indicate whether individuals  are fraudulently or improperly receiving disability benefits. In addition,  because we did not systematically evaluate internal controls as part of this  investigation, we plan to review such controls at that time.
To determine the number of individuals who are employed with the  federal government and potentially receiving SSA disability benefits  improperly, we matched the civilian payroll records from the Department  of the Treasury, the U.S. Postal Service, and the Defense Finance and  Accounting Service (DFAS) from October 2006 to December 2008 to the  SSA disability files of DI beneficiaries and SSI recipients as of December  2008. The scope of our investigation did not include Department of  Defense (DOD) military personnel who were improperly receiving SSA  disability benefits. To determine the number of commercial vehicle  owners and commercial drivers who were likely receiving DI and SSI  benefits improperly, we compared the Department of Transportation’s  (DOT) Motor Carrier Management Information System file and  Commercial Driver License Information System (CDLIS) file to the SSA  disability files of DI beneficiaries and SSI recipients. Since DOT’s CDLIS  file contains both active and inactive licenses, we also obtained data from  a nonrepresentative selection of 12 states to identify individuals who  maintain active commercial driver’s licenses (CDL).
To illustrate actual cases of fraudulent payments and/or improper  payments from our overall analysis, we nonrepresentatively selected 20  cases that illustrate the types of fraudulent and improper activity we found  in SSA disability programs. The 20 cases were primarily selected based on  our analysis of SSA electronic and paper files for the higher overpayment  amounts, the types of employment, and the locations of employment.  Because this is a nonrepresentative selection, the results of these 20 case  investigations cannot be projected to other federal employees, commercial  drivers, or commercial vehicle owners who received SSA disability  payments. To develop these cases, we interviewed, as appropriate, each  beneficiary and the beneficiary’s employer. We also reviewed relevant SSA  case file documents and employer payroll records. We also videotaped  employees who had improperly received benefits working at their places  of employment. See http://www.gao.gov/products/GAO-10-444. Our case  study investigations only focused on individuals who were improperly  receiving SSA disability payments based on their employment information.  Analyzing and identifying fraud based on fraudulent medical claims was  beyond the scope of this investigation.
To determine the reliability of the SSA disability records, we interviewed  officials responsible for SSA’s databases. In addition, for the SSA disability  records and the other databases used in our investigation, we performed  electronic testing to determine the validity of specific data elements in the  databases that we used to perform our work. Based on our discussions  with agency officials and our own testing, we concluded that the data  elements used for this report were sufficiently reliable for our purposes.
We conducted our audit and investigative work from September 2008  through June 2010. We conducted our audit work in accordance with U.S.  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  objectives. We performed our investigative work in accordance with  standards prescribed by the Council of the Inspectors General on Integrity  and Efficiency.
subsections: section_title: Background
paragraphs: SSA administers two federal programs under the Social Security Act that  provide benefits to people with disabilities who are unable to work: The DI  program provides cash benefits to workers with disabilities and their  dependents based on their prior earnings. The SSI program provides  benefits to the elderly and individuals with disabilities if they meet the  statutory test of disability and have income and assets that fall below  levels set by program guidelines.
subsections: section_title: Disability Insurance
paragraphs: The DI program was established in 1956 to provide monthly cash benefits  to individuals who were unable to work because of severe long-term  disability. SSA pays disability benefits to eligible individuals under Title II  of the Social Security Act. An individual is considered eligible for disability  benefits under the Social Security Act if he or she is unable to engage in  any SGA because of a medically determinable impairment that (1) can be  expected to result in death or (2) has lasted (or can be expected to last)  for a continuous period of at least 12 months. To be eligible for benefits,  individuals with disabilities must have a specified number of recent work  credits under Social Security (specifically, working 5 out of the last 10  years or 20 quarters out of 40 quarters) at the onset of medical impairment.  An individual may also be able to qualify based on the work record of a  deceased spouse or of parent who is deceased, retired, or considered  eligible for disability benefits, meaning one disability beneficiary can  generate multiple monthly disability payments. Benefits are financed by  payroll taxes paid into the Federal Disability Insurance Trust Fund by  covered workers and their employers, based on each worker’s earnings  history. Individuals are engaged in SGA if they have earnings above $940  per month in calendar year 2008 or $980 per month in calendar year 2009.
SSA conducts work-related continuing disability reviews (CDR) to  determine if beneficiaries are working at or above the SGA level. Each  beneficiary is allowed a 9-month trial work period, during which the  beneficiary is permitted to earn more than the SGA level without affecting  his or her eligibility for benefits. The trial work period is one of several  provisions in the DI program intended to encourage beneficiaries to  resume employment. Once the trial work period is completed,  beneficiaries are generally ineligible for future DI benefits unless their  earnings fall below the SGA level during the 36-month extended period of  eligibility (EPE). Work issue CDRs are triggered by several types of events,  although most are generated by SSA’s Continuing Disability Review  Enforcement Operation. This process involves periodic computer matches  between SSA’s administrative data and Internal Revenue Service (IRS)  wage data. Work CDRs can also be triggered by other events. For example,  SSA requires beneficiaries to undergo periodic medical examinations to  assess whether they continue to be considered eligible for benefits. During  such reviews, SSA’s staff sometimes discovers evidence that a beneficiary  may be working and usually forwards the case to an SSA field office or  program service center for earnings/work development. Additional events  that may trigger a work CDR include reports from state vocational  rehabilitation agencies, reports from other federal agencies, and  anonymous tips. Finally, DI beneficiaries may voluntarily report their  earnings to SSA by visiting an SSA field office or calling the agency’s toll- free number. SSA had increased work-related CDRs from about 106,500 in  fiscal year 2003 to about 175,600 in fiscal year 2006. However, the number  of work CDRs has decreased slightly since 2006, and SSA projects that it  will conduct about 174,200 work CDRs in fiscal year 2010.
section_title: Supplemental Security Income
paragraphs: Created in 1972, the SSI program is a nationwide federal cash benefit  program administered by SSA that provides a minimum level of income to  financially needy individuals who are aged, blind, or considered eligible  for benefits because of physical or mental impairments. Payments under  the SSI program are paid under Title XVI of the Social Security Act and are  funded from the government’s General Fund, which is financed through  tax payments from the American public. Individuals are not eligible for SSI  payments for any period during which they have income or resources that  exceed the allowable amounts established under the Social Security Act.  In addition, relevant information will be verified from independent or  collateral sources to ensure that such payments are correct and are only  provided to eligible individuals. SSI recipients are required to report  events and changes of circumstances that may affect their eligibility and  payment amounts, including changes in income, resources, and living  arrangements. SSI generally reduces the monthly benefit $1 for every $2 of  monthly earnings after the first $85.
SSA has implemented measures to help identify SSI recipients with excess  income, excess resources, or both, such as periodically conducting  redeterminations to verify whether recipients are still eligible for and  receiving the correct SSI payments. A redetermination is a review of a  recipient’s nonmedical eligibility factors, such as income, resources, and  living arrangements. There are two types of redeterminations: scheduled  and unscheduled. Scheduled redeterminations are conducted periodically  depending on the likelihood of payment error. Unscheduled  redeterminations are conducted based on a report of change in a  recipient’s circumstances or if SSA otherwise learns about a change that  may affect eligibility or payment amount.
SSA has deferred a significant number of SSI redeterminations since fiscal  year 2003. Although SSA increased the number of SSI redeterminations in  fiscal year 2009 above the 2008 level, the number of reviews remains  significantly below the fiscal year 2003 level. Specifically, SSA conducted  about 719,000 SSI redeterminations in fiscal year 2009, 30 percent fewer  than it did in fiscal year 2003. However, if SSA completes the number of  SSI redeterminations it is projecting for fiscal year 2010, it will be close to  the fiscal year 2003 level.
section_title: Federal Employees, Commercial Drivers, and Commercial Vehicle Company Owners Received SSA Disability Benefits
paragraphs: Our overall analysis found thousands of federal employees, commercial  drivers, and owners of commercial vehicle companies who were receiving  Social Security disability benefits during fiscal year 2008. It is impossible  to determine from data mining alone the extent to which beneficiaries  improperly or fraudulently received disability payments. To adequately  assess an individual’s work status, a detailed evaluation of all the facts and  circumstances should be conducted. This evaluation would include  contacting the beneficiary and the beneficiary’s employer, obtaining  corroborating evidence such as payroll data and other financial records,  and evaluating the beneficiary’s daily activities. Based on this evaluation, a  determination can be made if the individual is entitled to continue to  receive SSA disability payments or have such payments suspended. As  such, our analysis provides an indicator of potentially improper or  fraudulent activity related to federal employees, commercial drivers, and  owners of commercial vehicle companies receiving SSA disability  payments. Our case studies, discussed later, confirmed some examples in  which individuals received SSA disability payments that they were not  entitled to receive.
subsections: section_title: Federal Employees Receiving SSA Disability Benefits
paragraphs: Our analysis of federal civilian salary data and SSA disability data found  that about 7,000 individuals at selected agencies had been wage-earning  employees for the federal government while receiving SSA disability  benefits during fiscal year 2008. The exact number of individuals who may  be improperly or fraudulently receiving SSA disability payments cannot be  determined without detailed case investigations. Our analysis of federal  salary data from October 2006 through December 2008 found that about  1,500 federal employees’ records indicate that they may be improperly  receiving payments. The individuals were identified using the following  criteria: (1) DI beneficiaries who received more than 12 months of federal  salary payments above the maximum SSA earnings threshold for the DI  program (e.g., $940 per month for nonblind DI beneficiaries during  calendar year 2008) after the start date of their disabilities or (2) SSI  recipients who received more than 2 months of federal salary above the  maximum SSA earnings threshold for the SSI program after the start date  of their disabilities. Based on their SSA benefit amounts, we estimate that  these approximately 1,500 federal employees received about $1.7 million  of payments monthly. Table 1 summarizes the types of SSA disability  benefits for these 1,500 federal employees who are receiving disability  benefits.
Figure 1 shows that 379 of the approximately 1,500 federal employees  were U.S. Postal Service workers and 241 were DOD civilian employees.  The remainder was other federal civilian employees.
According to SSA officials, SSA currently does not obtain payroll records  from the federal government to identify SSA disability beneficiaries or  recipients who are currently working. SSA officials stated that they have  not conducted a review to determine the feasibility of conducting such a  match. However, SSA acknowledged that these payroll records may be  helpful in more quickly identifying individuals who are working so that  work CDRs could be performed to evaluate whether those individuals  should have their disability payments suspended.
section_title: Commercial Drivers and Transportation Business Registrants Receiving SSA Disability Benefits
paragraphs: Our analysis of data from DOT on commercial drivers and from SSA on  disability beneficiaries found that about 600,000 individuals had been  issued CDLs and were receiving full Social Security disability benefits. The  actual number of SSA disability beneficiaries with active CDLs cannot be  determined for two reasons. First, states maintain the current status of  CDLs, not DOT. Second, possession of a CDL does not necessarily  indicate that the individual returned to work. Because federal regulations  require interstate commercial drivers to be examined and certified by a  licensed medical examiner to be able to physically drive a commercial  vehicle once every 2 years, we selected a nonrepresentative selection of 12  states to determine how many SSA disability beneficiaries had CDLs  issued after their disabilities were determined by SSA. Of the 600,000 CDL  holders receiving Social Security disability benefits, about 144,000 of these  individuals were from our 12 selected states. As figure 2 shows, about  62,000 of these 144,000 individuals, or about 43 percent, had CDLs that  were issued after SSA determined that the individuals met the federal  requirements for full disability benefits. As a result, we consider the  issuance of CDLs to be an indication that these individuals may no longer  may no longer  have serious medical conditions and may have returned to work.  have serious medical conditions and may have returned to work.
Our analysis of DOT data on commercial carriers found about 7,900  individuals who registered as transportation businesses and also received  SSA disability benefits. The extent to which these business registrants are  obtaining disability benefits fraudulently, improperly, or both is not known  because each case must be investigated separately for such a  determination to be reached. These companies may have gone out of  business and not reported their closure to DOT, which would explain their  registration. In addition, DI beneficiaries may have a passive interest in the  business, which would not affect their eligibility for benefits. However, we  believe that the registration of a business is an indicator that the individual  could be actively engaged in the management of the company and  gainfully employed, potentially disqualifying him or her from receiving  either DI or SSI benefits. It also suggests that the individual’s assets may  exceed the SSI maximum for eligibility.
According to SSA officials, SSA currently does not obtain CDL or  transportation businesses registrant records from DOT. SSA officials  stated that these records do not have specific income records associated  with them.
section_title: Examples of Individuals Receiving SSA Disability Benefits Fraudulently and/or Improperly
paragraphs: Based on our overall analysis above, we nonrepresentatively selected 20  examples of federal employees, commercial drivers, and registrants of  commercial vehicle companies who received disability payments  fraudulently and/or improperly. As mentioned earlier, the 20 cases were  primarily selected based on our analysis of SSA electronic and paper files  for the higher overpayment amounts, the types of employment, and the  locations of employment, and thus they cannot be projected to other  federal employees, commercial drivers, or commercial vehicle owners  who received SSA disability payments. In each case, SSA’s internal  controls did not prevent improper and fraudulent payments, and as a  result, tens of thousands of dollars of overpayments were made to  individuals for 18 of these 20 cases. In fact, in one case, we estimate that  SSA improperly paid an individual over $100,000 in disability benefits. For  10 of the 20 cases, SSA continued to pay these individuals their SSA  disability benefits through October 2009 primarily because the agency had  not yet identified their ineligibility for benefits. For the other cases, SSA  has terminated the disability benefits and has negotiated repayment  agreements for 2 of those cases.
Our investigations found that five individuals committed fraud in obtaining  SSA disability benefits because they knowingly withheld employment  information from SSA. Fraud is “a knowing misrepresentation of the truth  or concealment of a material fact to induce another to act to his or her  detriment.” Although SSA instructions provided to beneficiaries require  them to report their earnings to SSA in a timely manner to ensure that they  remain eligible for benefits, several individuals knowingly did not notify  SSA of their employment.
Our investigations also found that 11 individuals potentially committed  fraud because these individuals likely withheld required employment  information from SSA. Most of these individuals claimed that they  reported their employment information to SSA. However, according to  SSA officials, for all 11 individuals, SSA did not have any tangible  documentation in its files that these individuals actually reported their  employment status to SSA. SSA officials stated that their workers are  required to document all contacts in their files and that these purported  contacts regarding employment notifications were likely never made.
Finally, our investigations found four cases with no evidence of fraud but,  rather, of administrative error. In these situations, the beneficiaries told  our investigators that they reported their employment to SSA and SSA had  evidence in its files that such contact did occur. Thus, we concluded that  SSA made improper payments to these individuals because SSA was aware  of the employment but continued to make disability payments to those  individuals.
During our investigations of the 20 cases, we also noted the following:    SSA has an automated process, called Automated Earnings Reappraisal  Operations (AERO), that screens changes in an individual’s earnings  record and uses that information to compute changes in the monthly  disability benefit payment. However, SSA currently does not use  AERO to identify individuals who return to work and alert SSA staff to  review these individuals’ records for possible suspension of disability  payments. As a result, SSA increased the monthly disability benefits of  several individuals based on the higher wages the individuals’ current  employers reported to the agency but did not properly suspend the  payments to those individuals.
Four individuals received additional disability benefits because they  had dependent children living with them.
One individual was hired by a federal agency during the required  waiting period prior to becoming eligible for benefits. This individual  also improperly received additional government medical assistance  (i.e., Medicare) based on the SSA disability determination.
Certain individuals who claim that they are unable to immediately  repay the disability benefits they improperly received can be put on  long-term repayment plans that span years or decades. Although SSA  has the authority to charge interest and penalties, SSA did not do so on  these agreements. As a result, several individuals from our cases were  placed in long-term, interest-free repayment plans for improperly  accepting disability overpayments. For 1 of our 20 cases, SSA placed an  individual on a repayment plan to repay approximately $33,000 in  overpayments through $20 monthly installments. Based on this  agreement, it will take over 130 years to repay this debt, exceeding the  life expectancy for this individual.
For 18 of these 20 cases, the individuals also received $250 stimulus  checks as part of the Recovery Act while they were improperly receiving  SSA disability payments. According to SSA officials, most of these  individuals were entitled to and would receive the $250 stimulus checks  even if SSA had properly suspended the disability payments to them.  Specifically, SSA officials stated that beneficiaries covered under the DI  program would have been covered under EPE, which is a 36-month period  in which SSA does not pay any benefit amounts (i.e., payments are  suspended) if the beneficiary has earnings above the maximum SSA SGA  threshold. According to SSA officials, all working beneficiaries covered by  EPE received the $250 stimulus check.
The Recovery Act states that these stimulus benefit payments should be  provided to individuals who are entitled to DI benefit payments or are  eligible for SSI cash benefits. SSA stated that it did not seek a formal  legal determination as to whether individuals who had their paym suspended because of employment should receive these stimulus  payments. In total, SSA paid about $10.5 million in stimulus payments to   However,  approximately 42,000 individuals who were covered by EPE. we believe that a question exists as to whether these payments were  proper and believe that SSA should have at least sought a formal legal  opinion before making the payments.
Table 2 highlights 10 of the 20 individuals we investigated. Table 3 in  appendix I describes the other 10 individuals that we investigated. For 3 of  these 20 cases, we videotaped the individuals who had improperly  received disability benefits working at their federal government jobs. (See  http://www.gao.gov/products/GAO-10-444.) In all 20 cases, we found that  SSA had improperly paid the Social Security disability benefits.
section_title: Conclusions
paragraphs: While it is important to encourage individuals with disabilities to return to  work, SSA must also ensure that it has an effective system in place to  maintain its program integrity. SSA has a stewardship responsibility to  identify those individuals who have returned to work and are no longer  eligible for benefits. Because of limited resources, SSA must effectively  allocate its resources to identify such individuals. Federal payroll records  and the AERO process are tools that SSA could utilize to timely initiate  reviews and minimize improper and fraudulent payments.
section_title: Recommendations for Executive Action
paragraphs: To enhance SSA’s ability to detect and prevent fraudulent and improper  payments in its disability programs, we recommend that the Commissioner  of Social Security take the following two actions to improve the agency’s  processes:    Evaluate the feasibility (including consideration of any costs and  operational and system modifications) of incorporating the AERO  process to identify individuals who have returned to work.
Evaluate the feasibility of periodically matching SSA disability  beneficiaries and recipients to federal payroll data. Such matches  would provide SSA with more timely data to help SSA systematically  and more effectively identify federal employees who are likely to incur  overpayments.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to SSA and DOT for comment. DOT  stated that it did not have comments on the report. SSA’s comments, along  with our responses, are reprinted in appendix IV, and its technical  comments were incorporated throughout the report as appropriate.
SSA agreed with all our recommendations. SSA stated that it will evaluate  the feasibility of using the AERO process. In addition, SSA stated that it  will review the efficacy of matching federal salary payment records with  SSA disability files of DI beneficiaries and SSI recipients. We encourage  SSA to follow through on these recommendations. SSA also expressed  concern that the overall message of our report is misleading and in some  cases factually incorrect. We believe our report accurately describes the  cases and our methodology.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to interested congressional  committees, the Commissioner of Social Security, and the Secretary of  Transportation. The report also will be available at no charge on the GAO  Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-6722 or kutzg@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report.
section_title: Appendix I: Examples of Individuals Receiving SSA Disability Benefits Fraudulently and/or Improperly
paragraphs: This appendix presents summary information on fraudulent and improper  payments associated with 10 of our 20 case studies. Table 3 shows the  remaining case studies that we audited and investigated. As with the 10  cases discussed in the body of this report, the Social Security  Administration (SSA) did not prevent improper payment of Social Security  disability benefits to these individuals. We referred all 20 cases to SSA  management for collection action. The SSA Office of Inspector General  has been informed of the 5 cases that we believe committed fraud. We also  referred the case involving the SSA employee to the SSA Office of  Inspector General for investigation.
section_title: Appendix II: Attributes of Selected Cases of SSA Disability Beneficiaries and Recipients Who Fraudulently and/or Improperly Received Benefits While Working
paragraphs: Our investigations detailed examples of 20 federal employees, commercial  drivers, and owners of commercial vehicle companies who fraudulently  and/or improperly received disability payments. For the 20 cases, our  investigations found the following:    For six cases, SSA eventually identified the disability overpayment and  sent notification letters to the individuals indicating that they would  have to repay the debts.
For 10 cases, the individuals were continuing to receive disability  benefits as of October 2009.
For 14 cases, the individuals claimed to have notified SSA that they had  returned to work or that it should terminate the disability benefits  because they were no longer eligible because of employment income.  However, for only 4 of these 14 cases did SSA have indications in its  records that the individuals notified SSA of the return to work or  requested termination of disability benefits.
For 10 cases, SSA improperly increased the benefit amounts of the  disability payments because the individuals had increases in the  reported wages on which the disability benefit payments are based.
For 18 cases, SSA sent the SSA beneficiaries and recipients the $250  economic stimulus check.
For five cases, we believe that there is sufficient evidence that the  beneficiaries committed fraud to obtain or continue receiving Social  Security disability payments. For each of these five cases, we  concluded that the individual withheld employment information from  SSA to obtain or continue receiving disability payments.
Table 4 provides these attributes for each selected case that we  investigated.
section_title: Appendix III: Debt Owed to SSA from Overpayment of DI and SSI Benefits Is Mounting
paragraphs: SSA’s failure to promptly prevent improper disability payments for the DI  and SSI programs has, in part, contributed to overpayments in these  programs. The overpayment of DI and SSI benefits may come from  beneficiaries who had their benefits suspended or terminated following a  work CDR. Overpayments may also be caused by other types of events,  including receipt of workers compensation benefits, being in prison while  receiving benefits, and medical improvement to the point where the  individual no longer has disabilities. As shown in figure 3, in fiscal year  2004 the total net amount owed to SSA for DI and SSI overpayments was  $7.6 billion. This debt has significantly increased through fiscal year 2008,  as individuals owed over $10.7 billion in overpayments of DI and SSI  benefits.
section_title: Appendix IV: Comments from the Social Security Administration
paragraphs: The following are GAO’s comments on the Social Security  Administration’s letter dated May 28, 2010.
subsections: section_title: GAO Comments
paragraphs: 1.  In the report, we identify those cases where SSA has sent an  overpayment notification letter to the individual. However, we do not  believe that identifying fraudulent or improper payments after dollars  have been disbursed is an effective internal control. Our work across  the government has shown that once fraudulent or improper payments  are made, the government is likely to only recover pennies on the  dollar. Preventive controls are the most efficient and effective. 2.  In the report, we state that to adequately assess an individual’s work  status, a detailed evaluation of all the facts and circumstances should  be conducted. This evaluation would include contacting the  beneficiary and the beneficiary’s employer, obtaining corroborating  evidence such as payroll data and other financial records, and  evaluating the beneficiary’s daily activities. Based on this evaluation, a  determination can be made on whether the individual is entitled to  continue to receive SSA disability payments or whether such payments  should be suspended. As such, our analysis provides an indicator of  potentially improper or fraudulent activity related to federal  employees, commercial drivers, and owners of commercial vehicle  companies receiving SSA disability payments. 3.  Our report described two cases of transportation drivers and owners  who fraudulently and/or improperly received SSA disability payments.  We do not believe that a change to the title is necessary. 4.  We believe that SSA should perform the match with more current  federal payroll records to determine the efficacy of matching federal  salary payment records with SSA disability files of DI beneficiaries and  SSI recipients. 5.  We revised the report to address SSA’s specific comment.  6.  IRS provides summary earnings data for a calendar year. We have  previously reported that the IRS earnings data used by SSA in its  enforcement operations are typically 12 to 18 months old when SSA  first receives them, thus making some overpayments inevitable. The  federal payroll data provide detailed earnings information for each pay  period (e.g., all 26 pay periods for a fiscal year). We believe that these  data are more useful in the determination of whether continuing  disability reviews and redeterminations should be conducted and  could be more current. 7.  We believe the footnote is appropriate for this report.  8.  As we stated in the report, SSA has the authority to charge interest and  penalties, but SSA did not do so on any of its agreements with  beneficiaries in our case studies. 9.  The American Recovery and Reinvestment Act of 2009 states that  these stimulus benefit payments should be provided to individuals who  are entitled to DI benefit payments or are eligible for SSI cash benefits.  SSA did not seek a formal legal determination as to whether  individuals who had their payments suspended because of  employment—and were thus not receiving DI or SSI payments during  November and December of 2008 or January of 2009—should receive  these stimulus payments. We continue to believe that a question exists  as to whether these payments were proper and believe that SSA should  have at least sought a legal opinion before making the payments. 10. IRS may well collect some of these stimulus benefits payments  through a reduction of the “Making Work Pay” tax credit. We simply  stated the magnitude of the stimulus payments made to those  individuals covered under the extended period of eligibility. However,  we believe that relying on the IRS offset is not an effective internal  control activity. 11. Our estimated overpayment amount was based on our review of  detailed payroll records and discussion with the SSA beneficiary. We  believe that our estimated overpayment is accurate. 12. Our estimated overpayment amount was based on our review of  detailed payroll records and discussion with the SSA beneficiary.  Detailed payroll records showed that the beneficiary’s earnings were  never below the substantial gainful activity threshold. As such, our  estimated overpayment is about $25,000.