Railroad Retirement Board: Total and Permanent Disability Program at Risk of Improper Payments
Published: 2014-06-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In recent years, the U.S. Department of Justice has investigated and prosecuted railroad workers who were suspected of falsely claiming over $1 billion in disability benefits, raising concerns about RRB's disability claims process. GAO was asked to evaluate the integrity of RRB's disability program. This report examines (1) whether RRB's policies and procedures for processing claims were adequate to ensure that only eligible claimants receive T&P disability benefits; and (2) the extent to which RRB's management strategy ensures that approved claims are accurate and addresses program risks. To answer these questions, GAO reviewed T&P determination policies and procedures, interviewed RRB officials in headquarters and four district offices—selected for geographic dispersion—reviewed relevant federal laws and regulations, and reviewed a nongeneralizable random sample of 10 T&P cases that were approved in fiscal year 2012 to illustrate RRB's claims process.
section_title: What GAO Found
paragraphs: The Railroad Retirement Board's (RRB) policies and procedures for processing total and permanent (T&P) disability benefit claims do not adequately ensure that claimants meet program eligibility requirements. To find a railroad worker eligible for T&P benefits, RRB makes an independent determination of disability using the same general criteria that the Social Security Administration (SSA) uses to administer its Disability Insurance (DI) program—that is, a worker must have a medically determinable physical or mental impairment that (1) has lasted (or is expected to last) at least 1 year or is expected to result in death and (2) prevents them from engaging in substantial gainful activity, defined as work activity that involves significant physical or mental activities performed for pay or profit. RRB's policy states that, to establish eligibility for financial benefits, examiners should assess medical records for evidence that a claimant is too severely disabled to maintain gainful employment, and establish that a claimant's earnings fall below a certain threshold. However, the procedure for establishing if claimants meet the income threshold relies on SSA earnings data that can be up to 1 year old. Sources of more timely earnings information, such as the Department of Health and Human Services' National Directory of New Hires and The Work Number , exist and include both non-railroad and self-employment earnings, but RRB has not sufficiently explored the possibility of using them to help establish eligibility for T&P disability benefits. In addition, RRB lacks a policy to require independent supervisory review for all claims determinations. As a result, the procedures that claims examiners use to review a claim also allow them sole discretion to decide whether to approve it. Between 2008 and 2012, RRB data show that about one-quarter to one-third of T&P claims are considered and approved without independent supervisory review. According to generally accepted standards for internal controls in the federal government, essential tasks—such as establishing and determining that benefits should be awarded—should be performed by separate individuals to reduce the risk of fraud.
RRB's strategy for post-eligibility quality assurance review is inadequate to ensure that disability determinations for approved claims are accurate and does not address program risks due to potential fraud. While RRB checks the accuracy of payment amounts, and periodically reviews compliance with its policies, it does not evaluate the accuracy of disability determinations made or regularly monitor the effectiveness of the determination process. Similarly, performance goals for the disability program focus on measures of timeliness and do not track the accuracy of determinations made. The agency also has not engaged in a comprehensive effort to continuously identify fraud within the program, even after a high-profile incident exposed fraud as a key program risk. RRB has conducted some analyses to identify patterns in claims data that may suggest potential fraud, but the work has not led to new practices in the T&P program. Finally, while RRB officials stated that the agency has developed and provided some fraud awareness training, staff in all four of the district offices that GAO interviewed did not recall receiving this training, and some stated that it was not their responsibility to be alert for potential fraud, further limiting RRB's ability to ensure it is paying benefits only to eligible claimants.
section_title: What GAO Recommends
paragraphs: GAO recommends that RRB explore options for obtaining more timely earnings information; revise its policy concerning the supervisory review of disability claims; establish a regular quality assurance review of T&P disability decisions; develop a performance goal to track decision accuracy; and develop and implement fraud awareness policies, procedures, and annual training. RRB agreed with these recommendations.

section_title: Letter
paragraphs: The U.S. Railroad Retirement Board (RRB) is responsible for  administering retirement, survivor, and disability benefits for railroad  workers and their families under the Railroad Retirement Act of 1974  (RRA).administered by the Social Security Administration (SSA), both RRB and  SSA share jurisdiction over the payment of railroad worker benefits. In  fiscal year 2012, RRB paid almost $276 million in total and permanent  (T&P) disability benefits to about 12,970 beneficiaries with physical or  mental impairments that prevent them from performing any type of work.
Although RRB administers its programs separately from those  In recent years, RRB has been the subject of Inspector General,  Government Accountability Office (GAO), and SSA audits, which have  disclosed weaknesses in RRB’s internal controls and oversight of its  benefit programs. These audits have found problems with basic RRB  operations and procedures, as well as higher-level deficiencies in RRB’s  oversight process. Additionally, between the late 1990s and 2008, as  many as 1,500 former Long Island Rail Road (LIRR) workers, with the  assistance of several medical doctors, a former union official, and a  former RRB field office manager, were suspected of falsely claiming RRB  benefits which if paid in full could total more than $1 billion—exceeding  the total amount of benefits paid to all claimants in fiscal year 2012— underscoring the need for effective program oversight. To date, 28  individuals have pled guilty and 5 were convicted in federal court. These  actions have resulted in approximately $400 million in restitution and  forfeiture. An additional 44 individuals also voluntarily disclosed their  involvement in the fraud scheme and agreed to the termination of their  RRB disability benefits. In light of these issues, we examined the  oversight and management controls of RRB’s T&P benefit program.  Specifically, this report examines:  1.  whether RRB’s policies and procedures are adequate to ensure that  only eligible claimants receive total and permanent disability benefits,  and  2.  the extent to which RRB’s management strategy ensures that  determinations are accurate and addresses program risks.
To address these objectives, we reviewed RRB’s policies and procedures  for processing railroad workers’ T&P claims using standards defined  within the RRA, and GAO’s published standards for internal control. We  interviewed RRB managers and staff at headquarters and in four district  offices— Jacksonville, Florida; Billings, Montana; Westbury, New York;  and Fort Worth, Texas—to learn how disability claims were processed. In  addition, we reviewed a nongeneralizable random sample of 10 RRB only  approved T&P cases approved in fiscal year 2012, to test for potential  vulnerabilities with the program’s management controls over cases that  were decided by RRB. Using GAO’s Standards for Internal Control in the  Federal Government and relevant federal law, we evaluated RRB’s  management strategies and tools, and the extent to which they provided  the agency with a comprehensive picture of the effectiveness of its  process and program performance. We also reviewed prior reports by  GAO, RRB management, RRB and SSA Offices of Inspector General  (OIG); and reviewed the information that RRB uses to manage its claims  process. We assessed the reliability of RRB-provided T&P and continuing  disability review (CDR) data by (1) reviewing existing information about  the data and the system that produced them, and (2) interviewing agency  officials knowledgeable about the data. We determined that the data were  sufficiently reliable for the purposes of this report. We conducted this  performance audit from February 2013 to June 2014 in accordance with  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 audit objectives.
subsections: section_title: Background
paragraphs: Under the Railroad Retirement Act of 1974, RRB makes independent  determinations of railroad workers’ claimed T&P disability using the same  general criteria that SSA uses to administer its Disability Insurance (DI)  program—that is, the worker must have a medically determinable  physical or mental impairment that (1) has lasted (or is expected to last)  at least 1 year or is expected to result in death and (2) prevents them  from engaging in substantial gainful activity, defined as work activity that  involves significant physical or mental activities performed for pay or  profit. Railroad workers determined to be eligible for benefits under the  T&P program are not expected to be able to return to the workforce. The  eligibility criteria for the T&P disability program differ from those of the  RRB’s occupational disability program.for benefits under the occupational disability program may be able return  to the workforce, but generally may not return to their original occupation.  T&P disability benefits are payable to employees with at least 10 years  (120 months) of creditable railroad service or to employees with 5 years  (60 months) of creditable railroad service after 1995. SSA staff review  about one-third of the cases that RRB has determined to be eligible for  T&P benefits for which Social Security benefits may potentially be paid. In  fiscal year 2012, RRB made 1,254 initial determinations under T&P  standards. Of these initial determinations, 977 were approved for  benefits.
Workers determined to be eligible  Claims representatives—staff located in RRB’s 53 field offices—assemble  applications, and collect individuals’ employment and medical information  needed to support the claim. Once assembled, claims representatives  send the files to RRB headquarters for processing, and program eligibility  determination. Claims examiners—staff located in RRB headquarters— review the case file documentation and periodically order additional  medical examinations to determine whether a railroad worker is eligible  for T&P benefits. RRB uses the same definition of disability and evaluates  T&P claims using the same criteria SSA uses for the DI program. For  example, RRB determines whether the claimant’s impairment is medically  disabling. If the claims examiner determines that a claimant has an  impairment that meets or equals SSA’s Listing of Impairments (which  describes medical conditions that SSA has determined are severe  enough to keep the claimant from performing any type of work), the  examiner will find that the claimant is disabled. If the claimant’s  impairment is not found medically disabling, RRB then determines  whether the claimant is able to do his or her past work, or potentially any  other work.
Together, RRB and SSA coordinate the financing of T&P disability  benefits, which totaled almost $276 million in fiscal year 2012. Doing so  involves computing the amount of Social Security payroll taxes that would  have been collected by certain Social Security Trust Funds if railroad  employment had been covered directly by Social Security, as well as the  amount of additional benefits which Social Security would have paid to  railroad retirement beneficiaries during the same fiscal year. When  benefits exceed payroll taxes, the difference, including interest and  administrative expenses, is transferred from the Social Security Trust   If taxes  Funds to the RRB’s Social Security Equivalent Benefit Account.exceed benefit reimbursements, a transfer is made in favor of the Social  Security Trust Funds. However, since 1959, such transfers have favored  RRB. In the last month of fiscal year 2012, Social Security trust funds  financed about 79 percent of total T&P disability benefits (see fig. 1).
Once the T&P disability benefit has been awarded, RRB uses continuing  disability reviews (CDRs) to determine whether beneficiaries remain  eligible for benefits. These reviews can include a determination of  whether an individual’s medical condition has improved to the point where  he or she is no longer considered disabled, is capable of performing work  (whether or not that work involves railroad employment) or whether the  individual continues to earn income below allowable program limits. In  fiscal year 2012, RRB completed 1,212 CDR activities.
The T&P disability program is linked to RRB’s occupational disability  program, in that claimants use the same application and medical  evidence to apply for benefits under both programs. Figure 2 shows  RRB’s disability T&P claims determination process, including how this  process relates to the occupational disability claims process.
In response to the LIRR fraud incident, RRB implemented a five point- plan to increase its oversight of LIRR employees who file for occupational  disability benefits or who are currently receiving occupational disability  benefits. Under the five point-plan, RRB:  1.  orders its own medical exams for all LIRR claimants to supplement  medical evidence provided,  2.  conducts continuing disability reviews for all LIRR occupational  disability annuitants age 54.5 and younger (as of October 21, 2008),  3.  exercises greater oversight of its Westbury field office in Long Island  through biweekly phone calls and quarterly visits,  4.  collects and plans to analyze data for LIRR claims to detect any  unusual patterns, such as impairments and treating physicians that  appear more frequently, and  5.  collects data on the extent to which LIRR management employees are  applying for benefits under the program.
In March 2013, RRB reported that a review of 519 occupational disability  applications for LIRR employees being handled under the plan resulted in  496 of the applications being granted—an approval rate of about 96  percent. According to the RRB OIG, the approval rate of LIRR  occupational disability applicants remains essentially unchanged from  when the LIRR fraud incident was made public and is indicative of  systemic problems within the program.
section_title: Policies and Procedures for Awarding Total and Permanent Disability Benefits Are Not Adequate to Ensure Proper Payments
subsections: section_title: Evidence Used to Establish Eligibility May Be Inadequate
paragraphs: The procedures RRB uses to verify a claimant’s work and earnings and  the severity and duration of physical or mental impairments are  inadequate to ensure that only eligible claimants qualify for T&P benefits.  Standards for Internal Control in the Federal Government states that  agencies should ensure that all transactions and other significant events  are clearly documented. This would include determinations that claimants  are entitled to benefits under the RRA. Such documentation could  facilitate tracing these actions from initiation through completion of the   Therefore, current and complete information  final claim determination.about a claimant’s work and earnings history and alleged impairment is  critical to establishing not only whether claimants are eligible for benefits,  but also the correct benefit amount to be paid.
Earnings File (MEF).contained within the MEF are for the last complete calendar year, and as  a result, the data that RRB uses to determine eligibility may lag behind  actual earnings by up to 12 months.
However, the most recent earnings information  Although RRB requires that claims examiners perform a detailed query of  reported earnings in the MEF at the time of their initial determination, our  review of case files showed that some determinations were based on  data that were as much as 10 months old. Three of the 10 case files we  reviewed also did not include sufficient information to allow us to  determine what additional steps, if any, were taken to verify that earnings  in the year the claims were filed did not exceed program limits. In one of  the case files, the claims examiner appeared to rely solely on the  claimant’s statement that there were no current earnings and in two  others, the claimant provided no information on current year earnings. In  discussing this issue, RRB officials noted that claims examiners routinely  perform an electronic query of the MEF before a claim is approved for  payment but may neglect to subsequently include a printout of the query  in the case file. Regardless of this explanation, the absence of this  documentation made it difficult to confirm that such queries were  performed. As a result, without complete documentation of all evidence  used to arrive at the initial determination, RRB lacks the ability to provide  reasonable assurance that these determinations are being made in  accordance with RRB policies and comply with relevant regulations.
Although more current information on work and earnings are available,  RRB has not explored these sources of information for T&P claims.  According to RRB, its annual match of current RRB beneficiaries against  the MEF, which helps target cases for CDRs, could help flag earnings  that may go undetected prior to an initial claim being awarded. However,  RRB has not reviewed this information to determine if the time lag for  reported earnings has resulted in the award of ineligible claims or  potential overpayments. In addition, the Department of Health and Human  Services’ National Directory of New Hires (NDNH)—established in part to  help states enforce child support orders against noncustodial parents— contains quarterly state wage information which is also more recent than  the annual wage information included in the MEF. The NDNH also  includes data from state directories of new hires, state records of  unemployment insurance benefits paid, and federal agency payroll data,  all of which can be used to help establish a more recent picture of a  claimant’s work and earnings. Access to the NDNH is limited by statute.  Although RRB does not have specific legal authority to access it, RRB  has considered obtaining access to the NDNH for the purpose of fraud  prevention in its unemployment and sickness benefit programs, but  abandoned the effort, citing cost as a key reason for not pursuing it  further. In May 2011, the agency revisited the issue in the wake of the  LIRR fraud incident. Specifically, in May 2011, RRB studied the feasibility  of using the NDNH to monitor the earnings level of individuals who are  already receiving disability benefits. RRB concluded that it would not  provide significant benefits due to costs associated with accessing the  database and redesigning its processes; the need for legislation to grant  RRB access; and potentially higher workloads, but did not quantify the  potential financial benefits. Furthermore, the study did not address  whether it would be cost-effective to use the NDNH to obtain more current  information about the earnings of people who apply for benefits. SSA,  which has legal authority to access the NDNH, currently uses the NDNH  to periodically monitor the earnings of those receiving Supplemental  Security Income benefits, and to investigate the current, or recent  alleged work activity that is not yet posted to the MEF for DI applicants  and beneficiaries. Other tools for verifying claimants’ earnings may be  available from the public sector, such as The Work Number—a  commercial, publicly-available data source.
RRB procedures provide claims staff flexibility to decide when to verify  medical evidence. Field office claims representatives are responsible for  assembling claim files and ensuring they are complete before forwarding  them to headquarters for evaluation; however, RRB does not require  them to verify that medical evidence is obtained from a reliable source.  Specifically, RRB’s field operations manual advises claims  representatives to “make no judgment as to the acceptability of a medical  source” and that, in the unlikely situation that the only medical-related  evidence is from a source considered unacceptable, a headquarters  claims examiner is to direct any further development of medical  evidence. notes that most claimants have impairments that are either continuing or  worsening, and directs them to avoid unnecessary claims development.
RRB Field Operations Manual, 1305.35.2. application to headquarters with an annotation asking that medical  examinations be ordered by the appropriate claims examiner.
Although claims representatives are a potentially valuable source of first- hand information about individuals filing T&P claims, and often represent  the agency’s sole direct contact with claimants, our interviews and review  of claims files showed that claims representatives’ observations are used  infrequently. When compiling case files, claims representatives can  include comments in designated parts of the application form, the  customer contact log, or in the form used to transmit the file to  headquarters. For example, a claimant who reports having a condition  that prevents them from walking without assistance could be observed  walking without a cane, or a claimant may present evidence of being  unable to sleep without mentioning associated behaviors such as memory  loss or difficulty concentrating that are clearly evident to the claims  reviewer. However, of the 10 cases we reviewed, 1 included remarks  from a claims representative documenting observations about the  claimant’s physical symptoms and another included observations  regarding possible self-employment that the claimant had denied. In a  third case, the transmittal notes appear to have been added after the  claim had already been transmitted. RRB’s online customer contact log,  used to track all interactions with claimants, can also be used to record  observations, including whether observed behavior contradicts medical  evidence. Although claims representatives and district managers said that  field staff may record their observations about the claimant in customer  contact logs, claims examiners told us that they review these remarks  only for the purpose of determining whether there is further evidence to  be forwarded. According to staff in the Westbury district office, a formal  process for flagging suspicious medical evidence may have allowed the  agency to flag potentially fraudulent claims from LIRR workers for  additional scrutiny by claims examiners.
section_title: RRB Policies and Procedures Do Not Ensure Initial Claims Are Properly Reviewed
paragraphs: RRB policies and procedures do not require that all initial determinations  are reviewed by an independent person to ensure that there is sufficient  evidence to support the determination. Standards for Internal Control in  the Federal Government states that agencies should ensure that key  duties and responsibilities are divided or segregated among different  people to reduce the risk of error, waste, or fraud. However, RRB’s  policies and procedures allow for discretion at the field office level  regarding how complete the case file must be before it is forwarded to  headquarters for a determination, and these files are subject to different  levels of supervisory review. Some district managers stated that they  make a point of reviewing virtually all claims developed in their offices  before they are mailed to headquarters, while others review only a  required sample of 10 percent of all claims, including those for other RRB  benefit programs, chiefly due to workload volume or competing duties.  In our review of case files, we observed that required information, such as  the year that a claimant last attended school or when the application was  signed, was missing from 4 of the 10 applications in the physical files we  reviewed. In another case, the medical evidence was over 12 months old  and new evidence was not developed, as required. Incomplete case file  information raises questions about whether all the relevant information  was properly considered in these cases.
At the determination level, RRB policy allows for some claims to be  approved without independent supervisory review. RRB policies generally  allow examiners to use their judgment to decide which cases do not  require independent review because an individual’s ailment meets or  exceeds SSA’s listing of impairments.claims examiner can self-authorize the claim. Consequently, in recent  years, about one-quarter to one-third of all T&P initial claims were  approved by the same claims examiner that reviewed the application (see  fig. 3). Such claims may be problematic if there is an error in judgment on  the part of the claims examiner.
section_title: RRB’s Management Strategy Does Not Ensure That Total and Permanent Disability Determinations Are Accurate and Does Not Adequately Address Potential Fraud
subsections: section_title: Program Oversight Has Not Ensured the Quality of Disability Determinations
paragraphs: RRB’s T&P program oversight process does not evaluate the accuracy of  disability determinations or provide managers with regular feedback about  the effectiveness of the determination process. According to RRB’s  strategic plan and agency officials, RRB’s key program objectives are to  make accurate and timely determinations and payments, and to pay  accurate benefits to eligible claimants. RRB’s Program Evaluation and  Management Services periodically conducts reviews of selected aspects  of the T&P program; however, rather than providing routine feedback  about the quality and accuracy of the determination process, these  evaluations are narrowly focused and according to RRB officials,  generally examine compliance with procedures and guidance. RRB’s  oversight is primarily focused on checking the accuracy of payment  amounts, periodically reviewing policy compliance, and assessing the  continued eligibility of already approved beneficiaries using CDRs and  death record matching. While RRB conducts annual reviews of benefit   these reviews only measure the percentage of dollars paid  accuracy,correctly and do not evaluate whether the medical evidence supported  the claimed disability or whether the process RRB used to establish  eligibility led to an accurate determination. Occasionally, the division  conducts full reviews of selected determinations, including the medical  evidence; however, such reviews have been conducted on an ad hoc  basis for internal purposes, have taken place after payments were  initiated, and have focused on certain types of determinations, such as  self-authorized claims. Standards for Internal Control in the Federal  Government states that agency management should assess and  continually monitor program performance to provide reasonable  assurance that the agency is achieving its objectives. According to RRB  officials, the CDR program is the agency’s response to major program  integrity issues identified in the T&P program—though the number of  work and medical CDRs completed has declined in recent years. For  example, in fiscal year 2009, RRB conducted 610 work and medical  CDRs; however, that number had declined to 235 in fiscal year 2012 (see  fig. 4).
According to RRB officials, the decline was, in part, a result of a  corresponding decline in the number of staff reviewers.
In contrast to RRB, SSA monitors quality in its similar DI program by  reviewing samples of disability determinations for accuracy prior to  initiating benefit payments. SSA’s Office of Quality Review, which is in a  separate division from initial claims examiners, conducts two types of  quality assurance reviews prior to initiating disability payments: (1)  ongoing quality assurance (QA) reviews, and (2) preeffectuation (PER)  reviews, which are intended to detect and correct improper disability  determinations prior to benefits being paid. For its QA review, SSA pulls a  random sample of 70 determinations and 70 denials per calendar quarter  per state. For its PER review, SSA pulls a sample of cases predicted to  be most likely to contain errors and represents 50 percent of all disability  approvals. For both reviews, QA staff evaluate the sampled cases to  ensure that the medical evidence supports the claimed disability and that  the evidence and the determination conform to SSA operating policies  and procedures. QA staff then communicate any errors and determination  reversals to the initial examiners and use the information collected,  including how and where errors occurred, to provide general feedback on  program performance.
The lack of routine up-front reviews of determination accuracy and the  quality of the determination process leaves RRB at risk of paying benefits  to ineligible individuals. One RRB official attributed RRB’s lack of such  oversight to the agency’s belief that delaying benefits to conduct accuracy  reviews before sending the payment would be detrimental to customer  service. According to OIG officials, RRB places greater focus on paying  benefits than with ensuring benefits are warranted, and noted that if RRB  strengthened its quality assurance framework prior to disability approval  and payment, fewer improper claims would be awarded. RRB does not  publicly report its approval rate for disability claims in its annual  performance and accountability report; however, as noted above, RRB  approved benefits in 78 percent of T&P cases decided in fiscal year 2012  (977 of 1,254).
RRB also lacks agency-wide performance goals that emphasize the  importance of determination accuracy. Specifically, RRB has established  performance goals that track the timeliness of disability determinations  and payments, but has not established goals that track whether the right  people are being awarded benefits over time. Federal law requires that  agencies establish outcome-related goals and objectives that relate to  key agency priorities. For the T&P program, RRB’s strategic goals focus  on the accuracy of payment calculations, the timeliness of the disability  determination process, and the timeliness of payments. However, RRB’s  performance goals do not measure or track the accuracy of disability  determinations—in other words, whether benefits are being correctly  awarded or denied. In its similar DI program, SSA has a performance  goal that tracks the accuracy rate for initial disability determinations over  time, in addition to goals that track timeliness. SSA’s accuracy rate goal  measures the percentage of determinations that contained errors as  identified during their regular quality assurance process reviews, and SSA  sets its fiscal year 2013 target accuracy rate at 97 percent. Without  similarly tracking and reporting on the accuracy of T&P disability  determinations in addition to measuring payment accuracy and  timeliness, RRB does not know whether it is paying benefits only to  eligible individuals and cannot observe trends over time.
section_title: RRB Has Not Engaged in a Comprehensive Effort to Continuously Identify and Prevent Fraud System- wide
paragraphs: RRB has not engaged in a comprehensive effort to continuously identify  and prevent potential fraud program-wide even after the high-profile LIRR  incident exposed fraud as a key program risk. Fraud that has occurred in  the occupational disability program may suggest a broader risk of fraud in  RRB’s disability programs because medical documentation in a claimant’s  case file may be used to justify either occupational or T&P benefits.  According to OIG officials, doctors often document occupational  disabilities in such a way that a claimant would also qualify for the T&P  program. In addition, RRB officials stated that, while randomly assigning  claims for examination at headquarters is intended to prevent collusion  between examiners and claims representatives in the field offices, it also  limits the ability of examiners to recognize patterns of potential fraud,  which RRB officials noted was made apparent by the LIRR incident.  Since that incident, RRB has increased its scrutiny of claims from LIRR  workers—for example, by ordering more consultative medical exams.  However, its other actions to improve fraud awareness and prevention  have been limited and narrowly focused. RRB hired an analyst to conduct  ongoing reviews of agency data to identify patterns that suggest potential  fraud, but the analyst’s work has thus far been focused on the  occupational disability program. In 2011, RRB also conducted an analysis  of 89 cases of proven fraud in its occupational and T&P disability  programs to identify common characteristics that could aid in identifying  at-risk cases earlier in the process, but RRB did not draw any  conclusions about new ways to identify potential fraud and, as a result,  did not make any system-wide changes to the determination process.  RRB officials stated that this work was not intended to lead to changes in  the process, but to identify other areas for examination. In addition, while  OIG officials said they have encouraged RRB staff to refer suspicious  claims to the OIG’s office before approving disability benefits—instead of  chasing the benefit in a subsequent fraud investigation—RRB has not  referred any suspicious claims to the OIG in the year and a half since that  guidance was provided.
RRB’s efforts to identify and prevent potential fraud have been limited and  are focused primarily on claims submitted by LIRR workers, which may  leave RRB’s T&P program vulnerable to risks of fraud. Standards for  Internal Control in the Federal Government states that agencies should  identify program risks from both internal and external sources, analyze  possible effects, and take action to manage the risks. According to RRB officials, since the LIRR incident, the agency has become highly alert to  potential abuse and is in the process of evaluating and implementing  safety measures. However, OIG officials stated that RRB’s process for  reviewing medical evidence and making disability determinations still  does not allow RRB to effectively identify potential medical fraud because  the agency does not have sufficient medical expertise on staff and the  process does not include reviews of initial determinations by independent  doctors. According to RRB officials, the 10 cases we reviewed included 8  that had been reviewed by SSA’s medical experts and 2 that had been  sent to the RRB’s medical contractors. While 8 of the case files we  reviewed contained copies of SSA’s own disability determinations that  were reviewed by SSA’s doctors, the same case files did not contain  evidence that SSA doctors had reviewed RRB’s T&P disability  determinations.
Moreover, RRB management has not fostered an environment of fraud  awareness throughout the agency. While RRB has initiated fraud  awareness training, agency participation has been incomplete and  updates and refreshers have been sporadic. The training program has  included instructor-led sessions for headquarters staff and recorded  modules for field service personnel. According to RRB, 59 of about 566  headquarters staff completed fraud awareness training in 2011, including  all members of the Disability Benefits Division, and all 53 field offices  reported viewing the recorded program. However, claims  representatives in all four of the district offices that we contacted said they  had not received any training directly related to fraud awareness. RRB  officials stated that they relied on manager certification that the training  was completed in 2011 and thought that staff we interviewed may have  forgotten about the training since it was more than 2 years ago. After  learning of our findings, RRB officials issued a directive to all network  managers to confirm by March 2014 that all field staff had completed  fraud awareness training. According to RRB, 29 claims examiners and  analysts at headquarters also participated in a two-part class that  revisited fraud topics in 2013; however, this follow-up course was not  offered to field offices. In addition, agency officials stated that RRB’s fraud  awareness training has been ad hoc and that no annual refresher courses  are required of, or have been offered to staff. In addition to the training  courses, RRB officials stated that they distributed a twice-yearly  newsletter intended to heighten fraud awareness. The newsletters  provide examples of disability fraud in the news and links to the OIG  website, but do not include messages from management or information  regarding other training resources. Despite RRB’s efforts, claims  representatives in two of the four district offices we contacted said that it  was not their job to be on the lookout for potential fraud. For example,  one claims representative said that even if something suspicious appears  on an application and a claimant has signed the application, the claims  representative has no responsibility to draw attention to the suspicious  information since it is the responsibility of headquarters’ staff to evaluate  claimants’ answers. In addition, a district manager from the same office  stated that even when faced with obvious patterns of potentially  fraudulent activity in the past, claims representatives had no mechanism  by which to flag the issue and generally have not been encouraged to do  so. Without agency-wide commitment to be alert to potential fraud,  including having the tools and training to identify suspicious claims, RRB  may not have sufficient information or context to make accurate disability  determinations and improper payments may result.
section_title: Conclusions
paragraphs: The RRB’s total and permanent disability program provides an important  safety net for individuals who are unable to work due to a disability. The  program provided $276 million in benefits to 12,970 beneficiaries in fiscal  year 2012 alone. While our review shows that RRB has taken some steps  to address potential fraud within the program, its existing policies and  processes impede its ability to prevent improper payments or to detect  and prevent fraudulent claims system-wide. In particular, RRB’s  continued reliance on outdated earnings information to identify  beneficiaries who may not be eligible for benefits, or on insufficient  medical evidence to make accurate initial determinations means that the  agency cannot ensure it is able to detect and prevent improper payments  including some that can potentially be very large. As a result, RRB has  placed itself in a “pay and chase” mode that stretches limited staff and  budgetary resources. Absent more timely sources of earnings data and  high-quality medical claim information to inform the determination  process, this problem is likely to persist. In addition, the agency is further  at risk due to its policies that allow claims examiners to unilaterally  approve selected claims without independent supervisory review.
We recognize that ensuring the integrity of the T&P disability process  presents a challenge for RRB. However, the lack of a robust quality  assurance and continuous improvement framework has hindered RRB’s  ability to identify potential program integrity risks and aspects of the  process that need to be improved. Absent comprehensive agency-wide  performance goals and metrics to track and report on the accuracy of  T&P determinations, RRB is also limited in its ability to monitor the extent  to which the agency is making correct determinations and reduce its  exposure to making improper payments. Finally, without clear policies  and procedures for detecting, preventing, and addressing potentially  fraudulent claims, RRB is unable to ensure the integrity of its process  system-wide and that known program risks have been addressed. The  weaknesses we identified in RRB’s existing determination processes and  policies require sustained management attention and a more proactive  stance by the agency. Without such a commitment to fraud awareness  and prevention, fraudulent claims may go undetected, and the agency  risks undermining public confidence in its ability to administer the  important programs under its jurisdiction.
section_title: Recommendations
paragraphs: To enhance RRB’s ability to prevent improper payments and deter fraud  in the T&P disability program, we recommend that the Railroad  Retirement Board Members direct RRB staff to:  1.  explore options to obtain more timely earnings data to ensure that  claimants are working within allowable program limits prior to being  awarded benefits;  2.  revise the agency’s policy concerning the supervisory review and  approval of determinations to ensure that all T&P cases are reviewed  by a second party;  3.  strengthen oversight of the T&P determination process by establishing  a regular quality assurance review of initial disability determinations to  assess the quality of medical evidence, determination accuracy, and  process areas in need of improvement;  4.  develop performance goals to track the accuracy of disability  5.  develop procedures to identify and address cases of potential fraud  before claims are approved, requiring annual training on these  procedures for all agency personnel, and regularly communicating  management’s commitment to these procedures and to the principle  that fraud awareness, identification, and prevention is the  responsibility of all staff.
section_title: Agency Comments and Our Evaluation
paragraphs: We obtained written comments on a draft of this report from the Railroad  Retirement Board. RRB agreed with all five of the recommendations we  made to strengthen its management controls over the T&P disability  determination process, and noted that it has already taken steps to  implement the report’s recommendations directed at improving the  agency’s ability to detect and deter fraud. RRB’s formal comments are  reproduced in appendix I. RRB also provided additional technical  comments, which have been incorporated as appropriate.
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 the Railroad Retirement  Board, relevant congressional committees, and other interested parties.  In addition, the report 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) 512-7215 or bertonid@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II.
section_title: Appendix I: Comments from the Railroad Retirement Board
section_title: Appendix II: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact:
section_title: Staff Acknowledgements
paragraphs: In addition to the contact named above, David Lehrer (Assistant Director),  Arthur T. Merriam Jr. (Analyst-in-Charge), Carl Barden, Sue Bernstein,  Jeremy Cox, Patrick Dibattista, Justin Dunleavy, Holly Dye, Alexander  Galuten, Michael Kniss, Theresa Lo, Sheila McCoy, Jean McSween,  Lorin Obler, Regina Santucci, Walter Vance made key contributions to  this report.
section_title: Related GAO Products
paragraphs: Supplemental Security Income: SSA Has Taken Steps to Prevent and  Detect Overpayments, but Additional Actions Could Be Taken to Improve  Oversight. GAO-13-109. Washington, D.C.: December 14, 2012.
Disability Insurance: SSA Can Improve Efforts to Detect, Prevent, and  Recover Overpayments. GAO-11-724. Washington, D.C.: July 27, 2011.
Use of the Railroad Retirement Board Occupational Disability Program  across the Rail Industry. GAO-10-351R. Washington, D.C.: February 4,  2010.
Railroad Retirement Board: Review of Commuter Railroad Occupational  Disability Claims Reveals Potential Program Vulnerabilities.  GAO-09-821R. Washington, D.C.: September 9, 2009.
Railroad Retirement Board Disability Determinations. GAO/HRD-84-11.  Washington, D.C.: July 20, 1984.