Social Security’s disability payments systems are so old and dependent on handwritten records that it makes it difficult to weed out fraud, an inspector general concluded in a major report last week that said the agency doesn’t appear to be taking the issue seriously.
Handwritten records can’t be screened electronically, which means the agency can’t easily spot doctors who are approving a large number of applications — a key indicator of potential fraud, investigators said.
Even when the agency does find overpayments, it doesn’t automatically cancel them, meaning the agency ends up knowingly paying erroneous claims, the inspector general said in its investigative report, released Friday.
“The agency’s outdated and unintegrated systems and policies have not been able to prevent or easily identify widespread fraud schemes,” investigators concluded.
The Social Security Administration regularly dismisses accusations of widespread fraud, saying the rate is less than 1 percent a year. But investigators dispute that number and say the agency is turning a blind eye to its vulnerabilities.
“SSA should not downplay large-scale fraud; it must acknowledge that the threat of another massive scheme is real and that criminals will always look for the next vulnerability — poking and prodding until they find a weak spot in the system to attack.”
The disability system has come under intense scrutiny following major fraud cases in New York City, Puerto Rico and West Virginia. The West Virginia case involved a Social Security administrative law judge who, congressional investigators say, conspired with a lawyer to approve hundreds of bogus cases.
As of this spring, Social Security still hadn’t gone back to review that judge’s cases to try to revoke bogus claims, members of Congress said.
The New York City case, meanwhile, involved retired police officers and firefighters who were coached on how to file bogus claims.
If the agency had an automated analysis tool in place, it could have caught up to 90 percent of the fraudulent claims from New York, West Virginia and Puerto Rico, said Rep. Sam Johnson, the Texas Republican who requested the inspector general’s review.
“Crime pays in the disability world because Social Security has failed to stop fraud by taking such steps as modernizing its systems, its penalties or its rules on who can work in today’s modern era of medicine and technology,” Mr. Johnson said.
In a statement responding to the report, Social Security said it tries to take a zero-tolerance policy toward fraud.
“It is regrettable that people will try to take advantage of Social Security programs; however, that is the reality. Thus, all Social Security employees receive comprehensive and extensive training on fraud detection,” the agency said.
The agency also repeated the 1 percent fraud rate statistic, but the inspector general called that misleading.
Investigators said SSA is only counting the 1 percent of cases that were referred for prosecution for potential fraud in a 2006 sample. But in another 18 percent of cases from that sample, beneficiaries were overpaid or had their benefits stopped because they weren’t eligible — each of which could be evidence of fraud.
Members of Congress have identified a number of changes that could help spot fraud, including letting judges look at online social media profiles of disability applicants.
Currently, the judges are banned from doing anything other than looking at the case file.
In the New York City case, some of the bogus applicants had posted pictures of themselves flying helicopters, sport fishing or riding a Jet Ski — all activities that investigators said were inconsistent with their disability claims. Those photos would have been available to see had adjudicators been allowed to scour the web.
Social Security’s disability system is separate from the pensions program that provides payments to most seniors, which is known as the Old-Age & Survivors Insurance program.
While the Old-Age program has been paying out more than it’s been taking in from taxes over the last few years, it is considered solvent because of interest payments on its trust fund. The disability trust fund, however, is poised to go bankrupt by 2016, according to the latest estimates.
If Congress doesn’t boost the disability trust fund, disability payments will be cut across the board.
Lawmakers said that precarious financing makes it all the more important that Social Security do a better job of rooting out fraud.