[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                    SOCIAL SECURITY DISABILITY FRAUD


                       CONSPIRACY IN PUERTO RICO

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 19, 2013

                               __________

                           Serial No. 113-SS8

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
         
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                      COMMITTEE ON WAYS AND MEANS

                     DAVE CAMP, Michigan, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas                   CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin                 JIM McDERMOTT, Washington
DEVIN NUNES, California              JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington        XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana  LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois            MIKE THOMPSON, California
JIM GERLACH, Pennsylvania            JOHN B. LARSON, Connecticut
TOM PRICE, Georgia                   EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida               RON KIND, Wisconsin
ADRIAN SMITH, Nebraska               BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas                 ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota              DANNY DAVIS, Illinois
KENNY MARCHANT, Texas                LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio

        Jennifer M. Safavian, Staff Director and General Counsel

                  Janice Mays, Minority Chief Counsel

                                 ______

                    SUBCOMMITTEE ON SOCIAL SECURITY

                     SAM JOHNSON., Texas, Chairman

PATRICK J. TIBERI, Ohio              XAVIER BECERRA, California
TIM GRIFFIN, Arkansas                LLOYD DOGGETT, Texas
JIM RENACCI, Ohio                    MIKE THOMPSON, California
AARON SCHOCK, Illinois               ALLYSON SCHWARTZ, Pennsylvania
MIKE KELLY, Pennsylvania
KEVIN BRADY, Texas






                            C O N T E N T S

                               __________
                                                                   Page

Advisory of September 19, 2013 announcing the hearing............     2

                               WITNESSES

The Honorable Patrick P. O'Carroll Jr., Inspector General, 
  accompanied by the Honorable Paul C. Lillios, Associate Chief 
  Administrative Law Judge, Social Security Administration.......     8
Beatrice M. Disman, Regional Commissioner, New York Region, 
  Social Security Administration, New York, New York.............    17

                        QUESTIONS FOR THE RECORD

The Honorable Sam Johnson........................................    48






                    SOCIAL SECURITY DISABILITY FRAUD



                       CONSPIRACY IN PUERTO RICO

                              ----------                              


                      THURSDAY, SEPTEMBER 19, 2013

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:30 p.m., in 
Room B-318, Rayburn House Office Building, the Honorable Sam 
Johnson [chairman of the subcommittee] presiding.
    [The advisory of the hearing follows:]
    

                               HEARING ADVISORY

                   FROM THE COMMITTEE ON WAYS AND MEANS

Chairman Johnson Announces Hearing on Social Security Disability Fraud 
                       Conspiracy in Puerto Rico

Washington, Sep 2013
    U.S. Congressman Sam Johnson (R-TX), Chairman of the House 
Committee on Ways and Means Subcommittee on Social Security, today 
announced a hearing on the Social Security Disability Insurance fraud 
conspiracy in Puerto Rico. The hearing will take place on Thursday, 
September 19, 2013, in B-318 Rayburn House Office Building beginning at 
2:30 p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Subcommittee and 
for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    On August 21, 2013, the United States Attorney for the District of 
Puerto Rico announced that a Federal Grand Jury in the District of 
Puerto Rico issued over 70 indictments charging three doctors, one non-
attorney representative (a former Social Security employee), and 71 
Social Security claimants with fraud in the Social Security Disability 
Insurance (SSDI) program in Puerto Rico.
    Under the alleged scheme, the non-attorney representative would 
help a claimant file an SSDI application and, with the assistance of a 
conspiring doctor, provide fraudulent medical evidence that would 
result in benefits for individuals who did not, in fact, meet the legal 
eligibility standard for disability benefits. The representative would 
collect a fee from the claimant of 25 percent of any past-due benefits 
owed (up to a limit of $6,000). The doctors involved would be paid $150 
to $500 by the claimant for their submission of false reports to the 
SSA.
    The multi-year investigation began when disability medical 
consultants in the Puerto Rico Disability Determination Services 
noticed and reported a suspicious pattern of benefit claims involving 
nearly identical medical evidence. As a result, the SSA and the SSA 
Office of Inspector General (OIG) conducted an extensive analysis of 
medical source documentation in SSDI files. The SSA OIG was joined in 
the investigation by the Federal Bureau of Investigation San Juan 
Office and the Puerto Rico Police Department, and included numerous 
interviews and surveillances.
    As a result of the federal indictments, the SSA was able to 
immediately suspend benefits to the indicted beneficiaries and has 
initiated internal reviews of over 6,000 files of beneficiaries that 
included evidence provided by one or more of the indicted physicians or 
the indicted representative. During the internal review, should the 
remaining evidence not substantiate the disability finding, benefits 
will be suspended and the beneficiary must submit evidence to 
substantiate the disability. Should a beneficiary be unable to 
substantiate their disability without additional evidence, his or her 
benefits will be terminated after proper notice and they will be 
required to repay the Social Security Trust Fund for the benefits they 
improperly received.
    The responsibility for making initial disability determinations is 
shared by the States and the SSA. All 50 States, plus the District of 
Columbia and Puerto Rico, maintain fully federally-funded agencies, 
known as Disability Determination Services, which decide initial and 
continuing eligibility for benefits under rules established by the SSA. 
According to the SSA OIG, approximately 185,000 disabled workers in 
Puerto Rico and their eligible dependents receive about $2.4 million in 
SSDI benefits each year.
    According to the Congressional Budget Office, 10.9 million 
beneficiaries received $135 billion in SSDI benefits in fiscal year 
2012. According to the 2013 Social Security Trustees report, SSDI 
program revenues will only be able to finance 80 percent of benefits 
beginning in 2016, unless Congress acts.
    In announcing the hearing, Social Security Subcommittee Chairman 
Sam Johnson (R-TX) said, ``The widespread disability fraud uncovered in 
Puerto Rico raises serious questions about Social Security's management 
of the disability program. At a time when the Disability Insurance 
program will be unable to pay full benefits beginning in 2016, it is 
deeply troubling that Social Security is doling out millions of dollars 
in fraudulent taxpayer-funded payments. Americans deserve answers. On 
behalf of the American taxpayer, I am committed to getting the answers 
and rooting out waste, fraud and abuse so that we can help keep the 
program strong for those who truly need it.''
      

FOCUS OF THE HEARING:

      
    The hearing will examine the investigation in Puerto Rico resulting 
in the arrest and indictment of individuals for Social Security 
disability fraud, Social Security's oversight of the SSDI program in 
Puerto Rico, and Social Security's overall efforts to detect, prevent 
and prosecute fraud.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word or 
WordPerfect document, in compliance with the formatting requirements 
listed below, by the close of business on Thursday, October 3, 2013. 
Finally, please note that due to the change in House mail policy, the 
U.S. Capitol Police will refuse sealed-package deliveries to all House 
Office Buildings. For questions, or if you encounter technical 
problems, please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days' notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

                                 

    Chairman JOHNSON. The hearing will come to order.
    This is the first subcommittee hearing since the passing of 
my friend and former subcommittee chairman Clay Shaw. We all 
remember him. Clay was one of the best, a great American, a 
diplomat, and a joy to work with regardless of your politics. I 
sat right next to Clay as he led the subcommittee during the 
106th, 107th and 108th Congresses.
    Through his leadership the committee achieved a number of 
legislative accomplishments for America and its people. Chief 
among them were the Seniors Freedom to Work Act of 1999, which 
repealed the retirement earnings penalty for individuals who 
attained their full retirement age; the Ticket to Work and Work 
Incentives Improvement Act of 1999 to help those receiving 
disability benefits to return to work; and the Social Security 
Protection Act of 2003 to protect vulnerable Social Security 
recipients from representative payees who misused benefits and 
other program protections, including withholding benefits from 
fugitive felons and parole violators. I guess that is similar 
to what we are going to talk about today.
    Chairman Shaw believed in Social Security and worked 
tirelessly to secure its future by authoring legislation to 
keep the Social Security promise, protect Social Security 
finances, and enhance Social Security benefits for women.
    Clay's instincts were to be bipartisan if possible and a 
gentleman legislator always. He joined efforts with then-Ways 
and Means Chairman Bill Archer in developing and promoting 
legislation to save Social Security for 75 years and beyond, 
the Social Security Guarantee Plus Act, a bill his Florida 
constituents and even some Democrats found thoughtful and 
possible. He was one of the earliest Members of Congress to 
lead the fight to protect Social Security numbers.
    Our hearts go out to Clay's beloved wife Emilee and his 
family, and I ask that we bow our heads for a moment of silence 
to honor our former Chairman.
    [Moment of silence.]
    Chairman JOHNSON. Thank you. I appreciate that.
    You knew him, too.
    Mr. BECERRA. I did, Mr. Chairman. If I may say a word?
    Chairman JOHNSON. You may.
    Mr. BECERRA. Mr. Chairman, if I may associate myself with 
every single word that you just uttered with regard to our 
colleague and friend Mr. Shaw. There are people who understand 
this institution and who work hard to try to make it work. Mr. 
Shaw was one of those individuals. He would reach out to his 
friends, Republican and Democrat alike.
    It is tough when you hear about a colleague who passes on 
because you think that you never quite grow that old, and you 
still remember those memories, and it is almost as if it was 
yesterday that Clay was here with us. So I join you in 
remembering a dear colleague and friend, and I hope that we are 
able to see this House continue to make progress on behalf of 
people like Clay Shaw, who gave quite a bit of his life and his 
hard work to make it work.
    So with that, Mr. Chairman, I thank you for yielding some 
time.
    Chairman JOHNSON. Thank you. I appreciate your comments.
    We now turn our hearing to Social Security disability fraud 
conspiracy in Puerto Rico. On August 21st, the United States 
Attorney for the District of Puerto Rico announced the arrest 
and indictment of 75 individuals for Social Security fraud. Let 
me repeat that number. Seventy-five arrested for allegedly 
seeking to defraud Social Security. So we are not talking about 
a few bad apples here. Those arrested include a claimant 
representative who was a former Social Security employee, three 
physicians, and 71 beneficiaries. My understanding is that the 
investigation is ongoing, and there could be additional 
arrests.
    Under the alleged scheme, the former Social Security worker 
would help a claimant file an application for disability 
benefits and, with the assistance of a conspiring doctor, 
provide fraudulent medical evidence that would result in 
taxpayer-funded benefits that should never have been paid in 
the first place. The representative would collect a fee from 
the claimant of 25 percent of any past-due benefits owed up to 
a cap of $6,000. The doctors would receive a kickback of $150 
to $500 by the claimant for their submission of false reports 
to Social Security.
    The investigation began back in November 2009 after medical 
consultants in the Puerto Rico Disability Determination 
Services reported a suspicious pattern of benefit claims 
involving nearly identical medical evidence. Social Security 
and the Office of the Inspector General then began an extensive 
review of the medical information. Later the FBI and the Puerto 
Rico Police Department joined the investigation.
    Social Security has now suspended benefits claimed by the 
indicted beneficiaries. It has also begun reviewing the files 
of over 6,000 beneficiaries that included medical evidence from 
the indicted physicians or representative. Unless beneficiaries 
are able to prove their disability with nontainted medical 
information, they will be required to pay back to Social 
Security the benefits they should not have received in the 
first place.
    So the bottom line is that at a time when the Disability 
Insurance program will be unable to pay full benefits beginning 
in 2016, Social Security has been doling out millions of 
dollars in fraudulent taxpayer-funded payments. This is 
unacceptable. And on the heels of the Puerto Rico case, GAO 
reported last week that Social Security paid $1.3 billion in 
overpayments to disability beneficiaries. Moreover, the debt 
owed to the Disability Insurance Trust Fund from those who need 
to pay back overpayments is now $6 billion. In this particular 
case, the problem occurred before beneficiaries even got their 
first check, so they may have been awarded benefits when they 
shouldn't have, all because Social Security's enforcement 
operations doesn't generate earnings alerts in all cases when 
earnings occur during the 5-month waiting period. In other 
words, in my view, Social Security wasn't doing its job.
    The Puerto Rico case along with GAO's report raises serious 
and troubling questions about Social Security's management of 
the disability program. The American taxpayer is right to 
wonder whether Social Security is fully committed to rooting 
out waste, fraud and abuse.
    Let me be clear that Social Security should not try to 
downplay the Puerto Rico case and the GAO's report by spinning 
the numbers to try to minimize the loss of taxpayer dollars. To 
do so would be an insult to taxpayers. Waste, fraud and abuse 
in the Disability Insurance program cheat honest, hard-working 
American taxpayers and those who truly need benefits. The best 
way to protect the disability program is to prevent waste, 
fraud and abuse before it occurs.
    The American people want, need and deserve answers. Social 
Security's leadership needs to get serious about better 
protecting this program paid for by America's hard-working wage 
earners.
    Chairman JOHNSON. I now will recognize our ranking member 
Mr. Becerra for his opening statement.
    Mr. BECERRA. Mr. Chairman, thank you very much.
    American workers pay for Social Security, and we owe it to 
them to protect their investments by preventing fraud and 
stopping it where we can. Every month over 160 million American 
workers contribute part of their hard-earned paychecks to 
Social Security to prepare for retirement and to protect 
themselves and their families.
    To put it in context, over Social Security's lifetime 
American workers have contributed $14.5 trillion to Social 
Security. During those 78 years, Social Security has 
safeguarded those contributions, it has invested surpluses in 
U.S. Treasury bonds, and it has paid American families their 
benefits on time and in full for 78 years. And in those 78 
years today, there are some $2.5 trillion in reserve that has 
yet to be used to help cover the future benefits of Americans 
who paid into this system. We owe it to Americans, therefore, 
to do everything we can to protect their contributions from 
those looking to defraud Social Security, while still paying 
those honest workers their earned benefits when they need them.
    SSA does a good job of fighting fraud, as evidenced by this 
successful investigation that we will hear about more. Most 
Social Security fraud is reported or prevented by Social 
Security Administration employees, as was this conspiracy. It 
was frontline employees at the Puerto Rico office who first 
detected this conspiracy as part of their work reviewing 
benefit applications. They brought it to the attention of SSA's 
regional leadership, and a referral was then made to the 
inspector general for investigation and potential prosecution.
    But SSA didn't stop there. They continued to track the 
suspicious cases, subjecting them to additional scrutiny. And 
in light of the deepening investigation and the emergence of a 
conspiracy, SSA set up a process to quickly rereview all 
suspicious cases as soon as the Attorney General filed 
indictments. SSA has already suspended benefits to the 71 
individual beneficiaries who were indicted on August 16th.
    The vast majority of disability insurance recipients are 
honest. They are hard-working Americans who became too disabled 
to work, and the disability insurance program has grown in 
recent years because of demographics and the aging population, 
not because of fraud. As Social Security's chief actuary has 
testified, the disability program has grown primarily because 
there is a larger population, the baby boomers are hitting 
their most disability-prone years, and the increase in the 
number of women in the workforce. These are factors that have 
nothing to do with fraud and that the actuaries have actually 
known about and projected for many years.
    Finally, I would note for the record that fraud is not a 
driver of the growth of the DI program in and of itself. Last 
year, in 2012, SSA employees made over 26,000 fraud referrals 
to the inspector general, including disability fraud. Of these 
the inspector general found that 5,300 cases merited 
investigation and, of those, 236 rose to the level of criminal 
prosecution; 236 out of 26,000 fraud referrals. That is less 
than 1 percent. And that doesn't even say that there was a 
conviction. That was a referral for a criminal prosecution.
    By the way, of those 236 cases that rose to the level of 
criminal prosecution, which represents 236 of the 26,000 fraud 
referrals, that is out of the 3.2 million applications that 
were received by the Social Security Administration for 
disability benefits out of the 57 million people who are in the 
Social Security beneficiary population altogether.
    So I think it is very clear that SSA is working very hard 
to root out fraud, because no one wants to see the hard-earned 
benefits of any American used for other than the benefits that 
have been earned.
    A highly trained, well-staffed SSA is our best defense 
against fraud. When SSA's disability examiners noticed this 
problem in Puerto Rico and reported it to the IG, SSA had more 
staff available to it than they have today. So we have to take 
a look. In 2012 reports from Social Security, employees were 
responsible for nearly two-thirds of the fraud investigations 
opened by the inspector general. They are not coming from the 
outside, folks. They are not coming from regular people. They 
are coming from the SSA employees themselves who are detecting 
this fraud.
    Unfortunately, SSA's budget has been cut by about $1 
billion a year since 2011, which has had real consequences for 
taxpayers, beneficiaries and the workers who are counting on 
Social Security in the future. It pains me to say, but this 
House has blocked $421 million that the Budget Control Act 
provided for SSA to fight waste, fraud and abuse, costing 
taxpayers billions of dollars. SSA has lost nearly 11,000 
highly trained employees to budget cuts over the past 2 years. 
As Ms. Disman says in her testimony, that leaves far fewer 
people to ``stand watch over Social Security'' and leaves them 
with far less time to document what they see and to report it 
to the inspector general.
    I am pleased that we have had a chance to come together for 
this hearing to see how SSA combats fraud, to learn more about 
what happened in this particular conspiracy and whether 
additional action is needed. At the same time we must keep in 
mind that in the overwhelming majority of cases, there is no 
fraud involved.
    SSA does a good job overall of detecting and preventing 
fraud, and the inspector general aggressively investigates 
reports of potential fraud. But without adequate resources, SSA 
cannot adequately police fraud while ensuring that individuals 
who have earned their benefits get paid on time and in the 
right amount.
    So we are very much interested in your testimony today, and 
with that, Mr. Chairman, I yield back my time.
    Chairman JOHNSON. I think as a matter of record it took too 
long to get into this. 2009 until today is a long time.
    As is customary, any Member is welcome to submit a 
statement for the hearing record.
    Chairman JOHNSON. Before we move on to our testimony today, 
I want to remind our witnesses to please limit your oral 
statements to 5 minutes. However, without objection, all the 
written testimony will be made part of the hearing record.
    We have one witness panel today seated at the table, the 
Honorable Patrick O'Carroll, Inspector General, accompanied by 
the Honorable Paul Lillios, Associate Chief Administrative Law 
Judge, Social Security Administration; and Beatrice Disman, 
Regional Commissioner, New York Region, Social Security. You 
are the one that has responsibility for Puerto Rico, I guess.
    Mr. O'Carroll, welcome and thanks for being here. Please go 
ahead with your testimony.

STATEMENT OF THE HONORABLE PATRICK P. O'CARROLL, JR., INSPECTOR 
    GENERAL, ACCOMPANIED BY THE HONORABLE PAUL C. LILLIOS, 
   ASSOCIATE CHIEF ADMINISTRATIVE LAW JUDGE, SOCIAL SECURITY 
                         ADMINISTRATION

    Mr. O'CARROLL. Good afternoon, Chairman Johnson, Ranking 
Member Becerra, and Members of the Subcommittee. It is a 
pleasure to be here today to discuss our ongoing criminal 
investigation in Puerto Rico.
    About 4 weeks ago in the early morning hours, 19 OIG 
special agents with 125 FBI special agents and about 150 Puerto 
Rico Police Department officers successfully executed 69 arrest 
warrants within a few hours. The arrests were meticulously 
planned and accomplished without incident.
    The arrestees were taken to the Morales Basketball Coliseum 
in Guaynabo where the United States Marshals Service was 
standing by to process and fingerprint them. They were able to 
appear immediately before an on-site United States magistrate. 
In addition to the 69 arrested, 6 additional suspects were 
arrested or surrendered to authorities in the days that 
followed.
    These arrests were based on 75 indictments returned by a 
grand jury in Puerto Rico. Our investigation had revealed that 
these 75 individuals took part in a massive scheme to defraud 
Social Security of millions of dollars in disability benefits. 
Seventy-one of the arrestees were disability beneficiaries, 
three were medical providers, and one was a nonattorney 
claimant representative named Samuel Torres Crespo, who was a 
former SSA employee.
    The scheme was simple enough. Word of mouth was all it 
took. Anyone looking to obtain disability benefits 
fraudulently, either because they had recently been laid off or 
because they saw what they thought was an easy mark, would go 
see Torres Crespo. He would, for 25 percent of the claimant's 
accrued benefits, put together an application and send the 
claimants to one of three of the indicted doctors. The doctor 
would charge the claimant a fee between of $125 and $500 to 
produce a false medical report, and then the fraudulent claim 
would go forward.
    Over time, observant disability examiners noticed that 
nearly identical medical reports were coming across their 
desks, and the OIG was notified. Over a period of months, from 
late 2009 to 2010, we received a series of such allegations. 
Each was carefully examined, and many required interviews or 
video surveillance before a decision could be made whether to 
conduct a criminal investigation. Some allegations proved 
unfounded, or, more often, the fraud could not be fully 
established.
    Finally, however, we were able to gain a foothold in early 
2011 thanks to an exhaustive review of records, tireless work 
by SSA analysts and our agents, and the timely cooperation of 
the FBI. Working with the U.S. Attorney for the District of 
Puerto Rico, the FBI and the Puerto Rico Police Department, we 
conducted scores of interviews, covert surveillances and 
undercover visits to doctors' offices. We also executed search 
warrants and used other investigative techniques that slowly 
revealed the breadth and extent of this complex scheme.
    I cannot say enough about the level of cooperation amongst 
these agencies. This was truly government and law enforcement 
at its finest.
    The judicial process in this case will take time to unfold. 
Some of these people will likely go to jail. Many will be 
required to repay the money they stole, and the government has 
already seized about $1.7 million in assets from Torres Crespo.
    Meanwhile, this investigation continues, and other 
investigations are spinning off from it. Calls to the toll-free 
hotline number that we established are generating new leads. 
That number, 1-855-777-0821, is being contacted frequently.
    Our work in Puerto Rico is far from finished, and Puerto 
Rico is by no means the only place where our office is 
investigating doctors, lawyers, representatives, interpreters 
and others who facilitate disability fraud in large numbers. 
This type of fraud has long been a priority of our office. It 
was one of the inspirations for the CDI program, with which 
this subcommittee is very familiar, and the Puerto Rico CDI 
unit is now up and running. It was also the motivation behind 
the recent creation of the disability fraud pilot. We 
specifically designed this program to detect and investigate 
facilitator fraud such as that which we found in Puerto Rico.
    Judge Lillios, who is here with me today, will work with 
one of our deputy assistant inspector generals for 
investigation and audit and investigative staff to mine data, 
review past allegations and beat the bushes for leads. They 
will also be looking for professionals who have abused the 
government's trust as paid participants in the disability 
process. Be they doctors, lawyers or representatives, they 
should know that we are looking long and hard at similar 
schemes.
    Of course, we will continue to advise this subcommittee as 
this work continues, and as always I appreciate your unflagging 
support, and I will be happy to answer any questions.
    Chairman JOHNSON. Thank you, sir. I appreciate that 
testimony.
    [The prepared statement of Mr. O'Carroll follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]           
    
   
    Chairman JOHNSON. Ms. Disman, welcome. Please proceed.

 STATEMENT OF BEATRICE DISMAN, REGIONAL COMMISSIONER, NEW YORK 
             REGION, SOCIAL SECURITY ADMINISTRATION

    Ms. DISMAN. Chairman Johnson, Ranking Member Becerra, 
Members of the Subcommittee, thank you for this opportunity to 
discuss Social Security's role in uncovering the complex 
disability fraud conspiracy in Puerto Rico. My name is Bea 
Disman. I am Social Security's Regional Commissioner for the 
New York Region. I have direct authority over the agency's 
operations in New York, New Jersey, Puerto Rico and the U.S. 
Virgin Islands. I began my career at Social Security as a field 
office employee in 1965. While much has changed since then, the 
agency's commitment to service and stewardship has never 
wavered.
    Like you, I am outraged whenever anyone attempts to defraud 
the government. I am especially chagrined that a former Social 
Security employee acting as a nonattorney claimant 
representative was an integral part of the conspiracy uncovered 
in Puerto Rico. This individual betrayed his former colleagues 
by violating the public trust, and, frankly, I am incensed by 
his actions.
    We applaud the recent news that law enforcement officials 
indicted the former employee, several physicians, and 
approximately 70 disability claimants for allegedly defrauding 
the disability program. While the Federal grand jury 
investigation continues, evidence suggests that the involved 
parties conspired to submit fabricated or exaggerated medical 
evidence in order to fraudulently obtain benefits. This 
criminal behavior is unconscionable, and we do not tolerate it.
    In this case it was the diligent employees of the Puerto 
Rico DDS, funded and trained by Social Security, who first 
identified the fraudulent medical evidence. The DDS employees 
referred the allegation to us in March 2009 during an on-site 
visit by my regional office staff and the quality reviewers.
    In November 2009, after completing additional analysis and 
case development, we referred the allegation along with 
information about the nonattorney representative to the Office 
of the Inspector General. In addition to referring the case to 
the OIG, we took aggressive steps to identify any additional 
cases and develop a process for reviewing the cases. These 
steps ensured that we could reliably handle any high-volume 
review that might result from the investigation.
    We directed Federal resources to Puerto Rico to assist in 
the investigation, monitor the Puerto Rico DDS operations and 
help decide cases. We also redirected and trained staff on 
medical issues from our Puerto Rico field offices and our 
program service center in New York City. These additional staff 
resources were focused on Puerto Rico cases, including those 
involved in the investigation.
    In addition, we authorized the New Jersey DDS to hire 
bilingual disability examiners to assist with Puerto Rico. 
Other DDSs, both inside and outside the New York region, 
provided workload assistance to the Puerto Rico DDS, which 
added more outside eyes to the cases being filed in Puerto 
Rico. A sustained, multiyear cross-training effort, as well as 
additional quality studies, further strengthened our work with 
the Puerto Rico DDS and ensured their quality continued to 
remain strong and the fraud identified.
    Without question, our antifraud activities in Puerto Rico 
worked. They have shown that our frontline employees are the 
best defense against fraud. Over the years our emphasis on 
their role in the integrity of our programs and 
responsibilities for reporting fraud have strengthened our 
stewardship focus.
    We have suspended over $130,000 in monthly benefits to the 
indicted individuals and their auxiliaries. As of today we are 
reviewing at least 6,600 disability applications in which we 
awarded benefits based in part on the medical evidence supplied 
by the doctors. These reviews will occur in New York City and 
in New Jersey. In redetermining these cases, we will disregard 
the tainted medical evidence. If the remaining evidence does 
not support our original allowance, we will suspend the 
benefits, providing the opportunity to submit additional 
medical evidence prior to a final determination. Beneficiaries 
will receive notification if we terminate their benefits and 
assess an overpayment.
    If we suspect additional fraud of medical providers in any 
of these cases we review, we will refer that to the OIG for 
investigation and possible referral to the U.S. Attorney. Under 
a program we are considering for Puerto Rico based on success 
in other regions, our agency's attorneys may pursue cases not 
accepted for criminal prosecution by the U.S. attorney.
    Looking ahead we know that it is critical that Congress 
fully fund our cost-saving program integrity activities while 
ensuring we have the resources to serve the deserving 
disability applicants who turn to us for help. Investigations 
are time-consuming and labor-intensive. In Puerto Rico it 
required close coordination between Social Security, the Puerto 
Rico DDS, and multiple layers of law enforcement. We need your 
support to keep the disability program strong.
    Thank you, and I will do my best to answer any questions 
you may have, with the understanding that this is still an 
active grand jury investigation.
    Chairman JOHNSON. Thank you for your testimony. I 
appreciate it.
    [The prepared statement of Ms. Disman follows:]
    
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    Chairman JOHNSON. Mr. O'Carroll, let me ask you a quick 
question. Has there ever been a case as big as this in the 
history of Social Security, in your opinion? Yes or no.
    Mr. O'CARROLL. No, there has not been any one as big as 
this.
    Chairman JOHNSON. Okay. I am glad you and your Acting 
Commissioner are convinced that fraud conspiracy is not limited 
to Puerto Rico since you have set up disability fraud pilot 
programs here in the United States focusing on third-party 
facilitators, claimant representatives and medical providers. 
It seems like everybody wants some of our money.
    Ms. Disman, with respect to the Puerto Rico case, what is 
the total amount of fraudulent taxpayer-funded benefits paid 
out by Social Security? I expect it will reach millions of 
dollars.
    Ms. DISMAN. At this point in time, Mr. Chairman, I do not 
have that figure because we are rereviewing all these cases, 
and our initial review of the 6,600 cases, which we have 
already started, shows a number of these people will continue 
to receive benefits because there is other medical evidence in 
the file even after we remove the tainted evidence. So we will 
be able to--after we finish the review be able to tell you what 
was involved with the tainted medical evidence and the amount 
of the benefits.
    Chairman JOHNSON. Well, I know it is Social Security's idea 
to get payments out as fast as they can. Do you think we are 
doing it too fast without checking what the status of the 
claimant is?
    Ms. DISMAN. In this situation it shows our frontline 
employees did their job and did the checking. What they 
uncovered was looking at template medical evidence, and they 
didn't stop there. They went ahead and followed the procedures 
that we have and the operating procedures that we have trained 
them on.
    Chairman JOHNSON. Yes, but you already paid them.
    Ms. DISMAN. Right, because based on other evaluation of the 
medical evidence in file and other factors--remember, this was 
fabricated medical evidence--it appeared that these people were 
eligible to meet the definition of disability.
    Chairman JOHNSON. Do you think our taxpayers will be made 
whole? Yes or no.
    Ms. DISMAN. I think our taxpayers will be made whole for 
those people we determine that are no longer eligible to 
receive disability.
    Chairman JOHNSON. In other words, all that money that we 
put out is going to be paid back?
    Ms. DISMAN. We are going to be charging overpayments if 
those decisions were based on fabricated medical evidence and 
cannot be supported, and they will be required to pay back the 
overpayments.
    Chairman JOHNSON. How do you go about getting that?
    Ms. DISMAN. Well, basically you ask them to pay the money 
back. You go through a process that gives them their due 
rights. But ultimately there is a request for the money.
    Chairman JOHNSON. Okay. And how much is Social Security 
spending to deal with this fraud?
    Ms. DISMAN. Well, during the review itself we are in the 
midst of determining what we will be spending on the review. I 
can tell you right now that the medical evidence in Puerto Rico 
is in Spanish, so that in order to start this review and to 
have it done by people that are not just bilingual and 
biliterate, we have had to translate a number of the medical 
documents, and that is hard to do because you have to be more 
than bilingual, you have to be biliterate in medical. So we 
have already spent $3 million in a contract to do the 
translation. We are right now factoring all the costs, and I 
will provide that for the record as soon as we finish putting 
that together.
    [Transcript Insert 1 follows:]
    
    
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    Chairman JOHNSON. So usted no hable espanol?
    Ms. DISMAN. It is not just speaking Spanish, it is reading 
complex medical terms. And I do agree with you, because I know 
you have spent, Chairman Johnson, some time in Puerto Rico.
    Mr. BECERRA. But he is a Texan. He knows everything.
    Chairman JOHNSON. Ms. Disman, I want to turn to the 
findings of a GAO study released last week on overpayments. It 
found that Social Security paid out $1.3 billion in disability 
that were wrong mostly because the individuals earned over the 
legal limit during the 5-month waiting period before they 
received their first check. The problem was simple: Social 
Security did not catch the earnings if they occurred the year 
before the year benefits were first paid.
    Now, this seems like a problem that ought to be able to be 
solved by a high school computer student. Why hasn't this been 
addressed, and can you give me an assurance it will be, and 
when?
    Ms. DISMAN. Well, Mr. Chairman, I read the GAO report as 
you did, and I have been involved in the enforcement operation 
as being Regional Commissioner for years. I can tell you that 
the enforcement operation is very complex, and it requires 
complicated work by our program service center employees as 
well as our field employees.
    In reading the GAO report, and also talking to our policy 
people, I know that we are going to have to go look behind the 
cases because GAO did not do any analysis. If someone has 
worked during a waiting period, it may be an unsuccessful work 
attempt, there needs to be a look at the cases itself.
    However, we agreed to look at those cases. We also agreed 
to look at GAO's recommendation, that we take a look at what 
the cost would be and the resources for us to obtain this 
information during the waiting period, understanding that if we 
did this, we may not be able to do something else given our 
budgets and what we are dealing with.
    Also, there are two proposals in the President's budget to 
deal with exactly this issue. One deals with going to a 
quarterly wage reporting. You know now it is yearly, so that by 
the time the data come to us, enforcement is already late. And 
the second is to continue and redelegate our demonstration 
authority to go ahead and experiment with different ways of 
counting earnings for the disability beneficiaries. And we have 
been experimenting with different demonstrations to see if we 
can simplify the program and still get at the heart of the 
issue of enforcement.
    Chairman JOHNSON. Have you been down there yourself?
    Ms. DISMAN. Where?
    Chairman JOHNSON. Puerto Rico.
    Ms. DISMAN. Oh, I have been down to Puerto Rico over the 
years. I must admit I go in August when it is 100 degrees. But 
having said that, you have very dedicated Social Security 
employees in Puerto Rico. They are really dedicated to the 
mission. I can tell you that this fraud investigation and this 
conspiracy, if you talk to my employees on the frontline, they 
are incensed and upset, and a number of them knew the retired 
Social Security employee, and they are beside themselves.
    Chairman JOHNSON. Well, GAO says it urged Social Security 
to use other verification sources since 2004, but you didn't. 
In responding to the GAO report, Social Security referred to 
the, quote, ``strategic plan goal of preserving the public 
trust and improving payment accuracy'' as one of your highest 
priorities. Is that true?
    Ms. DISMAN. Well, our highest priority is to ensure the 
public trust. I take stewardship responsibility personally. I 
have over the years been one of the foremost supporters of 
antifraud activities within Social Security. As a matter of 
fact, the inspector general and I set up antifraud committees 
in the regions, which are chaired by both of us.
    Chairman JOHNSON. When did you do that?
    Ms. DISMAN. We set that up a good 10 years ago that we have 
been working on that. We bring in line management. We identify 
various trends.
    So I will tell you, for a while I was the operations lead 
on anti-fraud--I want to say antifraud, not fraud--and I take 
this seriously and to heart, because when I was trained as a 
claims representative, that motto, we get the right check to 
the right person on time, is our foundation.
    Chairman JOHNSON. Well, you need to do both, and I am told 
that, you know, some people think you are more interested in 
cutting checks than trying to prevent fraud, and I hope that is 
not true.
    How can we believe the agency's statement that payment 
accuracy is the highest-step priority when the actions here say 
something different?
    Ms. DISMAN. Well, Mr. Chairman, I think you can see the 
actions here were a complex conspiracy, and if you actually 
look at the information of our accuracy of the data of Puerto 
Rico, they are equal or better than the national average, and, 
you know, we have an independent quality organization that 
looks at that.
    Chairman JOHNSON. Well, as the New York Regional 
Commissioner, you are responsible for overseeing the Puerto 
Rico Disability Determination Program; is that correct?
    Ms. DISMAN. That is correct.
    Chairman JOHNSON. And I would like to get your attention to 
the slide, if they can put it up on the screen. I think the 
staff gave you a hard copy of that.
    Ms. DISMAN. I don't have it, and let me see if I can see 
it. I can't see it, but I understand what it is showing.
    Chairman JOHNSON. Okay. You understand it just shows that 
the allowance rates in Puerto Rico are way above the national 
average anywhere else, like double and triple, and it was 
pointed out in a Wall Street Journal article from March of 
2011, which we will insert in the record without objection.
    [The Wall Street Journal article follows:]
    
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    Chairman JOHNSON. And show the next slide, please.
    That table shows the percent of beneficiaries nationwide, 
and the percentage of beneficiaries diagnosed with a mental 
disorder in Puerto Rico is at least 10 percent higher than the 
national average for all years. The percentage with a mood 
disorder is more than double the national average. And this is 
important since we have been told back problems and affective 
disorders, including mood disorders, were alleged by most of 
the beneficiaries who were arrested. Assuming you saw both the 
award rate and the diagnosis trends when they happened, what 
action did you take and when, and what was the result?
    Ms. DISMAN. Well, we have taken multiple actions in Puerto 
Rico. We have actually had a multipronged approach. We have had 
our quality reviewers and my own disability staff visit Puerto 
Rico and do extensive training. As a matter of fact, when we 
found out about the allegation of the doctors, we were there 
training them on the medical documentation of the file, how to 
identify suspect medical evidence, going over the risk factors 
for fraud and similar faults. Two of the categories in those 
risk operations for operations deals with affective disorders 
as well as back disorders, going through what the factors are 
for them to look at.
    We did more than that. We did very special training in July 
of 2011 where we brought together the ALJs and our DDS 
examiners. We had headquarters, we had our own people from the 
region, we had quality, going over again the characteristics of 
affective disorders, similar fault, and actually going through 
how you deal with the files for inconsistency when you see the 
types of trends. We do have very specific operating procedures 
for them to follow, and they have continued to do the 
referrals.
    But I do have to say allowance rates make up a total--a 
composite of a number of factors. It is not just what you are 
seeing with this conspiracy. It really does depend on the 
demographics of a population, it depends on the age, it depends 
on the education, it depends on the poverty level that exists, 
it depends on the jobs and the economy.
    So you can't draw a conclusion just by looking at the 
allowance rate, but you have to look behind it. We also asked 
for a special study where they did a 1,000-case analysis of 
what the Disability Determination Service was doing, and when 
they looked at those cases, they also made special referrals to 
the OIG, but at the same time they determined that the quality 
and accuracy of the decision making was equal to or better than 
the national average.
    In addition, as I have said before, we have had help from 
outside my region as well as within the region. So I really 
established eyes and ears to look at these cases to see if we 
could pick up any special trends and analysis and continue with 
the reporting of fraud.
    In addition to that, I have taken my own Federal resources 
from my field offices in Puerto Rico, and I could ill afford 
it, to devote them to training them on medical decisions and 
looking at specific cases.
    So I actually looked at, in working with the OIG, cases 
from specific areas in Puerto Rico to try to identify patterns. 
We would move it to ZIP codes and establish information that 
the OIG could use.
    Chairman JOHNSON. When did she first inform you of this 
effort?
    Mr. O'CARROLL. Well, Chairman, we have been working in 
conjunction with Regional Commissioner Disman and her office 
right from the beginning in 2009 when we heard about this. From 
there on we started referring cases to her for review. So we 
have been pretty much working united on this thing for the last 
few years.
    Chairman JOHNSON. Were you satisfied with what the answers 
were that you were getting?
    Mr. O'CARROLL. Yes. As we keep going with this, it is so 
complicated on it, and there are so many different tentacles to 
this situation, it has taken a lot of interaction back and 
forth and education on the part of our agents in terms of 
reviewing files, and I have got to say it has been a very good 
cooperation on this one.
    Chairman JOHNSON. Well, you know, if the Federal quality 
reviewers are saying the decisions are right, either we have 
got more fraudulent evidence out there, or we really need to 
take a good look at the statute defining disability.
    Mr. Becerra, do you wish to question?
    Mr. BECERRA. Yes, Mr. Chairman, thank you.
    And I think the admonishment that the Chairman just made 
is, I think, something all of us would agree with at this dais, 
and that is that we have to hunt this stuff down as quickly as 
we can. No one wants to see any kind of report of fraud, 
because it is what undermines the confidence that the people 
have that when they pay these Social Security contributions, 
these taxes to Social Security, that they will be used for the 
right purposes.
    So we appreciate, Ms. Disman, everything that your people 
have done, especially the line workers who often times don't 
get to be here to explain exactly what they have done. Please 
tell them that we appreciate that they were the ones that 
detected this, and that we hope they have the resources they 
will need to continue to be able to continue to do that. By the 
way, I also hope that you are able to keep those experienced 
staff, who probably have the knowledge it takes to sort of 
understand when something looks a little fishy on those 
applications.
    So I think you answered the first question I was going to 
ask, and that is what are you doing today to try to make sure 
you can prevent this type of fraud from occurring again when 
the Chairman asked some questions.
    So let me ask this: It all seems to hinge on this former 
employee who knew how the office operated, who sort of 
understood what your reviewers are looking for to determine if 
an application passes that bar so that it goes to the next step 
of getting closer to being approved.
    I agree with you and your line workers that if you could 
descend on this guy with every tool you have, we should, 
because he breached a trust. He learned the system, and then 
once he left and probably took a decent retirement with him, he 
still went ahead and shafted the very system that helped him. 
Those kind of guys don't even belong behind bars.
    Anyway, I would say that what you should do is give us a 
sense. There are probably several other people who have learned 
the system, understand what your disability reviewers are 
looking for, and therefore could tailor this fabricated 
evidence to look like they qualify. And unless you are really 
good--it is like when Sam, the chairman, and I talk about these 
fake IDs that are used to do all sorts of things including 
getting employment, an employer looks at this thing, and this 
looks like a real Social Security or a real driver's license, 
and, lo and behold, it is fake.
    How do you get to the point where you can prevent that from 
occurring? Because there are a whole bunch of former Social 
Security employees who are probably doing great work defending 
a lot or representing a lot of future beneficiaries or 
beneficiaries today. We don't want to indict everyone who just 
happens to have done good work and knows the system, but how do 
you make sure that those who know how they might be able to 
game the system aren't doing that?
    Ms. DISMAN. Well, I have to agree with your comments about 
the former employee, and one of the things that I hope is that 
this indictment and what has taken place in Puerto Rico serves 
as a notice to any former employee and anyone that we will find 
the fraud, we will investigate it, and you will face criminal 
charges and perhaps imprisonment.
    I will tell you we used this opportunity of the indictment 
to send out a message throughout Social Security to talk about 
what took place, to remind people about reporting it, how to 
report it, what to look for, and to continue to do it. How we 
really save this--and this hotline that the inspector general 
mentioned is bringing in information as to some other 
nonattorney reps that may exist. We do not know yet if they are 
former employees or just nonattorney reps.
    Having said that, I can't say a lot more because there is a 
grand jury investigation, but I will tell you that we are 
looking very closely at cases. We are trying to come up with 
patterns. It takes resources. I can tell you my regional office 
that helped do all this analysis and is working with the 
inspector general is down 22 percent in the last 3 years.
    I have moved resources from doing other work that Social 
Security requires to focus on this investigation. And this 
investigation will take place, and others, by doing on-the-
ground work, analytical work, hard work. But I do want to send 
a message to anyone that is out there: If you commit fraud 
against our programs, we will find it, and the Inspector 
General will find it, and you will serve the appropriate 
sentence.
    Mr. BECERRA. Well, I hope you can communicate to the U.S. 
attorney who is handling the prosecutions in this case that we 
hope that they throw not just the book, but the kitchen sink at 
these guys, including the doctors, because the doctors made it 
possible for this medical evidence to look real. And this 
former employee should be severely punished however the law 
allows it, but those doctors as well. Too often these 
professionals who abuse their own license to practice get off 
very easily, and before you know it, they are out there 
practicing again.
    I hope you can send a very clear message, especially, Mr. 
O'Carroll, as you said, this is the worst case of conspiracy 
and fraud that we have seen under SSA, that you will descend on 
these individuals as aggressively as you can. And if there is 
anything we can do to help by contacting the Department of 
Justice or the U.S. attorney to say, we need you to set an 
example so you don't have to come and testify in the future 
about these kinds of fraud cases, let us know, because this 
is--and I think this is a small, minute fraction, but it does 
spoil it for all those hard-working Americans who ultimately do 
qualify, are truly eligible for the benefit that they have paid 
for.
    So we urge you to continue to work. We thank you for what 
you are doing. And know that you have the support of, I think, 
this Congress to try to really go aggressively at any fraud 
that may occur out there. And I hope that we heed your guidance 
about resources; that you can only do so much and stretch a 
dollar so far in trying to get this done. And it is pound 
foolish to cut your resources and then find the fraud occurred 
because you don't have the personnel available to sort of catch 
it, and then have to spend lots of money and a lot of your 
personnel resources to now try to go after the bad guys who 
defrauded the system.
    But thank you very much for being here and for all your 
testimony.
    Chairman JOHNSON. Thank you, Mr. Becerra.
    Mr. Renacci, would you care to question?
    Mr. RENACCI. Thank you, Mr. Chairman, and I thank the 
witnesses for their testimony.
    Ms. Disman, you sound sincere, and I heard you say one of 
your mottos was ``right check to the right person,'' and 
clearly there was some systematic failures that occurred. So 
let's not talk about Puerto Rico as much as maybe you can help 
me with your office and other offices in the country.
    I guess I am concerned about uniform qualifications for DDS 
examiners. Can you tell me the qualifications of the examiners 
in the facilities that you oversee? And what I am asking is I 
understand some have high school educations, all the way to 
graduate school. What is their background and experience, 
because these are the frontline people.
    Ms. DISMAN. Well, I think to understand it, the DDSs are 
State employees or Commonwealth employees, and so they are not 
actually employed by Social Security. We pay the freight for 
it, the costs of it, and we train them. The States have 
different standards as to the qualifications for the employees. 
In most places it is a college graduate. For example, in the 
State of New York they have even nurses that are already come 
up and be disability examiners.
    So it varies by State. But we also do a very extensive 
disability training program for them. So they are not really 
considered proficient for about a 2-year period. They go 
through stage training. And we also--they are tested, they are 
mentored. So it is a very, very intense program for it.
    And, again, qualifications vary, but we have been looking 
at this on a national level in Social Security. There has been 
a task force looking at what type of standards should we try to 
set. And since I am not responsible for policy, there is a task 
force working on it, and I can get more information for the 
record for you.
    Mr. RENACCI. I would appreciate that.
    [Transcript Insert 2 follows:]
    
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    Mr. RENACCI. But you do agree there could be a high school 
graduate and a graduate student, and they are making some of 
the up-front decisions?
    Ms. DISMAN. It could be from high school through graduate 
or postgraduate.
    Mr. RENACCI. They have the training--you said they have a 
2-year training, but they could be making decisions during that 
training process, correct?
    Ms. DISMAN. They make decisions, but there is a quality 
control in the DDSs. There is an internal quality. They don't 
function on their own. They also have to pass a number of tests 
in order to succeed. So they are not left to their own devices, 
because we all collectively know that the medical decision that 
they make is a gateway, and we want to make sure that that 
medical decision is appropriate.
    Mr. RENACCI. Mr. O'Carroll, can you tell me, were video 
hearings used in some of the Puerto Rico cases?
    Mr. O'CARROLL. Mr. Renacci, no, I am not familiar with 
whether videos were used in those hearings.
    Mr. RENACCI. Do you know, Ms. Disman?
    Ms. DISMAN. I do not know, but I will tell you in looking 
at the universe of cases, very few of the 6,600 cases that we 
are looking at that are involved actually were made at the ALJ 
level. So it is a small amount. It is about 100.
    Mr. RENACCI. Do you know how much use we have of video 
hearings? Across the country I am talking about.
    Ms. DISMAN. Since that is not my area of responsibility, if 
I can get the information for the record, I would be glad to 
provide it.
    [Transcript Insert 3 follows:]
  
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    Mr. RENACCI. Mr. O'Carroll, do you know? Is there a 
backlog, and is there a reason we are using, or how many we are 
using? I am just trying to get systematic.
    Mr. O'CARROLL. I don't have a number. I will get it to you. 
But we have done some work, and we are supportive of it.
    Mr. RENACCI. Mr. O'Carroll, can you tell me a little about 
the hurdles OIG has to overcome in order to prosecute those 
that defraud SSA?
    Mr. O'CARROLL. Yes, and this is--probably a good example of 
it is that in order to do a prosecution, it requires a lot of 
criminal evidence and a lot of background on it. And I guess, 
again, in this case here where we had the cooperation of the 
U.S. Attorney's Office, and we were working with them, it was 
probably a little bit easier than we have it in any other 
districts on it in terms of that when we are making our 
presentations to U.S. Attorney's Offices, we are kind of in 
line with all the other Federal agencies, and oftentimes the 
fraud against SSA is usually in smaller amounts of money than 
what U.S. Attorney's Offices are looking to do their 
prosecutions on.
    So I guess the long answer to this thing is that it is very 
difficult to get prosecutions when you are competing against, 
you know, bank robbers or whatever on it, but we do do a lot. 
We use the State, we use local prosecutions as well as Federal, 
and we also use civil monetary penalties, again, to assert 
fines and penalties on people.
    Mr. RENACCI. I would just say in conclusion, and I am 
running out of time, that in the private sector--and, of 
course, I was in investigations from a CPA standpoint, many 
financial institutions--even though one person may have caused 
the problem, there are usually systematic issues that allowed 
that one person to cause that problem. So I am hoping that we 
are looking across the board at all our systems. And I thank 
you for your testimony.
    I yield back.
    Chairman JOHNSON. Mr. Kelly, do you care to question?
    Mr. BECERRA. Why don't we just reduce the time for each of 
the two so that way we can make sure we make votes.
    Chairman JOHNSON. I will give you a minute.
    Mr. KELLY. All right. Just very quickly. Thank you.
    I think my concern is because when you look at the amount 
of money that we are talking about, and are we talking about 
very small percentages, but a very small percent on a very 
large sum is great. And I think the integrity of the program 
always does come down to there are certain people that just 
find a way, as Mr. Renacci said, with these systemic 
opportunities.
    I look at Puerto Rico that has an unemployment somewhere 
beyond 13, 14 percent, so they are going to find a way to make 
money somewhere or get revenue somewhere. So you look to where 
the low-hanging fruit is, and apparently they found a way to 
gain revenue.
    I know this is tough, and I know you are trying to do an 
awful lot of things, but I see you have done a good job of 
redeploying some of your funds and looking at prioritizing your 
spending, and in a time when things get tough and coming out of 
the private sector, sometimes you don't have a choice, you just 
have to prioritize. I think what you have done is quite wise, 
although the amount of this is staggering.
    The chances of us ever getting that money back, slim to 
none? I mean, seriously, how much--what is the total amount? I 
mean, it runs into the billions, right, in overpayments or 
fraudulent payments?
    Ms. DISMAN. At this point I cannot tell you that because we 
are reviewing our 6,600 cases, and from our initial review of 
some of the cases, we just started this review, people have 
other medical evidence that would sustain it. So, for example, 
I am seeing medical evidence from the Veterans Administration 
and other places. So you can't make the assumption because we 
identified 6,600 cases that had these medical providers, that 
ultimately it was based on that that made the decision.
    Mr. KELLY. But in my own business, having dealt with when 
you get to the situation of accounts payable and them being 
overdue, the longer they are overdue, the less chance you have 
of recovering. So the recovery process on this--and we are 
talking in the billions of dollars in overpayments; is that 
correct?
    Ms. DISMAN. I don't think you are talking about billions.
    Mr. KELLY. Okay. All right. The chances of getting any of 
that money back?
    Ms. DISMAN. I think there is a good chance, because we have 
a very good debt process. And ultimately, remember, these 
people came on our rolls when they age. There is such a thing 
called retirement. There is offsets. There is a lot of other 
things we can do.
    I think the bottom line is we have to finish this rereview 
to see how many people really are involved and would no longer 
be eligible for benefits. And we intend to take the full action 
in recovering these overpayments.
    Mr. KELLY. My concern is always that, you know, there is a 
way of running out the clock on this stuff, and after a point 
the cost of recovery is greater than what you can possibly 
recover, because usually the recovery amount is very small.
    But I am going to yield back, Mr. Chairman, because we are 
running out of time, and I think Mr. Thompson has a question. 
Thank you all for being here.
    Chairman JOHNSON. Thank you all for your questions.
    Mr. Thompson, do you care to question?
    Mr. THOMPSON. Thank you, Mr. Chairman, and thank you to all 
of you for being here. Just a couple of things.
    You had mentioned, ma'am, that there is a policy part of 
this, and as you figure out what sort of policy is needed or 
needed to be changed, I would hope that you would consider our 
subcommittee so we can help facilitate that if any of that has 
to be done statutorily.
    In regard to getting the money, first, I couldn't agree 
more with Mr. Becerra and his comments on the fact that there 
is a special place in hell for people who would cheat this 
critical system, a system that is important to so many people. 
So I would hope that you would take every effort to make sure 
that whatever punishment is available, that it is doled out, 
because that sends a strong message to other folks. And we have 
all seen too many times when people who perpetrate this type of 
foul behavior walk. It is not right. So I hope you would do 
that.
    In regard to getting the money back, I think there is two 
kinds of money that we are talking about. There is the money 
that was paid out that shouldn't have been paid out, and I 
trust that your comments about getting that back, that you are 
going to do everything you can. But how about the money that it 
is costing us to go after this? You have had to rearrange 
priorities. We are spending a lot of dough to track these guys 
down, to investigate this. Is there a policy in place that 
allows us to go back and capture that?
    Ms. DISMAN. Well, I think I would have to yield to that to 
the Inspector General since he is involved with the U.S. 
attorney on recovery of assets.
    Mr. O'CARROLL. Mr. Thompson, in fact we have been in touch 
with the U.S. Attorney's Office a number of times over the last 
few weeks. But one of the issues that happened when we made the 
arrest on, in fact, the former SSA employee was we seized $1.7 
million worth of assets from him. Those assets were turned over 
to the Justice Department as assets, and eventually what will 
happen is that if a judge in the case assesses that he has to 
repay money to SSA, SSA can petition Justice Department to get 
at those seized assets.
    Mr. THOMPSON. But what I am talking about is not just the 
money they took inappropriately, but the cost of figuring this 
out and trying to get that. Can we get payment for that?
    Mr. O'CARROLL. I would like to see a way that we can 
penalize them that way, and I think that we can probably put 
that before the judge.
    Mr. THOMPSON. I think we should look at that. I think that 
would be important to do.
    Mr. O'CARROLL. We will do that.
    Mr. THOMPSON. Thank you.
    Chairman JOHNSON. We have got votes going on. Mrs. Black, I 
am sorry. Have you got a quick question?
    Mrs. BLACK. They can get back to me on this. I am just 
curious about when we look at recovery, not in this particular 
incident, but in recovery across the board, I am very 
interested in what percentage--looking over maybe a 10-year 
period, what percentage do we actually recover? And in that I 
would also like the figure what is the cost of the recovery? 
That should be one area. And then the other is the actual 
dollars that were inappropriately committed to the client, how 
much of that do we actually get back? So two different areas.
    Thank you, Mr. Chairman. I appreciate it.
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    Chairman JOHNSON. You know, we have got to get serious 
about better protecting this program which is paid for by 
America's hard-working wage earners, and Americans want, need 
and deserve no less.
    I thank you all for being here today. And we have votes, so 
we are going to call it a day. With that, the subcommittee 
stands adjourned. Thank you for being here.
    [Whereupon, at 3:30 p.m., the subcommittee was adjourned.]
    [Questions for the record follow:]
    
    
    
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