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








                SOCIAL SECURITY DISABILITY FRAUD SCHEME
                              IN NEW YORK

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

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

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 16, 2014

                          Serial No. 113-SS09

                               __________

         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 January 16, 2014 announcing the hearing..............     2

                               WITNESSES

The Honorable Patrick P. O'Carroll Jr., Inspector General, Social 
  Security Administration, accompanied by Edward Ryan, Special 
  Agent-in-Charge, New York Field Division, Office of the 
  Inspector General, Social Security Administration..............     9
The Honorable Carolyn Colvin, Acting Commissioner, Social 
  Security Administration, accompanied by Beatrice M. Disman, 
  Regional Commissioner, New York Region, Social Security 
  Administration.................................................    18

                       SUBMISSIONS FOR THE RECORD

Consortium for Citizens with Disabilities, statement.............    59
Elsibeth Brandee McCoy, letter...................................    64
Larry Butler, statement..........................................    66
Michael Gilbert, statement.......................................    70
National Organization of Social Security Claimants' 
  Representatives, statement.....................................    74
Veronica Mayer, letter...........................................    76

                        QUESTIONS FOR THE RECORD

The Honorable Patrick P. O'Carroll Jr............................    50
The Honorable Carolyn Colvin.....................................    55

 
          SOCIAL SECURITY DISABILITY FRAUD SCHEME IN NEW YORK

                              ----------                              


                       THURSDAY, JANUARY 16, 2014

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:00 a.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

Chairman Johnson Announces Hearing on Social Security Disability Fraud 
                           Scheme in New York

Washington, Jan 9, 2014

    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 a massive Social Security Disability Insurance 
fraud scheme in New York that could cost taxpayers hundreds of millions 
of dollars. The hearing will take place on Thursday, January 16, 2014 
in B-318 Rayburn House Office Building, beginning at 9:00 a.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 January 7, 2014, the New York County District Attorney's Office 
announced the indictment of 106 defendants for their alleged 
involvement in a criminal conspiracy to defraud taxpayers. The 
defendants, who include many retirees of the New York Police and Fire 
Departments, are accused of massive fraud against the Social Security 
Disability Insurance (SSDI) program. The 102 beneficiaries, along with 
four facilitators who assisted them, are accused of collecting 
approximately $22 million in fraudulent benefits.
    According to the District Attorney, from approximately January 1988 
to December 2013, the four principal defendants in the case coached 
applicants on how to falsely demonstrate symptoms of mental disorders 
in order to obtain disability benefits in exchange for a cash payment 
of up to $50,000. The remaining 102 defendants are charged with lying 
about their mental health and ability to work in order to receive SSDI 
benefits to which they were not entitled. Each claimant collected an 
average of $210,000 in total fraudulent SSDI payments, though for some 
the total amount obtained was close to $500,000. Many defendants 
falsely claimed to suffer from post-traumatic stress disorder and other 
mental illnesses as a result of their experience with the September 11, 
2001 terrorist attacks.
    According to the Social Security Administration (SSA) Office of 
Inspector General (OIG), the investigation dates back to 2008, when New 
York Disability Determination Service employees noticed that many 
applications had the same handwriting and contained identical 
descriptions of their ailments. These claims were referred to the SSA 
OIG's New York Cooperative Disability Investigations unit. In 2011, the 
SSA OIG and the New York County District Attorney's Office launched an 
undercover operation that led to the indictments.
    The announcement of these indictments follows revelations of 
similar abuse in August 2013, when authorities arrested more than 70 
individuals involved in a disability fraud conspiracy in Puerto Rico. 
Also, in October of 2013, the Senate Homeland Security and Governmental 
Affairs Committee released the results of their bipartisan 
investigation detailing inappropriate conduct and collusion between a 
West Virginia law firm, a Social Security Administrative Law Judge and 
some local doctors in approving benefits while outlining the 
ineffective oversight by the SSA.
    With the 2013 Social Security Trustees report projecting that the 
SSDI program will only be able to pay 80 percent of benefits beginning 
in 2016, losses to the system from fraud is an issue of increasing 
concern. According to the SSA, 11 million beneficiaries received $139.4 
billion in SSDI benefits in Fiscal Year 2013.
    In announcing the hearing, Social Security Subcommittee Chairman 
Sam Johnson (R-TX) said, ``The widespread disability fraud uncovered in 
Puerto Rico and most recently in New York is deeply troubling and 
unacceptable. Scandal after scandal proves the Social Security 
Administration is failing to protect precious taxpayer dollars and 
undermines Americans' confidence in this vital program. With the 
Disability Insurance program unable to pay full benefits as early as 
2016, my number one priority has been to keep this program strong for 
those who truly need it and protect taxpayer dollars. It's time for 
Social Security to make it their number one priority as well. On behalf 
of hardworking American taxpayers, I am committed to getting answers 
and rooting out waste, fraud and abuse. Social Security must be held 
accountable for failing the American taxpayer and work to restore their 
trust.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on the details of the New York 
investigation, how the fraud scheme was carried out, the estimated cost 
to taxpayers, and what the SSA is doing to crack down on disability 
fraud in the wake of this and other scandals in Puerto Rico and West 
Virginia.
      

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, January 30, 2014. 
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://waysandmeans.house.gov.

                                 

    Chairman JOHNSON. The meeting will come to order. Let me 
begin by saying to all my colleagues on this Subcommittee that 
it is with deep regret that we had to call this hearing today.
    Last week we were greeted with shocking headlines. The New 
York Times led with, ``Charges for 106 in a Huge Fraud Over 
Disability.'' And ABC News led with the ``New York cops, 
firefighters, in massive 9/11 fraud, the indictment says.'' I 
am outraged. But, more importantly, the American people are 
outraged. Law-abiding Americans woke up to learn that the taxes 
they paid to Social Security had been stolen.
    Today's hearing follows September's hearing on the scandal 
in Puerto Rico, which, according to the Inspector General, who 
is with us today, was at that time the largest fraud in the 
history of Social Security. Now, less than six months later, we 
have another even more shocking scandal in New York, where 106 
people have been arrested. Not only the size of the fraud that 
is shocking, but those who committed it: former policemen, 
firemen, and a former FBI employee.
    Worse, some of the defendants falsely claim that their 
disability was caused as a result of the 9/11 terrorist 
attacks, while many had never even worked at Ground Zero. It is 
truly a sad day in America when people who once held positions 
of public trust betray the public confidence. These individuals 
are accused of stealing from a vital program that serves those 
who can no longer work, due to disability.
    In Fiscal Year 2013, Social Security paid out $139 billion 
in disability benefits to 11 million beneficiaries. Also in 
that same year, Social Security paid out retirement benefits to 
57 million beneficiaries. This Subcommittee has held 11 
hearings on the disability program, and three of them focused 
specifically on disability fraud because preventing fraud is 
essential to maintaining public confidence in the program.
    The public is fast losing faith in Social Security, and I 
don't blame them, because we all are. While I fully recognize 
there will always be bad apples, what is going on these days is 
very different. This is a program plagued by fraud conspiracy.
    First, there was West Virginia. In October of 2013, the 
Senate Homeland Security and Governmental Affairs Committee 
released the results of their bipartisan investigation 
detailing collusion between a West Virginia law firm, a Social 
Security administrator, Administrative Law Judge, and some 
local doctors in approving benefits. Then there was Puerto 
Rico. And now, New York.
    The initial cost to the system in New York is $22 million 
initial cost. In Puerto Rico, the scandal initially alleged to 
cost taxpayers $2.1 million. Amounts resulting from the 
corruption in West Virginia are still under investigation. 
Moreover, a total 181 individuals have been arrested in the New 
York and Puerto Rico scandals.
    I know that crooks don't care about the people who really 
need their benefits, but I do. According to the Trustees, it is 
only two years before Social Security can only pay reduced 
benefits, unless Congress acts. The program can't afford more 
fraud. It is only a matter of time when Congress may be asked 
to bail out this program with the retirement side having to 
come to the rescue. And, if that is the case, then all 
taxpayers and beneficiaries will shoulder the burden of a crime 
wave.
    What is more troubling is that the cases are just the ones 
we know about so far. As we will hear from the Inspector 
General today, other similar investigations are underway. Like 
organized crime, these recent scandals reveal fraud committed 
by a network of professional crooks made up of doctors, 
lawyers, and judges. It is the new get-rich-quick scheme worth 
tens of thousands of dollars for every person who illegally 
gets on the rolls. It is appalling. And in New York, it went on 
for 25 years, starting in 1988.
    With the shocking news of the disability scandal in New 
York, Puerto Rico, and West Virginia, Americans and this 
Subcommittee deserve answers, and we need them now. On behalf 
of my colleagues and the taxpayers, I am asking how can this 
happen time after time after time. Why is Social Security 
failing to prevent these fraud conspiracies in the first place?
    But it is more than answers that are needed. To restore 
trust in the disability program, Social Security must be held 
fully accountable for failing to prevent widespread fraud. 
Accountability must be accompanied by action to prevent this 
from happening ever again. I think the time for excuses is 
over.
    Let me make myself clear. I expect accountability at Social 
Security for these crimes. It is time for real leadership. It 
has been nearly a year to the day since Social Security had a 
Commissioner. With the greatest respect to Mrs. Colvin, she has 
been appointed on a temporary basis. These scandals send a 
clear warning to the President that we need a Social Security 
commissioner who will make it his or her six-year mission to 
fight fraud and restore to the public confidence in this 
program.
    Further, not once has any Commissioner personally asked for 
our help to fight fraud. The next Commissioner must set a bold, 
new course, and be unafraid to reach out to us here in the 
Congress.
    Mr. O'Carroll, I am demanding a full investigation by your 
office of Social Security's entire management and their failure 
to prevent fraud and conspiracy. And it must be a full, top-to-
bottom investigation of Social Security. Leave no stone 
unturned. Find out how this could happen, and what Social 
Security can do to stop it in the future. You must make this 
investigation your top priority. I want the investigation with 
recommendations quickly. The rip-off of taxpayers by 
professional fraudsters has to end, and it needs to end now.
    I also would like a full report from you, Acting 
Commissioner Colvin, telling Congress the immediate actions you 
are taking to prevent these crimes from occurring again and 
again, as well as any recommendations for legislation that 
might help you. I want this report within 30 days.
    Lastly, preventing fraud should not be and is not a 
partisan issue. Ranking Member Becerra, I would like to work 
with you on whatever legislative is needed.
    Today we will hear from Acting Commissioner Carolyn Colvin 
and the Social Security Inspector General Pat O'Carroll. Don't 
just tell us about the facts of the scandal; we can read that 
in the news. And don't just tell us about what you did; it is 
clearly not enough. And don't just say you need more money, 
when the fact is Social Security has utterly failed to protect 
taxpayer dollars in the first place. Social Security must first 
regain the trust of the American taxpayer before it can 
credibly argue for more money.
    Hard-working taxpayers want, need, and deserve answers and 
action now to restore their confidence in Social Security. I 
thank you all for being here today.
    Chairman JOHNSON. I now recognize the Ranking Member, Mr. 
Becerra, for his opening statement.
    Mr. BECERRA. Mr. Chairman, thank you very much. And let me 
join with you in saying that we must ask Social Security to do 
everything possible, and certainly the Inspector General, to 
give us the best sense of how to go about going after that 
conspiracy, that fraud that does occur.
    But let me differ a bit, Mr. Chairman, from the way you 
have described it. The conspiracies in Puerto Rico, New York, 
were not uncovered by some intrepid consumer or some truth-
seeking American or some law enforcement officer outside of 
Social Security. It was uncovered by front-line Social Security 
staff. And they are working day in and day out. In fact, they 
have units, some fraud-busting units, that are doing exactly 
what we want them to do.
    So, it is more a matter of how do we work with the people 
there busting fraud today within Social Security, whether in 
the inspector general's office, or just the front-line staff of 
Social Security, that we must work with. Because when you have 
former police officers, former firefighters, when you have 
doctors who are colluding, these are all people of trust.
    And so, when a front-line Social Security representative 
sees a report from a doctor, and sees in front of her or him a 
former police officer who may have been involved in 9/11, or a 
former firefighter who had saved people's lives saying, ``I am 
disabled, and here is my documentation from a doctor saying I 
deserve now to receive the disability insurance benefits that I 
pay for,'' you could only do so much, unless you are going to 
say we are not going to not trust people like former 
firefighters, former police officers, and our doctors who care 
for us every day.
    And so, this is deep, because the collusion was heavy and 
the conspiracy was dark. And so we have to get to the bottom of 
this. But to say that this is the fault of Social Security is 
to blame the wrong people who are working every day, and whose 
trust we have put in for decades to make sure that Social 
Security serves those who paid for it.
    Remember, American workers pay for Social Security and 
Social Security Disability Insurance. Over its lifetime of some 
78 years, Social Security has received from American workers 
some $14.5 trillion in taxes, Social Security contributions. 
Because we haven't used that all up, and because some of that 
money has earned interest by being stored away in bonds, we now 
have more than $2.5 trillion in the Social Security trust fund 
available for Americans who have paid for Social Security and 
Social Security Disability Insurance.
    Social Security Administration workers have diligently, day 
in and day out, worked to protect Americans' Social Security. 
And I believe we see that in the conspiracy that was uncovered 
in Puerto Rico and in New York. Social Security provides a 
lifeline to 58 million Americans each month, 58 million 
Americans each month. Yet it has an overpayment rate of less 
than one-half percent. Let me repeat that: less than half-a-
percent overpayment, meaning whether it was due to fraud or due 
to error overpayment.
    In fact, that error rate, if you compare it to the private 
sector, is quite low. Private sector payrolls, which calculate 
the paychecks that millions of Americans get every day, that--
the rate of error for the private sector payroll offices in 
these companies, is probably about four times higher than 
Social Security's. One out of every five consumers has an error 
in their credit report that could keep them from getting a 
loan, or force them to pay higher rates in interest than they 
should.
    Do I need to talk about Target and the recent privacy-
hacking there, or Neiman Marcus, or you name it? It happens, 
because there are some bad people out there, and they are after 
our money. And it shouldn't surprise people that they are after 
Social Security's money, as well. So we have to work very hard, 
Mr. Chairman. And I want to join you in calling forth this 
investigation. But let's make sure we aim our fire at the bad 
guys, not the front-line workers who are detecting the fraud, 
not the front-line workers who are working so diligently to try 
to protect Americans' money.
    One of the most powerful fraud-busting teams that SSA has 
is the cooperative disability investigations unit. It is--it 
links with the inspector general, with local law enforcement, 
and front-line SSA staff. They are highly effective. In 2012 
alone, these fraud busters prevented $340 million in fraudulent 
Social Security payments. Most importantly, fraud prevention is 
built in to Social Security's day-to-day operations.
    As I said--I ask again. Who was it that uncovered the fraud 
conspiracy in New York? SSA front-line staff. Who was it that 
uncovered the conspiracy in Puerto Rico? SSA front-line staff. 
Day in, day out, Social Security workers are standing guard.
    The recent fraud cases were sophisticated conspiracies, 
involved recruiters who sought out individuals to willingly 
falsify applications for benefits, colluding doctors willing to 
provide fraudulent medical evidence. Defrauding the disability 
insurance program, as in these conspiracies, requires criminal 
collusion, criminal collusion from doctors and other persons in 
positions of trust.
    The New York City conspiracy, if you can believe it, again, 
required former police officers who recruited others to lie, an 
attorney willing to submit false claims, doctors willing to 
provide fake evidence, and applicants willing to undergo fake 
treatment for a year to make it look like they were genuinely 
disabled.
    Social Security's front-line employees are trained to spot 
and prevent fraud. Every employee, from the newest hire to the 
long-term veteran, attends fraud referral training every year, 
and is alerted to potential fraud tip-offs via a monthly 
bulletin. The vast majority of disability insurance 
beneficiaries, let's remember, are honest, hard-working 
Americans who earned their benefits through hard work, and now 
they need them to live on.
    To put it in perspective, last year, about 11 million 
people received Social Security disability insurance, and about 
1.8 million applied for disability benefits. That same year, 
Social Security Administration front-line staff made over 
22,500 referrals for suspected disability fraud. The IG opened 
formal investigations on 5,300 cases, and referred 100 to the 
attorney--a U.S. Attorney's office for prosecution. As you can 
see from these statistics, the vast majority, 99.9 percent of 
disability beneficiaries, are hard-working Americans who earned 
their benefits.
    So, Mr. Chairman, let me begin to close by saying this. We 
know that the number of disability insurance recipients has 
increased. But everyone who has looked at this has told us it 
is not so much because of fraud, it is because the Baby 
Boomers, we are retiring, and we are beginning to use our 
Social Security or our Social Security disability benefits. 
Women, over the last decades, have begun to join the workforce, 
and now they are becoming Social Security recipients or 
disability insurance recipients. So the chief actuary has told 
us that you don't even calculate, in the reason for the growth 
in the disability insurance population, the issue of fraud.
    So, let's go full steam ahead to investigate fraud, but 
let's not say that that is what is driving the fact that 
honest, hard-working Americans are now using their disability 
benefits. Let's go after the frauds, let's go after those who 
are willing to take away the taxpayer dollar. But let's not 
deprive those who have earned it, and now should receive it.
    And finally, Mr. Chairman, as we go about deciding how to 
go out there and detect this fraud before it can ever happen, 
let's not under-staff the very people at the front lines who 
detect it first. Let's not tie the hands of Social Security to 
find the fraud by continuing to cut their budget over $1 
billion in the last year or two. That New York City office that 
detected the fraud, today they have fewer people on the front 
lines working than they did back in 2008, when they detected 
the fraud.
    If we don't want to see fraud, we can't take the fraud 
busters off the front line. And so, let us work together to 
detect the fraud, but give Social Security the resources and 
personnel it needs to continue to be the defenders of a good 
working program for all Americans.
    Mr. BECERRA. And, with that, Mr. Chairman, I yield back.
    Chairman JOHNSON. Thank you, Mr. Becerra. As is customary, 
any Member is welcome to submit a statement for the hearing 
record. And, before we move on to our testimony today, I want 
to remind our witnesses to please limit your oral statements to 
five minutes. However, without objection, all of the written 
testimony will be made part of the hearing record.
    And before I introduce our witnesses, I want to recognize 
two important people who are in our audience today from the 
Manhattan District Attorney's office: Cyrus Vance, Jr., a 
District Attorney; and David Szuchman, Executive Assistant, 
District Attorney, and Chief of the Investigation. Thank you 
all for being here.
    On behalf of all Americans, I want to thank you and your 
staffs, along with the federal agents from the Social Security 
Inspector General's staff, the detectives from the New York 
Police Department, the New York State Attorney General's 
office, other state and local law enforcement agencies that 
have assisted in the arrests, and the employees of the New York 
State Disability Determination Services, and the Social 
Security Administration. Thank you for your tireless work in 
bringing these defendants to justice.
    We will now return to our hearing. And I am suspending our 
usual witness order protocol by asking the Honorable Patrick 
O'Carroll, Jr., Inspector General, Social Security 
Administration, to testify first, given the hearing's focus on 
the New York fraud scheme, and the primary role of the 
Inspector General and federal agents in this investigation. Mr. 
O'Carroll is accompanied by Edward Ryan, Special Agent in 
Charge, New York field division, Office of the Inspector 
General, Social Security Administration. And next is--next to 
him is Honorable Carolyn Colvin, Acting Commissioner of Social 
Security Administration.
    Mr. O'Carroll, welcome, and thanks for being here again. 
Please go ahead.

  STATEMENT OF PATRICK P. O'CARROLL, JR., INSPECTOR GENERAL, 
  SOCIAL SECURITY ADMINISTRATION, ACCOMPANIED BY EDWARD RYAN, 
SPECIAL AGENT-IN-CHARGE, NEW YORK FIELD DIVISION, OFFICE OF THE 
       INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION

    Mr. O'CARROLL. Good morning, Chairman Johnson, Ranking 
Member Becerra, and Members of the Committee. Thank you for the 
invitation to testify today. I am joined by Special Agent in 
Charge Edward Ryan from our New York field division. I am also 
joined here today with the district attorney for Manhattan, 
Cyrus Vance, Jr., without whom this case may never fully have 
come to light.
    The man you see on the TV screen is Louis Hurtado. Mr. 
Hurtado was an NYPD officer until 1988, when he left the force 
on a disability pension. In 1990, he applied for Social 
Security disability benefits, using a man named Raymond 
Lavallee as his attorney. In 1991, he was awarded benefits, 
including a lump sum retroactive payment of almost $19,000. He 
continued to receive as much as $1,700 in benefits every month, 
until they were suspended this week. In all, he received about 
$475,000 from SSA. For much of this time, he owned and operated 
the VIP Black Belt Champions Training Center. He taught and 
performed martial arts, and you can see him in his activities 
in this video.
    While we have more evidence than this clip, I am sure you 
will agree that running a business like this is inconsistent 
with his claim that he can't perform any work in the national 
economy. He is just one of 102 disability beneficiaries in this 
case. You will see pictures of some of them appear as I talk, 
who were recently indicted for fraud, and all but one has been 
arrested.
    It is alleged that these 102 beneficiaries, most of them 
retired New York City public safety officials, were able to 
fraudulently obtain disability with the help of four men: 
Raymond Lavallee, an attorney; Thomas Hale, a disability 
consultant; Joseph Esposito and John Minerva, who are retired 
NYPD officers who acted as facilitators and recruiters.
    The alleged scheme worked like this. A public employee on 
disability pension would contact Esposito or Minerva, who 
explained what the applicant needed to do to get SSDI for 
mental impairment, including coaching them on dealing with 
doctors, and then referred them to Hale. Hale further coached 
the applicant on how to appear mentally disabled, how to act, 
and what to say. About half of the applicants alleged stress 
from their work on 9/11, which caused the impairment, then 
referred them one of the two doctors and to Lavallee.
    After a year of mental health treatment, Lavallee would 
submit the disability application, and the person would be 
awarded SSDI, including a large lump-sum check for the year 
they were undergoing the treatment. Although the law generally 
limits attorneys to a fee of no more than $6,000, Lavallee and 
the other conspirators charged a fee equal to 14 months' worth 
of benefits, often more than $40,000, and accepted only cash as 
a payment. Esposito would instruct the clients to withdraw cash 
from their banks in amounts under $10,000 to avoid IRS 
detection, and then have them bring the cash to him. He would 
then split the cash with his partners.
    It was a lucrative business. When we executed search 
warrants on these four men, we found large amounts of cash in 
their homes and in their safety deposit boxes. For example, one 
safety box alone--safety deposit box alone held $650,000. 
Another one held $42,000 in cash, 28 gold coins, and 5 silver 
platinum bars.
    We began this investigation in 2008, after our New York CDI 
unit received a number of allegations from the New York DDS. It 
was a complex and lengthy investigation, but after a successful 
undercover operation, court-ordered wire taps, search warrants 
that I mentioned earlier, and working closely with the NYPD and 
the Manhattan district attorney's office, we were able to 
obtain all 106 indictments. This investigation is ongoing and 
very active; there will be likely more arrests to come.
    The SSDI program relies to some extent on honesty and 
integrity of the applicant. When that fails, it relies on the 
integrity of attorneys and doctors. When all those fails, fraud 
becomes a real possibility. Luckily, there are lines of 
defense, including the talented employees of SSA and the DDSs, 
anti-fraud measures like the CDI program, which led to this 
investigation, and law enforcement agents like the ones who put 
countless--hundreds of hours into this investigation.
    I can't say enough about them or the unflagging cooperation 
and support of the Manhattan DA's office and the NYPD. It was 
gratifying to sit in the courtroom in Lower Manhattan last week 
and see those who defrauded SSA brought before a judge in the 
first step of the judicial process. This is obviously a very 
short version of a long and successful story.
    SAC Ryan and I are happy to answer any questions that you 
have. I thank you for this hearing.
    [The prepared statement of Mr. O'Carroll follows:]
    
    
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    Chairman JOHNSON. Thank you. We appreciate your testimony.
    Commissioner Colvin, I appreciate you being here. And I 
didn't introduce your associate, Bea Disman; thank you for 
being here, as well. You are recognized.

   STATEMENT OF CAROLYN COLVIN, ACTING COMMISSIONER, SOCIAL 
  SECURITY ADMINISTRATION, ACCOMPANIED BY BEATRICE M. DISMAN, 
    REGIONAL COMMISSIONER, NEW YORK REGION, SOCIAL SECURITY 
                         ADMINISTRATION

    Ms. COLVIN. Chairman Johnson, Ranking Member Becerra, 
Members of the Subcommittee, thank you so much for this 
opportunity to discuss our front-line employees' role in 
uncovering the disability fraud conspiracy in New York. My name 
is Carolyn Colvin, and I am Social Security's Acting 
Commissioner. I have served in this position since February of 
2013. I am joined by Beatrice Disman, our Regional Commissioner 
for the New York Region. Ms. Disman is available to answer 
questions you may have about the case.
    Like you, I am offended whenever anyone attempts to defraud 
the government. I am especially outraged by the details of the 
fraud conspiracy in New York. In this case, an attorney and 
several others fabricated medical history to defraud the 
government of millions of dollars in disability benefits. Most 
of the false claims involved former firefighters and police 
officers. Some even alleged disabilities that they said arose 
from the tragic events of 9/11. Frankly, I am disgusted by this 
betrayal of the public trust, and I applaud the Chairman for 
shining a light on our work to root out fraud.
    On behalf of every employee at SSA, I am putting the 
criminals on notice. We will find you, we will prosecute you, 
we will seek the maximum punishment allowable under the law, 
and we will fight to recover the money that you have stolen.
    Social Security has zero tolerance for fraud. Moreover, 
this case in New York touches a very special nerve. As you can 
imagine, criminals invoking the memory of 9/11 to masquerade as 
disabled is deeply personal for our employees in the New York 
Region. Not only are the New York Regional Office and the New 
York DDS located within blocks of Ground Zero, but many of our 
employees were working at the time of the attack, and were 
fortunate to escape with their lives. Many of those same 
employees also returned to work in emergency outposts 
throughout the city to accept survivor claims from the families 
of the deceased.
    As the investigation unfolds, I could not be prouder of our 
employees at SSA, the New York DDS, and the office of Inspector 
General. They worked cooperatively to flag the fraudulent 
cases, connect them to a criminal conspiracy, and build the 
cases for prosecution. Partnership with state and federal law 
enforcement has likewise been essential. We owe a special debt 
of gratitude to the diligent employees of the New York DDS, who 
are funded and trained by SSA to make disability determinations 
and to identify fraud.
    These employees originally referred fraudulent cases 
involved in the conspiracy to the OIG. Over time, the OIG began 
to notice patterns in the referrals. The New York Cooperative 
Disability Investigation unit, one of the original five CDI 
units established in 1998, was critical to connecting the 
individual cases to a criminal conspiracy. To date, the 
Manhattan District Attorney has indicted 106 individuals for 
their crimes.
    According to our estimates, the fraudulent payments totaled 
$23.2 million to 102 disability beneficiaries and their 
auxiliaries. We have already suspended these individuals' 
benefits, and we will move aggressively to recover any 
overpayments.
    While our data show that the level of fraud in the 
disability program is less than one percent, even one case of 
fraud is too many. The best way to ensure we continue stopping 
fraud is to invest in our employees. Last year, they made over 
22,500 disability fraud referrals to OIG. Regrettably, Congress 
has not fully funded our employees' good work. In fact, since 
Fiscal Year 2012, Congress has appropriated $421 million less 
for program integrity reviews than what it authorized for us in 
the Budget Control Act.
    Recent news that Congress may fully fund our program 
integrity budget in 2014 is a step in the right direction. 
These resources would help to ensure that only those persons 
eligible for benefits receive them. However, I must caution 
that eliminating the CDR backlog and reversing the negative 
effects of past years of under-funding require a multi-year 
commitment. The net effect of budget cuts over the past three 
years has been the loss of about 11,000 employees. That means 
drastically fewer people standing watch for the next attempted 
theft, and drastically fewer people available to serve those 
who truly need us. Fewer people to handle mounting workloads 
also jeopardizes our exceptionally high payment accuracy, which 
is 99 percent or better in the Social Security disability 
program.
    We are proud of these results, and we will continue 
delivering them with your support. Thank you. Ms. Disman and I 
will do our best to answer any questions you have, with the 
understanding that the fraud case is an active investigation.
    [The prepared statement of Ms. Colvin follows:]
    
    
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    Chairman JOHNSON. Thank you for your testimony. We will 
turn to questions now. And I have one for Mr. O'Carroll.
    The New York case is the latest of three disability fraud 
cases in less than two years. Can the American people expect 
more like this? Yes or no?
    Mr. O'CARROLL. Chairman Johnson, we have got a number of 
investigations going on now involving----
    Chairman JOHNSON. The reason I ask is can we expect more 
like this to surface, yes or no?
    Mr. O'CARROLL. Probably.
    Chairman JOHNSON. Okay. You are refusing to give me a yes 
or----
    Mr. O'CARROLL. If you want a yes on it, yes. We have other 
investigations of----
    Chairman JOHNSON. Okay.
    Mr. O'CARROLL [continuing]. Magnitude.
    Chairman JOHNSON. Thank you. Ms. Colvin, has anyone at your 
agency been held accountable for fraud conspiracy in West 
Virginia, Puerto Rico, or New York cases?
    Ms. COLVIN. All of those cases are still open and active.
    Chairman JOHNSON. You didn't answer my question, either. 
Are you holding anybody in your agency accountable, yes or no?
    Ms. COLVIN. I think that my answer has to be that those are 
still open cases. We can certainly----
    Chairman JOHNSON. So the answer is no. Has anyone been 
fired or disciplined for these fraud schemes?
    Ms. COLVIN. There have been significant organizational 
changes in our West Virginia office. But, as I said before, 
those----
    Chairman JOHNSON. Well, you got West Virginia, Puerto Rico, 
and New York now. Are you taking care of those areas, as well?
    Ms. COLVIN. I think we need to let the investigation 
continue.
    Chairman JOHNSON. You are not making any changes in the 
Administration. Is that true or false?
    Ms. COLVIN. We are not making any changes in the 
Administration at all. There is no suggestion in my 
understanding that we need to do that at this time. I would 
prefer to see the investigation concluded, and we will make our 
decisions at that point.
    Chairman JOHNSON. Well, you know it has been a long time 
coming. Those investigations have been going on for many years. 
It is not just something brand new.
    Ms. COLVIN. We make the referral, Mr. Chairman. We don't 
determine the fraud or do the investigation. We simply make the 
referrals. And we make considerable referrals each year.
    Chairman JOHNSON. Yes, but you are running the agency right 
now. And you note on page two of your testimony, ``The 
continued success'' of the fraud detection and referral 
process--you call success three scandals in two years, with the 
last two within six months of the same region?
    Ms. COLVIN. Yes, I would call it success, because I think 
that anti-fraud activities have been very successful. Remember 
that it was our staff who uncovered those cases, and it was the 
Inspector General who was able to note patterns in those 
individual referrals that suggested conspiracy.
    I still contend that the first line of defense are our 
well-trained employees, the DDS as well as the field office. 
They are trained to identify potential fraud, and they are 
doing just that. And, clearly, the reduction in the number of 
staff we have to watch the alert to potential fraud is a 
concern for us, because the numbers have substantially 
decreased.
    Chairman JOHNSON. Well, it seems like it took an awful long 
time to uncover this last one.
    On page two you state you will move to recover any 
overpayments from the New York fraudsters. You call these 
overpayments, but aren't they illegal payments? Yes or no?
    Ms. COLVIN. I am sorry, you----
    Chairman JOHNSON. The payments you made to those people in 
New York during all this, you call them overpayments. Weren't 
they illegal payments?
    Ms. COLVIN. Bea.
    Ms. DISMAN. Chairman, as in Puerto Rico, we can't make that 
determination now. I am actually waiting to get a release from 
the Manhattan District Attorney to start the re-review on the 
cases. As a result of the re-review, we will be able to make 
that determination. As I told you in Puerto Rico, in some of 
the cases that were involved, there is other medical evidence 
and other disabilities.
    So, yes, we will be taking the same process as Puerto Rico. 
But right now you have the indictments and we have not been 
able to do that re-review of the cases.
    Chairman JOHNSON. But it has been going on for years. It 
seems to me you should have been more aware of it.
    Mr. O'Carroll, according to your testimony, U.S. Attorney 
for the southern district of New York ultimately declined to 
pursue the case. Thankfully, Manhattan's District Attorney 
agreed to take it. Why aren't federal prosecutors going after 
these crime rings?
    Mr. O'CARROLL. Well, Chairman Johnson, we have taken a 
review of presentations on our investigations to U.S. 
Attorney's office. And I would say more than half of the time 
that we present to them, they do accept. Many times, the U.S. 
Attorney's offices have thresholds for the amount of fraud that 
is involved before they will authorize on a prosecution. And 
often times, with our cases, especially in the infancy of a 
case, it isn't that much, in terms of the dollar amount, to 
attract the prosecution of it.
    And also, too, is that, with a lot of these things, it is 
cooperation. In terms of if we are using undercover agents or 
using other agencies to help us on an investigation, we will 
then have somewhat of an obligation to stay with the 
organization. In this case, here, it was a partnership with the 
district attorney's office. They were working in one direction, 
we were working another. We partnered, and we came up with a 
result. And we did keep the southern district of New York 
informed on it as we went along.
    Chairman JOHNSON. Well, I appreciate that, and I thank you 
all for helping us in those instances.
    Why don't federal prosecutors want to go after these kinds 
of crime rings?
    Mr. O'CARROLL. Well, in terms of the--it is usually--it is 
a long, involved, complex investigation, would be the example 
of these, and----
    Chairman JOHNSON. Too small a----
    Mr. O'CARROLL. And the small ones, they are not interested 
in--usually, on it. What they will do is, if we can package 
them together, and make a presentation with a half-a-dozen or a 
dozen of these investigations, they will go. But--and often 
times, I guess when they are making a determination on, you 
know, charging someone with bank robbery or a disability fraud, 
it goes in--you know, they have their priorities.
    And we--but I got to also tell you, Chairman Johnson, I go 
out personally and interview or meet with U.S. Attorneys across 
the country, discuss with them investigations that we have, 
explain to them the advantage of--the deterrent factor of doing 
it. And often times, it is just by talking to them we end up 
with prosecutions. So I am personally out there, talking to 
U.S. Attorneys, trying to get our prosecutions.
    Chairman JOHNSON. Well, thank you for that. I think if we 
don't go after these crime rings, you know, the federal 
prosecutors are sending a message to professional crooks and 
the phony disabled that committing fraud pays off. Thank you 
for your testimony. I think we need to change that.
    Mr. Becerra, do you have questions?
    Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for 
your testimony. And may I just say congratulations on the work 
you have done to uncover this fraud, the conspiracies? And 
especially, Ms. Disman, to you, can you please express to all 
your front-line workers a sincere thank-you for stopping what 
had been a conspiracy that had run for quite some time? Very 
much appreciated. Very much appreciative of the fact that they 
are the ones, your staff are the ones that discovered this. 
They are the ones that moved forward.
    And, Mr. O'Carroll, to the inspector general, I say thank 
you to you and your folks, working with New York City's 
district attorney and the local law enforcement authorities 
there in New York, for doing everything possible to follow up 
on the detection of the fraud, and now go after these folks. 
And, as the commissioner just said, now to go out and get back 
the money that taxpayers paid. That is very, very important.
    I want to clarify something, as well. Ms. Disman, when the 
chairman asked you questions about have you taken back the 
money that some of these corrupt individuals got, and you are 
saying that is under investigation, I think you are essentially 
saying what we all know, is that, in America, you are presumed 
innocent until proven guilty. And not that we want any of these 
despicable people who held a position of trust, having been 
former police officers or former firefighters, that we want 
them to keep the money they don't deserve, it is just that, 
like any other American, before you can say, ``You are a bad 
guy,'' we have got to prove it in court.
    Ms. DISMAN. I absolutely agree with you in two respects. 
Number one, let me assure all of you, this is even more 
despicable to me, because of my role in September 11th. Let me 
also assure you that my people started to identify these cases 
right after we set up the continuing disability investigations 
unit in 1998. So, we were identifying individual cases in 1999, 
and referring them to the Office of the Inspector General. That 
is how they were able to put together the trail and the 
patterns that actually came together in 2008.
    But having said that, we have--are abided by due process, 
we intend to do it. But make no mistake. As in Puerto Rico, we 
will get the money back. Once we review and determine the 
amount of the overpayment--and I also hope that, with the 
Manhattan District Attorney present, that part of sentencing 
after the trial will be to recover the money.
    Mr. BECERRA. Yes, so----
    Ms. DISMAN. So I think we have a dual approach to recover 
the money.
    Mr. BECERRA. So I want to make sure that, on the record, it 
doesn't look like you are giving a bureaucratic response when 
you say, ``The investigation is underway.'' It is just that you 
can't go out there and say publicly, as a government official, 
``Yes, these corrupt guys are guilty, and we're going to get 
the money.'' You are judging them before they have had their 
day in court. And we want them to be judged, and we want the 
judgment to be severe if they are found guilty. But, until 
then, we don't have a right to say you're guilty before we 
prove it.
    Ms. COLVIN. Mr. Becerra, we also are taking some actions in 
the cases that Chairman Johnson raised. We would be happy to 
brief you privately, but we don't want to say anything publicly 
that is going to compromise the investigation, and that is why 
I kept stressing that it is an open investigation.
    Mr. BECERRA. I appreciate that.
    Ms. COLVIN. But there have been some actions taken.
    Mr. BECERRA. I appreciate that. Maybe the chairman will let 
us take advantage of that.
    Ms. Disman, again, you are in charge back there in New 
York. So, tell me, how many of the--of your Social Security 
employees were involved in the conspiracy that was discovered?
    Ms. DISMAN. None. Unlike Puerto Rico, where you had a 
former Social Security employee, the extensive investigation 
and extensive analysis--and, let me just stress, my people 
worked directly with the Office of the Inspector General over 
the years. We helped do all the analytical work on the cases.
    And let me reassure you on this New York case. It is a lot 
different than Puerto Rico. This is an affinity group of people 
that were involved in, most of them, New York City pensions 
that actually committed this awful conspiracy.
    Mr. BECERRA. So, Mr. O'Carroll, let me get this straight. 
In New York City, not one Social Security employee was involved 
in this conspiracy of what you found?
    Mr. O'CARROLL. Correct, Mr. Becerra. It was facilitators in 
this case, not SSA employees.
    Mr. BECERRA. Not SSA employees. And in Puerto Rico, there 
weren't any Social Security employees involved, or at least not 
current. It was a former employee. But those that are on the 
line, on the job, getting paid by the taxpayers, were not 
involved in the conspiracies in New York or Puerto Rico.
    Mr. O'CARROLL. Correct.
    Mr. BECERRA. Okay. They are the ones that detected it. They 
weren't involved in it.
    Mr. O'CARROLL. Yes.
    Mr. BECERRA. Okay. Let's be clear on that. I think all of 
you know that this congress has continued to cut your funding 
over the last several years. And, Ms. Colvin, you mentioned 
that, as well. You mentioned $421 million less that you have 
received to do the fraud busting that we are talking about 
today.
    Ms. COLVIN. We are very pleased that it appears that our 
Fiscal Year 2014 appropriation may be approved. It has been 
approved in the House.
    I would just say that we are very aggressively involved in 
anti-fraud activities. That is one of the reasons that we first 
established the CDI units back in 1998. At that time I was in 
charge of operations for all of the field offices. And we have 
seen that the CDI units are effective. These cases are very 
complex, so you need the cooperation of the DDSs and SSA, the 
Inspector General, and local law enforcement. And that is what 
we have under the CDI, we have those formal arrangements.
    But because of the lack of resources, we only have 25 CDI 
units. With the program integrity money, if we get it, one of 
the things I want to do is expand some of those units, because 
we only have 25 states right now that have a CDI unit.
    Mr. BECERRA. So let me conclude with this, because I know 
my time has expired. So, Mr. Chairman, let me just ask one 
quick question that I hope Mr. O'Carroll and Ms. Disman can 
both answer.
    First, do you have enough of those fraud busters, these CDI 
units, where you need them? And secondly, how many of the 
staffers that you had in 2008, when you detected the 
conspiracy, the fraudulent conspiracy in New York, how many do 
you have now?
    Ms. DISMAN. Well, if you are talking about how many people 
are in the New York DDS now, I can just tell you, compared to 
2010, that staff is down 22 percent. And so, when you look at 
that, there are certainly less people on the line to do this 
work, and to report the detection. But they are really focused 
on fraud.
    I will tell you this case and the Puerto Rico case made our 
employees even more aware. And what is important is not only 
will you report it, it will be investigated, but what the 
Manhattan DA did and the U.S. Attorney in Puerto Rico allows us 
to do more referrals, because they see results as a result of 
their referrals.
    Mr. BECERRA. Inspector General?
    Mr. O'CARROLL. The CDI units, I have got to say, with the 
support of you, the chairman, and every--the members of this 
Committee, this is probably one of our best tools in terms of 
fighting fraud. The best part of it, it gets the money and 
identifies the money before it goes out the door. It is pre-
effectuation.
    With the support of this Committee, we are anticipating 
expanding them. We are adding people to the CDI units that we 
have now, with just the purpose of identifying fraudulent 
doctors, lawyers, and facilitators. And I think we have a 
pretty good story. And, moving forward, that is going to be one 
of our, you know, priorities, with any resources that we have.
    Mr. BECERRA. Thank you. Thank you, Mr. Chairman----
    Mr. O'CARROLL. And we would like to be in all 50 states, is 
what we would like to do.
    Mr. BECERRA. Thanks, Chairman.
    Chairman JOHNSON. Thank you. Mr. Griffin, you are 
recognized.
    Mr. GRIFFIN. Thank you, Mr. Chairman. I want to talk a 
little bit about this 99 percent accuracy, 1 percent inaccurate 
payment of overpayments and underpayments. You hear that 
general talking point or that factoid, whatever you want to 
call it, and you think, well, hey, everything is cool. It 
sounds like it is all great.
    But correct me if I am wrong, Mr. O'Carroll. Until we 
learned about the folks that you showed upon the screen, we 
thought those were legitimate, correct?
    Mr. O'CARROLL. Correct.
    Mr. GRIFFIN. So how can anyone tell me what they don't 
know? I mean the people that we saw on the screen were part of 
your accuracy. Sure, you can guess. You can estimate. But you 
have no idea what you don't know. That is the nature of fraud. 
If you knew what the fraud was, the next question would be, 
``Why are we allowing it to happen?''
    So, the idea that we can sit here and say, ``Well, it is 
only one percent,'' you have no idea what it is, it could be 5 
percent, it could be 10 percent, unless you have got a crystal 
ball that I am not familiar with. So, I know that makes for a 
good sound bite to say, well, it was only one percent, you 
know, let's go to the House.
    But it is just not true. You don't know. You don't know. I 
don't know. And I am sure you would say, if you had more money, 
you would know more. I have never heard a federal agency say 
they need less money, ever. It will never happen, I guess. So, 
I just want to get that point out there.
    I know there is a lot of hard-working people doing a good 
job. And you are a great guy, and I have worked with you on 
some stuff. But I just wanted to clarify that. That really--
that entire talking point just needs to be erased. I am sure it 
won't be. But it just makes no sense.
    The second thing I would say is--and I cannot speak for the 
Chairman--he does a great job on his own--but getting to the 
other cases of fraud, West Virginia and New York, and--the 
Chairman asked about employees. I certainly understand innocent 
until proven guilty in a court of law with regard to these 
guys' jet skis, and all this nonsense. Gymnast? I mean, you 
know.
    But when you are talking about employees, civil servants 
who may or may not have been involved--and only you all know 
the details, you know, there is a lot of stuff you can't 
probably talk about here--we all know that, in order to fire 
someone, they do not have to be innocent until proven guilty in 
a court of law applying a beyond-a-reasonable-doubt standard. 
That is not the standard to fire people.
    So, a lot of times, when things are discovered in an 
agency--IRS, for example, elsewhere--people are fired long 
before the case has made its way through the system fully, 
because you get enough, as an employer, to say, ``Hey, this 
person shouldn't be working for me.''
    Now, I understand it takes a whole lot of bad action in the 
Federal Government under the civil service rules to get rid of 
somebody. I mean I have worked in those agencies, and sometimes 
you think, short of a murder, we just got to move them around 
to some other desk, right? I mean let's all--we are all 
laughing, because we know it is true. If there are people 
identified as potentially bad actors, what do we do with them? 
We don't have to wait for courts to act to take action on that. 
I will wait on an answer on that.
    One more thing I want to mention. And, you know, there is 
always a danger with anecdotal evidence. But anecdotal evidence 
is important for Members of Congress, because we go back home 
and we hear stories, right? And I can tell you. I don't know if 
the rules that we have that a lot of people comply with make it 
easy to commit fraud, I don't know exactly. But I could tell 
you that almost every time I go home--and I am thinking right 
now about the Christmas holidays.
    There is a guy that I know, and I have talked with some 
folks about him, and he is a former professional. He rides a 
motorcycle, he is very active, he does all sorts of things. And 
he is on full disability, Social Security disability. And I 
don't think it is fraud like this. I think he went right 
through the system. And I think they said, ``You know what? 
There is nothing in the world that you can do. You must just 
get a check. Now go ride your motorcycle.'' You know, there is 
a lot of that that goes on. And I know that is not in your 1 
percent, 99 percent calculus.
    So, I am out of time. But, Mr. O'Carroll, if you could, 
just speak to the issue of employees that might need to be 
fired, even though they are not guilty in a court of law.
    Mr. O'CARROLL. Mr. Griffin, I will try to get both of them, 
real quick.
    First one, on the employees one, it is--you--just as this 
thing--you know, it is important when an SSA employee goes bad, 
we watch very closely on it. I must tell you. I get a report 
every day about every one of our employee investigations that 
we are having.
    And amongst them, kind of along your lines, I have two 
columns. I have--one column is what has happened to that 
employee now, meaning are they still working at SSA or are 
they, you know, on--if they are not at SSA, are they on leave 
with pay, or are they on leave without pay? And what we try to 
do is put them immediately on leave without pay while we are 
doing any of their criminal activities. Sometimes we will leave 
them in place, because that is the only way we are going to be 
able to catch any co-conspirators on it.
    But I must assure you. First and foremost of all of our 
priorities is employee fraud. And I must say that it is a small 
percentage, as we talked before. But any percentage, when you 
are talking about fraud, is unacceptable.
    And on the other one, for the person who is riding the 
motorcycle and looking very healthy, that is the reason why we 
have the CDI units, that is why we bring the videos in, to show 
you that we go out when there is a suspicion like that and do 
it. We get 140,000 allegations a year in our hotline, and we 
try to run out as many as we can.
    Chairman JOHNSON. Mr. Renacci, you are recognized.
    Mr. RENACCI. Thank you, Mr. Chairman, and I want to thank 
all of the witnesses with their testimony.
    You know, when I got here this morning and I heard the 
Chairman's opening remarks, you know, I agree 100 percent. He 
used words ``shocking,'' ``outrageous.'' And when I heard the 
Ranking Member's remarks, I almost thought, well, there is no 
problem. We ought to just go leave and--it is the bad guys, 
those bad guys out there.
    And, the truth of it is, there are bad guys. And we do have 
a lot of good employees. The issue, though, isn't just the bad 
guys, because there are always going to be bad guys, and we are 
always going to have to deal with bad people. The issue, 
really, is what are we doing to make sure we protect taxpayer 
dollars?
    You know, when I was mayor of my community, I didn't start 
every Monday morning meeting by saying, ``We got bad guys out 
there, we better be careful.'' What I started out every meeting 
was, ``The number one goal of every one of us in this 
Administration is to make sure we protect the taxpayers' 
dollars.'' So, when I go home, I have to listen to my 
constituents who aren't going to say, ``You guys are okay, it's 
the bad guys.'' They are going to say, ``What are you doing to 
fix the problem?''
    So, when you hear some of these fraud cases, and you see 
some of the pictures, yes, there are bad guys out there. But 
the question is, what are we doing to fix the problem? So I am 
going to go back to I know one question that the Chairman 
asked. I have got a couple as follow-ups.
    You know, we have some issues. And, of course, there are 
some employees who were involved, because somebody approved a 
disability payment. So, at that point in time--and I am not 
saying that was fraudulent, I am not saying it was wrong. But 
somebody had to approve a bad payment. So there is an employee 
somewhere that was involved. I am not saying that is a bad 
employee; that could be a good employee. The question is, do we 
review our staff? And have we made any changes in staff since 
Puerto Rico or, now, with New York? Any changes in staff 
because of these fraudulent activities? Yes or no?
    Ms. COLVIN. I am going to let Bea speak specifically to New 
York. But I don't see a reason to change our staff. There is 
nothing that has come to my attention that suggests that our 
staff has done anything wrong.
    Mr. RENACCI. I am not saying they did.
    Ms. COLVIN. Remember that the cases were identified by our 
staff. The medical information was fabricated, so there is no 
way that staff would have known that it was not----
    Mr. RENACCI. Okay, let's move past that. Let's hold on. Any 
changes in policy, then? Let's move--we have great staff. 
Let's----
    Ms. COLVIN. All right.
    Mr. RENACCI. We've got that one. Now, any changes in 
policy?
    Ms. COLVIN. We are looking at a number of policy areas. We 
are working with the Institute of Medicine to----
    Mr. RENACCI. How long ago was the Puerto Rico issue?
    Ms. COLVIN. How many?
    Ms. DISMAN. The Puerto Rico issue was investigated over a 
period of years. And it actually came to fruition, as you know, 
in August of this past year.
    Mr. RENACCI. Okay. Any changes in policy since August, 
because of the Puerto Rico incident?
    Ms. DISMAN. Well, there has been a number of initiatives. 
As we looked at Puerto Rico, over the years----
    Mr. RENACCI. Any changes in policy----
    Ms. DISMAN. Well, I am going to tell you. There has been--
our policy staff has been in touch with the Administrative 
Conference of the United States, and the Institute of 
Medicine----
    Mr. RENACCI. You are not answering the question.
    Ms. COLVIN. Mr. Renacci, we have to have data and research 
to make----
    Mr. RENACCI. I am just asking a simple yes-or-no question. 
Have there been any changes in policies?
    Ms. COLVIN. You don't make changes that quickly.
    Mr. RENACCI. Okay.
    Ms. COLVIN. You have to have time to----
    Mr. RENACCI. All right. We will move to the next one. Any 
changes in procedures?
    Mr. BECERRA. You have to let them answer.
    Mr. RENACCI. I am asking yes or no questions. I am trying 
to move on. I have five minutes.
    Mr. BECERRA. They are answering----
    Mr. RENACCI. Any changes in procedures?
    Ms. COLVIN. I am sorry. If you are looking for yes-or-no 
questions--answers, I can't give them to you.
    Mr. RENACCI. You can't answer whether there has been any 
changes in policies and procedures, or--since the Puerto Rico 
issue?
    Ms. COLVIN. [No response.]
    Mr. RENACCI. All right. Let me give you a policy, then, and 
just see what your thoughts are on it. Because, clearly, we are 
not getting anywhere.
    And I got to tell you. The people back in my district, they 
are concerned about this. They are concerned and they want to 
see action, that is why I am saying, I am not saying this is 
bad people, and I am not saying we are bad employees. I think 
you probably have a lot of great employees. And I think you are 
working as hard as you can. But I do think we have to move when 
we have dollars being lost, taxpayer dollars.
    You know, the Medicare program, doctors convicted of 
defrauding Medicare are banned from serving Medicare 
beneficiaries. Can you tell me if doctors that are kicked out 
of the Medicare program for previous fraud convictions are 
allowed to give medical advice in these situations, and are we 
accepting medical advice?
    Ms. COLVIN. They are not. We have a list of doctors that 
have been barred, and we check against that now. For 
information that is coming in from individual providers, we are 
not able to determine that. But for anyone that we hire or 
engage, they are not allowed to do that.
    Mr. RENACCI. Well, that is good. That is----
    Ms. COLVIN. And the local states and governments are very 
careful in checking those people who have been disbarred, if 
their attorneys have lost their medical license or been 
disciplined.
    Mr. RENACCI. Well, I just ran----
    Ms. DISMAN. If I could add to that, all the DDSs have 
professional relations people whose job it is to look at the 
licensing, and to also be alert to all of this. So they 
basically take them off any consultative panels and the medical 
evidence.
    Mr. RENACCI. I am out of time. But I know that I heard Mr. 
O'Carroll say that there are additional cases coming down the 
line.
    I would just ask you one thing, if you could get to my 
office. I would like to hear what policies and procedures you 
are going to change and have changed, hopefully within the next 
three to six months. I would like to hear some of those things 
and get some ideas. Policies and procedures, that is all I am 
asking for.
    Ms. COLVIN. We would be very happy to do that. That is why 
I said it couldn't be a yes-or-no answer, but there are a 
number of things in the works that I would be very happy to 
discuss.
    We are also looking at more data and analytics, so that we 
can look at the patterns. Because we knew these individual 
cases would not stand up alone, but when you see the pattern, 
the language pattern or whatever, and that is why the CDI units 
have been so effective, because we are able to work together 
and see those patterns.
    Mr. RENACCI. Thank you.
    Chairman JOHNSON. Thank you for your comments. Mr. Rangel, 
you are recognized.
    Mr. RANGEL. Thank you, Mr. Chairman. And let me thank you 
for--I really came down to congratulate you for this fantastic 
investigation. I had hoped that--an example of these terrible 
frauds that are being committed at the expense of men and women 
that put up their lives every day, and probably find it more 
difficult to get the type of assistance they need.
    The tone of the questions, I hope you understand, is 
because we do have a Democratic president, and sometimes 
anything that is done by the Administration is not appreciated. 
But in this particular case, I think, more than just the fact 
that you have indicted 100 people, you have sent a message to 
every policeman, every fireman, that the government does not 
intend to allow these things to happen.
    My question would be, did this information--was it received 
by the southern district of New York, United States Attorney's 
office, before it was turned over to District Attorney Vance?
    Mr. O'CARROLL. Yes. What happened in the early stages of 
this investigation was our investigators went to the southern 
district in New York and presented on it. And, in fact, I will 
have--let Mr. Ryan here, who--our agent in charge, he can kind 
of walk you through the two approaches, or the several attempts 
that we did, or several discussions that we had with southern 
district.
    Mr. RANGEL. Well, before we get involved in that, did they 
reject the evidence that was given to them as--whether or not 
they would prosecute?
    Mr. O'CARROLL. Yes. Early on in 2009, December of 2009, the 
case coordinators went over to the southern district of New 
York.
    Mr. RANGEL. And then you presented it to the----
    Mr. O'CARROLL. We presented it. They initially accepted it. 
Nine months later, we went back. Nine months later--I believe 
it was in September of 2010 we went back to them, explained 
what happened in that 9-month period. They decided at that 
point in time to decline the investigation, because they needed 
additional evidence to prove more than making false statements.
    Mr. RANGEL. Okay. I can't think of a program that has done 
more to take people out of poverty and to bring a sense of 
self-esteem and make such a tremendous contribution to our 
great nation than Social Security.
    You did turn it over to one of the greatest district 
attorney's offices that we have in the country. But as a former 
assistant U.S. Attorney it bothers me that, with the type of 
evidence that you presented to the New York County DA, that the 
U.S. Attorney's office did not see fit to follow through on 
this.
    In any event, I want to personally thank Ms. Disman for the 
cooperation that you have given with the difficult cases I have 
had in my congressional district. And I want to thank all of 
you for recognizing that it is rough being on that side of the 
table. But when you know that you are right, when you know that 
you have done the right thing, when you know that you have made 
a contribution to stop corruption, and when you can see 100 
people have been indicted, I think this should serve as an 
example for all of our federal agencies and Department as to 
what can happen when the front-line troops are looking for 
this.
    No U.S. Attorney's office, no district attorney's office 
can prosecute anything unless the evidence is presented to them 
in a way that is probable cause that they did violate the law. 
So I want you to know that it is appreciated. But these things 
happen politically, and all of you are mature enough to 
understand it. I do. And thank you so much for coming before 
this Subcommittee.
    And thank you so much, Mr. Chairman, for having this very 
interesting hearing.
    Chairman JOHNSON. Thank you. Mr. Kelly, you are recognized.
    Mr. KELLY. Thank you, Chairman. First of all, I appreciate 
you all being here. And, as you know, Mr. Renacci was talking 
about, you know, when I go back home--and it doesn't matter 
where I go--people come up to me and say, ``You know what? We 
know this is going on. And why aren't you guys doing something 
about it?'' They don't say to me, ``Listen, you need to get 
with the SSA people and find out who is not doing a good job.'' 
They say, ``You need to do something about this.''
    And all of us in this room today, both you testifying and 
us up here, we all work for the American people. You don't work 
for SSA and I don't work for the Republican Party. In fact, 
this is not a Republican or Democrat issue, this is an American 
issue. Because, as you know--and, Ms. Colvin, you can probably 
state it better than anybody else--how is Social Security 
funded?
    Ms. COLVIN. Taxpayer dollars. We are funded through----
    Mr. KELLY. Wage taxes.
    Ms. COLVIN [continuing]. FICA taxes.
    Mr. KELLY. Yes, wage taxes.
    Ms. COLVIN. Absolutely.
    Mr. KELLY. Wage taxes are paid by people who are working, 
and their employer: 6.2 percent from the employer, 6.2 percent 
from the associate. There is 12.4 percent of everybody's 
payroll going into a fund to take care of Social Security 
recipients. So when we talk about these things, it really isn't 
Republican versus Democrat, us versus you, it is about us, as a 
group, representing the American people. They sent us here to 
do a job. Our job in Congress is oversight, investigate and 
expose when we think there is something wrong.
    Ms. Colvin, I was looking at your bio. You have an 
incredible bio. And if you don't mind, I am just going to go 
through it, because I don't know if people understand 
everything that you do. Now, this is since 1995. You are a 
Regional Commission. You have direct authority over Social 
Security Administrations in New York, New Jersey, Puerto Rico--
--
    Ms. COLVIN. Ms. Disman.
    Mr. KELLY. Ms. Disman. But this is all in your region, 
right?
    Ms. COLVIN. I am the Acting Commissioner for the entire 
country.
    Mr. KELLY. Okay.
    Ms. COLVIN. Ms. Disman----
    Mr. KELLY. Ms. Disman.
    Ms. COLVIN [continuing]. Has the New York Region.
    Mr. KELLY. Okay, I am sorry. Ms. Disman, right. You are 
doing all of these different things.
    In addition to that--now, that is an administrative budget 
of about $400 million. You have 3,900 employees, 113 field 
offices, 4 teleservice centers, 4 Social Security card centers, 
the northeast program service center, and the regional office 
administrative staff. Throughout the region, more than 7 
million beneficiaries receive more than $88 billion--that is 
billion--in Social Security and supplemental Social Security 
income benefits, annually.
    Now, you are also--you were asked by the Commissioner of 
the Social Security to chair the Agency's Medicare planning and 
implementation task force. Right? You are responsible for 
implementing the responsibilities given to Social Security in 
the Medicare Modernization Act of 2003, the Medicare 
Improvement Acts--for Patients and Providers Act of 2008, and 
the Affordable Care Act of 2010.
    I am looking at all the different hats you wear. Right 
now--and correct me if I am wrong on this, because I don't know 
how you do these things--the reason you are here today is about 
this crime ring in New York. All right? You were here before 
because of Puerto Rico. But you are also the executive in 
charge of implementing the Affordable Care Act on behalf of the 
Social Security Administration. I understand that Social 
Security Administration must confirm the Social Security number 
of everyone who signs up for Obamacare.
    So, as you come here today, is your concern--has to be 
split. Of all these different things--really? You can do all 
these things? You are amazing.
    Ms. COLVIN. Excellent staff.
    Mr. KELLY. You are amazing.
    Ms. DISMAN. I also--it is more than just me. I have to 
credit it with all the employees that work for me, my executive 
team, and certainly all my years of analytical and experience, 
institutional knowledge.
    Mr. KELLY. Okay, all right. How many people we talking 
about getting Social Security numbers for, verifying?
    Ms. DISMAN. Well, we are talking about--are you talking 
about for the Affordable Care Act?
    Mr. KELLY. Yes, ma'am.
    Ms. DISMAN. Well, for the Affordable Care Act at this point 
in time, we wait for the CMS hub to send us----
    Mr. KELLY. Just ballpark it. I am not--listen, this is not 
a gotcha, I am just trying to figure out how many people you 
are trying----
    Ms. DISMAN. Yes. We are basically over 30 million right 
now.
    Mr. KELLY. Thirty million?
    Ms. DISMAN. Right.
    Mr. KELLY. Okay. And you have all this fraud going on, too.
    Ms. DISMAN. Well, this situation has not--has nothing to 
do----
    Mr. KELLY. You are a remarkable lady, then, for what you 
are doing. A remarkable person--I will take the gender 
specificity out of it. You are a remarkable person to be able 
to do all of this.
    Ms. Colvin, you said that you are underfunded, as an 
agency.
    Ms. COLVIN. That is correct.
    Mr. KELLY. Okay. How do you define ``underfunded''? What do 
you base that on?
    Ms. COLVIN. We are able to identify in our budget what we 
can do with the amount of dollars that you give us.
    Mr. KELLY. Okay.
    Ms. COLVIN. As a result of----
    Mr. KELLY. If I were to give you, from the United States 
taxpayers, $11.5 billion, would that be considered a sizeable 
amount?
    Ms. COLVIN. Our budget is----
    Mr. KELLY. No, no. Is that a sizeable amount? Because, you 
know, as Mr. Griffin said, there is never enough money for any 
of the agencies. Do you know this year it is $11.5 billion, and 
we are underfunding you?
    Ms. COLVIN. Well, if you give us----
    Mr. KELLY. And not ``we.'' I am talking about American 
taxpayers.
    Ms. COLVIN. If we receive the 2014 budget, we will 
certainly be able to----
    Mr. KELLY. Okay, all right. All right.
    Ms. COLVIN [continuing]. Focus on that program----
    Mr. KELLY. No, I just wanted to make sure that we are 
talking the right way here, because sometimes we get confused 
about who we are actually working for. I work for the people of 
America, that is who I work for. Taxpayers is who I work for. I 
got to tell you. What you are doing is fine. The work is noble. 
I am not criticizing your work. And I know that the number is 
absolutely incredible, the overpayments.
    Now, Mr. Becerra said it is only a half-a-percent.
    Ms. COLVIN. Well, as we said----
    Mr. KELLY. A half-a-percent is--well, wait a minute, wait--
is $1.29 billion. Let's not minimize it by saying it is a half-
percent. You know the debt owed from these overpayments has 
gone from $5.4 billion in 2010 to $6.1 billion in 2012? So I 
don't want to identify it as ``only a half-a-percent.''
    These are huge dollars. And what I don't want to do, I 
don't want to minimize what we are talking about by reducing it 
down to a percentage. A percentage, a small percentage of a 
very large number is a very large number to the people I 
represent in Western Pennsylvania. These are hard-working 
American taxpayers that are funding Social Security. They are 
putting 6.2 percent of every time they get paid, and their 
employer is matching it. This is not government money. This is 
taxpayer money.
    And I really get aggravated. I have only been here for 
three years. This is not Republicans versus Democrats. This is 
Republicans and Democrats working together to serve the 
American people. I get so damn mad when it becomes political, 
but this is not a political issue. This is an issue we are 
defrauding the American people. We are not defrauding Social 
Security. And we better start to understand who we represent 
here. I did not get elected by all Republicans or all 
Democrats.
    But, damn it, I will tell you what. I watch this--this is 
not a criticism of you. We have raised a group of people that 
look at a program and say, ``I think I can game this. I think I 
can crawl under the wire here. I think I can do this and take 
advantage of the government.'' No, no, no, no, no. You took 
advantage of every woman and man who gets out of bed in the 
morning, puts their feet on the floor, and goes to a job, and 
every time they get paid, contributes 6.2 percent of their 
paycheck, matched by their employer 6.2 percent, to fund this. 
And if we think it is about defrauding the government, we are 
really way off the line on this. We better wake up and smell 
the coffee. No wonder the American people have such a low 
opinion of us. We are not protecting them.
    I don't want you to take the blame for anything. Listen. 
You have a much higher approval rating than I do. But you know 
what? I get blamed for anything that happens in this 
government, because we didn't step up to do it. So the purpose 
of us being here isn't to go after you, it is to make sure that 
we protect the integrity of this system for the American 
taxpayers.
    Listen, I thank you all for being here. Mr. O'Carroll, I 
know you have a great, great tour of duty. All you, I thank you 
for what you do. It is not about you. It never will be about 
you. It is about us, working with you, to get to where we need 
to be. I just have a hard time, Ms. Colvin, when I look at 
$11.5 billion and think, my God, we are underfunding? That is a 
lot of money.
    Chairman JOHNSON. The time of the gentleman has expired. 
Thank you.
    Mr. KELLY. I have expired.
    [Laughter.]
    Mr. KELLY. Thank you, Chairman. Thanks for bringing it up.
    Chairman JOHNSON. Yes, sir. Thank you for your comments.
    Mr. Tiberi.
    Mr. TIBERI. Do I have to go next?
    [Laughter.]
    Mr. TIBERI. Wow.
    Chairman JOHNSON. Only if you will talk for five minutes.
    Mr. TIBERI. Well, thank you all. I think Mr. Kelly's tone 
expresses the frustration that we have, and it is not personal 
and it is not political. It is a frustration that we hear from 
our constituents. And I know, particularly the three of you 
that work for Social Security, share this concern that I am 
going to raise, and that is any time there is fraud, it hurts 
the integrity of the program. It hurts the integrity of the 
truly disabled. The whole program gets a black eye.
    And I would say that--to Mr. Griffin's point, when I go 
back home, there is not a whole lot of confidence in the 
program when they read stories like the New York story, because 
they don't think that is the one percent. They think it is the 
one that got caught. And so, while Mr. Rangel is correct--thank 
you for helping identify this--a constituent of mine might ask 
Mr. Ryan, ``Well, it is great that you caught it, but why did 
it take 20 years to catch?''
    Mr. Ryan, is it true that this goes back to 1988? And if 
that is true, what took so long to allow these criminals to 
operate for 20 years without getting caught?
    Mr. RYAN. Well, there is a long, drawn-out answer to that. 
But I will try to break it down----
    Mr. TIBERI. Okay.
    Mr. RYAN [continuing]. In segments. Number one, in 1998 it 
was identified through the diligence of SSA and the DDS in 
referring individual cases, individual referral, stating either 
this person was an NYPD or FDNY, or they had Lavallee as an 
attorney. Individual cases. We worked those individual CDI 
cases, and returned it back with our report mechanism, video 
surveillance, interviews, whatever. Went back to DDS. DDS, in 
95 percent of the time, denied them at the application stage.
    Subsequent to the application stage, there is the ODAR, 
which is the administrative law judges. Some of those, 
regardless of what was in the file, was placed on the rolls, 
based on the definitions----
    Mr. TIBERI. Outrageous.
    Mr. RYAN [continuing]. Of mental disability, based on the 
medical evidence in that file.
    The second part of the question is that total number was 
minuscule, and was not detected as a conspiracy, criminal 
conspiracy case, until 2008. And there was a lot of reasons for 
it. Automation. We were able to get in through the diligent 
efforts of Social Security, into the individual files 
electronically, and print that data, the analytics that Ms. 
Disman mentioned. We were able to get that, and we were able to 
identify the patterns then--Lavallee, et cetera--in this New 
York case.
    So, it is difficult to go back from 2008 to 1998, but in 
2008 we went full boat with the investigation. We knew what we 
had. It took us where we wanted to go with the prosecution, and 
get that money back. And it now rests with the Manhattan 
district attorney's office to get that money back to the 
American taxpayers.
    Mr. TIBERI. It does go back to 1988, though, right? With 
the four facilitators?
    Mr. RYAN. There was individual allegations.
    Mr. TIBERI. Okay. Back to 1988.
    Mr. RYAN. 1988.
    Mr. TIBERI. Okay, thank you.
    Mr. RYAN. And that was before--that was pension fraud. It 
was before when OIG was even in existence, and it was before 
CDI units were created----
    Mr. TIBERI. And Ronald Reagan was president, so we can 
blame him, too, right? Hey, but no one is trying to blame 
anybody. The point is that this----
    Mr. CROWLEY. I was in the other hearing room.
    Mr. TIBERI. It was a joke. Ronald Reagan. You weren't here 
when Mr. Rangel talked about the President.
    So, you know, this is real in American people's minds. And 
this is great that we caught this. But how much more of this is 
going on? I mean that is a question that people ask me all the 
time.
    And so, I got a question, Ms. Colvin. Last year your agency 
conducted 1.6 million continuing disability reviews.
    Ms. COLVIN. Yes.
    Mr. TIBERI. Three-quarters of which were completed through 
self-reported questionnaires, my understanding----
    Ms. COLVIN. Yes.
    Mr. TIBERI [continuing]. Correct me if I am wrong--called 
mailers. Were the reviews of these defendants in the New York 
case, were they completed via mailers, or full medical reviews, 
do you know?
    Ms. COLVIN. Which ones?
    Mr. TIBERI. The defendants in this particular case, the New 
York case, with the 100 defendants.
    Ms. DISMAN. Yes, these were not CDRs when they were 
reported. These were initial claims. But in my just doing some 
analysis on the 102, looking at it--remember, I can't look at 
the files right now----
    Mr. TIBERI. Yes, yes.
    Ms. DISMAN [continuing]. There were a number that had CDRs 
conducted on it. They were medical CDRs. As a matter of fact, 
we used that also as part of the investigation.
    So--but remember one thing. If you worked with your 
facilitators and your coaching, you would have the continuance, 
based on what the medical reports were.
    Mr. TIBERI. Does it--last question, because my time has 
expired. With respect to these mailers, if you are a criminal 
and you have got this disability benefit illegally, three-
quarters of the recipients are getting mailers. How many--it 
doesn't give me much comfort that if you are a criminal, that 
you are going to answer a mailer honestly. Is that a concern 
going back to the procedures that we have talked about earlier 
that might be under review because of this? Because why would a 
criminal answer a mailer?
    Ms. DISMAN. If I could just address the mailing system, 
because I was involved in disability, helping years ago. It is 
a profiling system. And that is to be smart with the budget 
that Congressman Kelly says, that you really want to identify 
those that are more likely to have medical improvement, and 
more likely to change.
    So, in doing the mailers, those are the high-risk people 
that are identified through a system, through analytics. And a 
number of the mailers are also reviewed and become medical 
CDRs, as well.
    Mr. TIBERI. Okay. I look forward to those procedures that 
Mr. Renacci talked about. I yield back.
    Chairman JOHNSON. Thank you. I am not sure that answer 
answered your question.
    Mr. Crowley, you are recognized.
    Mr. CROWLEY. Thank you, Mr. Chairman. I apologize I was not 
here for Mr. Rangel's statement, nor did I get the joke. 
Apparently, no one else got the joke, either. So I apologize, 
Mr. Tiberi, for that.
    Thank you, Mr. Chairman. I have tremendous respect for you, 
and so I do appreciate your holding this hearing today. We all 
know that we are people who will always try to--there are 
always people who will try to game the system in all walks of 
life. We see it throughout--it is throughout our society. What 
we need to do as policy-makers is to hamper their abilities to 
corrupt the system by putting into place systems to detect, 
catch, and bring those who violate the law to justice.
    From the standpoint of that test, what we are looking at 
today is proof positive that we have put in place those 
resources, both technical and human, to weed out, detect, 
apprehend people trying to defraud the Social Security 
disability program. We should commend the actions of the Social 
Security Administration.
    This hearing has been turned upside down on its head. This 
panel before us should be lauded for the work that they have 
done to uncover the fraud and corruption, and for bringing 
these cases to light. We here in Congress must also ensure our 
actions do not hinder their ability to continue these anti-
fraud programs.
    Listened very closely to the chairman's opening statement. 
I akin it to blaming the homeowner when their house is broken 
into. The homeowner, in this case, cried foul, got the cops on 
the beat, and brought those who invaded their home to justice. 
And we ought to be lauding that.
    I also want to laud the fact--in reference to the 1988 
number, those cases, as I understand it, Mr. Ryan, go back to 
1988 because they involved New York NYPD pension fraud. Is that 
not correct?
    Mr. RYAN. You are correct.
    Mr. CROWLEY. In essence, people who are police officers--my 
dad was a police officer, my grandfather before him--
individuals who are on the job, and then apply for what is 
known as three-quarter pay, is that correct, for disability?
    Mr. RYAN. That is correct, three-quarters.
    Mr. CROWLEY. And they get that in perpetuity, isn't that 
correct?
    Mr. RYAN. Correct.
    Mr. CROWLEY. And these are individuals who actually could 
work that you have helped to uncover. That not only saves the 
Social Security Administration dollars, but helps to save in 
conjunction with Mr. Vance's work, the district attorney of 
Manhattan, his work, millions and millions of dollars in New 
York City's pensions. Is that correct?
    Mr. RYAN. That is correct.
    Mr. CROWLEY. I thank you, once again, for that work, as 
well.
    Let me be clear. The people accused of perpetrating fraud 
on the American public under the guise of the worst terror 
attacks in American history are an outlier among the brave 
first responders in New York City. I come from a family of both 
police and firefighters, so I defend the reputation of both 
those departments and the men and women who serve in those 
departments, and do not defend in any way, shape, or form those 
outliers who would abuse the system.
    But there are far too many brave firefighters and police 
officers who are suffering today from real illnesses and real 
disabilities as a result of their service on what was known as 
The Pile, cleaning up Ground Zero after the horrific attack 
upon our nation. Let's remember it was the Federal Government 
that declared the air at Ground Zero safe and toxic free. But 
that wasn't the case. And the air and the elements that they 
were working in were not safe. Yet we allowed thousands of 
first responders to search without the proper protective gear 
for the remains of almost 3,000 victims. We did so to bring 
some relief and closure to those victims' families.
    We allowed thousands to work without protective gear to 
extinguish the fire, a fire, by the way, that burned for three 
months after the attack. We allowed those first responders to 
run into harm's way when the rest of us ran away. As a result, 
many of these heroes suffered and continue to suffer the after-
effects of this service. These men and women are legitimate 
recipients of a federal Social Security disability insurance 
program, and we should not and cannot let the few human nature, 
the few, to ruin a necessary program for the many.
    One of my proudest moments in Congress came when, under a 
Democratic majority, we passed the 9/11 First Responders Health 
Act. It came after years of obstruction and partisan delays, 
delays that never should have occurred.
    So, let me be clear. If any Member of Congress tries to use 
the fraudulent activities to taint the sick and wounded first 
responders of 9/11, they will have to deal with me directly. 
Congress has oversight and responsibilities and obligations. 
But we also have to make sure we don't actually hamper the 
ability of federal investigators to do their job of fraud 
detection. Some in Congress have tried to cut off the very 
federal resources that stop fraud through budget cuts, 
furloughs, and downsizing, taking the very cops off the beat 
who are looking out for fraud and abuse in these programs. 
Ultimately, this lack of resources encourages more, and not 
less, fraud.
    Thank you all again, each of you, for being here today. 
And, Mr. Chairman, thank you for holding the hearing. I do 
appreciate it. But I don't appreciate the tone of turning it 
upside its head and blaming the victims in this case for the 
work that they did to uncover this fraud and this abuse. There 
is always more to be done.
    I have news. There will be fraud for the rest of the 
existence of the United States and the world, as long as human 
beings exist on this planet. We are an inherently flawed 
people, and we have to get used to that. Let's get beyond this.
    Let's find--if we have--if there is an agenda of amendments 
that can reduce fraud and abuse, I ask the Majority to hold a 
hearing on your proposals. Bring them forward. If there is a 
way we can mitigate and stop waste, fraud, and abuse in this 
system, I am all for it. And, Mr. Chairman, I await your 
agenda, and let me know when the meeting notice will be. I will 
be here with bells on. I yield back the balance of my time.
    Chairman JOHNSON. Thank you. Ms. Black, you are recognized.
    Ms. BLACK. Thank you, Mr. Chairman. And, Mr. Chairman, 
thank you for allowing me to sit in on this Committee, although 
I am not a member of this hearing.
    However, I was a member of the Subcommittee for the first 
two years that I was here. And this issue has become one that I 
have delved into pretty deeply. And I have also, as a result of 
that, spent time when I was back in my district going through 
the entire system, from my local office to the determination 
unit to meeting with the ALJ's and also meeting with those who 
are on the Social Security Advisory Board. So, this is an issue 
that I feel like I have really spent a lot of time in trying to 
understand.
    As Mr. Renacci has said, how do we fix the problem? I thank 
you all for what you do. It is not an easy place to be. And, 
having gone through the entire system, I know that the 
determinations are not easy to make. There are a lot of things 
that we can fix, however, and I want to go to one of those.
    Mr. O'Carroll, more than half of the defendants in the New 
York case faked mental disabilities. Is that correct?
    Mr. O'CARROLL. Yes, Ms. Black, that is correct.
    Ms. BLACK. Okay. And then, following up on that, I am also 
looking back at the defendants in the Puerto Rico case--also 
faked mental disabilities. Is that correct?
    Mr. O'CARROLL. Yes.
    Ms. BLACK. Okay. Would you say that mental disabilities are 
easier to fake than other conditions?
    Mr. O'CARROLL. Yes. And the reason for it is, is that it is 
so subjective. As you well know, from being in the medical 
community, there aren't x-rays that will determine it, there 
aren't CAT Scans that do it. There is no test. So it is pretty 
much you are relying on the voracity of the patient, and then 
you are relying on the voracity of the doctor. And that is 
where our problem in Puerto Rico and New York was, is that 
they--it was collusion.
    Ms. BLACK. Okay. And so, let's go just another step 
further, because we have discussed this in hearings previously, 
that the criteria for awarding these benefits or medical 
disabilities or mental illnesses has not been updated. The last 
update was 1985.
    So, if we talk about how do we fix the problem so that we 
have better tools--not necessarily more money, but just better 
tools, Ms. Colvin, can you help me with why we haven't updated 
this? Is there a plan to update it? Are we working on that? 
Because this is 30 years now since it has been updated.
    Ms. COLVIN. That is an excellent question. Yes, we are. We 
are working with the Institute of Medicine, and they are 
reviewing more objective instruments that might be out there to 
test----
    Ms. BLACK. When do you expect something from this? I mean, 
again, 30 years' worth, I think I would like to have some kind 
of idea about what the plan is. You know, give us the timeline 
of when you would expect that there is going to be an actual 
update of looking at mental illnesses.
    Ms. COLVIN. We have just given the task order to the 
Institute of Medicine, so I don't have a date of when we will 
get their report. I will be very happy, once I talk with staff, 
to see what the timeline is there.
    But we also have been updating our medical listings. As you 
know, many of them had not been updated for many years. We have 
gotten----
    Ms. BLACK. You mean the grid? Are you talking about the 
grid?
    Ms. COLVIN. No, no, the listings, the medical listings that 
we use----
    Ms. BLACK. Oh, the listings, okay.
    Ms. COLVIN. And, in fact, I think right now we have updated 
10 of 15. The others are in the process of being updated. Our 
goal is to have all of them updated and then have them reviewed 
every three years.
    Ms. BLACK. Okay. I am sorry, I am going to reclaim my time, 
because I don't have very much time and I want to get to a 
couple of other things--but this updating is something that I 
have seen continuously throughout all of the departments that I 
have walked through. We have not updated this, and we can't 
wait for the medical community to say, ``Oh, we got to do 
another five years of research.'' I want to hear a plan of 
getting this done and getting it through.
    Grids are another thing. And looking at updating what 
currently jobs are available, we haven't updated that in years. 
So my own disability determination unit tells me that their 
hands are tied because there is not even computer skills that 
are out there now to say that you can be retooled to work with 
a computer skill if your knees are gone, or something where you 
have to have a job where you are sitting, that has not even 
been done. And it has been suggested for over 15 years now, so 
that one needs to happen, as well.
    So, when we talk about what can we do to fix the problem, 
there are tools out there that would help you to be able to do 
a better job, so that perhaps people wouldn't get on disability 
that don't need to be on disability. And that is what I want to 
hear back from you all, is when that is going to happen.
    Now, I want to go to Mr. O'Carroll again about using the 
Internet. So, Mr. O'Carroll, your agents were able to determine 
many of the defendants were working. And how were you able to 
do that? Did you use any of these more up-to-date kinds of 
tools that you could possibly use?
    Mr. O'CARROLL. Yes. We have been using social media. In 
fact, that was some of the video that we showed at the 
beginning on it. Normally, what we do with our CDI units is, as 
soon as we get an allegation that somebody is riding a 
motorcycle or doing something that is outside of the normal way 
they portrayed their disability, first thing we do is we start 
taking a look at probably public service type--not public--
public information, taking a look at licenses, see that type of 
information on it.
    Next step that we go to is we go to social media. And, 
often times, these people that are claiming that they can't go 
out in public, that they are afraid of crowds and things like 
that, will show on their social media that they are, you know, 
leading tours through rock concerts and things like that.
    Ms. BLACK. Certainly. So----
    Mr. O'CARROLL. So we use that, and we think it is a very 
good lead, and it is something that should be considered when 
people make an application.
    Ms. BLACK. So, if I could just complete this, Mr. 
Chairman--I know my time has run out, but going back to the 
decision-makers, I understand the decision-makers are 
prohibited from using these kinds of resources. Is that 
correct, Ms. Colvin?
    Ms. COLVIN. That is correct.
    Ms. BLACK. And is there a reason for that?
    Ms. COLVIN. Well, there are a number of reasons for it. We 
believe that using those media, one, it opens up to having PII 
data exposed. We also believe that it is an appropriate thing 
for the investigators to use, not for the adjudicators to use.
    Ms. BLACK. Well, I am going to suggest it is another tool. 
When we say how can we fix this problem to give those who are 
the decision-makers as much information as they possibly can, 
why not use things that are right at their fingertips, to be 
sure that they are getting all of the information, as well-
rounded a picture as they can?
    And I will tell you that the disability determination unit 
told me they would like to have the ability to be able to use 
things at their fingertips, but they are prohibited from doing 
so. I think this is something we should look into as a 
subcommittee, in giving them the opportunity, and maybe the 
ability to be able to use those.
    Thank you again, Mr. Chairman, for allowing me to sit on 
this Committee, and I yield back.
    Chairman JOHNSON. Thank you, Ms. Black. And I want to thank 
our witnesses for your testimony today, and thank the Members 
that were here and are still here. And I, along with my 
colleagues, are beyond outraged at this, and for good reason. 
So it is up to you, Commissioner, or Acting Commissioner--I 
will call you Commissioner--to take the actions you need to 
restore Americans' trust.
    And, with that, I thank you all for being here. The 
committee stands adjourned.
    [Whereupon, at 10:34 a.m., the subcommittee was adjourned.]
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