[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
STOPPING DISABILITY FRAUD:
RISK, PREVENTION, AND DETECTION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON SOCIAL SECURITY
OF THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
APRIL 26, 2017
__________
Serial No. 115-SS02
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
33-390 WASHINGTON : 2019
COMMITTEE ON WAYS AND MEANS
KEVIN BRADY, Texas, Chairman
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
DEVIN NUNES, California SANDER M. LEVIN, Michigan
PATRICK J. TIBERI, Ohio JOHN LEWIS, Georgia
DAVID G. REICHERT, Washington LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
VERN BUCHANAN, Florida JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska EARL BLUMENAUER, Oregon
LYNN JENKINS, Kansas RON KIND, Wisconsin
ERIK PAULSEN, Minnesota BILL PASCRELL, JR., New Jersey
KENNY MARCHANT, Texas JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee DANNY DAVIS, Illinois
TOM REED, New York LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania BRIAN HIGGINS, New York
JIM RENACCI, Ohio TERRI SEWELL, Alabama
PAT MEEHAN, Pennsylvania SUZAN DELBENE, Washington
KRISTI NOEM, South Dakota JUDY CHU, California
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
TOM RICE, South Carolina
DAVID SCHWEIKERT, Arizona
JACKIE WALORSKI, Indiana
CARLOS CURBELO, Florida
MIKE BISHOP, Michigan
David Stewart, Staff Director
Brandon Casey, Minority Chief Counsel
______
SUBCOMMITTEE ON SOCIAL SECURITY
SAM JOHNSON, Texas, Chairman
TOM RICE, South Carolina JOHN B. LARSON, Connecticut
DAVID SCHWEIKERT, Arizona BILL PASCRELL, JR., New Jersey
VERN BUCHANAN, Florida JOSEPH CROWLEY, New York
MIKE KELLY, Pennsylvania LINDA SANCHEZ, California
JIM RENACCI, Ohio
JASON SMITH, Missouri
C O N T E N T S
__________
Page
Advisory of April 26, 2017, announcing the hearing............... 2
WITNESSES
Sean Brune, Assistant Deputy Commissioner, Office of Budget,
Finance, Quality and Management, Social Security Administration 9
Seto J. Bagdoyan, Director, Forensic Audits and Investigative
Service, Government Accountability Office...................... 21
QUESTIONS FOR THE RECORD
Question asked in testimony by The Honorable David Schweikert, of
Arizona, to Sean Brune, Assistant Deputy Commissioner, Office
of Budget, Finance, Quality and Management, Social Security
Administration................................................. 58
Questions submitted by The Honorable Linda Sanchez, of
California, to Sean Brune, Assistant Deputy Commissioner,
Office of Budget, Finance, Quality and Management, Social
Security Administration........................................ 59
Questions submitted by The Honorable Sam Johnson, of Texas,
Chairman, Subcommittee on Social Security, to Sean Brune,
Assistant Deputy Commissioner, Office of Budget, Finance,
Quality and Management, Social Security Administration......... 62
SUBMISSION FOR THE RECORD
Shannon Benton, Executive Director, The Senior Citizens League... 64
STOPPING DISABILITY FRAUD:
RISK, PREVENTION, AND DETECTION
----------
WEDNESDAY, APRIL 26, 2017
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2020, Rayburn House Office Building, Hon. Sam Johnson
[Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
Wednesday, April 26, 2017
SS-02
Chairman Johnson Announces Hearing on
Stopping Disability Fraud: Risk, Prevention,
and Detection
House Ways and Means Social Security Subcommittee Chairman Sam
Johnson (R-TX), announced today that the Subcommittee will hold a
hearing entitled ``Stopping Disability Fraud: Risk, Prevention, and
Detection.'' The hearing will focus on the agency's ability to identify
and manage fraud risk, and the status of the Social Security
Administration's antifraud initiatives. The hearing will take place on
Wednesday, April 26, 2017 in room 2020 of the Rayburn House Office
Building, beginning at 10:00 a.m.
In view of the limited time to hear witnesses, oral testimony at
this hearing will be from invited witnesses only. However, any
individual or organization may submit a written statement for
consideration by the Committee and for inclusion in the printed record
of the hearing.
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with the formatting requirements listed below, by the close of business
on Wednesday, May 10, 2017. For questions, or if you encounter
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Note: All Committee advisories and news releases are available at
http://www.waysandmeans.house.gov/
Chairman JOHNSON. Thank you all for being here. Welcome to
today's hearing on how Social Security is preventing and
identifying fraud in its disability program.
Last month Eric Conn, a lawyer from Kentucky, pled guilty
to fraud that would have caused Social Security to pay $550
million in lifetime benefits due to fraudulent submissions.
Back in Texas, we would say that Conn is as crooked as the
Brazos River. And it is pretty crooked. In his plea, Mr. Conn
said he worked with doctors to submit false medical evidence
and that he paid Social Security administrative law judges
around $10,000 every month to approve claims. Conn was at this
since 2004.
Sadly, this isn't the only major fraud case to hit the
disability program in recent years. There is New York, where
New York City police officers and firefighters claimed 9/11-
related injuries, when many of them never even worked at Ground
Zero, in order to get disability benefits they didn't deserve.
And Puerto Rico, where a former Social Security employee
was in cahoots with a dirty doctor, who provided fraudulent
medical evidence that resulted in taxpayer-funded benefits that
should never have been paid in the first place.
Like organized crime, these recent scandals reveal fraud
rings made up of doctors, lawyers, and even Social Security's
own employees. It is a get-rich-quick scheme worth tens of
thousands of dollars for every person who illegally benefits.
These fraud cases show how Social Security hasn't always been
able to stop disability fraud.
Now, while the Bipartisan Budget Act of 2015 included many
commonsense ideas from this Subcommittee that try to address
the problem, these cases have brought to light the reality is
that it is like playing catchup. Bottom line, Social Security
has to be one step ahead of the fraudsters.
At today's hearing, we are going to take a hard look at
Social Security's efforts to fight fraud in its disability
programs and stop it before a single dollar of benefits is
paid. Social Security has a number of antifraud initiatives,
but without any way to judge their effectiveness, we don't know
if they are working or not.
Today the Government Accountability Office will release its
first report looking at agency efforts under its new fraud risk
management. This report looks at how well Social Security is
assessing and managing fraud risk in its disability programs.
As we will hear today, in recent years, while Social Security
has taken some steps in the right direction, there is still
important work to do to prevent fraud. Social Security pays
hundreds of billions of dollars in benefits each year, and if
left undiscovered, fraud rings like those uncovered in
Huntington, West Virginia, New York City, and Puerto Rico, have
the potential to cost hardworking taxpayers billions of
dollars.
I know stopping fraud is a goal that we all share, and
although Social Security has increased its efforts to fight
fraud, we need to be sure it is doing all it can to do so.
I thank our witnesses for being here today, both of you,
thank you so much, and look forward to hearing your testimony.
I will now recognize Mr. Larson for any opening statement
he cares to make.
Mr. LARSON. Thank you, Mr. Chairman. And let me further
underscore what the Chairman had to say with respect to the
work of this Committee, and I would like to applaud his
efforts, and particularly that of my predecessor on this
Committee, Xavier Becerra, who worked extraordinarily well
together.
We owe the 61 million Social Security beneficiaries
efficient administration and our most robust efforts to combat
fraud, waste, and abuse wherever it exists. And while the
actual number of fraud and erroneous payment cases is
relatively small, those who seek to defraud the Social Security
Administration, and the beneficiaries they serve, deserve
nothing less than the harshest punishment. I don't know about
that crooked river in Texas, but certainly we ought to make
sure that is the case.
And, again, I want to applaud this Chairman and my
predecessor, and the continued work I know that this Committee
will do. Many of the important actions the Social Security
Administration has already taken to combat fraud were the
results of the efforts here by this body.
The Social Security Administration, as the Chairman
established already, uncovered fraud and went after fraud that
existed in West Virginia, in New York City, and in Puerto Rico,
as the Chairman has indicated. For persons who abuse the public
position of trust, such as doctors, attorneys, and current and
former SSA employees, the law increased the penalties to 10
years in prison. I think in everyone's estimation on this
Committee and in the public, anyone who messes with the sacred
trust of the American people in the program and government that
they rely on the most deserves the maximum amount of punishment
that the law can provide. And, again, I want to compliment our
Chairman and the work of this Committee.
I also want to point out, though, that what we need to do
as well is to take a look at the current funding levels. And
while there has been a very focused area on fraud, abuse, and
waste, we have noticed that while the increase of recipients
with the baby boomers, coming through the process right now,
has risen dramatically, the cuts in the overall Administration
have dropped. This is problematic. Many of the frontline people
in Social Security are actually the people that are out there
recognizing and preventing the fraud, abuse, and waste.
They are the ones that pick up on the patterns. They are
the ones that, along with the Inspector General, are working on
the kinds of reforms and processing that we need to catch this
at the early stage. Further compounded by this issue, the very
people we are sworn to serve then find themselves in longer
waiting lines, in trouble that is reached in the disability
areas, the worst it has ever been at a wait that exceeds 18
months, and in large part because there isn't the capacity
there for us to reach out and serve these very deserving
people.
And so I think it is important that we catch up on the
fraud and we continue, as this Committee and this Chairman has
led, to do so.
We also must recognize the very dire needs of the large
group of people that are coming through this system while we
are experiencing even further cuts, who are also disadvantaged
by the fact that the technology that we have at our disposal
has not been fully modernized within the Social Security
Administration so that we can use both technology and the very
human services that are required in the face-to-face contacts
throughout our country and in all of our districts by the
Social Security Administration. It is my sincere hope that we
can do that.
Also, Mr. Chairman, if I might, I would like to submit for
the record an LA Times article on the Trump proposal to
eliminate the Social Security payroll tax and why that could be
extraordinarily problematic in terms of our ability not only to
fight fraud, but also, I think, jeopardizes the ability of the
fund itself.
And as this Committee in general--in the Subcommittee, but
also the Committee in general--considers tax reform, I believe
that this and other articles are salient, and I would ask
permission to submit for the record.
Chairman JOHNSON. Without objection.
[The submission of the Honorable Mr. Larson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. LARSON. Thank you, Mr. Chairman.
I also would like to thank our witnesses, and we look
forward to hearing from them and the ensuing questions that
will come.
Chairman JOHNSON. Thank you.
As is customary, any Member is welcome to submit a
statement for the hearing record.
Before we move on to our testimony today, I want to remind
our witnesses, please limit your oral statements to 5 minutes.
We get fidgety up here. However, without objection, all of the
written testimony will be made a part of the hearing record.
We have two witnesses today seated at the table. They are
Sean Brune, Assistant Deputy Commissioner, Office of Budget,
Finance, Quality and Management, Social Security
Administration. That is a long title.
Seto Bagdoyan, Director, Forensic Audits and Investigative
Service, Government Accountability Office, is also with us.
Mr. Brune, welcome and thanks for being here. Please
proceed.
STATEMENT OF SEAN BRUNE, ASSISTANT DEPUTY COMMISSIONER, OFFICE
OF BUDGET, FINANCE, QUALITY AND MANAGEMENT, SOCIAL SECURITY
ADMINISTRATION
Mr. BRUNE. Chairman Johnson, Ranking Member Larson, and
Members of the Subcommittee, thank you for inviting me to
discuss how the Social Security Administration works to detect
and prevent fraud in our programs. I am Sean Brune, Assistant
Deputy Commissioner for Budget, Finance, Quality and Management
at Social Security Administration.
We appreciate your leadership on this important topic. In
particular, we appreciate the support the Congress provided in
passing recent legislation, which included provisions that have
already enhanced and strengthened our ongoing antifraud
efforts.
Even with those new tools, we must remain constantly
vigilant to protect the agency's benefit programs from fraud.
It is despicable that some people will try to take
advantage of our programs, which serve the most vulnerable
members of society. Our message to those who attempt to defraud
Social Security is clear: We will find you, we will seek the
maximum punishment under law, and we will fight to restore the
money you have stolen from the American people.
Today I will give you an overview of our antifraud efforts
since we last discussed this issue with the Subcommittee in
2014. We would like to thank the Government Accountability
Office for recognizing the progress we have made and their
acknowledgement that we have established an organizational
culture and structure conducive to fraud risk management.
In 2014, we established the Office of Anti-Fraud Programs
to centralize oversight and accountability for our antifraud
efforts. This office leads our ongoing work to maintain
policies and internal controls to detect and prevent fraud
before we make a benefit payment.
We agree with GAO's recommendations to complete a
comprehensive fraud risk assessment of our disability program.
We will complete this assessment by the end of the year, and we
are moving forward to integrate ongoing risk assessments into
our antifraud efforts.
Next I would like to discuss a few important aspects of our
antifraud program.
We are excited to expand our use of data analytics
technology to combat fraud, including use of the Anti-Fraud
Enterprise Solution, or AFES tool. AFES is a multi-year, multi-
phase initiative that will replace and expand our current
antifraud systems. The tool will provide advanced data
analytics to help us identify and investigate high risk
transactions across all of our programs. It will run in real
time to identify situations that look similar to known fraud
schemes or are otherwise unusual, and score cases for their
relative fraud risk. The tool will integrate with the fraud
referral form to improve our coordination and information
sharing about alleged fraud with the Office of Inspector
General, OIG.
We continue to expand our Cooperative Disability
Investigations, or CDI, program. The CDI program places our
partners in OIG and law enforcement in a position to stop
people who attempt to fraudulently receive benefits. Chairman
Johnson and this Subcommittee have long championed the CDI
program, and we thank you for that support. In particular,
recent legislation requires the agency to expand the CDI
program to cover all States and territories. We currently have
39 units that cover 33 States, the Commonwealth of Puerto Rico
and the District of Columbia. We will continue to work within
available agency funding to secure law enforcement partners to
cover the remaining 17 States and territories.
In another important effort, for more than a decade our
Fraud Prosecution Project has sent our attorneys to the
Department of Justice to act as Special Assistant U.S.
Attorneys. These attorneys have increased the number of
prosecutions of violations of the Social Security Act. They
obtain criminal sanctions, including imprisonment, and recover
funds for the agency through criminal restitution and
forfeiture.
Before concluding my statement, I would like to acknowledge
the contribution of our frontline employees. In all our
antifraud efforts, our frontline employees remain an important
line of defense in detecting and preventing fraud. Our
employees prevent fraud by promptly referring allegations to
the OIG for investigation and by assisting the OIG in
developing case information for fraud investigations.
As I have discussed today, we have a comprehensive and
integrated antifraud program. We use a risk-based framework to
manage our fraud risk and we are working to increase prevention
through advanced predictive analytics. We will measure our
progress and continue to keep you informed as we move forward.
As an important reminder, everyone can play a role in
protecting our investment in Social Security. If you suspect
fraud, report it online to the OIG at oig.ssa.gov/report or by
phone through the OIG's Social Security Fraud Hotline at 1-800-
269-0271.
I would be happy to answer any questions you have.
[The prepared statement of Mr. Brune follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman JOHNSON. Have you seen any decrease in it lately?
Mr. BRUNE. Decrease in fraud? I think our efforts are
positioned to mitigate the evolving fraud risk.
Chairman JOHNSON. Good.
Mr. Bagdoyan, you are recognized.
STATEMENT OF SETO J. BAGDOYAN, DIRECTOR, FORENSIC AUDITS AND
INVESTIGATIVE SERVICE, GOVERNMENT ACCOUNTABILITY OFFICE
Mr. BAGDOYAN. Thank you, Mr. Chairman. Chairman Johnson,
Ranking Member Larson, and Members of the Subcommittee, I am
pleased to appear before you this morning to discuss GAO's new
report on SSA's antifraud activities in its disability
insurance programs, whose expenditures total over $200 billion
a year to about 19 million recipients.
Given their scope and scale, these programs are inherently
risky and vulnerable to fraud, and recent cases, like the ones
you mentioned, Mr. Chairman, highlight schemes through which
individuals fraudulently obtained hundreds of millions of
dollars in disability benefits.
Today I will highlight three key takeaways from this
report. First, SSA has taken some steps to establish an
organizational culture and structure conducive to fraud risk
management in its disability programs. Specifically, SSA
instituted mandatory antifraud training, established a
centralized antifraud office to coordinate and oversee the
agency's fraud risk management activities, and communicated the
importance of such efforts.
These actions are generally consistent with GAO's fraud
risk framework, a copy of which is right by my side here, a set
of leading practices intended to guide Federal program managers
when developing antifraud activities in a strategic way.
However, SSA's antifraud office, the Office of Anti-Fraud
Programs, or OAFP, faces challenges establishing itself as the
coordinating body for the agency's antifraud initiatives. For
example, the OAFP has had multiple acting leaders, though SSA
recently appointed a permanent leader to provide accountability
for the agency's antifraud activities.
Second, SSA has taken initial steps to identify and address
fraud risks in its disability programs, but has as yet to
comprehensively assess these risks or develop a strategic
approach to help ensure its antifraud activities effectively
mitigate these risks. Over the last year, SSA gathered
information about fraud risks, but these efforts generally have
not been systematic and did not assess the significance,
likelihood, or impact of all risks that were identified.
SSA also has several prevention and detection activities in
place to address known fraud risks in its disability programs,
such as fraud examination units, which review disability claims
to help detect fraud perpetrated by third parties. Further, SSA
has not developed and documented an overall antifraud strategy
that aligns its antifraud activities to its fraud risks.
Leading practices call for Federal program managers to conduct
periodic fraud risk assessments and develop a strategy to
address identified fraud risks.
Without conducting a fraud risk assessment that aligns with
leading practices and developing an antifraud strategy, SSA's
disability programs likely remain vulnerable to new fraud
schemes, and the agency will not be able to effectively
prioritize its risks and related antifraud activities.
Third, SSA monitors its antifraud activities through the
OAFP and its advisory body, the National Anti-Fraud Committee,
but the agency does not have effective performance metrics to
evaluate the impact of such activities. The OAFP has
responsibility for establishing performance and outcome-
oriented goals for them. It collects metrics to inform reports
about its antifraud initiatives, and the NAFC receives regular
updates about antifraud initiatives.
However, the comprehensiveness and relevance of the metrics
varies across initiatives, and some initiatives do not have any
metrics. Of the 17 initiatives listed in SSA's 2015 antifraud
report, ten had metrics that did not focus on outcomes and four
did not have any metrics. For example, SSA lacks a metric to
help monitor the effectiveness of its fraud examination units.
Leading practices in fraud risk management call for managers to
monitor and evaluate antifraud initiatives, with a focus on
measuring outcomes.
Without outcome-oriented performance metrics, SSA may not
be able to evaluate its antifraud activities, review progress,
and determine whether changes are necessary.
In closing, I would underscore that it is essential for SSA
to place a high policy priority on deploying effective
preventative processes and controls to help narrow the window
of opportunity for fraudulent activity in its disability
insurance programs and safeguard the government's substantial
investment in these programs. Fully and timely implementing the
four recommendations in our report would be essential in this
regard.
Chairman Johnson, that concludes my remarks. I look forward
to the Subcommittee's questions.
[The prepared statement of Mr. Bagdoyan follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman JOHNSON. Thank you, sir. I appreciate that.
As is customary, for each round of questions, I will limit
my time to 5 minutes and will ask my colleagues to also limit
their questioning time to 5 minutes as well.
Mr. Brune, a longstanding frustration of mine is how hard
it has been for Social Security to get some of its fraud cases
prosecuted. What is Social Security doing to make sure that the
cases get prosecuted and what role do Social Security Special
Assistant U.S. Attorneys play?
Mr. BRUNE. Chairman Johnson, thank you for the question.
For over a decade, in partnership with the Department of
Justice, we have placed dozens of our attorneys from the Office
of General Counsel in several United States Attorney's Offices
around the country to bring Federal criminal charges against
individuals who defraud Social Security.
These Special Assistant U.S. Attorneys (SAUSAs) are
dedicated to Social Security fraud cases, and they have
increased the number of prosecutions. During fiscal year 2017
in the first 6 months of the fiscal year, our SAUSAs, as was in
my written statement, obtained at least 119 guilty pleas,
leading to over $10.3 million in restitution. I believe those
are the outcome-oriented metrics that Mr. Bagdoyan is
encouraging us to employ. We look to advance more outcome-
oriented metrics. We agree with the GAO recommendation.
In addition to the SAUSA program, the Special Assistant
U.S. Attorney program, our Office of Inspector General refers
fraud cases to the U.S. Attorney's Office, even in
jurisdictions without fraud prosecutors, and is able to obtain
convictions in those jurisdictions when the cases meet the
Office's criteria for prosecution.
Chairman JOHNSON. It is up to the U.S. Attorney if they
want to have a Special Assistant U.S. Attorney, and it sounds
like you are offering up free labor to U.S. Attorneys. Why
don't all of them take you up on it?
Mr. BRUNE. Well, I would defer to the Department of Justice
on that question. We believe the partnership has been very
successful. We are committed to continuing the Special Fraud
Prosecution Project.
Chairman JOHNSON. Thank you. Mr. Brune, it sounds like your
new antifraud software should quickly identify fraud so we
don't have more of these multimillion dollar fraud schemes, and
that is a good thing, but when the time comes to get DOJ to
prosecute, is it going to be harder to get them to take on a
case when the dollars aren't as big? In my view, even $1 of
fraud is a dollar too much.
Mr. BRUNE. Chairman Johnson, we agree. One dollar of fraud
is a dollar too much. Our stated position for a long time has
been we have a zero tolerance for fraud.
Relative to your question, we believe that fraud
prosecution is important. It occurs after the fact. Our efforts
are interested in continuing the prosecution of folks who
defraud the program, but to increase our preventative
activities. In that regard, in my written statement I mentioned
the Anti-Fraud Enterprise Solution. This tool will help us to
focus our limited resources on the cases that have the highest
risk, that are, in fact, those third-party facilitator cases,
and hopefully we will be able to identify them both quicker and
take more prompt action because of the analytics that we run.
Chairman JOHNSON. Is there anything you need from the
Congress to make sure DOJ is prosecuting fraud cases that you
identify?
Mr. BRUNE. At this point, I think we have an excellent
ongoing rapport with the Department of Justice. We are
committed to maintaining our program and making sure that the
Special Assistant U.S. Attorneys are positioned to prosecute
the cases.
Chairman JOHNSON. Thank you.
Mr. Larson, you are recognized.
Mr. LARSON. Thank you, Mr. Chairman.
Mr. Brune, the Social Security Administration has about
61,700 employees right now, which is down from over 67,000 in
2010. That is approaching a 10 percent loss. Is that correct?
Mr. BRUNE. Approximately, yes.
Mr. LARSON. Social Security has many more beneficiaries
today than it did in 2010. Right now there are about 61 million
people receiving their earned benefits, roughly 7 million more
than in 2010. That is about a 13 percent increase. Would you
agree with that?
Mr. BRUNE. With my quick math, yes, that is about accurate.
Mr. LARSON. Yeah. My quick math and yours are about the
same, so, yes.
Mr. BRUNE. The numbers are the numbers.
Mr. LARSON. And at the same time, the Social Security
Administration's basic operating budget has fallen by 10
percent since 2010 after adjusting for inflation. So you have
less money, but have to serve more people. Is that a fair
statement?
Mr. BRUNE. Our beneficiary rolls have grown, yes.
Mr. LARSON. So, Mr. Chairman, I would like to submit for
the record this analysis of SSA's budget numbers by the Center
on Budget and Policy Priorities, with the Chairman's
permission.
Chairman JOHNSON. Without objection.
[The submission of the Honorable Mr. Larson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. LARSON. Does the Social Security Administration or the
actuaries have projections about how the number of
beneficiaries will grow in the next few years and in the
decades facing the large number of baby boomers coming through
the process?
Mr. BRUNE. Yes, Congressman Larson. The actuary updates
those projections regularly.
Mr. LARSON. And so it is only going to continue to grow.
My point here is that I think the Chairman needs to be
applauded, as does the Committee, for addressing the whole
issue of fraud, but we can't continue, and I don't think we
give enough credit to the frontline people, and I am going to
ask Mr. Bagdoyan questions about the culture that has been
established there, but I don't think we give them enough
credit, and we can't continue to shrink them and see our
waiting lists go up while we face this large number of baby
boomers, like Mr. Pascrell, that are coming through the
process. So I just wanted to make sure that we had those items
for the--that data for the record.
And, Mr. Bagdoyan, you talked at length about the culture
of antifraud. Could you describe that more, about how--when you
did your findings that this was embedded within the Social
Security Administration? And you mentioned different metrics
that they are not performing up to. And my question would be,
would they be performing them better if they had the staff and
the capability and the technology to do so?
Mr. BAGDOYAN. Well, sure, I would be happy to respond, Mr.
Larson.
The culture, we did notice that there are multiple efforts
underway. Training is one, 97 percent of staff had received
antifraud training, for example, for fiscal year 2016, so that
is an important number to hit.
The establishment of the OAFP as the central unit for
antifraud activities is also a step in the right direction, and
it also permeates a cultural shift, if you will.
And in terms of the resourcing question, that would be
driven by strategy, which we referred to in our report and also
I made a couple of remarks about. You have to have a strategy
that will dictate to you what you exactly need, where, and
when, and how to deploy it, in order to have a sense of the
dollars and numbers and technology that you would need.
Mr. LARSON. Even with this built-in culture, with the
growth rate of Social Security, there are over 61 million
beneficiaries now, and the projections are up to 10 years it
will increase by 28 percent to over 78 million.
Do you think that is going to require better staffing and
an increase in staffing or do you think that we can continue at
the current rates that we are at?
Mr. BAGDOYAN. Well, again, the level of staffing will be
dictated by what needs to be done. Right now I think OAFP has
approximately 60 or so staff to oversee a rather enormous
portfolio of benefits that are paid out, so that will have to
be looked at as part of the strategic planning effort, but I
can't really give you a number or even a guess as to how many
people they would need.
You would also have to add processes and procedures as well
as technology, coordination with stakeholders, and other
factors to arrive at a whole.
Mr. LARSON. Acting Social Security Commissioner Carolyn
Colvin testified to Congress in 2012 about what was happening
with the error rate and accounts of both overpayments and
underpayments to beneficiaries. It was well below 1 percent,
but she noted that back then, it was at 0.36 percent. What she
observed then is that if Congress wished to reduce errors, the
error rate further, it needed to stop squeezing the budget of
the Social Security Administration. Would you agree with that?
Mr. BAGDOYAN. Well, that was outside the scope of my work,
but clearly resourcing would have to be looked at going
forward.
Mr. LARSON. Thank you.
Chairman JOHNSON. Mr. Kelly, you are recognized.
Mr. KELLY. Thank you, Chairman.
I know both of you come from a lot of experience in the
private sector. And I think we are all concerned with funding
and how things get funded, but in the private sector, we have
seen pretty much the same evolution; as technology has
developed, we have found out that we can do actually more
sometimes with less and we have seen people pivoting to
different ways of making a living.
What I am trying to understand, in 1990, there were fewer
than 2\1/2\ percent of working age Americans actually on the
check. By 2015, the number stood at 5.2 percent. How did that
change--with all the technology, with all the changes, with all
the things that we look at in lifestyles, what is driving that
number? I mean, do either of you have an answer to that?
And then going through your private sector experience, what
happens in the private sector when you experience these type of
things, increasing money is usually the first thing people say,
but then after that, you say, well, wait a minute, how much
money can we continue to throw at a problem with the technology
we have today, the ability we have today to cross-reference and
data collect and analyze? That does bring a degree of
effectiveness and efficiency that you have to have in the
private sector in order to stay in business.
So just from the perspective that you are both in in the
private sector, not the government, where people actually have
to pay for things out of their own pocket and actually make a
dollar stretch farther by being more effective and more
efficient, what do you see that is taking place right now?
Quite frankly, I don't mind spending money as long as it is
a positive return on the investment for taxpayers. Spending
money for the sake of spending money is saying the answer is we
have to have a bigger government with more people involved and
spend more money. To me, that is not the answer. It doesn't
work in the private sector.
So if you can just give me your experience in the private
sector and what you would see differently about what you are
doing right now as opposed to what you did before?
Mr. BRUNE. Thank you, Congressman Kelly. I think that the
efforts that we are undertaking right now align well with the
GAO's framework, which is, I believe, inclusive of both Federal
risk management as well as private sector risk management best
practices.
Our interest is to move more of our analytical resources
earlier in the process so that we are preventing rather than
chasing after, the fraud that has been perpetrated. It is
important to continue prosecutions. The convictions and
restitution orders serve as a good deterrent for folks who
think they may want to rip off the American public. However,
the best action, we believe, is prevention upfront. Our
employees do that through identifying anomalies or suspect
transactions.
Technology is going to aid us substantially. The amount of
data that an individual can review and analyze is much less
than what our software can analyze. The package we procured has
12 distinct technology capabilities, helping us analyze,
report, manage those cases better so that we identify earlier
and take quicker actions.
Mr. KELLY. Okay. If you can, any explanation for the
growth, because a lot of the work that people do today is less
stressing on them physically because of the development that we
have seen on on-the-job actual work that has really relieved a
lot of the stress on people physically. How did it grow? How
did it double from 1990? How in 20 some years, 27 years did we
see this growth that should have been--I think we should see it
going down in working age people, not going up.
Mr. BRUNE. Right. Our actuary has reported that growth in
the program number of beneficiaries is largely attributable to
demographic factors, the aging of the baby boomers, as well as
the growth of participation in the workforce by women.
Indeed, some of the nature of work has changed, and that
has allowed folks to both enter and exit the workforce more
readily as well as stay in the workforce longer, but the
primary factor is the aging of the baby boomers.
Mr. KELLY. Mr. Bagdoyan, we are almost out of time.
Mr. BAGDOYAN. Yes, Mr. Kelly. I would echo much of what
Commissioner Brune just mentioned. This document is all about
prevention. You have to front load your controls, predictive
data analytics, which are widespread in the private sector.
I know from one of my credit card companies that always
flags me for things that look out of the ordinary with a quick
phone call to say, is this you making this rather large
purchase. So they have ways of flagging these things that
really don't look quite right, and that is definitely one of
the items in the toolbox for Social Security Administration
that is absolutely needed.
But I will also go back to my original point about an
overall strategy driving all these things, so that is important
to get upfront and get it right.
Mr. KELLY. I appreciate you both coming, but it is hard in
5 minutes to get to some of these things. I think we are all
concerned that Social Security stay solvent, but participation
in the workforce, we all know where the revenue comes from, but
I am still concerned. I don't know how things would have
doubled. With the advancements we have had for on-the-job
people, why they would be experiencing these trends, it doesn't
make sense to me. But thank you both for being here.
Thank you, Chairman.
Chairman JOHNSON. Mr. Pascrell, you are recognized.
Mr. PASCRELL. Thank you, Mr. Chairman. And thank you to our
panelists. Both of you have terrific backgrounds, and we are
honored to have you before the Committee.
I would like to start by asking a question to Mr. Bagdoyan.
Mr. BAGDOYAN. Yes.
Mr. PASCRELL. Can you describe further, I know you started
to do this before, what it means to have an antifraud culture
at any agency, particularly the one we are talking about now,
and how the GAO found this to be embodied in the Social
Security Administration? Could you be as brief as possible, but
direct as possible?
Mr. BAGDOYAN. Yes. Absolutely. Well, the culture is the
sense of importance that would permeate the agency to take this
issue very seriously. It comes from the tone at the top and it
is embedded throughout the organization at its multiple levels.
Mr. PASCRELL. So your estimation, in other words, is that
the SSA does have this as a priority? No question in your mind
about that?
Mr. BAGDOYAN. I think they have taken a lot of significant
steps in that direction. It is going to take a long-term effort
to sustain that, which is as important, if not more important.
Absolutely.
Mr. PASCRELL. Thank you. I want to reiterate the statements
made by my colleagues, on both sides of the aisle, that the
integrity of Social Security, that program, is crucial. I mean,
somehow folks got the idea that if we stop fraud, which is
critical, that we will be able to sustain Social Security. No
one is saying that here today. We know, however, it is an
intricate part of what we are doing and a very important part.
So maintaining vigilance is the responsible way to govern and
the right thing to do for our constituents.
I am proud of the enhanced funding that we have been able
to secure to combat fraud, but as a new Subcommittee Member
here on this Committee, I know a trend over the years. This is
the eighth hearing on fraud since 2012. We need oversight, to
be sure, but I want to make sure we are keeping the entirety of
the Social Security program in perspective.
We need to continue to push to ensure that the Social
Security program is strengthened for years to come, which is
why I am proud to support Congressman Larson's efforts in the
Social Security 2100 Act. It is the only in depth proposal that
has really been made about Social Security.
The SSA's mission is not just to make sure that the wrong
people don't get benefits, but that the right people get their
benefits, and this is why we need to keep an eye on the budget.
And you have heard some things today that are pretty alarming
to me in terms of the increase in population that you serve.
Do you have a dollar amount, Mr. Brune, in your mind of
estimate of fraud in the general program we call Social
Security?
Mr. BRUNE. Congressman Pascrell, thank you for the
question. I do not have a dollar amount of the general amount
of fraud. As GAO has recommended, we are looking to be data
driven. What we are doing is assessing the program for risk. We
are going to make that risk assessment with our disability
prevention units, our disability examiners that actually
adjudicate claims that involve fraud. They are our agency
experts. We are going to base our actions on their experience,
what they have seen in actuality both as far as frequency and
types of incidents.
Mr. PASCRELL. You do have data for the last 10 years,
obviously, and you looked at that data. You certainly can begin
to extrapolate some things as to where we are going. Is it
worse than we thought in that direction too, so that it helps
you in prospective budgets in the future, I would think.
Mr. BRUNE. Well, Congressman Pascrell, as I said, any
amount of fraud is too much, and----
Mr. PASCRELL. Well, of course.
Mr. BRUNE. Yes. And we are take----
Mr. PASCRELL. I am not trying to minimize fraud. What I am
tying to do is--are we doing what we are supposed to be doing
to help you do your job, because we do not know the massiveness
of the fraud. I had no idea.
Mr. BRUNE. This Subcommittee has been extremely helpful in
providing new tools to the agency, the stiffer penalties, the
updating of the civil monetary penalty amounts, the expansion
of the CDI program, all in recent legislation have provided us
tools that we need to ensure that the program is safe from
fraudulent activity.
Mr. PASCRELL. Which part of Social Security has most of the
problems of fraud, disability, SSI, general programs, children?
Chairman JOHNSON. Your time has expired.
Mr. PASCRELL. I am sorry?
Chairman JOHNSON. Your time has expired, sir.
Mr. PASCRELL. Can I get that one question in, sir?
Chairman JOHNSON. All right.
Mr. PASCRELL. Thank you.
Mr. BRUNE. Our strategy covers all of our programs,
retirement, survivors, and disability insurance.
Mr. PASCRELL. I know that, but which one is the worst?
Mr. BRUNE. We are vigilant on all programs because we have
found issues in each type of program.
Mr. PASCRELL. Thank you, Mr. Brune.
Thank you, Mr. Chairman.
Chairman JOHNSON. You bet.
Mr. Renacci, you are recognized.
Mr. RENACCI. Thank you, Mr. Chairman.
I want to thank the witnesses for their participation in
today's hearing.
Additionally, I want to thank Chairman Johnson for holding
this hearing. Hearings have become somewhat novel these days,
but it is a great way for us to listen and hear from witnesses.
I am encouraged to hear that in recent years the SSA has
been proactive in taking steps to reduce fraud, I am pleased to
see the collaborative efforts that have been implemented
through the National Anti-Fraud Committee, and the recent
installation of the IBM counter-fraud management software.
These are positive steps in the right direction. However, I
think that more can be done, and that we owe it to our
constituents to continue working to stay ahead of criminals and
further reduce fraud. As I have heard already, $1 of fraud is
$1 too much, so I appreciate your efforts.
Throughout my business career, I found that my employees
and I were most successful when we set achievable goals and
identified the appropriate steps to accomplish our goals. That
ensured that every member of our team knew the desired outcome
and could be held accountable when target goals were not met.
Mr. Brune, I found it interesting that the GAO report had
found that the SSA does not track many of its antifraud
initiatives through outcome-oriented metrics. It was on page 6
of the GAO testimony. Can you discuss the steps that the SSA is
taking to evaluate the effectiveness of the antifraud
initiatives that are being led by the SSA?
Mr. BRUNE. Thank you. Yes, Congressman. The GAO report did
also note that we do have some metrics. We just need to improve
them, and we are working hard to do so. You are correct, and we
agree, we have more important work to do, as the Chairman said.
Part of what we are doing is in the software that you
mentioned, the counter-fraud management tool, that tool will
improve our reporting capability. It has inherent case
management and reporting functionality, which is an improvement
over what we use right now, which is largely manual counts and
special runs from our databases, special queries into our
databases.
In addition, we have already consulted with our Office of
Inspector General to get their input on which outcome-oriented
metrics they believe would be most helpful for us. We have
started the process of doing the fraud risk assessment of the
disability program as GAO recommended. That, as I said in my
statement, will be complete by the end of the year.
That will inform our efforts. I want to underline this
point in response to a question Mr. Pascrell raised, we are
taking a risk-based approach; we are going to devote our
attention first to the highest risk wherever those risks lie,
at the initial claim level, at the reconsideration level, or at
the appellate level. We are taking an entire focus on the
program and focusing on the biggest problems first.
Mr. RENACCI. I appreciate that. And, again, that gets back
to the business model Mr. Kelly talked about. I mean, I was in
business as well. And as I travel my district, I continue to
hear about businesses who are doing more with less, and they
are using more analytical tools to do more of the job that
needs to be done, so I appreciate that we are looking toward
that, because I think that is important. We need to use those
tools. And it is just not about throwing more money or more
staff; it is about using the tools we have. So I appreciate
your work in moving in that direction.
Mr. Brune, in your testimony, I think you accurately
described the employees who work in the field offices around
our country as the front line in protecting against potential
fraud and abuse. I think that is important too. You have to get
it in the beginning. It is a lot more costly at the end.
You mentioned that starting in 2004 there was now annual
training for all agency and DDS employees on antifraud
measures. What has been the result of that increased training?
Mr. BRUNE. I think this gets to the question of relative
importance of the priority. It has increased at all levels of
the organization, the awareness that our antifraud
responsibilities are a significant responsibility, that every
one of us plays a role in identifying an issue, reporting it,
and making sure that the Inspector General has the information
they need to properly investigate the allegation.
We also support our employees throughout the country, not
only in our fraud prevention units, but in addition to our
field offices and hearing offices. We support the investigation
process by providing the Inspector General information that
they think would be valuable for them as investigative leads.
So as they are investigating cases, we help them develop
that information.
Mr. RENACCI. One last question, I know I am running out of
time. There are bad guys in every one of these agencies. There
are bad lawyers working with every one of these agencies. Are
we working with the other agencies so if they know the bad
attorneys that are causing some of these issues we can cross-
reference them? What are we doing with that?
Mr. BRUNE. That is a great question, and the answer is yes.
We are part of an interagency working group with Federal
benefit-paying agencies. We use that working group to share
information about proven practices as well as to explore data
sets that would be of high-value interest to us. The more data
we have to look at, the more our software tool can identify
these anomalies, and so we are working with all Federal
benefit-paying agencies to coordinate our efforts.
Mr. RENACCI. Thank you.
I wasn't picking on my attorney colleagues or friends, but
I yield back.
Chairman JOHNSON. Thank you.
Mr. Schweikert, you are recognized.
Mr. SCHWEIKERT. Thank you, Mr. Chairman.
Forgive me, is it Bagdoyan?
Mr. BAGDOYAN. Yes, Bagdoyan, Mr. Schweikert.
Mr. SCHWEIKERT. Can you walk me through just a couple
things. I am sure it is in here somewhere, I just haven't been
able to find it. First off, in bad acts, fraud, how many are
being found in the requests for benefits and what is being
found when someone is already receiving benefits? What have you
found differently?
Mr. BAGDOYAN. Well, for me, it is a hard question to answer
because that was not in our scope of work. I think from what I
have seen, it is distributed fairly even.
Mr. SCHWEIKERT. Okay.
Mr. BAGDOYAN. The risk assessment that we are talking about
is what would get to those kinds of things, whether you are
talking about the bread and butter type of fraud schemes versus
the big black swans, you know, low probability but high
consequence type of things that I think the Chairman alluded to
in his examples.
So it is--where the paperwork comes in, it is evaluated, it
is signed off by a physician, for example, adjudicated by an
administrative judge, that is a continuum. So where it starts
is obviously with the bad paperwork that, as part of the
conspiracy in this case, runs throughout the process of
benefit.
Mr. SCHWEIKERT. But you could appreciate the elegance of
finding that there is a bad act in the initial part of the
process and not, you know, a year or two into payments being
received?
Mr. BAGDOYAN. Correct.
Mr. SCHWEIKERT. Can I walk you through--and I was trying to
make notes to myself to try to find an elegant way to say this,
but----
Mr. BAGDOYAN. Sure.
Mr. SCHWEIKERT [continuing]. There is a difference between
an algorith----
Mr. BAGDOYAN. Algorithmic.
Mr. SCHWEIKERT [continuing]. Algorithmic mechanism that
says, hey, these attributes tie into these attributes, these
attributes where this person goes up on the risk profile, and a
data capture model. And my fear is building algorithms is
wonderful except for there is a small problem: In some ways it
is a couple decades out of date in the way we find fraud.
The fact of the matter is you used your credit card
example, the credit card example is capturing a data capture at
that second. That second says, hey, he is buying sky diving
equipment, except we----
Mr. BAGDOYAN. He doesn't skydive.
Mr. SCHWEIKERT [continuing]. We have never seen him being a
really big outdoors person. And in today's world,
particularly--let's say I come and make an application. There
are the commercial databases, but the ability to even touch,
say, green light, red light on my income model, how much was
passive, how much is active, you know, I mean, these databases
now know what type of ice cream I eat, how many of us here use
a Safeway shopping card or that type and--you know, when we are
buying something, and the levels of data even down to the value
of my home, the value of my income, the value of my activities,
the analysis of what I have been buying on my credit card.
Do we see any movement to use data capture to immediately
say, hey, there is something here that does not line up with
the types of application, instead of saying, let's build an
algorithm and look for outliers?
Mr. BAGDOYAN. Right. Yeah, I think the system that
Commissioner Brune mentioned, which came into being after our
audit work was completed, so I don't have much insight into it,
but it sounds like, if you would care to explain that a little
bit more----
Mr. SCHWEIKERT. And so the simple question is are you
reaching out and tagging, capturing data from commercial and
private databases?
Mr. BRUNE. That is in our plan, Congressman. As I said in
my statement, we wish to have an integrated, multi-faceted,
realtime approach, and I think that is what you are describing.
Integrated meaning multiple data sources, including the
information that our employees observe and that they enter into
the system.
Multi-faceted meaning internal, external data sets
possibly. And realtime meaning when the data is entered into
the system.
Mr. SCHWEIKERT. And forgive my instinct, and maybe I am
excessively data-centric, I believe you are doing it backwards,
absolutely backwards.
Has there been a calculation done on what the cost per
prosecution, you know, successful prosecution has been----
Mr. BAGDOYAN. I am not aware of it at GAO.
Mr. SCHWEIKERT [continuing]. Where you can do the all-in
costs of the cost of staff, the cost of office, the cost of--
you know, everything that has gone into that, and saying we
have had these many prosecutions that are successful? I am just
very curious right now in the model that is being used, because
it sounds very human centered in a world of data. I am just
curious, what is our cost per bad actor caught?
Mr. BAGDOYAN. Yeah. I would--I would not know, and I don't
think GAO has looked into that, sir.
Mr. SCHWEIKERT. Any?
Mr. BRUNE. Congressman, as I stated in response to a prior
question, we are very interested in moving from a pay and chase
into a prevention model. And I believe our expansion of the
cooperative disability investigation units, which this
Subcommittee has supported----
Mr. SCHWEIKERT. Do you know your cost per prosecution right
now, successful prosecutions, your all-in cost?
Mr. BRUNE. I would defer to our Office of General Counsel,
but I think we could provide you that----
Mr. SCHWEIKERT. Could you make a note----
Mr. BRUNE. We could provide you an answer for the record.
Mr. SCHWEIKERT [continuing]. And find that for me?
And with that, Mr. Chairman, I yield back.
Chairman JOHNSON. Mr. Rice, you are recognized.
Mr. RICE. Thank you, Mr. Chairman. And very interesting
hearing. I always learn a lot at these hearings.
Mr. Brune, you said earlier that, and it goes really to
what Mr. Schweikert was just asking you about, in 2015, I may
be quoting the numbers wrong, 113 convictions and you recovered
$14 million. And you said you were putting people in the U.S.
Attorneys Offices around the country. What kind of people? Are
these lawyers you are putting in the U.S. Attorneys Offices?
Mr. BRUNE. Yes, sir. They are fraud prosecutors, they are
general counsel employees who are on loan to the Department of
Justice, U.S. Attorneys Office.
Mr. RICE. Have you found that--you know, in South Carolina,
I was a tax lawyer for 25 years, and for the first 10 years of
my practice, the local solicitors, local district attorneys
were the people who were responsible for prosecuting tax fraud,
and they weren't interested in doing that, so it was hard to
get somebody to pursue it, so the State appointed a special
attorney general that oversaw tax fraud, and all of a sudden,
the prosecution of these cases mushroomed.
Is that the same kind of thing with U.S. attorneys? Are
they hesitant to pursue these Social Security fraud cases? Is
that why you are putting people in their offices?
Mr. BRUNE. We have a successful partnership with the
Department of Justice. They have, you know, vast
responsibilities, but there are prosecutorial thresholds in
different jurisdictions, and that is one of the reasons why we
have partnered with them for the fraud prosecution project.
Mr. RICE. How many lawyers--these people are lawyers? How
many people are you putting in--how many have you----
Mr. BRUNE. A couple dozen.
Mr. RICE. A couple of dozen? So you have 24, let's say, 25,
and they have 113 convictions in 2015 and they recovered $14
million. So that kind of gives you a little cost-benefit
analysis right there.
Do you know, these people who are getting these
convictions, I am sure a lot of them are guilty pleas, are they
going to jail? I mean, are they suffering real consequences
from this?
Mr. BRUNE. Real consequences, yes. I would say there are
cases which have included imprisonment. Restitution is
significant in most of these convictions, or plea agreements.
Mr. RICE. Now, I know that, you know, a lot of these are
just individuals who are defrauding the government, but in some
of these cases, there are massive conspiracies that involve
government employees. And what really, really just bothers the
heck out of me, it is like this thing with the veterans in
Phoenix, you know, these government employees lie on these
forms and kill people, yet they remain government employees,
because the Federal employees unions are so strong and they
have so many protections, that we can't fire them, and they
still get their pensions even though they are killing people.
So what I am curious about, these two massive frauds that
are listed in our materials here, the thing in New York where
there were 134 indictments, $14 million recovered, is that
judge, is he still a judge, is he still getting paid, is he
still----
Mr. BRUNE. The judge was involved in the West Virginia
case.
Mr. RICE. Okay.
Mr. BRUNE. And, no, he is no longer a judge.
Mr. RICE. You know, I read in these materials anecdotally
that he lives in Myrtle Beach, South Carolina, now, which is
where I live. That is my district. That is the city I live in.
Interesting. I need to look this guy up, this David Daugherty.
It was said that there were 1,700 claimants, and that--the
attorney now has pled guilty, but apparently this fellow, he is
out fine, living in Myrtle Beach. I wonder if he has an
oceanfront house.
Is he still drawing a Federal pension?
Mr. BRUNE. Congressman, as you rightly observed, we do not
have, under current statute, the authority to revoke his
pension. However, if a Federal employee is involved in a fraud
conspiracy, as you just described, a court order could require
restitution, and so, therefore, the pension would be offset
until Social Security is restored.
Mr. RICE. Let me ask you, if we put forth a legislative fix
for that, I mean, would that be something that you would
support, that people who are found guilty of these massive
fraud type things, they would lose their Federal benefits, all
of them?
Mr. BRUNE. We would be happy to talk to you about that.
Mr. RICE. I yield back my time.
Chairman JOHNSON. Thank you. And Mr. Larson, you are
recognized for 1 minute.
Mr. LARSON. Thank you again, Mr. Chairman.
I just wanted to point out a couple of things. Number one,
I agree with my colleagues, you learn an awful lot just by
sitting and listening to the questions that your colleagues
have.
I, too, was in the private sector, I ran a business myself
and know what it is like to meet a payroll, and really do
appreciate the fact that you can oftentimes do more with less,
especially, you know, if you have the right tools than if you
have the right technology available to you.
But I just note here for the record, Mr. Chairman, that I
believe as of 2016 the Social Security Administration has
already instituted its own hiring freeze. Is that correct?
Mr. BRUNE. Yes, sir.
Mr. LARSON. It is not replacing employees due to loss, due
to attrition, has severely restricted overtime, closed offices
and reduced the hours that remaining offices are open to the
public, cannot fulfill the statutory mandate to mail Social
Security statements to taxpayers and has cut back substantially
on other expenditures, most notably for example, IT spending,
which is 30 percent lower than it was in fiscal year 2015.
Now, as any good businessman would understand in the face
of this, and especially if you are in a service-oriented
business, which I happened to be when I had my small business,
you have to make adjustments.
And this culture that Mr. Bagdoyan was talking about, and I
think the points that my colleagues made about what we need to
do in terms of conviction, in terms of the actual penalties and
actually, in fact, poster child for that if you abuse this
system, what are the consequences, what are the results? And
for any Federal, any employee or any conspiracy that exists,
they deserve the maximum amount of punishment. And we should do
everything we can to make an example out of that.
By the same token, the very thing we are trying to create
this culture within, which would save us money by making sure
that we are dropping, you know, by dropping the frontline
members who are actually carrying out these functions, it just
seems to me that, you know, doing more with less is great,
unless you are overwhelmed by the numbers and it just seems
apparent that with the large number of baby boomers coming in,
I don't know if there has been any metrics that say, Mr.
Bagdoyan, how we are going to be able to deal with this large
increase given both the attrition, and the hiring freeze, and
everything that is currently going on.
Mr. RICE. Would the gentleman yield?
Mr. LARSON. Sure.
Mr. RICE. If there were 24 of these special prosecutors and
they recovered $14 million that is what, about a half million
dollars apiece? I will tell you what, they pay for themselves.
Chairman JOHNSON. I want to thank my colleagues for being
here. And we all agree that disability fraud is a serious issue
and we need to make sure that fraudsters don't continue to
benefit at the expense of hardworking taxpayers.
While Social Security has taken important steps to prevent
fraud, there is still work to be done. And I am committed to
working with Social Security and all of my colleagues to make
sure the agency has all the tools it needs to stop fraud.
I want to thank our witnesses for their testimony and thank
you also to our Members for being here. With that the Committee
stands adjourned.
[Whereupon, at 11:04 a.m., the Subcommittee was adjourned.]
[Questions for the Record follow:]
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