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Chapter 6: Program Integrity
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program
\ 3: a plan or system under which action may be taken toward
a goal [1]
integrity \ 1: firm adherence to a code of esp. moral or artistic
values: INCORRUPTIBILITY
2: an unimpaired condition: SOUNDNESS [2] |
he
American public depends on the Social Security Program administrators
to quickly and accurately provide benefits, properly record workers’
earnings, and effectively safeguard its benefit programs from
fraud, waste and abuse. Failure to do this would seriously
undermine the public’s confidence in government and its ability
to effectively administer programs and protect taxpayer dollars.
Social
Security has been one of the most successful programs ever undertaken
by the Federal Government. Since its inception, it has enjoyed
unprecedented public support. Yet the Agency found itself
in a peculiar situation in the early 1990s: a popular program
encased in an unpopular government.
As
a rule in 1993, public confidence in government was low when President
Clinton served his first term in office. The Social Security
Administration (SSA), then an Agency under the Department of Health
and Human Services, endured a similar lack of public confidence.
SSA was the subject of a barrage of reports and periodicals describing
problems such as lengthy delays in processing Federal disability
benefit claims; making payments to beneficiaries with addictions
to drugs and alcohol; perceived potential closings of field offices,
providing poor phone service; realizing a surge in disability
claims while downsizing its workforce; and issuing confusing letters
to its customers to name just a few.
The Government
Performance and Results Act of 1993 (GPRA), signed into law by
President Clinton on August 12, 1993, enabled SSA to reduce or
eliminate the problems mentioned above. The Act mandated
federal agencies submit long-range (at least five years) strategic
plans focusing on results, quality and customer service—outcomes
rather than outputs, effectiveness rather than efficiency.
Agencies were required to report to both the President and the
Congress on the degree to which strategic goals were met.
The overriding purpose of GPRA was to improve the Federal Government’s
performance.
The winds of
GPRA were blowing strong even before its enactment. Anticipating
both the new law and the arrival of the first confirmed Commissioner
of Social Security since independence, Acting Commissioner Lawrence
H. Thompson reviewed SSA’s planning processes to build on past
experiences and conform to the dictates of GPRA. On August
4, 1993, Mr. Thompson elicited the Executive Staff’s candid assessment
of both the planning and budgeting processes, and solicited their
specific recommendations on how SSA could improve these processes.
This “mid-course” review was seen as a critical “next step” to
meeting the growing external demands and expectations of the GPRA
statutes.
On September
11, 1993, President Clinton issued Executive Order 12862, which
directed public officials to revolutionize processes within the
Federal Government to provide service to the public that met or
exceeded the best service available in the private sector.
The Executive Order also supported GPRA by requiring each Federal
agency to publish a customer service plan, based on specific customer
service standards, by September 8, 1994. High performance
was paramount to restoring public confidence and maintaining Agency
integrity.
Shirley
Chater became the Commissioner of Social Security on October 8,
1993 accepting the monumental task of restoring the public’s faith
in the Agency using the provisions of GPRA and E.O. 12862.
The Commissioner’s strong support of strategic decision making
helped re-enforce the importance of planning.
Commissioner
Chater charged a workgroup to develop a plan to rebuild the confidence
of the American public in Social Security. The workgroup
was comprised of representatives from all of the Deputy Commissioners.
They analyzed data, recapitulated the major public confidence
issues, identified gaps in Agency knowledge, and recommended a
strategy for rebuilding public confidence in Social Security.
This strategy was called,“THE CHALLENGE OF CHANGE: Rebuilding
Public Confidence in Social Security.”
The
group focused on two major areas. The first was to document
confidence levels and determine the issues that drove confidence
down. The workgroup found that the low levels of confidence
cut across all demographic groups and also discovered that the
Agency needed to broaden its knowledge about the confidence of
its own employees.
The workgroup
discovered that there were a variety of reasons why people had
little confidence in Social Security. They generally fit
into the following seven broad categories:
1. Trust
fund insolvency [3] (“It won’t be there
for me.”);
2. Moneys
worth (“I could do better investing on my own.”);
3. The
role and significance of the trust funds (“The trust funds are
worthless IOUs.”);
4. Broken
promises (“Congress will change the rules by the time I retire
and I won’t get anything.”);
5. “Undeserving”
people getting benefits (“Drug addicts and immigrants are getting
money they don’t deserve.”);
6. Service
delivery issues (“I just get busy signals from the 800 number.”);
and,
7. General
distrust of government (“Government is wasteful and inefficient.”).
The second focal
area was the development of a short-range plan and a long-term
strategy to address the issues and rebuild confidence in the Agency.
The strategy included six specific objectives identified as follows:
1. Increase
the public’s knowledge about Social Security and counter existing
misinformation.[4]
2. Restore
the public’s confidence in the trust funds by restoring the long-range
actuarial balance of the trust funds.
3. Ensure that the Social
Security program is well designed and meets sound public policy
objectives.
4. Make
Social Security more responsive to public input.
5. Increase
the knowledge and understanding of SSA employees about the issues
confronting Social Security.
6. Reinvigorate
public affairs throughout SSA.
The workgroup presented its findings to the Commissioner approximately
one year after its inception. The findings equipped the
Commissioner with information that she used to begin steering
the organization out of a “sea of doubt” to an “ocean of assuredness.”
The course and speed of the Agency was about to change.
In January 1994,
the Commissioner revised the three Agency-level strategic goals
to the following:
·
Rebuild Public Confidence in Social Security
·
Provide World-Class Service
·
Create a Nurturing Environment for SSA Employees
In November 1998, the Agency’s ability to accomplish the first
two goals would be tested after the discovery of a 1978 computer
software design error by Agency employees. Approximately
426,000 beneficiaries were underpaid nearly $478 million.
The Agency braced itself for a deluge of inquires primarily from
the toll-free phone service lines, which already answered nearly
60 million calls per year. SSA quickly responded by assuring
the public that all of the money would be repaid within six months.
Although $478 million was a sizable sum, payments affected less
than one percent of SSA beneficiaries and were comparatively small
to the $325 billion in benefits paid by the Agency.
The Social Security Administration’s staffing decreased by approximately
20,000 employees or 17 percent for the ten-year period immediately
preceding the enactment of GPRA and issuing Executive Order 12862.
The Agency was expected to administer programs with reduced staffing,
do it better, and change its practices to restore organizational
integrity. Due to the changing demographics of its customer
base, workloads were increasing in volume and in complexity.
In the early to mid 1990s, disability claims became the fastest
growing workload in the Federal Government; disability claims
grew in excess of 70 percent. GPRA and the challenges of
Executive Orders 12862 and 12871 placed enormous demands on SSA.
In some regards, SSA was ill-equipped to execute actions to make
the necessary improvements defined by GPRA. It was evident
that major changes would have to be made.
In August 1994 the President signed legislation (H.R. 4277) establishing
SSA as an Independent Agency, with unanimous consent in the Senate
and House of Representatives. SSA became independent
on March 31, 1995, and this was a major step in restoring the
public’s confidence. The new Social Security Administration
was far more efficient, vigilant, and responsive. Commissioner
Chater reorganized and consolidated various planning elements
into a single component, the Office of Strategic Management (OSM),
responsible for strategic planning activities.
 The Agency’s accountability
became more evident with the advent of Independent Agency.
Several components played key roles in assisting the Agency in
improving its stewardship and maintaining its integrity, which
were two major elements required in regaining the public’s confidence.
They were the Advisory Board, Office of Strategic Management (OSM),
Office of the Deputy Commissioner for Finance, Assessment and
Management (DCFAM), and Office of the Inspector General (OIG).
Kenneth S. Apfel
was sworn in as the Commissioner of Social Security on September
28, 1997. Under his leadership, there were a variety of
major accomplishments to safeguard the Agency’s integrity and
improve stewardship.
The Agency released
a comprehensive Disability Management Report that had four goals.
One goal was to safeguard the integrity of the disability program.
The Foster Care Independence Act was signed into law by the President
on December 14, 1999, giving the Commissioner greater power to
protect the trust funds through the use of electronic information.
Social Security’s FY 1999 Accountability Report included the first
GPRA Annual Performance Report. SSA was the first Agency
to publish the statutorily required report. Under Commissioner
Apfel’s leadership, the Agency established an Electronic Service
Delivery Project to explore among other things more cost effective
and secure means for providing service that would further move
the Agency toward achieving the expectations of GPRA.
Program integrity
was significantly improved through the combined initiatives of
SSA and OIG supported by legislation passed during the Clinton
Administration.
Stewardship
 The
Social Security Independence and Program Improvements Act of 1994
established SSA’s own Office of the Inspector General. Until
a new SSA Inspector General (IG) could be nominated and confirmed,
the Department of Health and Human Services’ (HHS) IG, June Gibbs
Brown, was appointed to manage her office as well as the newly
established SSA OIG. The HHS’s OIG transferred 259 staff,
including three senior executive service positions, necessary
equipment and funding to create the office.
The OIG was
required by the Inspector General Act of 1978 (IG Act), as amended
to:
·
Conduct and supervise independent and objective audits
and investigations relating to Agency programs and operations.
·
Promote economy, effectiveness, and efficiency within the
Agency.
·
Prevent and detect fraud, waste, and abuse in Agency programs
and operations.
·
Review and make recommendations regarding existing and
proposed legislation and regulations relating to Agency programs
and operations.
·
Keep the Commissioner and the Congress fully and currently
informed of problems in Agency programs and operations.
·
Empower the IG with the independence to determine what
reviews to perform, access to all information necessary for the
reviews, and the authority to publish findings and recommendations
based on the reviews.
The SSA OIG’s mission
was to improve SSA programs and operations and protect them against
fraud, waste, and abuse by conducting independent and objective
audits, evaluations, and investigations. The IG provided
timely, useful, and reliable information and advice to Administration
officials, the Congress, and the public. The OIG proactively
sought new ways to prevent and deter fraud, waste, abuse, and
mismanagement. OIG committed itself to diversity, innovation,
integrity, and public service.
The mission of
the OIG was carried out through a nationwide network of offices
comprising the Offices of Audit (OA), Evaluation and Inspections,
and Investigations (OI). Staff in the Immediate Office of
the OIG supported these three components.
On June 28, 1995,
Commissioner Chater delegated to the IG the authority to implement
sections 1129 and 1140 of the Social Security Act. Civil
Monetary Penalties (CMP) were imposed against individuals and/or
entities who misused SSA symbols and emblems (section 1140), or
who made false statements and representations of material facts
for use in determining initial or continuing rights to Social
Security benefits or payments (section 1129). The first
set of rules was published in the Federal Register on November
27, 1995, which provided the foundation to get the program off
the ground.
The
Senate confirmed David C. Williams as Inspector General on December
22, 1995. As the new IG, he immediately implemented an aggressive
hiring program to build the investigative strength of the new
OIG. Budget allocations grew from $10.3 million in 1995
to $56 million in 1999 with staff nearly doubling. There
were enormous returns on investments. Experienced investigators
from other federal law enforcement agencies became integral members
of OIG. Their value to the Agency’s stewardship role was
apparent in the OIG reports released between 1995 and 2000.
|
AUDIT
AND EVALUATION RESULTS SINCE APRIL 1, 1995
|
|
FISCAL
YEAR
|
NUMBER
OF REPORTS ISSUED
|
QUESTIONED
COSTS
|
FUNDS
PUT TO BETTER USE
|
NUMBER
OF RECS.
|
NUMBER
OF RECS. IMPLEMENTED
CLOSED
|
|
1995*
|
12
|
$77,000
|
$35,000,000
|
88
|
61
|
|
1996
|
32
|
$363,358
|
$100,891,000
|
72
|
54
|
|
1997
|
54
|
$4,031,991
|
$699,500,000
|
225
|
124
|
|
1998
|
56
|
$14,661,078
|
$2,340,207,842
|
166
|
99
|
|
1999
|
60
|
$83,989,044
|
$519,716,442
|
219
|
34
|
|
2000**
|
27
|
$108,410
|
$170,516,955
|
62
|
9
|
|
TOTALS
|
241
|
$103,230,881
|
$3,865,832,239
|
832
|
381
|
*Reflects data from
April 1, 1995, through September 30, 1995.
**Reflects data
from October 1, 1999, through March 31, 2000.
The OIG received
2,236 complaints in FY 1995 from sources both within and outside
SSA. It opened 844 investigations, closed 679 cases, and
obtained 287 criminal convictions. It recovered almost $3.9
million through fines, judgements, restitution, and recoveries.
In addition, $35 million was saved through implemented recommendations
to put funds to better use.
The OIG conducted
a fraud vulnerability review during its first year of operation
to determine how to best use its limited resources to fight fraud,
waste, and abuse in SSA’s programs and operations. The review
identified areas in SSA’s operation that were most vulnerable
to fraud. Using this information and its experiences in
the first year of operation, OIG restructured to build upon its
original foundation and bring focus to its operations.
SSA has long delivered
service to the American public in a manner that fostered confidence
and trust in the quality of SSA programs and employees.
The SSA tradition of stewardship and responsibility to protection
of public information stemmed from its inception and was based
in its first regulation (Regulation 1), which established a high
standard for data protection. The IG’s reports included
information that the Agency used to enhance its performance and
solidify public trust.
The Clinton Administration
initiated great advances in technology, enhancements in information
sharing initiatives, and emergence of a strong Internet presence
throughout Government. This new environment offered many
advantages in improving SSA efficiency, public access, and employee
job enrichment via advanced technology.
Recognizing
that more online access created additional opportunities for abuse,
SSA took steps to implement formal sanctions for abuse of its
systems. In 1993, the Agency released the first formal set
of Security Guidelines for Administrative Action. SSA also
implemented an annual employee recertification process for systems
access that same year. The two transmittals provided guidance
to both employees and management regarding penalties for misuse
of information/system and included a requirement for management
to remind SSA employees of their responsibility to safeguard public
records.
In 1994, Commissioner
Shirley Chater issued the first memorandum to all employees that
addressed privacy of personal information in Agency files.
This memorandum re-emphasized employee responsibility to protect
all Agency personal data that was collected while carrying out
duties and reminded them of criminal and administrative penalties
if breached. It addressed details of inappropriate use or
disclosure of information and gave employees two methods of reporting
abuses and concerns along with an option of anonymity.
Throughout
the mid to late 1990s, SSA made great strides in expanding its
systems network, moving to a sophisticated client-server environment
and greatly expanding information exchange activity and data sharing
with many more trading partners. It also saw a great metamorphosis
in the way field office and other operating components had to
address its customers. Paperless processing and “one stop”
shopping were prevalent themes. This was also the era of
“zero tolerance” for fraud.
On June 22,
1998, SSA’s Commissioner Kenneth Apfel released Administrative
Penalties for Computer System Access Violations. This
replaced the 1993 guidelines. A set of uniform sanctions
entitled Sanctions for Unauthorized System Access Violations
was established to ensure SSA computer systems violations were
treated consistently. Three categories were established
with the severity of penalty based upon the nature of the violation.
Employees were also requested to sign acknowledgements indicating
that they had read and understood the sanctions and whether they
had current access to the computer systems or not. The sanctions
were revised in a memorandum on March 2, 2000, after concerns
were raised about Category II. This category was defined
as the unauthorized access of a record with disclosure to an unauthorized
source that does not involve personal or monetary gain and was
not made with malicious intent. The reservation raised about
Category II involved the fact it did not distinguish between disclosure
of data to a person who was otherwise entitled to the information
and the more serious violation of disclosure of information to
a person who was not entitled to the information. The Commissioner
listened to those legitimate concerns and decided to revise Category
II to acknowledge the difference between the two actions.
Changes were also made clarifying language in the other categories
as well. It cited laws and guidelines requiring that Social
Security to maintain proper security of all Automated Information
Systems (AIS) resources, including data.
During
the Clinton Administration, SSA Commissioners and IGs oversaw
major initiatives related to privacy and protection of information.
To maintain the confidence and trust of the American people regarding
Social Security programs and records, the Agency made significant
improvements in mechanisms and policies to enforce proper access
and aggressively address any misuse of Agency records.
There were a number
of initiatives that began in 1996. The OIG established the
Office of Management Services to provide support to its operations
by providing human resources, budget, and a variety of other resource
management needs. This office also hosted the November 25,
1996 ribbon cutting ceremony launching the operation of the SSA
Fraud Hotline. The Hotline served as the avenue for reporting
allegations of fraud, waste, and abuse for SSA employees; other
Federal, State, and local government agencies; and members of
the general public.
In
addition, during 1996, the Office of Evaluations and Inspections
merged with OA to create a nationwide capability to conduct both
formal audits and evaluations. Combining the knowledge,
skills, and abilities of auditors and evaluators enabled the OIG
to focus on identifying and recommending ways to prevent and minimize
program fraud and inefficiency, rather than detecting problems
after they occurred. This approach helped the Agency save
millions of dollars. After this consolidation, OIG moved
away from the traditional “regional” structure to “issue” area
teams that provided centers of expertise in each of SSA’s program
areas.
The OIG also created
the Office of the Counsel to the Inspector General (OCIG) in 1996.
Its primary purpose was to provide legal advice and counsel to
the IG and senior staff on statutes, regulations, legislation,
and policy directives governing the administration of SSA’s programs.
The office was also established to provide legal advice pertaining
to investigative procedures and techniques, as well as conclusions
drawn from audit and investigative activities. The OCIG
also assumed responsibility for administering the delegated Civil
Monetary Penalty (CMP) program for the OIG. The OCIG worked
diligently to publish final rules and regulations to build the
initial infrastructure to launch this program. Two sets
of rules were published in the Federal Register.
The publishing dates were April 24, 1996 and December 13, 1996.
The
Agency and the OIG established a unique partnership through the
National and Regional Anti-Fraud Committees to jointly combine
efforts and forces in a seamless attack on fraud, waste, and abuse
as part of the Agency’s “Zero Tolerance for Fraud” campaign.
These committees brought together OIG’s investigative experience
and SSA’s program expertise to identify and prevent fraud in SSA’s
program.
In 1996, the OA
also initiated the Payment Accuracy Task Force, which was another
cooperative effort with SSA that focused on enhancing the Agency’s
processes to improve the accuracy of its payments. The smallest
percentages of error represented large costs to the Agency and
the trust funds that it stewarded. The OIG aimed to set
a high standard for government excellence at SSA through cooperative
efforts.
The OIG established
the Joint Field Operations Program that was staffed with highly
experienced investigators who drew on their experience and established
contacts to focus on significant fraud and enumeration violations
against SSA. The Office of Investigations (OI) also established
a Strategic Enforcement Division to conduct studies of emerging
criminal trends and look for the best ways SSA and OIG could prevent
and detect fraud.
In 1997, the IG
established the Office of Operations to serve as the focal point
for the OIG’s strategic planning, the Congressional liaison, and
public affairs activities. The OIG added the Enforcement
Operations Division at Headquarters to oversee the day-to-day
field activities and created the Special Inquiries Division to
handle sensitive investigations into allegations of wrongdoing
by senior SSA officials.
The OIG implemented
an initiative to ensure readiness to combat “electronic crimes.”
The Electronic Crimes Team was created to institutionalize the
investigative capability to conduct computer forensic examinations,
recover evidence in an electronic environment, and to provide
expertise and training to OIG investigators across the nation.
As SSA began to explore the expansion of on-line access to services,
OIG needed to ensure that it was prepared to identify and address
exploitation of SSA’s systems and electronic services.
The National Anti-Fraud
Committee held its first National Anti-Fraud Conference from September
8 through 12, 1997 at SSA Headquarters. The theme of the
conference was “New Approaches in a New Environment.”
Over 450 SSA employees from central office and the field attended
the conference. Representatives from State Disability Determination
Services (DDS) units and the General Accounting Office (GAO) attended.
The conference featured discussions on new investigative approaches
and technology and systems issues. Acting Commissioner John
Callahan, Acting Principal Deputy Commissioner John Dyer, and
Inspector General David Williams participated in the conference
and spoke to the attendees.
The year 1998 marked
the start of large-scale investigative projects designed to address
major problems facing SSA in the administration of its programs.
Three of the most notable operations that had major impacts on
OIG’s successes were Operation Contender, Operation Border Vigil,
and Operation Water Witch.
OIG’s
work in this area focused on individuals who filed false claims
or program participants who defrauded the program by making false
statements or by overtly concealing factors that affected their
initial or continuing eligibility or entitlement for payments.
OIG joined with SSA’s Office of Disability and established CDI
teams in Georgia, Louisiana, Illinois, New York, and California.
These teams were composed of OIG Special Agents and State law
enforcement officers, as well as SSA and State DDS claims professionals.
The DDS referred suspicious cases to the team, which in turn collected
evidence to verify or refute the suspicion. If the team
confirmed that the claim was fraudulent, the DDS was notified
and it either denied the application or stopped benefits.
Operation
Border Vigil’s purpose was to focus on a major vulnerability in
SSA-administered programs. The IG initiated a variety of
projects under this operation across the country to identify Supplemental
Security Income (SSI) recipients receiving payments based on fraudulent
statements regarding residency as well as other eligibility factors
such as citizenship, alien residency status, age, income, and
resources. The OIG also participated in International Integrity
Projects with SSA’s Office of International Operation to define
problems inherent to the distribution of benefits to individuals
living in foreign countries and to develop strategies that addressed
the issues.
Operation Water
Witch was initiated to implement provisions of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996. A recipient
became ineligible for SSI benefits during any month that the recipient
fled to avoid prosecution for a felony or fled to avoid custody
or confinement after conviction of a felony. Through localized
and manual processes, OIG Special Agents identified SSI recipients
who were fugitives and notified the warrant issuing agency and
the SSA that the individual was ineligible for benefits.
SSA stopped payments, determined if the individual was overpaid,
and initiated collection activities.
Recognizing that
the operation would be more effective and efficient through the
use of computer matching, OIG negotiated with the Federal Bureau
of Investigation (FBI), the U.S. Marshals Service, and the National
Crime Information Center to establish computer-matching agreements.
By July 1, 1998, there were formalized investigative plans in
all 50 States to establish points of contact and define mechanisms
through which SSA and the State could exchange computer-matching
data.
The IG abolished
the Office of Operations, folded its functions into the Office
of Management Services, and established a new Office of External
Affairs in 1998. The Office of External Affairs assumed
responsibility for the OIG’s Congressional and Public Affairs
Program, the newly established quality assurance function, and
the conduct of OIG employee investigations. The Quality
Assurance Team performed internal reviews to ensure that OIG offices
held themselves to the same rigorous standards that were expected
from SSA. The Public Affairs Team communicated OIG’s planned
and current activities and their results to the Commissioner and
Congress as well as other entities.
The SSA Fraud Hotline
was moved from the Office of Management Services in 1998 to the
OI under a new division called the Allegation Management Division.
The move allowed investigators to more closely manage the incoming
allegations and apply their investigative expertise to gain more
efficiency in the Hotline operation. In FY 1998, the Hotline
staff processed nearly 30,000 allegations, which was a significant
increase from the 4,106 allegations in FY 1996. To keep
pace with the growing number of allegations received, the Principal
Deputy Commissioner agreed to increase the SSA Fraud Hotline’s
staffing levels in the next year.
On July 30, 1998,
IG Williams was officially nominated to be the Inspector General
at the Department of the Treasury. Immediately upon his
departure, the Deputy IG, James G. Huse, Jr. became the Acting
IG.
There were several
major changes in OIG’s organization in 1999. The OI reorganized
its Headquarters divisions, abolished the Special Inquiries Division,
and created the Manpower and Administration Division to provide
necessary resource, administrative, and technical guidance to
its field divisions. Also, in response to the Presidential
Decision Directives 62 (Terrorism), 63 (Critical Infrastructure
Protection), and 67 (Continuity of Government), the OIG established
the Critical Infrastructure Division (CID) within the Office of
Investigations. The CID worked with SSA’s System Security
Officers and representatives from SSA’s National Computer Center
to define and administer an intrusion response program that included
OIG notification and investigation, if warranted. The division
assumed responsibility for operating the Electronic Crimes Team
that was created in 1997.
OIG also merged
the Office of External Affairs and the Office of Management Services
to create the Office of Executive Operations. This component
was responsible for a broad range of activities including communicating
the results of OIG’s work to external stakeholders and providing
the internal administrative support for all OIG activities.
This office supported the budget, human resources, systems, public
affairs, and quality assurance infrastructure for the entire OIG.
In March 1999,
OIG held the Grand Opening for a newly expanded Fraud Hotline
that had increased in staffing to four times its 1998 size.
The Hotline was relocated to a new state-of-the-art facility and
it processed nearly 75,000 allegations representing a 150 percent
increase in productivity from FY 1998.
On July 28, 1999,
President Clinton submitted James G. Huse, Jr.’s nomination to
the Senate to become the second IG of SSA. On November 10,
1999, the Senate confirmed Mr. Huse’s nomination and on November
22, 1999, in a ceremony in Baltimore, Maryland, Mr. Huse was sworn
into office.
Late in 1998, the
Congress passed the Identity Theft and Assumption Deterrence Act
of 1998 (P.L. 105-318). This Act, commonly called the Identity
Theft Act, acknowledged that the Social Security Number (SSN)
was a means of identifying an individual. This legislation
empowered law enforcement authorities to arrest, prosecute, and
convict individuals who fraudulently used another person’s SSN
to create a false identity. The law also charged the Federal
Trade Commission (FTC) with establishing a centralized identity
theft complaint database and providing informational material
on identity theft to complainants. In addition, the FTC
could refer identity theft allegations to appropriate Federal,
State, or local law enforcement agencies, as well as to the three
major credit bureaus. Since SSN misuse accounts for over
half of the complaints to the Fraud Hotline, OIG aggressively
began partnering with other Federal  and
State organizations to reduce the incidents and impact of these
crimes and maximize its resources.
To proactively
address identity theft, OIG participated in a long list of activities
that included working with the Federal Trade Commission (FTC)
to develop government-wide educational material, reviewing and
providing input on FTC’s proposed identity theft complaint form,
became of member of the Identity Theft Subcommittee of the Law
Enforcement Initiatives Committee and the Attorney General’s Council
on White-Collar Crime, published an article entitled Social
Security Number Misuse and Identity Theft for the FTC’s Summer
1999 issue of Fraudbusters! Magazine, met with U.S. Sentencing
Commission representatives to discuss sentencing guidelines for
individuals convicted of identity theft, and launched SSN misuse
pilot projects in five cities across the Nation. Investigators
provided the lead in working with various Federal and State agencies
on SSN misuse allegations referred to OIG and developed a referral
system that allowed for the automated transfer of data between
the FTC and the OIG Hotline.
The OCIG was instrumental
in the prosecution of individuals guilty of violating section
1140 of the Social Security Act. The Federal Records Service
Corporation (FRSC) sent out approximately 2.2 million solicitations
each year that targeted new brides and new mothers with deceptive
advertisements. The direct mail solicitations to consumers
appeared to be from, or endorsed by, SSA. For a $15 service
fee, they offered to process SSA’s application forms for name
changes and newborns’ SSNs. SSA provided assistance in filling
out these forms free of charge. OCIG collaborated with investigators,
SSA’s Office of the General Counsel, and the Department of Justice
to obtain a preliminary injunction and negotiate a favorable settlement
of this case. Under the terms of the settlement, FRSC was
dissolved and the first two defendants were ordered to pay penalties
of $845,000 to the Social Security Trust Fund. Overall,
all the defendants agreed to pay over $1 million total to the
Social Security Trust Fund.
The success and
preventive nature of the CDI teams in the five pilot locations
caused SSA and OIG to add additional teams in Missouri, Oregon,
and Texas. The Fugitive Felon Project, under the former
Operation Water Witch, experienced a 287 percent increase in the
number of fugitives identified after implementing one electronic
data match with one State.
In FY 1999, OIG received 74,360 complaints, opened 9,238 investigations,
and closed 7,308 cases. OIG obtained 3,139 criminal convictions
and recovered over $213 million through fines, judgements, restitution,
and recoveries. In addition, over $519 million was saved
through implemented recommendations to put funds to better use.
OIG had an uneventful transition into the new millennium,
primarily due to the diligence of SSA’s systems staff, its own
CID staff, and systems support staff. The
year 2000 began with a Congressional and media focus on the issue
of representative payees, resulting from one of OIG’s recent investigations
involving a representative payee serving over 140 disabled individuals
who had embezzled over $300,000 in a 4-year period.
To
assist the Agency in addressing this area, the IG committed auditors
to performing independent on-site audits of a limited number of
representative payees.
These audits enabled the Agency to identify problem
areas that needed to be addressed to ensure that beneficiaries’
benefits were being soundly managed. The
IG also opened three more CDI teams in New Jersey, Virginia, and
Florida. By
the end of FY 2000, eleven teams were expected to be operational.
OIG
continued its activities in the SSN misuse and identity theft
arena.
It
needed to ensure that the office was equipped with the necessary
tools and resources to address the flood of complaints that it
anticipated from the Hotline and the FTC.
The
OIG participated in two key events that brought the private and
public sectors together to discuss efforts to address identity
theft. The
first of these events was the Canadian Identity Fraud Workshop
held in Toronto in February 2000. The
OIG gave a presentation to Government representatives from Canada,
Australia, and the United Kingdom on identity theft in the United
States.
It also participated in round table discussions
with representatives from other Nations to identify common problems
and possible remedies.
The
second event, the National Identity Theft Summit, held in March
2000, was hosted by the Department of the Treasury in Washington,
D.C. and incorporated five panels to discuss victim issues, prevention
measures, and short-term remedies for both the private sector
and governmental agencies.
The
OIG co-coordinated the prevention panel, which the IG moderated.
This panel was designed to give the attendees ideas
and suggestions on how to prevent identity theft.
To
further its fight, OIG proposed to the Congress and SSA that they
expand the CMP program to include SSN misuse and identity theft
penalties for those cases that were not accepted by the U.S. Attorney’s
Office for prosecution. The
OIG detailed a lawyer to the Department of Justice to assist in
the prosecution of SSN misuse and identity theft cases.
From October 1,
1999 through March 31, 2000, the OIG received 44,944 complaints,
opened 4,277 investigations, and closed 4,069 cases. It
obtained 1,169 criminal convictions and recovered over $122 million
through fines, judgements, restitution, and recoveries.
In addition, over $170 million was saved through implemented recommendations
to put funds to better use. The IG testified before House
and Senate Committees on ten occasions from March 7, 2000 through
September 12, 2000.
The IG was in continuous
dialogue with Congressional committees that sought legislative
remedies to strengthen SSA programs and to provide the investigative
tools to prevent, identify, and deter criminal activity and assist
the Agency in maintaining its integrity. The chart below
provides return on investment information for the SSA OIG since
its inception. It’s only one indicator of the successes
of the Office of the Inspector General.
FISCAL
YEAR
|
BUDGET
ALLOCATION
|
OIG
MONETARY ACCOMPLISHMENTS
|
RETURN
ON INVESTMENT
|
|
1995*
|
|
$38,970,360
|
4-1
|
|
1996
|
$25,800,000
|
$124,022,730
|
5-1
|
|
1997
|
$37,400,000
|
$767,463,244
|
20-1
|
|
1998
|
$49,200,000
|
$2,449,093,495
|
49-1
|
|
1999
|
$56,000,000
|
$817,661,342
|
14-1
|
*Reflects
data from April 1, 1995 through September 30, 1995.
Each
component of the OIG was dedicated to advancing SSA’s goal to
make SSA program management the best in business, with zero tolerance
for fraud and abuse.
Fraud
Initiatives/Program Integrity
SSA has always taken
its stewardship role very seriously. The American public
rightfully expects SSA to be vigilant stewards of its tax dollars.
In fulfilling its mission “to promote the economic security of
the nation’s people through compassionate and vigilant leadership
in shaping and managing America’s Social Security programs,” SSA
believed that fraud and abuse were unacceptable at any level and
operated to reflect its belief.
The potential for
deliberate acts of deception exists in all government programs.
While SSA had not found widespread fraud in its programs, any
level of fraud was a source of concern. Independent Agency
status allowed SSA to take steps to expand and strengthen the
OIG by providing additional investigative resources for combating
fraud. One goal of the Agency was to continue to increase
its attention to deterring fraudulent activities and bringing
to justice those who committed fraud, whether members of the public
or SSA employees. To accomplish this goal, SSA established
three major objectives:
·
Change programs, systems, and operations to reduce instances
of fraud;
·
Eliminate wasteful practices that erode public confidence
in SSA; and,
·
Prosecute vigorously those who damage the integrity of
SSA’s programs.
Initially developed in 1996, SSA and OIG devised a comprehensive
key initiative tactical plan to strengthen the public trust and
confidence in SSA and to assure the highest level of integrity
in SSA programs. The tactical plan reflected broad, Agency-wide
participation with initiatives identified at a grassroots level
throughout the Agency. A principal part of this tactical
plan initiative was the creation of a National Anti-Fraud Committee
whose function was to oversee, direct and support the Agency’s
anti-fraud plans and activities. The National Committee
was comprised of SSA senior staff and co-chaired by the Deputy
Commissioner for Finance, Assessment and Management and SSA’s
Inspector General.
In addition to developing its own anti-fraud initiatives, the
National Committee oversaw and supported Regional Anti-Fraud Committees,
which were established to coordinate anti-fraud strategies in
each of SSA’s ten regions. The Regional Committees included
Regional Commissioners, other Senior SSA and OIG staff, as well
as managers of SSA Field Offices.
The National Anti-Fraud Committee fully supported the SSA/OIG
Combating Fraud key initiative tactical plan. The tactical
plan initiatives were designed to provide stewardship and oversight
consistent with increased public confidence, while aggressively
deterring and detecting fraud. The Agency was very mindful
that reports of fraud, waste, or abuse would trigger public perceptions
that SSA was not efficient or that it did not make the best use
of tax payer dollars.
Four Regional or National Anti-Fraud Conferences were held from
September 1997 through May 1999. These conferences provided
a forum to discuss new ideas, as well as existing initiatives.
Since 1997, SSA has published the Annual Report to Employees
on Anti-Fraud Initiatives to inform employees about the Agency’s
anti-fraud efforts and to generate new ideas and recommendations.
Perhaps the Agency’s biggest contributors to its anti-fraud efforts
were the employees in SSA’s 1,300 field offices whose commitment
to maintaining the integrity of the Social Security programs was
unswerving. It was often field office and DDS employees
who uncovered fraudulent schemes. These employees were the
biggest assets in the Agency’s fight against fraud. SSA
was committed to continue training them in anti-fraud practices
and seeking additional tools to make their anti-fraud commitment
easier and more effective.
Components partnered in a number of initiatives
to capitalize on the skills of staff and to make the most of limited
resources.
The
OIG believed that a
constant flow of information among its auditors, investigators,
and attorneys was critical to the success of improving SSA program
integrity. The Agency and OIG also
worked with other Federal and State agencies on a number of initiatives.
Employee
Fraud
Although the vast
majority of SSA’s 65,000 employees were proven trustworthy and
dedicated civil servants, a few corrupt employees could compromise
the integrity of the Social Security system and undermine the
public’s confidence in the Agency’s programs. Because of
this, the detection of employee fraud was an investigative priority.
The OI provided
the lead in a cooperative effort with various financial institutions
to uncover a scheme where SSA employees provided private information
from SSA’s databases to outside individuals. The individuals
used the information to activate stolen credit cards. Since
the project’s inception in 1998 to March 31, 2000, the OI identified
12 SSA employees involved in the activities and $1.4 million in
fraud loss to financial institutions.
Service
Provider Fraud
SSA appoints representative
payees for individuals who are unable to manage their own funds.
While the vast majority fulfilled their roles, there were some
representative payees who misused the benefits of their clients.
The Agency and the IG were committed to detecting and punishing
individuals who committed this type of fraud as well as identifying
ways for SSA to improve its oversight of representative payees.
The OIG audit work
identified two major challenges
facing SSA concerning the Representative Payee Program.
They
were the processes of selection and monitoring of representative
payees.
When SSA determined a beneficiary
was “incapable of” or “prohibited from” managing their benefits,
SSA screened and selected a suitable representative payee.
The Agency used a preferred list to initiate a search for a suitable
representative payee. SSA generally preferred to appoint
relatives as representative payees rather than friends or other
third parties.
SSA interviewed
and “investigated” prospective representative payees to determine
their suitability. It was not a formal investigation, but
rather a means to conduct an SSA records verification. Some
of the documents that SSA reviewed were drivers’ licenses, state
identification cards, bankbooks, and credit cards. The Agency
generally did not verify the accuracy of the information presented
unless it had a reason to question the applicant’s suitability.
The Agency verified that the prospective representative payee
had not been convicted of a felony against Social Security programs.
For
organizational payees, SSA verified the Employer Identification
Number (EIN) of the representative payee by comparing the EIN
on the representative payee application to the EIN on SSA’s records.
SSA did not perform credit or security background checks on prospective
individual or organizational payees to determine if they had financial
problems, bad credit, or if individuals or employees of the organization
were convicted of any other felony.
The Agency had
safeguards in place to ensure that representative payees did not
misuse benefits. The safeguards included requiring an annual
accounting report from all representative payees for each individual
under their care and performing on-site reviews of representative
payees.
The
OIG’s December 1996 report entitled Monitoring
Representative Payee Performance: Nonresponding Payees
identified several problems with representative payees who did
not provide these annual accounting reports.
The
IG recommended that SSA determine why representative payees did
not complete and return accounting reports and determine whether
SSA staff were properly processing systems-generated alerts for
payees who did not respond.
SSA
responded by proposing to conduct Quick Response checks when representative
payees did not
return the reports.
On-site
reviews were visits with the representative payee or the administrators
of organizations and consisted of an examination of the accounting
records and interviews with beneficiaries to determine if their
needs were being met or if they were experiencing any problems.
While
the reviews may not have uncovered all instances of representative
payee abuse, the Agency believed the reviews provided a deterrent
effect for those who were prone to commit this type of fraud,
especially of those representative payees who did not submit the
annual accounting form.
In a March 1997
evaluation report entitled Monitoring Representative Payee
Performance: Roll-Up Report, the IG recommended that SSA conduct
a more thorough screening of potential representative payees.
As a result, SSA proposed legislation that would require
non-governmental organizational representative payees to be both
bonded and licensed, providing that licensing was available in
the State.
The
Congress later introduced the proposal.
The
March 1997 report also included recommendations for SSA to conduct
periodic reviews of selected payees and change the focus of the
current process from accounting to
monitoring and compliance.
By
focusing on compliance issues, SSA could learn in a timely manner
whether or not a problem existed. The
Agency embarked upon actions intended to address various aspects
of its representative payee monitoring and oversight.
SSI
Eligibility Project
SSA partnered with
OI in 1998 in an SSI Eligibility Project that was designed to
determine the extent of violations concerning eligibility requirements
for the SSI program. Staff mailed questionnaires to a sample
of recipients, and if they were not answered, face-to-face interviews
were requested. Within a short amount of time, it became
clear that certain individuals had given false information to
SSA about their residence status in order to make them eligible
for SSI payments. In addition, others were identified who,
after having been declared eligible for SSI, returned to their
country of origin and continued to receive SSI payments.
The
Office of Audit (OA) conducted a review, The Adequacy of the
Residency Verification Process for the Supplemental Security Income
Program, to determine the adequacy of the process used in
the project. The review also determined if SSA provided
the proper guidance to field offices to verify that recipients
were U.S. residents. OA recommended that SSA revise its
procedures to provide for expanded residency development.
Because of the
success of these investigations OIG collaborated with SSA’s New
York Regional Office, New York City, and New York State officials
to identify SSI recipients who obtained payments illegally or
contrary to regulations. Perhaps more importantly, it was
determined that this method could be used to identify both suspect
SSI and Old-Age, Survivors and Disability Insurance claims at
foreign sites and other U.S. locations.
SSN
Misuse
 Because
SSN misuse can strike at the core of SSA’s programs and operations,
the OIG knew that misuse would be one of its major workloads.
One of OIG’s first reports issued as the new SSA OIG dealt with
the effectiveness of computer profiling to detect suspected fraudulent
enumeration and claims activity. Other reviews conducted
revealed some alarming trends and issues related to SSN misuse.
OIG recommended actions that would strengthen SSA’s enumeration
process and help to prevent SSN misuse.
One
of those reviews, Using Social Security Numbers to Commit Fraud,
documented vulnerabilities in SSA’s enumeration process and highlighted
several SSN fraud cases that OIG investigated and referred to
the Department of Justice for prosecution. In the report,
three recommendations were made: 1) SSA should incorporate
preventive controls in its Modernized Enumeration System; 2) SSA
should require verification from the issuing State when an out-of-state
birth certificate was presented as evidence for an SSN application;
and 3) SSA should continue its efforts to have the Immigration
and Naturalization Service (INS) and the State Department (DOS)
collect and verify enumeration information for aliens.
Better overall
governmental efficiencies and savings were expected to flow from
the new streamlined process. Prior to the new process, legal
non-citizens had to apply for Social Security cards at SSA offices,
where they were required to furnish virtually the same information
they gave to DOS and INS for immigration purposes. Assigning
SSNs based on information collected by DOS or INS would save the
individuals the additional trip to SSA and only require them to
give the information once.
Over
the years, the Agency tightened its SSN policies and instituted
different procedures and systems checks to prevent fraudulent
documents from being used to obtain SSNs and SSN cards.
Essential to the Agency’s ultimate goal to prevent fraud was ending
its dependence on documents that might have been forged or misused
by the dishonest in an attempt to acquire an SSN.
The Agency’s prior
efforts to prevent the use of fraudulent documents to obtain SSNs
included:
·
Instructions for SSA employees on examining documents submitted
as evidence for an SSN (i.e., proof of age, identity, and U.S.
citizenship or alien status).
·
An SSA system that tracked applications for SSN cards submitted
with “suspect” or “fraudulent” documents. This capability
prevented an individual with fraudulent documents from “shopping
around” for an SSA office which might accept them. It interrupted
the issuance of an SSN card pending further investigation by the
SSA office.
·
SSA used the INS Systematic Alien Verification for Entitlements
(SAVE) program to verify every INS document presented with an
application for an SSN card except for documents from aliens who
have not been in the country long enough for information to be
available through SAVE.
The
Agency’s Comprehensive Integrity Review Process alerted field
offices when multiple Social Security cards were sent to the same
address over a short period. The offices then investigated
to determine whether the alerts reflected any fraudulent activity.
The
Enumeration at Entry initiative proceeded with a phased in approach:
Phase
1: The DOS will collect enumeration data for
immigrants along with visa information and forward it to the INS
that will, in turn, forward the data to SSA;
Phase
2: INS will forward to SSA the enumeration data
collected from aliens changing from nonimmigrant alien status
to permanent residents; and
Phase
3: INS will forward to SSA enumeration data
collected from aliens applying for permission to work and issued
employment authorization documents (EAD).
The
Enumeration at Entry initiative would provide a better overall
enumeration process for non-citizens, deter the use of fraudulent
documents, and allow applications for SSNs as part of the immigration
process.
The
following chronology details activity on the non-citizen enumeration
process:
1991
SSA wrote to INS requesting INS explore with SSA new ways to enumerate
non-citizens. SSA and INS met to discuss new ways to enumerate
non-citizens.
INS
informed SSA that it could not assist SSA then in enumerating
aliens because of higher priorities and operational considerations.
1994
SSA and INS reopened discussions on exploring new ways to enumerate
non-citizens.
1996
SSA and DOS signed a memorandum of understanding for DOS to collect
enumeration information for immigrants as part of the immigration
process.
1997
Proposed rule published to permit the DOS and INS to collect information
needed to assign SSNs to aliens.
1998
Final rule published to permit the DOS and INS to collect information
needed to assign SSNs to aliens.
In
addition to the complexity of coordinating this initiative with
three agencies, two separate pieces of legislation (the Illegal
Immigration Reform and Immigrant Responsibility Act of 1996 and
the Taxpayer Relief Act of 1997) required INS and
SSA to temporarily set aside work on the Enumeration at Entry
effort.
The
INS set aside its review of the draft memorandum of understanding
(MOU) received in June 1996 to focus on implementing the requirements
of the 1996 immigration reform legislation (enacted in September
1996). The INS completed its review of the MOU in June 1997
and returned it to SSA with minor comments.
SSA
began revising the MOU to incorporate the INS comments but put
it aside when the tax legislation passed in August 1997.
That legislation required SSA to collect additional information
when assigning Social Security numbers to children for income
tax purposes. As a result, SSA decided to limit the collection
of enumeration information to adults (individuals age 18 and over)
only for the Enumeration at Entry initiative.
The
Agency revised the MOU and returned it to INS in March 1998.
Because of high workloads and other priorities, the INS did not
complete its review of the revised MOU until July 2000.
SSA, INS, and DOS began meeting in July 2000 to discuss final
MOU language.
In
a report related to one of the new OIG’s first reports, Analysis
of Social Security Number Misuse Allegations Made to the Social
Security Administration Fraud Hotline, OIG identified the
different types of SSN misuse allegations and estimated the number
of occurrences for each category during the period of review.
The analysis showed that the sampled OIG Hotline allegations could
be placed in five categories: identity verification; sales
solicitation; loss of SSN card; problems with the SSN; and identity
theft. About 81 percent of the SSN misuse allegations the
Hotline received related directly to identity theft.
In
an effort to prevent program-related SSN misuse, OIG conducted
work that considered the possibility of SSA using biometrics technologies.
The report, Social Security Administration is Pursuing Matching
Agreements with New York and Other States Using Biometrics Technologies,
outlined the possible benefits to SSA of pursuing matching agreements | 
www.socialsecurity.gov
