Millions of dollars wasted by Social Security fraud

Friday, October 14th, 2011 By

A cemetary

Sending checks to dead people and other things results in the Social Security Administration losing a lot of money. Image from Wikimedia Commons.

Millions of people rely on Social Security payments to sustain them after they have stepped away from the workforce. Money draws fraud artists like moths to a flame, and millions of dollars go down the drain annually due to Social Security fraud.

Millions paid out to dead people

The Social Security Administration provides millions of retired or disabled persons with their sole means of an income, but mistakenly pays far more than it should to some. This year, the SSA disclosed that its audit of January of 2008 revealed some 2,000 people were receiving Social Security checks despite being dead, according to CNN. It was estimated that dead people “received” more than $40 million in improper payments.

It can take the SSA a long time to find the mistake. CNN quoted one man who was receiving Social Security checks for his mother four years after she had died.

According to CBS, the Social Security Administration estimated it had made $6.5 billion in improper payments during fiscal years 2007 to 2009. Of that, about $2.5 billion was paid to people receiving disability benefits, survivors and retirement benefits.

Scams bleeding agency

The Social Security Agency is sparing with information about losses to fraud, such as people cashing dead people’s checks illegally. It has to be substantial.

CNN quoted one case where a man cashed $300,000 in his mother’s Social Security checks over a 15 year period. She had died at home, and he buried her in the back yard without reporting her death.

A woman in Bakersfield, Calif., pleaded guilty to fraud charges in June for cashing more than $70,000 in benefits paid to her great aunt between 2003 and 2010, according to KERO23, a Bakersfield ABC affiliate. Her aunt died in July 2003 and the coroner reported the death, but the SSA failed to catch on and kept sending checks.

The SSA has issues with its death reporting infrastructure. Aside from sending dead people checks, the agency also falsely declares 14,000 people dead every year, according to CNN. The Death Master File, the database of death records for the Social Security Administration, makes errors on one of every 200 deaths or about 38 per day.

Disability fraud more common

A common source of fraud committed against Social Security is where people receive disability income to which they aren’t entitled.

Part of the problem, according to a 2008 investigation by The Oregonian, is that the Social Security Administration lacks the resources to certify that people deserve disability or supplemental income. People receiving disability income are subject to Continuing Disability Reviews to certify they are unable to work and many people keep cashing the checks once they are healthy enough to resume working. In 2007, one of every 21 CDRs conducted resulted in disability benefits being cut off.

In 2008, 1.7 million CDR investigations scheduled for 2007 had not been performed. According to the Washington Post, fully half of the 2.8 million scheduled CDR investigations won’t be performed. In 2008, it was estimated that bringing all pending CDR investigations up-to-date would save the SSA upwards of $11 billion in future payments.

Sources

CNN

CBS

CNN

Turnto23/KERO

The Oregonian/Oregonlive.com

Washington Post

 

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