An OIG "Special Report"

     Social Security's Office of Inspector General (OIG) has issued a "Special Report" on The Social Security Administration's Ability to Prevent and Detect Disability Fraud. There are some small bits of news in the "Special Report" but it's mostly a stale rehashing of old news in an attempt to placate Congressional Republicans who want proof that fraud is rampant in Social Security's disability programs. Three isolated instances of alleged small scale schemes to defraud Social Security do not constitute proof of rampant fraud. It's merely a sign that there are stupid people who make the mistake of thinking that it's easy to defraud Social Security.

     Anyway, here's the few nuggets of news that I found in this "Special Report":

• "The Acting Commissioner and others have consistently and inaccurately cited a 2006 OIG report as the “best-available evidence” that the rate of fraud in the disability program is less than one-tenth of one percent. We are currently updating that 2006 report, and expect that our findings will give us more insight into fraud and abuse in the disability programs." Later in the report, OIG says, basically, that even though there's a report they issued some years ago that can be interpreted in the way that the Acting Commissioner interpreted it that she shouldn't have because maybe there are some overpaid claimants that OIG doesn't want to prosecute but who OIG still wants to label as fraudsters. Is it reasonable to call something fraud if you're not willing to prosecute it as fraud?

• "The Agency’s dated systems, combined with the diverse and unintegrated systems of 54 DDSs, provide little protection against the cookie - cutter approach to large - scale DI fraud conspiracies such as those in New York and Puerto Rico, where only vigilant DDS analysts were finally able to detect signs of a scheme after millions of dollars were paid to fraudulent beneficiaries."
• "This year, SSA began an initiative to develop predictive analytics to detect disability fraud."
• "SSA is currently working with three vendors: Northrup Grumman and SaS on the use of the predictative analytics tool, and Accenture regarding a joint anti-fraud unit."
• OIG has noticed that scanned images of documents don't contain searchable fields, meaning it's impossible to turn the powerful software that Northrup Grumman and SAS wants to sell the agency loose on all those scanned documents so why is the agency considering buying the software? That means that humans, who are actually pretty good at noticing patterns, will probably have to be the ones noticing the patterns.
• OIG wants "a comprehensive tracking and review process for all claimant representatives."
• "SSA is currently working with the Disability Researth Consortium and the Library of Congress in a literature review to look at how other disability systems factor in age, education and work history. The agency intends to update the vocational grids, used to establish disability and to identify other work that a claimant could perform."
• "In FY 2007, 19.6 percent of ALJs allowed more than 85 percent of their cases; in FY 2013, that percentage dropped to 2.9% of ALJs ..." What does this have to do with fraud? Also, did the percent of ALJs denying a huge percentage of the cases they heard go down in a similar way?

Social Security Statement Mailings To Resume

     From a Social Security press release:

Carolyn W. Colvin, Acting Commissioner of Social Security, today announced the agency will resume the periodic mailing of Social Security Statements—once every five years for most workers-- while encouraging everyone to create a secure my Social Security account to immediately access their Statement online, anytime. ...

Beginning this month, workers attaining ages 25, 30, 35, 40, 45, 50, 55, and 60 who are not receiving Social Security benefits and who are not registered for a my Social Security account will receive the Statement in the mail about 3 months before their birthday.  After age 60, people will receive a Statement every year.  The agency expects to send nearly 48 million Statements each year.

Colvin Nomination Moving Forward

     The Senate Finance Committee has scheduled an "Open Executive Session" for September 18 to consider reporting out the nomination of Carolyn Colvin to be confirmed as Commissioner of Social Security. Although it appears that there is no opposition to the Colvin nomination, it is far from clear that she will be confirmed. There may not be enough time for full Senate to confirm her before it adjourns for the election. If Republicans win a majority in the election, they will almost certainly try to run out the clock on all nominations in the lame duck session after the election. It's judicial nominations they'll be aiming at but she may get caught in the crossfire.

Why Are So Many Student Loans Being Collected From People On Social Security Disability Benefits?

     The Government Accountability Office (GAO) did a recent study on the collecting of student loan debts from Social Security benefits. The chart below is from that study.

     Obviously, most of the student loan debt that the Social Security Administration collects comes from disability benefits. Under the Department of Education's own regulations, these student loan debts are supposed to be discharged if the debtor is "permanently impaired." The Department of Education has interpreted "permanently impaired" to include anyone found disabled by the Social Security Administration who has a five to seven year review date, a group that Social Security classifies as Medical Improvement Not Expected (MINE). That's a fair number of younger disabled people. It would be easy for Social Security to identify student loan debtors who are in the MINE category and notify the Department of Education so that no more money would be improperly withheld from the Social Security disability benefits of these disabled people and, indeed, so that all other collection efforts would be ended for this group of people. I'm pretty sure this isn't being done. Why not? If data matches can be done to collect debts, why can't data matches be done to stop inappropriate debt collection?

Women And Social Security Disability

     The National Women's Law Center has produced a fine fact sheet on women and Social Security disability benefits. This chart is from that fact sheet.

Phased Retirement For SSA Employees In Doubt

     From the Federal Times:

Federal employees at the Social Security Administration may have to wait longer for phased retirement — if the agency decides to implement it at all.

Dorothy Clark, SSA spokeswoman, told Federal Times that the agency was still deciding if it was going to implement the program.

“We are currently evaluating OPM’s [Office of Personnel Management's] regulations and what would be required if the agency decides to implement a phased retirement program,” Clark said. “If SSA decides to implement a program, it will not be implemented until calendar year 2015 or later.”

Student Loans A Growing Problem For Social Security Recipients

     From the New York Times:

Janet Lee Dupree, 72, was surprised when she received her first Social Security benefits seven years ago. About one-fifth of her monthly payment was being withheld and she called the federal government to find out why.

The woman, who is from Citra, Fla., discovered that the deduction from her benefits was to repay $3,000 in loans she took out in the early 1970s to pay for her undergraduate degree. ...

She is among an estimated two million Americans age 60 and older who are in debt from unpaid student loans, according to data from the Federal Reserve Bank of New York. Its August “Household Debt and Credit Report” said the number of aging Americans with outstanding student loans had almost tripled from about 700,000 in 2005, whether from long-ago loans for their own educations or more recent borrowing to pay for college degrees for family members.

The debt among older people is up substantially, to $43 billion from $8 billion in 2005, according to the report, which is based on data from Equifax, the credit reporting agency. Currently about 155,000 people, according to federal data, have money deducted from their Social Security payments to pay down their outstanding student loans. ...

Attorney Fees Down 19% In Last Four Years

     I have written that attorneys and others representing Social Security disability claimants are under considerable economic stress. It's a simple matter to demonstrate what's happening. Social Security posts the totals on fees paid. These numbers are available through August of this year. Let's compare the total fees paid to attorneys and others for representing Social Security claimants for this year and each of the preceding four years through August of each year:

• 2010 $977 million
• 2011 $941 million, a reduction of $36 million or 4% from 2010
• 2012 $935 million, a reduction of $6 million or 1% from 2011; a reduction of $42 million or 4% from 2010
• 2013 $876 million, a reduction of $59 million or 6% from 2013; a reduction of $101 million or 10% from 2010
• 2014 $792 million, a reduction of $84 million or 10% from 2013, a reduction of $185 million or 19% from 2010

     If there had been essentially no change in representation, these numbers should have gone up modestly due to inflation. Instead, they went down by 19% over five years, with most of that change happening in the last two years.

     What happened? There's been a generalized slowdown in processing disability claims at Social Security. It just takes longer to get a case through every stage of the process. Naive people might think that slower processing would mean higher fees but the reality is that it just means lower total fees as the cases pile up at every level. Even more important, it has become more difficult to get a favorable decision from an Administrative Law Judge. That's had the direct effect of reducing the fees paid because fewer claimants are winning. It's had the secondary effect of changing the standards used by attorneys and others in selecting cases. Because a fee is paid only if the claimants wins, everyone tries to avoid cases they regard as unlikely to succeed. The "unlikely to succeed" category has gotten considerably larger over the last five years. More prospective clients are turned away. It's also had the effect of reducing the advertising that attorneys and others do seeking Social Security clients. Many people who were advertising in the past just can't afford it now. Even if they do advertise, the advertising is less effective because more prospective clients are turned away because of increased selectivity. This means that advertising has a lower yield, making it less cost effective. Less advertising means that fewer claimants learn that they can try to hire an attorney. "Try" is the right word here since it's clear at ground level that there are many claimants desperately seeking an Social Security attorney and not finding one willing to take on their case.

     If you're not in the business of representing Social Security claimants, your reaction to this is probably, "Who cares? That's your problem, not mine." However, Social Security has offloaded a considerable part of its workload to those who represent Social Security claimants. We have to do a lot of the filing of appeals, gathering of medical evidence and advising claimants. The agency is in no position to pick up that workload.