Social Security audit finds dead people getting checks

McClatchy NewspapersJune 30, 2009 

WASHINGTON — The Social Security Administration has continued to pay millions of dollars in benefits to dead Americans, and other elderly U.S. residents are at risk of losing badly needed aid because they're improperly recorded as deceased, federal investigators warn in a new report.

The consequences of either bureaucratic error can be severe.

"The addition of erroneous death entries can lead to benefit termination, cause severe financial hardship and distress to affected individuals," investigators with the Social Security Administration's Office of Inspector General noted in the report, which was quietly released on Sunday.

The mistakes cost taxpayers and individual beneficiaries in different ways. Taxpayers are losing money when benefits are paid to the deceased. Individuals get into trouble when they're prematurely pronounced dead.

In Southern California and elsewhere last year, investigators analyzed 305 Social Security beneficiaries who were recorded as deceased in their Social Security Administration files. At least 140 of them were still alive.

All told, investigators say, more than 6,000 current Social Security beneficiaries are recorded as being deceased. An untold number of them are still, in fact, alive.

"There is no rhyme or reason," the Scott Nishioki, chief of staff for Rep. Jim Costa, D-Calif., said Tuesday of the recurring Social Security problems. "Often, it's probably just a clerical error."

Costa's office has handled about 10 cases in the past four years in which the Social Security Administration has incorrectly classified constituents as dead, Nishioki said. Other congressional offices have periodically confronted the same problem.

The identified problems are only a fraction of the nation's 50 million Social Security beneficiaries, and Social Security officials say they've instituted protective measures.

Social Security officials already have recovered some of the improperly paid-out funds. They further agreed to investigate "as quickly as possible based on available resources" the correct status of 6,733 potentially deceased individuals identified in the new audit.

"We will investigate the alert and follow-up systems to assess how these cases were missed by our current controls," James A. Winn, chief of staff for the Social Security Administration, said in the agency's formal response.

An agency representative couldn't be reached Tuesday to elaborate on the audit.

Those affected can feel the problem acutely even if they're still getting Social Security checks, because Social Security death records can be used by other agencies.

Several individuals told investigators that they "had to prove to the Internal Revenue Service they were not deceased before receiving a refund," investigators noted. Some sought congressional help.

"A retired beneficiary expressed a recurring problem when he could not receive funding from his private pension plan since he was declared deceased," the investigators noted. "Each time he attempted to correct the issue, the problem recurred when the pension plan updated its death information."

The flip side of the problem occurs when a beneficiary is properly designated as deceased, but the Social Security benefits continue. Payments were made to dead beneficiaries in at least 88 out of the 305 cases studied by investigators. Some of these improper payments continued for years.

For instance, a New York City resident died in April 1990. Nonetheless, Social Security checks of $1,185 were mailed out monthly, and cashed, until October 2008. Investigators have since charged a suspect with improperly taking more than $210,000 in benefits.

All told, investigators found $2 million in improper payments were made to the 88 deceased beneficiaries. In some cases, a "death alert tracking system" hadn't properly notified Social Security field offices. In other cases, Social Security numbers were transposed.

Investigators in April further identified 6,733 Social Security benefit recipients whose master files "contained a date of death." Extrapolating from their smaller sample, investigators warned that more than $40 million may have been paid out improperly to deceased beneficiaries.

As a result of the new study, at least three dozen potential criminal cases have been forwarded to the agency's Office of Investigations for further inquiry and possible prosecution.

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