SSA History

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. 

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*	$10,300,000	$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.

The Agency’s Enumeration at Entry initiative was expected to greatly improve the way SSA assigned SSNs and issued SSN cards to non-citizens.  With this initiative, INS would electronically forward the data collected as part of the immigration process to the Agency to assign SSNs and issue Social Security cards.  This change served two important goals:  fraud prevention and improved customer service.

The initiative would increase and protect the integrity of the enumeration process by closing off opportunity for illegal work and other crimes.  Prior to the initiative, non-citizens presented INS issued documents in SSA offices as proof of alien status and authority to work.  The INS could not authenticate the documents for some time after the non-citizen’s arrival because the data was not available in any INS system.  This lag allowed dishonest individuals to present false INS documents at SSA offices and fraudulently secure SSNs for illegal work activity or credit card scams.  With INS and the DOS collecting enumeration information during the immigration process and quickly passing it on to SSA, the Agency could ensure that a non-citizen’s lawful status and authority to work were never in doubt when it assigned an SSN.

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 with States that have employed biometrics technologies to combat fraud and identify ineligible recipients for social service programs.  OIG believed that SSA could use the results of New York State’s biometrics program to identify individuals who were improperly receiving benefits, thereby reducing and/or recovering any improper benefit payments.