Disability Insurance:

Actions Needed to Help Prevent Potential Overpayments to Individuals Receiving Concurrent Federal Workers' Compensation

GAO-15-531: Published: Jul 8, 2015. Publicly Released: Aug 3, 2015.

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What GAO Found

GAO found that the Social Security Administration (SSA) detected concurrent Disability Insurance (DI) and Federal Employees' Compensation Act (FECA) payments received by some, but not all individuals who received these concurrent payments during at least 1 calendar month from July 1, 2011 through June 30, 2014, which was the most-current data available at the time GAO began its work. Specifically:

SSA successfully detected FECA payments for approximately 4,090 individuals (about 52 percent) of the approximately 7,860 individuals who received concurrent FECA and DI payments during that period.

SSA did not detect concurrent FECA payments for approximately 1,040 individuals (about 13 percent). These 1,040 individuals received a total of $48 million in DI benefits during this period, but the data GAO received did not contain detailed information necessary to determine the exact amount of any DI overpayments.

Due to limitations in the SSA data GAO received, GAO was unable to determine whether SSA detected concurrent FECA benefits for about 2,730 individuals (about 35 percent) who received concurrent FECA benefits.

SSA's internal controls for helping to prevent DI overpayments due to the concurrent receipt of FECA benefits rely on beneficiaries to self-report any workers' compensation benefits, including FECA benefits. However, GAO's nongeneralizable case studies showed that SSA's internal controls did not detect and prevent potential DI overpayments to any of the 20 beneficiaries GAO selected for additional review. For 7 of the 20 individuals GAO reviewed, SSA did not detect and prevent potential overpayments for more than a decade, resulting in potential overpayments totaling more than $100,000 for each of these 7 individuals. GAO plans to refer these 20 cases to SSA for further review. Thus, GAO describes these as potential overpayments because SSA has not yet established overpayments for these individuals.

SSA officials reported that the agency made an estimated $371.5 million in DI overpayments stemming from FECA benefits from fiscal year 2009 through fiscal year 2013, but GAO was unable to determine how much of these funds SSA has recovered. SSA officials told GAO that they have spent more than a decade exploring the best way to match the Department of Labor's (DOL) FECA data with SSA data to prevent DI overpayments, but SSA is not currently performing a routine match of these data. SSA previously stated that it would not be cost-effective to perform a routine match of FECA data with SSA data to help prevent DI overpayments, but SSA did not consider specific cost and benefit information in making this determination. The Office of Management and Budget has issued guidance stating that a program may be justified if its benefits outweigh its costs. In this context, making such a determination would involve comparing the costs and benefits of alternatives to SSA's current approach for reducing these overpayments, which relies on beneficiaries to self-report any FECA benefits they receive. These alternatives may include, among others, obtaining available FECA data to prevent overpayments. Comparing alternatives for reducing these overpayments would help SSA to determine which option presents the best opportunity to detect and prevent DI overpayments related to FECA benefits.

Why GAO Did This Study

Both SSA's DI program and DOL's FECA program provide an important safety net for workers by providing billions of dollars in benefits annually to workers with disabilities. Federal law requires SSA to reduce DI benefits for some individuals receiving workers' compensation payments, including FECA payments, and SSA risks overpaying benefits if it does not do so.

GAO was asked to study potential DI overpayments due to the concurrent receipt of FECA benefits. GAO examined the extent to which: (1) SSA has detected individuals receiving concurrent FECA benefits that may result in potential DI overpayments, (2) internal controls that SSA relies on help prevent these potential overpayments, and (3) SSA is identifying and recovering these potential overpayments. GAO compared DI beneficiary data to FECA beneficiary data. GAO reviewed agency documentation and interviewed officials to identify relevant internal controls. GAO also reviewed case files for a nongeneralizable sample of 20 individuals, selected based on their risk of DI overpayments. GAO also reviewed information on DI overpayments and recovery efforts.

What GAO Recommends

GAO recommends that SSA review the potential overpayments GAO identified and compare the costs and benefits of alternatives for reducing the potential for overpayments to individuals receiving concurrent FECA payments to determine how best to strengthen internal controls. SSA agreed with GAO's recommendations.

For more information, contact Seto Bagdoyan at (202) 512-6722 or bagdoyans@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In September 2017, the Social Security Administration (SSA) provided documentation that it had reviewed the potential DI overpayments resulting from FECA benefits identified in GAO's case studies, as GAO recommended in July 2015, and stated that it identified any indicators of fraudulent activity and established debt-collection efforts, as appropriate. This activity helped ensure that the agency does not continue to overpay these beneficiaries, who may face economic hardship in repaying these large debts.

    Recommendation: To improve SSA's ability to detect, prevent, and recover potential DI benefit overpayments due to the concurrent receipt of FECA benefits, the Commissioner of Social Security should review the potential DI overpayments resulting from FECA benefits identified in our case studies, as well as any indicators of fraudulent activity related to FECA benefits that were not self-reported by DI beneficiaries, and establish debt-collection efforts and fraud-related penalties, as appropriate.

    Agency Affected: Social Security Administration

  2. Status: Open

    Comments: As of December 2017, SSA stated that it has completed reviewing the instances described in GAO's report in which SSA staff did not obtain proof of FECA benefits that DI beneficiaries reported nor took follow-up actions as needed, as GAO recommended in July 2015. SSA also stated that it will continue working to finalize the temporary workflow process to help facilitate SSA staff obtaining proof of FECA benefits pending the FECA data exchange. SSA does not expect the FECA data exchange to become operational in fiscal year 2018. It will be important for SSA to continue its work to finalize the workflow process to have better assurance that its staff are identifying and preventing DI overpayments to individuals who dutifully report their benefits to SSA.

    Recommendation: To improve SSA's ability to detect, prevent, and recover potential DI benefit overpayments due to the concurrent receipt of FECA benefits, the Commissioner of Social Security should review the instances described in our report in which SSA staff did not obtain proof of FECA benefits that were reported by DI beneficiaries and (1) determine the reasons for these occurrences and whether this is a pervasive problem; and (2) if necessary, design appropriate controls or make other efforts, such as staff training, to help ensure SSA staff obtain proof of workers' compensation payments, as required by SSA policy.

    Agency Affected: Social Security Administration

  3. Status: Open

    Priority recommendation

    Comments: SSA has considered alternatives to its current approach of relying on beneficiaries to self-report any FECA benefits they receive, but the agency has not completed its efforts. In December 2017, SSA told GAO that the agency's Office of General Counsel is performing its final review of the draft agreement for a new Computer Matching Agreement (CMA) with DOL and that this is the last stage prior to requesting agency-level sign-off on the agreement. According to SSA, this CMA establishes the terms, conditions, and safeguards under which DOL will disclose FECA payment data for offsetting DI benefits in accordance with federal law, as GAO recommended in July 2015. Because SSA has not completed its work in this area, it is too early to determine whether these actions will address the problems GAO identified. GAO will continue to monitor SSA's work in this area. It will be important for SSA to follow through with these plans in order to help the agency identify and prevent potential DI overpayments.

    Recommendation: To improve SSA's ability to detect, prevent, and recover potential DI benefit overpayments due to the concurrent receipt of FECA benefits, the Commissioner of Social Security should, in accordance with OMB guidance, compare the costs and benefits of alternatives to SSA's current approach for reducing the potential for overpayments that result from the concurrent receipt of FECA benefits, which relies on beneficiaries to self-report any FECA benefits they receive. These alternatives could include, among others, routinely matching DOL's FECA program data with DI program data to detect potential DI overpayments.

    Agency Affected: Social Security Administration

  4. Status: Open

    Priority recommendation

    Comments: SSA has taken steps to strengthen internal controls, but it has not completed its efforts. In December 2017, SSA told GAO that the agency's Office of General Counsel is performing its final review of the draft agreement for a new Computer Matching Agreement (CMA) with DOL and that this is the last stage prior to requesting agency-level sign-off on the agreement. According to SSA, if the CMA is established, SSA will use DOL's FECA benefit data to administer DI benefits, specifically SSA will use this data to improve efficiencies in its ability to offset/reduce DI benefits when an individual is concurrently receiving FECA benefits, as GAO recommended in July 2015. Because SSA has not completed its work in this area, it is too early to determine whether these actions will address the problems GAO identified. GAO will continue to monitor SSA's work in this area. It will be important for SSA to follow through with these plans in order to help the agency identify and prevent potential DI overpayments.

    Recommendation: To improve SSA's ability to detect, prevent, and recover potential DI benefit overpayments due to the concurrent receipt of FECA benefits, the Commissioner of Social Security should strengthen internal controls designed to prevent DI overpayments due to the concurrent receipt of FECA benefits by implementing the alternative that provides the greatest net benefits.

    Agency Affected: Social Security Administration

 

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