By Sean McCalley
Federal News Radio

Some of New York’s finest are behind bars for their involvement in a criminal ring to defraud the Social Security Administration. A group of 106 people, many of them New York City firefighters and police officers, pocketed $23.2 million in fraudulent disability claims from the SSA.

Four of them created a legitimate-looking paper trail to try to dupe the agency, including two doctors, an attorney and a disability consultant. Despite their efforts, federal law enforcement rounded up the entire group.

The people responsible for catching these types of criminals — and recovering all the money they steal from SSA — are employees of the agency’s Office of Inspector General. But investigations involving high-profile crime rings and fraud schemes are just part of how the OIG patches the leaks in SSA’s financial systems.

In part two of Federal News Radio’s special report, Rainmakers and Money Savers, we take an inside look at how much money is brought into the federal coffers due to the work of a specific group of federal employees.

Three-pronged approach

Patrick O’Carroll, SSA’s Inspector General, said the goal for his employees (about 550 serving across the country) is an 8-to-1 return on investment for all the money Congress appropriates his office every year. The average return currently sits at about 20-to-1 — roughly three times more than the goal.

“We’re overseeing an agency that’s paying well over $1 billion a day to the American public,” O’Carroll said. “Because of that, every dollar that we can save is usually going to be [in] large numbers.”

To illustrate that sense of scale, consider this: For all of fiscal 2013, SSA paid more than $850 billion in benefits. That money was split between more than 62 million beneficiaries every month. Just by themselves, SSA’s disability programs awarded 15 million people about $175 billion in benefits last year.

O’Carroll said a strong ROI is dependent on three areas the OIG specializes in: Investigations, audits and lawsuits. Certain specialties bring in more money than others, but all three play an important role in the mission of safeguarding — and refilling — SSA’s trust fund.

Auditing power

SSA OIG auditors look for strange patterns in the agency’s financial data to find waste, fraud and abuse. From a strictly financial sense, audits are the agency’s most valuable tool.

During the six months between October 2013 and March 2014, SSA OIG issued 33 audits. From those 33 audits, the IG found $521 million in questionable costs made by the Social Security Administration. The IG also redirected $6 million in waste and duplication to needy programs at SSA, according to its latest semi-annual report to Congress.

But before the auditing team starts investigating SSA’s financial system, it has to dream up new ways to detect waste, fraud and abuse.

“We do a lot of brainstorming,” said Judy Oliveira, director of the OIG’s Boston Audit Division. “One audit idea will lead to something else.”

For example, Oliveira said an SSA employee tipped her off to people using multiple Social Security numbers (SSNs) to claim multiple benefits. She scanned the agency’s data to see if it issued any benefit checks to multiple, random SSNs listed under a single address.

“But what if the person was a little smarter and had a different mailing address?” Oliveira said. Taking the original tip and turning it into a larger investigation, Oliveira’s auditing team found about 200 people using multiple SSNs. The agency overpaid them by $3 million.

Audits bring back the most money because they have a cumulative effect on SSA’s financial systems. O’Carroll said the combination of a retrospective approach (fixing existing problems) and a prospective approach (recommending ways to prevent problems) build upon each other and have huge effects on SSA’s financial bottom line.

Investigative units

SSA OIG has 10 field divisions responsible for monitoring the agency’s work in about 60 different cities. The fraud ring uncovered in New York was under the legal jurisdiction of its New York field office, which is responsible for the New York region and the commonwealth of Puerto Rico.

Ed Ryan is the special agent in charge of the New York Field Division. He and his fellow agents serve as the “boots on the ground” for the OIG during criminal investigations. Ryan said the field divisions have to decide whether cost of planning, labor, and legal expenses will be worth an investigation.

In other words, the amount of money to recover must offset the cost of the effort involved in reclaiming it.

“If it meets that litmus test … we will put an investigative team out to do the old traditional gumshoe activity. We follow people, we interview people. We’ll want to view the complainant, the source of the allegation. And we’ll conduct surveillances as we see fit,” Ryan said.

The case involving New York’s finest netted $23.2 million in recovered funds for SSA.

A different case in Puerto Rico involved a man receiving benefits for a mood disorder that prevented him from working. But he actually worked at a grocery store that paid him cash to conceal his employment. The man had to pay back $110,000, and the grocery store owed another $60,000, resulting in about $170,000 for SSA.

O’Carroll said Ryan helped recover many millions more throughout his entire tenure at the New York Field Division. But perhaps equally as important, even though hard to quantify, is the public image benefit OIG investigators bring. High-profile cases like Ryan’s help the OIG spread awareness.

That positive public image might one day lead to more generous budgets from Congress, which O’Carroll said will be welcomed with open arms.

“We’ve been [dealt] the same amount of resources and the same amount of staff” for years, O’Carroll said. “As a realist and a taxpayer myself, it makes me look to see where we can be more efficient and where we can get a better bang for the buck with the resources that we have.”

Legal expertise

For cases that don’t warrant the cost of a criminal investigation or get missed by a wide-scale audit, SSA OIG turns to civil lawsuits. It uses a Civil Monetary Penalties system to punish wrongdoing and reclaim small amounts of money for SSA.

“Hopefully, we’re going to catch them early enough that it isn’t a very large amount of money that they’ve stolen from the government,” O’Carroll said. “When we go to get them prosecuted, oftentimes the amount of money that was stolen might not be commensurate with the cost it would take to bring them to trial.”

By attacking thieves in the civil court system, SSA OIG can avoid racking up court fees and recover a substantial amount of money. In its most recent semi-annual report to Congress, the OIG says it processed almost 200 civil cases to recover about $10 million.

“An individual will be fined, usually an amount of $5,000, for each time they’ve lied to the Social Security Administration,” O’Carroll said. “As a result of that, we get large amounts of money back in penalties.”

This article is part of Federal News Radio’s special report, Rainmakers and Money Savers. Check back Thursday for parts 3 and 4. Click here to view all content from our special report.

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