SSA Gave $3 Million in Benefits to Dead Californians

Agency ‘incorporated identity thieves’ work activity’

August 18, 2014

The Social Security Administration (SSA) gave $3 million in benefits to deceased people in California whose Social Security numbers were used by identity thieves, according to a new audit by the Office of the Inspector General (OIG).

The agency continued to distribute payments to beneficiaries who died in the 1980s, according to the audit released Thursday.

"OI [Office of Investigations] and SSA confirmed that SSA issued approximately $3 million in improper payments to 14 beneficiaries who died in California during the 1980s," the report said. "SSA terminated payments in each of these cases and quantified improper payments issue after the numberholders’ deaths."

In one case, the widow of a disabled man received his benefits for 28 years following his death in 1985. The widow received $231,687 in payments until November 2013. The agency will not pursue criminal charges due to the widow’s "advanced age."

The total amount of improper payments issued to dead people in California may be higher. An additional $598,350 in payments is being investigated for four individuals that the OIG believes to be deceased.

The SSA also mistakenly recorded three beneficiaries who are alive as deceased, and created death certificates for identity thieves that were using their SSNs.

"In these instances, it appeared that California had issued death certificates upon the deaths of identity thieves who used these SSNs to work in the 1970s and 1980s," the audit said. "It appeared that all three beneficiaries improperly benefited from the identity thieves’ earnings, resulting in as much as $186,000 in overpayments."

"It appeared that SSA erroneously incorporated the identity thieves’ work activity into all three beneficiaries’ payment computations," the OIG added.

In another case the SSA issued $104,906 in retirement benefits to two Mexican nationals living outside the country, who had fraudulently used the SSN of a Californian who died in 1986.

The audit also found that thousands of workers in California are using SSNs that belong to likely deceased individuals, holding the potential for future fraud.

Currently over 64,000 "numberholders" in the SSA’s database in California are not listed as deceased, though their information matches California Department of Public Health death records.

Between 2007 and 2011, 1,041 of those SSNs were used for nearly 5,000 W-2s, amounting to $41 million in reported wages. Many of the SSNs are used multiple times. For instance, a single SSN was used to file 71 separate wage reports during this period.

The numbers have also come up during hundreds of E-Verify inquiries, which "could indicate use of these SSNs by identity thieves," the audit said.

Though none of the SSNs are currently used to receive benefits, the OIG warned that if SSA ignores the use of deceased individual’s SSNs it is likely to issue additional improper payments in the future. The OIG recommended that the SSA process death information for the 64,193 numbers.

In response to the audit the SSA said they do not "have a reason" to check if the SSN of a dead person is being fraudulently used, as long as benefits are not being paid out.

"SSA disagreed with Recommendation 2 and stated it does not seek non-beneficiary death information and does not have a reason to process non-program related information, nor the resources to do so," the OIG said. "While SSA may not seek non-beneficiary death information, we believe SSA should not ignore non-beneficiary death information available to it."

"We strongly disagree with SSA’s assertion that it does not have a reason to process non-program related information," the OIG added. "With its comments, SSA appears to disregard the fact that numberholders who are not current beneficiaries can still have benefit claims filed in their names."

"Further, federal benefit paying entities, the Department of Homeland Security’s E-Verify program, State and local government entities, and private industry customers rely on the accuracy and completeness of SSA’s death information to detect unreported deaths and prevent fraud without regard to the deceased individuals’ Social Security benefit status," they said.

Published under: Social Security