How SSA and the OIG Investigate Deceased Payee Fraud

Beyond the Numbers

Date: 
Thursday, January 28, 2016
Posted by: 
The Communications Division

A Utah woman’s lengthy and costly Social Security fraud couldn’t last forever.

For more than 20 years, she fraudulently collected and used more than $380,000 in Social Security retirement benefits intended for her deceased aunt—SSA had no record of her aunt’s death, so the payments kept coming.   

The theft might have continued, had it not been for the Medicare Non-Utilization Project, or MNUP—a Social Security initiative that identifies deceased Social Security beneficiaries, stops their benefits, and refers possible deceased payee fraud cases to OIG.

In this case, our investigation found a woman received her aunt’s benefits from the time of her aunt’s death in July of 1993, until May 2014. Social Security identified the case by comparing its records to Centers for Medicare and Medicaid Services (CMS) records. That comparison revealed that the beneficiary—who was receiving benefits and was older than 90—had not used her Medicare benefits in over three years. When Social Security couldn’t make contact with the woman, they suspected she was deceased, but the death had not been reported to SSA. And because the woman was an in-pay beneficiary, the agency forwarded the case to our office for investigation.

As a result of the MNUP referral and our criminal investigation, the Utah woman pled guilty to theft of government funds. She was sentenced in September 2015 to probation and ordered to repay SSA in full—all $381,096 she fraudulently collected from 1993 to 2014.

OIG-Recommended Integrity Project

The MNUP initiative actually came to be from work and recommendations from our auditors. In our 2012 report, Using Medicare Data to Identify Deceased Beneficiaries, we recommended that SSA use enhanced data to better identify deceased beneficiaries. In conducting the audit, we estimated that SSA overpaid about 900 deceased beneficiaries approximately $100 million. One beneficiary in the sample was deceased for 29 years and was overpaid $307,900.

Based on the data and evidence from our audit work, we made several recommendations to SSA; foremost of those was for SSA to work with CMS to establish a data-use agreement to identify aged (over 90 years old) beneficiaries who are not using Medicare, and to use the information to conduct MNUP reviews.

SSA followed through with our recommendation, and established MNUP as an official integrity program in 2013. Since then, SSA has identified numerous deceased beneficiaries and stopped benefit payments, improving Social Security program integrity in the process. Additionally, the initiative has led to numerous OIG deceased payee fraud investigations, generating significant monetary recoveries for SSA and saving taxpayer dollars.

In fiscal year 2015, for example, we closed 529 deceased payee fraud cases, and 210 deceased payee fraud cases led to criminal convictions. In 2015, our deceased payee fraud investigations led to over $34 million in monetary recoveries and court-ordered restitution (repayment to SSA), and contributed to $21 million in projected savings to SSA’s programs.

Preventing Deceased Payee Fraud

Deceased payee fraud is a Federal crime with potentially stiff penalties, including prison time, as a Nebraska man learned last year. In this case, the man was the representative payee for a beneficiary who received Social Security retirement benefits.

The beneficiary left the United States and later died in Hungary. However, the representative payee did not report his friend’s death for nearly 13 years, from 2001 to 2014, instead using the Social Security payments for his own benefit. Similar to the case we described above, through the MNUP initiative, SSA suspected the beneficiary might be deceased, and forwarded the case to our office for review. 

During our investigation, the man admitted he did not report his friend’s death and collected his benefits. In June 2015, he was ordered to repay more than $193,000—and he was sentenced to 12 months in prison.  

If someone you know dies—and you are responsible for his or her financial affairs—the best course of action is to make sure Social Security is aware of the death. And if you are aware of someone receiving a deceased person’s benefits, you can report that to the OIG at oig.ssa.gov/report.