THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
Automated One-Time Payments
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Date: September 19, 2008 Refer To:
To: The Commissioner
From: Inspector General
Subject: Automated One-Time Payments (A-06-08-18035)
Our objective was to determine whether automated one-time payments (A-OTP) were valid and properly authorized.
The Social Security Administration (SSA) prefers to provide Supplemental Security Income (SSI) recipients their payments through the regular systems process. However, routine processing is not always possible because of system limitations. In these instances, SSA bypasses the routine system to issue payments that could not otherwise be made. For example, SSA will issue an A-OTP to satisfy certain underpayments due a recipient, to issue excess refunds or conserved funds to a recipient or representative payee, or to pay surviving family members an amount due a deceased recipient. Our review of SSA payment data indicated that from August 2004 to September 2007, SSA field offices issued over $745 million in A-OTPs to approximately 330,637 individuals.
A recent Office of the Inspector General investigation found that an SSA operations supervisor used the A-OTP process to issue fraudulent payments and instructed subordinate employees to issue the fraudulent payments. In some instances, the supervisor authorized individuals to receive multiple SSI payments in the same month. In other instances, the supervisor approved payments for one SSI recipient to be deposited into the bank account of a different individual. As a result of this fraud, SSA paid approximately $268,000 to individuals who were not authorized to receive SSI payments. In January 2007, the supervisor pled guilty to Misapplication of Fiduciary Property, received a prison sentence, and was ordered to make restitution to SSA.
RESULTS OF REVIEW
We found that, in general, A-OTPs appeared valid and properly authorized. However, during our review, we identified two instances where SSA erroneously issued A-OTPs to individuals with balances due to SSA as a result of previous overpayments. We also identified administrative and timeliness issues related to A-OTPs issued to survivors of SSI recipients eligible for payment during the month of their death.
A-OTPS TO RECIPIENTS WITH BALANCES DUE TO SSA
Our review identified two improperly authorized A-OTPs made to SSI recipients over the age of 105 with outstanding balances owed to SSA. In both instances, SSA paid
A-OTPs, although the individuals had overpayments on their payment records. At some point, field office staff inappropriately deemed balances due from the recipients uncollectible. Instead of issuing the A-OTPs, SSA should have applied the funds to balances owed by these individuals. SSA payment records indicated both numberholders died after receiving the A OTPs. Consequently, it was no longer possible for SSA to recover these funds.
A-OTPS ISSUED TO SURVIVORS OF DECEASED SSI RECIPIENTS
SSA did not always ensure timely SSI payments were issued to survivors of deceased recipients eligible for payment during the month of their death. During our review, we identified 20 A-OTPs issued 10 or more years after the recipient’s death. In each case, SSA attempted to make payment to the deceased recipients. However, surviving family members were unable to redeem the payment because either the U.S. Treasury canceled the checks or Financial Institutions would not allow family members to negotiate checks payable to the deceased individuals.
According to SSA, the payments were not processed timely because there was no permanent alert sent to SSA field offices to notify them of instances where a check was denied by the Financial Institutions after the beneficiary’s death. In these cases, the checks were returned to SSA and no further action was taken. Only years later did the field offices become aware these payments were owed to surviving beneficiaries on behalf of the deceased beneficiaries.
CONCLUSION AND RECOMMENDATIONS
We determined that, in general, A-OTPs appeared valid and properly authorized. However, we identified administrative issues that resulted in a small number of erroneous or untimely A-OTPs.
We recommend SSA:
1. Ensure overpayments deemed “uncollectible” meet requirements delineated in POMS.
2. Ensure SSA field offices timely issue underpayments to eligible survivors on behalf of deceased recipients.
SSA agreed with our recommendations. The full text of the Agency’s comments is included in Appendix B.
Patrick P. O’Carroll, Jr.
APPENDIX A – Scope and Methodology
APPENDIX B – Agency Comments
APPENDIX C – OIG Contacts and Staff Acknowledgments
Scope and Methodology
To accomplish our objective, we:
• Reviewed the Social Security Administration’s (SSA) policies and procedures related to Automated One Time Payments (A-OTPs).
• Interviewed SSA Systems and Operations staff to discuss procedures used to process A-OTPs.
• Identified 380,529 A-OTPs, totaling $745,178,169, processed between August 2004 and September 2007. Of these A-OTPs, we reviewed the following 233 payments:
All 19 instances where over 100 A-OTPs were deposited into the same bank account. In addition, we reviewed a randomly selected sample of 50 cases from the 569 instances where between 5 and 99 A-OTPs were deposited into the same bank account.
All 24 instances where 6 or more A-OTPs were sent to the same address. In addition, we reviewed a randomly selected sample of 50 cases from the 2,092 instances where between 2 and 5 A-OTPs were sent to the same address.
All 23 A-OTPs that exceeded $46,000.
All 22 A-OTPs made to individuals over the age of 105.
A non-random sample of 25 of the 221 A-OTPs made to individuals under age 1.
All 20 A-OTPs made to individuals 10 to 20 years after their date of death.
• Coordinated our payment review with staff in SSA’s Office of Public Service and Operations Support.
• Obtained data from SSA’s Audit Trail System that identified address and bank account information when each A-OTP was issued.
We performed our audit from November 2007 through May 2008 at SSA’s Regional Office in Dallas, Texas. We did not test the general or application controls of SSA systems that generated electronic data used for this audit. Instead, we traced selected transactions to source documents and performed other validation tests and found the data to be sufficiently reliable to meet our audit objectives. The entity audited was the Office of the Deputy Commissioner for Operations. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Date: September 11, 2008 Refer
Refer To: S1J-3
To: Patrick P. O'Carroll, Jr.
From: David Foster /s/
Executive Counselor to the Commissioner
Subject: Office of the Inspector General (OIG) Draft Report, "Automated One-Time Payments” (A-06-08-18035)--INFORMATION
We appreciate OIG’s efforts in conducting this review. Attached is our response to the recommendations.
Please let me know if we can be of further assistance. Please direct staff inquiries to
Ms. Candace Skurnik, Director, Audit Management and Liaison Staff, at (410) 965-4636.
COMMENTS ON THE OFFICE OF THE INSPECTOR GENERAL’S (OIG) DRAFT REPORT, “AUTOMATED ONE-TIME PAYMENTS” (A-06-08-18035)
Thank you for the opportunity to review and provide comments on this draft report. We appreciate that in general you found automated one-time payments (A-OTP) are issued properly and for their intended purpose. We believe the A-OTP process improves our service to the public by giving field offices the flexibility to deliver Supplemental Security Income (SSI) payments when needed and when routine processing is not possible because of systems limitations. We feel that our current controls over the A-OTP process, namely the peer review and signature, are effective and have provided a high degree of accuracy.
Ensure overpayments deemed “uncollectible” meet requirements delineated in POMS.
We agree. We will ensure that the appropriate field office personnel receive instructions on properly processing “uncollectible” decisions on SSI overpayments. We plan to release the instructions by the end of December 2008.
Ensure SSA field offices timely issue underpayments to eligible survivors on behalf of deceased recipients.
We agree. In August 2007, the OIG Report, "Underpayments on Prior Supplemental Security Income (SSI) Records," recommended that we provide refresher training to field office personnel to address the issue of underpayments on terminated SSI records. Because the topics are closely related, we will include in the refresher training, instructions on the timely processing of underpayments on the records of deceased recipients. We expect to provide this training by the end of December 2008.
The August 2007 report also recommended that we pursue a system enhancement to ensure timely issuance of underpayments on terminated records. In our response, we agreed with the recommendation; however, it was dependent on available system resources. Since this report recommendation is similar, it would also benefit from system enhancements. Unfortunately, system resources are still not available to develop and implement an electronic system to alert field office staff that underpayments exist. In the future, as system resources become available, we will pursue system enhancements in this area.
OIG Contacts and Staff Acknowledgments
Ron Gunia, Director, Dallas Audit Division, (214) 767-6620
Jason Arrington, Audit Manager, (214) 767-1321
In addition to those named above:
Erica Estrada, Senior Analyst
Teresa Williams, Senior Auditor
For additional copies of this report, please visit our web site at www.ssa.gov/oig or contact the Office of the Inspector General’s Public Affairs Staff Assistant at (410) 965-4518. Refer to Common Identification Number A-06-08-18035.
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Overview of the Office of the Inspector General
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