U.S. Congressman Sam Johnson (R-TX), Chairman of the House Committee on Ways and Means Subcommittee on Social Security, today announced a hearing on a massive Social Security Disability Insurance fraud scheme in New York that could cost taxpayers hundreds of millions of dollars.  The hearing will take place on Thursday, January 16, 2014 in B-318 Rayburn House Office Building, beginning at 9:00 a.m.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only.  However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing.

BACKGROUND

On January 7, 2014, the New York County District Attorney’s Office announced the indictment of 106 defendants for their alleged involvement in a criminal conspiracy to defraud taxpayers.  The defendants, who include many retirees of the New York Police and Fire Departments, are accused of massive fraud against the Social Security Disability Insurance (SSDI) program.  The 102 beneficiaries, along with four facilitators who assisted them, are accused of collecting approximately $22 million in fraudulent benefits. 

According to the District Attorney, from approximately January 1988 to December 2013, the four principal defendants in the case coached applicants on how to falsely demonstrate symptoms of mental disorders in order to obtain disability benefits in exchange for a cash payment of up to $50,000. The remaining 102 defendants are charged with lying about their mental health and ability to work in order to receive SSDI benefits to which they were not entitled.  Each claimant collected an average of $210,000 in total fraudulent SSDI payments, though for some the total amount obtained was close to $500,000.  Many defendants falsely claimed to suffer from post-traumatic stress disorder and other mental illnesses as a result of their experience with the September 11, 2001 terrorist attacks.  

According to the Social Security Administration (SSA) Office of Inspector General (OIG), the investigation dates back to 2008, when New York Disability Determination Service employees noticed that many applications had the same handwriting and contained identical descriptions of their ailments.  These claims were referred to the SSA OIG’s New York Cooperative Disability Investigations unit.  In 2011, the SSA OIG and the New York County District Attorney’s Office launched an undercover operation that led to the indictments.

The announcement of these indictments follows revelations of similar abuse in August 2013, when authorities arrested more than 70 individuals involved in a disability fraud conspiracy in Puerto Rico.  Also, in October of 2013, the Senate Homeland Security and Governmental Affairs Committee released the results of their bipartisan investigation detailing inappropriate conduct and collusion between a West Virginia law firm, a Social Security Administrative Law Judge and some local doctors in approving benefits while outlining the ineffective oversight by the SSA. 

With the 2013 Social Security Trustees report projecting that the SSDI program will only be able to pay 80 percent of benefits beginning in 2016, losses to the system from fraud is an issue of increasing concern.   According to the SSA, 11 million beneficiaries received $139.4 billion in SSDI benefits in Fiscal Year 2013. 

In announcing the hearing, Social Security Subcommittee Chairman Sam Johnson (R-TX) said, “The widespread disability fraud uncovered in Puerto Rico and most recently in New York is deeply troubling and unacceptable.  Scandal after scandal proves the Social Security Administration is failing to protect precious taxpayer dollars and undermines Americans’ confidence in this vital program.  With the Disability Insurance program unable to pay full benefits as early as 2016, my number one priority has been to keep this program strong for those who truly need it and protect taxpayer dollars.  It’s time for Social Security to make it their number one priority as well.  On behalf of hardworking American taxpayers, I am committed to getting answers and rooting out waste, fraud and abuse.  Social Security must be held accountable for failing the American taxpayer and work to restore their trust.”

FOCUS OF THE HEARING

The hearing will focus on the details of the New York investigation, how the fraud scheme was carried out, the estimated cost to taxpayers, and what the SSA is doing to crack down on disability fraud in the wake of this and other scandals in Puerto Rico and West Virginia.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms.  From the Committee homepage, https://waysandmeans.house.gov, select “Hearings.”  Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.”  Once you have followed the online instructions, submit all requested information.  ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by the close of business on Thursday, January 30, 2014.  Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings.  For questions, or if you encounter technical problems, please call (202) 225-1721 or (202) 225-3625.

FORMATTING REQUIREMENTS:

The Committee relies on electronic submissions for printing the official hearing record.  As always, submissions will be included in the record according to the discretion of the Committee.  The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines.  Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below.  Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All submissions and supplementary materials must be provided in Word or WordPerfect format and MUST NOT exceed a total of 10 pages, including attachments.  Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing.  Instead, exhibit material should be referenced and quoted or paraphrased.  All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. All submissions must include a list of all clients, persons and/or organizations on whose behalf the witness appears.  A supplemental sheet must accompany each submission listing the name, company, address, telephone, and fax numbers of each witness.

The Committee seeks to make its facilities accessible to persons with disabilities.  If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days’ notice is requested).  Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

Note: All Committee advisories and news releases are available on the World Wide Web at http://www.waysandmeans.house.gov/.