Audit Finds Benefits Going to Dead

The Social Security Administration said Friday that an internal audit has uncovered $11.5 million in payments to dead beneficiaries and estimated that the total would be nearly triple that amount when its investigation is completed.

The agency has examined records in only 4% of the 1,400 cases it has opened for investigation, said Danny R. Johnson, a spokesman for Social Security’s Office of the Inspector General. It estimates that nationwide $31 million had been paid to dead beneficiaries as of the end of last year.

One deceased beneficiary received payments for almost 13 years, the audit found.

Another case involved a Jacksonville, Fla., beneficiary who had received $130,053.20 after dying.

More than half of the $11.5 million already identified is “either scheduled for recovery or already has been recovered,” and $18.2 million in improper payments were stopped before being sent out, Johnson said.

But he was reluctant to estimate the total amount that could be recovered.

“There’s no way [the auditors] can put a price tag on that,” he said, “because it’s an ongoing audit.”

In a statement released Friday night, the agency said it processes more than 2 million death reports each year and appropriately stops payments in 99.9% of those cases.

The inspector general audit looked at auxiliary beneficiaries--widows, spouses, children or parents who receive the old-age, survivors and disability benefits of a deceased family member. There are about 11.9 million auxiliary beneficiaries, according to SSA. When the auxiliary beneficiaries die, payments are supposed to stop.

In one case cited by auditors, more than $17,000 in benefits was paid into the bank account of a dead woman in St. Louis before officials caught the error. Most of the money was reclaimed from the account, but the woman’s daughter, who had been using the joint account she shared with her mother, had to write a $3,885.08 check to make up the difference.

The agency’s computer system sends out checks until it is notified that a beneficiary has died, Johnson said.

Ninety percent of deaths reported to the agency come from relatives, friends and funeral homes; deaths also are reported by post offices, financial institutions and government agencies, according to the inspector general’s office.

The SSA also sends out surveys and forms periodically, and computers note when beneficiaries fail to respond to a number of the mailings.

The problem for the agency comes when surviving family members fail to report the death.

The survivors have a responsibility to contact the SSA and inform them of the death of a beneficiary, Johnson said, but “unfortunately, we have a lot of people out there that are not doing that.”

Most of the money was being direct-deposited in dormant bank accounts without the knowledge of surviving friends and relatives, Johnson said, and most of the money that has been recovered has come from such accounts.

Investigators were able to recover some of the original checks in their familiar brown envelopes, he said.

The agency has been comparing beneficiaries to the “death master file” since 1989, Johnson said, but the comparison for auxiliary beneficiaries was not started until last year, after the OIG reported the oversight.

A preliminary study of 33 auxiliary beneficiaries in Connecticut found 11 who had received more than $180,000 in benefits after their dates of death. That study triggered the larger-scale analysis of the program.

In the most recent audit report, the inspector general’s office identified 5,033 beneficiaries nationwide who were receiving payments but were listed as dead.

The office examined 200 of those cases and discovered that 165 of the beneficiaries were still alive. But 33 of the beneficiaries were dead, and 27 of them were still receiving benefits.

The office was still trying to find out if two of the beneficiaries were dead or alive, according to the report.

Based on those results, the auditors estimated that nationwide, $31 million in payments had been sent out to dead auxiliary beneficiaries as of December 2000, and 4,152 living beneficiaries were receiving benefits but were erroneously reported as dead.

The inspector general’s office did not estimate improper payments by state or region, but Johnson said the audit began in the areas with the highest rates of improper payments.

The report said that data entry errors and database problems contributed to the erroneous death records.