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I See Dead People . . . Cashing Federal Checks; Legislation Targets Payments Made in Error

A social security card sitting on a pile of money.

Would you believe that some federal agencies are still mistakenly paying people long after they are dead? Fortunately, new bipartisan legislation in the Senate takes steps to tackle this problem.

A major portion of wasteful government spending is a broad category known as “improper payments,” which are payments made in the wrong amount, to the wrong people, or for the wrong reason. An estimate from fiscal year 2016 showed $144 billion in misspending that year—an all-time high. These improper payments result from insufficient financial accountability, and divert dollars from where they are needed. While significant progress by Congress and federal agencies has been made in curbing improper payments during the past decade, more needs to be done to stop this wasteful and ineffective practice.

Agencies and programs throughout the federal government are the sources of improper payments. For example, the Department of Agriculture noted $218 million in federal crop insurance overpayments in 2016. Also, the Pentagon admitted that, in fiscal year 2016, it made more than $100 million in overpayments to commercial vendors, and more than $400 million in overpayments when reimbursing individuals for travel costs.

Notably, federal agencies mistakenly paid individuals who are deceased. According to the Government Accountability Office (GAO) this is a substantial improper payment problem. What allows this problem? Not all federal agencies have access to the most complete list of deceased individuals, which is maintained by the Social Security Administration. Instead, when checking eligibility for federal payments, many agencies are only allowed to access a partial list of those deceased, thereby missing millions of people.

Access to the more complete list of dead people would not only help prevent payments to those individuals, but also stop fraud that results in more than just lost federal dollars. For instance, the GAO has discovered that the Drug Enforcement Agency (DEA) is only permitted to use the partial database of deceased individuals, even though it is responsible for maintaining the database of physicians authorized to prescribe controlled substances. This is the database checked by all U.S. pharmacies before filling prescriptions for those medications susceptible to fraudulent diversion. One method of fraud is to use the identity of a dead physician in order to write a bogus prescription for drugs with a high street value, such as sleeping pills or painkillers. Since DEA does not have access to the complete Social Security Administration’s death file, it may be months or even years before the DEA database is updated.

Some in Congress are working to fix the problem.

The “Stopping Improper Payments to Deceased People Act” (S. 2374/H.R. 4929) would provide all relevant agencies with access to the full death list maintained by the Social Security Administration, while still maintaining strong privacy and security protections for the data. The legislation would also require steps to improve accuracy and completeness of the Social Security Administration’s database of deceased individuals. Finally, the bill would provide for the Office of Management and Budget and GAO to review agency use of the death data.

The Project On Government Oversight is working with Congress on these commonsense steps to end improper payments to those who have died. We will also work with the Administration and Congress on other measures to improve the accuracy and accountability of government spending.

By: Peter Tyler
Senior Policy Analyst, POGO

Peter Tyler Peter Tyler is a Senior Policy Analyst at the Project On Government Oversight. Peter's areas of expertise are congressional oversight, federal spending accountability, and Inspectors General.

Topics: Government Accountability

Related Content: Health Care Fraud, Waste, Wasteful Defense Spending, Improper Payments

Authors: Peter Tyler

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