Paying Respects

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There are many ways to pay respects to someone who has died. You can attend the funeral, give a eulogy, send flowers or make a donation to the deceased person’s favorite charity. An article in The Washington Post reports that the U.S. government has a different way of paying respects to deceased citizens. Apparently, over the past few years, several government agencies have paid out nearly $537 million in benefits to the dead. (Toss in some tax refunds to dead guys and add another billion or so to the grand total.)

The article states that deceased citizens received $133 million from the Social Security Administration (SSA) and $400 million from the federal employment retirement system. An aid program paid out another $3.9 million to more than 11,000 dead people for heating and air conditioning bills. In 2011 alone, auditors found that Medicare paid $23 million for services provided to dead people. Between 2009 and 2011, $8.2 million was paid for equipment prescribed by doctors who had been dead for at least a year. (Sounds like some poor record-keeping or some entrepreneurial fraudsters to me.)

Since 2008, government audits show that $700 million has been paid to the dead because of a ”glitch” in the government system that tracks deceased citizens. (To say that this is opportunity for fraud would be an understatement.) There are three types of people affected by this ”glitch.” The first group includes people who are deceased, but are ”alive” according to federal records. Considering that approximately 2.5 million Americans die each year, relatives of the deceased can rack up millions of dollars in benefits by not reporting their loved one’s death. (That sounds like a fraudster’s dream.) The second group affects those who are very much alive, but somehow get flagged as ”deceased” – about 9,000 people a year. (Sorry, you don’t exist. No benefits for you!) The final group is you and me – the taxpayer, who winds up footing the bill for this fraud.

So, how does this happen? A key problem appears to be the national database of deceased individuals, contains 90 million reports. Each day, new reports are added to the database, by compiling information from relatives of the deceased, funeral homes and state agencies that issue death certificates. With this large influx of information on a daily basis, it is easy to see how problems can occur. One wrong click can have dire consequences and take many hours and a lot of effort to correct.

To eliminate these erroneous payments, the administration has requested $22 million to improve the ability for states to have full access to shared death reports. The senate also has written a bill that would require all federal agencies to check the database before paying benefits. (That’s a good start.) In the meantime, the dead continue to get paid. And since the dead can’t take their money with them, their nearest and dearest fraudster relatives keep on processing their grief by cashing in on some pretty great bereavement benefits.

Source: Today’s ”Fraud of the Day” is based on the article titled, ”Agencies Can’t Always Tell Who’s Dead and Who’s Not, So Benefit Checks Keep Coming,” written by David Fahrenthold and published in The Washington Post on November 3, 2013.

WASHINGTON — The US government has a problem with dead people. For one thing, it pays them way too much money.

In the past few years, Social Security paid $133 million to beneficiaries who were deceased. The federal employee retirement system paid more than $400 million to retirees who had passed away. And an aid program spent $3.9 million in federal money to pay heating and air-conditioning bills for more than 11,000 of the dead.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.