Privacy concerns complicate efforts to end 'death fraud'

Privacy and data security concerns can make it tricky to collect information that would help federal agencies avoid mistakenly paying out benefits to recently deceased individuals, witnesses told House lawmakers during a Tuesday hearing on reducing improper payments.

Sen. Tom Carper, D-Del., came before the House Oversight and Government Reform Committee to discuss an improper payments bill (S.1409) he co-authored, which includes language designed to reduce so-called death fraud. The provision “requires that the Office of Management and Budget, in consultation with other agencies and stakeholders, identify specific solutions and report back to Congress,” Carper said in prepared testimony.

Danny Werfel, controller of the Office of Federal Financial Management at OMB, told committee members that cases of continuing payment years after an individual has died are outliers. The biggest concern is with recently deceased individuals whose information has yet to be updated in the Social Security Administration’s Death Master File, he said.

When questioned by Rep. Edolphus Towns, D-N.Y., about the possibility of the government communicating with funeral directors to keep more up-to-date information, Werfel said SSA was testing this initiative in some states, but involving the government so closely with such a sensitive topic creates other concerns.

“Though potentially valuable in preventing improper payments, agencies are limited in their ability to use and share information such as this due to legitimate and important concerns related to privacy and data security,” Werfel said. “We would welcome Congress’ assistance in navigating these issues and working toward a solution that allows us to prevent payment errors while maintaining sensitivity to these issues.”

In a follow-up email, OMB spokeswoman Moira Mack added, “SSA is working closely with states to create more effective mechanisms for reporting relevant death information into the SSA Death Master File in a timely fashion. Currently, SSA posts almost 90 percent of deaths to their records within 30 days of death.”

Mack also pointed to the GOVerify Business Center, a division of the Bureau of the Public Debt founded in 2010 to support federal agencies in efforts to reduce improper payments.

“The GOVerify team plans to explore whether additional information obtained from funeral directors can be useful in ensuring the comprehensiveness and reliability of death information received from states,” she said.

Carper’s legislation builds on the 2010 Improper Payments Elimination and Recovery Act. It calls for more transparency surrounding mistakes and sets into law a governmentwide Do Not Pay database that tracks the eligibility of federal fund recipients. President Obama signed a memorandum establishing the database in 2010.

“We need to establish a different kind of culture in Washington when it comes to spending,” Carper said in prepared testimony. “We need to establish a culture of thrift to replace what some would call a culture of spendthrift.”

The bill is making its way through the Senate.