Railroad Retirement Board:

Total and Permanent Disability Program at Risk of Improper Payments

GAO-14-418: Published: Jun 26, 2014. Publicly Released: Jul 28, 2014.

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What GAO Found

The Railroad Retirement Board's (RRB) policies and procedures for processing total and permanent (T&P) disability benefit claims do not adequately ensure that claimants meet program eligibility requirements. To find a railroad worker eligible for T&P benefits, RRB makes an independent determination of disability using the same general criteria that the Social Security Administration (SSA) uses to administer its Disability Insurance (DI) program—that is, a worker must have a medically determinable physical or mental impairment that (1) has lasted (or is expected to last) at least 1 year or is expected to result in death and (2) prevents them from engaging in substantial gainful activity, defined as work activity that involves significant physical or mental activities performed for pay or profit. RRB's policy states that, to establish eligibility for financial benefits, examiners should assess medical records for evidence that a claimant is too severely disabled to maintain gainful employment, and establish that a claimant's earnings fall below a certain threshold. However, the procedure for establishing if claimants meet the income threshold relies on SSA earnings data that can be up to 1 year old. Sources of more timely earnings information, such as the Department of Health and Human Services' National Directory of New Hires and The Work Number , exist and include both non-railroad and self-employment earnings, but RRB has not sufficiently explored the possibility of using them to help establish eligibility for T&P disability benefits. In addition, RRB lacks a policy to require independent supervisory review for all claims determinations. As a result, the procedures that claims examiners use to review a claim also allow them sole discretion to decide whether to approve it. Between 2008 and 2012, RRB data show that about one-quarter to one-third of T&P claims are considered and approved without independent supervisory review. According to generally accepted standards for internal controls in the federal government, essential tasks—such as establishing and determining that benefits should be awarded—should be performed by separate individuals to reduce the risk of fraud.

RRB's strategy for post-eligibility quality assurance review is inadequate to ensure that disability determinations for approved claims are accurate and does not address program risks due to potential fraud. While RRB checks the accuracy of payment amounts, and periodically reviews compliance with its policies, it does not evaluate the accuracy of disability determinations made or regularly monitor the effectiveness of the determination process. Similarly, performance goals for the disability program focus on measures of timeliness and do not track the accuracy of determinations made. The agency also has not engaged in a comprehensive effort to continuously identify fraud within the program, even after a high-profile incident exposed fraud as a key program risk. RRB has conducted some analyses to identify patterns in claims data that may suggest potential fraud, but the work has not led to new practices in the T&P program. Finally, while RRB officials stated that the agency has developed and provided some fraud awareness training, staff in all four of the district offices that GAO interviewed did not recall receiving this training, and some stated that it was not their responsibility to be alert for potential fraud, further limiting RRB's ability to ensure it is paying benefits only to eligible claimants.

Why GAO Did This Study

In recent years, the U.S. Department of Justice has investigated and prosecuted railroad workers who were suspected of falsely claiming over $1 billion in disability benefits, raising concerns about RRB's disability claims process. GAO was asked to evaluate the integrity of RRB's disability program. This report examines (1) whether RRB's policies and procedures for processing claims were adequate to ensure that only eligible claimants receive T&P disability benefits; and (2) the extent to which RRB's management strategy ensures that approved claims are accurate and addresses program risks. To answer these questions, GAO reviewed T&P determination policies and procedures, interviewed RRB officials in headquarters and four district offices—selected for geographic dispersion—reviewed relevant federal laws and regulations, and reviewed a nongeneralizable random sample of 10 T&P cases that were approved in fiscal year 2012 to illustrate RRB's claims process.

What GAO Recommends

GAO recommends that RRB explore options for obtaining more timely earnings information; revise its policy concerning the supervisory review of disability claims; establish a regular quality assurance review of T&P disability decisions; develop a performance goal to track decision accuracy; and develop and implement fraud awareness policies, procedures, and annual training. RRB agreed with these recommendations.

For more information, contact Dan Bertoni at (202) 512-7215 or bertonid@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: RRB agreed, noting that it would review its practices to ensure that awards of T&P disability annuities are reviewed by a second party. As of September 2014, the agency reported that T&P disabilities determinations are currently being reviewed by a second party. GAO will close this recommendation when RRB provides documentation that the policy was revised regarding supervisory review and approval of determinations.

    Recommendation: To enhance RRB's ability to prevent improper payments and deter fraud in the T&P disability program, the Railroad Retirement Board Members should direct RRB staff to revise the agency's policy concerning the supervisory review and approval of determinations to ensure that all T&P cases are reviewed by a second party.

    Agency Affected: Railroad Retirement Board

  2. Status: Open

    Comments: RRB agreed with this recommendation. In June 2014, the agency reported that it would continue to explore opportunities to obtain more timely earnings data. They will resume a previously unsuccessful effort to obtain the required legislative authority to access National Directory of New Hires (NDNH) data as well as strategies for funding the initiative. In September 2014, RRB reported that it analyzed earnings data and determined that there is insufficient timely earnings data currently available. They will continue to investigate alternate means to obtain current earnings data. In addition, the agency prepared a proposal to obtain the required legislative authority to access NDNH data for submission with the FY16 budget.

    Recommendation: To enhance RRB's ability to prevent improper payments and deter fraud in the T&P disability program, the Railroad Retirement Board Members should direct RRB staff to explore options to obtain more timely earnings data to ensure that claimants are working within allowable program limits prior to being awarded benefits.

    Agency Affected: Railroad Retirement Board

  3. Status: Open

    Comments: RRB agreed with this recommendation, noting that it would expand its quality assurance program to ensure that all critical activities of the disability initial determination process are addressed. In September 2014, RRB reported that the Board approved the establishment of a quality assurance unit to assess the quality of medical evidence, the accuracy of disability determinations, adherence to established procedures, and process areas needing improvement, including those with extensive disability review knowledge. The review would include an independence medical review by a contractor to evaluate whether the limitations identified by the examiner are supported by the medical evidence in the record. In addition, the Board is reviewing three categories of LIRR disability claims annuitants who participated in the Voluntary Disclosure programs, were indicted or did not request reconsideration after receiving the March 2013 termination letter. The project is comprised of an adjudication review to ensure examiners followed current procedures, data analysis to confirm previous findings and determine any new trends, including other involved providers, and a "potential fraud review" to use expertise in determining any unusual patterns of forms and in medical records that may be used for future training.

    Recommendation: To enhance RRB's ability to prevent improper payments and deter fraud in the T&P disability program, the Railroad Retirement Board Members should direct RRB staff to strengthen oversight of the T&P determination process by establishing a regular quality assurance review of initial disability determinations to assess the quality of medical evidence, determination accuracy, and process areas in need of improvement.

    Agency Affected: Railroad Retirement Board

  4. Status: Open

    Comments: RRB agreed with this recommendation. In September 2014, the agency reported that the new Disability quality assurance program is overseeing the development of performance goals to track the accuracy of disability determinations.

    Recommendation: To enhance RRB's ability to prevent improper payments and deter fraud in the T&P disability program, the Railroad Retirement Board Members should direct RRB staff to develop performance goals to track the accuracy of disability determinations.

    Agency Affected: Railroad Retirement Board

  5. Status: Open

    Comments: RRB agreed with this recommendation. The agency reported that it is in the process of strengthening its pre-payment fraud detection effort that will include formal procedures and regular training to implement that procedure and that communicates the anti-fraud responsibilities of staff. They convened a team of senior managers to guide anti-fraud efforts. They are also considering contracting for an assessment of its existing fraud prevention and detection processes throughout their operations by an independent source. In September 2014, RRB reported several actions to help implement this recommendations. Specifically, the agency: 1) established a Fraud Detection and Prevention Task Force of high-level agency officials to guide agency efforts in the anti-fraud arena; 2) created an email box in June 2014 and released an agency-wide email to communicate fraud concerns to all staff and solicit anti-fraud ideas and issues; 3) is evaluating anti-fraud suggestions received by email from staff with adoption and execution of proposed initiatives; 4) selected a Director of Audit Affairs in August 2014 to coordinate agency responses in anti-fraud and other program integrity efforts; 5) conducted and continues to conduct advanced medical training on orthopedic conditions and mental impairments for the Disability staff by medical professions under contract to the RRB; 6) participated in AGA's September 2014 Internal Control and Fraud Prevention Training; 7) selected an external consultant to conduct fraud awareness training for agency staff; 8) is assessing the applicability and adaptability of SSA models to detect and deter fraud in the disability and representative payee programs and working with SA to model their processes; and 9) released an RFP in September 2014 for an independent assessment of existing fraud prevention and detection processes throughout agency operations.

    Recommendation: To enhance RRB's ability to prevent improper payments and deter fraud in the T&P disability program, the Railroad Retirement Board Members should direct RRB staff to develop procedures to identify and address cases of potential fraud before claims are approved, requiring annual training on these procedures for all agency personnel, and regularly communicating management's commitment to these procedures and to the principle that fraud awareness, identification, and prevention is the responsibility of all staff.

    Agency Affected: Railroad Retirement Board

 

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