Civil Rights: Additional Actions in Pigford II Claims Process Could Reduce Risk of Improper Determinations
Highlights
What GAO Found
The parties charged with carrying out the terms of the Pigford II settlement agreement have created numerous internal control measures designed to balance various interests including accuracy, efficiency, and cost. Many of these measures serve to identify and deny fraudulent or otherwise invalid claims. For example, the parties conduct iterative reviews of each claim and identify potential fraud concerns. In addition, the parties told us that they plan to conduct final control measures after all claims are provisionally adjudicated and before payments are made. Those measures include identifying duplicate claims (to ensure no one is paid twice) and claims filed on behalf of the same farming operation (to ensure only one payment per farming operation) or same class member (to ensure only one payment per class member).
In general, the internal control design provides reasonable assurance that fraudulent or otherwise invalid claims could be identified and denied; however, certain weaknesses in the control design could expose the claims process to risk of improper determinations. Some of these weaknesses are a result of constraints imposed by the terms of the settlement agreement, which were agreed to by the parties to the settlement agreement as fair, reasonable, and adequate. In addition, the terms were approved by the presiding judge, effectively ratified by Congress in the Claims Resolution Act of 2010 and in some cases originated in Pigford I and were subsequently enacted in the 2008 Farm Bill. These design weaknesses, hence, cannot be modified by the implementing parties. For example, by the terms of the settlement agreement, most claims must be evaluated based solely on the information submitted by the claimants and, as a result, the adjudicator of these claims has no way of independently verifying that information. Another weakness is within the authority of the implementing parties to modify. Specifically, the Claims Administrator is responsible for determining class membership, including that claimants have not obtained prior judgments on their complaints. The Claims Administrator, however, has not established agreed upon procedures--beyond consulting two other settlement participant lists--for checking whether claimants already obtained judgments in judicial or administrative forums. Without such procedures, some individuals may improperly be found to be class members.
Finally, at the time of our review, the internal control design was generally operating as intended to identify and deny fraudulent or otherwise invalid claims. However, the design has not yet been fully implemented, and we cannot determine whether the remainder of the design will operate as intended.
Why GAO Did This Study
On April 14, 1999, the U.S. District Court for the District of Columbia approved the settlement of Pigford v. Glickman (Pigford I), a class action lawsuit brought against the U.S. Department of Agriculture (USDA) by African American farmers. In Pigford I, the farmers alleged that USDA had willfully discriminated against them and other African American farmers by (1) denying or delaying the processing of their applications for farm loans and benefit programs and (2) failing to properly investigate and resolve their discrimination complaints. The settlement was estimated at the time to be worth at least $2.25 billion, the largest civil rights settlement in U.S. history. By the settlement's claim filing deadline, approximately 22,700 individuals had filed claims for relief under the settlement; however, about 74,000 additional individuals submitted requests to file late claims, about 97 percent of whom were not allowed to proceed under the settlement. After congressional hearings, Congress passed legislation--the 2008 Farm Bill--which permitted claimants who had submitted a late-filing request under Pigford I and had not received a final determination on the merits of their claims to bring a civil action in federal court to obtain such a determination. The legislation made available $100 million for payment of successful claims.
After the legislation was enacted, 23 separate complaints were filed--together representing approximately 40,000 individual claims--which were subsequently consolidated into a single case commonly referred to as Pigford II. After nearly 2 years of litigation, a settlement agreement was reached providing that $1.25 billion be made available for the resolution of claims, contingent upon congressional approval of $1.15 billion in funding beyond the $100 million made available by the 2008 Farm Bill. The parties to the Pigford II settlement were USDA, represented by the U.S. Department of Justice (DOJ), and the African American farmers, represented by Class Counsel.
The Claims Resolution Act of 2010, enacted in December 2010, appropriated the $1.15 billion and mandated that GAO evaluate the internal controls created to carry out the terms of the Pigford II settlement agreement and report at least twice during the claims adjudication process. On November 13 and 14, 2012, we provided a briefing to Congressional offices in response to the first of these two reporting obligations. This report formally transmits the November briefing, provides updates to that briefing, and satisfies the second reporting obligation.
Recommendations
- To improve the internal control design, we recommend that the Claims Administrator establish and document procedures to provide reasonable assurance of identifying claimants who obtained prior judgments on their discrimination complaints in judicial or administrative forums, including reaching agreement with USDA on the Claims Administrator's request that USDA check its records of judicial and administrative determinations.
- To help ensure that the design operates as intended to provide reasonable assurance of identifying and denying fraudulent or otherwise invalid claims, we recommend that the parties charged with carrying out the terms of the settlement agreement continue their efforts to fully and correctly implement the remainder of the internal control design, including measures to (a) identify duplicate claims and claims submitted on behalf of the same farming operation or the same class member and (b) verify timeliness determinations.
For more information, please contact Daniel Garcia-Diaz at (202) 512-3841 or garciadiazd@gao.gov.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Pigford II Claims Administrator | To improve the internal control design, the Claims Administrator should establish and document procedures to provide reasonable assurance of identifying claimants who obtained prior judgments on their discrimination complaints in judicial or administrative forums, including reaching agreement with USDA on the Claims Administrator's request that USDA check its records of judicial and administrative determinations. |
In December 2012, we reported that there was an absence of agreed upon procedures in the Pigford II settlement's internal control design to identify claimants who already obtained determinations on their discrimination complaints in judicial or administrative forums, without which some individuals may improperly be found to be class members. To improve the internal control design, we recommended that the Claims Administrator-the implementing party responsible for determining class membership-establish and document such procedures, including reaching agreement with USDA on a request made by the Claims Administrator that USDA check its records of judicial and administrative determinations. Following our recommendation, the Claims Administrator and USDA met several times by March 2013 and agreed that USDA would provide information on administrative decisions and that the Claims Administrator would obtain information on judicial decisions. In February 2013, the Claims Administrator documented the procedures it had established. Based on application of these procedures, the Claims Administrator determined that at least one claimant was not a class member because the claimant had already obtained a determination.
|
| Pigford II Claims Administrator | To help ensure that the design operates as intended to provide reasonable assurance of identifying and denying fraudulent or otherwise invalid claims, the parties charged with carrying out the terms of the settlement agreement should continue their efforts to fully and correctly implement the remainder of the internal control design, including measures to (1) identify duplicate claims and claims submitted on behalf of the same farming operation or the same class member and (2) verify timeliness determinations. |
In December 2012, we reported that the Pigford II settlement's internal control design had not yet been fully implemented and that its effectiveness was contingent upon the remaining control measures being fully and correctly carried out. To help ensure that the internal control design operated as intended to provide reasonable assurance of identifying and denying fraudulent or otherwise invalid claims, we recommended that the parties charged with carrying out the terms of the settlement agreement continue their efforts to fully and correctly implement the remainder of the internal control design, including measures to (1) identify duplicate claims and claims submitted on behalf of the same farming operation or the same class member and (2) verify timeliness determinations. Regarding verification of timeliness determinations, we noted that our testing of a sample of Pigford II claims found that, for an estimated 5 percent of claims, the Claims Administrator had incorrectly recorded the submission dates. Based on our work, the Claims Administrator agreed to correct the inaccurate submission dates and did so in November 2012. Based in part on our work, the other remaining internal control measures were also implemented by August 2013. For example, by July 2013, the Claims Administrator had conducted multiple searches of the claims database to identify duplicate claims and claims submitted on behalf of the same farming operation or the same class member and provided the results of those searches to the adjudicators for use in final claim determinations.
|