U.S. OFFICE OF PERSONNEL MANAGEMENT OFFICE OF THE INSPECTOR GENERAL STOPPING IMPROPER PAYMENTS TO DECEASED ANNUITANTS Theodore Roosevelt U.S. Civil Service Commissioner SEPTEMBER 14, 2011 Page Intentionally Left Blank OPM OFFICE OF THE INSPECTOR GENERAL SEPTEMBER 2011 EXECUTIVE SUMMARY STOPPING IMPROPER PAYMENTS TO DECEASED ANNUITANTS The overarching reason for this report is to demonstrate the need to stop the flow of improper payments from the Federal Government’s Civil Service Retirement and Disability Fund (CSRDF) to deceased annuitants and survivors (annuitants), averaging $120 million annually over the last five years. While we are concerned with all post-death improper payments, our paramount concern is with the improper payments resulting when an annuitant’s death is not reported or detected and payments continue, sometimes for many years. This report gives the current status of the prior recommendations we have made in this area, but most importantly reemphasizes our concern that sufficient funds and resources of the U.S. Office of Personnel Management (OPM) be focused on this serious matter in order to bring about a full measure of success. Director John Berry and I agree that it is time to stop, once and for all, this waste of taxpayer money. Based on our recommendations, OPM has taken positive steps to address this issue. Regular meetings over the last three years between subject matter experts in OPM’s Retirement Services, Retirement Policy, the Office of the Chief Financial Officer, and the Office of the Inspector General (OIG) have led to enhancements in procedures. As a result of the efforts of this working group, a number of improvements have been achieved since the original OIG paper (July 2005), and our last paper (January 2008) with respect to the goal of reducing improper payments. In retrospect, however, these improvements were clearly only partial remedies at best. These improvements include: • Death Master File Match. Retirement Services committed to performing, in addition to the weekly match, an annual computer match between its annuity roll and the Social Security Administration’s (SSA) death records. The annual match was performed in 2005, 2009, and 2010, and is scheduled to be performed again in the Fall of 2011; • Over 90 Project. OPM sampled the annuity roll population over 90 years old (Over 90 Project) in September 2009, which at that time totaled 125,000, to confirm that the annuitants are still alive and appropriately receiving an annuity from the CSRDF. The sample consisted of 4,400 annuitants. Of this sample, six were determined to be deceased but were not identified during prior computer matches with SSA. In addition, as of the December 2010 report on this project, 144 annuitants in the sample had not responded to letters of inquiry from OPM and their annuities were placed in a suspended payment status. OPM is determining how best to proceed on these cases; i OPM OFFICE OF THE INSPECTOR GENERAL SEPTEMBER 2011 EXECUTIVE SUMMARY • Internal Revenue Service (IRS) Form 1099R. These forms are mailed out annually to annuitants and report taxable annuity income received. As of May 2011, OPM received approximately 33,000 returned 1099Rs from the January 2010 mailing and Retirement Services is analyzing the forms to determine whether the annuitant has a new address that has not been reported to OPM, or is no longer living; • Automated Check Reclamation System. In January 2010, OPM implemented an Automated Check Reclamation System to streamline the reclamation process, thereby saving significant time and resources. A reclamation is an action taken by the Government to recover improper post-death payments from financial institutions. The automated system ensures that all annuitants removed from the active annuity roll because of death are processed through OPM’s Death Data Reporting System, which automatically initiates a reclamation action through the U.S. Department of Treasury (Treasury); • Treasury Denied Reclamations. Due to Treasury regulations and procedures, not all requests submitted to Treasury for reclamation of post-death payments are sent to the financial institutions for recovery. Financial institutions are not liable for the return of post-death payments made more than six years prior to the date of the request for reclamation. Therefore, at our suggestion, a process was implemented by OPM to reach out to financial institutions for reclamations denied by Treasury; and, • Improving Death Reporting. To improve the timeliness of death reporting, OPM enhanced communications with annuitants and their family members through changes to mass mailings, the creation of video messages for the OPM Website, and recorded telephone messages activated while placed on hold by OPM Call Center representatives. Despite these positive developments, there remains a high probability that egregious loss of monies from the CSRDF will continue and require strategic corrective actions. Each year new cases are identified which support this concern, such as an annuitant’s son who continued to receive benefits until 2008, 37 years after his father’s death in 1971. The improper payment in this case exceeded $515,000 and was reported to OPM when the son, who fraudulently received the payments, died. The improper payment was not recovered. When compared to other Federal benefits programs, the improper payment rate is arguably low; however, the amount of post-death improper payments is consistently $100-$150 million annually, totaling over $601 million in the last five years. In addition, the balance due the Government related to these improper post-death payments during the last five years has risen much faster (70%) than total annuity payments (19%), and stronger steps must be implemented by OPM to identify and recover improper payments. ii OPM OFFICE OF THE INSPECTOR GENERAL SEPTEMBER 2011 EXECUTIVE SUMMARY The Administration and Congress have determined that the amount of improper payments Government-wide is unacceptable and as such, efforts must be made to identify the root causes of the improper payments and put in place a corrective action plan to reduce them. Even though the Office of Management and Budget has not placed the CSRDF in the high risk category because its improper payments fall below 2.5% of the fund’s total disbursements, OPM must pursue aggressive and effective strategies for the integrity of the CSRDF, and especially for the sake of the taxpayer. Patrick E. McFarland Inspector General iii Page Intentionally Left Blank Table of Contents Executive Summary....................................................................................................... i Status of Efforts to Reduce Improper Payments to Deceased Annuitants ...............................................................................................1 Background . .........................................................................................................................1 OIG Recommendations.....................................................................................................4 Matching with SSA’s Death Master File ....................................................................5 Sampling of Annuitants Over 90 Years Old...............................................................6 Tracking Undeliverable IRS Form 1099Rs................................................................7 Capitalizing on RSM Technology. .................................................................................8 Establishing a Working Group to Improve Program Integrity..........................8 Recovering Funds Held in Inactive Accounts with Financial Institutions which Remain Unclaimed/Escheatment of Monies to the States...................10 Conclusion ......................................................................................................................11 Acronyms AVL Address Verification Letter CSRDF Civil Service Retirement and Disability Fund FEHBP Federal Employees Health Benefits Program HCDW Health Claims Data Warehouse IPERA Improper Payments Elimination and Recovery Act of 2010 IRS Internal Revenue Service OCFO Office of the Chief Financial Officer OMB Office of Management and Budget OPM United States Office of Personnel Management RSM Retirement Systems Modernization SSA Social Security Administration OPM OFFICE OF THE INSPECTOR GENERAL Status of Efforts to Reduce Improper Payments to Deceased Annuitants Background Over the last few years, the subject of improper payments by Federal agencies has received increasing attention from elected officials. This has led to a number of executive orders, presidential memoranda, and laws to attempt to reduce the amount of improper payments. In Fiscal Year (FY) 2010, the U.S. Office of Personnel Management (OPM) was listed by the Office of Management and Budget (OMB) as having CSRDF one of the 79 programs, at 18 agencies, that are susceptible to significant improper improper payments. While OMB has not designated OPM’s Civil Service payments have Retirement and Disability Fund (CSRDF) as a “high-error” program (because averaged improper payments are less than 2.5 percent of total disbursements), the $120 million CSRDF continues to incur high amounts of improper payments, consistently annually for totaling between $100 and $150 million annually (an average of $120 million the last 5 years annually over the last 5 years). Additionally, the accounts receivable balance resulting from improper payments made to deceased annuitants and survivors (annuitants) has increased significantly. At the end of FY 2006, total receivables resulting from payments to deceased annuitants totaled $66 million. By the end of FY 2010, the total receivables totaled $113 million, an increase of 70 percent. Improper Payments & Related Accounts Receivable (in millions) $150.0 $144.9 $126.2 $125.0 $119.8 $115.0 $114.9 $116.8 $113.1 Improper Payments Payments $100.0 $98.0 $98.1 Accounts Receivable (as of (as of 9/30) 9/30) $75.0 $66.4 $50.0 2006 2007 2008 2009 2010 1 OPM OFFICE OF THE INSPECTOR GENERAL The Administration and Congress have recently taken additional steps to curb wasteful spending and streamline Government processes, including the Improper Payments Elimination and Recovery Act (IPERA), signed into law by the President on July 22, 2010. IPERA is designed to cut fraud, waste, and abuse by Federal Government agencies due to improper payments. In April 2011, OMB issued guidance to agencies on the implementation of IPERA, which is contained in Parts I and II of Appendix C of OMB Circular A-123. Under this guidance, agencies are required to perform the following for FY 2011 reporting: 1) Review all programs and activities and identify those that are susceptible to significant improper payments. Significant improper payments are defined as gross annual improper payments in the program exceeding (1) both 2.5 percent of program outlays and $10 million of all program payments made during the fiscal year or (2) $100 million (regardless of the improper payment percentage). The CSRDF meets the criteria for significant improper payments, with such payments exceeding $100 million annually. 2) Obtain a statistically valid estimate of the annual amount of improper payments. • All programs and activities susceptible to improper payments will ensure that their sampling methodologies are approved by OMB prior to conducting their sampling measurement. • In addition, agencies should incorporate refinements to their improper payment rate methodologies based on recommendations from auditors (such as their agency Inspector General, the Government Accountability Office, or private auditors). 3) Implement a plan to reduce improper payments. • Agencies shall identify the reasons their programs are at risk of improper payments and put in place a corrective action plan to reduce them. • Agencies shall set reduction targets for future improper payment levels and a timeline within which the targets will be reached. Reduction targets must be approved by the Director of OMB. • In addition, agencies must ensure that their managers and accountable officers (including the agency head), programs and program officials are held accountable for reducing improper payments. 2 OPM OFFICE OF THE INSPECTOR GENERAL 4) Reporting • Agencies shall report in their annual Agency Financial Report and Performance and Accountability Report estimates of the annual amount of improper payments and progress in reducing them. • For estimates greater than $10 million, agencies shall discuss the causes of the improper payments, actions planned or taken, and the results of the actions taken to address those causes. ▫▫ Part of the discussion shall include the portion of improper payments attributable to insufficient or lack of documentation; ▫▫ Agencies need to also address the amount of actual improper payments the agency expects to recover and how it will go about recovering them; ▫▫ Agencies must include a statement on internal controls; and, ▫▫ Agencies must include a description of the steps to hold managers accountable. Managers should be accountable through annual performance appraisal criteria for meeting applicable reduction targets and establishing and maintaining sufficient internal controls to prevent improper payments from occurring, and if they occur, to promptly detect and recover them. Another component of IPERA is the use of payment recapture audits, a process of identifying and recovering improper payments. OMB Memorandum M-11-04, issued November 2010, provides agencies with instructions on intensifying and expanding payment recapture audit reviews. Agencies were required to submit to OMB their payment recapture audit plan by January 14, 2011. With respect to the CSRDF, OPM has controls in place that serve as payment recapture audits, such as its weekly consolidated death match with the Social Security Administration (SSA). This activity, along with the Death Master File match and the Over 90 Project that we recommended, meets the criteria for the payment recapture audits as they are a detective control and a corrective control activity designed to identify and recapture improper payments, and is an OPM management function and responsibility. What OPM does not have in place are annual recovery targets that will drive their annual performance. The targets should be based on OPM lacks annual the rate of recovery (amount of improper payments recovered divided recovery targets by the amount of improper payments identified). Since the recovery that drive their of the improper payments is often difficult, it may therefore be very annual performance challenging to set a target. Per OMB, agencies shall strive to achieve annual recapture targets of at least 85 percent within three years (with 2011 as the first reporting year). If an agency cannot meet this target, it must seek approval from OMB before setting a lower recapture target. For FY 2010, OPM recovered only 46 percent of the improper payments to deceased annuitants. 3 OPM OFFICE OF THE INSPECTOR GENERAL OIG Recommendations In our last paper on this subject, dated January 25, 2008, we provided OPM with 14 recommendations related to improper annuity payments to deceased annuitants. In the last three years, our office participated in a working group with staff from OPM’s Retirement Services, Retirement Policy, and the Office of the Chief Financial Officer (OCFO) in an effort to identify ways to minimize improper payments. We are encouraged by the cooperation demonstrated by these program offices and feel that with the added support of OPM management, they have carried out substantial work to address many of these recommendations. In addition, the implementation of programmatic changes suggested by these recommendations has brought about a newfound commitment to more aggressively detect and stop payments to deceased annuitants. During ongoing meetings, staff representatives from the OIG and the affected program offices have carefully reviewed the 14 recommendations to clarify their understanding of the intent and discuss the feasibility of accomplishing tasks required to implement each recommendation. These meetings have been a very positive learning experience for all involved. With the direct contact between the working group members, it became easy to obtain immediate feedback and set goals through mutual discussion and agreement. Many of the annuity roll processes proved to be complicated. Group members, while knowledgeable in specific areas, often lacked a complete overview of the various processes used in the identification and tracking of deceased annuitant debt, detection tools such as computer matching, and the reclamation/collection of post-death annuity payments. As a result, the learning process derived from the group meetings allowed the participants to obtain the broader understanding of the processes and systems required to meet the goals of the recommendations and understand the need to improve on existing practices. To date, significant actions have been taken by Retirement Services OPM Working group and the OCFO on 10 of the 14 recommendations. The program has closed offices have demonstrated to the OIG that specific steps, such as the 10 of the 14 strengthening of computer programs designed to detect potential fraud OIG and facilitate the collection of debt, improvements in communicating recommendations with the annuitant population and their family members, and “overseas proof of life exercises,” indicate that sufficient progress has been made to close the recommendations. The following is a summary of the open and closed recommendations that the working group has discussed: OPEN RECOMMENDATIONS • Original Recommendation #1 - Tracking Undeliverable IRS Form 1099Rs • New Recommendation #1 - Capitalizing on Retirement Systems Modernazation Technology 4 OPM OFFICE OF THE INSPECTOR GENERAL • New Recommendation #4 - Establishing a Working Group to Improve Program Integrity • New Recommendation #8 - Recovering Funds Held in Inactive Accounts with Financial Institutions which Remain Unclaimed/Escheatment of Monies to the States CLOSED RECOMMENDATIONS • Original Recommendation #2 - Reconciliation of Issued Form 1099Rs to Total Payments • Original Recommendation #3 - Matching with the SSA’s Death Master File • Original Recommendation #4 - Matching of Annuitants’ Social Security Numbers with SSA Files • Original Recommendation #5 - Validating Changes to the Annuitants’ Personal Information • Original Recommendation #6 - Conducting Overseas Proof-of-Life Exercises • New Recommendation #2 - Sampling Annuitants Over 90 Years Old • New Recommendation #3 - Improving Timeliness of Notification of Death to OPM • New Recommendation #5 - Improving Referrals of Deceased Annuitant Fraud to the OPM • New Recommendation #6 - Improving Untimely Reclamation of Post-Death Annuity Payments • New Recommendation #7 - Recouping Partial Reclamation of Funds Held in Deceased Annuitants’ Bank Accounts Recently, the ongoing work performed in computer matching, along with the commitment by Retirement Services to continue the Death Master File match on an annual basis, has prompted the closing of original Recommendation #3. Other key projects used to identify improper payments to deceased annuitants include the tracking of undeliverable IRS Form 1099Rs and targeting samples of the annuitant population over 90 years old on a routine basis to verify if they are still living. What follows is a brief summary of the results of the Death Master File match and the Over 90 Project, as well as the status of the four remaining open recommendations. Matching with SSA’s Death Master File A weekly computer match is performed comparing annuitant identifiers on active annuity rolls with current SSA death records. However, we also recommended in 2005 that Retirement Services perform an annual match against SSA’s Death Master File1 to identify those deaths which may have gone undetected in prior weekly death matches. 1. The Death Master File from SSA contains over 87 million records of reported death. 5 OPM OFFICE OF THE INSPECTOR GENERAL Retirement Services performed the match in 2005, 2009, and 2010, and going forward has committed to perform the match annually. The match is scheduled to be performed again in the Fall of 2011; however, we have recently learned that the staff performing both the weekly match and the annual Death Master File match, among other duties, has been reduced from 12 to 6, including the loss of two subject matter experts and a supervisor. We are very concerned about the negative impact this will have on the effectiveness and efficiency of this valuable work, as well as the integrity of the results gained. These matches are critical in reducing the amount of improper payments and such a reduction in staff responsible for them is extremely alarming. The inherent value of such a two-phased approach (weekly matches and the annual Death Master File match) is evidenced by the Death Master File matches performed in 2005 and 2009, which successfully identified significant numbers of unreported deaths resulting in improper annuity payments. These improper payments fall into one of two categories: OPM was never notified of the death, or the death was identified in prior death matching activities but was wrongly judged to be an erroneous match, with no action taken to stop the annuity payments. This often happened after a fraudulently Match with SSA’s returned OPM Address Verification Letter (AVL) indicated the Death Master File annuitant was still alive. discovered improper payments We feel the detection of 24 previously deceased annuitants from of $1.2 million the match with SSA’s Death Master File performed in 2009 to a deceased clearly supports the need to continue this match annually. In annuitant one instance, a deceased annuitant was identified as having received improper payments of over $1.2 million. We recommend that OPM perform these matches annually and include an analysis of the results to determine the weaknesses in their processes that allow some deaths to go undetected for many years. Sampling of Annuitants Over 90 Years Old Based on past experience in investigating fraudulent payments to deceased annuitants, it is clear that one characteristic that many share is that Retirement Services does not have any ongoing interactive communications with much of this population. For example, correspondence where the program office requests a periodic reply from the annuity recipient is relatively rare. Since most annuitants receive their payments via electronic funds transfer to a bank account, the only annual mailings from OPM are those announcing a cost of living increase, a change in deduction for health benefits costs, or the annual open season for health insurance. For these mailings, no one is specifically obligated to return anything back to OPM. Needless to say, there appear to be numerous annuitants who have not had contact with OPM for many years. In addition, the annuitants’ addresses of record are sometimes no longer valid and mail is returned to OPM. At our request, OPM began surveying the over age 90 population of the annuity roll in September 2009. At that time, there were over 125,000 annuitants over the age of 90 on the annuity roll. In the Over 90 Project, Retirement Services reached out to a sample of 1,000 6 OPM OFFICE OF THE INSPECTOR GENERAL of the annuitant peopulation between ages 90 and 99, and all annuitants over the age of 100 (approximately 3,400), and requested that an AVL be signed and returned to OPM. Unreturned forms were noted and a second mailing was sent requesting a response, or suspension of payments would occur. The project was completed in the summer of 2010 with the following results: • No response to the AVL’s was received for 144 annuitants in the sample, resulting in suspension of their annuity payments. • Six unreported deaths were discovered, of which three are suspected to involve fraud and have been referred to the OIG investigators. • In 866 cases, follow-up was required because the returned AVL was signed by someone other than the annuitant without having a Representative Payee2 on file. We applaud the program’s commitment to this project and see it as a step towards establishing more frequent interaction with the annuitant population. We believe such contact and interaction is critical to ensuring that OPM has correct contact information, especially addresses for annuitants, and OPM should continue to explore other ways to efficiently increase contacts. Tracking Undeliverable IRS Form 1099Rs The IRS Form 1099R contains information on taxable annuity amounts which is mailed annually to each annuitant who received annuity benefits the preceding calendar year. The information contained on this form is also shared with the IRS as notification of a potential taxable annuity, along with identifiers, such as the social security number and name of the recipient. Based on the importance of this form, we felt that verification of delivery is a significant indicator that the annuitant has supplied their correct address for official OPM correspondence, and that they are alive and receiving mail at that address. Even if they died within the preceding calendar year, information supplied on the 1099R is of importance in the settlement of their estate. Therefore, when 1099Rs are returned as undeliverable it would indicate a breakdown in communication between OPM and the annuitant which needs correction, and/or the potential for an unreported death of an annuitant. The recommendation to analyze all returned 1099Rs has been accepted by Retirement Services and the returned 1099Rs from the January 2010 mailing have been collected for further evaluation and processing. Although staff availability and the cost of this project have been cited as potential roadblocks to its completion, Retirement Services has committed to proceed with an analysis of these returned forms. 2. A Representative Payee is an individual appointed to receive and manage the annuity payments in the event the annuitant needs assistance handling their financial affairs. 7 OPM OFFICE OF THE INSPECTOR GENERAL While progress towards completion of this project has been slow, and the setting of a targeted completion date has remained vague, Analysis we are encouraged by the program office’s plans to determine why continues into approximately 33,000 of these forms were returned in 2010. A reasons for 33,000 similar project, conducted in 2007, proved cost effective in detecting IRS Form 1099Rs unreported deaths and halting the improper annuity payments. As returned as with the Death Master File match, we believe this project should be undeliverable conducted annually. in 2010 Capitalizing on RSM Technology While the Retirement Systems Modernization3 (RSM) effort has slowed and is being re-examined, we continue to believe that there are opportunities in many of the steps being taken in moving towards a modernized environment to insert new procedures and controls to reduce instances of fraud, waste, and abuse of the retirement trust fund. In addition, many legacy processes, such as the death matches and surveys, will certainly need to be redefined in an automated retirement annuity environment. For example, we believe OPM should actively explore the capabilities of any automated solution to flag records and produce management reports for anomalies or suspect activity, such as multiple address or bank account changes in a short time period. We also recommend that OPM ensure that the development process for any new procedures or comprehensive solution consider the impacts on current controls and procedures, such as the weekly and annual death matches, and make sure that they are able to continue as effectively as they are now. Establishing a Working Group to Improve Program Integrity We believe that one of the most important recommendations included in our previous papers, which is still unresolved, is the recommendation to establish a working group to improve program integrity. The recommendation calls for OPM to establish a group comprised of subject matter experts to explore risk areas and develop data mining programs to look for anomalies in the annuity roll that could indicate possible improper payments or fraud. As required by the OMB’s Circular A-123, Management’s OPM must Responsibility for Internal Control, OPM has the responsibility to continually review design controls to protect the integrity of program data. We do not and analyze data believe OPM can carry out this responsibility effectively unless it is from the continually reviewing and analyzing data from the active annuity roll, annuity roll and related sources, to identify potential weaknesses, flaws, and errors in its operations, programs, and data. Coincidentally, OPM is currently in the early stages for the development of a Health Claims Data Warehouse (HCDW), which would include health claims information for a large percentage of 3. Retirement System Modernization is an OPM strategic initiative to automate the retirement calculations using modern technology to ensure annuitants are paid correctly. 8 OPM OFFICE OF THE INSPECTOR GENERAL the enrollees in the Federal Employees Health Benefits Program. The purpose of the HCDW would be to analyze claims information in an attempt to discern ways to more effectively design benefit structures for health plans, to both reduce the cost of health care and to achieve healthier outcomes for enrollees. The potential benefits that can be achieved from the HCDW are clear. We believe that our recommendation for the Retirement Services working group is along exactly the same lines (using a large store of data for analysis in order to make program improvements and protect integrity) as the HCDW effort, but it would take much less time and money to implement. The annuity roll data is already in OPM’s possession. With management support and dedication to the project, all that needs to be done is identify the funding and the subject matter experts, and permit them to start sooner rather than later. This staff might need to be engaged 10 – 20 percent of their time initially, but could theoretically grow to a full-time job for a small number of staff. By virtue of such a first time permanent group arrangement, discussions of their concerns and ideas regarding ways to identify improper payments should reduce the amount of such payments. Some examples of ideas that could be explored are: • The development of management reports which identify worker errors that result in improper payments. • The creation of reports on annuity roll transactions that identify unusual anomalies that indicate either profound worker error or possible internal fraud. • The establishment of annuity roll data snapshots which can be manipulated in a data base to identify potential areas where the data should be questioned with respect to types of payment actions, address validity questions, frequent changes in payment addresses, and unusual annuity payment increases. • The continuation of ongoing meetings with other benefit paying agencies to share knowledge and advancements in the early detection of improper payments. • The continued validation of annuitant information with respect to correct social security numbers and correspondence addresses. • The establishment of data bases which can be shared with other Government benefit programs that allow the communication of valid information on the status of our annuitant population. With 2.5 million annuitants and the disbursement of over $60 billion annually, there is an enormous amount of data in OPM’s annuity roll to be studied. This data should have certain characteristics, trends, and patterns, and it is OPM’s responsibility to ensure the integrity of this data is protected. 9 OPM OFFICE OF THE INSPECTOR GENERAL Recovering Funds Held in Inactive Accounts with Financial Institutions which Remain Unclaimed/Escheatment of Monies to the States Several years ago, proactive investigations by our criminal investigators into determining if annuitants were deceased or alive led to a working relationship with the local Wells Fargo Bank. One of our investigators assigned to that region determined that Wells Fargo was maintaining accounts that had been inactive for several years, with the exception of electronic funds transfer deposits of Federal annuity payments into the accounts. Wells Fargo was not able to verify if the account holders were deceased and in most cases would turn the money over to the State of California. As a result of our efforts, we were able to identify deceased OPM annuitants, recover funds from inactive accounts, OPM should expand and return over $800,000 to the CSRDF. In addition, this action their working stopped future OPM funds from being deposited into these relationship with the inactive accounts. We subsequently recommended that OPM banking community expand their working relationship with financial institutions to to uncover uncover inactive annuitant accounts, as well as explore ways to inactive accounts proactively recover improper payments that have been escheated to the States. OPM was able to expand their working relationship with Bank of America through participation in a quarterly forum, including the U.S. Treasury Department (Treasury) and other financial institutions, discussing reclamation issues and questions. In addition, OPM sent letters to seven other financial institutions largely used by the annuitant population inviting representatives to participate in a quarterly forum. The OCFO reported that they did not receive responses to the additional letters. Managers committed to reducing improper payments in the programs they manage should think strategically to determine the next course of action instead of doing nothing about the setback. Therefore, we continue to recommend that OPM take aggressive actions to establish working relationships with more financial institutions. 10 OPM OFFICE OF THE INSPECTOR GENERAL CONCLUSION We would like to recognize that OPM has made strides over the last few years in attempting to reduce improper payments from the CSRDF, as well as increasing the chances of identifying and recovering improper payments after they have been made. The willingness of Retirement Services and the OCFO staff to examine procedures and explore alternatives is encouraging. In addition, we would like to thank OPM Director John Berry for his full support. Our bottom line is that OPM must establish a working group of subject matter experts to improve program integrity, and to be successful must devote additional funding and resources. We believe that innovative thinking is needed, with new ideas that can bring these efforts to completion. If not, hundreds of millions of dollars in improper payments will continue to be made, much of which will have little chance of ever being returned to the CSRDF. 11 Office of the Inspector General U.S. OFFICE OF PERSONNEL MANAGEMENT Theodore Roosevelt Building 1900 E Street, N.W., Room 6400 Washington, DC 20415-1100 Telephone: (202) 606-1200 Fax: (202) 606-2153 Website: www.opm.gov/oig
Stopping Improper Payments to Deceased Annuitants in Washington, D.C.
Published by the Office of Personnel Management, Office of Inspector General on 2011-09-14.
Below is a raw (and likely hideous) rendition of the original report. (PDF)