Appendix D
In-Depth Study of Misuse

The Social Security Administration (SSA) stores data about individual and organizational representative payees and their beneficiaries in the Representative Payee System (RPS). The system was created in response to the Omnibus Budget Reconciliation Act of 1990, which required SSA to develop and maintain a centralized file of representative payees (U.S. Social Security Administration, 2002).

For the payees and the beneficiaries, the RPS keeps data from the application to become a payee, certain demographic and socioeconomic characteristics, the benefit type, the history of payee-beneficiary relationships, and information about direct deposit. There is also an indicator of payee misuse. In March 2005, tallies generated from the RPS showed 11,464 representative payees identified as misusers—0.08 percent of the 14.3 million representative payees in the system at that time. If one assumes an equal annual distribution of misusers since 1992, when the RPS became operational, about 882 payees have been labeled misusers each year.

In order to learn if some payees are more likely to become misusers than others, we examined the RPS data and carried out an in-depth study on a small universe of misusers. The in-depth study was designed to focus on the documentation of misuse events, and it included a detailed review of beneficiary folders (which were retrieved from various storage locations). By understanding not only who is likely to be a misuser but also the circum-



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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse Appendix D In-Depth Study of Misuse The Social Security Administration (SSA) stores data about individual and organizational representative payees and their beneficiaries in the Representative Payee System (RPS). The system was created in response to the Omnibus Budget Reconciliation Act of 1990, which required SSA to develop and maintain a centralized file of representative payees (U.S. Social Security Administration, 2002). For the payees and the beneficiaries, the RPS keeps data from the application to become a payee, certain demographic and socioeconomic characteristics, the benefit type, the history of payee-beneficiary relationships, and information about direct deposit. There is also an indicator of payee misuse. In March 2005, tallies generated from the RPS showed 11,464 representative payees identified as misusers—0.08 percent of the 14.3 million representative payees in the system at that time. If one assumes an equal annual distribution of misusers since 1992, when the RPS became operational, about 882 payees have been labeled misusers each year. In order to learn if some payees are more likely to become misusers than others, we examined the RPS data and carried out an in-depth study on a small universe of misusers. The in-depth study was designed to focus on the documentation of misuse events, and it included a detailed review of beneficiary folders (which were retrieved from various storage locations). By understanding not only who is likely to be a misuser but also the circum-

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse stances involved in misuse, our goal was to determine if changes to policies and procedures are warranted to prevent future misuse in the program. The first part of this study presents the results from our analysis of the RPS data. The second part presents the outcome of our in-depth review, focusing on how much money was misused, the length of the misuse, and the circumstances surrounding the misuse. We stress that our analyses are confined by the limited nature of the existing variables in the RPS and by the very small number of identified misusers. As noted above, less than one-tenth of 1 percent of the payees in the RPS in 2005 were identified as misusers. Because of this very small number, the data in this study are descriptive: it was not possible for us to do any discriminant analyses with the available data. ANALYSIS OF RPS DATA In this section we first examine the characteristics of all the representative payees in the RPS by misuser status. We then discuss the characteristics of payees by misuser status and type of beneficiary. The last section discusses misuse status and relationship to beneficiary for currently active payees who are identified misusers. Payees by Misuser Status In order to learn if misusers have characteristics that are different from non-misusers, we created four dimensions for comparisons: (1) demographic characteristics, (2) stability in the community, (3) sources of income, and (4) indicators of criminal background. Table D-1 shows a comparison of the payees on these dimensions. All representative payees with a history of misuse are compared with all other representative payees in the system. All comparisons except sex (p < .0370) and “other last name in RPS for the representative payee” (p < .2319) were statistically significant at the p < .0001 level. Looking first at the demographic dimensions, misusers tend to be younger than non-misusers. In both groups, females are more likely to serve as representative payees than males, but there are slightly more males in the misuser group. The percentage of payees with different last names is about the same for the two groups (p < .2319). With regard to indicators of stability in the community, misusers are less likely to use their residence address as their mailing address and more likely than non-misusers to have moved, both within the last year and for their time in the RPS. Misusers are more likely than non-misusers not to have provided a contact phone number. For income, we selected six of the variables in the RPS for analysis:

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-1 Payee Characteristics by Misuser Status (in percentage) Characteristic Misusersa Non-misusersb Demographic Variables     Under age 50 67.4 53.4 Male 28.7 27.8 Other last names in RPS 3.8 4.1 Stability in Community     Same mailing and home address 84.3 88.0 Only one prior address in last year 59.3 77.6 Prior residence indicator 41.0 22.5 No telephone 4.9 2.3 Sources of Income     Self-employment 3.4 1.9 Other than employment 38.8 24.2 OASDI or SSI 17.0 10.9 Public assistance 1.7 0.6 AFDC or TANF 6.1 1.6 Pension 1.4 2.4 Indicators of Criminal Background     Ever convicted of a felony 6.2 2.4 Ever served time in prison 3.7 1.5 aN = 11,464. bN = 14,380,000. SOURCE: Data generated from a review of SSA administrative data of identified misusers conducted for the National Academies Committee on Social Security Representative Payees (2006). self-employment, income from sources other than employment, receipt of Social Security benefits, income from public assistance, income from federal welfare programs,1 and income from pensions. Table D-1 presents the data on several demographic variables and on income. Self-employment is more likely for misusers than non-misusers, and misusers are also more likely to have income from sources other than employment. Those other sources include Social Security benefits—Old Age Survivors and Disability Insurance (OASDI), Supplemental Security Income (SSI), or both. More misusers than non-misusers say public assistance is a source of their income. Finally, the percentage who reported welfare benefits as a source of income is higher among misusers than non-misusers. The percentage with a pension as a source of income is lower for misusers 1 Until 1997, the primary federal welfare program was Aid to Families with Dependent Children (AFDC); since that date it has been Temporary Assistance for Needy Families (TANF).

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse than for non-misusers, perhaps reflecting the younger age distribution of the misusers. Finally, on the fourth dimension, Table D-1 shows that misusers are more likely than non-misusers to have been convicted of a felony or to have served time in prison. For misusers, the percentage who have served time in prison is higher than the national average: 3.7 percent compared with 2.7 (see www.ojp.usdoj.gov/bjs/crimoff.htm). Payees by Misuser Status and Type of Beneficiary We examined the data to learn if the misuser payees are serving different types of beneficiaries than the non-misusers. Specifically, we wanted to know if family membership is related to misuse. For this analysis, we categorized beneficiaries in three groups: family members, nonfamily members, and a mix of family members and nonfamily members. Table D-2 presents the data on these variables. Almost all the representative payees serve family members only. In general, there is more misuse for representative payees who serve both family members and nonfamily members (i.e., they have a mix of beneficiaries). The misusers are younger than the non-misusers across the three beneficiary types. Misusers are less stable in their communities than non-misusers as measured by the percentage with only one prior address in the last year or the percentage with a prior residence ever. The representative payees with a mix of beneficiary types (family and nonfamily members) tend to be the most mobile. Misusers with a mix of family and nonfamily members are also more likely to have income from sources other than employment, including OASDI and SSI benefits, welfare (AFDC or TANF), public assistance, and pensions. Misusers with family members as beneficiaries are less likely to have been convicted of a felony or served time in prison than misusers with nonfamily members or a mix of beneficiaries. Active Payees Identified as Misusers The analysis of the RPS records revealed that some payees who have been identified as misusers have not been terminated as payees: they continue to serve either for the beneficiary whose funds they misused or for others. Of the approximately 5.3 million active representative payees in March 2005, 2,359 or 0.04 percent carry the label “previous misuser.” They serve 3,620 beneficiaries. Table D-3 shows the relationship of active payees to their beneficiaries by misuser status. Almost 55 percent of the non-misusers are mothers, but among the misusers the percentage is 61.3 percent (0.06 percent of mothers are misusers). About 3 percent of all non-misuser payees are grandparents,

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-2 Payee Characteristics by Misuser Status and Type of Beneficiary (in percentage) Characteristics Beneficiary Type Family Only Nonfamily Mix Misusera Non-misuserb Misuserc Non-misuserd Misusere Non-misuserf Demographic Variables             Under age 50 66.5 50.9 58.5 44.5 59.6 50.8 Male 27.2 26.9 48.3 43.9 20.0 21.2 Other last names in RPS 4.1 4.1 3.8 4.1 2.0 2.8 Stability in Community             Same mailing and home address 85.1 89.0 82.2 83.0 81.0 85.2 Only one prior address in last year 60.2 77.9 65.2 78.2 47.8 59.9 Prior residence indicator 40.0 22.2 35.2 21.9 52.6 40.3 No telephone 4.6 2.1 6.2 4.0 5.2 3.5 Sources of Income             Self-employment 1.9 1.4 12.2 8.8 5.4 4.6 Other than employment 31.4 22.0 56.9 50.9 70.1 63.1 OASDI or SSI 13.9 10.0 15.8 18.5 38.6 33.5 Public assistance 1.4 0.4 3.5 1.9 2.4 2.3 AFDC or TANF 5.0 1.3 6.0 3.4 12.6 8.8 Pension 1.1 2.3 2.2 4.2 2.4 3.3 Indicators of Criminal Background             Ever convicted of a felony 6.0 2.3 7.3 4.2 7.1 4.5 Ever served time in prison 3.5 1.4 4.6 2.9 3.9 2.7 aN = 8,837. bN = 13,300,000. cN = 1,255. dN = 725,080. eN = 1,354. fN = 355,980. SOURCE: Data generated from a review of SSA administrative data of identified misusers conducted for the National Academies Committee on Social Security Representative Payees (2006).

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-3 Active Representative Payee by Relationship to Beneficiary and Misuser Status (in percentage) Relationship Percent Misusers Percent of All Misusers Non-misusers Mother 0.06 61.3 54.5 Other relative 0.05 9.4 9.9 Self 0.07 9.4 7.3 Grandparent 0.09 6.1 3.4 Other 0.07 5.0 3.4 Father 0.02 4.4 13.2 Child 0.03 2.2 4.2 Spouse 0.03 2.2 3.6 Stepfather 0.00 0.0 0.3 Stepmother 0.00 0.0 0.2 SOURCE: Data generated from a review of SSA administrative data of identified misusers conducted for the National Academies Committee on Social Security Representative Payees (2006). but among the active payees identified as misusers the percentage of grandparents is 6.1 (0.09 percent of grandparents are misusers). In comparison, about 13 percent of non-misusers are fathers, but their percentage of the active payees identified as misusers is only 4.4 (0.02 percent of payee fathers are misusers). Thus the percent of mothers and grandparents who are misusers is proportionally higher than the percent that are non-misusers. It is important to note that we could not discern from the available RPS data whether the active misuser payees: (1) continue to serve for the beneficiary whose funds they had misused, (2) were terminated as the payee for the beneficiary whose funds were misused, but continue to serve for other beneficiaries, or (3) were terminated as the payee for the beneficiary whose funds were misused and then subsequently selected for the same or other beneficiaries. We randomly selected 10 active misuser payees (and their beneficiaries) in the RPS for further analysis, hoping that a few anecdotes would provide some insight into this universe of payees, but we did not see anything unique about this group. Among the 10 cases, we found mothers who are continuing to serve for their child or children whose funds they misused, and mothers serving different children. One mother—who has two sets of children far apart in ages living in different states—was terminated as payee for her older children, but subsequently appointed to serve for her younger children. One payee who misused the benefits for her ex-spouse is now the payee for her child. In two other cases a brother continues to serve, though he misused another brother’s benefits and an unrelated payee is still serving for other unrelated beneficiaries. In one case the RPS notes

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse suggest that the misuse is only alleged and that the designation of misuse might be inaccurate: the payee is an adult daughter who continues to serve for the same beneficiary. Summary Our analysis of the RPS data provides some information about the type of payee who is identified as a misuser in the system. Compared with non-misusers, the misusers tend to be younger; be less likely to have the same mailing and residence addresses; move more frequently; be self-employed; have income from sources other than employment; be recipients of public assistance; be OASDI or SSI beneficiaries themselves; and have a criminal background. When relationship to beneficiary is taken into account, we find the following: In general, payees tend to serve family members only, but misusers are disproportionately found among payees who serve a mix of family and nonfamily members. In general, payees tend to be female, whether misusers or not, but misusers who serve nonfamily members tend to be disproportionately male. Misusers tend to have income from sources other than employment; this tendency is especially strong for misusers who serve for a mix of family and nonfamily members. As noted above, misusers are more likely to have criminal backgrounds than non-misusers, and this tendency is especially strong for payees who serve nonfamily members or a mix of family and nonfamily members. The analysis showed that more than 2,000 active payees have a prior history of misuse. Mothers and grandparents make up an even higher percentage of these payees than of all payees, while fathers and spouses make up a lower percentage. Payees with a history of misuse have been allowed to continue to serve as payees for either the beneficiary whose funds they misused or for other beneficiaries for whom they have no record of misuse.

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse IN-DEPTH ANALYSIS Some information about the circumstances surrounding the misuse can be gleaned from notes in the RPS, but the picture is incomplete. Therefore, the committee carried out an in-depth analysis in order to learn more about misuser representative payees. We compiled data that would help us describe the misuse, the factors leading up to the misuse determination, the amount of money involved, the characteristics of the payees and the beneficiaries at the time of the misuse, including the beneficiaries’ living situations and relationships to their payees. Process We began the in-depth analysis with a pilot review of 10 randomly selected beneficiary folders of representative payees identified in the RPS as misusers and serving beneficiaries with disabilities. The folders for these beneficiaries were stored at the SSA Processing Service Center in Baltimore and therefore could be retrieved fairly quickly. This initial review was designed to determine what information could be retrieved from the beneficiary folders and what information we would need to retrieve from other administrative records, including the RPS, to supplement the contents of the folders. In addition to RPS and the 10 pilot folders, we used the following SSA data files for this analysis: ROAR Recovery of Overpayments, Accounting and Reporting File MBR Master Beneficiary File SSID Supplemental Security Income Display SEQY Summary of Earnings Query NUMI Numident File PUPS Prisoner Update Processing System From the information available from all the sources—and after appropriate input from staff of the Representative Payee Program—the committee developed a 60-item recording sheet that also included ample space for the case reviewers to provide information about the misuse event. SSA staff members assisted with the request of folders. They also set up a system to track the folders through the review, to store the folders temporarily at SSA HQ and to return the folders to storage after the review. The SSA Representative Payee Program staff performed the actual case review under the guidance of NAS staff. Two training sessions were held for the case reviewers, which led to a few adjustments to the case review process and further refinements to the recording sheets. For many of the payees and beneficiaries, the case

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse reviewers had to read various notes in several folders in order to glean the information presented in this study. To meet our goal of reviewing 300 folders, we drew a random sample of 500 non-fee-for-service individual representative payees from a list we had generated from the RPS of previously identified misusers. Because the RPS dates to 1992, some of the beneficiary folders were old. Of the 500 beneficiary folders initially requested, 206 had been destroyed or were not in central storage (stored instead in a field office or a payment center), and another 26 were determined by the Representative Payee Program staff to have been erroneously labeled as misusers in the RPS. Thus, we had to draw a supplementary sample to ensure we had about 300 folders to review. Ultimately, we obtained and reviewed 291 folders, which represents 2.54 percent of the RPS misuser payee universe (11,464). Characteristics of Misusers and Their Beneficiaries In order to ensure that the payees selected for the in-depth study were representative of the larger universe of misuser payees (described above), we examined and confirmed the distribution of their characteristics on the indicators shown in Tables D-1 to D-3. In the process, we also looked for additional characteristics, such as education, that might be useful in understanding misusers. Demographic Characteristics: Payees and Their Beneficiaries Table D-4 shows the demographic characteristics of the payees (at the time of the misuse). More than 65 percent of the misuser payees are female, and more than 50 percent of the payees are between the ages of 30 and 50. Most of the payees are the parents of the beneficiaries. Table D-5 shows the demographic characteristics of the beneficiaries of the payee misusers. The beneficiaries tend to be male and minors. Consistent with the findings for the payees, most beneficiaries are the sons or daughters of the payees. Custody and Guardianship Arrangements We looked at the custody arrangements of the payees and their beneficiaries at two points in time: application and occasion of misuse. At the time of the application to become the representative payee, of the 291 cases, 42 percent of the payees who became misusers (123) had physical custody of the beneficiary; 22 percent did not (65); the information was not known or available for 35 percent (103). At the time of the misuse, 16 percent (48) of payees had physical cus-

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-4 Payee Demographic Characteristics at Time of Misuse Characteristic Number Percent Gender     Male 84 28.9 Female 190 65.3 Not available 17 5.8 Age     19 1 0.3 20-29 44 15.1 30-39 108 37.1 40-49 64 22.0 50-59 32 11.0 60-69 8 2.8 70 and older 5 1.7 Not available 29 10.0 Age Relative to the Beneficiary’s Age     Younger 47 16.2 Older 207 71.1 Not available 37 12.7 Relationship to Beneficiary     Spouse 9 3.1 Parent 146 50.2 Son or daughter 8 2.8 Grandparent 2 0.7 Grandchild 1 0.3 Other relative 36 12.4 Other 24 8.5 Not available 65 22.3 SOURCE: Data generated from a review of SSA administrative data of identified misusers conducted for the National Academies Committee on Social Security Representative Payees (2006). tody of their beneficiaries; 46 percent did not (133); and the information was not known or available for 38 percent (110) of the payees. Of those who indicated on the application form that they had physical custody of the beneficiary, just under 33 percent had physical custody at the time of the misuse (40 of 123); and 53 percent no longer had physical custody (65); and for 15 percent the information was unavailable or unknown. A very small fraction, 6 percent (4 of 65), did not have custody at the time of the application, but they did at the time of misuse. Thus, for the payees for whom information is available, it appears that many payees who misuse funds do not have the beneficiary in their custody at the time of misuse although they did at the time of the application. With regard to guardianship, information was not available for the time at which the payees applied to become or became the payees. At the

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-5 Beneficiary Demographic Characteristics at Time of Misuse Characteristic Number Percent Gender     Male 163 56.0 Female 107 35.1 Not available 8 8.9 Age     Under 18 160 55.0 18-64 107 36.8 65 and older 8 2.8 Not available 16 5.5 Relationship to Payee     Spouse 8 2.8 Parent 16 5.5 Son/daughter 136 46.7 Grandparent 1 0.3 Grandchild 4 1.4 Other relative 35 12.0 Other 24 8.3 Not available 67 23.0 SOURCE: Data generated from a review of SSA administrative data of identified misusers conducted for the National Academies Committee on Social Security Representative Payees (2006). time of the misuse, only 4 percent of the payees were court-appointed legal guardians of their payees; 73 percent were not, and for 23 percent the information is not available. Socioeconomic Characteristics: Payees and Their Beneficiaries Table D-6 shows some education and income characteristics of payees at the time of the misuse. Information on payees’ level of education is not formally included in any of the SSA administrative data: the case reviewers were able to obtain the information by reading through the materials in the review folders looking for any notes with reference to this item. From the information they were able to pull together, it appears that at the time of the misuse only a small portion of the payees had a high school or higher level of education; however, data were not available for 83 percent of the payees. For sources of income and income amount, data were available for almost 75 percent of payees. For those payees, the two major sources of income—slightly less than one-fourth each—are employment and OASDI and more than two-thirds had annual incomes of $20,000 or less. Slightly more than one-third of the payees (101) were themselves beneficiaries at the time of the misuse. Of them, close to 60 percent (59) re-

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-13 Recovery of Misused Money by Payee’s Decision to Dispute Payee Dispute Misuse Recovered Number Percent Yes Yes 2 0.7   No 6 2.1   Don’t know 2 0.7   Total 10 3.5 No         Yes 30 10.3   No 65 22.3   Don’t know 20 6.9   Total 115 39.5 Not Known   166 57.0     291 100.0 SOURCE: Data generated from a review of SSA administrative data of identified misusers conducted for the National Academies Committee on Social Security Representative Payees (2006). presents the distribution of misuse events by categories of explanation. We note above and in the body of the report that misuse is not well documented in the RPS, and it is also not well documented in the beneficiary folders or other administrative data. As shown in this table, the case reviewers were able to piece together explanations or find documentation for only 59 percent of the cases (172 of 291). For about 16 percent of these cases, the explanations of misuse are straightforward, as illustrated by the quotes found in the beneficiary folders or provided by the SSA staff who reviewed the cases: The payee takes the money, and does not spend it on the beneficiary. Did not use funds for beneficiary. Beneficiary moved and payee kept the money. Payee was the deceased mother’s boyfriend. Beneficiary reported payee not using money for her care. Her rent was allegedly not paid. Beneficiary claims that daughter took off with money (one month’s benefit) and left town. Payee left home and used benefit check for self. Beneficiary applied to be her own payee and reported never receiving any of the money payee received. Payee used benefits for self rather than beneficiary. Payee would claim nonreceipt of beneficiary’s check and then cash reissued check as well as original check.

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-14 Explanations of Misuse Events by Categories of Explanations Explanation Number Percent Number Percent Yes 172 59.1     Miscellaneous     28 16.3 Physical custody         Parent     77 44.8 Other payee     13 7.6 Total     90 52.4 Payee issues         Payee could not be located by SSA     2 1.2 Payee was not the payee of record     4 2.3 Payee was in prison while listed as payee     4 2.3 Payee could not account for spending     6 3.5 Total     16 9.3 Misuse/inappropriate spending         Payee misused dedicated account     9 5.2 Benefits not due beneficiary         Beneficiary was deceased     1 0.6 Beneficiary was in prison/institutionalized     12 7.0 Beneficiary was not due the money - other     9 5.2 Total     22 12.8 Misuse was alleged         Misuse was never substantiated     7 4.1 No 119 40.9     Total 291 100.0     SOURCE: Data generated from a review of SSA administrative data of identified misusers Payee reports not receiving check and cashes both checks—double check abuser. By far the largest category of misuse determination involves SSA’s unknowingly sending the benefit check to a person, who does not have the beneficiary in his or her care (52 percent). Within the physical custody category, narratives and anecdotes suggest that much of the known misuse involves custodial disputes between parents of minor children. A typical scenario in this category is for the payments for minor beneficiaries to go to the father when the mother has physical

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse custody of them. If other relatives are involved, the most likely scenario is for the payments to go to a mother or a father when they should be going to a custodial grandparent. The following direct quotes illustrate the custody issues: Father received a large retro-check for son in the amount of $7,197. On 1/99 payee changed to mother effective 2/99. Father never sent money to new payee (mother). Parents had separated on 12/93 and mother has had custody the entire time. Father received benefits for children on deceased mother’s records. Children lived with grandmother, who was later granted legal and physical custody. Father used the money on himself. He did not have child in his care. Mother lost custody and did not use money for kids. Child actually lived with father while mother was payee—mother did not report custody change. Client’s mother filed to be payee in 2001 stating she had physical custody of her son. In 2005 client’s father found out that the mother had been collecting benefits for the child. Father was able to prove that he has had full legal and physical custody of his son since 1999. Mother misused monies received from 2001 to 2004. Misuser payee alleged custody; beneficiary’s sister initiated investigation; misuser did not have custody and did not use funds for beneficiary. Beneficiary went into foster care and payee kept the money for self. Third party reported that children have not lived with mother for three years. Children are in foster care. Payee did not have beneficiary in her custody. Failed to report beneficiary moved in with father. Sometimes the payees themselves feel that they are entitled to the beneficiary’s money even though they do not have the beneficiary in physical custody, as in this example: Beneficiary started working, got married, was no longer in payee’s care and was not due the money. Payee was a mother with four children. She looked at the monthly benefit as a family allotment, not as separate money for each child. She was found to misuse close to $9,000 over 26 months. She “forgot” to tell SSA, that “Donald,” age 16, moved out, got married and started working. Payee said: “Donald removed himself from the family. He was welcome to return to our house at any time, and I expected that he would do that. However, my wishes were to be in vain,

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse and the days stretched into weeks, weeks into months and months into years. Furthermore, to have divided up the benefits from SSA and given to Donald the amount you claim was due to him, would have left the other children in need.” Smaller categories of explanation for misuse include the inability of SSA to locate the payee (1 percent), payee not being the payee on record (2 percent), and as illustrated by the narrative below, payee being in prison, yet still serving as payee (2 percent). The payee was incarcerated and had her mother cash the beneficiary’s checks. Some of the money was used to pay her bail and court expenses. According to case reviewers, the RPS misuse indicator was sometimes assigned because the payee failed or refused to participate in the annual accounting process (3 percent). In other words, it appears that SSA sometimes assumed misuse because the accounting did not take place, as illustrated in this statement in the records: Payee did not respond to concerns of field office about payee accounting. Accounting report raised questions. Payee would not give information regarding beneficiary’s conserved funds. Payee has not responded to multiple requests for an accounting of the benefits he received. Payee refused to give nursing home money and refused to account. The misuse indicator may also reflect that the payee spent the money in a dedicated account on purchases that do not benefit the beneficiary or for nonauthorized expenditures. About 5 percent of the cases are classified this way. In these cases, judging from the SSA staff reviewer notes, there is some ambiguity on their part in determining what constitutes misuse and what is inappropriate or unauthorized spending. The SSA staff made the following type of observations: Misapplied monies from dedicated account, not misuse. This case involves misapplication of dedicated account funds which differ from misuse. However, the field staff posted this as misuse on RPS in error. RP [payee] mismanaged dedicated account funds and also used funds in an unauthorized manner (to repay a personal loan). A note in the folder indicates that $196 was misapplied and $387 was misused by payee. Retro-money for beneficiary was supposed

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse to be in a dedicated account to be used for specific things. Payee used it for things other than what qualifies, and it was considered misuse although payee was not charged. If the beneficiary is in prison, institutionalized, or deceased, SSA is supposed to be notified and the monthly benefits should be suspended or cease. About 7 percent of the misuse determinations were in this category. Such infractions are sometimes noted to be overpayments to the payees. Judging from the case reviewers’ comments, there appears to be some ambivalence about calling this misuse (see Chapter 5), as illustrated in these remarks: The payee (parent) cashed two checks after death of beneficiary (daughter). Payee failed to report that beneficiary was in jail. Payee cashed checks despite beneficiary being in an institution. Beneficiary was in jail. Payee withdrew all monies from account and would not account for it. Payee reported fraudulent change of address for beneficiary who was in jail. Overpayment. Payee did not report that beneficiary is incarcerated. Overpayment. Beneficiary is in prison and did not report. Overpayment due to prison. Not a case of misuse. Strictly an overpayment case. Why? From 6/99-8/99 beneficiary was entitled to no money because of being in an institution. There are other reasons that the beneficiary should not have been receiving a monthly benefit. Again, the case reviewers found that many of these situations should have been characterized as overpayments, not misuse: This is an overpayment because mom won lottery and on another occasion got $28,000 in insurance money. Therefore, beneficiary was not due checks. Beneficiary was ineligible to receive the Title 16 benefits. He was working, thus overpaid. This is an overpayment, because beneficiary sold a house for $61,000 and did not qualify for SSI benefits. The SSI redetermination was denied. Therefore, beneficiary is overpaid for those months. She is additionally overpaid because for 7 months during the above period, duplicate checks were issued and cashed.

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse This is not a misuse case. It is an overpayment. The payee failed to report beneficiary’s disability had improved. Apparently, payee was overpaid because she received the benefits (SSI) on behalf of the beneficiary and later beneficiary was found ineligible. Payee requested reconsideration and continuance of SSI. Administrative Law Judge found benefits should terminate. The case reviewers found notes to suggest that about 4 percent of the misuse cases were actually never substantiated and in their opinion would have been more properly classified as alleged misuse: Misuse was originally alleged by recipient against his payee/mother. Field office did preliminary development and determined the allegation was without merit. Therefore, misuse proceedings were abandoned. Payee alleges beneficiary took money. There is no evidence of that in the folder. No indication what misuse was about. The records indicated that number holder was in nursing home and that payee was still receiving checks, but alleged that checks were not coming. No misuse evidence in file or on RPS other than payee abused beneficiary. No determination available. Misuse reported by adoptive father of beneficiary. The misuse determination found there was no misuse. Payee’s spouse, beneficiary’s mother was complainant. She has a history of alleging misuse. Payee presented receipts and listed expenses. Beneficiary filed to be her own payee at age 18 claiming former payee misused her SSI money—no other evidence regarding misuse is available. At times, the case reviewers found that the field office made a misuse notation in the RPS even though the field office investigation suggested that no misuse took place, as exemplified in this case: On 4/16/04, a third party contacted SSA complaining that the RP [payee] was borrowing money and not returning it to her. The claims representative did an alpha search on X and found the payee, Y and investigated this payee for misuse. On 5/10/04 the payee was contacted and asked to come to the office with all receipts and bank statements for X’s SSI payments. The payee brought every receipt and bank statement. The payee admitted that from time to time he would borrow money from beneficiary and repay it the same day or very next. RP kept excellent records of

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse beneficiary’s SSI payments. Field office contacted beneficiary for a statement concerning the payee’s suitability and whether he wished the payee to continue. The statement indicated the RP borrows money, but pays it back and beneficiary had no problem with this and had given RP the approval to borrow funds. The FO found no misuse and continued RP with the beneficiary’s approval. Sometimes, the case reviewers questioned the accuracy of the misuse notation in the RPS: This was originally coded as misuse over 19 months in the amount of $4,767. As of 8/30/05, the RPS now has the code “not a misuser.” There is no information about misuse in the folder. Misuse indicator posted to the wrong payee. The records for this payee do not indicate misuse. It cannot be misuse, if the amount is zero. Beneficiary is his own payee. One cannot be found to misuse own benefits. RPS remarks show: The mother was her payee in the past. T2 claim was locked, so they showed misuse to clear it. There was no misuse. For a total of 41 percent of the cases, no explanation could be found. That is, if the SSA staff who reviewed the folders could not find any explanation of the misuse or could not deduct a reason from the review, they would make a note of “unknown” or “no data in the files.” Their comments are illustrative of these cases: Beneficiary’s RPS screen shows payee changed for more suitable payee. The beneficiary applied to become his own payee. Nothing in the file makes reference to the misuse issue. There is no information pertaining to misuse in the claims folder. Perhaps misuse can be assumed by looking at the RPS screens, which show a payee change in the period the misuse occurred. Not sure if misuse ever happened. There is nothing on queries to verify it, and no misuse data in the folder. Not enough data in file to identify what happened. There is nothing in file regarding misuse. How SSA Discovered the Misuse Table D-15 presents information about how SSA discovered the misuse: such information was available for 180 of the 291 cases. For about 10

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE D-15 Source of Misuse Allegations Source Number Percent Beneficiary 30 10.3 Third party 75 25.8 New payee 31 10.7 Combination of above 4 1.4 Other 40 13.8 Not available 111 38.1 SOURCE: Data generated from a review of SSA administrative data of identified misusers conducted for the National Academies Committee on Social Security Representative Payees (2006). percent of the cases in our in-depth study, the misuse was detected through allegations from the beneficiary. For another 36 percent, the allegation came from a third party, such as a family member, a friend of the beneficiary, a neighbor, or a doctor. In third-party situations, the scenario is often that the custodial payee comes to the local SSA field office and complains about nonreceipt of money for the care of a child from the noncustodial parent. The noncustodial parent will falsely have stated to SSA that he or she has physical custody of the beneficiary. As shown in the table, the information sometimes comes to light when there is a change in payee or from a combination of the beneficiary and others. Summary We undertook the in-depth study of randomly selected identified misusers to look for information about the demographic and socioeconomic characteristics of the payees and their beneficiaries or other factors that might explain misuse. We were also looking for circumstances that led to the misuse event. We note first that the administrative data do not provide a complete picture of misuse for a variety of reasons. First, folders are not available for all beneficiaries. Some folders have been destroyed because the files are inactive. Others are kept in either the field or the payment centers and cannot be readily retrieved. Second, for those folders we did retrieve and review, many records were incomplete and had limited or no data on misuse. The rest of this section summarizes what we learned from the available information.

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse Circumstances of Misuse About 50 percent of the documented misuse happens because the payee does not have the beneficiary in his or her care (custody) as claimed. Most custodial misuse involves parents. About 5 percent of the documented misuse involves money in dedicated accounts. More than 12 percent of the documented misuse results from payees’ not having reported to SSA events affecting the benefit amount or entitlement to the benefit. How SSA Learns about Misuse SSA is most likely to learn about misuse through a third party. The beneficiaries also tell SSA about misuse. Amount Misused The average misuse amount was $4,414. The smallest amount misused was $41 (benefits for 1 month). The highest single amount misused was $45,000 over 9 years and 4 months. Length of Misuse Most misuse involves just 1 month of benefits. More than 77 percent of misuse lasts no more than 12 months. Recovery of Misused Funds The misused funds are recovered (or in the process of being recovered) in only a small number of cases. Characteristics of Payees Most are female. About 35 percent are themselves beneficiaries; they are most likely to be receiving disability benefits. About 12 percent have more than one address in a year. More than 80 percent provide a phone number at the time of the application. Close to 72 percent give the same mailing and residence address. They speak the same language as their beneficiaries.

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse About 5 percent have criminal records. About 7 percent are reported to be abusing drugs or alcohol. Characteristics of Beneficiaries The majority of the misused beneficiaries are male. The majority of the misused beneficiaries are children (55 percent). The beneficiary is frequently the son or daughter of the payee. About 32 percent receive OASDI disability benefits. Close to 35 percent are SSI beneficiaries. Almost all beneficiaries speak the same language as their payees. Only a small percentage has alleged drug or alcohol abuse (4 percent). About 25 percent suffer from alleged mental illness. Less than 2 percent have been judged legally incompetent. Characteristics Associated with Payeeship About 9 percent of payees have failed to respond to the annual accounting process. About 24 percent of the payees serve as payees for several beneficiaries at the time of the misuse. In spite of being labeled misusers in the RPS, about 9 percent are still serving as payees. About 44 percent of the misuser payees have been terminated once, 16 percent twice, and 22 percent more than twice with the notation that “a more suitable payee” has been found for either the beneficiaries associated with the misuse or for other beneficiaries served by the payees. CONCLUSION Misuse is not very well documented in SSA data. When SSA staff makes a notation of misuse in the RPS, they do not necessarily document the circumstances that led to the misuse determination. When it is documented, it appears that other SSA staff would on several occasions have disagreed with the decision and instead labeled the misuse as an overpayment. Without documentation, it is difficult for SSA to learn about either the demographic and socioeconomic characteristics of the payees who get labeled as misusers in the RPS or the causes of misuse. As a consequence, it is difficult for SSA to make empirically based decisions about changes to

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse the policies and procedures pertaining to selection, training, and monitoring representative payees. Reference U.S. Social Security Administration 2002 Representative Payee Program. Office of Income Security Programs. Baltimore, MD: U.S. Social Security Administration.