Social Security program failed to properly notify people of huge fines, report finds
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The Social Security Administration’s internal watchdog office failed to properly notify some poor and disabled Americans before levying huge fines on them, an investigation by an independent watchdog agency found.
The two-year probe into a little-known anti-fraud program discovered particularly stark due process violations starting in 2018, with investigators finding no evidence that the government ever sent written notice to some of those hit with massive penalties, which at times reached more than $100,000. Even when the inspector general’s office, which runs the program, did send notification letters in previous years, investigators found it often failed to properly serve people with notice of the proposed fines.
The findings raise “significant legal questions about the validity of penalties” on low-income people “who are potentially subject to having their future Social Security and disability benefits withheld,” Justice Department Inspector General Michael Horowitz wrote, summarizing his findings in a report issued this month to Congress and Social Security Commissioner Martin O’Malley.
Horowitz took the unusual step of urging the Social Security Administration to review every penalty the government has issued under the Civil Monetary Penalty program since 1995, to notify claimants who were fined and to take “corrective action.”
His report follows a Washington Post investigation in 2022 that revealed how escalating penalties - which started before Inspector General Gail Ennis took office in 2019 as a Trump administration appointee and continued under her tenure - affected more than 100 disabled and elderly people receiving disability benefits who were accused of fraud. Over a seven-month period that ended in mid-2019, 83 people were charged a total of $11.5 million, documents obtained by The Post showed - a jump from less than $700,000 for all of 2017.
Social Security, which long ago delegated administration of the program to the inspector general’s office, suspended the Civil Monetary Penalty program following The Post’s report. Agency spokesman Mark Hinkle said in an email that officials have “diligently moved forward with a review of the Civil Monetary Penalty Program.”
Following The Post’s report, the White House also ordered the Council of the Inspectors General on Integrity and Efficiency (CIGIE), a group that assigns federal watchdogs to investigate misconduct allegations against fellow inspectors general, to launch an inquiry into Ennis’s office.
Horowitz is continuing a broad investigation of Ennis’s office but said he moved more quickly to notify a committee of fellow watchdogs of the specific improprieties he found in the anti-fraud program “because we believe they require prompt agency attention and corrective action.” The Post obtained a copy of the report, which has not been made public.
Ennis’s office, in responses published in the report, pushed back on a number of the conclusions and wrote that any mistakes made in trying to notify people of fines were in effect harmless errors. Horowitz disagreed with the arguments.
In a comment sent separately to The Post, Ennis spokeswoman Rebecca Rose referred specific questions about the findings to Social Security since the agency “has had full responsibility over administration” of the anti-fraud program since 2022.
Ennis, an attorney who was a partner at the WilmerHale law firm before her federal appointment, has asked the chairman of the inspectors general council in meetings and letters since early this year to curtail the probe, correspondence shows, accusing Horowitz of exceeding his authority and violating the federal law designating the authority of federal watchdogs. Ennis has urged in the letters that the report on the anti-fraud program be rescinded.
“We believe DOJ OIG has no authority to make unprecedented, programmatic recommendations to [the Social Security Administration],” Rose wrote in an email Monday. “It is disappointing that our concerns, which have government-wide implications, are not being taken seriously.”
After lawmakers and the Social Security commissioner received Horowitz’s report this month, Ennis’s office also protested in a letter to the Justice Department’s Office of Legal Counsel. That communication, obtained by The Post, called the findings an invalid interpretation of the law, which Ennis’s staff argued gives the office wide latitude on how to serve notice to people of proposed fines.
The report comes as President Biden faces pressure from a top Senate Democrat to fire Ennis, whose 500-person office is charged with oversight of the agency that distributes retirement benefits to 69 million Americans and monthly disability checks to about 15 million others. Senate Finance Committee Chairman Ron Wyden (Ore.), in a letter in February, told the president that he had lost confidence in Ennis, whose promises to “establish a culture that welcomes debate, collaboration, and transparency … appear to have been hollow.” The letter cited numerous performance issues.
In a new statement Monday, Wyden said the investigation into the operations of the anti-fraud program bolsters his case.
“It continues to be clear that the Inspector General refuses to take responsibility for anything,” Wyden said. “Gail Ennis needs to go so that trust in the Inspector General’s office can be restored.”
A spokesman for Horowitz referred a request for comment to the inspectors general council. Interior Department Inspector General Mark Greenblatt, chairman of the council, declined to comment through a spokeswoman.
Congress created the anti-fraud program with bipartisan support to help Social Security recover benefits paid in error in its two antipoverty programs for low-income elderly Americans and those with disabilities. Civil fines are the common alternative when fraud is considered too small to warrant criminal prosecution by the Justice Department. In years past, cases had often been settled, with agreements for drastically lower fines as claimants gradually paid back what they owed taxpayers.
The law establishing the program requires the government to notify anyone who is a target of a fine and allow them to request a hearing before imposing the penalty.
This did not always happen on Ennis’s watch, though, Horowitz found. Her office imposed a fine of $135,000 in one case in March 2019, but there was “no [United Parcel Service] confirmation” that any notice was provided to the individual, the report said. A month earlier, the office imposed another penalty of more than $140,00o, with no notice delivered. The same was true in May 2019, when a penalty in excess of $160,000 was imposed with “no proof in file” that any notice of the initiation of the action was provided to the individual. The inspector general’s office said it is continuing to review its records in these cases, according to the report.
Before Ennis arrived, the investigators found, her predecessors did attempt to serve notice by sending letters to those targeted with penalties. But the report found that this method also often violated the statute, since many states do not consider notification by U.S. mail and private delivery services a legally permissible method of serving notice.
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