Where Do We Go from Here? — Hearing, House of Representatives (September 10, 2024)
Summary
Transcript of the hearing Where Do We Go from Here? Examining a Path Forward to Assess Agencies’ Efforts to Prevent Improper Payments and Fraud, before the Subcommittee on Government Operations and the Federal Workforce of the Committee on Oversight and Accountability, on September 10, 2024 (Serial No. 118–128). Hon. Pete Sessions, Chairman of the Subcommittee, presided. Witnesses were The Honorable Michael E. Horowitz, Chair of the Pandemic Response Accountability Committee; Orice Williams Brown, Chief Operating Officer of the U.S. Government Accountability Office; and Linda Miller, Co-Founder and Chair, Program Integrity Alliance. The index lists CBPP reports submitted by Rep. Norton and a statement for the record, and the subcommittee adjourned at 12:38 p.m.
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“Where Do We Go from Here? — Hearing, House of Representatives (September 10, 2024).”
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WHERE DO WE GO FROM HERE?
EXAMINING A PATH FORWARD TO
ASSESS AGENCIES’ EFFORTS TO
PREVENT IMPROPER PAYMENTS AND FRAUD
HEARING
BEFORE THE
SUBCOMMITTEE ON GOVERNMENT OPERATIONS
AND THE FEDERAL WORKFORCE
OF THE
COMMITTEE ON OVERSIGHT
AND ACCOUNTABILITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
SEPTEMBER 10, 2024
Serial No. 118–128
Printed for the use of the Committee on Oversight and Accountability
(
Available on: govinfo.gov
oversight.house.gov or
docs.house.gov
U.S. GOVERNMENT PUBLISHING OFFICE
56–884 PDF WASHINGTON : 2024
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
JAMES COMER, Kentucky, Chairman
JIM JORDAN, Ohio JAMIE RASKIN, Maryland, Ranking Minority
MIKE TURNER, Ohio Member
PAUL GOSAR, Arizona ELEANOR HOLMES NORTON, District of
VIRGINIA FOXX, North Carolina Columbia
GLENN GROTHMAN, Wisconsin STEPHEN F. LYNCH, Massachusetts
MICHAEL CLOUD, Texas GERALD E. CONNOLLY, Virginia
GARY PALMER, Alabama RAJA KRISHNAMOORTHI, Illinois
CLAY HIGGINS, Louisiana RO KHANNA, California
PETE SESSIONS, Texas KWEISI MFUME, Maryland
ANDY BIGGS, Arizona ALEXANDRIA OCASIO-CORTEZ, New York
NANCY MACE, South Carolina KATIE PORTER, California
JAKE LATURNER, Kansas CORI BUSH, Missouri
PAT FALLON, Texas SHONTEL BROWN, Ohio
BYRON DONALDS, Florida MELANIE STANSBURY, New Mexico
SCOTT PERRY, Pennsylvania ROBERT GARCIA, California
WILLIAM TIMMONS, South Carolina MAXWELL FROST, Florida
TIM BURCHETT, Tennessee SUMMER LEE, Pennsylvania
MARJORIE TAYLOR GREENE, Georgia GREG CASAR, Texas
LISA MCCLAIN, Michigan JASMINE CROCKETT, Texas
LAUREN BOEBERT, Colorado DAN GOLDMAN, New York
RUSSELL FRY, South Carolina JARED MOSKOWITZ, Florida
ANNA PAULINA LUNA, Florida RASHIDA TLAIB, Michigan
NICK LANGWORTHY, New York AYANNA PRESSLEY, Massachusetts
ERIC BURLISON, Missouri
MIKE WALTZ, Florida
MARK MARIN, Staff Director
JESSICA DONLON, Deputy Staff Director and General Counsel
BILL WOMACK, Senior Advisor
ALEX RANKIN, Professional Staff Member
MALLORY COGAR, Deputy Director of Operations and Chief Clerk
CONTACT NUMBER: 202-225-5074
JULIE TAGEN, Minority Staff Director
CONTACT NUMBER: 202-225-5051
SUBCOMMITTEE ON GOVERNMENT OPERATIONS AND THE FEDERAL WORKFORCE
PETE SESSIONS, Texas, Chairman
GARY PALMER, Alabama KWEISI MFUME, Maryland Ranking Minority
CLAY HIGGINS, Louisiana Member
ANDY BIGGS, Arizona ELEANOR HOLMES NORTON, District of
BYRON DONALDS, Florida Columbia
WILLIAM TIMMONS, South Carolina MAXWELL FROST, Florida
TIM BURCHETT, Tennessee GREG CASAR, Texas
MARJORIE TAYLOR GREENE, Georgia GERALD E. CONNOLLY, Virginia
LAUREN BOEBERT, Colorado MELANIE STANSBURY, New Mexico
RUSSELL FRY, South Carolina ROBERT GARCIA, California
ERIC BURLISON, Missouri SUMMER LEE, Pennsylvania
Vacancy JASMINE CROCKETT, Texas
RASHIDA TLAIB, Michigan
(II)
C O N T E N T S
Page
Hearing held on September 10, 2024 ..................................................................... 1
WITNESSES
The Honorable Michael E. Horowitz, Chair, Pandemic Response Account-
ability Committee
Oral Statement ........................................................................................................ 4
Orice Williams Brown, Chief Operating Officer, U.S. Government Account-
ability Office
Oral Statement ........................................................................................................ 6
Linda Miller, Co-Founder and Chair, Program Integrity Alliance
Oral Statement ........................................................................................................ 7
Written opening statements and statements for the witnesses are available
on the U.S. House of Representatives Document Repository at:
docs.house.gov.
INDEX OF DOCUMENTS
* Report, CBPP, Gov Pandemic Response Turned Poverty Surge into De-
cline; submitted by Rep. Norton.
* Report, CBPP, Unemployment Programs Provided Support; submitted
by Rep. Norton.
* Statement for the Record; submitted by Rep. Connolly.
Documents are available at: docs.house.gov.
(III)
WHERE DO WE GO FROM HERE?
EXAMINING A PATH FORWARD TO
ASSESS AGENCIES’ EFFORTS TO
PREVENT IMPROPER PAYMENTS AND FRAUD
Tuesday, September 10, 2024
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
SUBCOMMITTEE ON GOVERNMENT OPERATIONS AND THE FEDERAL
WORKFORCE
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:09 a.m., in
room 2154, Rayburn House Office Building, Hon. Pete Sessions
[Chairman of the Subcommittee] presiding.
Present: Representatives Sessions, Palmer, Higgins, Biggs,
Timmons, Burchett, Burlison, Raskin, Mfume, Norton, Frost, Con-
nolly, Lee, Crockett, and Tlaib.
Mr. SESSIONS. The hearing of the Subcommittee on Government
Operations and the Federal Workforce will come to order.
And I would like to welcome everybody.
Without objection, the Chair may declare a recess at any time.
And I recognize myself for the purpose of making an opening
statement.
This morning, we are awaiting some of our other colleagues. I
must admit, I do not live anywhere close to here, and so I wake
up on the Hill. And yet I know that it is not as easy for others who
live around here. And so, with great respect, we are going to—we
have been delayed for a few minutes. We are going to probably talk
slowly for a few minutes, and we will all recognize that.
I want to thank the panel that is here. We have tried to make
sure that we had a conversation with you before today.
Thank you very much. I hope you are good today. Mr. Mfume
will be here in just a few minutes.
The importance of today’s hearing will become very apparent to
the American people as we go through the conversation that we are
going to have with each and every one of you.
The idea is about tracking agency process on identifying and pre-
venting fraud and improper payments. The estimated amounts of
waste, fraud, and abuse in COVID-related programs are simply
mind-boggling—half a trillion dollars. And while each of our wit-
nesses today are aware of this figure, many in the American public
and many Members of Congress may not be.
(1)
2
So, that is why we are having this hearing. We have been work-
ing on this in the Subcommittee on a bipartisan basis for a long
time. We are today looking for and searching for answers.
We find that much of it was lost to criminal actors and our en-
emies, often comical, simple tactics, taking advantage of the Amer-
ican taxpayer. If this is not a call to action, I do not know where
there is one.
And so, today we will politely work through that process. We will
talk to logical people who have questions and answers. We will be
asking them for their professional comments.
The full Committee and this Subcommittee will hold hearings at
the beginning of the next Congress on this subject, I am sure. And
during those hearings, it will be clearly asked about how could this
happen and could it happen again? So, these are questions we are
going to ask today.
It is easy for us to say, but I think it should be a demand on
agencies and upon all of us to make sure that we can answer that
before we walk out of here. Are we on the pathway? Do we know
what happened? Because things have to change.
That includes the way the oversight community—and that is this
Subcommittee—will look at and track progress not only on Federal
agencies but also at the state level to make our anti-fraud meas-
ures amount to more than just a screen door on a submarine,
meaning it is just open for fraud.
This Committee and government reform and oversight will today
release a staff report regarding fraud in COVID-related unemploy-
ment insurance programs. That number is stunning also.
One of the report’s findings was that, in many instances, states
were unprepared to implement the emergency provisions passed by
Congress, to include the attending spike in unemployment claims.
And while it is true COVID was an unprecedented situation, it
nonetheless exposed weaknesses in the unemployment and insur-
ance framework; namely, an ability to scale itself at a time when
many people sought that help.
There were also too many instances of basic oversight measures,
like verification of identity, not even sought or being taken.
These are but a few examples in one program, but they illustrate
the problem and they illustrate the need to effectively track efforts
to plug these holes now.
This hearing was originally intended to serve as a rollout for a
scorecard to track anti-fraud and improper payment steps in major
programs, but it quickly changed. So, ultimately, it has become ap-
parent that we must—that we simply lack the data to determine
whether programs and agencies are getting better. It is unaccept-
able to think that we would simply excuse this behavior rather
than fixing what has been placed before us.
So, in this hearing, as I have told our witnesses, I want to ask
the basics: What are the questions that we need to ask? What in-
formation is needed? And how are we going to work together to see
not just the problem but the answers?
And I will tell you that each of these lie before us today. We are
not going to blame someone. We are going to find the problems,
and we need to fix them.
3
The Ranking Member, Mr. Mfume, and I have tried to work to-
gether and have done, I think, what is a remarkable job. We have
seen the tasks that lie before us, and we understand that this is
a problem for the American people.
So, with that said, sir, welcome. I know you had to drive in. How
is that traffic going today?
The gentleman is recognized for any opening statement the gen-
tleman chooses to make.
Mr. MFUME. Thank you very much, Mr. Chairman. It is a little
rough getting down from Baltimore today. So, I apologize.
But I would like, if it is OK with you, to allow these witnesses
who have made time to be here to proceed. And then I will—like
to do my opening remarks after that.
Mr. SESSIONS. That will be great.
Mr. MFUME. Great.
Mr. SESSIONS. We wanted to make sure we did not go too far.
So, as the gentleman has consented, we will move forward. And
then he will come back with any opening statement that the gen-
tleman chooses.
I am pleased to introduce our witnesses today.
Michael E. Horowitz is the Inspector General of the Department
of Justice and Chairman of the Pandemic Response Accountability
Committee. As Chairman of the PRAC, Mr. Horowitz leads a com-
mittee of Federal inspector generals responsible for overseeing the
over $5 trillion in Federal pandemic-related emergency spending.
Spending time with him yesterday, I learned much about not just
this role but the power behind the legislation that has given him
this ability across the government.
We also welcome Orice Williams Brown is the Chief Operating
Officer of the GAO. In her role, she is responsible for the day-to-
day agency management and overseeing the development of hun-
dreds of reports and testimoneys to Congress. It is a big role. It has
a wide view.
And we are delighted that you are with us today, Ms. Brown.
Thank you very much.
We also add Linda Miller. She is the cofounder and Chair of the
Program Integrity Alliance. Over 16 years’ experience in both the
public and private sector, she is considered a national authority on
fraud prevention and detection. I think she is also a national asset.
And I hope that by the end of today’s hearing you will agree with
that.
So, I look forward to us joining and hearing from you.
I would like to ask that you stand now to take the oath for each
of our witnesses.
Pursuant to Committee Rule 9(g), the witnesses will please
stand, as they have done, and raise their right hand. And I will let
you answer.
Do you solemnly swear or affirm that the testimony you are
about to give is the truth, the whole truth, and nothing but the
truth, so help you God?
[Chorus of ayes].
Mr. SESSIONS. Let the record reflect that the witnesses have an-
swered in the affirmative. Thank you very much.
4
OK. Now that we have gotten this done, let me please remind
you that, as we spoke about yesterday, that we have a copy of your
written statement, and it will appear in full in the hearing record.
I also told you yesterday that while we have a 5-minute rule, I
would like for you to make sure that you get your work done. If
it goes a little bit over that, does not bother me. Mr. Mfume is here
for the same reason. We need to make sure that you are given the
time to speak clearly with us, that we understand what we are
talking about.
I would also remind you that the button in front of you is for the
microphone so that Members can hear you. And, of course, you will
recognize the signals that come.
I would now like to recognize the distinguished gentleman, Mr.
Horowitz, for 5 minutes. The gentleman is recognized.
STATEMENT OF THE HONORABLE MICHAEL E. HOROWITZ
CHAIR
PANDEMIC RESPONSE ACCOUNTABILITY COMMITTEE
Mr. HOROWITZ. Thank you.
Chairman Sessions, Ranking Member Mfume, Members of the
Subcommittee, thank you for inviting me to testify at today’s im-
portant hearing.
Improper payments and fraud, as we will discuss, remain a very
significant challenge for the Federal Government. The Subcommit-
tee’s bipartisan development of a scorecard and its efforts to do so
to assess agency efforts to address improper payments and fraud
is an important step forward.
At the PRAC, we and our member IGs are working hard to im-
plement—to help prevent improper payments and fraud, including
by using advanced data analytics.
Today’s hearing comes at a particularly critical time because, un-
less Congress takes action, one of the most significant tools to im-
prove program integrity and prevent fraud will be lost.
In early 2021, Congress provided $40 million to the PRAC to cre-
ate and operate what we have referred to as the Pandemic Ana-
lytics Center of Excellence, or PACE, through 2025. It has proven
to be extraordinarily successful. It has already resulted in recov-
eries that far exceed its operating costs, and it is assisting over 40
law enforcement agencies as they pursue hundreds of fraud cases
involving over $2 billion.
Unfortunately, this fraud-fighting tool, which should be expanded
to prevent improper payments in non-pandemic programs, is in-
stead scheduled to disappear entirely on September 30, 2025.
The GAO has strongly recommended that Congress permanently
establish this analytic center, and recently estimated that it could,
quote, ‘‘result in a billion or more annually in financial benefits.’’
The PACE can also help prevent fraud and improper payments
going forward, ensuring that money goes to its intended bene-
ficiaries, not fraudsters. And it is important to keep that in mind
as we talk today because every dollar that goes to a fraudster does
not go to the small business, to the unemployed, to others that
Congress were intending to help.
Working with IGs and their agencies, PRAC staff can have the
PACE assess applications for fraud indicators before funds are dis-
5
bursed. And it is not a theoretical possibility. It is what we out-
lined in our Fraud Alert last year.
We could have conducted identity verification back in March
2020, had our analytics platform been available, likely saving tax-
payers millions, if not billions, of dollars.
Unfortunately, other systems that exist, such as Treasury’s Do
Not Pay, are not able to prevent the kind of multiprogram and
identity-related fraud that occurred during the pandemic, which
the PACE can identify because of its dynamic nature, proactive na-
ture, and how it can identify risk indicators through machine
learning and other tools and, therefore, can be used for prevention.
What is unique about the PACE is that it can identify fraudsters
attempting to use different stylings of an individual’s name, birth
date, and other information to obtain benefits from programs
across the Federal Government. It can also identify other anoma-
lies, as well as the use of known compromised IP addresses and
foreign IP addresses.
Additionally, the PRAC has law enforcement authority, unlike
Do Not Pay. And, therefore, we have access to law enforcement-
sensitive data to help us identify bad actors.
Further, the PACE, unlike Do Not Pay, can find hidden connec-
tions between multiprogram schemes, such as the use of shared
bank account information, email address, and phone numbers,
thereby helping multiple agencies prevent fraud that they and Do
Not Pay would not otherwise be able to identify.
In developing the PACE, we have been highly mindful of privacy
interests, and we have been transparent with Congress about what
data we hold and what we do with it. We have also made data se-
curity paramount for the PRAC.
If we want to continue to advance the fight against improper
payments and fraud, we should not allow this important and valu-
able fraud-fighting tool to expire, as occurred in 2015 when the
highly successful data analytics platform of the Recovery Board
was allowed to sunset.
Because that analytics platform was no longer available when
the pandemic started, the PRAC was unable to use data analytics
to help prevent billions of dollars in fraud that we now know tran-
spired.
Moreover, simply folding the PACE into the Treasury Depart-
ment would repeat the same unfortunate choice made back in 2015.
That approach did not work then, and it would again diminish the
Federal Government’s ability to prevent improper payments and
fraud.
We should instead continue the investment that Congress has
made in this highly successful data-driven tool that has a proven
track record and a demonstrated return on investment.
I look forward to working with you, the Committee, on how we
can address improper payments, improve program integrity going
forward, and reduce fraud.
I look forward to answering your questions today.
Mr. SESSIONS. Mr. Horowitz, thank you very much.
Ms. Brown, you are recognized for 5 minutes.
6
STATEMENT OF ORICE WILLIAMS BROWN
CHIEF OPERATING OFFICER
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. BROWN. Good morning. Chairman Sessions, Ranking Mem-
ber Mfume, and Members of the Subcommittee, thank you for the
opportunity to be part of today’s hearing and to help shed light on
what can be done about the longstanding and pervasive issue of
improper payments and fraud in the Federal Government.
Whether it involves an established program, or one created to re-
spond to an emergency, improper payments and fraud erode the
public trust and results in hundreds of billions of dollars lost.
Since 2003, agencies have estimated $2.7 trillion of payments
were improper. In April, GAO also developed the first government-
wide estimate of fraud. We estimate based on 2018 through 2022
data that the Federal Government has lost between $233 and $531
billion annually.
While my written statement covers GAO’s wide body of work re-
lated to improper payments and fraud, I will focus on ways agen-
cies can better prevent improper payments and fraud.
First, consistent with GAO’s 2015 Fraud Management Frame-
work, which has been codified by the Payment Integrity and Infor-
mation Act and OMB guidance, agencies must commit to estab-
lishing an organizational culture dedicated and conducive to fraud
risk management. To do this, agencies must first recognize and ac-
knowledge their fraud risk. And I cannot stress that point enough.
Agencies at times view anti-fraud controls being at odds with
their mission to support their intended beneficiaries. However,
these are not opposing goals. Any dollar that is improperly paid or
defrauded results in one less dollar going to an eligible beneficiary
or for another beneficial program purpose.
Next, agencies must assess the extent of their unique fraud risks.
This involves assessing fraud risks to determine their fraud risk
profile, including fully considering the specific fraud risk faced,
analyzing the potential likelihood and impact of fraud schemes,
and documenting prioritized fraud risk and determining their risk
tolerance.
After that, they need to design and implement a strategy with
specific controls to mitigate, assess fraud risks, and collaborate
with internal and external stakeholders to help ensure effective im-
plementation.
And, finally, agencies must evolve and adapt. This includes eval-
uating outcomes of their efforts using a risk-based approach and
adapting activities to improve their fraud risk management.
It is also important to realize that this is a journey, and it re-
quires regularly assessing the threat landscape and adjusting as
the threat environment changes and the types of fraud being per-
petrated evolve. The fraudsters never sleep, and Federal agencies
cannot either.
This focus on fraud risk management also aligns with other ac-
tions agencies can take to prevent improper payments that may not
be fraudulent. For example, agencies’ focus on front-end controls is
critical for preventing improper payments, especially in emergency
situations when money needs to be moved out the door quickly.
7
In closing, I will also note the important role that Congress can
play in addressing improper payments and fraud. In addition to
dozens of recommendations to agencies to address their individual
programs, we have also identified numerous legislative actions that
Congress could take to strengthen payment integrity related to
transparency, accountability, and oversight of improper payments
and fraud.
Through hearings and other oversight tools, Congress could also
hold agencies accountable for putting needed safeguards in place to
protect Federal dollars.
As always, we stand ready to help Congress carry out this over-
sight and advance the fight against fraud and improper payments.
This concludes my opening statement, and I would be happy to
answer any questions at the appropriate time.
Thank you.
Mr. SESSIONS. Ms. Brown, thank you very much.
Ms. Miller, you are recognized for 5 minutes.
STATEMENT OF LINDA MILLER
CO-FOUNDER AND CHAIR
PROGRAM INTEGRITY ALLIANCE
Ms. MILLER. Thank you very much, Chairman Sessions, Ranking
Member Mfume, and Members of the Subcommittee.
My name is Linda Miller, and I have spent the last 15 years try-
ing to help Federal agencies manage their risks to fraud. Some of
those years were spent at both the organizations that my fellow
panelists represent today.
I recently cofounded a nongovernmental organization called the
Program Integrity Alliance, and today I am here in my capacity as
the chair and cofounder of PIA.
PIA’s mission is to strengthen integrity and data-driven fraud
prevention in the U.S. through a more trust—to establish a more
trustworthy, effective, and efficient government.
PIA is expressly nonpartisan because fraud is not a partisan
issue. Administrations on both sides of the aisle have ignored or
downplayed this issue for decades.
How big is this problem? GAO’s recently issued estimates of $531
billion a year, that could fund almost 10 million veterans’ benefits
every year. That is how big this problem is.
After 15 years of studying this problem and then walking shoul-
der to shoulder with government officials to address it, I believe
there are four key issues that I want to discuss today.
The first one is data. Agencies cannot or do not try to access the
data that they need to find fraud. As you can see on the screen
here, this is an analysis of the 31 programs that report their im-
proper payments through the paymentaccuracy.gov website. As you
can see, there is significant misalignment between what the agen-
cies are saying the cause of the problem is and what they are actu-
ally doing about it. On the left, you can see that of those programs,
almost 75 percent have cited a failure to access or verify data as
the root cause of their improper payment. And on the right-hand
side, you can see that the main mitigation strategy that agencies
report pursuing is training.
8
Training is not going to get agencies more access to data. So, the
agencies are already telling us a big part of what the problem is
right here.
No. 2, agency leaders are by and large terrified to even utter the
f-word. Fraud is literally a four-letter word to most agency leaders,
and you cannot solve a problem you refuse to admit exists.
When I speak on this topic, I often say, if you took all the police
officers off the road, you would not have any more speeding. Obvi-
ously, people would still speed. You just would not be looking for
them.
Too often today that is how agencies are approaching fraud, by
remaining willfully blind to its existence. And it is just easier for
them that way.
No. 3, agency leaders lack incentives or a mandate to meaning-
fully address the problem of fraud in their programs. And this
turns into a compliance exercise where they really do check-the-box
tasks and activities to satisfy reporting requirements that continue
to pile up year after year, not in service to achieving an outcome.
And, finally, fraud prevention requires technology and tools. And
many agencies do not prioritize the funding to acquire the tools.
During and since the pandemic, we have seen a dramatic uptick
in the number of fraud actors targeting government programs and
the sophistication of their methods. Fraud of today utilizes artifi-
cial intelligence and stolen identity information. Fraud actors are
smart, savvy, and creative. And in many ways government agencies
are just no match.
The private sector, on the other hand, is using proactive, pre-
dictive automative tools designed to stay ahead of or at least at
pace with the fraud actors. But they have invested in those tools.
Too often, government is simply taking the word of the hidden
entity on the other side of the screen that they are who they say
they are, that they are, in fact, unemployed, disabled, or disadvan-
taged in some way.
Shell companies, agencies posing as recipients, nation-state ac-
tors attacking systems at scale, all are rampant in an environment
that places so little importance on finding and preventing fraud.
This is a whole-of-government challenge, and it is going to require
a whole-of-government response, including investment and better
accountability for outcomes.
A word on investment, because we all know that adding more
money to a problem is often not Congress’ favorite way to solve a
problem. But we do know that the return on investment in fraud
prevention is positive and in many cases many, many times over
the dollars invested.
We need a fundamentally new framework to see meaningful
progress in fighting fraud. The emphasis must be on data, and we
should get rid of the burdensome reporting requirements for the
low-priority programs. We need to take a risk-based approach to
this problem.
We need to hold agency leaders accountable for measurable re-
sults, and that means a real and sustained reduction in their fraud
and improper payments.
There are bright spots. Treasury’s Office of Payment Integrity is
working tirelessly to increase access to data-driven tools and to put
9
more and more data into its Do Not Pay system, and SBA has in-
creased its use of data and proactive tools in service to preventing
fraud prior to awarding a loan.
Hardworking public servants across the government are trying to
meaningfully tackle the problem. But legal barriers, technological
limitations, scarce resources, and lack of senior level buy-in are too
often standing in their way.
I am heartened the Committee is taking this time this morning
to closely examine the problem, and I look forward to robust discus-
sion on the path forward.
Thank you.
Mr. SESSIONS. The gentlewoman yields back her time. Thank you
very much.
I want to thank all three of you, and I think each of you have
provided this panel with the opportunity of Members to delve in.
And I know each of you have much, much more to give us.
I would like to, if I can at this time, yield to the distinguished
gentleman, the Ranking Member, for any opening statement that
gentleman chooses to make.
The gentleman is recognized.
Mr. MFUME. Thank you very much, Mr. Chairman.
I, too, want to again thank the witnesses, all three of them, for
being here with us and make a couple of brief comments before we
go to the question-and-answer portion of this hearing.
I want to thank you, Chairman Sessions, for, again, convening us
on this very important topic.
Since the beginning of the 118th Congress, my colleagues and I,
on the House Oversight Committee, on both sides of the aisle, have
been laser-focused on combatting waste, fraud, and abuse within
our Federal Government. And it is, for the most part, not been a
partisan issue. No matter what side of the aisle you are on, we
should be able to agree, I think, that every single cent of people’s
money that we spend ought to be going to its intended purpose.
From our conversations with the distinguished panelists who
have appeared at several other hearings, as well as the helpful
work of the Government Accountability Office, the Pandemic Ac-
countability Response Committee, and others, we have learned that
the potential extent of improper payments and fraud within our
government is, for lack of a better word, simply astounding.
For example, in April of this year, as was mentioned by Ms.
Brown earlier, the GAO released a report estimating that between
$233 and $521 billion per year worth of fraud occurred in the span
of 2018 to 2022. While the Office of Management and Budget has
taken significant issue with the methodology for obtaining these
figures, there is no doubt that there is a very, very large level of
fraud that has occurred.
On the improper payments front, this past March, the GAO re-
ported a total of $235 billion in improper payments to government
entities in the last fiscal year. That is almost $500 billion, at least
by the numbers that I have, since 2015.
In recognition of what I consider is a shared challenge, Chairman
Sessions and I have been working, roughly, for about a year on a
bipartisan basis to create a congressional scorecard to assess the
progress of key government spending programs and reducing fraud
10
and improper payments. The Federal programs on this scorecard
were selected because they represent those in many instances with
the highest fraud risk per dollar.
The earned income tax credit, which has helped 359,000 people
in the state of Maryland alone to be able to make ends meet last
year, is on that scorecard. The Supplemental Security Income,
which keeps the lights on for more than 35,000 of my eligible con-
stituents alone, is on that scorecard as well.
And so, it is increasingly and crucially important for me, and I
will say for all Members of this Committee, that we assess the de-
gree of fraud and progress in combatting fraud and the improper
payments in these programs because they have been so successful
at keeping our country afloat, particularly during the worst of the
COVID–19 pandemic.
Thanks to the policies passed by a large bipartisan majority dur-
ing the beginning of the pandemic and the American Rescue Plan
passed by congressional Democrats and signed into law by the
Biden-Harris Administration, the United States has had the larg-
est and the strongest economic recovery out of the entire developed
world.
So, many of us believe that Congress should defend those pro-
grams from those that seek to abuse them deliberately over and
over again by strengthening, as we have heard today, the executive
branch’s ability to track the success and ongoing prevention efforts.
And before I conclude, I would also be compelled, Mr. Chairman,
to mention the importance of investing in solutions that we already
know are effective in combatting waste, fraud, and abuse. In the
Council of the Inspector General for Integrity and Efficiency’s 2023
report to the House and to the President, it was found that for
every dollar spent on the Office of Inspectors General, $26 were
saved by the Federal Government. It may sound like a small
amount, but when we talk about billions of dollars, it is significant.
So, I would continue to urge my colleagues to consider the bene-
fits of further investments in the OIGs to achieve greater cost sav-
ings for all of us.
Furthermore, Larry Turner, the Department of Labor Inspector
General, has done an exemplary work in investing—investigating
in potential benefits of data analytics, which we have talked about
often, in preventing fraud, and found that the use of such analytics
could have prevented much of the unemployment insurance fraud
that occurred during the pandemic.
So, I am very interested in learning more about how this Com-
mittee, and indeed the entire Congress, can invest in those kinds
of tools for prevention. Our Subcommittee has tried to be an island
of bipartisan productivity in a storm of what really has been a cha-
otic 118th Congress. So, I am proud of the work we have done and
the strength and the cooperation across party lines to get us to this
point. I look forward to hearing more about this topic today.
Mr. Chairman, I, again, want to thank you, and I would yield
back any time I might have.
Mr. SESSIONS. I thank the distinguished gentleman.
And so that the panel knows, we do approach this with serious
nature and on a bipartisan basis, and that comes down to the lead-
11
ership that Mr. Mfume provides that we work together including
this Committee.
We will now move to Members’ questions. I would give 5 minutes
to the distinguished gentleman from Alabama, Mr. Palmer.
Mr. PALMER. Thank you, Mr. Chairman.
And I appreciate the witnesses being here.
Mr. Horowitz, is there adequate access to data sources for effec-
tive oversight?
Mr. HOROWITZ. No, not currently. There is—there is some access,
but it is clearly insufficient.
Mr. PALMER. Particularly a problem with Social Security and
their Death Master File, isn’t it?
Mr. HOROWITZ. Yes. Look, the most obvious source of informa-
tion, if you want to verify data, is the Social Security Administra-
tion’s Death Master File. Is someone living or dead is a pretty
straightforward question.
Mr. PALMER. How dependent is the Social Security Administra-
tion on state data for ensuring that the Death Master File data is
accurate?
Mr. HOROWITZ. I am sorry. I did not hear you there.
Mr. PALMER. Well, my question is, the Social Security Death
Master File is dependent on data from the states. Is that—how
well is that working?
Mr. HOROWITZ. I actually have not done, myself, a review of how
SSA manages its own Death Master File index. I can certainly get
back to you on that, talk to the SSA OIG. I know they have issued
reports about that and have concerns about the reporting in that
space.
Mr. PALMER. I think the Government Accountability Office, Ms.
Brown, has reported that one of the leading causes of improper
payments is antiquated data systems. And what I am trying to find
out is, how much of a problem in terms of having adequate access
to data sources is related to antiquated data systems?
Ms. BROWN. The two are definitely related.
In the work that we did in 2023 on unemployment insurance, one
of the things we looked at were the states’ data systems. And we
found that many states were using data systems that were estab-
lished in the 1970s and the 1980s, and this was across a number
of their programs.
So, it is no question that antiquated data systems were a factor,
not only in being able to execute the programs, but definitely not
able to help prevent any type of improper payments and fraud be-
cause the systems just could not handle the type of analytics need-
ed.
Mr. PALMER. So that is one——
Mr. BROWN. So, it is an issue.
Mr. PALMER. That is one roadblock, Mr. Horowitz, and you have
run into other roadblocks dealing with Social Security Administra-
tion on this issue. Would you like to elaborate on that?
Mr. HOROWITZ. Yes. One of the challenges we had during our ef-
fort to take applicant information that came to the Small Business
Administration, their Paycheck Protection Program, Economic In-
jury Disaster Loan Program, referred to as PPP and EIDL, it took
us I think it was around 8 months to get an agreement in place
12
with the Social Security Administration so that we could verify ap-
plicant information. It should not take so long. It is then, I know,
for both us and Treasury Do Not Pay, costly to get that verification
information from Social Security Administration.
So, there are several things that need to get fixed. They should
be able to have that data accessed by programs so they can verify
applicant information and not pay substantial sums to get that
verification.
Mr. PALMER. Is that a standard practice, though? I mean, should
one Federal agency be charging another agency, particularly an
oversight agency, for data?
Ms. BROWN. So, this is no question it was an issue. So, Treasury
getting access to the Death Master File took legislative action, and
their current access is temporary. And one of the things that we
would like to see is for that access to be made permanent, and we
would like to see the democratization of data.
Mr. PALMER. Does that require legislation, Ms. Brown?
Ms. BROWN. I think it would. Definitely in the case of the Death
Master File, it would require legislation for Treasury’s access to the
Death Master File to be made permanent.
Mr. PALMER. What other statutory changes would be rec-
ommended?
And that is a question for Ms. Miller. I do not want to leave you
out.
Ms. MILLER. Yes. Treasury has a strong need to get access to not
only the death files, the full death file permanently, but also the
national new hire data base, another data base that GAO took al-
most 10 years to get access to. They also would like to have more
authority to be able to have some exemptions from the Computer
Matching Act, which is another big barrier for agencies using data.
So, Treasury’s Do Not Pay Initiative has expanded significantly
in the last year through the Office of Payment Integrity, and they
are really looking to improve their access to data which they can
then make available to all of the Federal Government in a central-
ized fashion. But it does take legislation to give them those au-
thorities and to give them further access to those datasets.
Mr. PALMER. There is also another issue that I think has—needs
to be addressed, and that is, at the state level during the pandemic
on the unemployment, the state unemployment agencies, in my
opinion, under pressure from the Federal Government to get money
out in some cases, but they were very lackadaisical in verifying eli-
gibility. They were making—they were sending unemployment
checks to people who applied through foreign IP addresses.
I tried to address this. I tried to get the last big relief bill amend-
ed to prohibit foreign IP addresses, to make some other—put some
other safeguards in. Could not get that in.
But I do think the states have some responsibility here, some
culpability here. And because when they approved payments of un-
employment, sending out unemployment checks, that carried with
it the Federal Government’s check as well, that $300.
Ms. BROWN. Absolutely. And I would add that any program that
is a Federal-state partnership, the states have a role in getting the
Federal dollars out, requires a strong partnership between the Fed-
13
eral Government and the states, but the states then become critical
partners in getting it out.
Totally agree, unemployment insurance was an example. Med-
icaid is another example, TANF. There are a number of programs
that are administered at the state level. And the states have to
have really strong and robust IT systems, and they also need to
have strong data analytic capabilities.
Mr. PALMER. Well, Mr. Chairman, I have been working on this
issue almost from the time I came into Congress. I was able to get
it into the budget as an action item for reducing improper pay-
ments.
And when you think about the fact that improper payments, just
the improper payment side of things, about $250 billion a year,
with us operating a deficit, every dollar of that is a borrowed dol-
lar. We are paying interest on money improperly expended. And I
think we have got to take this much more seriously than we have
to do something about this.
With that, I thank you for your generosity in time. And I yield
back.
Mr. SESSIONS. The gentleman yields back his time.
The distinguished gentleman, Mr. Mfume, is recognized.
Mr. MFUME. Thank you, Mr. Chairman.
I want to recognize and yield at this time to the distinguished
Chair of the full Committee, former Chair, Mr. Raskin of Mary-
land.
Mr. RASKIN. Thank you to the Ranking Member for your courtesy
here.
Ms. Miller, I want to start with you. Is the problem of fraud and
improper payments one that affects America uniquely or is this a
struggle that takes place in governments around the world? I want
to know. I mean, is it because of something in our culture or econ-
omy or is this a global problem?
Ms. MILLER. It is a global problem. When I was at the PRAC,
I was a member of the International Fraud Forum that brings to-
gether international organizations to look at this issue. And I am
also a member of the U.K. Public Sector Fraud Authority’s Advi-
sory Panel. So, I have spent time talking with other countries, in-
cluding the U.K. and Australia, about their issues with fraud.
We did have a much more significant problem here in the United
States than they did in the U.K. I mean, obviously our budget is
larger. But we also had—we had fewer safeguards in place during
the pandemic, and so we did lose a whole lot more money to fraud
during the pandemic than most other nations.
Mr. RASKIN. Some of the fraud is transnational in character,
right?
Ms. MILLER. Yes. Some of it is transnational in character, and,
you know, those numbers are sort of unknown. Mr. Horowitz may
be able to speak more to this, but the Secret Service has indicated
that they believe about half of the pandemic unemployment assist-
ance fraud went to transnational nation-state actors. That data is
very difficult to get. A lot of identity theft-based fraud you never
get back, you never find it.
Mr. RASKIN. Uh-huh.
14
Ms. MILLER. And so, you really have to—you know, it is very dif-
ficult to know exactly what was lost. But we do know that there
were adversarial nation-state actors that were very, very active
during the pandemic, and they continue to be active today.
Mr. RASKIN. Mr. Horowitz, you want us to establish a central
data analytic center. How would that remove barriers to accessing
the data across the full reach of the Federal Government?
Mr. HOROWITZ. Very important question, Congressman.
One of the things that you have given us in the IG Empower-
ment Act was an exemption from the Computer Matching Act that
Ms. Miller mentioned. You also in the IG Act gave us the power
to access all data from the agencies.
So, what we are able to do—and this is the challenge for Treas-
ury—is go to the agencies. We have a group of IGs that can go to
agencies, get the data. We are centralized. Again, in the CARES
Act, I worked with your staffs, Republican staffs, to give us the
ability to get that data. So, we are centralized already with that
data. And we are able to proactively look at it for various fraud
risk indicators, and there are many, including, by the way, as you
just mentioned, foreign IP addresses. Applicants——
Mr. RASKIN. That would be something of a tip-off, no?
Mr. HOROWITZ. That would be a tip-off.
Mr. RASKIN. Yes.
Mr. HOROWITZ. Now, to be fair——
Mr. RASKIN. Yes.
Mr. HOROWITZ [continuing]. Right, the pandemic froze everybody.
So, there were people overseas at the start of the pandemic who
could not get back. But it is a pretty good reason to put somebody
in secondary inspection, right, because that is what we talk about
here, by the way. And that is what the PACE, I think, does.
It is like a magnetometer in the airport. We are not telling peo-
ple you cannot get the money, but there are suspicious indicators
that are causing you to do a secondary inspection.
Mr. RASKIN. But how did you create that data hub so quickly and
so effectively for PRAC?
Mr. HOROWITZ. Well, first of all, Congress in the ARP, in the
American Recovery Plan, gave us $40 million to get that going and
move it forward. And that was because, back in 2015, Congress,
the Administration, let the prior analytics platform expire despite
GAO’s recommendation. So, we needed that $40 million to get it
going, and that was a lifeline.
And it—we also had, I have to add, the strong support of the
leadership of Office of Management and Budget.
Mr. RASKIN. So, Mr. Chairman, I introduced a bill to transition
the essential functions of PRAC, as described by Mr. Horowitz, to
a permanent entity called the Government Spending Oversight
Committee.
Mr. Horowitz, if we do not extend or codify the PRAC, what are
we risking in terms of our ability to uncover and detect fraud and
improper payments?
Mr. HOROWITZ. Well, first of all, right now, as far as I under-
stand it, we are the only analytics platform that can look across
agencies for multiagency fraud schemes which we saw repeatedly
15
during the pandemic. And Treasury Do Not Pay is a passive data
base that is—requires agencies to go to it.
We have the ability to look at this data and go to the agencies
and let them know where the frauds are based on this multiagency
data that we are getting. And a fraudster who knows they can steal
from SBA, we saw, learning they can go and try and steal from the
Labor Department and unemployment insurance.
Mr. RASKIN. Uh-huh.
Mr. HOROWITZ. And they can pretend they are a rural broadband
need in assistance or that they are faking and pretending they are
a veteran and getting other benefits.
And it is important to keep in mind, it is not pandemic only.
Emergency spending for hurricanes, tornadoes, fires going on now,
et cetera, there are 30-plus agencies that manage those—30-plus
entities, subagencies, agencies that manage those programs. The
possibility of multiagency fraud is sitting there in our government
programs because we are siloed.
Mr. RASKIN. Alas, I am out of time.
Mr. Chairman, I just wanted to note that the companion bill to
the one I have introduced in the House has broad bipartisan sup-
port over in the Senate. And I hope that we might be able to get
together to create a similar bipartisan consensus here in the House
on doing this, and I would love to talk to you about that.
And thank you for your indulgence. I yield back.
Mr. SESSIONS. I thank the gentleman for his line of questioning,
and it is good to see the gentleman.
I would now like to go to the distinguished gentleman from Mis-
souri, Mr. Burlison. You are recognized for 5 minutes.
Mr. BURLISON. Thank you, Mr. Chairman.
Ms. Brown, I think it has been said before, we know that in 2023
alone there has been $240—$236 billion that is—of improper pay-
ments. Do we have any idea about what happened during the
COVID era, how much in total? That may be a question for Mr.
Horowitz.
Mr. HOROWITZ. We actually do not have a number for the pan-
demic at this point, although SBA IG and Labor IG alone have rec-
ommended a combined $300 billion-plus in fraud.
We are still—we are still pursuing. We alone are involved in
about 900 cases involving 22,000 subjects. The amount of fraud
was enormous. Could have been prevented, by the way. And that
is what, you know, love to chat further about.
Mr. BURLISON. Yes.
Mr. HOROWITZ. But we are not going to know the final number
for several more years. The hardest part to get our arms around,
as was mentioned before, is the foreign, international wrongdoing,
because it takes so much work to follow money that has left the
country and fraudsters that have left the country.
Mr. BURLISON. So, it was said that we, you know, we need to
pass—there is legislation that would need to be passed in order to
help this.
Ms. Miller, I think you referenced that. What is included in that
legislation that would give the agencies the tools that they need?
Ms. MILLER. Well, there is a lot of different legislative solutions
that probably need to be considered.
16
I mean, certainly, I think codifying the PACE feels like a no-
brainer to me because it is an amazing, centralized tool, as Mr.
Horowitz has been talking about.
Allowing Treasury to have more access to more datasets will help
as well, because as Mr. Horowitz is talking about, the PACE and
the PRAC are in the oversight community and there is an inde-
pendence line between the management side of government and
the oversight side of government. And so, Treasury also needs addi-
tional tools and they need additional authorities and they need ad-
ditional datasets.
It takes up to 2 years to get a new dataset implemented into Do
Not Pay right now. Because of the way it is set up, OMB has to
go through a lengthy process to approve the use of a dataset to be
used in Do Not Pay.
So, some of this stuff is sort of low-hanging fruit, in my opinion.
There is some legislative fixes that could really improve access to
data very quickly for Treasury, as well as codifying the PACE.
And then I think really what needs to happen is we need to start
investing in some return on investment analytics activities as high-
risk programs.
I also, you know, while you are asking, I kind of think we need
to jettison the regime at the moment that just encourages paper
pushing right now. There are many agencies that engage in im-
proper payments reporting for the sake of reporting, and they are
very low-risk programs. CRS has estimated that up to——
Mr. BURLISON. Sorry. Can you break that down for me a little
bit?
Ms. MILLER. Yes.
Mr. BURLISON. So, you are saying the low-risk programs. Give
me an example.
Ms. MILLER. So, you know, the Pension Benefit Guaranty Cor-
poration, maybe that, that would be one of the programs.
So, the congressional Research Service has done studies that
have found that up to 95 percent of all improper payments in the
government are centered on those high-priority programs that are
reporting to paymentaccuracy.gov. It is about 30 programs. It is
about 95 percent.
So, we are talking about risk. You know, Ms. Williams mentioned
the importance of the GAO Fraud Risk Management Framework.
I led the development of that framework 10 years ago.
Risk is important here, and we have to think about this problem
in the context of risk. It does not make sense to be telling an agen-
cy with a budget, you know, that is a couple of million dollars, to
spend a lot of money and time, considering how much improper
payments they have. We ought to be focused on the big programs,
and we ought to be making those programs do data-driven, out-
come-oriented activities. And we ought to be asking them to dem-
onstrate that they are reducing their fraud and improper payment.
Mr. BURLISON. Is it possible that some of the data that they are
needing access to, even a program that is, like, a smaller program
like that, that they could have, I do not know, an interface or some
kind of ability to quickly query these other——
Ms. MILLER. Yes.
Mr. BURLISON [continuing]. Datasets——
17
Ms. MILLER. Yes.
Mr. BURLISON [continuing]. So that they do not——
Ms. MILLER. In an ideal world, we would have a centralized ca-
pability. And, I mean, honestly, the PACE is a great example.
And, again, it in the law enforcement side of government. And
so, a challenge for you guys, but you guys are the ones that can
solve this challenge, is a way to get the management side of gov-
ernment access to some of that data as well, because there are
things like the OIG Empowerment Act that give IGs access to data
that then management side of government does not have.
Mr. BURLISON. And it could be done—we have little time. But it
could be done in such a way where you are not creating more expo-
sure risk, right, because—I mean, just the other day I got an FSA
letter saying that my personal information has been compromised.
But we could do this in a way where there is no additional expo-
sure for the data, right?
Ms. MILLER. Yes. There is a lot of technological advancement in
hashing and being able to mask the identities of the personally
identifiable information. And so, this privacy issue, the tension be-
tween privacy advocates and the use of data for fraud prevention
is a real tension in the policy space.
Mr. Horowitz.
Mr. HOROWITZ. Yes. Can I—it is an excellent question. It is a
very important question and one that we have been very mindful
of and I have been very mindful of.
If I could have a minute to just talk about what we have done
to make sure we are—how this can be done in a safe and secure
way.
Our data analysts took 33 million applications from SBAs, PPP,
and EIDL programs. They identified about 2.7 million of those 33
million using advanced data analytics that we have for potential
anomalies, suspicious numbers potentially. Does not mean they
are. They were potential.
We spent, as I mentioned earlier, about 8 months or so getting
agreement in place with Social Security Administration.
What we did was we took the name, date of birth, and Social Se-
curity number and sent it to SSA, Social Security Administration.
We did not want any of their data for the privacy issues and all.
We sent the applicant information to them and said answer three
questions.
Mr. BURLISON. Yes.
Mr. HOROWITZ. Is it a real number? Yes or no. And if it is a real
number, do those three indicators match your three: name, date of
birth, Social?
And, finally, living or dead?
We got back over 200,000 hits that were—did not answer all
three questions the right way. Of those, 69,000 got $5.4 billion. OK.
It took us—took Social Security Administration less than 2 weeks
to answer the three questions for the 2.7 million numbers.
We can do this. What needs to be done is IGs and their agen-
cies—and this is what has to happen going forward in the preven-
tion space. We can enter into an agreement. And I have talked
about this with GAO and Gene Dodaro, and we are in agreement.
It does not impair our independence.
18
We enter into an agreement with agencies where they can send
us applicant information to run against our data base and use—
I have over a hundred agreements with agencies now where I can
send them data and they can give me verification information, for
example. And we have used those tools to verify.
It does not mean someone is ineligible, but it does mean they
should be essentially pulled out of line at the airport, like happens
if you beep at the magnetometer——
Mr. BURLISON. Right.
Mr. HOROWITZ [continuing]. And undergo secondary questioning.
And it can be done promptly.
It is a false choice if people say, ‘oh, it will take months and
months and months to figure this out.’ The data is sitting there.
We have done the hard work over 4 years to get those agreements
in place. It can be done quickly, and I—and the Committee should
not accept people’s explanations that, oh, it will take too long.
Mr. BURLISON. Well, and the—sorry. If I may, Mr. Chairman, I
would just make a comment.
The problem is that it is causing impact to everyone, right. So,
you have got legitimate claimants who are being delayed. Some-
times they are being accused of committing—being lumped into the
fraudsters. And at the end of the day, we just need to make this
system more efficient.
Mr. HOROWITZ. If I can just say, we had a—we had hearings on
this. We heard from, to your point, Congressman, in the unemploy-
ment space we heard from unemployed—about examples where un-
employed individuals were second. The fraudsters beat them in,
and they did not get their payments initially because a fraudster
beat them to it first. And they had to get help to convince the agen-
cy that they were not the fraudster or an improper payee.
And, of course, the people who need unemployment insurance
probably do not have a lot of money to get the support they need
to do that.
So that is the reality of what is happening.
Mr. BURLISON. Thank you.
Ms. BROWN. Mr. Chairman, can—I want to add one point, be-
cause I think just another illustration.
Similar to the example that Mr. Horowitz shared about sending
the files to the Social Security Administration, GAO took much of
that same information and ran it against the national new hire
data base. And we found millions of questionable loans. And we re-
ferred that information to the SBA IG.
So, it is just another illustration of, if all of the available
datasets are together and they—and an application or a potential
claimant can be run through all of those data bases, then you real-
ly get the best information because you are able to cross-check
across all of them and identify and refine questionable payments
before they are paid out. And it goes back to prevention being key.
Thank you.
Mr. SESSIONS. Thank you very much.
The gentleman yields back his time.
The gentleman, Mr. Mfume, is recognized.
Mr. MFUME. Thank you again, Mr. Chairman. I want to, if I
might, just kind of look through a long, long lens and give my im-
19
pression as to why so many people across our Nation believe that
we simply know what the problem is and that we do not do enough
about it.
And for many years, the Federal Government has been reliant on
a pay-and-chase-and-catch model, where payments are made up
front, and then payment errors are discovered and recovered,
chased down after the fact and some of the money—some of the
money—is recovered.
And while that type of model, I think, can succeed in
recuperating some lost funds, I continue to believe that our biggest
challenge is to prevent the fraud to begin with, to stop it before it
starts.
Now, in 1987, as a Member of this body, with Ronald Reagan as
President and Jim Wright as our Speaker of the house, myself and
many others in that 100th Congress, which was a very partisan
Congress. I mean, there were philosophical differences, but there
was never seemingly a difference on the issue of fraud, because it
affected all of our constituents, it affected all of the government
agencies, and we realized it was throwing money away.
So, during that time, one of the few things that seemed to come
together was a general feeling across the aisle that this was a pri-
ority. So, you, I hope, can imagine how I must feel now 37 years
later, after having spent 10 years here and been away for 23 and
back for 4, and we are still dealing with the same thing.
And so, it is difficult to tell people, with all the suffering and
hurt that needs to be addressed in our society, and the efficiencies
that need to be put in place, it is really difficult to say to the Amer-
ican onlooker, the taxpayer, the citizen, do not worry, we are work-
ing on this, we have got it.
So, I do hope, Mr. Chairman, that we really do have it this time.
We are all kind of seeing this thing play out as if it’s dèjä vu. And
there is so much that can be done if we, as a Congress, do our job.
Now, I think I am speaking to the choir here on this Committee,
but the rest of our colleagues in the House and in the Senate must
know that this, among so many other things, has to be right at the
top of the priority list.
So, I have got a quick question for each of you. All of you have
given great testimony as to what you think should be done. And,
Ms. Miller, I appreciate the fact that you have gone out and tried
to put together an organization outside of Congress to deal with
this.
But if all of you could just give me one thing from your own per-
spective as to what the No. 1 priority of the Congress should be,
I will either come up with three priorities or we will have una-
nimity in some form or another as to how we should go forward.
I am going to start with you, Mr. Horowitz, if you do not mind.
Mr. HOROWITZ. I think the biggest opportunity now since 1987 is
data. And I think agencies, as Ms. Miller indicated, IGs, need to
have data, data access, and data tools to put enough hurdles in
place to prevent fraud and improve program integrity.
Mr. MFUME. Thank you.
Ms. Brown?
Ms. BROWN. Mine is consistent. It is really prevention, which the
data is a key part of the prevention, but we have to make sure that
20
agencies understand that prevention is key. And having upfront
controls is not at odds with their core mission. It is actually inte-
gral to the mission.
And I think that is—if Congress could push on one place, I think
that is critically important, because that will make it a priority for
the agencies.
Mr. MFUME. Thank you.
Ms. Miller?
Ms. MILLER. I just want to absolutely agree with what Mr. Horo-
witz said. I think I would have said that, but since I get to say a
second thing, I also believe we have to do something about the in-
centives that we do not have in place. I mean, why did we lose this
much fraud during the pandemic and there is almost—I mean, we
are just wringing our hands. We are not—nothing has really hap-
pened. Agency leaders have to see this as a priority.
I mean, you made an excellent point. Why, in 30 years, is this
not a priority? You know why it isn’t is because when somebody
does not get a benefit, they call you up and they say, I need to get
my benefit quicker. And, boy, that happens.
Customer experience, user experience, we are investing in that.
And I am not saying that is a problem. We should be doing that.
But nobody is calling up. This is a silent problem. The fraud actors
are quietly over here stealing the money, and no one is calling
their Congressman. And so, the agency leaders are content to look
the other way and say, we do not have a fraud problem here.
And so there has to be something has to change where agency
leaders are held accountable, and they have incentives, whether
those are carrots or sticks or both, so that we are not going to be
sitting here in 37 more years saying, ‘gee, agency leaders just do
not prioritize this problem.’
Mr. MFUME. Thank you very much.
I yield back.
Mr. SESSIONS. The gentleman yields back his time. Now, I will
move to the distinguished gentleman from Louisiana. You are rec-
ognized for 5 minutes, Mr. Higgins.
Mr. HIGGINS. Thank you, Mr. Chairman.
I thank our panelists for being here today to talk about this. It
is a very frustrating conversation you have back home. Most of us
do a lot of town halls. I certainly do. Sometimes my town halls last
3, 3–1/2 hours, 4 hours, and unscripted.
You are talking to American citizens that are struggling, man.
They are having a hard time buying groceries, paying rent. And we
have—allegedly, you know, we have built a beautiful Nation where-
in we the people run things.
And they are not feeling like that. The American people are feel-
ing discarded. They are feeling like their struggles get lip service,
and their financial woes are further injured by big policies out of
the elite rulers of D.C.
I am just telling you this is some of the levels of pain. That if
you are a compassionate American, you are listening very carefully
to the citizens that you have sworn to serve, this is what you are
hearing.
And one of the—one of the common refrains that we listen to
with our constituents and share a concern is the level of fraud and
21
fraudulent payments coming out of the Federal Government, total-
ing billions and billions of dollars, depending upon what study you
look at, what period of time. It is a lot of money.
And, you know, my constituents are looking at the cost of eggs
and bread. They cannot make it. And they see, ‘oh, the IRS sent,
you know, 3,000 refunds to the same address.’
This kind of thing requires accountability, ladies and gentlemen.
And the way Americans like me measure accountability is some-
body in jail in a small cell getting their next meal of bread and
eggs through a small hole in a steel door. That is how we measure
accountability. We have had enough of this theft of our treasure.
So, it is not a comfortable conversation that we are engaged in,
but this may be one of the most uniting topics that I share with
my colleagues across the aisle. We demand an end to this, and we
insist upon accountability.
Mr. Horowitz, if I could, regarding the Pandemic Response Ac-
countability Committee, so you can throw that switch in your bril-
liant mind, and we appreciate you being here today. What, if any-
thing, do our agencies and IGs need to help combat the billions of
dollars of fraudulent and improper payments?
And I will give you a broad question like that for you to share
with America what you feel the problems are and how they can be
addressed. It is a lot of money that we have invested to respond
to the pandemic, and it makes us quite angry when that money is
stolen and then nothing is done about it.
What can we do better?
Mr. HOROWITZ. There are many things to be done. First of all,
I will mention for several IGs, like the Small Business IG, the
Labor Department IG, they are suffering from an inability to pur-
sue all of the fraud and hold people accountable that you men-
tioned, because they have not been funded sufficiently to go after
that fraud.
That is one of the things I know they have been asking for, and
so I will just mention there are some IGs that are having that chal-
lenge.
From a broader standpoint, the key is, as was mentioned, pre-
vention. We need to take commonsense steps to ensure this kind
of activity is prevented up front, because we can put a lot of people
in jail for stealing the money after they have stolen the money, but
that is not what people want first and foremost. They want it
stopped.
Mr. HIGGINS. True.
Mr. HOROWITZ. They do not want the money going out to the
fraudster. What drives them crazy, as you said, is the Social Secu-
rity Administration is sitting on a Death Master File Index to know
someone is living or dead, right?
Pandemic hits. Checks go out from the IRS and the Treasury De-
partment to people who are dead. How does that happen? SBA
sends loan money that is intended for small businesses to people
who are dead. How does that happen, right?
That is what I think, in many respects, drives people even
crazier. It is both the prevention up front that needs to happen
and, as you said, on the back end, we cannot let fraudsters get
22
away with it, because if we let fraudsters get away with it, we have
done a couple of things.
We have trained fraudsters, ‘come back, because you will get
away with it.’ And, you know, as we all grew up being told by our
parents, crime can never pay, right? There has to be a consequence
to it, I think, on both sides.
Mr. HIGGINS. Thank you for your insightful answer.
My time has expired, Mr. Chairman. Thank you for the indul-
gence.
Mr. SESSIONS. The gentleman yields back his time. Thank you
very much.
The gentlewoman, Ms. Norton, is recognized.
Ms. NORTON. Thank you, Mr. Chairman.
When the unemployment rate spiked to nearly 15 percent at the
onset of the pandemic, expansions of Federal programs served as
the bulwark against poverty for millions of American families.
For example, one study found Democrats’ American Rescue Plan
child tax credit expansion helped drive child poverty to an all-time
low of 5.2 percent. Another study concluded that expanded unem-
ployment insurance benefits kept an estimated 5 to 6 million peo-
ple out of poverty in 2020 alone.
I would like to ask unanimous consent to enter into the record
these two studies from the Center for Budget and Policy Priorities
into the hearing record, please.
Mr. SESSIONS. Without objection, it will be entered into the
record.
Ms. NORTON. As we consider reforms to tackle improper pay-
ments, it is imperative that we strengthen Federal programs and
not gut them.
Ms. Brown, in time, in the time that Government Accountability
Office has been studying improper payments in Federal programs,
has it even once recommended program cuts or program elimi-
nation to Congress or Federal agencies?
Ms. BROWN. Those are public policy decisions. So, no, I am not
aware of any recommendations that GAO has made in that regard.
Ms. NORTON. Thank you. Ms. Brown, what are two or three suc-
cessful strategies that agencies have used to fight improper pay-
ments?
Ms. BROWN. So, the agencies that really are most mature on the
scale are agencies that have done a couple of things, and that is
not to say that there are any agencies that are perfect in this
space, but agencies that have designated someone in the agency to
be responsible for managing fraud, for identifying the risk and then
developing a strategy.
I mentioned this in my opening statement, but one of the first
things that has to happen is an agency has to admit that they have
a problem. So, in order to identify those agencies that are not at
high risk of fraud, they have to do an assessment.
And that is what we really push for, for agencies to proactively
do that determination, and not just assume that they are at low
risk of fraud, because we have identified a number of agencies that
have told us they are at low risk of fraud, we do our investigation
and we find fraudulent activity.
23
So, agencies really have to come to terms with their real risk of
fraud, and then put a plan in place to deal with it. You are not
going to deal with the problem if you are fundamentally in denial
about the problem.
So, those are a couple of things that agencies that recognize their
risk and they then start to take efforts to prevent it, because we
cannot stress enough this issue of the change that has to happen
is really a focus on prevention.
Because when you are not identifying improper payments, and
even improper payments or overpayments that are not the fault of
the beneficiary, they create all sorts of havoc on the parts of those
beneficiaries.
So, they—it is not just a way to stop the fraudsters, but it is also
a way to not harm people who are already struggling.
Ms. NORTON. Well, one simple way to fortify programs and re-
duce improper payments is to streamline, clarify, and simplify ap-
plications for Federal programs.
At this Subcommittee’s last hearing on improper payments, we
heard witness testimony from Adrian Haro of The Workers Lab
about the onerous and poorly designed application process for Fed-
eral programs that create needless barriers to receiving vital assist-
ance. Federal application forms, which sometimes are still paper,
can be difficult to read and nearly impossible to get right.
It should not shock us that many applicants make mistakes that
lead to improper payments. According to the Government Account-
ability Office, insufficient information or a lack of documentation
from applicants caused about $20.3 billion, or approximately 8.2
percent of all improper payments in fiscal 2022.
By investing in tools and practices to design simple and acces-
sible applications, the Federal Government can serve those who
Congress intended and reduce improper payments.
Ms. Miller, what technologies or processes should agencies em-
ploy to help them improve their agency processes?
Ms. MILLER. Well, I am really glad you asked that question, Con-
gresswoman, because we have seen some really impressive activi-
ties in different pockets across the agencies.
And one in particular, recently, the IRS took significant impres-
sive preventative action in the Employee Retention Credit program
where they were seeing flags that looked suspicious.
And so, they said, we are going to take a 6-month moratorium,
6 months, not 5 years, 6 months, and we are going to go back and
look at these applications. And they found $65 billion in fraudulent
applications for the Employee Retention Credit that they saved.
They did not make those payments.
And so, we have been talking about, you know, we have a pay-
and-chase problem. We know we have a pay-and-chase problem.
That is a really, really great example of an agency taking proactive
measures and using data, right? And so, they had to identify those
flags using data.
And these are the kinds of things I think we want to see more
of. I think we want to see agencies taking, you know, examples like
that. So, pick a program. Like Social Security Administration, the
President’s budget for 2025 has identified that continuing disability
reviews have a nine-to-one return on investment.
24
So, that is crazy, right? So, you would obviously want to do that,
because you are going to get nine times the money back by invest-
ing in conducting continuing disability reviews. What are some
other examples where we can get an ROI similar, or it does not
even have to be that high, five to one, three to one.
And I think that when agencies—that is why, again, I want to
go back to high risk. Pick the high-risk programs. Pick specific
pieces of the high-risk programs, and then implement data-enabled
tools, and then measure your outcomes.
This is what we really need to do. We need to start showing
those. We need to start advertising them. We need to start high-
lighting and showing agencies. And incentives can be, ‘hey, IRS,
great job, you know, we want to see other agencies do similar
things to that.’
So, it has to be data-driven. I think it can be use-case and pilot
and proof of concept-driven. And I think we are going to see the
power of being able to use data if we invest in—and these are
small investments—in some of these kinds of activities.
Mr. SESSIONS. The gentlewoman yields back her time. Thank you
very much.
The distinguished gentleman from South Carolina is recognized.
Mr. TIMMONS. Thank you, Mr. Chairman.
During the pandemic, there were countless cases of fraud and
abuse, with GAO estimating over half a trillion taxpayer dollars
lost. Countless bills have been filed, letters have been sent, and
congressional committees have had many hearings to dissect what
went wrong during COVID.
We must ensure that this mismanagement of funds never hap-
pens again. And the work we have done points to many ways we
can actively improve our improper payment and fraud protection
programs. We must fill the gaps in these systems while providing
transparency to the American people to prove we can be good stew-
ards of their tax dollars.
Focusing on fraud prevention, the 2015 GAO Fraud Risk Frame-
work is a good place to start.
Ms. Brown, 9 years since the framework was developed, could
you give an update as to how much of it has been implemented
across the 15 executive agencies? Further, could you speak to the
relationship between GAO and individual agencies in implementing
this framework across the board?
Ms. BROWN. So, GAO has done dozens of individual reviews of
agencies’ implementation of the framework, and we have seen some
mixed results. We continue to beat the drum on this.
I think we have positive relationships with OMB, for example.
And we make ourselves available to agencies proactively if they
want to work through how to go about implementing the frame-
work, if they have questions.
One of the things that we did a couple of years ago, we provided
a framework to help agencies address improper payments in emer-
gency programs that really built on the 2015 framework.
Mr. TIMMONS. Would you be able to give each agency a grade, C,
D, F, A? I mean, if we asked you in writing, could you do that?
Ms. BROWN. On their implementation of the fraud framework?
Mr. TIMMONS. Correct.
25
Ms. BROWN. It would be difficult, because there is not a lot of in-
formation provided. The Payment Integrity Information Act re-
pealed some of the reporting requirements that existed before that
required agencies to provide information on that.
Mr. TIMMONS. I am going to followup with additional questions.
Ms. BROWN. So, we could, yes.
Mr. TIMMONS. Thank you.
I would argue the largest blind spot in our effort to combat fraud
during the Paycheck Protection Program, I mean, it was just exten-
sive, and I think it could have been fairly easy to address some of
the concerns.
Mr. Horowitz, what additional identity verification tools could we
have put in the statute to limit the amount of fraud?
Mr. HOROWITZ. I think, Congressman, you are exactly right. The
Paycheck Protection Program, PPP, and the
Economic Injury Disaster Loan program, EIDL, both adminis-
tered by SBA, their goal at the outset was to get the money out.
And they lowered the guardrails. Congress did not put any
guardrails in, arguably encouraged them to get the money out,
based on the language in the law. And so, they sent it out based
solely on self-certification. I say who I represent I am, I am truly
that person.
And what we have learned is, not surprisingly, lots of people
were fraudsters who were willing to fill out that form, swear to the
truth of it, and take the money and run.
Mr. TIMMONS. Would it have been difficult to use Treasury’s cer-
tifications to achieve the same objective? If you cannot pay your
taxes, sorry. I mean, if you have the ability to pay your taxes, you
have the ability to get relief?
Mr. HOROWITZ. So that is exactly right. So, even what was avail-
able back in 2020, which was the Treasury’s Do Not Pay System,
which is a list, essentially, of bad actors, as you indicated, known
bad actors, that was sitting there. SBA did not check that in 2020.
They sent the money out instead.
57,000 applicants got $3.6 billion who were already on that Do
Not Pay list. So—and that, by the way, the Payment Integrity In-
formation Act, it is part of that that they should be checking Do
Not Pay. But they could have done more with the data analytics,
right? Again, we have identified individuals who were deceased got
paid while that Death Master File Index is sitting at the Social Se-
curity Administration.
Mr. TIMMONS. Hindsight is 20/20, but we need to learn from this.
Ms. BROWN. Could I jump in for 1 second on that on the issue
of SBA? So, early in the pandemic, GAO pointed out some of those
steps, preventative steps they could take. And when SBA imple-
mented our recommendation, it resulted in over $4 billion pre-
vented in potentially fraudulent payments.
And then for the Restaurant Revitalization Fund, we also rec-
ommended that if they do any—the same thing with that program,
that they take some additional actions. And when they did, that
prevented $6 billion of fraudulent funds going out the door. So, it
definitely pays off.
Mr. TIMMONS. I yield the remainder of my time to my friend from
Alabama, Congressman Palmer.
26
Mr. PALMER. I thank the gentleman.
Mr. Horowitz, you said Social Security charged PRAC for
verification data. Can you provide an itemized list to the Com-
mittee on how much the Social Security Administration charged
PRAC? Just to verify Social Security numbers and other data, that
was all you were asking, wasn’t it?
Mr. HOROWITZ. That is right. I can check that. I do not remember
off the top of my head what the number was, but what I do recall
from it was when my—when we first got this agreement in place,
when we went there with the 2.7 million numbers, they came back
with some—with a number that I thought was not reasonable.
I told our folks to go back and ask them for an itemized list of
why they were charging that much. And the price started dropping.
So, it was subject to negotiation.
Mr. PALMER. It would be good for the Committee to get that list.
And would you recommend that we consider legislation to require
the Social Security Administration to verify the data?
Mr. HOROWITZ. Absolutely.
Mr. PALMER. And you would be willing to help with that?
Mr. HOROWITZ. Absolutely, be happy to work with you.
Mr. PALMER. I thank the gentleman.
I yield back.
Mr. HOROWITZ. And can I just add one thing in terms of where
we are going? We have put out a couple of Blueprint Reports of les-
sons learned, and we are continuing to do that over the next 6
months, because we want to put in one place all of the issues that
GAO has identified.
I should add the SBA IG also issued reports that were finally im-
plemented that saved taxpayers billions of dollars as well. The
same with the Labor IG. And we have collated those, brought them
together in one document. We have put out two chapters so far,
and we have got three more to go.
Mr. PALMER. Well, you know I am a nerd, so send them to my
office. Thanks.
Mr. HOROWITZ. Absolutely.
Mr. SESSIONS. The gentleman yields back his time. Thank you
very much.
The gentleman, Mr. Connolly, is recognized.
Mr. CONNOLLY. Thank you, Mr. Chairman.
And let me just say, I think this is one of the best panels we
have ever had on this subject. I have been going to hearings and
getting excited about improper payments for 16 years. Your prede-
cessor, Todd Platts, chaired the first hearing I went to. And like
Ms. Miller, I bemoan the fact that we do not seem to have made
much progress.
Let me just start by saying, to me, if you are going to have data
sharing and data analytics that help us flag and ultimately prevent
fraud, you need an IT platform that works. And a lot of this can
be sourced back to the fact that we have underinvested in IT in
Federal agencies, let alone state agencies, which I will get to, Ms.
Brown, for a long time.
You know, IRS is a great example, where we kind of starve the
beast of modernized IT upgrades, and then we are surprised when
27
systems fail, when fraud occurs, when even nonfraud improper pay-
ments occur, because we do not—the information is not correct.
I want to give you a chance, Mr. Horowitz, just to comment on
that aspect of this problem, the failure or the lagged nature of our
staying up with IT modernization in the Federal Government,
Mr. HOROWITZ. It is absolutely a problem, as you outlined. I will
go back to 12 years ago when I became IG. One of the things we
were going to look at and undertake in one of our early data ana-
lytics efforts was disability fraud, where Justice Department em-
ployees——
Mr. CONNOLLY. I think you and I met on it.
Mr. HOROWITZ. We did. And doing both, getting money from
Labor, through Labor Department, disability, as well as still col-
lecting a paycheck from somebody else.
One of the problems was the Justice Department’s IT systems
could not read all of the data that Labor had, and so they could
not do the match. Ours—we had to cleanse the data, build the sys-
tem. We do it, as you know from our time together working on
these issues, pretty effectively and efficiently, but we had to do it
because the IT systems were not interoperable with each other.
Mr. CONNOLLY. Right. Even within agencies, we had——
Mr. HOROWITZ. Correct.
Mr. CONNOLLY [continuing]. Competing H.R. systems could not
talk to each other. Unbelievable.
Ms. Brown, you and Mr. Palmer, my friend from Alabama, were
talking about unemployment. And during the pandemic, you know,
we changed the rules. We streamlined and made simpler eligibility.
We pumped up payments. We extended the eligibility time period.
But the problem with all of that is so we set the rules at this
level and we pumped the money, but it is managed by 50 different
IT systems, 50 different states, and we do not control any of that.
Knowing that, at the time—and we were worried about the emer-
gency, so not everything was going to go perfect. But did we invest
any money in helping the states upgrade their unemployment IT
system so that we could try to minimize fraud and try to make
sure the system was efficient and payments got to people who real-
ly needed it in the midst of the worst pandemic in 100 years?
Ms. BROWN. So——
Mr. CONNOLLY. No, no, my question is real simple. Did we pro-
vide money? Did we make investments to give states resources to
upgrade their IT systems to manage unemployment?
Ms. BROWN. Not enough.
Mr. CONNOLLY. Not enough?
Ms. BROWN. No.
Mr. CONNOLLY. OK. I just say to my friend from Alabama, I
mean, I did not mean to cut you off, but I am trying to make a
point here, that when we have sort of third-party execution—so we
are not running the unemployment program, they are.
Ms. BROWN. Yes.
Mr. CONNOLLY. What can go wrong with 50 different systems?
And some did well and some did not. And the whole point was, get
it out now. People are in urgent situations. We do not want them
evicted. We do not want them hungry. We want to keep them to-
gether. And we could not meet that goal.
28
By the way, the same with Small Business. But we could not
meet that goal, because we got some old clunky, underinvested un-
employment IT platforms in the 50 states. And, you know, I—cer-
tainly in my own home state of Virginia, I know people were not
getting their unemployment benefits, which was supposed to be
flowing in April and May 2021, they were not getting it until Octo-
ber-November. And sometimes we had to go through a rigamarole
of trying to make sure they were eligible.
Ms. Miller, good to see you again. You appeared before my prede-
cessor’s subcommittee I chaired. By the way, this is a good example
of why IT and government ops need to be married.
But you had a phrase earlier today that fraud is a four-letter
word even though it is, of course, five, but for government, we will
let it go, a four-letter word in a lot of agencies. And I want to ex-
plore that a little bit, and the others could jump in. This will be
my last question.
But one of the things that struck me about improper payments,
not only fraud prevention, the biggest challenge, but even just try-
ing to get it right so that we are not duplicating payments or what-
ever.
There is no incentive system in the Federal Government to really
make this your cause in life. You are going to get, you know, a
Nobel Peace Prize if you prevent hunger and made sure—you
know, make sure famine is turned around. If you are at CMS or
HHS, you are going to get some big award if you can say, I ex-
panded healthcare coverage by 10 million people.
No one is going to give you an award, in theory, for you to say,
I prevented $10 billion in fraud. Something did not happen; I am
going to get an award. I mean, I liken it to local government. You
know, no one is going to give you, if you are on the Board of Super-
visors, you know, an award for upgrading the sewer system to pre-
vent blowout of—you know.
Ms. MILLER. Right.
Mr. CONNOLLY. Even though it is a pretty critical function. So,
how do we turn that around? How do we—and I know, Ms. Brown,
you kind of alluded to this as well. How do we turn that around,
so we create real incentives both for the agency itself and for indi-
viduals within the agency to make this a priority?
Ms. MILLER. Well, so, I think we have to get creative. We cannot
fire people in the government, right? So, we are not going to say,
‘oh, agency leader X, you lost half a trillion dollars of fraud so you
lost your job,’ right? And we cannot cut their budgets, because most
of the budget is going to benefit the people that they are trying to
serve.
So, cutting the budget does not—it impacts the actual—the vic-
tims themselves, right? And so, we have to be creative in this prob-
lem. This is not—we cannot be analogous to the private sector.
I think there is a couple things. One, when I was at GAO, and
we would talk to agencies about approving, let us say, applications,
the performance metrics were all how quickly do we approve an ap-
plication.
Mr. CONNOLLY. Yes.
Ms. MILLER. So, if I see that this application has some flag on
it, well, my incentive, my performance measure is about, ‘well, did
29
you get your 15 done today?’ It is going to take me another hour
to go run down this flag, so I am just going to let that go, right?
So, part of it is incentivizing performance metrics around pro-
gram integrity and around fraud prevention at every level, includ-
ing leadership. There needs to be the scorecard idea that has been
floated around here for senior leadership. The organization that I
just co-founded, the Program Integrity Alliance, we are creating a
fraud benchmarking scorecard.
And, I mean, you know, Partnership for Public Service has this,
you know, best places to work in the Federal Government. Agencies
are super proud to be on the top of that list. They put their—GAO
puts its—it is right in the front, right? GAO is—we are the best
place to work in the Federal Government for mid-size government
agencies.
So, it is a Hall of Fame/Hall of Shame kind of idea. I have been
advocating for a long time that agencies who are continuing to see
significant losses in fraud, waste, abuse, and improper payments
ought to be put on some sort of Hall of Shame list. They ought to
be having regular hearings. It could be quarterly.
If we look to the private sector, things like banks who are—un-
dergo monitorships when they have a big fraud event. Like Wells
Fargo has a big fraud event, they have to do—they are undergoing
this big monitorship for the next year. Everybody is like—they
have got, you know, an army of auditors in there making sure that
they are not going to—it is not going to happen again.
I mean, I think it would have to increase the budget of Ms.
Brown and Mr. Horowitz, but you could create similar monitorship
kind of for those really egregious agencies and say, we are just
going to be all over you, like white on rice, until you fix this prob-
lem.
So, I think incentivizing leadership performance metrics and
coming up with some sort of creative shaming and, you know—and
advertising and, you know, awarding and rewarding those agencies
that are doing it good. But we are definitely going to have to be
creative in this problem.
Mr. CONNOLLY. Mr. Chairman, thank you. And thanks so much
for holding this hearing. I really want to commend you and Mr.
Mfume. I think this is one of the most substantive hearings we
have had on this subject in the 16 years I have been here. Thank
you.
Mr. SESSIONS. Mr. Connolly, thank you very much.
I think that the expression of support that you have given here,
if we listen to these witnesses, as you and I, Mr. Mfume, and oth-
ers have done, we really glean together enough information to
know that there is a desire on their side to do something to fix this.
And in discussions that I had with them yesterday, each and
every one of them, we found common ground to things that they
asked me for. And I think it is important that we follow this up.
Mr. Mfume and I do very well with each other, as you and I do,
Gerry, of following up on those tasks that I believe they have pre-
sented to us, also, to be responsible about that. And I will look for-
ward to working on that, as I know Mr. Mfume would with you
also. Thank you very much.
30
I now will yield myself my 5 minutes and would defer that to the
gentleman, if he would choose, from Alabama. Are you still seeking
additional time?
Mr. PALMER. No.
Mr. SESSIONS. The gentleman is not seeking additional time.
Thank you very much. I will give that to myself then.
Each of you have been here and spoken, I think, very clearly
about the things which are in the best interests, which are ideas
that are very available to us.
Does this mean that we need to gather together and re-meet with
you as a group, perhaps, Mr. Connolly, Mr. Perry, Mr. Frost, Mr.
Mfume, myself, and come up with a real plan?
Because it seems like, to me, there is a desire if you gained our
agreement, if we were able to put things in legislation, if we were
able to listen to Mr. Horowitz about the things which he talked to
me about, about extending his not only legislative mandate that he
has, but the tool kits that are available within that. Is this the
kind of thing that we really should be following up on?
Ms. Brown, what would you expect us to do following this hear-
ing?
Ms. BROWN. Absolutely. And the GAO is—stands ready to work
together. I think this is a problem that is solvable, but it is going
to take all of us to work together to solve it.
In my statement, I lay out a number of legislative proposals that
we would like to see addressed. In terms of the issue that Con-
gressman Timmons asked about rating, we think we could get
there with a rating, but there needs to be some additional informa-
tion. There are a number of other legislative proposals. We have
talked about making permanent Treasury’s access to the Death
Master File.
There are a number of other steps that we think could take in
terms of improving the accuracy of data that is available on USA
Spending, for example. That is the place that we send Americans
to go when they are interested in getting information about Federal
spending. And the data are not reliable. And we want to make sure
that OMB and Treasury understand that they have a responsibility
to make sure that that information is accurate.
I think all of this goes to helping restore the public trust in gov-
ernment. And, you know, I understand the frustration of taxpayers
across America when it comes to making sure that the government
is being responsible stewards of their hard-earned tax dollars.
So, it is important we are ready to work with all of you to come
up with a path forward on this, and I think we can do it. And we
have talked about the things that need to be put in place to really
address the issue of prevention, data analytics.
To Representative Connolly’s point about IT investments, that is
a huge issue. It is something that is easy to ignore when things are
going OK. And I think that is a lot of what we saw with unemploy-
ment insurance. You know, unemployment was fairly low. There
were agencies that had really low rates of unemployed people seek-
ing unemployment payments. So, there was not necessarily an in-
vestment. But then trying to push out trillions of dollars through
systems that were 40 or 50 years old, no one should have been sur-
prised at the outcome of those efforts.
31
Labor has tried. They have provided about $780 million to states
to modernize their IT systems, but we have to make sure that
those efforts are fully executed on. So, we are ready to work with
you.
Mr. SESSIONS. Thank you. Ms. Miller, there is—I am going to let
you add, but I also want to say, and how do we go about engaging
states, please?
Ms. MILLER. Yes. So, I really think—I do not want to over-
simplify some of the really significant policy tensions that exist
here. So, when we talk about data, there are an awful lot of people,
American citizens, people in academia, people in the private sector,
who are really concerned about government’s use of data to prevent
fraud. And so, there is this sort of privacy protection arm, let us
say, and then there is the—sort of the fraud prevention arm.
And I have been advocating for a long time. One of the reasons
that I started the Program Integrity Alliance is because what I see
missing is getting people in a room. And that is why I really love
the idea that you have come up with, Congressman, because get-
ting those people in the room, we have got to find the common
ground.
I think we can all agree that American people’s personally identi-
fiable information should not just be available for—you know, for
use no matter what, in any circumstance, right? But I think we
also know that the fraud actors have our data, all of our data.
Every single one of us, they have all of our data and they are using
it right now.
And so, it is really important, I think, to start to get the privacy
advocate arm that exists in academia and in some pockets of policy
and politics onto the same page with the fraud prevention arm and
find where there is the common ground.
I think these conversations that need to happen, because these
problems are not easy. They are going to require compromise. They
are going to require people saying, ‘OK, we do need more access to
data on citizens. How can we do it in a safe way?’ How do we make
sure IT systems are modernized that we can trust when we are
sharing that data, and how can we create a legislative framework
that enables the sharing of that information and makes American
citizens feel safe about how their data is being used.
That is one example where I think a lot of this information or
this common ground connection and getting to someplace where we
are all walking in the same sort of—in the—you know, we all sort
of agree this is a problem. We do not all agree on how to solve it.
And some of these legislative proposals that have been talked
about are sort of—they are the easy ones. Those are the easy ones.
Get access to the full death file. That should not be hard. You
know, codify the PACE, that should not be hard.
These other things, these are going to be harder, and they are
going to require conversations, they are going to require com-
promise.
Mr. SESSIONS. I think you are right. And I think also, of course,
it is so broad. When we were talking yesterday perhaps with all
three of you, there was a conversation about SBA, where there are
large numbers.
32
Mr. Horowitz may have given us the number again today about
how stunning that amount of money is, but I just cannot imagine
you would not expect that they would come in and take out a loan
and you would gain all the information. You could certainly look
at it instead of trying to get it out the door. It would be trying to
do the right thing.
I think that what we need to recognize is that if we will work
together, we cannot just plug a lot of these holes. We can come up
with an understanding about your responsibility, the agreement
that we have about what the American people would have to do to
get a loan, to share information. But the government has an in-
credible amount of information.
My last point here, because I am over my time, is in conversation
with you yesterday, someone brought up about all the calls that we
personally received during these COVID periods about, ‘hey, all you
have to do is come to us.’ They were some third party. Come to us
and we will go get that money for you. Come to us and we will get
this student loan, or we will get this whatever it might be.
And I think, Ms. Miller, what you just said is the bad actors
have data also. They know the right answers to the questions.
They know who might be doing these things. And yet they were in
the—had positioned themselves in the marketplace as an inter-
mediate to the agency on behalf of people. I think that is a very
interesting concept that we need to delve into and understand also.
I will now go to the gentlewoman, Ms. Lee, for her time. I yield
back my time.
Ms. LEE. Thank you, Mr. Chair.
My colleagues have touched on this throughout our hearing
today, but to get to the heart of what we are talking about, im-
proper payments simply means that the government did not or can-
not tell whether its payments to the right person—got payments to
the right person or in the right amount.
Ms. Williams Brown, overpayments, where the government sent
more money to someone than they were supposed to receive, are
considered improper payments. Is that correct?
Ms. BROWN. Correct.
Ms. LEE. About what percent of errors in payments were over-
payments?
Ms. BROWN. Ninety percent.
Ms. LEE. Goodness. It was more than I thought. Overpayments
are not necessarily fraudulent. It could be that someone is not even
aware they received an improper overpayment, right?
Ms. BROWN. Yes.
Ms. LEE. Thank you. So, the Social Security and Disability Insur-
ance programs have a history of these types of overpayments, ones
where the recipient is not even aware they were overpaid.
Ms. Miller, if the Social Security Administration somehow over-
pays a person’s Social Security benefits, the Social Security Admin-
istration is required to take that money back.
What are some of the ways an agency like SSA might try to get
that money back?
Ms. BROWN. So, they have a number of possibilities. In some
cases, the person can repay the amount in full. There may be pay-
ments made over time. So, there are a range of actions that an
33
agency like SSA could take to try to recoup it. They—some agencies
associate it with refunds, Federal refunds. In some cases, waivers
are a possibility. So, there are a range of potential actions.
Ms. LEE. So, as you said, we have seen in some cases SSA would
dock a Social Security recipient’s monthly benefits entirely, though,
forcing some seniors and those with disabilities to lose their homes
or go without food. So, the government makes a mistake and the
person on Social Security benefits, who is likely unaware of the
overpayment, pays the price, literally.
Fortunately, as a small fix by this Administration, recipients of
these overpayments now have nearly double the time to repay the
government than they had previously, but more time can still be
a problem. So, recouping overpayments has real kitchen table, as
we call them, implications for seniors and people with disabilities,
who rely on Social Security benefits and live on tight budgets.
Any change in the amount can mean less food or a missed mort-
gage payment or foregoing medications. These heartbreaking sce-
narios could be prevented if the government leveraged technologies
to more effectively track program payments from the outset.
Mr. Horowitz, the PRAC has made great strides in advancing
how the government uses data to prevent improper payments in
pandemic spending.
What have been some of your greatest successes?
Mr. HOROWITZ. So, Congresswoman, I think you are absolutely
right. You know, one of the things that what we have been able to
do with the analytics efforts is—well, first of all, support tracking
down the fraudsters, because, as said earlier, these are people who
stole money from the public, who harmed intended recipients.
So, that I think has been very important. But I think another
thing that we have done that has really changed the way we do
oversight is we have worked closely with our state and local over-
sight partners, with state auditors, county auditors, county offi-
cials, with GAO, which we had a close relationship with before this.
But working with state and locals, we got word to them early on
about fraud alerts that we were seeing, so they could do, as you
said, stop things early, prevent it early, and thereby ensure money
was going to go to the beneficiaries, the unemployed, the small
businesses, not the fraudsters.
Ms. LEE. Certainly. Mr. Horowitz, a lot of that success also has
been through leveraging cyber talent, data analytics to improve
these processes, correct?
Mr. HOROWITZ. Correct.
Ms. LEE. Would codifying the analytic capacity at the PRAC help
combat improper payments or—excuse me, and overpayments?
Mr. HOROWITZ. Absolutely, they would. It is such an important
and potential prevention tool that we just should not lose.
Ms. LEE. Thank you. So, improper payments, they just do not
exist in the government contracting world. It affects real people
who rely on these benefits to live. No one should worry about af-
fording their prescription drugs or putting food on the table be-
cause the government is clawing back on overpayments that they
did not even realize they received.
I am hopeful that this upcoming scorecard will incentivize agen-
cies to use technologies that prevent these improper payments. Of
34
course, our constituents deserve nothing less. And also, it is some-
thing that is anxiety-inducing and truly, you know, punishing folks
who have done no wrong, but still, we have to make sure that we
are correcting these.
Mr. HOROWITZ. And you are exactly right, Congresswoman. Can
I add to that?
Ms. LEE. Please.
Mr. HOROWITZ. As I mentioned earlier, you know, there are peo-
ple who were the intended beneficiaries who fraudsters beat to the
unemployment line, and they had to prove they were the real per-
son. And for someone who does not have the money and who needs
the unemployment, very hard for them to find someone to help
them get through the agency bureaucracy at that point, right?
In addition, I bet you all of your constituents were the victims
of an identity theft and a fraud that occurred. They were not bene-
ficiaries. They were simply people whose identities were stolen who
learned after the fact when they got a 1099 from the IRS or a no-
tice from their local government, that somehow they got benefits
that they never got. And those are victims here, also, I am sure in
every district in the country.
Ms. LEE. Yes. Thank you so much for that. I thank you all for
your time. And thank you to our Chair and Ranking Member for
this important hearing.
I yield back.
Mr. SESSIONS. The gentlewoman yields back her time.
The gentlewoman, Ms. Crockett, is recognized.
Ms. CROCKETT. You can tell I was a little surprised.
First of all, thank you so much, Mr. Chair, for recognizing me,
and thank you so much for pulling together this hearing.
I want to go over a few things. Some of the things were actually
just brought up by my colleague. I was surprised to hear that 90
percent was the percentage of overpayments, which leaves 10 per-
cent, if I am good at my math, potentially that would be the realm
for fraud.
Go ahead.
Ms. BROWN. I would just say that improper payments includes
underpayments. So, the 10 percent could also include underpay-
ments.
Ms. CROCKETT. Oh. But—OK. Oh, got what you are saying. So,
we are saying that there is potentially—OK.
So, my question is this: If we had to tie down—and if you do not
know the answer, that is fine, because literally I am just going
here because I just was surprised by the number.
If I had to tie down how much money we are losing specifically
as it relates to fraud, do we have a number for that?
Ms. BROWN. So, we did an estimate of losses related to fraud,
based on 2018 to 2022 data.
Ms. CROCKETT. OK.
Ms. BROWN. And we estimate that the range is between $233
and $521 billion dollars annually.
Ms. CROCKETT. OK. And my next question is—because I do not
have this information. So, if you do not, that is OK as well. As it
relates to recommendations around technology, there have been a
lot of conversations around basically upgrading, doing something
35
different, basically moving us forward instead of kind of sticking to
the old way.
Do we have estimates or proposals or requests that have been
made by any agency as it relates to what it would cost us to go
ahead and put in the technology that would be most helpful?
Ms. BROWN. I am not aware of an estimate.
Mr. HOROWITZ. I am not aware of an estimate. And I think one
of the challenges, Congresswoman, is what you and others have
talked about here, which is, agencies are not incentivized nec-
essarily to come forward with that number and to focus on fixing
this problem, which is why I think this hearing has been so valu-
able.
Ms. CROCKETT. OK. Well, I am going to say this right now. I am
charging all of you all to go and get me some numbers, because at
the end of the day the American people are relying upon us, espe-
cially those of us that sit on Oversight, to actually be watchdogs
over their tax dollars.
And so, I really hate to leave a situation where we have had lots
of good, feel-good conversations and we have no solutions. And so,
most technology costs money. For instance, we have had Oversight
hearings as it relates to issues with the Department of Defense,
who cannot pass their audits, and at least we are getting estimates
on what the cost would be.
I at least would like to say that we have had that information
before us, because none of us—and I am maybe being presump-
tuous—sitting up here have the expertise to know what it is that
you need to make sure that these agencies are going to be able to
better do their jobs.
And the reason that I ask for the numbers is because I could
guess—this is just a guesstimate—that whatever the technology
costs, it is less than $233 to $521 billion dollars a year. That is just
my guess, but I could be wrong. And I am here to provide some
sort of solutions.
In addition to that, you know, I appreciate this hearing because,
No. 1, we are acknowledging that there is a problem. That is a
good start for us, specifically here in Congress, to agree on that.
But one of the issues that I have is kind of this blind eye that
we sometimes turn, because as we are in election season. And there
is definitely a candidate that said that he is just going to get rid
of fraud in his first 6 months. You know, I do not know what kind
of wizardry he has going on to be able to snap his fingers and get
rid of anything in 6 months, but I would like real solutions, be-
cause the talking is not getting us anywhere.
It is my understanding that if we go back a few years, back to
2013, I believe the number was, the number as it relates to this
particular conversation was down at $35 billion? Yes, back in 2003,
the number was $35 billion. And now we are truly just going
through the roof.
And again, as we are hearing the conversations around how the
American people are struggling, we need to do something better
about the moneys that we are getting in so that we can then move
on to help people that need help, such as those that are relying on
SNAP benefits and things like that.
36
So, I appreciate any assistance that you all can provide. And
maybe the next proposed budgets, you all can put in something for
technology upgrades to help and assist all agencies that need the
help and assistance to make sure that we can start to rein this in.
Thank you so much, and I yield.
Mr. SESSIONS. The gentlewoman yields back her time.
The gentlewoman, Ms. Tlaib.
Ms. TLAIB. Thank you, Mr. Chair. I really appreciate both you
and Ranking Member Mfume for working on this.
I know we always talk about money, but I want to talk about the
human impact. It is devastating when they—when our residents
get that letter. And, honestly, when they get those checks, they do
really have no idea, but they are like, ‘OK, I got a check from the
Federal Government.’
They have no idea to say, pause and let us figure this out, be-
cause what happens, not in a month, not in a few months, some-
times over 6, 8 months later, and they get charged—Mr. Chair,
Ranking Member, they get charged interest and back fees.
And this reminded me of when I served in the state house, the
Michigan Unemployment Agency at that time, they had put in a
computer system. We have a lot of auto workers in Michigan. And
so, in July, they would take—I think it was around the summer-
time—they would take a couple weeks off for what they call turn-
over.
You know, they would do some maintenance on some of the auto
companies in assembly lines. And so, folks would apply. And, of
course, just like every year, they would get their 2-week unemploy-
ment check. Years pass by, or so forth, and all of a sudden, they
get this automated letter saying, you committed fraud. We had peo-
ple lose their homes, like homes, over just not being able to pay
their taxes and a number of other things.
The question I have—and, you know, Ms. Williams Brown, you
can help me. We cannot determine whether a payment went to the
right person in the right amount. We call it improper payment, cor-
rect? That is what we call it, improper payment.
Ms. BROWN. Correct.
Ms. TLAIB. So, are most improper payments financial fraud or
are there other causes at play? And you guys talked a little bit
about it, but I read that 91 percent of improper payments are at-
tributed to an agency’s failure.
And we are seeing this now, right now, where I have folks that
were getting unemployment during the pandemic, and they contin-
ued getting payments, even though they had—you know, did the
proper paperwork saying—you know, did not send in their paper-
work, they were getting automated payments.
And now they are getting back and they are saying, you com-
mitted fraud, even though they could prove like, ‘hey, I did not fill
out the paperwork, I did not do anything.’ But it takes a long time,
because they have to go through the process of showing that they
are innocent.
Can you talk a little bit about that, Ms. Brown? Because it is
devastating when they do get those letters.
Ms. BROWN. So, we have done work.
37
I will take an example from the Social Security Administration
space and their disability program. They have a program called
Ticket to Work that encourages people with disabilities to work.
We found that it also creates a disincentive, because if you breach
the threshold for the program, you then risk having your disability
either reduced or cut. And there are a number of issues in terms
of timing of reporting that can result in an improper payment or
the beneficiary actually provides all of their paperwork in time but
Social Security Administration does not process that paperwork in
time to adjust——
Ms. TLAIB. Yes.
Ms. BROWN [continuing]. A payment.
Ms. TLAIB. I have actually heard about this.
Ms. BROWN. Yes.
Ms. TLAIB. Yes.
Ms. BROWN. So, I have a—we testified on this in June. I am
happy to submit that testimony for the record. But it creates—it
creates an issue.
So, it is definitely a challenge. And if you look at some of the root
causes, we really stressed that agencies need to get behind the root
causes of improper payments.
Ms. TLAIB. Yes.
Ms. BROWN. And often if you look at the root causes they provide,
they really are providing reasons. They are providing categories of
improper payments but not the root cause.
So, the Social Security Administration identified, you know, kind
of failure to process the paperwork as one of the causes of improper
payments. But the question then becomes, well, what was the
cause for the slowness in processing the information? And that is
where you start to pull the thread to get behind what the real root
cause of the improper payment is in order to be able to address it.
Ms. TLAIB. One question to the Chair Horowitz. One of the
things I hear—and I do not know if it is you. But during the pan-
demic, what I heard is, you know, even some people were coming
back to work, but it was not full 40 hours. It was not the original.
So, they were trying to at least still be able to make up the dif-
ference between, you know—they went back to work.
And I actually have family—a resident right now that did every-
thing right but said, oh, but my hours were reduced. So, I still
would qualify at least because I am not back at 40 hours.
And there was this whole mix-up. And they were, I guess, given
different kind of information.
But then they said, no, you are committing fraud. You are back
at work.
But I am not back at work at the full 40 hours. I am only back
at 20.
I mean, can you talk about what we can do? Because our families
are stuck in this. It is—you know, there are the scammers, and I
love going after scammers. I cannot stand them. I do not care if
they are billionaires or not, all of them. The ones who scam our
IRS system, all that, I cannot stand it.
But it is our families that just do not know, and they get that
check. And, of course, they are not like, let me go send it back, let
38
me make sure this is right. They cash it. They put it in their bank
account. They go pay their bills.
Mr. HOROWITZ. Right.
Ms. TLAIB. And I do not know how to fix it and how to make sure
that we are not ruining their lives because we cannot get it right
on our end.
Mr. HOROWITZ. Yes. Yes, I agree with you, Congresswoman. And
I think it is something we have talked about here. When that hap-
pens, when the agency makes a mistake and sends the wrong
amount of money out, they hold the person who got the check ac-
countable.
Ms. TLAIB. Yes.
Mr. HOROWITZ. But they do not hold themselves accountable——
Ms. TLAIB. That is right.
Mr. HOROWITZ [continuing]. For it.
And what we have to figure out is a way to have that happen.
I think the scorecard is a very important part of that actually, the
bipartisan scorecard——
Ms. TLAIB. Uh-huh.
Mr. HOROWITZ [continuing]. Because I agree that, you know, the
public should know, you should know, the policymakers should
know which agencies are doing it well and which agencies are fall-
ing down on the job.
And when that happens with agencies, what you are men-
tioning—and Social Security Administration has had this prob-
lem——
Ms. TLAIB. Uh-huh.
Mr. HOROWITZ [continuing]. As talked about, what accountability
measures are there internally——
Ms. TLAIB. I agree, yes.
Mr. HOROWITZ [continuing]. To figure that out?
And, frankly, as we have all talked about today and as we have
discussed in this hearing, there aren’t many. There are not many
agencies that are doing that. There are a few but not many, and
that is what we need to sit and work together on to address.
Ms. TLAIB. I apologize. I went over time. I did not realize that
Mr. Chair. I apologize sincerely.
But we do need to talk about timing. Our residents, after they
made the mistake and they get the letter in a year, that is not fair.
They have already spent the money. They are living check by
check. They do not deserve to be punished.
Thank you so much, Mr. Chair. And I yield.
Ms. BROWN. Could I just add one—one thing about this issue?
One of the things I want to make sure I mention, that agencies do
have some flexibility in terms of waiving nonfraud payments that
have been deemed to be improper because of eligibility concerns.
And two things they can consider is fairness and impact.
So, agencies do have some flexibility to try to parse out someone
who may have innocently received an overpayment and they tried
to do the right thing versus fraudsters.
Mr. SESSIONS. The gentlewoman yields back her time.
The gentleman from Florida is recognized.
Mr. FROST. Thank you, Mr. Chair. And thank you so much for
calling this hearing.
39
Americans have heard about improper pandemic relief payments
and the bad actors who took advantage. There are also many folks,
to what my colleague, Congresswoman Tlaib, was just talking
about, folks in my own family who are, you know, not fraudsters,
received incorrect overpayments, and were very stressed receiving
those letters, receiving those calls, figuring out what they need to
do next.
These bad actors use the government’s need to act urgently as
an opportunity to claim taxpayer dollars meant for those who need-
ed it the most.
Mr. Horowitz, I want to talk really quick about trends and pat-
terns. Have you—I mean, you have helped identify several individ-
uals who have stolen and misused COVID relief money. Are these
individuals usually pretty sophisticated fraudsters?
Mr. HOROWITZ. We are seeing the range of fraud. It was men-
tioned earlier about the Secret Service. We have worked with them
on international organized crime efforts.
On the other hand, you have people who just do it as an oppor-
tunity, as an opportunity to get money. Some people because they
really thought they needed more money, because they were eco-
nomically disadvantaged—does not excuse the fraud—and other
people who were billionaires or millionaires who decided to buy
luxury yachts, Lamborghinis, we call them—refer to them as
Lamborghini cases sometimes—people stealing the money and buy-
ing expensive cars, yachts, diamonds, et cetera, going on trips.
We have plenty of those cases, sadly, as well.
Mr. FROST. And do you feel like the government was very clear
in what would be a proper use and improper use of all the funds
that people were requesting?
Mr. HOROWITZ. Well, I think one of the challenges with the Small
Business Administration programs was the lack of clarity on expec-
tations. And we have heard in other programs, that we have had
hearings on and discussed with program administrators, the lack
of clarity from the agencies on how to implement new programs,
the lack of guidance, and that they—they struggled with states, lo-
calities, other entities that were getting grants and loans.
That is something that also needs to happen with regularity.
Mr. FROST. Are there patterns in their behaviors, the fraudsters,
that make catching future ones easier to catch?
Mr. HOROWITZ. You know, one of the things I have talked about
is avoiding the perfect being the enemy of the good.
There are plenty of hurdles we can put in place of people who
try to engage in fraud. And what we have seen over and over
again—and I was formerly a prosecutor earlier in my career. If you
put a hurdle or enough hurdles in front of people, you might not
stop the most sophisticated fraudster. You might need even more
stringent efforts and guardrails, but you are likely to stop most
people. Because when they first get the call or are told, you know,
you triggered an alert, we want to talk to you, most people who
know they are fraudsters drop it right there, right. They do not
show up for the interview.
I have, again, compared it at the airport. If you know there is
the magnetometer there, you are probably going to think before you
40
try and walk through with a weapon, right? That does not happen
with great frequency, fortunately.
But if there is no magnetometer there, if it is, like for many of
these programs, just sign a form and say you are telling the truth
and we will give you the money, you get fraudsters lining up.
Ms. MILLER. Could I—could I add something really quickly?
Mr. FROST. Yes, please.
Ms. MILLER. The Comptroller General testified several times dur-
ing the pandemic that, you know, GAO put the GAO fraud frame-
work out almost a decade ago and agencies did not implement the
practices within.
And one example, when you ask about these fraud cases during
the pandemic, there was a case in California where an enterprising
group of fraudsters applied for unemployment insurance on behalf
of every prisoner in the California state penal system, and they got
it.
So it was, you know, hundreds of millions of dollars of obviously
improper stolen unemployment insurance. When the California
State Auditor went back and looked, the state had never conducted
a fraud risk assessment.
Now, if these things are done well, as the GAO fraud framework
clearly lays out, then the state of California would have at some
point in that time prior to the pandemic asked—that would have
been a fraud scheme, somebody posing as a prisoner trying to get
an unemployment benefit.
And then they would say, how would we mitigate that? Well, we
have access to prisoner data. Do we have access to prisoner data?
We do not. So, we see a gap. Now we are going to get access to
prisoner data, and we have now closed that fraud scheme, that
risk.
And that is what is—you know, when Ms. Brown is talking about
the importance of implementing the GAO fraud framework, that is
really a real-world example is, if the state had done that, then they
would have known they needed that access to the data prior to the
pandemic. They would have gotten that data-sharing agreement in
place, and that fraud scheme and that—those hundreds of millions
of dollars would not have been stolen.
Ms. BROWN. And that is also the importance of the states and the
Federal Government working together, because California can then
share its experience with all the other states and all the states can
look for it.
And to his credit, the Department of Labor IG in April put out
a fraud alert about this, and that was one of the situations that
they put states on alert to.
But just to add on to Mr. Horowitz’ point with another example.
The retention tax credit program is an IRS program. And what
they have done is they suspended the program and they put a
pause on all of the folks that had filed claims for this particular
tax credit. And they ran analytics and they identified a number of
them as likely fraud. And then they had a category of, like, a high-
er-risk level that they were uncomfortable with and then a lower
level. And they also offered folks who had filed a claim an oppor-
tunity to withdraw their claim.
41
And a number of people withdrew their claim because it is, like,
if you—you know, IRS has now flagged it. So, if this is problematic,
we are going to give you an opportunity to withdraw your return.
So, I think that is another example of where an agency was
proactive in preventing money from going out the door fraudu-
lently.
Mr. FROST. Well, thank you to the three of you for being here.
I think, you know, something I am really getting out of this is
it is not that—it is that we have—we have a ton of best practices,
right, and use cases that we can use in the future, so that way the
conversation is not around not doing programs that are going to
help the American people, especially in time of need, but making
sure we do it in a better, more efficient way.
Thank you. I yield back.
Mr. SESSIONS. The gentleman yields back his time.
The distinguished gentleman from Arizona is recognized.
Mr. BIGGS. Thank you, Mr. Chairman. Thank you for holding
this hearing today.
And I thank the witnesses for their testimony. I am sorry I have
missed most of it.
GAO has estimated the Federal Government improper payments
totaled $236 billion in Fiscal Year 2023. Since 2003, it is estimated
that the cumulative improper payments total $2.7 trillion.
And while we will never know the exact total of improper pay-
ments made, that in and of itself, that statement in and of itself,
is a sad one to make.
We will not know the total funds lost to fraud during COVID.
GAO estimates that it exceeded half a trillion dollars.
While congressional and agency attention to this longstanding
problem has resulted in increased accountability, improper pay-
ments and outright fraud persists, particularly when policymakers,
including congressional policymakers, prioritize shoveling money
out the door in response to a crisis instead of ensuring those funds
reach their intended recipients.
Ms. Williams Brown, thank you for your testimony and for GAO’s
attention to improper payments. We appreciate that.
In a 2022 review of COVID–19 relief programs entitled, ‘‘Emer-
gency Relief Funds: Significant Improvements Are Needed to En-
sure Transparency and Accountability for COVID–19 and Be-
yond’’—a very pithy title to your report—GAO made a number of
recommendations for Congress to consider in order to reduce fraud
in Federal emergency programs.
I am happy to announce that my office has drafted a bill that is
actually in GAO’s hands now for review to implement some of those
recommendations.
One of those recommendations is that Congress enact a law effec-
tively requiring Federal agencies to adopt model internal control
plans based on OMB guidance which can be used in or adapted to
a future emergency response.
Can you please talk about the need for agencies to adopt emer-
gency internal control plans and what steps those plans should in-
clude?
Ms. BROWN. Absolutely. And thank you so much for your support
on this endeavor.
42
So, what we really want OMB to do in conjunction with the agen-
cies is to really think about how they will handle emergency situa-
tions before they happen. Trying to figure out what those upfront
controls are in the moment, it is not going to happen. The priority
is going to be getting the money out the door. And many of the con-
trols that need to be in place are controls that need to be in place
for existing programs. So, it is not that they necessarily need to do
something special or different, but it is making sure that agencies
are building those controls in upfront, having a plan in place so
they are thinking about it.
So, it is similar to coming up with, you know, a contingency plan.
You think about it ahead of time so when you are faced with the
emergency, you already have the muscle memory to know what you
need to do in place.
And this is—this is what we want OMB to work with the agen-
cies to do because we think that is the best way to really achieve
that goal of preventing those dollars from going out the door, before
they go out the door.
Mr. BIGGS. I appreciate that. Thank you.
The widespread proliferation of sensitive personal identifiable in-
formation due to data breaches, like the recent national public data
breach or the activities of the unregulated data broker industry, is
making it very easy for fraudsters to assume identities and steal
government benefits using date of birth, Social Security number, or
childhood address. Yet many methods of identity verification actu-
ally rely upon the data matching conducted by those same data
brokers.
Some recommendations to Congress mentioned data matching as
a useful tool to prevent improper payments. But as Congress is
working to strike a balance on preventing fraud and protecting con-
sumer privacy, can you speak to the pros and cons of deploying it
as a fraud prevention solution?
Ms. Brown?
Ms. BROWN. Identity verification is critically important. It is a
complicated issue, but it is one that has to happen. I think Mr.
Horowitz may be able to speak to it, but I think identity theft was
a huge issue during the pandemic, as well as synthetic identities.
That is a new, complicating factor that makes it even more com-
plicated to identify the fraud.
So, there was a perfect storm brewing as the pandemic hit and
the fraudsters were really ready to pounce because there was lots
of readily available personally identifiable information available on
the dark web for them to exploit.
Mr. BIGGS. Thank you.
Now, Mr. Horowitz, this next three questions, I am putting them
into one compound question before I run out of time, because he
will let you run on and answer a question but he is not going to
let me run on too long.
So, here is my three questions for you. Last time you were here,
I flagged that early implementation of ID verification technology in
Arizona based on NIST Digital Identity Guidelines is credited with
preventing more than $75 billion in unemployment insurance
fraud. There was 99 percent reduction in fraud in Arizona using
that.
43
What has prevented more states from implementing similar
measures? How can Congress encourage states to consider identity
verification technology and other fraud tools more broadly?
Now while you are thinking about that, I am going to ask the
other question real quick too. We wrote to you on August 22, 2023,
about the IRS whistleblower cases and specifically the scope of
your investigation of their claims of retaliation. Are you—can you
today, before you leave, can you provide us an update about their
cases and maybe tell us a bit about the scope of your inquiry and
when we can expect a resolution?
So, two very different topics, but I—you know, I tried to get those
in before my time was too far expired.
Mr. HOROWITZ. Thank you, Congressman.
On the first issue, I think, you know, as we have talked about
during the hearing, we have—every state has its own workforce
agency. They are at varying levels of sophistication on technology.
Some of them have very old technology. Some of them have newer
technology that makes it, frankly, a lot easier to implement some
of the verification tools that you and I have talked about in the
past.
And so, I think probably first and foremost, that is the overlying
issue, which is I think it is very important for us to get a baseline
understanding of where the states are, not to point fingers and wag
fingers at people, but you cannot know the scope of the problem un-
less you understand what they can and cannot do. And I think that
is very important up front.
Mr. BIGGS. So how do you get that?
Mr. HOROWITZ. Well, I think what Congress needs to do—and we
are happy to come and speak with you about this—is put together
an effort with the Labor Department and the state workforce agen-
cies, which, by the way, we worked with closely on pandemic-re-
lated issues, and understand how we can figure that out and how
we can understand best what they need and also what kind of
identity verification tools will work for them and can work for
them.
We have been seeing this at the Federal level in trying to under-
stand—and we have seen varying programs be out there, including
facial recognition software, others on how to identify individuals.
And there are challenges.
When a pandemic hits, for example, people are not going—could
not walk into the agency, right. They were closed. So, how do you
do that from a distance?
Not everybody has, as we saw, broadband or internet access. And
so, people in rural areas, we saw, were not able to timely apply for
some of these programs and got shut out from some of them be-
cause they did not have access to that kind of software, individuals
who were elderly who did not have internet access or did not know
how to best pursue that.
So, it is a complicated area. But I think the first thing that is
missing is, you and I have talked about, what you mentioned,
which is understanding what the state workforce agencies can and
cannot do in the first instance, because it is widely varying out
there.
44
On the second issue, as we have talked about before on this,
when there is an ongoing criminal case, we put on hold some of our
work. We have met with the whistleblowers in the past. We con-
tinue to have that matter on our list of items, but we follow our
usual course. We hit a pause while a criminal case is going on.
That may be winding down, and that will allow us to consider
where we go from there, so—and I am reminded, OSC has jurisdic-
tion on this, and I know they have a matter, the Office of Special
Counsel, the agency, not the Justice Department Office of Special
Counsel. Now we are talking about a separate agency for the
public’s purpose. I know you know that.
And so, they have the look of the retaliation. What we have is
the management-related issues that I have authority over as the
Justice Department Inspector General.
So, we are trying to keep those lanes, as we always do by the
way, separate.
Mr. BIGGS. So, the DoJ, are you able to pursue and investigate
now the management side which is the DoJ side?
Mr. HOROWITZ. If and when the criminal case gets completely re-
solved, which is—you know, it is not completely resolved yet—we
can then reengage on that. And I am happy to talk with you fur-
ther about that, Congressman.
Mr. BIGGS. Thank you, Mr. Chairman. And thank you for indulg-
ing me. Thank you.
Mr. SESSIONS. The gentleman yields back his time.
I am going to ask one more set of questions that will be perhaps
a bow on top of this package that has been developed today. So,
welcome to the lightning round.
I really want to ask a question. Let us suppose this is 2026 and
you are looking back to 2024. We have been getting numbers about
what previously was 2018 through 2022, somewhere between $233
billion a year and $531 billion. That was looking back.
It is now 2026. How much fraud are we going to subscribe to in
2024?
Mr. Horowitz?
Mr. HOROWITZ. I am not going to predict an exact number be-
cause I will probably get it wrong. But you know what I would love
to see?
Mr. SESSIONS. Well, we will not know yet.
Mr. HOROWITZ. Yes. But what I would love to see is working to-
gether to get the number on a downward trend for 2, 3, 4 years
in a row——
Mr. SESSIONS. OK.
Mr. HOROWITZ [continuing]. Because it is going the wrong direc-
tion.
Mr. SESSIONS. But you did not want to play my game.
Mr. HOROWITZ. Well——
Mr. SESSIONS. My point is——
Mr. HOROWITZ. I would say 10 percent——
Mr. SESSIONS [continuing]. A little bit longer is that we have
talked about the past and we have talked about, hey, we have
caught on, we saw things, we are making changes. We are now ap-
plying the Social Security data. We are now doing those things as
if it was happening this year.
45
Mr. HOROWITZ. Right.
Mr. SESSIONS. So, I am asking, so we will go to Ms. Brown—I
understand you do not have to play my game—and Ms. Miller,
what is going to be our number that we see in 1926 for 1924?
Lightning round. Go.
Ms. BROWN. I also do not have a predictive number, but what I
would like to see——
Mr. SESSIONS. Well——
Ms. BROWN [continuing]. Us do is really——
Mr. SESSIONS. You have got between $233 and $531. So, we kind
of gave you guardrails there, and this is really telling me how
much confidence you have the things that you have been doing pro-
vided some worth.
Thank you. Not everybody has to play my game.
Ms. Miller?
Ms. MILLER. It will be higher, and here is why.
The fraud actors are getting more sophisticated every single day.
We are not. Just patting ourselves on the back that we have finally
got access to a dataset that took a decade to get access to, is not
going to work when we are dealing with really, really sophisticated
actors using artificial intelligence, generative AI, and all kinds of
deepfake technologies. We are losing this game big time. And we
are losing ground every year by a bigger and bigger margin.
So, I do not personally feel great about the things we have done
to date, though we have talked about things that have been done
and definitely we are in a better place than we were in 2020. But
we are nowhere near where we need to be. And in 2026, we are
going to be further behind unless we make some really, really sig-
nificant changes in the way that we are doing things today.
Mr. HOROWITZ. Can I just jump in on that? I agree if nothing is
done—if we come out of the hearing and nothing is done, it will go
up.
Mr. SESSIONS. Well, I——
Mr. HOROWITZ. I think we have——
Mr. SESSIONS. That was not the question.
Mr. HOROWITZ. No, I know, but I think——
Mr. SESSIONS. Well, of course——
Mr. HOROWITZ [continuing]. We come out of here——
Mr. SESSIONS [continuing]. We could say that.
So, if you—I am not putting words in your mouth, but if you
view that Mr. Mfume and I are lackeys and would hold this hear-
ing and not do something, then perhaps that could be a true state-
ment.
Mr. HOROWITZ. No.
Mr. SESSIONS. I was trying to gain a foothold off now that we are
hearing positive things that each of you have presented, how—
what kind of an impact those things had. And the bottom line is
it is a bigger swell of water against us than we are making head-
way, treading water, and making advances. So, it simply proves to
me in that bow that I wanted to put on the top, get ready.
So, Mr. Mfume, would you like to give any closing remarks to our
distinguished panel?
Mr. MFUME. Well, I would, Mr. Chairman.
46
I want to again thank you for this hearing and this really bipar-
tisan effort that you and I have been able to put forth throughout
the 118th Congress.
I only hope that it does more than last. I really hope that many
of the other committees look at this as a starting point. I mean, we
have got a million things that we do not agree on. But on some-
thing like this, where it is a starting point, it is very important.
I want to thank our witnesses again.
Ms. Miller, thank you for being so outraged about what was
going on that you took it upon yourself to form your own organiza-
tion, to find a way to come at this in a very straightforward fash-
ion, as has been the case with the other two. I really appreciate
that that has not been lost on me.
Mr. Horowitz, thank you for the eloquence of the example that
you have provided over the years at the Department of Justice, a
real steady hand as Inspector General, receiving the confidence of
former Presidents Obama, Trump, and Biden. That says a lot in
and of itself. I can tell you that Members of this Committee trust
also in what you have said to us today and in previous times.
And, Ms. Brown, thank you for almost 34 years of exemplary
work at the Government Accounting Office. That says a lot. And
congratulations also on the—I think it is the Roger Jones Award
that you have received for excellence in leadership. I can tell you
the American University does not give that out lightly. So, con-
gratulations belatedly.
Mr. Chairman, you and I are of like minds on this. And because
it is such a priority, I am looking forward to the joint action that
we move ahead with.
People hearing a lot of this for the first time probably are about
as disturbed as we were when we heard it over and over again, this
whole notion of how people just robbed us during the pandemic. We
were in a rush to get it out the door. We as a Congress—I think
that is the blame of all of us—did not do enough to put up guard-
rails.
This notion of self-certification, I do not know where in the hell
that came from. God knows that is the—it is just unbelievable that
any agency would put forward self-certification as a way of getting
government dollars. It is like, here, come take it, we do not want
it. And so, when you see, particularly in SBA, the amount of fraud
that came out of that, it is just—it is unbelievable.
So, we know we have a lack of access to data. We know we have
got inadequate technology. We know all the problems that have
been said and said over again, including my little look down the
telescope at the last 37 years.
We are here, Mr. Chairman, and I think it would be great if we
can now find a way, given all of the suggestions that the witnesses
have given, given all of the testimony that we have taken in pre-
vious hearings from other witnesses, and given what we know real-
ly will get us to where we are going, if you and I can look at con-
structing, along with Members of your side of the aisle and mine,
a sort of omnibus antifraud act that incapsulates all of that, that
runs up, by the way, also, the penalties for those who are caught,
and that gives some sense of assurance that, once and for all, we
47
are going to either do this as a Congress united or we are going
to pass the ball on again.
So, I would absolutely be in favor of something like that. I am
not speaking for you, but I know where your heart is on this and
I know you would also.
I agree first priority right now is to track down and to continue
to track down the fraudsters and to lock them up and put them in
jail for very long periods of time. But at the same time, I do want
to pursue this omnibus antifraud act, for lack of a better term, so
that we can do what we know we have to do and then lay that be-
fore Members of the House and Senate for adoption.
So, I would yield back. And thank you again for the opportunity.
Mr. SESSIONS. I thank the gentleman.
We often, and I think our panel knows this, Members of Con-
gress get challenged back home about a number of things that the
American people see. But one of them is, I sure wish you guys
would work well together.
And I think Mr. Mfume landed on what might be my point now,
and that is, I think that it is possible to find areas of concentration.
And we found it with each of you today, also.
I will accept the challenge that, as we began talking about this
today behind the dais, I will accept the challenge and be prepared
next week with some things in writing——
Mr. MFUME. And me too.
Mr. SESSIONS [continuing]. To gather together. I would like to be
able to deal with all three of you.
I am interested, Ms. Miller, in your feedback, even if you want
to give us your scorecard. I think that would be fair. If we are
going to rate some other people, let them rate us other than just
at the ballot box.
I want to thank each of you.
Ms. Brown, I am going to get something from you that I know
you brought me today.
We will come down, Mr. Mfume and I, and thank each of you.
This now concludes the hearing.
But we need to read the statement about that Members would
have 5 days—5 legislative days within this to submit additional
written questions for our witnesses which will be forwarded to
them.
Not seeing any further business from the Subcommittee, we are
now adjourned.
[Whereupon, at 12:38 p.m., the Subcommittee was adjourned.]
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