Fraud Prevention: Understanding Fraud in Federally Funded Programs Run by the States (April 15, 2026)
Summary
Transcript of the hearing Fraud Prevention: Understanding Fraud in Federally Funded Programs Run by the States, before the Subcommittee on Government Operations of the Committee on Oversight and Government Reform, on April 15, 2026 (Serial No. 119–61). An opening statement is listed for Chairman Pete Sessions. Witnesses were Mr. Seto Bagdoyan of the U.S. Government Accountability Office; Dr. O.J. Oleka, Chief Executive Officer, State Financial Officers Foundation; Ms. Allison Ball, Auditor of Public Accounts, Commonwealth of Kentucky; and minority witness Mr. Robert Westbrooks, a former executive director of the Pandemic Response Accountability Committee. The index lists letters for the record, and the subcommittee adjourned at 11:58 a.m.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Fraud Prevention: Understanding Fraud in Federally Funded Programs Run by the States (April 15, 2026).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-119hhrg63450-fraud-prevention-understanding-fraud-in-federally-fu-81aae6e7d6/
, SHA-256 67d90e9c4d1bfea18b81e72a3b7b7899afdd0afe66e394482fd776ecf5cd2800.Full text
FRAUD PREVENTION:
UNDERSTANDING FRAUD IN FEDERALLY
FUNDED PROGRAMS RUN BY THE STATES
HEARING
BEFORE THE
SUBCOMMITTEE ON GOVERNMENT
OPERATIONS
OF THE
COMMITTEE ON OVERSIGHT AND
GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
APRIL 15, 2026
Serial No. 119–61
Printed for the use of the Committee on Oversight and Government Reform
(
Available on: govinfo.gov, oversight.house.gov or docs.house.gov
U.S. GOVERNMENT PUBLISHING OFFICE
63–450 PDF WASHINGTON : 2026
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JAMES COMER, Kentucky, Chairman
JIM JORDAN, Ohio ROBERT GARCIA, California, 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 RAJA KRISHNAMOORTHI, Illinois
GARY PALMER, Alabama RO KHANNA, California
CLAY HIGGINS, Louisiana KWEISI MFUME, Maryland
PETE SESSIONS, Texas SHONTEL BROWN, Ohio
ANDY BIGGS, Arizona MELANIE STANSBURY, New Mexico
NANCY MACE, South Carolina MAXWELL FROST, Florida
PAT FALLON, Texas SUMMER LEE, Pennsylvania
BYRON DONALDS, Florida GREG CASAR, Texas
SCOTT PERRY, Pennsylvania JASMINE CROCKETT, Texas
WILLIAM TIMMONS, South Carolina EMILY RANDALL, Washington
TIM BURCHETT, Tennessee SUHAS SUBRAMANYAM, Virginia
LAUREN BOEBERT, Colorado YASSAMIN ANSARI, Arizona
ANNA PAULINA LUNA, Florida WESLEY BELL, Missouri
NICK LANGWORTHY, New York LATEEFAH SIMON, California
ERIC BURLISON, Missouri DAVE MIN, California
ELIJAH CRANE, Arizona AYANNA PRESSLEY, Massachusetts
BRIAN JACK, Georgia RASHIDA TLAIB, Michigan
JOHN MCGUIRE, Virginia
BRANDON GILL, Texas
RICHARD MCCORMICK, Georgia
MARK MARIN, Staff Director
JAMES RUST, Deputy Staff Director
RYAN GIACHETTI, Chief Counsel
JENNIFER KAMARA, Director of Strategic Initiatives
MARY WOODARD, Senior Counsel
EMILY ALLEN, Professional Staff Member
BILL WOMACK, Senior Advisor
MALLORY COGAR, Director of Operations and Chief Clerk
CONTACT NUMBER: 202–225–5074
ROBERT EDMONSON, Minority Staff Director
CONTACT NUMBER: 202–225–5051
SUBCOMMITTEE ON GOVERNMENT OPERATIONS
PETE SESSIONS, Texas, Chairman
VIRGINIA FOXX, North Carolina KWEISI MFUME, Maryland, Ranking Member
GARY PALMER, Alabama ELEANOR HOLMES NORTON, District of
TIM BURCHETT, Tennessee Columbia
BRIAN JACK, Georgia MAXWELL FROST, Florida
BRANDON GILL, Texas EMILY RANDALL, Washington
(II)
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Pete Sessions, U.S. Representative, Chairman ............................................ 1
WITNESSES
Mr. Seto Bagdoyan, Director, Forensic Audits and Investigative Service, U.S.
Government Accountability Office
Oral Statement ........................................................................................................ 4
Dr. O.J. Oleka, Chief Executive Officer, State Financial Officers Foundation
Oral Statement ........................................................................................................ 6
Ms. Allison Ball, Auditor of Public Accounts, Commonwealth of Kentucky
Oral Statement ........................................................................................................ 7
Mr. Robert Westbrooks (Minority Witness), Former Executive Director, Pan-
demic Response Accountability Committee
Oral Statement ........................................................................................................ 9
Written opening statements and bios are available on the U.S. House of
Representatives Document Repository at: docs.house.gov.
INDEX OF DOCUMENTS
* Letter, from Dr. Stack to Auditor Ball re Medicaid Concurrent Enroll-
ment; submitted by Rep. Mfume.
* Letter for the Record, from AV SFR; submitted by Rep. Sessions.
* Letter for the Record, from Program Integrity Alliance; submitted by
Rep. Sessions.
* Letter to Cheryl Mason of CIGIE; submitted by Rep. Walkinshaw.
The documents listed above are available at: docs.house.gov.
ADDITIONAL DOCUMENTS
* Questions for the Record: Mr. Seto Bagdoyan; submitted by Rep. Ses-
sions.
* Questions for the Record: Mr. Robert Westbrooks; submitted by Rep.
Mfume.
These documents were submitted after the hearing, and may be available
upon request.
(III)
FRAUD PREVENTION:
UNDERSTANDING FRAUD IN FEDERALLY
FUNDED PROGRAMS RUN BY THE STATES
WEDNESDAY, APRIL 15, 2026
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
SUBCOMMITTEE ON GOVERNMENT OPERATIONS
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:06 a.m., Room
2154, Rayburn House Office Building, Hon. Pete Sessions, [Chair-
man of the Subcommittee] presiding.
Present: Representatives Sessions, Comer, Foxx, Burchett, Nor-
ton, Frost, and Randall.
Also present: Representative Walkinshaw.
Mr. SESSIONS. The Subcommittee on Government Operations will
come to order.
And I would like to welcome everyone. This is a room that we
have been without for about a year, and so this is the first Sub-
committee or Committee meeting that we have held. And I would
like to say, Mr. Chairman, great job.
Chairman COMER. On time, on budget. Not really, but pretty
close. Thank you, Mr. Chairman.
Mr. SESSIONS. Well, I think that this is a beautiful room, has al-
ways served as an opportunity for the American people to be a part
of it, and they will now see that we have new and improved things
on this side, TVs, ability to see things, and I am very happy.
So, without objection, as the Chair, I may declare recess at any
time. And I recognize myself for the purpose of making an opening
statement.
OPENING STATEMENT OF CHAIRMAN PETE SESSIONS
REPRESENTATIVE FROM TEXAS
Good morning, and welcome back to the freshly refurbished main
Committee hearing room for the Government Reform and Over-
sight Committee [sic]. For the past three years, Ranking Member
Mfume and I have worked together to understand and to piece to-
gether the basic elements of fraud in Federal programs. We work
together. We see the problem together, but his insight and my in-
sight leads us to where we have to understand by associating our-
selves with government agencies and outside people of what they
see the fraud problem is.
(1)
2
So, how does it happen? How can we fix it? How do we look
ahead about what may be next? How do we get the experts and
people who are in Federal Government and state government and
outside to know that we will not allow this to continue? We are
here to do something about it.
So, I am pleased to announce that this work provides the founda-
tion for the Fraud Prevention and Accountability Act, which I will
be introducing today. We think it is a piece of legislation that ad-
dresses leading-edge ideas to have the Federal Government more
accountable. For too long, too little emphasis has been placed on
preventing fraud. This legislation changes the paradigm from pay-
and-chase to prevention by ensuring Treasury financial service can
stop fraudulent payments from ever going out in the first place.
This is more than an idea. It is a concept that had to be worked
on by the Federal agencies who would be involved, and they have
provided their input. Just as important, if not more so, it ensures
the money intended for those who need it now stand a better
chance to get it.
My bill also creates the Inspector General for fraud, account-
ability, and recovery piece, which, in essence, creates a permanent
home for the anti-fraud, analytic, and investigative capacities de-
veloped by the Pandemic Response Accountability Committee,
known as PRAC, that was established at the end of COVID. I am
hopeful that the provisions of this bill will mark an important step
in showing fraud is not just a cost of doing business and something
we are going to live with. We need to be able to take the ideas and
issues that we have learned much from and put it into a piece of
legislation whereby our partners, including the Federal Govern-
ment and state governments, know that we are serious.
Regardless, our work is far from over, and we will hear that
today. Today, we will focus on fraud that occurs in Federal assist-
ance programs that are administered by states such as Medicaid,
SNAP, and unemployment insurance.
I want to make one thing perfectly clear, and that is that while
we are fresh off the heels of a full Committee investigation in the
hearings into fraud, this is not about one state. This is not about
Minnesota. It is not about any one particular area. It is about
where the Federal Government has programs that work with the
states, making sure we see the alignment of who is responsible for
what, who does the follow-up, and who is accountable for—if the
word whistleblower is correct—to at least make sure that we are
all aware where we have a problem.
So, we know that we have problems, however, not just Min-
nesota. There is also Mississippi in which the state auditor, Shad
White, identified waste and fraud in Temporary Assistance for
Needy Families (TANF). TANF is a necessary program and one
that must be available to those who need it, but the integrity of
that program is at risk.
So, while I am hoping to clearly identify today our prime factors
about why this happens, it is also who is responsible for pin-
pointing these. At what point do we follow up, and who is actually
responsible for working to fix the things that we have seen? Is
there enough evidence in it for states to aggressively prevent
fraud? Do states feel like they can get back to the Federal Govern-
3
ment? Is the Federal Government listening, or does the Federal
Government turn a blind eye?
We are going to vet these ideas, and today, we have an oppor-
tunity to have people who bring real-life examples and ideas, in-
cluding, you will hear today, about one state where the auditor has
done over 400 audits in a year. That means that you have got your
hands on to programs and the incentives that are associated with
those to create good behavior.
What changes are necessary in transparency in communities is
very important to us. So, we are going to hear from a controller
today who sees the effectiveness of the program but also the things
we need to do. Today’s witnesses will help us understand the root
causes of state-level fraud and lay the groundwork for additional
action to ensure that taxpayer dollars are appropriately used.
So, today, we will move directly to the opportunity for Members
of Congress who are finding themselves today stretched as they
have their duties done, but I am going to waive on several Mem-
bers who have asked on a bipartisan basis to be here today, with-
out objection, Representative Boebert, Lauren Boebert of Colorado,
and Representative Walkinshaw of Virginia, who finds himself here
on a regular basis. I think he likes this Committee, would be the
assumption that I would make. So, welcome on the Committee for
the purpose of questioning the witnesses at today’s hearing, with-
out objection.
So, I am pleased to welcome our witnesses for today’s hearing.
We spent a good bit of time yesterday in my office listening to you,
understanding that the things which you need to bring to us need
to be stated.
Mr. Chairman, you understand that I do not have a quick gavel.
I want our witnesses to make their points, to feel like that they can
engage this Committee. This Committee is on a bipartisan basis,
very, very close to an association with each other where we believe
each other asks good questions. We believe each other are after the
same answers. We believe each other has a goal in mind, and that
is something that Mr. Mfume and I have worked at for a number
of years. So, each of our witnesses today that I am getting ready
to introduce should feel like that they are in not just friendly terri-
tory but they are in territory where we are asking them to make
sure that their words are clearly understood.
So, I would first welcome Mr. Seto Bagdoyan, who is Director for
Audit Services in the U.S. Government Accountability Office, Fo-
rensic Audits and Investigation Services at GAO. He leads audits
of major Federal programs focusing on a range of programs and the
integrity of those programs and risk management, including fraud.
We are delighted he is with us.
We then welcome Dr. O.J. Oleka, who is the Chief Executive Of-
ficer of the State Financial Officers Foundation, a national organi-
zation dedicated to advancing fiscal responsibility for public policy,
protecting taxpayer dollars, and promoting economic freedom. Doc-
tor, welcome.
We also welcome Allison Ball. She is the elected Auditor of Pub-
lic Accounts for the Commonwealth of Kentucky. In this role, she
leads an independent office charged with auditing the accounts and
4
financial transaction of all spending agencies of Kentucky and pro-
tecting taxpayer dollars from waste, fraud, and abuse.
And we add Mr. Robert Westbrooks, who is currently an inde-
pendent consultant. Until 2022, he served as Director of the Pan-
demic Response Accountability Committee. He previously served as
Inspector General at the Pension Benefit Guarantee Corporation
and the U.S. Small Business Administration. Welcome, Mr.
Westbrooks. We are delighted that you are with us today. So,
thank you to each of you for joining us.
I would now ask that each of you would rise for the administra-
tion of the oath to our witnesses, raising your right hand. Pursuant
to Committee Rule 9(g), the witnesses will raise their right hand
and answer the following.
Do you solemnly swear or affirm that the testimony that you are
about to give is the truth, the whole truth, and nothing but the
truth, so help you God?
Mr. BAGDOYAN. Yes.
Dr. OLEKA. Yes.
Ms. BALL. Yes.
Mr. WESTBROOKS. Yes.
Mr. SESSIONS. Let the record reflect that each of the witnesses—
you may be seated—each of the witnesses answered in the affirma-
tive.
And we welcome each of you. We are remembering that this Sub-
committee does mean it when we say all of the truth to where you
should not be bound by anything of a time constraint. We want you
to make your points made. So, we appreciate you being here today.
Let me remind the witnesses that while we have read your writ-
ten testimony, feel free to go well beyond that because I think that
as we get your oral statements on the record, you will recognize
that we are here to listen and learn from you.
So, please remember that we have got a system here that goes
green light, yellow light, red light. As you get to the red light, as
you are able to effectively move your comments, I understand that.
So, I would now recognize Mr. Bagdoyan for his opening state-
ment. The gentleman is recognized.
STATEMENT OF SETO BAGDOYAN
DIRECTOR, FORENSIC AUDITS AND INVESTIGATIVE SERVICE
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. BAGDOYAN. Thank you. Chairman Comer, Chairman Ses-
sions, distinguished Members of the Subcommittee, I am pleased to
discuss today at a high level the fraud risk landscape facing state-
administered, federally funded assistance programs. This landscape
has changed significantly and is evolving rapidly and not in a good
way in the long aftermath of the COVID pandemic. Massive spend-
ing during that period exposed significant weaknesses, which per-
sist today in Federal and state capacity to preemptively identify
and manage fraud risks in multiple joint programs.
Illustrating this, GAO estimated a while ago that up to $135 bil-
lion in pandemic-era unemployment insurance benefits, or 15 per-
cent of the total spending, was lost due to fraud resulting from poor
controls. Most of these losses were never recovered.
5
Spending on Federal assistance programs administered by states
exceeds about $1 trillion annually, rendering them inherently at
risk of fraud. In this regard, two such programs, unemployment in-
surance and Medicaid, are on GAO’s high-risk list for significant
program integrity weaknesses. Other programs such as SNAP and
TANF face substantial fraud risks and have experienced actual
fraud.
What underscores the present state of the fraud risk landscape
is a fundamental failure by Federal and state agencies to acknowl-
edge that they exist, are significant, and require decisive response.
This mentality must change, and quickly, to mitigate both the
present and future risk landscapes.
As symptoms of the failure to acknowledge their existence, prin-
cipal factors contributing to fraud risks at the Federal and state
levels include absence of leadership priority to drive effective re-
sponses; weak fraud risk management capacity such as superficial
risk assessments and counter-fraud strategies; inadequate prevent-
ative front and backend controls, especially regarding verifying
identity, determining eligibility, calculating benefit amounts and
tracking their duration; averting duplicate benefits across multiple
jurisdictions; and recovering financial losses. As I mentioned, pan-
demic losses were recouped only at a cents-on-the-dollar rate.
Then, there is fund-and-forget postures regarding Federal over-
sight of state activities, as well as restrictive program design. It is
very important to make note of precluding stringent controls or al-
lowing loose rules that exacerbate risk, including the signal bane
of auditors—unquestioned program applicant self-attestation and
certification.
In a landscape that offers numerous opportunities for exploiting
risks, fraudsters are innovative and fast moving, taking full advan-
tage of technology, including artificial intelligence to pursue their
schemes. However, due to the aforementioned lack of acknowledge-
ment, Federal and state agencies are not keeping up with cas-
cading risk effects.
I will close by stressing that the current fraud risk landscape fac-
ing state-administered Federal programs involving potentially sig-
nificant financial losses is of great concern. Of equal concern is the
absence of decisive, comprehensive Federal and state responses.
This must be rectified, beginning with an acknowledgement that
this is a significant problem. Sustained congressional oversight and
comprehensive action, such as that contemplated by the Oversight
Committee, are essential to eliciting an effective response.
Mr. Chairman, this concludes my remarks. I look forward to the
Subcommittee’s questions. Thank you.
Mr. SESSIONS. Sorry, we are getting used to this. They think I
ought to be able to speak into a microphone.
Thank you very much. We have much to speak about. Your pres-
entation opened up a lot of issues. Dr. Oleka, you are now recog-
nized.
6
STATEMENT OF O.J. OLEKA
CHIEF EXECUTIVE OFFICER
STATE FINANCIAL OFFICERS FOUNDATION
Dr. OLEKA. Thank you, Mr. Chairman. Chairman Comer, Chair-
man Sessions, and distinguished Members of the Subcommittee,
thank you for the opportunity to testify today. My name is Dr. O.J.
Oleka, and I serve as the Chief Executive Officer of the State Fi-
nancial Officers Foundation. SFOF is a nonpartisan national net-
work of 41 statewide elected financial officers across 28 states who
collectively oversee roughly $1.5 trillion in public assets. We equip
these officers to promote fiscally responsible policy and protect tax-
payer dollars.
I am also the son of Nigerian immigrants who came to this coun-
try with nothing. Through hard work, faith, and the opportunities
that this great country provides, my parents lived the American
dream. That dream is why I have dedicated my career to public
service in ensuring that government works for the people who pay
for it and that American generosity is not taken advantage of by
fraudsters, foreign or domestic.
In our inaugural oversight report released on February 27 of this
year, we showed how state financial officers are already saving tax-
payers billions of dollars by stopping waste, fraud, and abuse. Ex-
amples include Florida CFO Blaise Ingoglia, who identified $1.86
billion in excessive local government spending; North Carolina
auditor Dave Boliek, who exposed over $1.4 billion in lapsed sala-
ries across 46 state agencies; and Kentucky auditor Allison Ball,
who you will hear from next, who uncovered more than $836 mil-
lion in wasted Medicaid payments; and Utah auditor Tina Cannon,
who uncovered nearly half a billion dollars in inappropriate hos-
pital payments.
These are not isolated successes. State treasurers play a critical
role in stopping waste, fraud, and abuse before it occurs. State
auditors complement this work by exposing waste, fraud, and
abuse after the fact. Together, these elected officials serve as the
frontline guardians of public funds.
Fraud and waste in Federal and state benefit programs are not
abstract problems. They drive up costs for American families. New
polling shows that 87 percent of voters express concern about fraud
or misuse of taxpayer dollars, and 83 percent say fraud contributes
to higher taxes and rising costs for families. Every dollar lost to
fraud is a dollar that could have gone to education or to infrastruc-
ture or tax relief. Defrauding the American taxpayer has become
a multi-billion-dollar industry. It is a feature in our system, not a
bug.
Thankfully, President Trump’s task force to eliminate fraud, led
by Vice President Vance, is fully committed to ending the fraud in-
dustrial complex and restoring public trust back in the government
benefits system. SFOF and our 41 state financial officers are fully
committed to supporting Vice President Vance and the Administra-
tion’s initiative to root out fraud. SFOF stands ready to serve as
a resource.
I would like to offer five specific recommendations that can help
the Vice President, the task force, and Congress be as successful
as possible.
7
Number one, state financial officers routinely identify fraud,
waste, and abuse in federally funded programs administered at the
state level, but there is no formal mechanism to share that infor-
mation with Federal Inspectors General. Amend the Inspector Gen-
eral Act to require every Federal inspector general to establish
standing liaisons with state financial officers, mandatory data-
sharing protocols, and joint task forces.
Number two, Federal benefit programs such as Medicaid, SNAP,
and unemployment insurance still rely heavily on self-attestation,
as was just mentioned, or periodic checks rather than real-time
verification of income, residency, and citizenship status before pay-
ments are issued. Mandate truly real-time nationwide cross-check-
ing of income, residency, and citizenship status before benefits are
issued.
Number three, Federal agencies are still catching most fraud
after payments have been made rather than preventing it in real
time, even though advanced tools already exist. Accelerate adoption
of modern fraud detection technologies across all Federal benefit
programs.
Number four, many Federal benefit programs administered by
states continue to experience high rates of improper payments and
fraud despite existing Federal rules. Under the current system,
states receive full Federal matching funds regardless of how effec-
tively they verify eligibility, detect fraud, or reduce waste. Expand
performance-based funding across Federal benefit programs admin-
istered by states to help resolve that problem.
And number five, taxpayers and elected officials currently lack a
single accessible real-time view of fraud, waste, and improper pay-
ments across Federal programs. Create a single real-time public
dashboard so taxpayers can see exactly where their money is going
and how much is lost to fraud and waste.
And in conclusion, Mr. Chairman, as a policy leader, as the son
of immigrants, and the father of three young children who loves
this country, I believe we have a moral and fiscal duty to protect
American taxpayers and their hard-earned dollars. SFOF stands
ready to support this Committee, this Congress, the President, the
Vice President, and the task force to eliminate fraud and to defend
our Nation’s treasure, defeat corruption, and deliver real results
worthy of the American people’s trust.
Thank you, Mr. Chairman.
Mr. SESSIONS. Dr. Oleka, thank you very much; very, very nice.
We next go to Auditor Ball. Welcome.
STATEMENT OF ALLISON BALL
AUDITOR OF PUBLIC ACCOUNTS
COMMONWEALTH OF KENTUCKY
Ms. BALL. Thank you very much, Chairman Comer, Chairman
Sessions, Democratic and Republican Members of the Sub-
committee. It is an honor to be here today, and I thank you very
much for this invitation.
The topic of waste, fraud, and abuse is not necessarily the most
pleasant one to discuss, but I hope to set a positive and hopeful
tone while speaking about this nonpartisan issue.
8
In just a little over two years since I was elected as State Audi-
tor, my office has uncovered over $1 billion of waste, fraud, and
abuse within Kentucky’s executive branch. Fraud is obviously what
makes the headlines, and I am more than happy to talk about how
we discovered fraud such as a state employee’s embezzlement of
$400,000. But I also want to make sure that we talk about the
more prevalent, and I think monetarily impactful, problem of
waste. This is a problem that my office encounters every day, but
it is one that is easily fixable. And because unfettered waste ulti-
mately creates an environment where fraud can flourish, we must
do all we can to combat both.
In August 2023, my predecessor began a special examination at
the request of the Biden Administration’s Health and Human Serv-
ices (HHS) Office of Inspector General (OIG), in conjunction with
three other states. When I took office, I saw this examination
through both under the Biden Administration and the Trump Ad-
ministration. This exam revealed that Kentucky paid $836 million
to managed care organizations for the same Medicaid beneficiaries
whose coverage was also being paid for by another state.
To be clear, this is definitively waste because one state’s payment
to a Managed Care Organization (MCO) covers all healthcare of all
Medicaid recipients, so when two or more states are paying MCOs
for the same person, only the MCO, not the Medicaid recipient,
benefits.
But that is not all we found. In conducting the last three audits
required by the Single Audit Act, we have revealed a plethora of
problems that show Kentucky is a target-rich environment for
waste, fraud, and abuse in the executive branch. These problems
include dead people remaining on Kentucky Medicaid, multiple
people using the same Social Security number to obtain Medicaid,
ineligible non-citizens receiving Medicaid benefits. An executive
branch data system housing Kentucky’s taxpayers’ personal info
was hacked in five minutes during a security test. And Medicaid-
funded long-term care facilities, like nursing homes, in Kentucky
were not being inspected every 15 months as required by law, and
some had not received an inspection since 2019.
And that is not all. My office of the Ombudsman Unit, which re-
views Kentucky’s processing of SNAP, Medicaid, Medicare, and
TANF benefits, performs a variety of error reviews, one of them
being payment error reviews. In just one year, we have been able
to assist the Commonwealth in dropping its SNAP payment error
rates from 9.1 percent to 3.5 percent.
But there is still more work to be done because Federal rules for
other programs have been more relaxed until the passage of the
One Big Beautiful Bill last year. Kentucky’s executive branch sim-
ply has not paid as much attention to the other programs as it
should. That is why Kentucky has a payment error rate of 47.5 per-
cent for Medicaid long-term care program, 28.5 percent for the
Medicare Savings Program, 9.7 percent for the TANF program, and
5.3 percent of the MAGI Medicaid program. These error rates likely
implicate hundreds of millions of dollars in Federal funding.
I could go on and on about waste, fraud, and abuse my office has
uncovered, but it is more productive to talk about solutions. I rec-
ognize that auditors across the country are structured differently.
9
In Kentucky, I am an independent, statewide elected official that
is constitutionally separate from every other office and branch of
government, beholden to no one but the people of Kentucky. In my
view, it is crucial for every state auditor to bring this mentality of
independence to their jobs.
In doing so, state auditors must go beyond just doing legally
mandated audits. To do this, I have instructed my office to com-
plete a number of what we call special examinations, like what we
did to uncover the $836 million of Medicaid waste. Special exami-
nations are essentially investigations that are not bound by tradi-
tional auditing rules that can be too constraining to root out the
problem of waste in particular. As an example, the traditional au-
diting rule of materiality sometimes allows wasteful expenditures
that do not have a material impact on an entity’s finances to go un-
detected.
So, I have employed a multidisciplinary group of auditors, law-
yers, investigators, and analysts who understand how to tackle
waste, fraud, and abuse from every angle. And those people need
to be well-equipped. That is why my office has an AI task force to
determine how to implement the use of AI in all the aspects of our
work. AI can help us look at whole populations of data versus tra-
ditional sampling methods in auditing and will drastically cut
down the amount of time it takes to audit, allowing us to tackle
more issues than ever before.
Another part of being well-equipped is having the right data ac-
cess. For the Medicaid capitation exam I discussed earlier, HHS
OIG gave us safeguarded special access to a Federal data base,
housing far better information than what states normally have ac-
cess to.
And finally, the unfortunate reality is that some people simply
will not change their ways unless the harm they are causing to
their state is exposed. Congress is well-suited to hold accountable
the nefarious and incompetent state actors who waste taxpayer
money and defraud the American people. And like today, state
auditors’ offices can assist Congress in doing so.
This is a nonpartisan issue. If we take waste, fraud, and abuse
seriously, we can ensure that every family gets needed assistance
without breaking the backs of American taxpayers.
Thank you very much for your time, and I am happy to answer
any questions the Subcommittee has.
Mr. SESSIONS. Auditor Ball, thank you very much.
Mr. Westbrooks, welcome to the Subcommittee today. The gen-
tleman is recognized.
STATEMENT OF ROBERT WESTBROOKS (MINORITY WITNESS)
FORMER EXECUTIVE DIRECTOR
PANDEMIC RESPONSE ACCOUNTABILITY COMMITTEE
Mr. WESTBROOKS. Thank you, Mr. Chairman. Chairman Ses-
sions, Chairman Comer, distinguished Members, thank you for this
opportunity to testify today. My name is Bob Westbrooks. I spent
the last 30 years in public service investigating fraud cases and au-
diting fraud controls. I am a retired Inspector General and a
former Executive Director of the PRAC.
10
I authored the book titled Left Holding the Bag about the pan-
demic fraud aid experience and the gaps in fraud prevention and
detection efforts and how we can be better prepared for the next
emergency crisis.
I would like to highlight a few points from my written testimony.
Is there fraud in federally funded state-run programs? Abso-
lutely. Why? It is because it is where the money is. It is relatively
easy to steal, and fraudsters do not sufficiently fear getting caught
and punished.
The prevalence of fraud and the underlying root cause vary
among programs. Is there too much fraud? Absolutely. But we do
not really know, in my view, the true amount of fraud—a true
amount of lost—the true amount that we have lost to fraud. What-
ever the amount, headlines involving large dollar loss fraud cases
erode public trust and can adversely impact those in need.
So, what do we know about this type of fraud? Government ben-
efit fraud, unfortunately, happens, and no program and no state is
immune. My written testimony contains data from the U.S. Sen-
tencing Commission and some illustrative cases. The past few
years have given us two prominent case studies, one, of course, the
$250 million Minnesota Feeding Our Future Scheme, which has re-
sulted in over 60 convictions; and two, the $100 million Mississippi
TANF scandal, which has resulted in the conviction of the former
Executive Director of the State Department of Human Resources
and others.
Unfortunately, federally funded state-run programs, like most
Federal programs, are big, soft targets for individuals in inter-
national fraud rings. The internet has reduced barriers to fraud.
Offenders can find free fraud tutorials online, can purchase stolen
identities for the price of a Happy Meal, and can file claims from
anywhere in the world. With automation tools, they can simulta-
neously file multiple claims in multiple states. The prevalence of
fraud discussions online normalizes this behavior, in my view, and
reduces the fear of getting caught and punished.
So, what can we do to reduce fraud? It is as simple as making
it harder to steal. We can do that a couple of different ways. I am
a big supporter of the fact that we do not have all the answers
here, and sometimes, we can look at the international community
for some of the answers. And I am a big fan of the U.K. Public
Fraud Authority, which is a great model that would need to be
adopted in the United States, but in terms of consolidating the best
practices, guides, and standardization of counter-fraud activities,
not the enforcement side, but counter-fraud activities, I think there
is a lot to be gained by looking at that model.
We can also employ appropriate controls to deter fraudsters from
even attempting to file a fraudulent claim, prevent fraudsters from
consummating the claim, promptly detect those claims that suc-
cessfully pass, and then correct and respond to fraudulent claims
through prompt enforcement action, target hardening, disruption,
and recovery.
There is no one-size-fits-all solution. Officials must consider rel-
evant risk factors and weigh program objectives and the operating
environment to design fit-for-purpose fraud controls. To be frank,
it is simply impossible or impracticable to design a 100 percent
11
fraud-proof program. The cost of controls and the impact on the de-
livery of public benefits would be too great. Whether you are run-
ning a mom-and-pop store, Amazon, or a government program,
fraud risk management always involves very difficult tradeoff deci-
sions.
This is not to suggest in any way that we should tolerate fraud.
The American public should reasonably expect that public moneys
are not used to pay dead people, they are not used to pay incarcer-
ated individuals, or to pay duplicate claims in the same state or
across states, and that public funds are otherwise appropriately
safeguarded. Officials should aggressively but responsibly adopt
new technology tools in the fight against fraud.
Finally, safeguarding public money should be supported by a co-
ordinated and comprehensive risk-and data-driven approach,
leveraging our existing Inspector General structure and other ac-
countability partners to both reduce losses and restore public trust.
I look forward to your questions.
Mr. SESSIONS. Mr. Westbrooks, thank you very much, very inter-
esting.
I will move now to the young Chairman of the full Committee,
the gentleman, Mr. Comer, is recognized.
Chairman COMER. Thank you, Mr. Chairman, for always having
good, substantive subcommittees here, always bipartisan. This is a
very important subject to this Committee—waste, fraud, abuse,
and mismanagement. I cannot think of a better panel.
And I am going to start with our great Auditor in Kentucky, Alli-
son Ball. Auditor Ball, you have done a tremendous job exposing
waste and fraud in Kentucky. In your quest to determine all of this
Medicaid fraud, which I have been screaming about for years in
Kentucky—we support Medicaid in Kentucky. You are from a poor
Medicaid-dependent region in the state, just like I am. We want to
support the program, but there is so much fraud and mismanage-
ment, in my opinion, in the Medicaid program in Kentucky, and we
are just trying to get the backs of the taxpayers. And your work
has been phenomenal.
Out of curiosity, has Governor Beshear worked with you any dur-
ing your audit? Were they helpful in turning over information or
anything to help come to the conclusions that you came to with re-
spect to the amount of fraud?
Ms. BALL. That is a good question because I really do believe
these are nonpartisan issues, and we should be able to work to-
gether. Unfortunately, I have to say, it has not been a great system
of cooperation. Boots-on-the-ground people have been helpful. When
it comes to rising levels of leadership, it does get to be more dif-
ficult to get information from them, and it is only—actually only
gotten more difficult as time has gone by. So, the unfortunate an-
swer is no, it has actually been disappointing that I have not had
good cooperation from the top level of the Beshear Administration.
Chairman COMER. Do they dispute the findings? I know you
came out with this a few weeks ago. Has there been any commu-
nication between the Beshear Administration and the Auditor’s of-
fice?
Ms. BALL. So that is a good question. Their response was mostly
that it is not unique to Kentucky, that this happens in other places
12
as well, which in my view—and that is true, it actually does hap-
pen in other places as well, but I think that that attitude makes
it less likely to be addressed. Just because it happens somewhere
else does not mean that it is not serious and not important.
Chairman COMER. And you are exactly right, and the Governor
is right. It is happening everywhere. We are trying to do something
about it. We are serious about it. Dr. Oleka mentioned the task
force that J.D. Vance will lead. We are serious about trying to do
something about this, and there is just an attitude among a lot of
politicians—and I am not going to be partisan in here, Mr. Chair-
man, because you want this to be a good bipartisan hearing, but
there is just an attitude among a lot of Governors and a lot of big
city mayors that, well, it is okay. It happens everywhere. It is no
big deal. You know, why do you care? It is just government money.
It comes down like manna from heaven. I mean, that is the atti-
tude that a lot of these officials have.
So, I just want to publicly thank you for the work you are doing.
It is so essential. We have an independently elected Auditor in
Kentucky. Not every state does. I am glad that we do. It has
worked out well in this instance, and I hope that the Kentucky
General Assembly will take some of your findings and work to re-
form Medicaid in Kentucky because I do not think it is going to
happen administratively, at least over the next two years.
So, my next question is to Dr. Oleka, my constituent, real proud
of the work that you do. Your organization, the State Financial Of-
ficers Association, can play a huge role in fighting fraud. Can you
give us some examples of how your organization can work with
Congress to help not only identify fraud but to try to hold people
accountable for fraudulent behavior?
Dr. OLEKA. Absolutely. Well, one of the things that we try to do,
Mr. Chairman, is provide good ideas for good public policy. As a
501(c)(3), we provide educational resources. And we think that if
Congress is able to put some frameworks in place where the state
elected officials, again, Auditor Ball and her colleagues, can effec-
tively work directly with inspectors general, work directly with
these folks in the Federal Government, you will see some real re-
forms.
One of the things that is incredibly important, I think, for a
framework—and you touched on it—you need leaders who have
good policy information. They also need the statutory authority.
But they also need the political incentive or, in a word, courage.
You need good leadership. We have that leadership, obviously, in
Kentucky with Auditor Ball. We also have it in other states as
well, with Auditor Foley in Nebraska, Auditor Cannon in Utah,
and so many different places. If you have got leaders like that, who
are then able to work with Congress directly, to work with the In-
spectors General on the executive side, then you can start to see
some real reforms.
Also, if you have got a transparency website here at the Federal
level where the American people can see where their taxpayer dol-
lars are going, especially with fraud, that will help.
And one last thing, our financial officers actually have trust
among the people, so when they respond to these issues, people lis-
ten to them.
13
Chairman COMER. Well, thank you. Do not ever hesitate to reach
out to this Committee. We are serious about trying to prevent
fraud. We would love to claw back money. We would love to hold
people accountable. But at the end of the day, we have got to re-
form programs and put more guardrails.
When there are duplicate payments in Medicaid, when there are
people that have been deceased that are still, for some reason, get-
ting Medicaid benefits, or providers like we are seeing in Los Ange-
les County with hospice are still billing people that are no longer
alive, that is a problem. And there is just an attitude that is
breathtaking to me among a lot of government officials, they do not
care.
Well, some of us do care on this Committee, and I know you all
care, and we thank you for your great work. We look forward to
working with you in the future.
Mr. Chairman, I yield back.
Mr. SESSIONS. The gentleman yields back. Mr. Chairman, thank
you very much.
For the record, I think that we need to make sure that we sup-
port you. You have given Mr. Mfume and I an open hand, an open
opportunity with staff, with the opportunities to have hearings, and
we are trying to take full advantage of that. And I believe that
your words are matched by the effectiveness of what Mr. Mfume
and I are attempting to do, but——
Chairman COMER. Thank you.
Mr. SESSIONS [continuing]. We are going to have to move more
legislation. And I sent a note to Mr. Womack, our staff director
[sic], that is associated with me, and we have to find a way to come
together on bipartisan legislation. So, expect me to be at your door-
step——
Chairman COMER. Absolutely.
Mr. SESSIONS [continuing]. With that also. And when we do it to-
gether, I think that speaks volumes about matching what has hap-
pened here.
Chairman COMER. Absolutely.
Mr. SESSIONS. Thank you very much.
The gentlewoman, Ms. Norton, is recognized.
Ms. NORTON. Thank you.
Millions of Americans rely on Social Security net programs like
the Supplemental Nutrition Assistance Program and Medicare. We
must ensure that these critical programs run efficiently with mini-
mal disruption. To that end, it is crucial that agencies conduct
their fraud prevention activities efficiently so that funding and
services can reach people without unnecessary delays. Effective
oversight requires highly skilled personnel and adequate resources.
Mr. Bagdoyan, what tools and resources do agencies need to pre-
vent unnecessarily delaying benefits?
Mr. BAGDOYAN. Thank you for your question, Ms. Norton. That
is a tricky proposition, to be frank. You have to thread the needle
on this. You cannot obviously delay important benefit delivery, but
on the other hand, you have to ensure a certain amount of integrity
in that delivery. So, technology is part of the solution. Expedited
reviews that fit within the delivery timeline is important, access to
vital data. I think as Dr. Oleka mentioned earlier, it has to be done
14
in real or near real time to make sure that deceased individuals,
incarcerated individuals, and other ineligible individuals do not re-
ceive that payment.
But also, I would go back to a point I made earlier. It is the cul-
ture, the acknowledgement, that fraud is a problem that has to
drive the response and make considerations of fairness and speed
of delivery versus the program integrity, fraud risk management
tradeoff. So that would be my high-level response to your question.
Thank you.
Ms. NORTON. Inspectors General are a key part of detecting and
preventing fraud. However, the Trump Administration has fired 19
Inspectors General, robbing their offices of leadership expertise and
institutional knowledge. Mr. Westbrooks, how do these firings
harm people who need government assistance the most?
Mr. WESTBROOKS. Well, firings certainly have an impact on the
effectiveness of the Offices of Inspectors General. With the absence
of top-level leadership, you have instances where there may be a
lack of strategic direction or commitment to oversee certain pro-
grams with the rigor that Congress and the American people
should expect.
As probably more problematic in my view, just as problematic or
more than the firings, is actually the proposed budget cuts, which
are crippling. There was a study that was put out, I believe yester-
day, from the Partnership for Public Service that the IGs on aver-
age are being asked to take a 13 percent budget cut over Fiscal
Year 2024. GAO similarly was facing some budget cuts.
And when you look at the return on investment, I mean, they are
the best thing I think the government has got going. I know I am
biased in that regard, but I think on average IGs have about an
$18 to $1 return on investment. And I believe GAO has in the na-
ture of over $100—I think it is $120 per dollar spent for those
budgets. So, it is money well spent.
So, we do need the leadership positions filled with the right peo-
ple that are independent in fact, in appearance, and those offices
need to be funded to do their job effectively. Thank you.
Ms. NORTON. We must work together to ensure that Inspectors
General offices are not only fully staffed but also fully funded. We
cannot expect these offices to do the work we need them to do when
we do not give them the proper resources. I hope my colleagues will
join me in supporting full funding for Inspectors General offices to
ensure that Federal assistance goes to those who need it most.
And I yield back.
Mr. SESSIONS. The gentlewoman yields back her time. Thank you
very much.
The distinguished gentleman from Tennessee, Mr. Burchett, is
recognized.
Mr. BURCHETT. Thank you, Mr. Chairman.
It just seems to matter who is in charge. Everybody wants to
point the finger at the other side, but when they are in charge, it
just does not seem it is the same case.
I always have said that if we could just eliminate the fraud in
these systems, that it would provide for the least amongst us, more
of us. And so, you know, I have been in—as Mayor of Knox County
and things, some things did not go right, and I had to stand up and
15
take the hit and admit to it. And I am afraid that is kind of what
is lacking all over the place up here.
And saying that, I want this to just go down the line. What
issues do the state and Federal agencies face in addressing fraud
risk in their program? And I guess I mean to say what issues that
stop them from addressing it? Start with you, sir. How do you say
your name?
Mr. BAGDOYAN. It is Bagdoyan, Mr. Burchett.
Mr. BURCHETT. Well, you got my name right, so Bagdoyan. I got
yours right, too. There you go.
Mr. BAGDOYAN. Absolutely. Thank you.
Mr. BURCHETT. That is a first——
Mr. BAGDOYAN. Thank you.
Mr. BURCHETT [continuing]. For both of us, probably.
Mr. BAGDOYAN. Thank you.
Mr. BURCHETT. Go ahead.
Mr. BAGDOYAN. I am glad we have that understanding. So, as I
mentioned, you know, the culture is very important, so that drives
whatever happens below. But it is essential to have a robust fraud
risk management capacity. You have to have the leadership, you
have to have the strategy, you have to have the controls and exe-
cute those effectively.
But at the Federal, state level, many times, as I mentioned in
my opening remarks, you have this issue of program design, either
statutory and/or regulatory restrictions on what a state and a Fed-
eral Government can do, or a permissive attitude as well, which al-
lows extensive reliance on self-attestation, which, as I described, is
the bane of any auditor. So, that is something that really needs to
be looked at.
I think you have a question, a follow-up.
Mr. BURCHETT. Well, actually, I just go down the line and ask
that, and then I will come back on my follow-up. But thank you
for that.
Yes, sir.
Dr. OLEKA. I might offer, actually, the same response. There is
a challenge sometimes where state elected officials are not aware
of all the resources available to them. For example, the Do Not Pay
list, it is a great resource that has the Federal Government’s sup-
port effectively outlining——
Mr. BURCHETT. What is the Do Not Pay—I know what it is, but
I am sure the rest of the Committee does not.
Dr. OLEKA [continuing]. It as a resource.
Mr. BURCHETT. That is a joke. I do not know what it is. Go ahead
and tell me.
Dr. OLEKA. Well, it is a resource that allows states—it is com-
piled by the Federal Government, and it is a resource that allows
states to effectively look through folks that they should not give
benefits to, that they can actually review it to make sure that there
is no implication of fraud if you were to give some folks some re-
sources. You can utilize that tool, and it can be expansive, based
on the data that is given to it from states, so you pass data back
and forth.
When you have got a policy response in that way, it increases,
it makes more robust, the resources that are available. So, if state
16
financial officers in particular had access and knowledge to that,
that can help things, as well as the statutory authority. There is
a Single Audit Act for Medicaid that effectively puts state financial
officers, auditors in particular, in a position where they have got
to audit Medicaid. If you had—once a year. If you had that for
every program, then you are more likely to find fraud. So, those are
some instances, as well.
Mr. BURCHETT. Ma’am?
Ms. BALL. So, I am going to piggyback a little bit on the culture
issue because we found that on this $836 million of waste that we
discovered—because when we started doing interviews with boots
on the ground and then with leadership, we found out that people
that were actually doing the work were told, hey, this is not that
big of a deal, it is low priority. If you get to checking somebody’s
residency, you know, that is good, but it is really not that big of
a deal. So, it really did expose that the attitude at the top really
does make a difference.
I think that is why it is really important today that we are here
because you are indicating to all the American people, hey, this
really matters. And that has a cultural response and a cultural
change. So, I would say the culture is important.
I also think that we need to be reviewing things at all levels. So,
as we have started to get more aggressive on reviewing the error
rates, those error rates have begun to go down. We saw that with
SNAP. We went from 9.1 percent to 3.5 percent error rates just be-
cause we were actually involved in the process, and we were identi-
fying particular errors. I think that has to be part of it.
And then another thing—actually, this piggybacks on what O.J.
was just saying—the real-time review was a serious problem on
this particular audit that we did because they were doing what was
called Public Assistance Reporting Information System (PARIS)
alerts—we were getting from the Federal Government from a pro-
gram, but it only happened like once a quarter. So, it was not real
time by any means whatsoever. People were also being told, hey,
just ignore it for the most part. So, we need a greater level of ac-
cess to as close to real time as we can get.
There is a program called Transformed Medicaid Statistical In-
formation System (T-MSIS). We were able to use that in our audit.
Normally, we cannot, but we were permitted to use it. HHS OIG
gave us special access, and that gave us much closer to real time,
and it was much fuller information. So, we were able to look and
see, do they actually live in Kentucky or not? That kind of access
is a gamechanger.
Mr. BURCHETT. Ma’am, thank you.
Mr. Chairman, I am out of time, but if I could yield, let Mr.
Westbrooks say something. I saw him making some notes, and he
is sort of got an orange tie on, and I am from Tennessee, so if I
could let him just say something if that would be all right. Go
ahead, brother.
Mr. SESSIONS. The gentleman is recognized.
Mr. WESTBROOKS. Well, thank you for that. A couple of com-
ments from my experience in government, generally, and then dur-
ing the pandemic emergency, is there are eligibility data bases that
are out there, and it is very frustrating for anybody to say, why
17
aren’t we catching dead people, incarcerated individuals, et cetera,
and duplicate payments?
So, food stamps or the SNAP program has the National Accuracy
Center. You have—with unemployment insurance, there is an em-
ployment data hub. The problem is the 50 states and the dif-
ferent—and territories, they have got different information sys-
tems, so sometimes it is very challenging for them, for the data sys-
tems to talk to each other. They do not have the funding or the re-
sources to connect in real time that we would like for them to have.
So, that is one of the challenges is why these tools are not being
fully implemented.
The other thing I would say is, you are—and I do not think this
can be overstated—is the level of sophistication with international
fraudsters and organized crime rings is a significant drain on
states. I give an example in the pandemic, the one that sticks with
me, my home state of Maryland, Governor Hogan announced in
July of 2020, when—the heat of the pandemic when they were com-
pleting all these claims, there was an international fraud ring that
had submitted 46,000 fraudulent UI claims for $500 million. So,
while the agency is busy making sure people have unemployment
insurance to put food on the table, they are also getting hit by
these very sophisticated fraud rings that they have to deal with as
well. So, that is why I think we really need a much more coordi-
nated approach.
Thank you.
Mr. BURCHETT. Real quick, are they mob-related or are they
international terrorists?
Mr. WESTBROOKS. You have both. You have got state-spon-
sored——
Mr. BURCHETT. Oh, okay.
Mr. WESTBROOKS [continuing]. Bad actors——
Mr. BURCHETT. Thank you.
Mr. WESTBROOKS [continuing]. And you have got fraudsters, yep.
Mr. BURCHETT. Thank you, Mr. Chairman, for your indulgence.
Mr. SESSIONS. The gentleman——
Mr. BURCHETT. And my friends across the aisle, I appreciate you
all’s indulgence. Thank you all.
Mr. SESSIONS. Thank you very much, Chairman Burchett.
Ms. Randall, you are recognized.
Ms. RANDALL. Thank you, Mr. Chair, and thank you to our wit-
nesses for being here today.
Combating fraud where it exists and ensuring proper steward-
ship of taxpayer funds is a shared responsibility amongst all elect-
ed officials at the state, local, and Federal level, and a responsi-
bility I wish was shared by this Presidential Administration. I
would like to quickly point out that the United States is currently
spending $1 billion taxpayer dollars a day for a war in Iran that
the President chose to start. Not to mention that Trump has per-
sonally profited $4 billion in his first year back in office through
crypto schemes, shady property deals, and selling products like
Trump Bibles and watches.
Some of my colleagues on the other side of the aisle and this Ad-
ministration are quick to demonize so-called blue states, but it is
important for the record to reflect that blue states like Washington
18
are taking fraud issues incredibly seriously. For example, when it
comes to Medicaid improper payments and potential fraud, Wash-
ington has moved from a reactive system to a proactive data-driven
integrity model.
As a state senator, I voted to codify oversight expectations for the
healthcare authority in their administration of Medicaid, and I also
supported funding for Washington’s fraud abuse detection system.
This law, combined with elevating program integrity into a dedi-
cated division, established focused leadership and accountability.
And integrating audit and program integrity functions has led to
a 178 percent increase in fraud referrals and over $300 million re-
covered across two years.
Another example of the work Washington State is doing can be
seen within the long-term services and supports programs, where
the states recovered over 99 percent of improper payments. When
it comes to childcare programs, of the over 63,000 families who re-
ceived a subsidy in Washington, 2.6 percent of those families who
were ultimately investigated, 13 individuals were prosecuted
through the state’s rigorous audit process. These are just a few ex-
amples of how Washington State, a blue state, is being very thor-
ough and intentional in continuously improving and evolving their
best practices to make sure that not only is fraud being addressed
but that fraud is also being prevented. One example of 50, like
some that we have heard here today, of how our states play such
an important role in maintaining the integrity of taxpayer dollars.
What I want to make sure we are all very clear about, though,
is that when there is an overpayment or an improper payment,
that does not automatically equate to fraud. Mr. Westbrooks, is it
fair to say that most improper payments are paperwork issues
rather than fraud?
Mr. WESTBROOKS. It varies by program, but absolutely. That is
the very challenging thing about when we use improper payment
as the error rate is that includes overpayment and underpayment,
and it includes situations where the claim was actually valid, but
there is no documentation in the file. Fraud is a part of that.
And one of the things that frustrates me in the SNAP program
in particular is where we are seeing a lot of the fraud is on the
retailer side, retailer trafficking of fraud, and then stolen benefits.
Neither of those are captured in the error rate that we have when
we talk about improper payment. Improper payment is just a pay-
ment that on the surface, somebody looks at it, should not have
been paid, or is in the improper amount.
Ms. RANDALL. Thank you, Mr. Westbrooks.
I have mentioned before in Committee that I had a sister with
really complex disabilities who relied on Washington State’s Med-
icaid program, and I can think of a number of times where my
mom did not submit paperwork in time because Olivia was in the
hospital or had another bout of pneumonia or had any number of
health complications that meant that her stack of paperwork on
the kitchen counter just got bigger and bigger and bigger. And
those improper payments sometimes are just a struggling family
trying to keep their kid or family member alive and healthy.
Mr. Westbrooks, it seems to me that one of the underlying prem-
ises of many of our hearings on fraud is that states are not
19
incentivized to properly oversee federally funded programs. Given
that states share in the cost of improper payments, what evidence
suggests that states are not incentivized to oversee their programs?
Mr. WESTBROOKS. You know, I have not seen any evidence, and
I cannot say that it does not exist. I will say, just frankly, 30 years
in government in this business, I do not find many or any state,
local, or Federal officials that do not seem to care about fraud.
They seem to care about fraud. It is the fact that they do not have
the tools available. And I think that the Federal—there are oppor-
tunities for the Federal Government to standardize and make these
tools available, whether it is making sure that data systems talk
to each other or just providing guidance and enhancing the general
workforce and skillset of counter-fraud professionals across govern-
ment, state and Federal.
Ms. RANDALL. Absolutely.
Thank you so much, Mr. Chairman. I yield back.
Mr. SESSIONS. The gentlewoman yields back her time. I just
might make a note that the gentlewoman very appropriately has
her substance as she chooses to speak, but we are trying to address
today Federal and state programs not related to any political sec-
tion necessarily, that we believe that this is a nationwide problem,
that we believe this is not a blue versus red state, but rather
things that we can accomplish by working together, and so I want
to thank the gentlewoman, who has a strong record of not only
working for that benefit, but today, once again, we are highlighting
some successes that can be made by states that they have in con-
tact.
Ms. RANDALL. We should learn lessons wherever we can.
Mr. SESSIONS. And we will continue to do that, and I thank the
gentlewoman very much. I now would yield to the distinguished
gentlewoman, the Chairwoman of the Rules Committee, Ms. Foxx.
Ms. FOXX. Thank you very much, Mr. Chairman.
Mr. Bagdoyan—am I saying that? Bagdoyan, got it. Bagdoyan,
got it, sorry. One of the biggest problems with federally funded pro-
grams funded by the taxpayers, run by the states, lack of incen-
tives for states to be good stewards of taxpayers’ hard-earned
money, and I am building on comments that have been made al-
ready. It is all too easy, I think, for states to treat the Federal Gov-
ernment as a piggybank that pays for the lion’s share of programs
which allow states to tolerate a much higher amount of fraud than
if their own money was at stake. And I think this applies to gov-
ernment agencies as well as the individuals involved. It is wrong.
These programs are all funded by the same taxpayers.
Here we are on tax day, and we are reminded that nobody gets
to choose to pay taxes to their state or their Federal Government.
The same taxpayers must forfeit their pay to both levels of govern-
ment. There is no ‘‘Federal’’ money or ‘‘state’’ money, but rather
taxpayer money. Therefore, all levels of government have the same
obligation to be good stewards of taxpayers’ money.
So, what prevents state agencies from implementing stronger
guardrails for detecting and preventing fraud in programs that re-
ceive Federal funds such as eligibility and identity checks? What
kinds of checks could state agencies implement quickly to help
verify eligibility and identify as part of these programs?
20
Mr. BAGDOYAN. Thank you for your question. So, the response is
multifold. I think I will keep going back to the culture of account-
ability, which drives everything else. You can have very elegant
fraud risk management systems, but if you do not have the leader-
ship to make that happen, nothing is going to work. So, that is an
important thing.
The other one which was manifested during the pandemic is un-
employment insurance, where states were just overwhelmed, I
think as one of my fellow witnesses mentioned, with massive
claims for benefits. They did not have the systems, they did not
have the expertise, they did not have the data to respond to that
onslaught. But what happened, unfortunately after much of the
benefits were dispensed, the Federal Government provided funding
as well as expertise, called Tiger Teams from the Department of
Labor that helped stem some of the more egregious problems, in-
cluding the self-attestation issue that I mentioned earlier. So, that
showed success during the pandemic, but I do not think it is being
sustained at this present time.
Ms. FOXX. But we could have had, in the law, you could not self-
attest. We could have put that into legislationc——
Mr. BAGDOYAN. Right.
Ms. FOXX [continuing]. That you could not do that, correct?
Mr. BAGDOYAN. You can, but it has to be verified.
Ms. FOXX. Right.
Mr. BAGDOYAN. That is where states fell short. You know——
Ms. FOXX. Right.
Mr. BAGDOYAN [continuing]. I attested myself as being eligible
for unemployment insurance. I signed my name, but, you know,
who is going to verify that? And then data analytics is very impor-
tant, real-time data analytics, but you also have to respond to the
results of those data analytics.
Ms. FOXX. Thank you.
Ms. Ball, you talked about the culture, and I think that is a very
important issue. I do think there is a culture of, well, it does not
matter. So, how can we do more here to prevent the improper pay-
ments from being made in the first place without the Federal Gov-
ernment having to take all the responsibility for making sure that
this happens?
Ms. BALL. So, that is a great question. I really do think there is
a partnership element with somebody at the Federal level and then
somebody at the state level. So, I like to use my example because
I think it has worked pretty well. I have myself as State Auditor.
I am responsible to the people of Kentucky. I am independent, and
I am very interested in accountability, transparency, and exposure.
So, that kind of exposure, that impacts the culture. I think that
people that were working on this were embarrassed to find out that
suddenly it is reported. There were actually comments made, this
is not a high priority, it is a low priority. You know, if you get to
it, great, but it is really not something we are that interested in.
And once the public becomes aware of that, then there is a desire
and incentive for a cultural change.
So, I really do think there has got to be somebody at the state
level who is keeping an eye on these things, who is incentivized to
do that. I think auditors work well for that. We have an ombuds-
21
man as part of our office, and I think that has really added a lot
to us because we are checking error rates all the time, and we
check what type of error rate it is. So, I would think it would be
a partnership like that.
Ms. FOXX. One quick question, excuse me, Mr. Chairman. North
Carolina has an independently elected auditor. How many states
have independently elected auditors who should be held account-
able and can be held accountable?
Ms. BALL. That is a great question. I know not every state has
elected auditors or somebody who functions like that. It is actually
probably more a question that Dr. Oleka would be more well-versed
to answer than me. I know kind of here and there who is. He might
know the full body if you want to do it that way.
Ms. FOXX. Do you mind, Mr. Chairman?
Mr. SESSIONS. The gentlemen is recognized. This is why we are
here, and the gentlewoman is actually moving in on a very impor-
tant subject, so the gentleman is recognized.
Ms. FOXX. Thank you.
Dr. OLEKA. Thank you for the opportunity to answer that ques-
tion. It is a tricky question in the sense of the names have different
titles. You could have a comptroller in Texas, which is extremely
powerful, but does not have the title of auditor.
What we have seen in terms of our 41 state financial officers
across 28 states, we have got roughly a dozen or so that are audi-
tors. Probably a little less than half than that have the type of au-
thority that Auditor Ball has, that Auditor Boliek has in his state.
Pennsylvania has a strong auditor in Auditor General DeFoor.
Utah Auditor Tina Cannon is very strong in that regard. So, there
are a few. One of the things that could make this issue a little bit
better is if you had stronger auditors, as you just pointed out.
I also quickly want to touch on the culture issue that you men-
tioned because while people say this is not a big deal, obviously
this body knows, this auditor knows. Let me tell you why this is
such a big deal in terms of the American people. When you have
a culture that defers to fraud and allows it to stand, then you
spend more money. When you spend more money, that then man-
dates, based on your political philosophy, an increase in taxes. So,
if you increase taxes on hardworking families, now they are faced
with the choice of putting gas in their car, paying for diapers for
their children. This is a real cost that families have to go through,
all because fraud was not detected.
And it also sows distrust because you have people who are trying
to survive on Special Supplemental Nutrition Program for Women,
Infants and Children (WIC) or Supplemental Nutrition Assistance
Program (SNAP) or government benefits, and they look to their left
and they see one of their neighbors who is a fraudster riding
around in a Benz buying as much food as they can.
So, when you do not have a culture of accountability, when you
do not have the type of leadership that Auditor Ball and her col-
leagues across the country have, you sow distrust, you have discord
in the public, and you also have a culture of tax increases, which
takes money out of the hands of the American people.
Ms. FOXX. Thank you.
Thank you, Mr. Chairman.
22
Mr. SESSIONS. The gentlewoman yields back her time. Thank you
very much.
The gentleman, Mr. Walkinshaw.
Mr. WALKINSHAW. Thank you, Mr. Chairman, and thank you for
your indulgence again in allowing me to join the Subcommittee.
And thank you to our witnesses.
Mr. Bagdoyan, the GAO testimony includes five principles of
fraud. Probably all four of you are familiar with this from the
International Public Sector Fraud Forum’s Guide to Managing
Fraud for Public Bodies, really wonderful five principles there. I
would add a sixth that I think the Chairman has demonstrated
today. A fraud prevention effort has to be apolitical and non-
partisan if it is going to get the kind of buy-in necessary to succeed.
And Dr. Oleka, I really appreciate you and your organization and
your commitment to this work, your commitment to working on the
Vice President’s initiative, which I sincerely hope is successful in
accomplishing its stated goal.
I do think we have to just speak the truth here and say that the
President of the United States in describing that initiative—this is
a direct quote—said it would ‘‘focus primarily in blue states.’’ And
I think that would violate the principles of everything that we are
discussing here. I hope that is not the direction that it goes.
Auditor Ball, you made a very powerful comment. You said that
it is crucial for every state auditor to bring their mentality of inde-
pendence. And you probably would agree that if Governor Beshear
were here today, he maybe would have a slightly different response
to the question that Chairman Comer gave about his work. And
that is okay, that is good. You are independent, you have your own
perspective. He cannot fire you if you say something that he does
not like.
I want to just reiterate concerns that some of my colleagues have
shared about the diminution of the independence of our Federal
IGs. And one aspect of that, that has not been specifically ad-
dressed, is with the mass firing of 17 of them, many have been re-
placed by acting IGs who do not have the same statutory protec-
tions that those fired IGs have. Three-quarters, three-quarters of
the Federal IG positions are vacant today, so the very people who
are helping to do this work. Mr. Westbrooks has laid out the sav-
ings are not on the job anymore. And we have talked about the
budget. Just the HHS IG is facing in the President’s budget a po-
tential $13.7 million cut.
My concern, Auditor Ball, is if those kind of cuts to the HHS IG
and others are put into effect, the next time a state auditor like
yourself wants to partner with the HHS IG to identify and reduce
$800 million of fraud in Kentucky, they will not have the capacity
or the resources to partner with you or one of your colleagues
around the country.
Mr. Westbrooks, based on your experience as a Federal IG, what
kind of operational impact would it have if you were told that your
office was going to face a 12 percent budget cut in one year? What
would you have to do? What would you have to scale back in terms
of your work to prevent fraud?
Mr. WESTBROOKS. As an immediate impact, the immediate im-
pact on your audit operations are on prospective engagements. You
23
have to look at what you are going to be able to audit in the future
in the short term. On ongoing engagements, now you have to
rescope—potentially and most likely rescope those audits because
you are not going to have the staffing or resources to do the field
work that you need to do. You know, our Federal audits, particu-
larly the big agencies, you are doing field work around the country.
It is not—they are not desk audits.
And then the really difficult thing and the challenging thing is
when you have this disruption in the community, you have very ex-
perienced OIG auditors that are leaving government, and so the
brain drain from what we have experienced in the last year, it is
very hard to overstate. Some of the most experienced auditors that
I have worked with are no longer with us but had still plenty of
years left in Federal service that they should still be in the job, but
now they are in the private sector.
Mr. WALKINSHAW. Thank you.
And Mr. Chairman, this morning, I sent a letter to Cheryl
Mason, who is the relatively new, I think, Chair of the Council of
the Inspectors General on Integrity and Efficiency (CIGIE), asking
for clarity on how these vacancies, firings, and budget constraints
on the IG community are affecting our ability to prevent and detect
fraud, waste, and abuse. And without objection, I would like to sub-
mit that letter for the record.
Mr. SESSIONS. Without objection.
Mr. WALKINSHAW. Thank you, Mr. Chairman. If you will indulge
me, it is just me and you, I wanted to just ask Mr. Bagdoyan one
question. Your testimony noted the many recommendations GAO
has made. I think you said that maybe 40 percent are open. Forty
percent of 215 recommendations you all have made to Federal
agencies are not open. One of those—or maybe this is, maybe a
number of them are in this category—that an agency designate an
entity to lead fraud risk management. You cite that as a rec-
ommendation. Maybe that is a recurring recommendation.
Mr. BAGDOYAN. It is.
Mr. WALKINSHAW. I think that would surprise most Members of
Congress that an agency does not have an entity designated to lead
fraud risk management. I mean, if the Secretary of HHS were here
and we asked them that question, would they say, no, we do not
have any entity that leads fraud risk management?
Mr. BAGDOYAN. Yes. Well, for HHS, they do have the Center for
Program Integrity. But again, fraud risk management is a huge
agency. It is rather dispersed. But yes, that is a very important
thing to have in place. Dedicated entity, that implies dedicated to
fraud risk management. What we do find often is that that respon-
sibility is devolved to existing units based on as other duties as as-
signed. They do not have necessarily the expertise, the bandwidth
to do true fraud risk management. And that is apparent when, I
mentioned earlier in my remarks, that the capacity to manage
fraud risks is on the softer side, and that means you do not have
the right controls in place. And that, in part, might explain, might
explain why some of these agencies are still lagging in imple-
menting our recommendations. So, I hope that——
Mr. WALKINSHAW. Thank you.
Mr. BAGDOYAN [continuing]. Is responsive to your question.
24
Mr. WALKINSHAW. Thank you. Thank you, Mr. Chairman.
Mr. SESSIONS. The gentleman yields back his time. I am going
to yield to myself now.
I want to thank each of you for being here. Yesterday, we re-
ceived a rather in-depth and robust opportunity to allow you to
speak. And I have thought about this overnight and have obviously
a number of questions that we do want to make sure we approach
by asking questions and getting answers and moving to that. And
I do accept the responsibility that primarily this falls on Mr.
Mfume and myself to make sure that we talk with each other, that
we look at things.
But it is a robust, robust marketplace of ideas of things we do
not do. And I think that perhaps we tend to think that we inhibit
ourselves based upon either the law or common courtesy. And a
prime example is perhaps how we identify people. The Internal
Revenue Service has a heck of a time knowing who they are talk-
ing to, who they are going to meet with. And of course, you and
I do not have to agree, but I think that we have ways to identify
people, biometrics, our eyes, our fingerprints.
Look, we have got a lot of other things to get into, but Mr.
Westbrooks, tell me about leading-edge techniques and some
pushback or your view as an auditor about utilizing technology as
opposed to just data that is gleaned from a sheet of paper or per-
sonal information.
Mr. WESTBROOKS. Yes, on identity verification, there are a lot of
tools out there. And it is not my personal view but my experience
in the community was there is a lot of public debate. There are
some privacy issues related to that where things that might be
common sense, people object to. You know, and some European
countries have a national digital ID card, which would go a long
way if we had a similar concept here in the United States It would
go a long way to reducing identity fraud, but that was just ‘‘dead
on arrival’’ for whatever reason beyond my comprehension.
The other thing it is important to note is, you know, these inter-
national fraud rings utilize AI and other tools, and they can afford
to make mistakes, right? The government has less opportunity.
There is less forgiveness if the government aggressively utilizes AI
and makes mistakes and people’s benefits get cutoff. And there was
a big scandal in the Netherlands related to this where they very
aggressively used this algorithm and many, many, many people
were cutoff from benefits. Some included—committed suicide as a
result of it.
So, you know, we talk about ethical or responsible use of these
tools. Unfortunately, I think that is the reality. I think government
may always be a step behind the fraudsters who can afford to make
mistakes. It does not cost them anything.
Mr. SESSIONS. Well, let us see where we end on that. Perhaps,
Auditor Ball, you can get closer to this. One of the things I learned
from you yesterday is I asked the question, how do you find a lot
of these problems? And you said, whistleblowers. People call us. No
one likes to see that, whether they are sitting in a room with other
people or that they see things that happen, that they want these
things to happen where fraud would be involved. But we just vet-
25
ted out and heard maybe some European models might be some-
thing good to look at.
What is wrong with requiring or having a data base where you
have to present your finger? And I know we have talked about this
with voting. And that is where we get into the states are respon-
sible for that. But Federal benefits, we have got a robust amount
of data with fingerprints. What would that seemingly do to this
issue?
Ms. BALL. So, honestly, I have to say, it is not something that
I have analyzed very deeply. So that is kind of a brave new world
looking at that kind of information. And from a personal perspec-
tive, I get a little bit nervous about presenting biometric informa-
tion to a database, and it is housed somewhere and the kind of se-
curity issues that you have. But it does not——
Mr. SESSIONS. Well, you go to the airport.
Ms. BALL. That is true. That is true.
Mr. SESSIONS. You go to the airport, and they take your picture.
And it is true that they agree then not to keep that picture.
Ms. BALL. Right.
Mr. SESSIONS. But it presented itself as a way to identify your-
self. And I think we have got to—I am asking the questions, want-
ing you to give the answer, but you ought to present evidence who
you are——
Ms. BALL. Right. You do need——
Mr. SESSIONS [continuing]. That is certifiable before you gain
these benefits, not show up and self-report.
Ms. BALL. Right. I do think there needs to be a secure, reliable
identification process. What that is at this point, I do not nec-
essarily have the answer. There are so many technological ad-
vances that are occurring rapidly right now. And there are con-
fidentiality and security issues that kind of coexist with those type
of situations.
I will say for us in our experience, it is not always proving that
somebody is who they say they are that is the problem. It is other
kinds of breakdowns. So, my focus has been on the problems of,
well, we know this person is dead, but they are still listed as eligi-
ble and issues like that. So, I would say you are correct, that is
part of the problem, but my focus has been on a lot of other prob-
lems, duplicative payments for one person, issues like that. And I
would say those may be the greater issues of concern right now
rather than someone pretending to be somebody that they are not.
Mr. SESSIONS. Well, we have got to certainly go back and cobble
together the information we have got. All four of you, I could just
ask a question. I am not trying to get you to jam into all the an-
swers at the same time, but the PRAC, the PRAC has a billion, 700
million pieces of data that is not indicative that—it is broad, but
it is indicative that you need to ask or gain more information. You
need to know that this is—the term red flag may or may not be
appropriate, but an indication, please go look at this. And that
should be an indication perhaps where we would start with wan-
dering into the world. Do we know who you are? Do you need to
come and present yourself?
And I have just gone through Social Security issues, and they
vetted me to make sure they knew who I was. It would have been
26
nice if they had said, please come in Waco, Texas, to the Social Se-
curity office, but not everybody likes that. And there is a line be-
tween what is required and what is requested. I just think we have
got to get closer to understanding. So, talk to me about the use of
PRAC data and information as this helps itself to get closer.
Mr. Westbrooks?
Mr. WESTBROOKS. Yes, thank you for that question. So, the
PRAC has an enormous amount of data, as does the Treasury’s Do
Not Pay or Payment Integrity Center. The way the system is struc-
tured, though, the states would really connect with Treasury’s Do
Not Pay to do—that is where the connection point should be, where
you would check eligibility against the various data bases.
I think the PRAC needs to be and is working toward being closer
aligned with Do Not Pay and the Department of Treasury so it is
not a pay-and-chase after the fact. It is on a much more real-time
basis. But I do think it is critical that we have that centralized gov-
ernment data system.
The other thing I will say related to this, and it is something you
should be thinking about is as bad of a job as we do in preventing
fraud, I submit to you, we do just as bad of a job in protecting in-
formation. You know, my, like probably many people in this room
and many Federal employees, you know, my top-secret security
clearance information was all stolen by a hostile nation-state, and
I was on, you know, credit check monitoring for several years, paid
for by the government. So, that is one of the things that we need
to look at when we balance this idea of centralized repositories for
identification is who is going to be holding it and how secure is it?
Because it can do irreparable harm.
That is why we are seeing these international—what are the re-
percussions? These bad—these international fraud rings are lit-
erally buying personal information for the cost of a Happy Meal on
the dark web because of these hacking of government systems. So,
that is the thing that concerns me as much as fraud is the informa-
tion of personal—protection of personal information. Thank you.
Mr. SESSIONS. I agree. Mr. Bagdoyan?
Mr. BAGDOYAN. Yes, I would echo much of what Mr. Westbrooks
said. There are a lot of datasets out there that can be crunched to
yield results. We look for indicators of potential fraud. That is how
GAO does its data analytics. But once we present our findings to
agencies, we expect them to respond to the results. And many of
them, unfortunately, do not do that, so that is a huge problem.
And I will use one example from the VA’s Community Care pro-
gram where there are a lot of providers from outside the VA who
tend to veterans’ health needs. And we flagged several thousands
of them several years ago that posed problems based on their back-
ground. They were convicted of fraud. They were convicted of pa-
tient neglect and abuse, things that would be disqualifying. We
made the referral to the VA, and they promptly lost the referral.
So, when we followed up with them, they had never heard of the
referral, so they had not done anything with it. So, that is a huge
problem.
Mr. SESSIONS. You act like we are busy. I would now yield to the
gentleman, Mr. Walkinshaw, who is requesting this opportunity.
The gentleman is recognized.
27
Mr. WALKINSHAW. Thank you, Mr. Chairman.
Mr. Westbrooks, I want to just ask you to go back to your PRAC
experience. And I apologize for asking a question that perhaps is
answered in your book. I will have to get a copy of it. You know,
talk to us about, from your perspective, the future of PRAC. Do we
still need PRAC? The pandemic is over. What role did PRAC’s rel-
ative independence, being constituted of IGs, hosted by CIGIE, play
in its success? Is it important that that independence continue if
we should continue PRAC? Just give us your answers to those
questions or thoughts on those, please.
Mr. WESTBROOKS. Thank you for your question. When the PRAC
was created, it was created—you know, the pandemic hit, and in
a very—in a matter of a couple of days, the Senate drafted a bill
which included the CARES Act, which included the PRAC provi-
sions. They took the PRAC provisions from the Recovery Act and
just dropped it into the bill. So, there are a lot of lessons learned
from the experiences that I had from April 27, 2020, when I first
got appointed, through December 2022. If you look at the CARES
Act, there are a lot of things, lessons learned on how we can im-
prove.
It is absolutely critical that we have got a centralized repository
for government information that has the authorities, legal authori-
ties, to share that data with state and local partners. I think that
was the secret sauce that we had with the PRAC was we could ag-
gressively use our legal authorities to share with state and locals
and Federal law enforcement partners data without entering into
complex data sharing, matching agreements. So, it is critical that
there be this repository, that they have the appropriate legal au-
thorities, that they have the independence to do their work, they
are appropriately funded, they are tied to Treasury’s Do Not Pay
system, they do not operate independently. That is not much gov-
ernment value to me. And I think those are the keys for success.
I do not know—this is my personal opinion. I am retired from
government so, and I can speak freely on it, but I do not know to
what extent they—it needs independent investigative and audit au-
thority. I think the analytic data center of excellence authority is
a prominent role. But unfortunately, it is the investigative authori-
ties that give you the special legal rights to share data with your
law enforcement partners, so there needs to be some smart
lawyering and legislative counsel thinking on how to write the law
on that. But I do think it is critical that there be a center of excel-
lence that can share not just with the Feds, but with the state and
locals. And it would be somewhere where the state and locals feel
like they are—or GAO feels like referrals are going to be taken se-
riously and not lost in a file somewhere. Thank you.
Mr. WALKINSHAW. Thank you. I want to just shift gears to IT
systems and IT modernization. And Mr. Bagdoyan, your testimony
highlights some of the challenges states face, especially with re-
spect to UI programs being implemented by legacy IT systems or
outdated IT systems. And I am curious, Auditor Ball, I mean, is
that something you have experienced in Kentucky where maybe
you say there is fraud in this program and we need X, Y, and Z
controls, and you talk to the IT folks and they say, sorry, we have
a legacy system that just cannot do it. Have you experienced that?
28
Ms. BALL. That is definitely an aspect that we deal with. We ac-
tually have a division that deals with IT audits, so we look to see
all the time, this legacy software program that you have available,
is it up to speed? Does it do the work we need it to do? Actually,
lately, what we have seen breakdowns, though, has been when they
have been eliminating a legacy program and incorporating a new
one, it is the switch that has created the opportunities for break-
downs. And we actually just saw this with our Department of Rev-
enue. We have had just all sorts of problems with bringing on a
new program on every level, so that is its own problem.
Mr. WALKINSHAW. Okay. Great. And then for Mr. Bagdoyan,
what is it that the Federal Government or Congress can do to bet-
ter incentivize or support states who are trying to get their IT sys-
tems in a position where they can do fraud prevention in the way
it needs to be done?
Mr. BAGDOYAN. Yes, thanks for your question, Mr. Walkinshaw.
Again, going back to the UI experience, we designated that out of
cycle as a high-risk area in the midst of the pandemic, in large part
driven by data and technology issues, among others like service de-
livery and so forth. And what worked during that time was that
the Federal Government provided funding and expertise to, among
other things, states’ technology system upgrades, which relatedly
eventually caught up with the integrity issues and helped mitigate
them. But as I mentioned, by the time that happened, most of the
money had already been dispersed. So, something like that is—
should warrant close consideration so that, you know, the states
can have skin in the game but also have some Federal support to
make things happen.
Mr. WALKINSHAW. Thank you. Dr. Oleka, anything? I apologize
for going over my time, but you are literally itching to jump in on
this question, I can tell there.
Dr. OLEKA. Well, just to echo what Auditor Ball was saying in
particular, I think there is an opportunity for states to utilize the
new technologies that you were talking about as well to make sure
that they have all the tools and the resources that they need.
One of the things that the Chairman was mentioning in terms
of potential new technologies, I would offer if you have a stronger,
deeper relationship between state leaders, the state treasurers and
auditors in particular, treasurers obviously on the front end in
terms of verification, eligibility, transparency of how money is
being spent, and the auditors on the back end with regard to inves-
tigation, examination, and obviously audits, then I think you can
see a lot of that cooperation.
Also, I wanted to respond earlier mentioning that you hope that
the Vice President’s task force is successful, and of course, so do
I. I was able to meet with some of that leadership last week. Now,
again, it was not an in-depth conversation. I do not want to cer-
tainly suggest that there was more discussed than there was, but
I can say that that team is very serious, very focused on these
types of conversations. How do we get better with technology? How
do we get better with cooperation and partnerships between the
state and the Federal level? And it was not from a partisan per-
spective. So there, I think, is a great deal of opportunity here from
this Committee, state leaders, and also this task force led by the
29
Vice President to get really good, serious, systemic change done on
the fraud issue.
Mr. WALKINSHAW. Thank you.
Mr. SESSIONS. He yields back. Before he leaves, I would like to,
if I can, do a follow-up to what the gentleman was asking because
I think it is a valid point.
So, Mr. Westbrooks, probably I would ask this. We began dis-
cussing a little bit more in depth PRAC. We discussed a little bit
more in depth about its existence, its seemingly integration into
the law and how it has become effective. Do we want to keep
PRAC? Do we want to expand its knowledge and use it and to
make sure it is still ready to go, maybe made permanent?
Mr. WESTBROOKS. Thank you for your question, Chairman Ses-
sions. And this is the central premise of my book, quite honestly,
was the frustrations in the early days of the pandemic to reinvent
the Recovery Board’s data analytics capability. You cannot just flip
a switch and create something. It needs to be on standby. It may
not need to be as big as it was during the pandemic, but it was
incredibly, incredibly challenging to get the, hey—it is called the
PACE, the Pandemic Analytics Center of Excellence—and unbeliev-
ably challenging to get that stood up in a very short period of time.
So, I would hate to see that capacity gone because there will be—
not only will there be another emergency crisis that we will deal
with, but just on normal operations, you need that capacity. We
want that capacity. And it is a relatively low cost for it. Thank you.
Mr. SESSIONS. Well, I think the main point I would say is it ex-
ists, day one. And the last part, which I am not here to shill for,
but I have a piece of legislation that I am dropping today that
makes it permanent. So, thank you very much for amplifying that.
And of course, we need to pass it out to Members of this Sub-
committee also.
I will yield back my time now, go to this distinguished gentleman
from Florida, the gentleman, Mr. Frost.
Mr. FROST. Thank you very much, Mr. Chairman.
In the Fiscal Year 2024, over $10 billion of Federal Government
spending on SNAP was lost due to improper payments. The One
Big Beautiful Bill Act included a SNAP provision that is nick-
named the Alaska carveout. This was a political move that was
made to get the One Big Beautiful Bill passed over on the Senate.
The Alaska carveout delays the cost-sharing requirement for states
with high improper payment rates, like my state, the State of Flor-
ida. It makes absolutely no sense. Essentially, it penalizes the
states that make good-faith efforts to improve integrity and reduce
their errors, and it rewards the worst-performing states in the en-
tire nation.
We are already seeing people take advantage of this loophole. In
Maryland, a whistleblower claimed that senior officials were trying
to leave correctable errors uncorrected to keep the error rates up.
It also kicked the problem for the worst-performing states down the
line by creating a two year delay. And this is important to me be-
cause I am from the State of Florida, which has some of the high-
est rates of improper payments on SNAP in the entire nation.
Mr. Westbrooks, how does the Alaska carveout discourage low-
performing states with high improper payments, like my State of
30
Florida, from making the necessary improvements and actually fix-
ing the problems?
Mr. WESTBROOKS. Thank you for your question. I cannot speak
specifically for Florida officials and what any state official might be
thinking. You know, I would look at it from an audit perspective.
I would look at the effectiveness of any intervention. When we are
talking about penalties and incentives, are they closely tied to the
behavior to drive the desired results?
Just on a personal level, I am a proud father of five, and it
strikes me as giving my D student, dinging their allowance, my D
student, but then letting my F student pass and say—just with a
finger wag to say, well, next year, I am going to cut your allowance.
So, in terms of the tie, direct tie to the behavior, I think that is
going to be a challenge. And I look forward to auditors, GAO, and
other officials looking at how effective that carveout is in practice
in reducing fraud, which is the ultimate goal.
Mr. FROST. Yes. I doubt it is going to be effective. I mean, it was
not a move made to fix anything. It was a political move. It was,
you know, pretty reported on. We all knew about it when it was
going on the Senate. You know, my state, our Governor, Governor
DeSantis, has allowed the program to essentially crash and burn.
I mean, the Florida payment error is over 15 percent. It is unac-
ceptable. And because of carveouts like the Alaska carveout, states
like Florida are getting rewarded for running a horrible program.
There is no reason to believe that even with a delay, that states
like mine can get their act together and finally turn things around.
And this is important because it really impacts working families
and the commitment we have made to them.
Mr. Westbrooks, do you have any indication that states that are
receiving this carveout are actually moving toward compliance? Is
there any indication of that?
Mr. WESTBROOKS. No, I cannot speak to that. No, I have not seen
anything on that. Thank you.
Mr. FROST. And how do high error rates impact Floridians and
just Americans in general who depend on the vital programs?
Mr. WESTBROOKS. Well, as you know, in the Act, depending on
the level of the error rates, there is a certain percentage of cost
sharing that has shifted. I guess some of the criticism that I have
seen of it is that, you know, you are relying on an error rate that
includes overpayments and underpayments and includes what we
talked about earlier about documentation errors. So, there is a cost
implication or a penalty associated with a, one could argue, an im-
perfect measurement. It is the best that we have, right? It is—the
improper payment rates, error rates, is the best measure that we
have, but when you tie it directly to financial penalties in a dif-
ferent timeframe, I think that is where some of the debate has
been on whether it will be effective or not. Thank you.
Mr. FROST. What do these errors mean for, like, a working fam-
ily? I mean, I think we can all understand what, like, an under-
payment can mean for a family. What does an overpayment mean
for somebody?
Mr. WESTBROOKS. Well, an overpayment just means that the
state made an error in the calculation, and so they overpaid. And
the way the SNAP program—data quality program works, if the
31
error is under, I think it is $58, then it is deemed as not material,
so it is not factored in. So that—so, you might have instances
where there are a large number of under $58 errors, overpayment
or underpayment, but there is a systemic issue underneath that
that will never be addressed because it does not meet the error.
But, you know, all of the error rates ultimately, like I said, af-
fects—as you know, affects the state cost share amount. And any
time that there are, this is any government program, whenever
there are penalties associated with anything, you always have to
worry as an auditor that people are going to game the system in
terms of their statistics. And that is always going to be a risk, and
data quality is always going to be a risk in that program and I
think any other Federal program. Thank you.
Mr. FROST. Thank you. I yield back.
Mr. SESSIONS. The gentleman yields back his time.
You have given us not only a laundry list, but I think some good
direction that we need to go. I am interested in making sure that
I follow up with each of you on not just your ideas but that I pro-
vide you feedback about how we are getting there.
We cannot fix this without each of you, auditors who see things
and direction we go, but I think that you see some sense of oppor-
tunity that lies within the Members here that are truly concerned
about over and underpayments. Perhaps an underpayment is very
difficult for us always to quantify. I am not sure we pay as much
attention to those, even though our congressional offices have to
fight many times with people who want to be recipients on those
matters. We can consume ourselves if we do not fix this problem.
We can take away from the availability of money, and we see that
when we look at the national debt.
This chance that we have, however, I think, Dr. Oleka, needs to
be brought front and center to people who are like you, who are
auditors, who then openly express their delight or their problems
with what we are doing.
I am very much interested, and Mr. Mfume and I in this Sub-
committee, getting closer to this, but we have to start with more
than just looking at the PRAC or looking at making legislation per-
manent to save it. And I think Mr. Westbrooks’ point that I took
under advisement that I wholly agree with is, why would we do
away with the data we have? Why would we not move forward on
that?
But I think the question is—and we have vetted that here. This
staff and I have spent a great deal of time of wondering what is
that key word? Is it fraud that we need to focus on that says be-
cause of a question of fraud—not fraud, but a question of fraud—
will that allow us to receive information across the board and other
agencies to where they could do business with each other, where
they could verify things? And I think it is our hope that weakens
my last question to you today.
I think if we were to ask a question, not assuming we know the
answer, us asking a question, would that mean that the entities,
no matter Small Business Administration (SBA), Department of
Veterans Affairs (VA), wherever it is, they could then go and vet
that question a little bit better and ask for data to certify who peo-
ple are? Is that really the answer to where we would ask people
32
and take the 15 minutes and vet them and then have the tools to
where we could go and double check what they said, death certifi-
cate, voter registration, license information? There is a lot of infor-
mation that is out there that they should have access to, even if
it is to their own state. Help lead me down that pathway, anyone.
Mr. Westbrooks?
Mr. WESTBROOKS. I can share my experience as IG of the Pen-
sion Benefit Guarantee Corporation. We had—and it is a very im-
perfect analogy and model, but with Death Master File data, you
have currently existing matching capabilities, right? And you want
to build a system because that data is very imperfect, right? So,
you build the system so that if there is a match of two or three ele-
ments, I think our agreement with them was, they are two ele-
ments match, that is a flag. You cannot take action unilaterally on
a flag. The flag has to be adjudicated and resolved, but it is at least
a flag.
What you do not want are agencies taking action. And this is
sometimes—I think folks act too precipitously if they have not been
working fraud cases. A flag is just a flag, and there are many,
many, many false positives, many false positives, so—but you want
to system and build an environment where the flags are identified
very quickly and adjudicated very quickly. You do not want, you
know, an adverse impact on a claimant, but you do not want to get
into a pay-and-chase situation. So, that is how it worked with the
Death Master File data. It cannot just be one—you know, a mis-
spelling on, you know, you did not put the ‘‘s’’ on the end of my
last name. It has got to match two elements. Then you adjudicate.
Mr. SESSIONS. I think you make my point very eloquently, and
this is the point that whether you are going on veteran’s benefits,
whether you are taking out an SBA loan, whether you are going
in Social Security, the mistake that if it is not vetted properly up
front over long term becomes a huge issue.
Auditor Ball?
Ms. BALL. Absolutely, there needs to be a thorough and accurate
vetting process. I do not know that it means that you have 15 min-
utes with each person who reaches out to you because a lot of times
what we find is, it is a red flag, it is a notification, it is an alert,
that then gets ignored. When we start to dig into our systems, a
lot of times we actually know someone has passed away, they are
a deceased person because it says it in their file, but it also says
that they are eligible. So, I think a lot of it really does boil down
to making sure that you are acting on red flags. There is a good
system in place for what you are supposed to do when there is a
red flag. It really is having those controls and then following
through on those controls.
Mr. SESSIONS. Is there a timeframe associated with that? Is
there a limitation associated with that? Is there one red flag does
not indicate something, but it might indicate a question, and you
keep going? Certainly, someone who is committing fraud has mul-
tiple failures across questions and challenges that would be
asked——
Ms. BALL. Right. Sometimes——
Mr. SESSIONS [continuing]. Correct?
33
Ms. BALL [continuing]. That is the case where there are multiple
red flags, and sometimes they are not acted upon. So, I think you
need to have very, very clear guidelines and controls to ensure that
you are treating those things seriously and you are doing the
things in the timeframe that you are supposed to do them.
Mr. SESSIONS. Do we need to help with that and say these need
to be cleared?
Ms. BALL. That is a good question. I think the work that we have
done is starting to highlight the breakdowns, and it is going to be
good to see in the next year and the year after that, okay, we have
highlighted the problems at the state level. Are they fixing them?
I do not know that it needs to be spelled out at a greater level at
the Federal level. In some instances it may. Sometimes it just
needs to be the oversight on the front end to just make sure they
are actually doing it.
Mr. SESSIONS. Yes, because I can envision circumstances where
multiple failures were recognized and someone gave up on it think-
ing maybe they had pushed too hard. We generally expect someone,
when challenged, to go, whoops, I got caught. I do not think that
happens. I think that there is a continuation of this. Dr. Oleka?
Dr. OLEKA. Yes, I think what the Auditor is saying is exactly cor-
rect. There is obviously a belief in federalism, I think, among this
crowd. Allow the states to figure out what would make the most
sense in terms of a lot of the controls, and then potentially what
could happen is that you and your colleagues set a baseline. And
I will give you an example. In Mississippi, Treasurer David
McCrae, he was able to figure out an issue regarding citizenship
for unclaimed property. Unclaimed property is a financial asset
that you can give back to the people if they have lost it. A lot of
treasurers have that authority. So, he was able to put in some
guardrails to effectively make sure that there was not a lot of fraud
based on citizenship. So, he was able to do that.
Now, you couple that with a lot of the new technologies that we
have been discussing, it becomes iterative. So then when you have
continued types of fraud, if it is verification or eligibility, now, be-
cause of technology, you can actually batch different queries where
if the red flag, as you were mentioning, is a set of issues that re-
gards to paperwork, you are able to answer those in a lot different
ways if it is a couple of red flags that it results to very clear out
and outright fraud.
So, based on what Auditor Ball and her colleagues are able to do
within their states, then again working in a continual relationship
with the Federal Government, the necessary partners, you can fig-
ure out a lot of that stuff without having to mandate it. Some
things, obviously, though, it needs to be a clear, compelling mecha-
nism, but I think that is where the conversation can go back and
forth to figure out what that ought to be.
Mr. SESSIONS. And we ought to drive that to a conversation of
common sense.
Mr. Bagdoyan?
Mr. BAGDOYAN. Yes, thank you, Mr. Chairman. I would agree
with all the comments that we just heard. Data analytics is at the
heart of this. You have to look for those red flags. And as I kept
saying throughout my presence here today, you have to act on the
34
results. Back in December of last year, we issued an interim report
on our review of the Affordable Care Act, the Federal exchange. We
flagged—the most egregious flag was a single Social Security num-
ber that had 127 ACA policies associated with it. When we pre-
sented that example to the Centers for Medicare and Medicaid
Services (CMS) for an explanation, they told us that they did not
perform that sort of analytics. They were surprised by the result,
but they were not planning on doing anything about it because
they were concerned about kicking the wrong person off that policy.
So, you know, that is a pretty significant example of a massive
red flag that, at least for now, that particular agency is not going
to take any action on. You have to act on those red flags. You can-
not say, oh, it is a red flag. Well, okay, but, you know, we are good
with it. And that is the temperament that has to change.
Mr. SESSIONS. I know you are right because I, early in my career,
had an opportunity to have people who collected money, offered
service, and if you did not give them the available answers, they
quit vetting things. It is no different than a police officer that ar-
rests a criminal and the judge lets them out by the time the night-
time shift is done and they see them back on the street. There have
to be ways that are common sense, cost effective, reasonable to
where people can understand the system and the outcomes. But it
does mean that I and this Subcommittee have to do our job.
And I found out yesterday—Mr. Westbrooks, I did not have a
chance to meet with you yesterday, but I did the other three wit-
nesses that are here today. I found out that they have placed a
great deal of confidence that we can make progress and work to-
gether.
I asked Dr. Oleka a question yesterday and again this morning
about the follow-up, about how we are going to come and actually
engage on this issue properly. And certainly, we recognize the Vice
President is engaging, walking in this shadow also of making sure
that what we do is bipartisan, is not political, is driven by data
that can be sustained. And this is where we are moving.
So, I want to thank each of you for taking time not just to get
on a flight and come here but to take your very important time
away from the duties that you have that help save this country the
embarrassment of systems that are frail or do not work properly.
I look forward to touching base with each of you on future activities
and how we can best work together.
So, with that and without objection, all Members have five legis-
lative days within to submit materials and additional written ques-
tions for witnesses, which will be forwarded to the witnesses.
If there is no further business, without objection, this Sub-
committee is now adjourned.
[Whereupon, at 11:58 a.m., the Subcommittee was adjourned.]
Æ
File and source
- File
- CHRG-119hhrg63450.pdf
- Size
- 203,338 bytes
- SHA-256
- 67d90e9c4d1bfea18b81e72a3b7b7899afdd0afe66e394482fd776ecf5cd2800
- Our copy
- CHRG-119hhrg63450.pdf
- Original
- www.govinfo.gov