News

The Social Security Administration's inspector general is investigating a case of potentially widespread disability fraud in Puerto Rico, two people familiar with the matter said, part of the agency's stepped-up efforts to tackle abuses in the financially struggling program.

The inspector general, Patrick O'Carroll, told an audience at an Aug. 30 disability-examiners conference that the investigation was tied to a pharmaceutical plant that recently closed in Puerto Rico, with 300 employees losing their jobs.

Shortly after the layoff, 290 of the 300 former employees applied for Social Security disability benefits and they all used the same doctor, who lived far from the plant, Mr. O'Carroll told the audience. Mr. O'Carroll didn't identify the doctor, whose identity couldn't be learned.

Jonathan Lasher, an assistant inspector general at the agency, wouldn't comment on the case, but said, "The office of the inspector general is continuing to pursue any number of fraud allegations in Puerto Rico related to the Social Security disability program."

The investigation comes as part of a stepped-up presence in the U.S. commonwealth by the inspector general's office following a March article in The Wall Street Journal that showed how much easier it is to win Social Security disability benefits on the Caribbean island compared with any of the 50 U.S. states.

In 2010, the Social Security Administration awarded benefits in 63.4% of its initial decisions in Puerto Rico, compared with much lower rates elsewhere. In Arizona, for example, benefits were awarded in initial applications in 35.6% of the cases. Nine of the 10 top U.S. zip codes for workers collecting Social Security disability benefits are in Puerto Rico, according to government data.

A spokesman for the Social Security Administration said in light of "statistical trends" in Puerto Rico it has asked the inspector general's office to "make sure that these trends do not reflect an increase in fraud."

The Social Security Disability Insurance program, known as SSDI, was created in the 1950s and is used to provide financial and health-care assistance for Americans who can no longer work because of mental or physical illness or injury. It can help Americans with a range of ailments, including cancer, severe depression and chronic back pain.

The cost of the SSDI program has more than doubled in the last decade and it is projected to run out of reserves in 2017 or 2018 if changes aren't made. About 10.2 million people collected $124 billion in 2010.

Experts attribute the program's economic strains to persistently high unemployment rates and an aging population that is more prone to meeting the government's definition of having disabilities.

The system's structure has also drawn critics who charge the awarding of benefits to the needy relies too heavily on accidental factors, such as where someone applies or which judge is assigned to determine an appeal.

Doctors also play a central role in the process, as their recommendation holds large sway with examiners and judges who make decisions.

Even though SSDI is a federal program funded by payroll taxes, initial decisions about whether someone qualifies are made by state officials because of the way the program is designed. Officials in the Puerto Rican government promised full cooperation with the probe.

"We strongly support the effort to investigate this case and any incident of abuse, and will partner with federal officials to eliminate fraud in not only the disability program, but in other federal health programs like Medicare and Medicaid," Lorenzo Gonzalez, Puerto Rico's secretary of health, said in a written statement. "As with any other federal investigation involving fraud with a federal program, if a physician is found to be performing unlawfully, we will move swiftly at the local level through the state licensing board to take whatever action is needed to halt the abuse."

Mr. Gonzalez said these incidents "are not unique to Puerto Rico" and show the need for "standardized, clear cut guidelines" in determining how benefits are awarded.

Puerto Rico's unemployment rate was 15.5% in July, higher than the 9.1% national average.

Social Security Administration officials have said areas with elevated unemployment rates can translate into more applications for disability benefits.

People who are on SSDI for a set period of time can also qualify for Medicare benefits, which is one of the most attractive features of the program.

Many people remain on SSDI for years, and experts estimate that the program's benefits cost the government roughly $300,000 per beneficiary over the course of a lifetime.



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