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May 4, 2000, Thursday

SECTION: PREPARED TESTIMONY

LENGTH: 1202 words

HEADLINE: PREPARED TESTIMONY OF GARRY G. GEFFERT WV LEGAL SERVICES PLAN, INC.

BEFORE THE HOUSE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON SOCIAL SECURITY

BODY:
My name is Garry G. Geffert. I have been a staff attorney with the West Virginia Legal Services Plan, Inc. office in Martinsburg, West Virginia, for almost twenty years. The West Virginia Legal Services Plan, Inc. annually obtains a grant from the Legal Services Corporation to provide legal assistance to low-income individuals in civil matters.

I urge the Subcommittee to recommend passage of H.R. 3666, proposed by my Congressman, Representative Bob Wise, amending Titles II and XVI of the Social Security Act. Congressman Wise's bill would give meaningful protection from exploitation to the most vulnerable to Social Security and SSI beneficiaries, those who cannot handle their own financial affairs and so must depend on representative payees. Congressman Wise's bill does this by permitting a social security beneficiary to recover any benefits which have been misappropriated by a representative payee without proving that the Social Security Administration was negligent in overseeing the representative payee. And, it would provide retroactive relief. A recent incident which occurred in my home town, and which was the subject of a segment on the news program 20/20, shows the need for passage of Congressman Wise's bill.

Many social security beneficiaries in our area have no family member who can serve as a representative payee. In the early 1990's, a local business man, Gregory Gamble, set up a nonprofit corporation, called the Aurora Foundation, to be a representative payee, for a fee. The corporation was essentially a one-person operation. Once the Foundation was established, the local Social Security office routinely told beneficiaries that the Aurora Foundation would be their payee; beneficiaries were not given a choice.

From time to time, beneficiaries complained about the Aurora Foundation and the manner in which their funds were handled. Those complaints were largely ignored; none were investigated. In 1996, a beneficiary wrote to the Foundation complaining about the handling of his money, and sent a copy to the Social Security Administration. He was subsequently allowed to discontinue using the Foundation as his payee, but no investigation of his complaint was made.

In early 1999, clients of the Aurora Foundation began getting eviction notices for nonpayment of rent and letters from utility companies threatening to cut off service for nonpayment of bills. These were, of course, payments that the Aurora Foundation was supposed to have made for its clients. The Foundation office closed and the state court appointed a receiver. The state's action was too late. The money was gone.

The Office of the Inspector General of the Social Security Administration audited the Foundation's records and determined that $223,353.00 had been stolen from 127 Aurora Foundation clients.

Mr. Gamble has entered a plea of guilty to embezzlement of Social Security funds. He has also filed for bankruptcy. Although the Bankruptcy Judge has ruled that the debts to my clients, and other Aurora Foundation victims, are not dischargeable, Mr. Gamble has no assets from which to repay the individuals whom the Social Security Administration put in his clutches.

Under current law, my clients may be able to recover from the Social Security Administration ("SSA") the benefits which the Aurora Foundation misappropriated. However, in order to recover they must show that the they lost their benefits as the result of "the negligent failure of the Commissioner of Social Security to investigate or monitor a representative payee." 42 U.S.C. Section 405(j)(5); 42 U.S.C. Section 1383(a)(2)(E). This is neither a simple, nor a swift, task.

Social Security's monitoring duties are so minimal that it is difficult to show they negligently failed to meet them. All Social Security requires of a payee is the filing of a two-page summary of income and expenses. (Form SSA-623-F6). While this summary accounting is appropriate for a family member acting as payee, it is inadequate for an organization which handles the money of many individuals.

The inadequacy of the reporting requirement is demonstrated by the Aurora Foundation. The Aurora Foundation maintained one checking account, into which were placed all the benefits for almost all of its clients. The Foundation then purported to keep records showing how much of the account belonged to each client. Until the end, the account usually had more money in it than belonged to any one client. However, no one ever required the Foundation to show that the account had all of the money for all of the beneficiaries. Social Security does not even require an organizational payee to show that its bank accounts balance. The Aurora Foundation's part-time clerk testified that she tried to balance the client checking account, but could not make it balance. When she asked her boss about it, he said that the problem was caused by bookkeeping entries he had failed to make, and that she should not worry about it.

Further, negligence must be proven in the SSA administrative complaint scheme, a system which has no time deadlines and can be excruciatingly slow, and under which there are none of the normal procedures through which information can be obtained. This seriously handicaps the ability of my clients to pursue their claims, as neither my clients nor I have been able to determine whether the Foundation even filed the short summary forms which the SSA does require. While both my clients and I have made requests under the Freedom of Information Act and the Privacy Act, SSA has been playing hide the ball. It has refused to turn over even basic information about the Foundation, claiming that release of that information could hinder its criminal investigation, and it has failed to respond to any of the Privacy Act requests seeking copies of the annual summary statements which the Foundation should have filed for the clients.

Congressman Wise's bill, HR. 3666, would solve these problems. It would eliminate the need to show that the SSA was negligent in its oversight of the representative payee. The SSA beneficiaries could promptly recover the benefits upon which they depend for the necessities of life. The SSA could then recover from the dishonest representative payee, a task which it is in a far better position to accomplish than are the beneficiaries.

Congressman Wise's bill also does what the SSA's bill does not; it makes the removal of the "negligence" requirement retroactive. This is of crucial importance to my clients, and the other victims of the Aurora Foundation. Their money was stolen prior to the end of 1999; under the SSA's bill, they would recover nothing. That is not fair. It was not their choice to have the Aurora Foundation appointed as their payee; the SSA directed them to the Foundation. They should not suffer from the poor choice of the SSA.

The one hundred twenty-seven victims of the Aurora Foundation are in desperate need of the relief which Congressman Wise's bill would afford them. On their behalf, I ask that your Committee recommend passage of H.R. 3666 to the House of Representatives.

Thank you for the opportunity to present these views to you.

END

LOAD-DATE: May 5, 2000

Document 6 of 44.


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