Exclusive: The head of Social Security promises to fix the 'cruel-hearted' clawbacks of overpayments

Fred Clasen-Kelly | (TNS) KFF Health News

The new leader of the Social Security Administration is committed to changing the system of taking back billions of dollars that it claims was mistakenly sent to recipients, stating that it doesn't seem fair.

In an interview with KFF Health News, SSA Commissioner Martin O’Malley expressed his intention to propose modifications to prevent people from facing overwhelming debts that have driven some into homelessness and caused financial difficulties for the most vulnerable individuals – the poorest of the poor and people with disabilities or persistent medical conditions or who are at least age 65.

O’Malley, who took office in December, said that 'addressing the injustice we do to too many Americans because of overpayments, the rather cruel-hearted and mindless way that we recover those overpayments,' is among his top priorities.

He mentioned specific measures, such as establishing a time limit, shifting the burden of proof to the agency, and imposing a 10% limit on clawbacks for certain beneficiaries.

'We do have the ability and we do have the authority to address many of these injustices,' he said, suggesting that the SSA won't have to wait for congressional action.

The pledge comes after an investigation by KFF Health News and Cox Media Group television stations revealed that SSA routinely reduces or halts monthly benefit checks to reclaim billions of dollars in payments it sent to beneficiaries then later said they should not have received.

In some cases, years passed before the government discovered, and then imposed, debts that sometimes have reached tens of thousands of dollars on people who cannot afford to pay. KFF Health News and Cox Media Group discovered that more than 2 million people a year have been hit with overpayment demands.

Most overpayments are associated with the Supplemental Security Income program, which provides funds to individuals with minimal or no income, who are disabled, blind, or at least age 65. Others are linked to the Social Security Disability Insurance program, which assists disabled workers and their dependents.

O’Malley stated that the agency plans to stop pursuing overpayments from years ago and terminate the practice of cutting off benefits for disabled workers who don't respond to overpayment notices because they did not receive them or couldn’t understand them.

'We're not meeting the intent of Congress by forcing seniors out of their homes and forcing them to live on the streets when they didn't understand our notice,' O’Malley commented.

Denise Woods resides in her Chevy, searching for a safe place to sleep each night at strip malls or truck stops around Savannah, Georgia. Woods stated she became homeless in 2022 after the SSA – without explanation – determined it had overpaid her and demanded she return around $58,000. Woods did not have that amount available, so the agency stopped her monthly disability benefits to recover the debt.

The agency later reinstated some of her benefit payments: She now receives $616 per month. That is insufficient to cover rent in Savannah, where even modest studio apartments can cost $1,000 per month.

In January, she became sick and ended up in intensive care with pneumonia. “I signed a [Do Not Resuscitate form] and a nurse asked, ‘Do you know what this means?’” Woods said. “I told her there was no reason to revive me if my heart stops. They have already ruined my life. I’m beyond exhausted.”

After KFF Health News and Cox Media Group released the series “Overpayment Outrage,” many disability recipients came forward with disturbing stories, including how the government sent them overpayment notices without explanation and threatened to cut off their main source of income with little warning.

Members of Congress publicly demanded that SSA fix the problems. Democratic Sen. Ron Wyden of Oregon said he would meet monthly with agency officials “until it is fixed.”

Sens. Gary Peters and Debbie Stabenow, both Michigan Democrats, sent a letter dated Feb. 29 to the SSA, saying many overpayments were caused by the agency. They asked officials to explain what is causing the problems.

“It’s absolutely critical that the agency is accurately administering these benefits,” Peters said in written response to an interview request. “I’ve heard from too many people across Michigan who have faced financial hardship after the agency sent them incorrect payments.”

The agency recovered $4.9 billion of overpayments during the 2023 fiscal year, with an additional $23 billion in overpayments still uncollected, according to its latest annual financial report.

O’Malley said he wants to address overpayment clawbacks as part of a larger effort to address SSA’s “customer service crisis.” He did not provide specifics but said he anticipated plans would be implemented this year.

Officials have long acknowledged that the federal disability system is plagued by long delays and dysfunction. Some people become homeless or grow sicker while waiting for an initial decision on an application, which took an average of over seven months in 2023, according to a letter signed by dozens of members of Congress.

O’Malley said the agency terminates disability benefits for some people who don’t contact the SSA after receiving a clawback letter.

“To be honest, a lot of problems [are caused by] our notices being hard to read,” O’Malley said. “In fact, one might argue that the only thing that’s really clear about the notice is to call the 800 number.”

The agency’s toll-free number, O’Malley said, is on his fix-it list, too.

Callers complain of lengthy hold times and often are unable to reach an agent for help, according to congressional members, disability attorneys, and others.

O’Malley pointed to a 27-year low in staffing. “We’ve been unpacking many of these customer service challenges,” he said. “There’s not one of them that hasn’t been made worse by the short staff.”

Still, he said, the overpayment process is unfair. Beneficiaries often must produce evidence to show they did not receive extra money, O’Malley noted.

“One would assume that in a country where people are innocent until proven guilty,” he said, “that the burden should fall more on the agency than on the unwitting beneficiary.”

Supporters of the impoverished and disabled expressed optimism that O’Malley will fulfill his promises.

“We have long struggled with clients being given too much money, causing significant difficulty,” mentioned Jen Burdick, an attorney with Community Legal Services of Philadelphia, which helps clients who have received notices of receiving too much money. “We are encouraged to see that SSA’s new commissioner is carefully considering reforms to the policy on overpayments and we remain hopeful that his administration will finally provide relief to these individuals.”

Mike Pistorio is concerned that change won’t happen quickly enough for him.

A letter dated Sept. 21, 2023, that he received from the Social Security Administration states that he was given $9,344 too much. The letter accuses Pistorio — a 63-year-old man with disabilities who claims to have four stents in his heart — of receiving excessive money on behalf of his adult children.

Pistorio stated that he doesn’t understand why he owes the government money and that the SSA has not addressed his inquiries. He stated that he and his wife are afraid of being kicked out of their home because they rely on his $1,266 monthly disability benefits to pay the rent.

“What angers me is that none of this is my fault,” stated Pistorio, who resides in Middletown, Pennsylvania, and worked as a plumber until his health declined. “The stress of this has made my diabetes worse.”

Pistorio stated that the agency has proposed taking $269 per month from his benefits to pay off his debt — an amount he claims he cannot afford.

“I have informed them that ‘I will lose my housing,’” Pistorio stated.

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(KFF Health News, formerly known as Kaiser Health News (KHN), is a national newsroom that produces detailed journalism about health issues and is one of the core operating programs of KFF — the independent source for health policy research, polling and journalism.)

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