Bureaucrats blew the whistle on excessive fines on the poor and disabled: they were fired and demoted by a Trump appointee

A snapshot of what a more politicized administration will look like

For a couple of years of the Trump administration a Social Security anti-fraud program went off-the-rails. It imposed enormous fines on a poor and disabled population for wrongfully cashing checks that were sent to them. One woman receiving a $1,400 monthly check she was ineligible for was fined $119,392 — nearly three times what she received in error. Another was fined $132,000 after wrongly receiving up to $10,618. A third was fined $168,000 after receiving $14,960.

Hat tip to @Reinlwapo of the Washington Post who wrote this story and does excellent in-depth coverage of government. As a public management professor, the story spoke to how the pursuit of fraud can lead to perverse outcomes, how administrative burdens of a vary particular kind are created, and the ways in which politicization undermines the quality of government. Contrary to deep state conspiracy theories, it is a case where bureaucrats were looking out for members of the public, and trying to stop abusive uses of state power, and were punished for their troubles.

Elected officials focus on fraud, leading to performance perversity

Fraud can arise when Social Security beneficiaries fail to disclose changes in status that affects their eligibility. In some cases, they might not be aware that they need to. Congress created the anti-fraud program in 1995 to recover benefits wrongly claimed, and allowed hefty fines for each check received, while also giving significant discretion to Social Security in imposing those fines.

Around 2017, Social Security auditors said that Congress pushed them to be more aggressive, and so they started raising the amount of fines, but also suspending due process provisions (like sending notice of the fines via certified mail, taking into account their financial state, age, and level of remorse). In other words, they stopped using their discretion to take into account the details of the case, and sought to maximize the financial punishment regardless of the circumstances. According to the Post, those targeted were unaware that they had the right to appeal the judgment.

In a narrow sense, this new approach worked. Simply by ramping up the scale of the fines, auditors could generate bigger returns without additional work.

Over a seven-month period ending in mid-2019, 83 people were charged a total of $11.5 million, the documents obtained by The Post show — a jump from less than $700,000 for all of 2017.

This is a classic case of performance perversity: administrators respond to external pressure to improve performance by worsening outcomes. In this case, it meant they increased the amount of money claimed by squeezing more out of a small number of individuals.

Audits as venues of burden

Much of our attention on administrative burden people encounter in their experience of government focuses on applying for or staying enrolled in programs. Carolyn Barnes has also written about the burdens involved in using benefits once you are enrolled. But another venue of burdens are audits, where the government reassesses someone’s eligibility and identifies potential wrongdoing. This is, for example, an enormous issue for the EITC, a relatively low-burden program unless you get audited, and find yourself dealing with a complex mail audit process.

Audit burdens impose an entirely new set of learning costs on people: what rights do I have? Can I appeal? The compliance costs can be enormous, both in the form of actual fines in this case, as well as the need to hire legal defense. Perhaps most troubling are the psychological costs, where citizens feel that because of an error, the state has effectively ruined their life.

If this sounds like exaggeration, look at this case of Lydia DePiero, who owed $434,935 for receiving about $47,000, and who lives on a $1,502 disability check:

“I feel like I got thrown in a pot of boiling water…I’m twisted in something I can’t get out of.”

DePiero, 55, said she has learning disabilities and back pain stemming from a leg damaged from birth. A single mother of five children, she had fought through eight years of appeals to win a $1,600 monthly benefit. Soon before her final appeal was heard, her parents died, DePiero said, and she asked the lawyer she had hired on contingency if inheriting their homes would put her benefits in jeopardy. He told her not to worry about it, she said. But while inheriting one house did not count against her benefits, the second did, along with several vehicles for which DePiero said she was signatory for car loans for her children.

“I know it all falls on me, even though he told me not to worry about it,” she said.

DePiero made several calls to the inspector general’s office before her appeal window closed, phone records show. But by the time she connected with an attorney there, it was two days after the deadline. She said she was told it was not possible to appeal the charges

Whistleblowers silenced

Government has a legitimate concern ensuring that people do not claim benefits they are entitled to. But such efforts need to be proportionate. How did this anti-fraud program become such a failure? Some of the blame lies on Capitol Hill, where lawmakers pushed to ramp up the program without considering potential abuses. But the Trump administration, and their politicization of Social Security, is the primary culprit.

Career staff in the Inspector General’s office warned about how abusive the program had become. For example, one was shocked to be ordered to impose a $176,000 fine on a woman who had written a check for the $26,000 she owed the government. A Trump-appointed Inspector General, Gail Ennis, not just ignored these concerns, but punished the officials who raised them. When the officials persisted in their objections to the disproportionate fines, urging they be renegotiated, they were escorted from their office, and suspended. One was fired and another was demoted. The Inspector General said it was because one had misplaced a file (which mysteriously turned up in another mailbox) while the other was had asked for a postponement on a case, which hardly seem like fireable offenses.

The Merit System Protection Board, which adjudicates on unfair treatment of federal career employees, ruled two years later for the employee who appealed her demotion, finding evidence that she was retaliated against for blowing the whistle on the anti-fraud program. The other employee settled her retaliation claim, and is back at Social Security, though reportedly working on tasks below her previous responsibilities.

Inspector General Ennis’s office appears to be badly troubled, with high turnover, low morale and low outputs in terms of number of audits. After she tracked the computer logs and phone records of remote employees, an employee union accused her of creating a “dysfunctional, derogatory and demeaning” work environment.

It is relatively rare for Presidents to ask Inspector Generals to resign as they do other political appointees, in large part because the job of the Inspector General is to be a watchdog of the President. When Trump fired five Inspectors General shortly after his first impeachment, he was justly criticized because he appeared to be retaliating against those investigating him or his Cabinet officials like Mike Pompeo. There is no such conflict of interest for Biden here, and there is a relatively strong case against Ennis as an Inspector General who has enabled abusive practices of both employees and members of the public under her watch.

Ennis should be asked to resign.

A snapshot of a more politicized federal government

To some degree, the efforts of the whistleblowers appeared to work. Congress started asking more questions about abuses in the anti-fraud program, and the Inspector General provided new guidelines that limited the scale of the fines. But how many of staff took note of the cost their colleagues faced for trying to do the right thing?

As I’ve written elsewhere, when Trump left office he had a plan in place for a massive politicization of the federal employee workforce, once which he or a Trump-like leader will almost certainly impose in a future administration. Career staff like the whistleblowers in this story would lose their career protections. As this case illustrates, such politicization will increase the likelihood that abusive practices by ideological appointees will become more likely when whistleblowers are silenced.

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