Regulation and Compliance > State Regulation

Hearing Set on Death Master File

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A House panel will hold a hearing Thursday on the accuracy and uses of the Social Security Administration’s (SSA) Death Master File (DMF).   

The issue is of growing importance to the life insurance industry out of concern of incorrect use of the DMF. 

Several industry officials said the industry played no role in the decision of Rep. Sam Johnson, R-Texas, chairman of the Subcommittee on Social Security of the House Ways and Means Committee, to hold the hearing but he will be monitoring it.

No list of witnesses will be available until Wednesday, Johnson’s office said.

Out of concern of misuse of the DMF, Johnson recently introduced a bill, H.R. 3475, the “Keeping IDs Safe Act of 2011,” which would stop Social Security from making this information public.

The industry has been criticizing the use of the system to publicly criticize them and investigate them, citing inaccuracies.

That is because state Insurance Department and revenue officials have been using the DMF to initiate intense probes of their policies. They use the file to find beneficiaries of life insurance policies and, if not, turn over the unclaimed property to the states promptly.

Such large insurers as MetLife, John Hancock, Prudential and AIG have recently settled with state officials on the issue, or have taken charges against earnings out of concern of potential liability.

Thirty-seven states have retained an outside firm, Verus, to examine the books of insurers representing 92 % of industry assets  in order to determine whether they are complying with unclaimed property laws.

Verus is using the DMF to pore over the records of these insurers to see if they are turning over the funds to the state based on state law.

In fact, state officials in New York are double-teaming the issue. The state Department of Financial Services is investigating all life insurers in the state on the issue, and the state comptroller and attorney general have launched a separate probe, subpoenaing the records of the state’s nine largest insurers.

Insurers have complained that the death master file contains inaccuracies and Johnson, in convening the hearing, appears to acknowledge that.

He cited newspaper reports that incorrect reporting of death “have created severe personal and financial hardship for those who are erroneously listed as deceased, including the termination of benefits and the public disclosure of information that the SSA normally keeps confidential.”

Johnson said in announcing the hearing that, “According to the SSA, each year approximately 14,000 individuals are incorrectly listed as deceased on the DMF.  Those affected have experienced termination of benefits, rejected credit, declined mortgages and other devastating consequences while their personal and private information is publicly exposed.”

Moreover, he said the DMF “reportedly has become a source for thieves to capitalize on the identities of children and others who have died.”

Johnson said that criminals appear to be exploiting the easy access to death information to submit fraudulent tax returns that include the decedent’s social security number. 

He explained that, “Parents of the deceased child do not know their child’s identity has been stolen until the IRS rejects their legitimately filed return and the theft has been exposed.”

Johnson also cited the National Taxpayer Advocate’s 2011 report to Congress, which included a section entitled “The Federal Government Facilitates Tax-Related Identity Theft by Publicly Releasing Significant Personal Information of Deceased Individuals.”

In announcing the hearing, Johnson said that, “Since 1980, Social Security has been required to publicly make available Americans’ personal information through the so-called Death Master File.

“Nearly anyone can get this information, including identity thieves. Identity theft 

affects swindled businesses, American taxpayers and grieving families,” Johnson said.

“Also, any one of us could find ourselves on that list by mistake – a mistake which could cause severe financial hardship,” he said.

An industry offical who asked not to be named, cautioned that unclaimed property is far from the focus of the hearing, if a topic at all.” But the DMF file is the criteria being used by Verus, the outside firm being used by 37 states to determine if insurers are complying with unclaimed property law, in examing insurer files.