A watchdog at the Social Security Administration testified today that there are about 1,000 cases each month in which a living individual is mistakenly included in the agency’s Death Master File.
The comments were made by Patrick P. O’Carroll, Jr., SSA Inspector General, at a House hearing on problems with the DMF, and what steps can be taken to better ensure that individual privacy is protected and identity theft reduced.
The Death Master File is a primary tool by which the life insurance industry determines when annuitants have died, thereby notifying them when lifetime payments can be halted. It is also used by the industry to determine when life insurance policyholders have died – especially those without family to notify the insurer. The asymmetrical use of the DMF – more aggressively to halt annuities and less diligently to determine when life payments need to be made – is at the heart of ongoing regulatory inquiries and civil litigation against numerous large life insurers.
See also: Prudential, MetLife Sued over Death Master File
The hearing was convened by Rep. Sam Johnson, R-Texas, chairman of the Social Security Subcommittee of the House Ways and Means Committee.
He is pushing a bill, R. 3475, the ‘Keeping IDs Safe Act of 2011,’ that would stop Social Security from making this information public.”
In his opening statement, Johnson said, “Identity thieves who get their hands on a Social Security number can reap instant rewards, while the rightful owner has no idea what has happened.”
In his testimony, Carroll said that SSA officials have told him and his staff that when the Agency becomes aware it has posted a death report in error, SSA moves quickly to correct the situation, and the Agency has not found evidence of past data misuse.
“However, we remain concerned about these errors, because erroneous death entries can lead to benefit termination and cause severe financial hardship and distress to affected individuals.
But, the issue is also important to the insurance industry. Currently, 37 states are having an outside firm scrutinize the records of insurers constituting 92 percent of industry to determine whether they are complying with laws require prompt payment of insurance policies upon death to the appropriate beneficiary, or, in the alternative, the proceeds turned over to the states under so-called escheat or unclaimed property laws.
The records of insurers are being matched against the DFM to determine whether they are appropriately pay beneficiaries of life insurance policies, or, in the alternative, turn the move over to the states.
Several insurers have paid penalties to the states and reimbursed beneficiaries. Others have entered into agreements.