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Financial Fraud Law

'Do Not Pay' Dead People (Or Other Ineligible Recipients), President Orders

 The Obama Administration is making an effort to eliminate waste, fraud, and abuse in federal programs, including by reducing and recapturing erroneous payments, as illustrated by Executive Order 13520 (Nov. 20, 2009), and in a March 10, 2010, memorandum to the heads of executive departments and agencies. Now the administration is making clear its goal of preventing payment errors before they occur. That could be quite productive - the Office of Management and Budget ("OMB") says that over the past three years, the federal government paid out benefits totaling more than $180 million to approximately 20,000 Americans who were dead, and more $230 million in benefits to approximately 14,000 fugitive felons or those in jail and who were not eligible for benefits.

To remedy that problem, the president has now directed federal departments and agencies to review current pre-payment and pre-award procedures and “ensure that a thorough review of available databases with relevant information on eligibility occurs before the release” of any federal funds, to the extent permitted by law.  At a minimum, this means that the government, before payment and award, will be checking the following existing databases (where applicable and permitted by law) to verify eligibility: the Social Security Administration's Death Master File, the General Services Administration's Excluded Parties List System, the Department of the Treasury's Debt Check Database, the Department of Housing and Urban Development's Credit Alert System or Credit Alert Interactive Voice Response System, and the Department of Health and Human Services' Office of Inspector General's List of Excluded Individuals/Entities.  

This network of databases, and additional databases to be designated by the Director of the Office of Management and Budget (“OMB”) in consultation with executive departments and agencies, are going to known, collectively, as the "Do Not Pay List." 
Within the next 90 days, executive departments and agencies are required to submit to the OMB a plan that includes information on its current pre-payment and pre-award procedures and a list of databases that the agency checks pursuant to those procedures. Within 120 days, the Director of the OMB will provide a plan for completing integration for the remaining databases, to the extent permitted by law, so that agencies can access them through a single entry point. Within 180 days, the Director of the OMB will issue guidance, to be developed in consultation with affected agencies and taking into account current agency pre-payment and pre-award practices, on actions agencies must take to carry out the new requirements; the guidance will clarify that the head of each department or agency is responsible for ensuring an efficient and accurate process for determining whether the information provided on the "Do Not Pay List" is sufficient to stop a payment, consistent with applicable laws and regulations, and, if so, whether a payment should be stopped under the circumstances.  In addition, this guidance will identify best practices and databases that departments and agencies should utilize to conduct pre-payment checks to ensure that only eligible recipients receive government benefits or payments.