COMPARISON OF BENEFIT PROVISIONS AND AVERAGE BENEFITS AWARDED AND BEING PAID UNDER THE RAILROAD Type of benefit RETIREMENT ACT AND THE SOCIAL SECURITY ACT, JANUARY 1959-Continued Under age 62, entitled child in her care, unremarried (with exceptions): employee fully or currently insured. $63. Under 18, or became totally disabled before 18: employee fully or currently insured. Election by employee before 1947. Retirement annuity reduced to provide annuity for widow. Average benefit awarded. (3). Average benefit being paid. $50. LUMP-SUM DEATH BENEFITS Average benefit awarded. 1 Averages for January 1959 are estimates which include the effect, on both railroad 2 Present minimum railroad retirement annuity is based on 10 years of service and a maximum monthly compensation creditable was $300; beginning July 1954, it was increased to $350. 3 Too few awards for average to be significant. 4 Gross amount before deductions for other benefits paid. Source: Office of Director of Research, U.S. Railroad Retirement Board, Feb. 6, 1959, and Social Security Administration. Employer Employee Self-employed Percent FINANCING RAILROAD RETIREMENT BENEFITS AND SOCIAL SECURITY BENEFITS The Railroad Retirement Tax Act provides for a pay- Social security benefits are financed by a payroll tax 1959 1963-65 1966-68 1969 and after. Calendar year 4/2 42 Mr. BENNETT. Mr. Chairman, there was handed to me this morning a letter from the Railroad Retirement Board dated February 13, addressed to the Senate Committee on Labor and Public Welfare having charge of this legislation, on the subject of fraudulent unemployment insurance claims. Might I ask the Railroad Retirement Board to furnish this committee with a similar letter addressed to this committee so that we can put it in the transcript of our record? Mr. HARPER. We will be glad to do that. The CHAIRMAN. We will be glad to have the information. (The letter referred to follows:) Hon. OREN HARRIS, U.S. RAILROAD RETIREMENT BOARD, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. HARRIS: Pursuant to your request of February 16, I enclose herewith the Board's statement to the Honorable Wayne Morse, chairman, Subcommittee on Railroad Retirement, Committee on Labor and Public Welfare, U.S. Senate, dated February 13, 1959, and a separate statement of Board Member Healy dated February 17, 1959, concerning fraudulent claims under the Railroad Unemployment Insurance Act and claims under that act in which the claimant has been discharged or has left work voluntarily. Sincerely yours, Enclosures. HORACE W. HARPER. U.S. RAILROAD RETIREMENT BOARD, Hon. WAYNE MORSE, Chairman, Subcommittee on Railroad Retirement, Committee on Labor and Public Welfare, U.S. Senate, Washington, D.C. DEAR SENATOR MORSE: This refers to your request of February 9, 1959, for information concerning fraudulent claims under the Railroad Unemployment Insurance Act and claims under that act in which the claimant has been discharged or has left work voluntarily. Statutory provisions FRAUDULENT CLAIMS The provisions of the Railroad Unemployment Insurance Act relating to the points concerning which you have inquired are set out in an attachment to this letter. With regard to fraudulent claims, you will note that section 4(a−1) (i) imposes a disqualification which excludes a claimant from receiving benefits for any of the 75 days beginning with the first day of any registration period with respect to which the Board finds that a fraudulent claim was made. This disqualification is sometimes referred to as the administrative disqualification. In addition to the administrative disqualification, the act provides for the criminal prosecution of anyone who knowingly makes a false or fraudulent claim. Under the provisions of section 9(a) such an individual is punishable by a fine of not more than $10,000 or by imprisonment not exceeding 1 year, or by both fine and imprisonment. Section 2(d) of the Railroad Unemployment Insurance Act contains specific provisions to facilitate the recovery by the Board of benefits paid to an individual who was not entitled to them. Such recovery may be made by offsetting any benefits to which the individual or his survivors may become entitled, not only under the Railroad Unemployment Insurance Act but also under the Railroad Retirement Act. These specific provisions are in addition to the general rights of the Government as a creditor. Administration of fraud provisions In almost all cases of fraud, the claimants have failed to report that they were working on days which they claimed as days of unemployment.. The Board takes steps through its registration procedures, to prevent the payment of benefits to employees when they are working. Employees ordinarily register before railroad unemployment claims agents, usually at their last railroad work location. The claims agent thus has knowledge whether the employee worked for the railroad. In the smaller communities, the unemployment claims agents often have knowledge whether their claimants are performing other work, and this helps to assure valid claims. Fraud is usually detected by comparing a claimant's periods of claimed unemployment with wage records showing his wages as reported by all of the persons or companies for whom he worked. Such records are compiled by the Railroad Retirement Board for the railroad industry and by State unemployment compensation agencies and the Social Security Administration for other industries. Some time must elapse before the records are available. In some cases, wage records are not ready and cannot be consulted until the second quarter of the calendar year following the year in which the wages were earned. It would be impractical to withhold benefit payments until such records can be prepared and consulted. Checks for employment on claimed days are made on a spot-check basis and are directed toward cases where it seems most likely that improper claims may be found. In selecting cases to check, consideration is given to the length of the claimant's unemployment, his occupation, and any other information in the file which would indicate whether he might be likely to have obtained work. Such checks are made by the various field offices of the Board in a minimum of 2 percent of the cases. When the Board finds that a claimant has received compensation or wages during a period when he claimed that he was unemployed, a check is made of the employer's payroll to determine the days on which he worked. If the employer's payroll shows that the claimant worked on days which he claimed as days of unemployment, the question of fraud is then considered. The 75-day administrative disqualification is applied in each case where fraud is found. In addition, many cases are referred to U.S. attorneys for criminal prosecution under section 9(a) of the act. The more flagrant fraud cases, ones in which there is most likelihood of conviction, are considered for prosecution. Other cases are not referred because in most areas of the country the large number of cases on the Federal court dockets and other factors make it impractical to do so. Convictions are obtained in many of the cases referred for criminal prosecution. Often the claimant is placed on probation with repayment of the benefits due the Board made a condition of the probation. Separate records are not kept of amounts of benefits determined to be recoverable because the claims were fraudulent or of the amounts of such benefits which are ultimately recovered. There are records of the total amount of benefits held to be recoverable for all reasons (including fraud) and of the total amount recovered. These records show that most of the money determined to be recoverable is recovered. The following table shows the percentage of unemployment benefits held to be recoverable to the total unemployment benefit payments for each of the last 4 completed years: |