Bogus Claims, Cashing Checks of Deceased: IG Cites Cases of FEHBP, Retirement Fraud

Following is a section of the latest six-month report from the inspector general’s office at OPM in which the IG highlights cases of fraud against the FEHB and federal retirement program.

Health Care Investigations

Most OPM OIG investigations—annually, about two-thirds—involve health care fraud allegations affecting the FEHBP. These allegations cover a wide range of schemes that can risk harm to patients and waste program and taxpayer dollars . . .

Ineligible Family Member Files $130K in False Health Claims After FEHBP Member Dies

In January 2020, an FEHBP member who lived in the Philippines died. This member was the wife of a retired Foreign Service Officer and received FEHBP coverage as a survivor annuitant.

The Foreign Service Benefit Plan, an FEHBP health insurance carrier, continued to receive medical and pharmacy claims after her death. Medications continued to be dispensed as well. These claims continued until December 2022 and cost the FEHBP $138,903. In January 2023, we received a carrier notification from the Foreign Service Benefit Plan about questionable member-filed claims submitted on behalf of the deceased survivor annuitant, which included expensive and excessive non-FDA-approved prescription drugs.

Further investigation found the adult child of the deceased survivor annuitant stole the reimbursements. In addition to the falsified claims that OPM paid, other federal agencies paid $212,920 to the adult child as part of the fraud scheme, costing federal programs $348,719 in total.

According to court documents and information found during our investigation, the adult child used the stolen government funds to write checks to cash or with notations such as “kitchen remodel,” “Airbnb,” and for other personal expenses.

The adult child was charged by a criminal information filed in the U.S. District Court for the District of Maryland with one count of theft of public money. On July 30, 2024, the adult child pleaded guilty to the charge. They have not been sentenced as of the end of this reporting period.

Retirement Investigations

Fraud committed against OPM retirement programs because of the death of an annuitant that is not reported to OPM often takes years for OPM to detect or discover, which can allow for thousands to hundreds of thousands of dollars in improper annuity payments. Our investigations in these cases often uncover deceitful actions intentionally taken by perpetrators to continue the fraud, such as forging a signature of the annuitant on OPM’s Address Verification Letters or, as in the case described in this semiannual report, forging personal checks to illicitly access money paid to a deceased OPM annuitant. Our investigations in this area are essential to identifying, stopping, and recovering these improper payments and protecting OPM’s retirement programs.

In-Law Uses Checks of Deceased CSRS Annuitant in $75K Fraud

In June 2022, Retirement Services provided a fraud referral based on the unreported death of a CSRS annuitant. The CSRS annuitant had died in December 2018, but OPM continued to deposit monthly annuity payments through November 2021. This resulted in an overpayment of $77,865. OPM recovered $2,131 via reclamation actions, but $75,734 in improper payments remained outstanding.

Our investigation found that the decedent’s daughter-in-law used checks written to herself, some signed by the CSRS annuitant prior to their death, for things such as the daughter-in-law’s own expenses.

In May 2023, the daughter-in-law was charged by criminal information in the U.S. District Court for the Eastern District of Missouri with one count of theft of government money and pleaded guilty. On July 25, 2024, the daughter-in-law was sentenced to 36 months of probation and ordered to pay $75,734 in restitution.