Social Security 'Death File' designed to fight fraud but now aids it

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WASHINGTON - The fraud-fighting businessman who 31 years ago won court-ordered release of an important federal database to stop thieves now worries it is widely misused by crooks and blundering bureaucrats.

Ronald Perholtz is especially unhappy that the federal government hasn't fixed the problem of tens of thousands of living people who've been listed in the Social Security Administration's Death Master File, putting them in an Orwellian nightmare where they can't get jobs, open checking accounts, buy cell phones, obtain credit cards or get mortgages and college loans.

Perholtz, 63, of Stuart, Fla., said he was rebuffed when he brought the problem to the attention of federal authorities nearly three decades ago.

"We met with Social Security people and the Inspector General's staff in the early 1980s. We gave them a thick printout of people who weren't dead. They didn't act on it," Perholtz said. "They wouldn't deal with us. I thought they had more of a social responsibility."

The file also is being misused by crooks who file for tax refunds using the names and Social Security numbers of recently deceased Americans, including children, according to IRS officials.

Perholtz wants to make changes.

He originally sought release of the Death Master File as a tool for pension companies, for whom he worked, to identify the theft of benefits paid to people who have died. When Social Security provided the file under a court-sanctioned agreement, Perholtz and his staff quickly found many cases of pension fraud throughout the industry.

In a recent interview, Perholtz said he's willing to renegotiate that settlement to keep the death file from being so widely distributed that it's become a tool for thieves.

"We should control this death information only for use in protecting companies from fraud," Perholtz told Scripps Howard News Service. "We ought to contain this. I would keep this information more centralized."

But Social Security Administration spokesman Mark Hinkle said the agency cannot make changes.

"We are required to provide such information under the Freedom of Information Act (FOIA)," Hinkle said in response to Perholtz' offer. "Revisiting the court order would not change what we must disclose under FOIA."

Social Security Commissioner Michael Astrue has taken the same position with congressional leaders. Astrue said his agency is required to publicly release the full names, Social Security numbers and birth dates for everyone whom the agency believes has died.

"In order for us to limit the information that we make publicly available, Congress would need to amend the FOIA," Astrue said in a letter to Sen. Richard Durbin of Illinois, the No. 2 Democrat in the Senate.

Rep. Jim Moran, D-Va., said that Social Security is "hiding behind" the 1980 court ruling "as an excuse." Moran has received complaints from grieving parents who can't get their income tax refunds because identity thieves have used the death file to claim recently deceased children as dependents.

The Social Security Administration "can fix that," Moran said. "They can go back to court and ask to reconsider the consent order based upon the abuse."

Nina Olson, the official taxpayer advocate at the Internal Revenue Service, said the unrestricted release of personal information "aids and abets identity theft and tax fraud and is, frankly, appalling."

She said about 350,000 apparently fraudulent tax filings this year used the personal information of recently deceased Americans in an attempt to obtain $1.25 billion in refunds.

"If the Social Security Administration feels it must ask the court that entered a consent judgment in a 1980 FOIA case to modify the judgment, it should do so," Olson said.

Perholtz said much of the problem stems from a failure of Social Security officials to seek cooperation with other agencies and with state governments to obtain an accurate accounting of the 2.7 million Americans who die each year.

"There needs to be a cooperative effort so everyone has the latest and correct information and that errors are ferreted out," Perholtz said. "Like I was pointing out to Social Security years ago, but no one seems to be interested."

The Death Master File has become a widely distributed database easily accessed on the Internet.

The Social Security Inspector General's Office issued a scathing report four years ago, asking the agency to consider reducing the number of people given access to the file or, at least, to release only part of deceased Americans' Social Security numbers.

"All of the people that we disburse the death file to are just creating chaos," Perholtz said.

(E-mail reporters Thomas Hargrove at hargrovet(at)shns.com and Isaac Wolf at wolfi(at)shns.com)

(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)