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Dead or Alive

Thousands of errors to the Social Security Administration's Death Master File can result in fraudulent payments -- costing taxpayers billions -- and identity headaches

The following script is from "Dead or Alive" which aired on March 15, 2015. Scott Pelley is the correspondent. Pat Shevlin and Gabrielle Schonder, producers.

It was Benjamin Franklin who wrote, "nothing can be said to be certain but death and taxes." Turns out, with taxes that may be true, but not so much with death. In America, the job of ultimately accounting for who is dead or alive belongs to the Social Security Administration which compiles something called the Death Master File. There are about 86 million names on this national list of the deceased. And it's deadly serious business because when you're added to the file, that means that banks, the IRS, Medicare, law enforcement and the like, scratch you out of existence. But we found that the Death Master File is often fatally flawed. A lot of people who pass on, don't get on the list which costs taxpayers billions of dollars in fraudulent payments to people standing in for the departed. And then, there are those who are on the Death Master File who are very surprised to hear that they're dead.

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Scott Pelley interviews Americans wrongly declared dead by the SSA
CBS News

Scott Pelley: How many of you have been declared dead by the federal government? All of you. You're looking pretty well to me.

This would be a séance except these are living, breathing Americans that we conjured up from around the country-- all declared dead by the Social Security Administration. Don Pilger passed away when he tried to report the death of his wife.

Scott Pelley: This is a form from the Social Security Administration. The idea was you were going to call this number and essentially report that your wife had passed.

"I was in college. I walked into the bank to open up an account and same thing. 'We can't help you.' 'Well, why?' 'You're coming up as deceased. You need to go to Social Security office.'"

Don Pilger: Exactly. And that's what I did on the following Monday. Eight days later I went to access my bank account and it was-- they kept saying, "Invalid pin." So I went to the bank and I give the lady the problem I was having. She typed my numbers into the computer and she grabbed my hand, she says, "Mr. Pilger, I don't believe this. They reported you deceased and not your wife."

Kristina Pace's life was cut short at an early age.

Kristina Pace: I was in college. I walked into the bank to open up an account and same thing. "We can't help you." "Well, why?" "You're coming up as deceased. You need to go to Social Security office." And I did. But just randomly years later it would come up. I'd want to get a car or something. "Oh no. Oh, let me guess. I'm dead?"

Betty Denault was summoned to her Social Security office where the computer read like an epitaph.

Betty Denault: And she pointed on the screen up in the corner and it said, "DOD." And I said, "What does DOD mean?" And she said, "Date of death." And I said, "Well, how did you come up with this?" And she said, "All it takes is somebody to input on the computer the wrong numbers. And it just makes a big difference, of course."

Most people never find out how it happens but when the federal computer says you're dead, you might as well be. The terrible news is relayed by the government to banks and credit agencies. Judy Rivers told us she had $80,000 in her accounts, but when she tried to use a bank card at a store, they assumed she was an identity thief.

Scott Pelley: You couldn't get access to your bank accounts. You couldn't get a credit card. How did you live?

Judy Rivers: Well, for a time I lived in my car. And I couldn't get an apartment. I had my debit cards, which were, of course, no good. I used one without knowing the consequences, and was actually taken to jail and questioned because they thought I was an identity thief.

Scott Pelley: You ended up arrested? Ended up living in your car because of all of this.

Judy Rivers: For six months.

Scott Pelley: You had been eliminated from the human race.

Judy Rivers: Cyber ghost.

Scott Pelley: Cyber ghost.

Don Pilger: Cyber ghost.

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Scott Pelley and Judy Rivers
CBS News

Judy Rivers now haunts a borrowed camper in Alabama and while her finances were ruined, she found that the government makes a tidy profit selling the Death Master File to credit agencies. So, word of her death was nearly immortal in dozens of databases. And it came back again and again. She protested to a credit agency called ChexSystems for what seemed like an eternity.

Judy Rivers: Finally, ChexSystems responded to me and told me to send my information in, and they would consider it, after I had sent it to 'em over 20 times.

Scott Pelley: They would consider whether you were still alive.

Judy Rivers: Correct.

We looked in the Alabama Vital Records Office for Rivers' death notice but it's not there. No one seems to know how she got in the federal Death Master File.

God may judge the quick and the dead but it's the states that collect the data. They pass it along to Social Security and there is plenty of room for error. Record bureaus get death notices from doctors, hospitals, funeral homes or families. And every state has its own rules. Perhaps because the dead don't vote, many of the states don't spend much keeping tabs on them.

This is the State of Alabama Vital Records Vault. It is a place so secure that you need a key and a fingerprint to get inside. But once in here, the technology becomes pretty 19th century. These are death certificates from 1912, for example. All in all, there are 17 million paper records in here. Now, the State of Alabama is moving toward an electronic system. And it's about 60 percent of the way there. But there's so little funding around the country for that kind of transition that there are about a dozen states in America that do not have a statewide electronic filing system for death records.

Scott Pelley: How accurate is the Death Master File?

Patrick O'Carroll: I guess, the best way to say it is as accurate as it can be.

Patrick O'Carroll is the Social Security Administration's inspector general. His office investigates how the Death Master File is used and abused.

Patrick O'Carroll: Right now, that the Death Master File has in it about 86 million records in it, and it gets about 2 million records every year from the states. And we're probably, as with everything else, as strong as the weakest link, in terms that some states are reporting electronically, have very good data. And then with other states, it's done on a more haphazard level. So again, there's going to be some falling through the cracks there.

But O'Carroll told us that live people "falling through the cracks" isn't what keeps him up at night--the much more costly problem is in the millions of Americans who do die and are not recorded.

Scott Pelley: Your office found that Social Security had no death data for 6.5 million people over the age of 111. Do you really believe that there are 6.5 million people over the age of 111 in this country?

Patrick O'Carroll: No, and in fact that's why we did the audit on it. What we were finding is that people that were over 112 years of age, were opening up bank accounts. And it got us suspicious and we found that 6.5 million was not recorded as being deceased in SSA's records.

Scott Pelley: How many people are over the age of 111 in this country?

Patrick O'Carroll: I'm thinking 10.

Most federal agencies depend on the Death Master File. So if a death isn't listed, federal payments just keep coming. We wondered what that would add up to during the course of a year, but it turns out, no one in the federal government is keeping an overall count. The best we could come up with was a few reports from individual agencies.

For example, the Department of Agriculture paid farm subsidies and disaster assistance to more than 170,000 dead people over six years. That came to $1.1 billion. The Office of Personnel Management paid dead federal retirees a little over a billion. And in 2010 alone, the IRS paid more than $400 million in refunds to the dead. Social Security doesn't know how many retirement and disability checks are cashed by the relatives of the dead like Sandra Kimbro.

Sandra Kimbro: I'm a wife, a mother, a grandmother, and now a felon.

Like a lot of people, she took in her aging, ill, mother and had a joint bank account with her. When her mother died, the disability benefits kept coming.

Scott Pelley: When did she die?

Sandra Kimbro: She died--1984.

Scott Pelley: When she died, did you report her death to Social Security?

Sandra Kimbro: I did not.

Scott Pelley: Why not?

Sandra Kimbro I thought perhaps it would have been taken care of by the funeral director at some point.

Scott Pelley: Were you surprised that these benefits kept coming to you?

Sandra Kimbro: No, not initially. Because I had had a conversation with my mom prior to her death, that I would be entitled to the benefits. So I had just assumed and went along with that, thinking that I was entitled.

Scott Pelley: And what did it come to?

Sandra Kimbro: Over a 30-year period, $160,000.

Though she took the checks for three decades, otherwise, Sandra Kimbro is no one's idea of a thief. She and her husband had good, full-time jobs through retirement, a solid middle class life, and raised two children. But then, came an unexpected call from Social Security.

Scott Pelley: The investigator from Social Security must've asked where your mother was?

Sandra Kimbro: Oh, well I explained to him immediately. I didn't try to say that she was alive. I said that she was deceased.

Social Security suspected as much because it is using a clever new tool.

Patrick O'Carroll: So, we go to Medicare and see if anybody hasn't been to Medicare for three years. And if they haven't been, we then, you know, try to go out and make a phone call to 'em, see if they're, you know, still here. Also we look at people that reach 100 years of age, and try to reach out, and see if they're, you know, doing well.

Sandra Kimbro's mother would have been 93 and hadn't used Medicare in 30 years. Kimbro was charged with theft, pled guilty, and is now looking at at least a year in prison. She spoke with us, she said, to warn others.

Sandra Kimbro: I've spent 66 years, no criminal history. Haven't done nothing wrong, lived a good life, did everything I was supposed to do, be a law-abiding citizen. And succumbed to this human error. And this is where I am. And obviously "felon" is not compatible with the other three things that I said. But it is my reality.

Inspector General Patrick O'Carroll says that Social Security is managing about 150 convictions a year, a fraction of the total. But it adds up to about $55 million in fraud.

Patrick O'Carroll: What we're tryin' to do, is get the word out there, is if you do take it, and you're not supposed to do it, we're gonna find you, we're gonna arrest you, and we're gonna get the money back.

Over the last decade, O'Carroll has made 70 recommendations to Social Security to reform the Death Master File. But he says there's little sense of urgency.

Scott Pelley: Is part of the problem here, that in Washington $50 or $100 million a year just isn't a very big number?

Patrick O'Carroll: It's interesting you bring that up, because I deal in very big numbers. About $2 billion go out every day. So when you start taking a look at percentages of $2 billion, that's what to you, me, to a general taxpayer is gonna be is extremely large amounts of money, really, percentage wise, is small, compared to what's going out every day.

As for the living who've been declared dead, Social Security told us "we... work very hard to correct errors when we learn of them."

The agency said that its error rate is only one third of one percent. But that still, adds up to about 9,000 Americans killed off by the government each year. For them, it can be a long road to resurrection. It took Judy Rivers five years. And today, she carries a few credit cards. And something else.

Scott Pelley: You carry a letter around with you--

Judy Rivers: All the time.

Scott Pelley: Everywhere you go. What does it say?

Judy Rivers: It's from the Social Security Office. And I have it updated once a month. And it says that-- who I am, what my Social Security number is, that I have been mistakenly declared as deceased in the past, and that that it's not correct. And I'm alive and well, or at least alive.

Scott Pelley: And you have that updated every month?

Judy Rivers: Every month.

Scott Pelley: Why?

Judy Rivers: Because when you get to about three months, people look at the date and say, "Well, this is old. You know, you could've died since then."

Tomorrow the U.S. Senate's Homeland Security and Governmental Affairs Committee will hold a hearing on all of this. Senators Ron Johnson and Tom Carper will introduce a bill to ensure that improper payments to the dead stop, and the living stay off the Death Master File.

  • Scott Pelley

    Correspondent, "60 Minutes"