Social Security Administration officials failed to recognize basic signs of disability fraud, such as huge clusters of people in the same area with the same fake affliction sharing the same lawyer.
The result was millions of dollars lost to fraudulent schemes before anyone at the agency took notice, according to an annual report released Thursday by the Social Security Administration's inspector general.
Officials overpaid Social Security recipients by billions thanks to a series of administrative and reporting errors, the watchdog found. The agency managed to recover $3.4 billion in overpayments, but spent $0.07 chasing every dollar it got back and ended the year with $18.5 billion in uncollected payments.
That included $46.8 million that was paid to Social Security recipients who had already died.
The inspector general's office said it was "concerned" that "noncitizens" are illegally obtaining and using Social Security numbers.
"In addition, recent audit work determined that over 6 million numberholders age 112 or older had no death information," the watchdog wrote.
Under pressure to cut down on disability fraud, the Social Security Administration is getting slower at handling hearings for individuals who appeal a denial of disability benefits, the report said.
Individuals who want a hearing on their Social Security disability benefits waited an average of 480 days this year, up from 426 in 2014.
What's more, the number of pending disability hearings jumped from roughly 700,000 in 2010 to more than 1 million this year.
The agency has poured $344 million over seven years to create a system for processing disability claims, but has yet to develop one, the report said.