COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 27 Jan 2005

Chapter 13.3 — Prosecutions.

Mr. J. Hynes (Secretary General, Department of Social and Family Affairs) called and examined.

Chairman

We are here to discuss the 2003 annual report of the Comptroller and Auditor General and appropriations accounts: Vote 40 — Department of Social and Family Affairs; chapter 13.1 — medical assessment and review; chapter 13.2 — overpayments; and chapter 13.3 — prosecutions. We will take all three chapters together, although the discussion falls into two sections, medical assessment and review, and overpayments and prosecutions. Members might organise their questions with this in mind, although they are free to range across the chapters and the Vote. There is no relevant correspondence.

The attention of members and witnesses is drawn to the fact that as and from 2 August 1998 section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee's proceedings. These rights include the right to give evidence; the right to produce or send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written and oral submission; the right to request the committee to direct the attendance of witnesses and the production of documents, and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of the proceedings who are not present may have to be made aware of them and provided with a transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House, or an official, either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions of Standing Order 156 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.

I call on the witnesses from the Department of Social and Family Affairs and the Department of Finance to introduce themselves and their officials.

Mr. John Hynes

The officials accompanying me are Mr. Eoin Ó Broin, the director responsible for the Department's regional operations and control programme; Mr. Philip Cox, the principal officer in charge of the Department's Longford office which deals with many of the disability related schemes and carers' payments; and Mr. John Doyle from the Department's accounts branch in Dundalk.

Mr. John Fitzpatrick

I am an assistant principal officer in the public expenditure division of the Department of Finance dealing with the Vote for the Department of Social and Family Affairs.

Chairman

I now invite the Comptroller and Auditor General to introduce Vote 40.

Chapters 13.1 to 13.3, inclusive, of the report of the Comptroller and Auditor General read:

13.1 Medical Assessment and Review

Introduction

Medical assessment and review is the main control mechanism of illness and disability related schemes administered by the Department of Social and Family Affairs. Medical assessments are made to provide an independent second opinion for the guidance of Deciding Officers when determining eligibility for illness and disability related benefits on medical grounds. Deciding Officers are department staff appointed by the Minister to decide on claims under the provisions of the Social Welfare Acts. Claimants may appeal decisions on eligibility.

The illness and disability schemes subjected to medical assessment and review are

· Short term schemes

— Disability Benefit

— Injury Benefit

· Long term schemes

— Disability Allowance

— Invalidity Pension

— Disablement Benefit

— Carers Benefit/Allowance

Table 47 summarises the numbers of recipients of illness/disability benefits.

Table 47

Scheme	No. currently in receipt of benefit	Claims processed during 2003
Disability Benefit	58,912	267,000
Injury Benefit	1,183	15,000
Disability Allowance	69,898	17,405
Invalidity Pension	54,214	5,698
Disablement Benefit	12,002	1,750
Carers Benefit	631	1,267
Carers Allowance	21,474	6,319

Referral

When and how applicants for any of the Department's illness/disability schemes are referred for medical desk review and/or physical examination depends on several factors. Long term and short term schemes are treated differently as are particular illnesses e.g. lower back pain. Payment of short term benefits commences following registration of a claim. However, payment of long term benefits does not commence until an applicant is found to be medically qualified.

Short Term Schemes

The Department processed 282,000 short term benefit (Disability and Injury) claims in 2003 and approximately 60,000 cases are currently in benefit. Such cases are referred for assessment 4, 6 or 8 weeks from the date of application. The type of illness declared determines the referral date. Minor illnesses are allocated a 4 week referral date, while more serious illnesses are given later referral dates. Lower back pain cases in Dublin, Cork and Galway are referred immediately.

Claimants must provide medical certificates covering the entire period of an illness to ensure continued payment of benefit. The medical referral process is activated when a medical certificate extends beyond the allocated referral date. When a claimant is found medically qualified for benefit the medical assessor sets a date for reassessment — the review date. Final certificates are regularly received before the referral/ review date is activated. This happened in 61,498 cases in 2003 and no assessments took place in these cases. When no certificate is received, payment is immediately suspended if the claim is subject to weekly certification. If the claimant's illness is long term and subject to monthly or 6-monthly certification, payment is suspended after three weeks if a certificate is late. If no certificate is received for eight weeks, the Department automatically suspends the claim in all cases, the referral is cancelled and no further action is taken. If medical certificates are later provided the case is rescheduled for referral and prioritised as ‘urgent'. In 2003, payment was stopped in 22,870 cases when medical certificates were not submitted as due but payment was restored to 5,021 of these cases following the submission of ‘late' medical certificates.

Long Term Schemes

All new applicants for long term schemes such as Disability Allowance and Invalidity Pension are subject to medical assessment/examination.

Existing beneficiaries of these schemes are scheduled for recall for a second or subsequent medical assessment.

Table 48 shows the review status of Disability Allowance and Invalidity Pension cases at May 2004.

Table 48

	Disability Allowance	Invalidity Pension
‘Do not refer again’	27,505	44,343
Review dates not yet reached	8,462	7,395
Review dates overdue	19,683	2,476
Review dates not assigned	14,248	—
Number of claimants in payment	69,898	54,214

Table 49 shows the numbers of Disability Allowance and Invalidity Pension review dates which have passed without reassessment taking place.

Table 49

Year	1997 or earlier	1998	1999	2000	2001	2002	2003	Uncertain	Total
Disability	17	161	2,683	3,194	4,150	4,370	4,993	115	19,683
Invalidity	223	188	175	155	78	963	694	—	2,476

Only 16 overdue Disability Allowance review cases were examined in 2003. All were found unqualified for the scheme.

The Department stated that it has two separate computer systems, one of which supports payments and the other medical review. The payment support computer system does not correctly reflect the referral status of overdue Invalidity Pensions reviews in all cases. There are some 1,200 cases with a one or two year review date among the overdue review cases but all were, in fact, referred to Medical Review and Assessment Section.

The Department stated that an analysis of Invalidity Pension cases medically reviewed in 1999 and 2000 showed that the systematic review of all cases with review dates of one year or more may not be cost effective. Only 3 claimants out of 3,788 examined had their entitlement disallowed. Risk is low given that medical eligibility criteria for Invalidity Pension are rigorous and 50% of claimants are over 55 years old.

The Department's current policy is to review all Invalidity Pension claims that have a 1-year review date. Claims with a review date of more than 1 year are targeted on a sample basis.

Medical Review and Assessment

The Department's Medical Assessors are specially trained to perform medical assessments. They carry out desk assessments of medical evidence presented in support of claims and physically examine claimants in appropriate cases to determine fitness for work. A nurse attendant is present with theMedical Assessor during each examination, in accordance with the accepted guidelines of the Medical Council.

Medical evidence is provided to assessors by

·illness details recorded on a claimant's application forms

·weekly and monthly medical certificates from a claimant's certifier usually his/her General Practitioner (in some cases of serious long term illness 6-monthly certificates are provided)

·a detailed medical report requested by the Department from a claimant's General Practitioner in certain cases.

The assessment process starts with a desk review that either confirms the medical eligibility of the claimant or results in a date for physical examination. Eligibility on medical grounds cannot always be determined from medical reports alone.

In the conduct of the examination, the medical assessor reviews the history of the case, considers any fresh medical evidence and expresses an opinion based on the clinical examination. The medical assessor does not dispute the certified cause of incapacity but assesses the degree to which the loss of function resulting from the illness affects the person's ability to perform his/her own job or alternative work.

The Department's medical review policy provides for the assignment of either a review date or a review status of ‘Do not refer again (DNRA)' to all claimants. Table 50 shows the review status of the different types of case managed in 2003.

Table 50

Case Type	Review in 0 to 2 years	2 years +	DNRA
Disability/Injury Benefit	17,840	1,173	945
Invalidity Pension	464	171	177
Disability Allowance	1,879	466	641
Carers Allowance	3	—	1
Appeals Cases	2,015	119	112

Physical examinations are prioritised as follows

·Appeals by claimants against declarations of ineligibility and suspension of payments

·Applications for long term illness schemes

·Urgent requests from scheme administrators

·Claimants with bad attendance records at previous examinations

·Other normal applications (mainly Disability Benefit) and reviews of persons to determine continued entitlement to payment (also mainly Disability Benefit).

Resources

The medical assessment and review system is supported by 21 medical assessors employed full-time by the Department. The Department also employs over 60 nurse attendants (6 of whom are full-time). Administrative support is provided by 36 staff.

Physical examinations are carried out at 61 centres throughout the country. Six examination rooms in Dublin and three in Cork are in use on a full-time basis. The frequency of use of the other centres depends on the volume of cases on hand and on the availability of centres, nurse attendants and medical assessors.

Table 51 provides details of the costs of the Medical Review and Assessment Section in 2003.

Table 51

Expense Type	€000
Salaries — Medical Staff	1,910
Salaries (including overtime) — Administration staff	850
Fees to part-time nurses	217
Travel	473
Incidentals	158
Room Hire	14
Total	3,622

Outturn

In 2003 a total of 118,362 cases (128,552 in 2002) were scheduled for either desk assessment or examination. Of these 59,737 were desk reviewed while 58,222 Irish cases and 403 UK cases were called for physical examination. The latter group are examined on foot of reciprocal arrangements between the two countries. Table 52 provides details of the results of medical examinations of Irish cases in 2003.

Table 52

		Examined	Not examined
Scheme	Called forexamination	Qualified	Notqualified	Finalcertificatereceived	Unfit toattend	Did notattend	Cancelled/notexamined
Disability/Injury Benefit	38,670	19,958	6,406	3,840	240	7,062	1,164
Disability Allowance	8,450	2,985	2,689	70	65	2,279	362
Invalidity Pension	1,128	529	391	11	14	135	48
Carers Allowance	423	4	172	9	9	206	23
Disablement Benefit	3,234	2,296	—	—	3	811	124
Appeals	6,317	2,246	2,534	604	27	665	241
Total	58,222	28,018	12,192	4,534	358	11,158	1,962
Percentage	100%	48%	21%	8%	1%	19%	3%

Benefit is terminated when a final medical certificate, indicating that the claimant is fit to return to work, is received. The Department estimates that 26% of final certificates are submitted following notification to claimants of appointment for medical examination.

Excluding Disablement Benefit, where the purpose of the examination is to assess the degree of disablement, one in three who are examined are found capable of work. In all, three quarters of those desk assessed and/or examined are deemed qualified for the particular scheme applied for.

Found capable of work

If a claimant is found capable of work a disallowance notice is issued automatically and payment of benefit is terminated. 950 claimants whose Disability Benefit payments were terminated in the period January to May 2004 were subsequently paid Unemployment Benefit/Assistance (903 cases) or Supplementary Welfare Allowance (47 cases).

The average length of time that these 950 cases were not in receipt of social welfare payment was 13 days.

Non-attendance for examination

Those who fail to attend for medical examination are suspended from benefit payment. Suspension may, however, be lifted and payment restored if a claimant subsequently provides a valid excuse. 7,062 Disability Benefit claimants failed to attend medical examinations in 2003. 4,826 claimants had payments restored, while the other 2,236 remained suspended from payment.

Those who fail to attend for medical examination are rescheduled for review and prioritised as ‘urgent'.

Current Caseload

A review of the current caseload revealed that while desk assessments were up to date, there were 31,542 referred cases awaiting medical examination on 6 April 2004. Table 53 shows the distribution of those awaiting medical examination by scheme.

Table 53

Scheme	Number	%
Disability Benefit	29,141	93
Injury Benefit	739	2
Disability Allowance	704	2
Disablement Benefit	907	3
Carers Allowance	51	—
Total	31,542	100

The bulk of the backlog relates to Disability Benefit cases. Currently such cases are accorded the Department's lowest level of priority for examination. However, when this matter was examined in 1994 experience suggested that the longer a person remained on Disability Benefit, the less likelihood there was of the person being found capable of work at a medical referee examination.

The Department at that time decided to put greater emphasis on referring short term claimants for medical examination earlier and more frequently than previously. That policy change was regarded as a factor in the reduction in the overall number of Disability Benefit claims from 47,600 in January 1993 to 42,250 in December 1994. The April 2004 figure was 58,900. The number of PRSI contributors insured for Disability Benefit rose from 968,300 in the 1993/1994 contribution year to 1,906,516 in the 2002 contribution year.

Reasons for backlog

The Department indicated that some 14% of scheduled physical examinations did not take place in 2003 because

·Some 6,685 or 11% of claimants failed to show up on the day or gave insufficient notice of cancellation making it impossible for the Department to fill the vacant slots

·88 examination sessions were cancelled by the Department resulting in the loss of 1,516 of all appointments, while a further 446 attended but were not examined (mainly as a result of being late for their appointments).

The Department attributed session cancellations to:

·Unavailability of nurse attendants. There are 3.5 permanent vacancies and the Department has difficulty recruiting part-time nurses. While Dublin has 6 examination rooms, on average only 3 rooms are in operation weeklydue mainly to the Department's inability to recruit part-time nurse attendants.

·Insufficient caseloads to justify sending a medical assessor to particular examination centres. Some cases may be on referral for months while awaiting a sufficient caseload.

·Unavailability of suitable examination rooms. Examination sessions are infrequent in some areas due to the small caseload and held in temporary accommodation hired for the day. Eight former centres are closed.

·Participation by seven medical assessors in the lower back pain project in addition to their other duties.

Appeals

If a decision based on the opinion of the medical assessor is unfavourable to the claimant then he/she has a right of appeal to the independent Social Welfare Appeals Office (SWAO). Before an appeal is determined a different assessor gives the claimant a second medical examination. Of the 6,406 Disability Benefit claimants found capable of work following initial medical examination in 2003, 3,115 received a second examination. The second examination found 1,446 appellants were qualified/incapable of work. Of the remaining 1,669 capable of work, 1,158 went on to appeal while 511 withdrew or did not pursue their appeals prior to consideration by the Appeals Officer.

The appellant may be afforded an oral hearing or the Appeals Officer may make a decision based on the documentary evidence available. The average time for processing appeals is 22 weeks of which SWAO time is 10 weeks. The average time is distorted by the protracted nature of some appeals. Appeals decisions and case papers are returned to Medical Review and Assessment Section and filed.

Table 54 shows the results of appeals on medical grounds.

Table 54

Scheme	Appeal Upheld	Appeal partially upheld	Appeal rejected	Total
Disability Benefit	609	17	532	1,158
Injury Benefit	118	1	23	142
Disability Allowance	285	7	369	661
Invalidity Pension	91	1	61	153
Carers	185	18	239	442
Total	1,288	44	1,224	2,456

50% of appeals are upheld even though appellants have already been found unqualified on separate occasions by two different medical assessors. The Department is of the view that the main reason for upheld appeals is the presentation of additional information to SWAO on the claimants' illnesses/disabilities.

Department Initiative — Lower Back Pain

The number of claimants providing medical certification for lower back pain has been increasing steadily in recent years. In 2002, there was a significant increase in the number of Disability Benefit claims from 51,000 to 56,000 and lower back pain claims accounted for 9,675 (17%) of all open Disability Benefit claims. Some 6,500 of these fell into the 20-50 age group.

In 2003, the Department initiated a targeted approach in the management of lower back pain cases. New claimants were given top priority and referred for prompt medical examination. Pilot projects were undertaken in Dublin and Cork using specially trained medical assessors. Table 55 shows the results in respect of 1,532 lower back pain cases selected for the projects.

Table 55

Project Cases	1,532
Less Final Certificate Submitted before Notification of Appointment	172
Called for Examination	1,360
Final Certificate Submitted after Notification of Appointment	736
Did not attend	197
Examined	556
Qualified due to lower back pain	154
Qualified for reasons other than lower back pain	127
Not Qualified	275
Appealed	122
Deemed Capable of Work	77
Did not Attend Appeal or Returned Final Certificate	29
Appeal Upheld	16

It is noteworthy that

·Of 1,200 claimants removed from benefit under the project, 463 have submitted a new Disability Benefit claim of which 204 were back related. 369 of these repeat claims were subsequently terminated by the end of December 2003.

·An additional 257 subsequently claimed under other schemes as follows

— Unemployment Assistance/Benefit 146

— Supplementary Welfare Allowance 4

— Long term schemes 107

·The number of back pain claims for disablement pension dropped by 100 (20%) during the project.

A follow up project in Dublin, Cork and Galway on a further 2,775 claimants has produced similar results.

Consideration is being given to extending the project to other areas.

Audit Findings

Disability Review Dates Not Recorded

Review dates for 13,165 cases transferred from the Health Boards in 1996 were not entered on the Department's computer records. According to the Department the process was discontinued in the interests of administrative efficiency because the bulk of the papers examined indicated that disabilities were long term and would have been unnecessary to review in the future. However, a further 1,083 cases have since not been assigned review dates. The Department has stated that review dates were omitted in these cases in error.

Low Level of Disability Allowance Review

The medical reassessment process for Disability Allowance claimants has almost ceased and there are 20,000 cases currently overdue. Only 16 claimants were reassessed in 2003 and, significantly, all were found unqualified for the scheme.

Backlog Awaiting Examination

There are currently 31,681 cases awaiting physical examination and half of these are overdue by more than 3 months. The backlog problem is related mainly to resource issues.

It was noted that in some locations, for example Cork and Tralee, the backlog for medical examination of up to almost a year has built up in cases allotted a 'normal' priority review status.

Some 19,900 of those awaiting physical examination were previously called. Crucially 1,689 of these had never been examined: 47 had been referred at least five times.

Disability Benefit Average Duration

My 1994 Report noted that as a result of the Department's decision to focus its resources on referring short term claimants for examination earlier and more frequently than previously there was a marked reduction in the average duration of short term Disability Benefit claims from 5.5 weeks in March 1993 to 3.2 weeks in the first quarter of 1995. Earlier and more frequent medical referral could, similarly, have an impact in reducing the currently computed average of 4.9 weeks.

Success of Back Pain Initiative

The results in respect of those called for examination under the project were significantly different from those pertaining to medical referrals generally. A comparison of the project and general results revealed the following:

·54% of the lower back pain project cases called for examination submitted final medical certificates before the date appointed for examination compared to 10% generally

·49% of the project cases were found qualified following examination compared to 75% generally

·43% of the project cases who failed the examination lodged appeals compared to 61% generally.

The success of the project was due to a number of factors including early intervention. The pilot project has been continued in Dublin and Cork and extended to other regions. It is intended to ultimately fast track all lower back pain cases for prompt medical examination. The Department should explore the scope for extending this type of approach to other identified high risk ailments.

General

Information relating to persons who fail to attend for medical examination or those who, having failed to qualify, reapply or apply for benefit under other social welfare schemes should be systematically recorded to serve as an input into risk rating of social welfare claimants.

Accounting Officer's Response

In response to the report's findings the Accounting Officer stated that

·The number of people eligible for illness or disability payments has increased significantly over the past ten years for a number of reasons. New schemes have been introduced, including Disability Allowance and Carer's Benefit and eligibility conditions for these and for other illness and disability schemes have been eased. The number of people eligible for disability benefit in particular has increased because the numbers paying PRSI have risen in line with increased employment and because PRSI coverage has been extended to additional groups, such as new entrants to the public service.

·The Department acknowledges that there are particular difficulties in relation to Disability Allowance because of the increased number of claims (approximately 70,000 in payment at present compared to less than 57,000 three years ago) and is examining the possible reasons underlying this.

·Given the finite resources available to it, the Department must strike a balance between:

—Processing new claims

—Maintaining claims in the context of rising numbers in payment

—Implementing eligibility and other improvements in schemes as announced from time to time

—Implementing controls to ensure that payments are made in accordance with eligibility.

·The Department considered that the range and extent of control activities to date achieved a reasonable balance between competing priorities in the context of resources available while recognising that certain elements of control activities were in need of improvement. A new, dedicated, Control Unit is being established to improve control of the Disability Allowance, Carer's and Invalidity schemes. This Unit has been specifically tasked to address the points raised, including the very low rate of review in Disability Allowance cases. Measures have also been introduced to prevent the erroneous omission of review dates for new awards of Disability Allowance.

·The Department accepted that compliance with the medical eligibility criteria in respect of continued entitlement was of crucial importance. The Department depends on certifiers (usually general practitioners) in the first instance to attest correctly that the applicant for a social welfare payment is not capable of work. In that regard, the Department spends in excess of €23 million per annum on fees to medical practitioners in respect of certificates and medical reports.

·The Department also employs a team of independent Medical Assessors to advise on individual medical eligibility for its relevant schemes. The Department has found it difficult in the recent past to recruit suitably qualified medical practitioners to fill vacancies in the existing team and considers that increasing the number of Medical Assessors employed by the Department would be difficult. It has also encountered difficulties in recruiting nurse attendants and would require increased numbers of both doctors and nurse attendants in order to increase the number of examinations undertaken.

·The Department could adjust its referral criteria to achieve a better balance between the numbers referred for examination and the resources available to undertake examinations. However, it considers that there is a value in scheduling cases for medical review even though the backlog of cases for examination is such that many cases will be overdue when examined, because significant numbers of people cease claiming on being notified of referral for medical examination.

·The Department is currently undertaking a review of the Medical Review and Assessment System and it is intended to engage external consultants in that regard. The review will include consideration of any possible alternative or complementary methods of assessing medical eligibility in order to cope with the increased volume of assessments that need to be undertaken.

·The Department is also examining the backlog with a view to developing measures to deal with arrears of cases for medical examination.

13.2 Overpayments

The Department of Social and Family Affairs administers some 50 welfare schemes paid through Vote 40 and the Social Insurance Fund. Expenditure on assistance and insurance schemes was €5.46bn and €4.65bn respectively in 2003.

Tables 56, 57 and 58 outline overall expenditure on various schemes over the period 1999 to 2003, and for the same period, the amounts recorded as overpayments and the amounts of overpayments attributed to fraud or suspected fraud.

Table 56 — Scheme Expenditure

	1999	2000	2001	2002	2003
	€m	€m	€m	€m	€m
Social Insurance	2,681	2,993	3,517	4,198	4,649
Social Assistance	3,320	3,425	3,983	4,940	5,460
Total	6,001	6,418	7,500	9,138	10,109

Table 57 — Number and Amount of overpayments recorded for recovery (Numbers shown in brackets)

	1999	2000	2001	2002	2003
	€m	€m	€m	€m	€m
Social Insurance	7.66(18,080)	6.39(15,252)	6.79(15,786)	9.72(23,723)	10.60(26,174)
Social Assistance	20.79(21,346)	20.59(18,110)	19.26(14,274)	19.41(15,084)	28.77(17,459)
Total	28.45(39,426)	26.98(33,362)	26.05(30,060)	29.13(38,807)	39.37(43,633)

The increase in the value of Social Assistance overpayments recorded in 2003 was mainly attributable to the specific targeting in that year by the Department's Earnings Review Unit of persons in receipt of One Parent Family payments.

Table 58 — Number and Amount of overpayments attributed to fraud or suspected fraud (Numbers shown in brackets)

	1999	2000	2001	2002	2003
	€m	€m	€m	€m	€m
Social Insurance	3.22(5,821)	3.39(5,159)	3.27(5,321)	4.43(8,089)	5.00(9,567)
Social Assistance	12.14(9,273)	10.89(7,466)	7.73(5,350)	7.36(5,696)	8.73(7,114)
Total	15.36(15,094)	14.28(12,625)	11.00(10,671)	11.79(13,785)	13.73(16,681)

The amount of overpayments attributed to fraud or suspected fraud compared to totaloverpayments since 1999 is summarised in Figure 2.

The Department's record of recovery of overpayments during the period 1999 to 2003 is shown in Table 59.

Table 59 — Department's record of recovery of overpayments 1999 to 2003

	1999	2000	2001	2002	2003
	€’000	€’000	€’000	€’000	€’000
Overpayments not disposed of at 1 January	53,619	60,581	64,374	65,452	70,621
Overpayments recorded for recovery	28,448	26,982	26,049	29,130	39,367
less
overpayments recorded in prior years cancelled	(292)	(447)	(668)	(394)	(381)
sums recovered in cash	(5,154)	(7,464)	(9,873)	(8,892)	(10,397)
sums withheld from current entitlements	(4,198)	(4,999)	(5,185)	(6,734)	(6,521)
net amounts written off as irrecoverable	(11,842)	(10,279)	(9,245)	(7,941)	(6,736)
Overpayments not disposed of at 31 December	60,581	64,374	65,452	70,621	85,953

Of the €85,952,516 overpayments outstanding at 31 December 2003 — €28,031,611 dates from 2003; €16,746,568 from 2002; €13,977,236 from 2001 and €27,197,101 from earlier years.

13.3 Prosecutions

Cases involving abuse of the system are considered with a view to taking legal proceedings. Prosecutions are taken against employers who fail to carry out their statutory obligations and persons who defraud the social welfare pay-ments system. Prosecutions can either be by summary or indictment proceedings. Civil proceedings are taken to facilitate the recovery of scheme overpayments or the collection of PRSI arrears. Such cases are only taken where it has been established that the debtor has sufficient means to discharge the debt.

During 2003, 355 criminal cases (2002 — 205 cases) were forwarded to the Chief State Solicitor's Office (CSSO) for prosecution as shown in Table 60.

Table 60 — Criminal cases forwarded to the Chief State Solicitor's Office

	2003	2002
Unemployment Assistance	146	91
Unemployment Benefit	158	61
Disability Benefit	29	18
One Parent Family Payments	1	8
Other Schemes	7	2
Offences Committed by Employers	14	25
Total	355	205

A total of 186 criminal prosecutions (2002 — 160 prosecutions) involving social welfare recipients were finalised in court in 2003. The total amount of overpayments assessed in these cases of persons who attempted to or obtained benefits/assistance fraudulently was €1,007,332 (2002 — €605,113). The results of these 186 court cases and the penalties imposed are given in Table 61.

Table 61 — Results of Court Cases involving Social Welfare Recipients

	Fines Imposed	Community Service	Imprisoned	Probation Act	Proven No Penalty	Adjourned /Liberty to Re-enter	Bound to peace
Unemployment Assistance	50	6	12	9	10	3	2
Unemployment Benefit	34	4	12	13	7	1	2
Disability Benefit	6	1	2	2	1	—	—
One Parent Family Payments	1	—	—	—	—	1	—
Other Schemes	2	—	2	—	3	—	—
Total	93	11	28	24	21	5	4

Prosecutions of 24 cases involving employers (2002 — 7 employers) were also finalised with 16 being fined, 1 sentenced to community service, 3 given the Probation Act and 4 recorded as Proven No Penalty.

The number of prosecutions finalised in the courts since 1999 is summarised in Figure 3.

A total of 60 civil cases have been forwarded to the Chief State Solicitor's Office since 1999. Table 62 details the history of civil cases forwarded and the cases still pending with the Chief State Solicitor's Office and Table 63 details the outcome of the 34 civil cases finalised.

Table 62 — Civil cases sent to the Chief State Solicitor's Office

	1999	2000	2001	2002	2003	Total
To CSSO	9	6	14	11	20	60
Finalised	3	1	5	11	14	34
Pending	6	5	9	0	6	26

Table 63 — Results of civil cases finalised

	Total
Settlement reached without going to court	10
Client had no assets	1
Not pursued due to the circumstances of the debtor	6
Case statute barred	5
Recovered by instalments	11
Finalised in Supreme Court	1
Total	34

Mr. John Purcell

Chapter 13.1 records the results of an audit of the Department's medical assessment and review activity. Medical examination is an important element in the control arrangements for administering illness and disability related welfare schemes. An effective system of medical review and examination should balance the resources applied with the risk of inappropriate payment while minimising the burden of bureaucracy on clients. The audit found that in some respects the Department had succeeded in achieving this difficult balance but that there was still scope for improvement in several areas.

On the positive side, there is systematic referral for medical examination in the case of short-term schemes, namely, disability and injury benefits, while a more selective approach is taken to reviewing long-term cases. That is as it should be. Moreover, the Department adopts a proactive approach which is perhaps best illustrated by a pilot initiative it undertook in 2003 to give priority to referring lower back pain cases for prompt medical examination. This stemmed from a steady increase in such cases in recent years to a stage where they represented 17% of all open disability benefit claims in 2002, and from research showing that continued absence from work was not conducive to recovery from the condition. The prompt call for examination resulted in both "early recovery" and "found capable" rates being far higher than the average for short-term ailments. The success of this project suggests that early intervention might also have a positive impact on the duration of claims in respect of other identified high risk ailments.

There are, however, some problem areas such as disability allowance where only 16 cases were reassessed in 2003, all of which were found to be no longer qualified for the scheme. The Accounting Officer recognised the need to improve performance in this area and, as a result, established a new dedicated control unit in late 2004 to address the shortcomings.

There is a significant backlog of claimants generally awaiting medical examination. The outcome of examinations in 2003 as shown in Table 52 suggests that the backlog probably contributes to a situation where many claims could be in payment which would otherwise have been terminated on medical examination. Given the stated difficulty of recruiting suitably qualified medical practitioners and nurses to sustain the capacity of the Department's team, decisions need to be made in the short term about prioritising certain cases for examination. To do so effectively, management must take account of factors such as the inherent risk associated with certain ailments and schemes and the fact that claimants living in certain areas have not been subject to examination for some time. This information would also form a valuable input into the major project the Department is about to undertake to review all aspects of the medical assessment and review system. It is intended that the review will include consideration of any possible alternatives or complementary methods of assessing medical eligibility in order to cope with the increased volume of assessments that need to be undertaken.

Chapter 13.2 sets out the recorded number and amount of overpayments on the welfare schemes operated by the Department for 2003, together with figures for the four previous years for comparative purposes. Recorded overpayments in the year totalled €39.4 million. The chapter also shows the corresponding figures for the element of the overpayments attributed to fraud or suspected fraud. In this respect, the Department reckons that about one third of the overpayments for the year can be put down to fraud, €13.7 million or so. While this is a small sum when set against total welfare payments of over €10 billion, I stress that it only reflects what is detected. In reality, it is likely that the scale of detected overpayments and fraud is related to the resources the Department can commit to control activity in any one year and to the effectiveness of the way in which those resources are applied. To illustrate, in the case of one parent family payments, a new unit, the earnings review unit established in 2003, was responsible for identifying most of the cases that had given risen to the increase in recorded overpayments of this allowance from €1.6 million in 2002 to €8.4 million in 2003. The committee will recall that last year I published a report on my office's evaluation of the Department's control activity. Table 59 shows that the Department finds it difficult to recover amounts overpaid. At the end of 2003 nearly €86 million was outstanding, this after writing off a total of €46 million as irrecoverable in the past five years.

Chapter 13.3 outlines the extent of the Department's prosecution activity in 2003 and the outcome of the ensuing court proceedings. Some 355 criminal cases were forwarded to the Office of the Chief State Solicitor, well up on the corresponding figure in 2002 — 205. In all, 210 criminal prosecutions were finalised in court in 2003. Of these, 186 involved social welfare recipients while 24 involved employers. The prosecution action was invariably successful. Civil action is taken to pursue the recovery of material overpayments where it has been established that the recalcitrant debtor has sufficient means to discharge the debt.

Chairman

I call on Mr. Hynes to make his opening statement.

Mr. Hynes

I thank the Chairman for giving me the opportunity to address the committee. Three paragraphs of the Comptroller and Auditor General's report refer to the Department of Social and Family Affairs. The medical review and assessment system is the focus of paragraph 13.1, particularly as it applies to sickness and disability payment schemes. The schemes cater for a diverse group, ranging from people suffering from a short-term illness who may need nothing more than prompt payment of benefit for a couple of weeks until they return to work to, at the opposite end, those with significant disabilities who need additional supports to help with return to work, etc.

The numbers in receipt of the main disability related payments have increased in the past ten years. The numbers claiming disability benefit for short-term illness increased from approximately 42,000 at the end of 1994 to approximately 59,000 at the end of 2004. The numbers claiming long-term disability payments have also increased. The number of individuals in receipt of disability allowance increased from approximately 31,000 at the end of 1994 to approximately 73,000 at the end of 2004. In the same period the number of invalidity pension recipients increased from approximately 40,000 to approximately 56,000.

The basic criterion for entitlement to illness or incapacity benefits is whether a person is incapable of work. The first assessment is made by a general practitioner. Departmental medical assessors carry out selective medical review examinations and assessments to provide second opinions for the guidance of deciding officers of the Department and appeals officers who decide on entitlements. The Department applies a risk management approach in identifying claimants for referral to a medical assessor, based primarily on the nature of the underlying incapacity. The Comptroller and Auditor General's report outlines how cases are prioritised for medical review and refers to the backlog of cases awaiting examination.

The report identifies particular problems regarding disability allowance, the former disabled person's maintenance allowance which was taken over by the Department from the health boards in 1996. As this is a social assistance scheme as opposed to a social insurance benefit, it involves a means assessment as well as a medical assessment. While a substantial number of means reviews were carried out in recent years, medical reviews were given a lower priority. This was partly because where medical reviews were carried out, the number of people found capable of work was low. The high volumes of claims to be processed were also a factor. However, a recent reorganisation of work has enabled the assignment of additional resources to control work in the Longford office. As a result, the medical review process is being given a higher priority within the disability allowance scheme with 1,000 cases recently referred to the chief medical adviser for review.

The Comptroller and Auditor General's report also raises issues regarding short-term disability benefit, specifically the fact that the average duration of short-term illness has increased in the past ten years. Any trend towards longer absences will have the effect of increasing expenditure on disability benefit. The report refers to an initiative taken by the Department that focused specifically on the problem of back pain. The project took account of international evidence that early intervention in cases of less severe back pain was, from a medical viewpoint, in the interests of patients and could reduce the incidence of progression to chronic disability. The project has been successful to date and led to earlier return to work in many of the cases involved as well as reduced expenditure on disability benefit. While it has involved more detailed and time consuming work for medical assessors, we hope to apply it in all appropriate cases.

The Comptroller and Auditor General's report focuses on the control aspect of the illness and disability schemes. Apart from the strict control aspect but related to it, the Department tries to encourage and facilitate people to make the transition to work or training as appropriate to their circumstances. People may often consider themselves partially capable of work but may be afraid to risk the loss of payment. There are arrangements under the disability schemes whereby they can, subject to certain conditions, undertake therapeutic or rehabilitative work while still retaining their payment. It is also possible for those on long-term scheme payments to take up employment using, for example, the back-to-work allowance. Those in receipt of disability payments have been identified as a group needing particular support in maximising their employment potential ensuring, where possible, that they do not become dependent long term on social welfare payments.

The medical assessment and review system is an important element of the Department's control system and the support system for those receiving disability payments. The Department tries, within the resources available, to strike a reasonable balance between customer service, support to work and control. The Comptroller and Auditor General's report indicates aspects of control activities in need of improvement such as the low level of reviews in certain schemes. Steps have been taken to address this. As the report notes, the medical review and assessment system is to be comprehensively reviewed to see whether alternative approaches can be devised to make the overall system of certification and review more effective in today's circumstances. A request for tenders for the carrying out of this review is being finalised and will issue in the near future.

Paragraph 13.2 of the Comptroller and Auditor General's report refers to overpayments of social insurance and social assistance payments in 2003. Recorded overpayments increased from a total of €29.13 million in 2002 to €39.37 million in 2003. This increase was due to the setting up of a special project in the area of one parent family payments. This project was put in place after several projects undertaken at local level had identified the one parent family payment scheme as high risk. In addition to work involved in the project, greater use is being made of information supplied by the Revenue Commissioners on people who have taken up employment and whose earnings exceed the limit for the payment. The project continued throughout 2004. Since it was initiated in June 2003, payments have been terminated in over 1,900 cases and reduced in a further 400.

Some progress has been made in putting in place a better IT system for recording overpayments and monitoring their recovery. Whereas in the past the main focus of overpayment recovery was on deductions from social welfare payments, greater focus is being placed on recovery from those who are no longer in the system as they may have returned to work, for example.

Paragraph 13.3 of the Comptroller and Auditor General's report deals with prosecutions. It shows that the number of cases referred for prosecution increased from just over 200 in 2002 to some 350 in 2003. A consistent approach is being implemented to the taking of prosecutions throughout different areas of the Department to ensure all appropriate cases are considered. The use of civil proceedings for recovery of amounts that are overpaid is an option we will be using more frequently in the future. In conclusion, I hope the committee appreciates the general approach we are taking as regards the issues raised by the Comptroller and Auditor General and I will try to deal with any points which members may wish to raise.

Chairman

I thank Mr. Hynes. May the committee publish his statement?

Mr. Hynes

It may.

Chairman

Before I call on Deputy Boyle, perhaps Mr. Doyle will confirm that this is the 2003 set of accounts. I believe the total spend of his Department was €10.1 billion. Will he give the committee the breakdown between the voted Estimate and the draw down from the social insurance fund? Will he give similar figures for 2004 and the Estimate for 2005, so that the committee gets the framework of the total spend?

Mr. John Doyle

I do not have the Estimate figure for 2005 with me.

Chairman

That may be easily checked, anyway. Has he got the other information?

Mr. Doyle

Will the Chairman repeat the information that is needed?

Chairman

We are looking at 2003. The total is €10.1 billion. What is the breakdown between the Vote and the draw down from the social insurance fund? Will Mr. Doyle give the committee similar figures for 2004?

Mr. Doyle

I will have to get those figures for the committee.

Chairman

That is all right.

Deputy Boyle

I believe the 2003 figure was €5.5 billion and the rest came from the social insurance fund. I do not have any other figures apart from that. As regards the criticism over the delay in review dates for the short-term schemes, will Mr. Hynes say what immediate work has been done within the Department towards speeding up the time gap? I refer to the short-term schemes in particular when people are actually given a review date and more particularly as to when that review date is followed up on.

Mr. Hynes

A review programme is in place for all the schemes depending on the length of time a person is in receipt of a benefit and the type of illness he or she is certified for. In certain cases we try to refer people more quickly than in others. That is the general policy. We refer a number of cases after four weeks depending on the type of illness, in other cases after eight weeks. The extent to which reviews can take place depends on a number of factors. Obviously we have claims from all over the country and a medical review system must be arranged so that our medical assessors, when they visit a given area, have sufficient cases to review to make the system efficient and effective. Depending on the area of the country a person lives in, it may take longer for a review to happen. In practice it is found that when people are called for review, many of them submit a final certificate in any event. They do not actually turn up for the review because they have recovered and are able to return to work.

Deputy Boyle

Is it not a central part of the Comptroller and Auditor General's report that when the announcement is made, this assists the review process and the final decision as to whether people have recovered sufficiently becomes apparent?

Mr. Hynes

I suppose the longer the time period, the greater the chance that someone has recovered if he or she is suffering from short-term illness.

Deputy Boyle

Is the delay to help people recover?

Mr. Hynes

As the Comptroller and Auditor General explained in his report there are a number of medical assessors. We have set up circuits and put in place arrangements for them to carry out their reviews around the country. Obviously this takes time and cannot be done instantaneously. Basically, we depend on the certificates we get from the doctors. That is the initial proof we have that people are incapable of work.

Deputy Boyle

There are two types of review, when they are eventually organised — the desk review and the physical examination. The Comptroller and Auditor General does not go into detail on the breakdown for the different types of review. Does Mr. Hynes have that information?

Mr. Hynes

Generally speaking, desk interviews assess whether a physical examination is required in particular cases. In some cases the medical assessor will be able to decide on the basis of the papers whether in his or her view——

Deputy Boyle

That is the type of information I am looking for. How many decisions were made on the basis of a desk review and how many were referred for a full physical examination?

Mr. Hynes

I will get that detail for the Deputy.

Mr. Purcell

On page 120 there is a total of 118,000 between desk assessments and examinations. Basically it breaks down 50:50. Some 59,737 cases were desk reviewed while 58,625 were called for physical examination.

Deputy Boyle

That clears up matters. The analysis of the claimants made by the Comptroller and Auditor General highlights the particular categories people are placed in by the Department in terms of the various payments it makes. Almost 40% are in a category known as "Do not refer again" and there is no subsequent review. I presume this is because the nature of the invalidity or disablement is quite chronic and severe. There is another category which accounts for close to 50% of people who have either had a review date assigned or their assessments have passed without any action being taken. When those two figures are combined, the people whose invalidity is such that they should not re-enter the system and those which have not been correctly dealt with administratively, one is talking of approximately 90% of the cases under review. That is a very high figure. Does Mr. Hynes find that acceptable?

Mr. Hynes

Is the Deputy referring to the long-term disability cases?

Deputy Boyle

I am.

Mr. Hynes

We accept we have not been carrying out sufficient medical reviews on the disability allowance scheme over a number of years. As I said in my opening statement, this is partly due to the fact that when these reviews were being carried out, a very small number of people were found to be incapable of work. There is also the issues of the resources available to us for carrying out these reviews and the fact the numbers of claims under these schemes has been increasing significantly in recent years. That obviously affects the capacity to carry out such reviews. I would agree with the Deputy, however, that more reviews need to be carried out, and more frequently, in the future. We are trying to do that. A special review unit has been set up within the Longford office which will focus on control and review of the disability related schemes.

Deputy Boyle

Some of the delays are chronic. There are 240 cases that go back as far as 1997. These relate to people who have not been put into the "Do not refer again" category. It would appear a decision was taken not to put them in that category. In fact, 16% of the cases outstanding relate to a period prior to the year 2000, which has a high number in its own right. Will Mr. Hynes explain why that type of delay is occurring in those cases?

Mr. Hynes

When an examination was carried out on those people, a review date was arranged. Because of the resource issues involved, we were not able to actually carry on with these reviews, so the people stayed on payment. An assessment has to be made, I suppose, of the risk involved here. If only a very small number of people are actually found capable of work and there are pressures on other areas of the Department, we have to take a decision whether resources are better employed on other aspects of control rather than on delivering services. I agree that ideally all cases with a review date should be reviewed. We try to take a risk related approach.

If we believe the resources could be better used elsewhere, we will take that decision.

Deputy Boyle

The resources argument is a telling one but it brings us to the fact that in 2003 only 16 cases were reviewed. Though it is a small sample, all 16 were found not to qualify for disability allowance. Why was it that such a small number was reviewed? What steps have been taken since to remedy this?

Mr. Hynes

If information is made available to the Department by our inspectors in the field on particular cases, they will be referred to the relevant section. There is a greater likelihood that people will be found to be capable if they have been identified in the course of inspection. In practice, while people are found to be capable of work and are often disqualified from receiving disability allowance, they have the option of appealing in which they can be successful. In other cases, the persons concerned apply for other benefits under the social welfare system. Therefore, in the majority of cases, those involved will continue on some payment.

Deputy Boyle

Are some approaching this category of social welfare payment to get the highest possible rate that might be available to them? On failing, do they look at other payments?

Mr. Hynes

I am sure that is a factor in applying for payments. To qualify for the payment one has to prove one is permanently incapable of work. If one is incapable, this is the appropriate scheme. In practice, there is much movement from unemployment to disability payments. Some people are unemployed for a long time and are able to satisfy the conditions for entitlement to a disability payment. They tend to move because in the case of unemployment payments, one is subject to a different regime and has to prove one is capable of work, seeking work and available for work on a continuous basis. If one is not available for work, the appropriate scheme is the disability allowance scheme.

Deputy Boyle

Such movement would be understandable in the case of short-term benefits. It would be less so in the case of long-term benefits. I wonder whether the Department undertakes any analysis of the crossover where those who have applied for long-term benefits end up in receipt of unemployment benefits.

Mr. Hynes

As a general rule, where people apply for and fail to qualify for disability allowance, the majority will apply for an unemployment payment as they have been found capable of work by the medical assessor. The only other avenue of support open to them is through the unemployment payment schemes. There is much movement from one scheme to another. People apply under one scheme, fail to qualify and then apply either for an unemployment payment or perhaps supplementary welfare allowance if they do not have resources.

Deputy Boyle

I want to move on to deal with the actual medical assessment, particularly the physical assessment. The total cost is around €3.6 million but there is one telling figure. There are 60 nurse attendants available for such assessments, only six of whom are full-time. What are the factors behind this?

Mr. Hynes

In many parts of the country the medical assessor only appears infrequently. It would not be economic to have full-time nurse attendants based in those locations. In the circumstances we tend to employ nurse attendants on a part-time basis and pay them by reference to the number of sessions attended. In larger areas such as Dublin and Cork there is continuous medical assessment. Therefore, we tend to employ full-time staff. Being able to recruit them on a full-time basis is sometimes an issue.

Deputy Boyle

Is there a danger in this for the Department? Lack of continuity might be a factor in delaying reviews. If people are known to staff of long-standing, familiarity with their previous history should help.

Mr. Hynes

The nurse attendant does not have any input into the decision on whether a person is found capable. They are there to provide assistance for the medical assessor. They do not carry out any other functions. They are essential to the process because we cannot organise medical review sessions without them.

Deputy Boyle

There was an 8% reduction in the number of assessments in 2003, which was strange. There was a reduction at a time when the Department would have been anxious to find out whether there were more or fewer people claiming improper benefits. The actual number with insurable benefits for which the Department is catering has almost doubled since 1994. Why is it that the Department has found itself undertaking fewer assessments given that the number in the system has grown?

Mr. Hynes

It comes back to the number of assessors available to carry out reviews. This can fluctuate from time to time. It is difficult to recruit people as medical assessors. We have found that it is not easy to get people with the right qualifications who are prepared to do this work. This is a constraint in the number of reviews we can carry out. As the Comptroller and Auditor General has pointed out, we are planning to carry out a full review of the medical assessment system to see whether there are other ways by which we can have more effective reviews carried out. We are planning to issue an RFT to enable this review to be done.

Deputy Boyle

There is so much in the three paragraphs and even the Vote that I am not sure the committee can get through them today. I have one question on the paragraph dealing with overpayments. The Department operates seven criteria in determining whether overcharging has taken place and there is an element of fraud, one of which is that wrong information has been given in making a claim. Given the low levels of recorded fraud by the Department, this seems to be a peculiar criterion. If someone has knowingly given wrong information, it is dealt with under the heading of overcharging rather than in the consideration of fraud by the Department.

Mr. Hynes

On fraud, the main category consists of people who are working and claiming at the same time. However, deliberately and knowingly providing incorrect or misleading information to the Department is also regarded as fraud. While a decision must be made as to whether the incorrect information is provided knowingly and with the intent to defraud the Department, deliberately not disclosing means or information relevant to the claim with the intention of receiving a benefit to which a person is not entitled is regarded as fraud.

Deputy Boyle

Given that payments are structured as they are, particularly in this chapter, the benefit of doubt may be given. Is the Department taking a cautionary approach or a first offence approach in that some people are not being considered in terms of making an incorrect claim, that it is put in into this category of overpayments?

Mr. Hynes

In any case where we identify that somebody received a payment to which he or she was not entitled, we try to recover it. On whether we deem it to be fraud, we consider the circumstances to find out whether the information was deliberately withheld. We do not apply any condition along the lines the Deputy suggests, namely, that for a first offence we would take a different view. It is an objective look at the circumstances of the case to find out whether, in the Department's view, the person deliberately tried to defraud the system.

Deputy Boyle

Does Mr. Hynes know how much of the overcharging can be attributed to wrong information being provided?

Mr. Hynes

I will have to look for that information.

Deputy Boyle

If it is uncovered, it can be dealt with by the next questioner. I apologise but I must leave to attend the House.

Deputy Curran

I welcome Mr. Hynes. I listened to his replies to Deputy Boyle. In Mr. Hynes's opening statement as Accounting Officer, one of the issues to which he referred on a number of occasions was that of resource limitation. As a committee, we acknowledge this. However, no matter who sits opposite us at the committee, we always hear of resource limitation. Our objective is to understand how the resource is used, how risk is managed and whether the resource is being used appropriately in regard to the areas of risk. We appreciate that in any line infinite resources are not available. However, while resources are limited, we are trying to understand whether the resources are being targeted at what are perceived to be the risk areas.

Social welfare is a complex area and I struggle to come to terms with all of its aspects. Mr. Hynes will forgive me if my questions are somewhat straightforward initially. For the purposes of clarification, I will begin with the area of resources. Page 120 of the Comptroller and Auditor General's report refers to the medical assessment team. There are 21 medical assessors in the Department. Are they doctors?

Mr. Hynes

They are doctors who were recruited to the medical assessment section of the Department. We have a chief medical adviser and a deputy medical adviser, to whom medical assessors report. They are medically qualified.

Deputy Curran

Deputy Boyle referred to the 118,000 cases for the year in question, of which roughly half were desk reviews and half full medical reviews. Did the medical assessors carry out the medical examinations only or all of the work?

Mr. Hynes

They carried out all of the work.

Deputy Curran

Did they carry out the desk reviews?

Mr. Hynes

Yes.

Deputy Curran

Pages 118 and 119 of the report refer to the long-term schemes. Table 48 shows cumulative figures over a period of years for disability allowance and invalidity pension. The number involved was close to 72,000. Did they receive full medical examinations or desk reviews?

Mr. Hynes

It was either a desk assessment or a full examination, depending on the nature of the illness for which the person was certified. The medical assessor would have before him or her a report from the person's doctor which would be the initial assessment of the person's capacity or incapacity. Based on the information in the assessment, the medical assessor may be able to say a person does not need to be referred again because he or she is unlikely to become capable of work.

Deputy Curran

Does Mr. Hynes have a breakdown?

Mr. Hynes

I do not have the information with me but I can forward it to the Deputy.

Deputy Curran

This refers to a large group. What got me thinking about the matter was a later section in regard to cases where there were appeals. In roughly 50% of cases where there were appeals, a change was made. In such cases, those involved would have had two medical assessments with one doctor saying one thing and another doctor saying something else. I was struck by the fact that almost 72,000 were in the "do not refer again" category. Nobody intends to consider them again. I am unsure if they have ever had a medical assessment or of the extent of it. From a risk perspective, how does the Department consider this category?

Mr. Hynes

Having gone through a medical assessment process and been reviewed by the medical referee, I have a high degree of confidence that the people concerned would not be capable of work.

Deputy Curran

Yet, to take the first group, some 16 people in the disability allowance category were reviewed during the year and they were all found eligible for work. I am putting this together as a bigger picture because it refers to a substantial number of people. Is there a planned target in this regard? Is it a risk area? I am not saying all 16 were in the "do not refer" category as I do not have that information. However, this is a major issue, one that is historical, in some sense, because it has accumulated over a number of years.

Mr. Hynes

The main priority is to be able to review the cases where there are review dates but but we have not been able to review them. I tend to focus resources at that level rather than on the cases which, in the opinion of the medical assessors, did not need to be reviewed again. We tried to focus our attention on cases where medical assessors said people needed to be reassessed or where they had specifically entered a review date on the file. These are the cases we would consider have priority.

Deputy Curran

I do not have the information but I will certainly consider the 72,000 who have had no medical assessment and are in the category as a result of a desk review only. I am conscious this section needs to be reconsidered. When I looked at this yesterday, I did not think it would be possible for somebody to be in that category without a medical review. I was surprised to learn they could be there following a desk review only.

Mr. Hynes

Obviously, the GP will have assessed them.

Deputy Curran

I appreciate that, but in this context the phrase "Do not refer again" means it is permanent. I would have taken it initially except that GPs differ. That has been proven by the appeals system where 50% of the cases are overturned based on GP evidence. In light of that, I was surprised to learn that there was anyone among that 72,000 people on a desk review only.

I want to move on. All these areas are in some way interlinked. It is not as clear-cut as going through chapter 13.2. I want to look ahead to the area of overpayments. The cumulative figure is quite small in comparison with the massive spending of the Department. Some of this is historical. We have previously had the Revenue Commissioners before the committee who said a point came where they realised that some money was uncollectible and was written off. From a purely book-keeping point of view, has the Department sought to try to do something similar? Some of that money is now quite old. Is it possible to collect all these overpayments?

Mr. Hynes

This issue has been considered over recent years and we did have an agreement up to some years ago. Where an overpayment case had been outstanding and where no activity had occurred on a case for three years, the case was written out of the accounts. That did not mean that we would not take the opportunity to recover it in the future if the opportunity arose, but for accounting purposes, the overpayments were written off once they went over that three-year limit. However, this issue was raised by the Comptroller and Auditor General in recent years and we now take a slightly different approach. Where cases go over three years and there has been no activity, we ask the particular sections concerned whether there is a likelihood of recovery in the near future. Based on that information, we write it off. The fact that it is written off does not mean that we would not try to recover it in the future if an opportunity arose to do so.

Deputy Curran

The overpayments for 2003 were about €40 million. About one third of them represented fraud or suspected fraud. This means that the other two thirds were not. In other words, it was as a result of human error. Are there people undetected who have had errors made in their payments? How definitive is Mr. Hynes that this represents the total amount and that other amounts will not be discovered next year for this year's payments?

Mr. Hynes

We have only detected the overpayments recorded here. Obviously, it is possible that there are overpayments that we have not detected and that people have received payments to which they are not entitled.

Deputy Curran

How could someone receive a payment if it is not fraudulent?

Mr. Hynes

In many of our means-tested payments for people on social assistance, their means may fluctuate. If people are working and are still entitled to claim some of our payments, their means frequently fluctuate over a period. For such people, it is possible that they might have been overpaid. We would not necessarily regard that as a fraudulent overpayment, but it is an overpayment. It may only come to light subsequently when we review the case a number of years later and discover that a person had been getting an incorrect payment for a period of time.

Deputy Curran

The Secretary General said in his opening statement that the Department was now making greater use of information supplied by the Revenue Commissioners on people who have taken up employment and whose earnings exceed a certain limit. Will the Secretary General explain the relationship with the Revenue Commissioners? Does the Department receive a constant flow of information? Is it an integrated system?

Mr. Hynes

It is not a completely integrated system, but we get a constant flow of information from the Revenue Commissioners about people who take up employment. People who begin employment have to inform the Revenue Commissioners of that fact. We get information on a regular basis from them about people who have taken up employment over the past month. We check that against our records of people on payments. In that way, we are able to identify people who may not be entitled to the payment.

Deputy Curran

If there were a truly integrated system, the Department would receive information on a continuous basis. Would that reduce that category of overpayments?

Mr. Hynes

We follow up all the cases that are identified at the moment.

Deputy Curran

The Department follows up because it discovers after a period that the overpayment has become a substantial sum of money. For people in receipt of a social welfare payment, that debt can cause considerable hardship. I appreciate that the Department would give them a period to pay it. If the Department had an integrated system, would Mr. Hynes not know at shorter notice what is happening? The Department could prevent overpayments from occurring.

Mr. Hynes

At the moment, we are told within a month of someone taking up employment. We follow up the case pretty quickly. It may happen that as a result of that, we discover that the person has been in employment previously and therefore that an overpayment has arisen. I am not sure that we could expect to get that information any quicker than we do at the moment through the system that we have.

Deputy Curran

It is an area I would like to see examined and addressed. At a cursory glance, we are talking about €40 million and 40,000 people, which is an average of €1,000 per person. This means that it is significantly in excess of €1,000 for some people. For people on social welfare, that causes considerable hardship, anxiety and trouble to repay. If they are complying in both places and not endeavouring to be fraudulent, and if they are on the revenue system and on the social welfare system, it would seem appropriate to expect that the two systems would be in communication with each other. No one should ever get to the situation where they have an overpayment against them in excess of €1,000. On this figure for 2003, that is the average per person. That is a considerable amount of money for a social welfare recipient.

Mr. Hynes

I take the point the Deputy is making. Up to 50% of the overpayments which occur represent very small amounts of money. They only relate to a number of days of overpayments. Of the 40,000 people that the Deputy identifies, more than 50% would have overpayments of less than ten days' benefit.

Deputy Curran

That means that in the case of the other 50% there is a substantial overpayment.

Mr. Hynes

That is true.

Deputy Curran

Yet they may not be acting fraudulently, or endeavouring to do so, and the information is known to Revenue. As a public representative, I have met some of the people concerned in my constituency office. The matter causes them absolute hell because they are living on a set budget and all of a sudden they are told they owe so many thousand euro. The statistical information provided by Mr. Hynes proves this is happening. There needs to be a tighter relationship and a much quicker flow of information between Revenue and social welfare offices to prevent this occurrence. Most of the people concerned are compliant and repay the sum owed in weekly amounts. However, there is anxiety. They are living on what they have and to take this away from them causes considerable hardship.

The Department should be more proactive, particularly in this day and age when most systems are fully computerised and there are standard numbers. It should be possible to advance on the issue. I will follow its progress when Mr. Hynes returns to the committee next year because I have huge sympathy for those ordinary compliant individuals who are caught because two systems are not talking to each other in a timely fashion.

Deputy Deasy

The two previous speakers said one of the biggest issues for them was a review. However, I do not agree. I am concerned about getting it right first time. I am particularly concerned about the backlog. The caseload is approximately 31,000. The figure of 16 for the number reviewed as unqualified for disability allowance is interesting. However, it is more relevant that 31,000 are waiting. In my experience, the biggest problem in dealing with this issue is posed by the people who are trying to be looked at in the first place.

Some of the other speakers touched on a question I wish to ask. Mr. Hynes mentioned the medical assessors are doctors. What special training do they receive?

Mr. Hynes

They are recruited as doctors and have received the standard training for that profession. However, during their career with the Department they undertake courses, particularly in occupational medicine and related disciplines. Some follow particular specialties.

Deputy Deasy

Probably the best example I can come up with is a case I dealt with approximately three months ago. A lady called to me to say she had broken her pelvis in giving birth. She had been in and out of hospital for a number of years and had been referred to Dr. Ken Patterson, one of the few pain management specialists in the country and with whom she had spent a long time. He had issued all of the documentation before she presented for her medical assessment. She was refused disability allowance. To make a long story short, I spoke on the telephone to the appeals officer to make the situation clear and faxed him the details. He could not believe the person concerned had been refused in the first instance. We were shocked about the system in place. Is there any review of medical assessors? Even as a layman, it was blatantly obvious that the person concerned needed the allowance and perfectly deserved it, yet she had been turned down. I asked for the appeal to be rushed through, which it was with the agreement of the person reviewing the case. The person concerned was reassessed very quickly and disability allowance granted.

The figure of 50% for the number of successful appeals seems high. However, I return to my point that I am not sure the Department is getting it right first time. It is fine to talk about reviews but is the necessary quality management system in place? Are those who make medical assessments reviewed?

Mr. Hynes

There are a number of questions. I cannot comment on the case mentioned.

Deputy Deasy

I am simply giving an example.

Mr. Hynes

Generally, if somebody is assessed by an assessor and found to be capable and he or she appeals the decision, he or she is examined by a second assessor. Any information a person supplies by way of specialist or GP reports is considered. As a general rule, the system works well. However, there will be cases where people will not be happy with the decisions made. As an overall comment on the system, I am satisfied there is a good and fair assessment of cases. The deciding and appeals officers depend on the medical assessment system in place. There is no other avenue of appeal.

Deputy Deasy

Is there a review of medical assessors or the decisions they make from a quality management standpoint?

Mr. Hynes

Their function is to give an opinion rather than make a decision. It may perhaps be a second or third opinion because there may be a number of medical assessors involved depending on the circumstances. The opinion is for the benefit of the deciding or appeals officer who will ultimately make the decision. We are undertaking a review of the medical assessment system in general to see whether it needs to be updated or changed in any way in today's environment.

Deputy Deasy

I will return to this issue later.

I draw Mr. Hynes' attention to Table 1 which deals with travel expenses for which a figure of €473,000 was allocated. Are medical assessors hired regionally or are most of them based in Dublin? How is such a large figure arrived at? Is there any effort made to regionalise the hiring of such personnel?

Mr. Hynes

Naturally, the bulk of them are based in Dublin but there are a number located in different areas of the country. I understand there is one in Longford. However, the vast majority are based in and work from Dublin. Travel costs arise from the fact they must go on circuit around the country.

Deputy Deasy

Presumably, the Department advertises the positions nationally or regionally. Does it make any effort to cut down costs on a regional basis?

Mr. Hynes

We would be happy to recruit outside of Dublin. We have two assessors based in Cork and one each in Galway, Kilkenny and Longford. The rest are located in Dublin.

Deputy Deasy

How many assessors are there in total?

Mr. Hynes

There are 20.

Deputy Deasy

Five of whom are located outside Dublin.

Mr. Hynes

That is correct.

Deputy Deasy

On the reasons for the backlog, 6,685 or 11% of claimants failed to show up or gave insufficient notice of cancellation. The biggest problem is presented by people trying to get an appointment in the first place. I do not mean to be facetious but there is a cancellation list when one has one's car tested. People make an effort to get in contact on the day or the day before. What is the Department's procedure in this regard? People wait months for assessments. Is it enough to give two days' notice?

Mr. Hynes

Does the Deputy mean two days' notice of cancellation?

Deputy Deasy

Yes.

Mr. Hynes

There is an issue about people not turning up for examinations. Obviously that is a significant problem for the Department in the sense that it is a waste of time and resources if people do not attend for examination.

Deputy Deasy

Are they called on the day? If they are not there does somebody call them? Do they have their telephone numbers or does a letter arrive in the post two months previous to the date? What is the procedure? Is there any reminder closer to the date?

Mr. Hynes

My understanding is "No", that we notify the person once of the assessment.

Deputy. Deasy

That is it.

Mr. Hynes

I would have to check whether at a local level any other arrangements might be made.

Deputy Deasy

It appears to me that these examinations are critical. It appears to me that a basic management procedure would be to notify these people closer to the date. I think what is happening is that they are notified approximately two or three months or even longer in advance that the assessment is taking place in the Tower Hotel in Waterford. If Mr. Hynes wants to reduce that 11,685 figure, a simple management procedure would be to take their telephone numbers and have somebody call them before the due date.

Mr. Hynes

I take that point. I am not 100% sure whether there is any such arrangement in place. I do not think there is but I will certainly take it up.

Deputy Deasy

In the Accounting Officer's response, one figure on page 126 jumps out at me. The Department depends on certifiers, usually general practitioners in the first instance, to attest correctly that the applicant for a social welfare payment is not capable of work. In that regard the Department spends in excess of €23 million per annum on fees to medical practitioners in respect of certificates and medical reports. Could a the doctor sign the certificates for disability benefit for a person over six weeks or whatever? What kind of review is in place for those medical practitioners and the decisions they make? Surely, in the first instance, there must be some kind of review from the Department's standpoint given that the Department is spending €23 million? Does it review the decisions that certain doctors make in this regard? It is a large number.

The reason I say this is that I think the Department takes every doctor's signature on these certificates at face value. However, when it came to the woman whose pelvis split at birth and the pain specialist who had been in this business for 20 or 30 years, it did not take it at face value. I think there is a contradiction within the Department as to how it deals with certain practitioners and the recommendations they make. That is an issue that should be examined. The Department has a problem with such a figure when there is no review with it and when people who are specialist consultants are ignored. I think Mr. Hynes takes my point. It is the point I was trying to make initially. Certain decisions are given value in some cases when it comes to people seeking allowances.

Mr. Hynes

I suppose I would have to take issue with the Deputy's reference to specialists' reports being ignored. I would not accept that happens. I accept the general point he is making that the Department relies on the doctors in the initial stages. When somebody applies for disability benefit, he or she is paid on the basis of a certificate from his or her GP for the first period of payment. That is the position. Otherwise we would not be able to put claims into payment quickly and efficiently. It is after a certain length of time that the medical assessment system comes into operation. The Deputy is correct in saying that the GP initially has the say in whether a person qualifies for disability benefit.

Deputy Deasy

Is there any review of the decision of GPs within the Department?

Mr. Hynes

We review the extent of certain certification practices but there is a limit on what we can do in the sense that if we want to issue payments, we have to rely on the information we get from the doctor.

Deputy Deasy

Has the Department ever taken issue with a doctor for signing a certificate?

Mr. Hynes

I do not personally remember any such instance.

Deputy Deasy

Mr. Hynes understands the point. The Department is spending €23 million. If it had some kind of review process of the signing of GP certificates, it would go a long way towards saving some money. The resources about which Deputies Curran and Boyle spoke might be better placed within the system. It is a matter the Department should definitely examine.

Mr. Hynes

To be fair, the GPs are in a difficult position when somebody feels they are unable to work.

Deputy Deasy

That is correct, but, at the same time, it would not be any harm if they knew the Department would review any decisions they made.

Mr. Hynes

I take the point.

Deputy Deasy

Thank you.

Deputy Fleming

I wish to follow on directly from that point because it is one I had listed. Deputy Deasy made the point very well. When a case ultimately goes for a medical examination, I hope the Department would have on its computer system the name of the GP who certified that patient up to the most recent certificate. When the Department's medical assessors make decisions, does it have on its information gathering network system the name of the GP who has recently certified that person? Are there any names of GPs that come up more frequently than others in that Department medical assessors regularly contradict the certificates? Does Mr. Hynes have the names of the GPs?

Mr. Hynes

Obviously we do.

Deputy Fleming

Is there a mechanism for examining any cases that are disallowed on medical grounds by a particular GP's certificate? I do not want to damn all GPs as they all do good work. Inevitably, as in all walks of life, some may be rushed even to see the patient physically. What happens regularly is that a person arrives and the secretary hands out the certificate. In most ongoing certification procedures the GP does not see the patient in practice. They come to the reception desk. What happens when a GP's name regularly comes up where the certificate is not supported by the medical examination? Does the Department do anything about that?

Mr. Hynes

We do not do anything on a systematic basis and maybe it is something we need to look at in the future.

Deputy Fleming

That is the simplest first starting point where the Department has concrete evidence about certain GPs without trawling through the millions of certificates that are signed. It is a particular issue I suggest it begin with.

I wish to make points as opposed to asking specific questions on issues that have been raised. A matter that concerns me, and Deputy Curran has touched on it but was much too mild about it, is the question of the one-parent family payment. Where a person, normally a lady, takes up a job and earns €50 per week more than she is entitled to, after a year she owes €2,500 and after two years €5,000. Suddenly she receives letter to the effect that she owes the Department €5,000. There is not a Deputy who has not come across these cases where people are trying to eke out a living.

The State, the Department and the Revenue have been a disgrace in their treatment of people in this category. Some may know the legal position but rates of pay, minimum hours and conditions have changed and I do not think people are adequately informed of the current position. I regularly meet girls who have taken up jobs. A train is coming down the track after them and they do not know about it yet. I do not accept there is a timely co-ordination and follow-through because the Accounting Officer said in 2003 that 1,900 payments were stopped and 400 were reduced.

That is only the tip of the iceberg. A letter should be sent to all recipients of lone parent allowance every time they are issued with a new book or an annual payment advising them of the position. People are being genuinely badly caught out due to ignorance. If they were advised of this they would not be half as badly caught out. These people have taken up legitimate jobs with a PAYE number and pay tax to the State at the end of each week, but two years later they are told that another arm of the State is pursuing them for money. That information is in the hands of the State from the time the first pay cheque is paid to these people. Untold and unnecessary problems have been caused due to not getting this system moving much quicker.

I heard what the Accounting Officer said, but that is not our experience on the ground. We still meet people who receive letters who may have been in their jobs for 18 months prior to that. The Accounting Officer might make a final comment on this matter, which Deputy Curran ventilated. I believe the problem is much worse than that to which the Accounting Officer alluded in terms of the impact on these individuals on low incomes.

Mr. Hynes

I referred to the project we had done in regard to lone parents. For the future the system will be more efficient in the sense that we are getting information from Revenue when people take up employment. We will know when people commence employment and we will be able to follow it up at that point. There have been cases where people have been in employment for a long period but we were not aware of that.

Deputy Fleming

How could that be the case if Revenue has such information?

Mr. Hynes

We did not use this system that we now have or the contact we have with Revenue. People can earn relatively substantial amounts and still qualify for benefit.

Deputy Fleming

The amount of €160 a week is by and large the figure.

Mr. Hynes

I make that comparison to people in receipt of unemployment payments.

Deputy Fleming

Yes.

Mr. Hynes

Therefore, there is that advantage.

We tell people the rules that apply. The book supplied refers to the fact that one has to tell the Department if one's circumstances change, for example, on taking up employment. I fully accept that there are cases where difficulties occur, but there are cases at the other end of the spectrum where people are deliberately defrauding the system. We have to make sure that we follow up all cases. We have a code of practice on recovering over-payments. We try to do that in a fair and reasonable way having regard to people's circumstances. We fully accept that people on social welfare payments can be in difficult circumstances. The repayment arrangements will take account of that.

Deputy Fleming

We have made the point that people are getting landed in it, although some of them knew the score. Some of them have been drawing the payment for a number of years and now they have an opportunity to take up a part-time job.

Another point I wish to raise, which has been touched on, is that 50% of decisions in medical appeal cases are upheld by the social welfare appeals officer, notwithstanding that two medical examinations would have been carried out by the Department's medical referees. I note from page 123 of the Comptroller and Auditor General's report following chart 51 that the Accounting Officer's view on that topic is that the main reason for this is the presentation of additional information to the supplementary welfare appeals officer on the claimant's illness and disabilities. I do not believe that is quite right. The decision in some of cases might be due to that, but in respect of others it is due to inadequate assessment from day one. We are all familiar with cases where a deciding officer when he or she does not get the necessary information immediately disallows the cases and takes the view that if claimants are not happy with the decision they can appeal it.

There was a complaint in the Ombudsman's report two years ago, about summary decisions by deciding officers in the Department. They simply dismissed cases and decided that if the claimants wished to lodge an appeal they could do so. We can say that the deciding officer's decision was right or wrong when it came to the appeals officer. If I was the Accounting Officer, I would be concerned at appeals officers' success rate if 50% of decisions being appealed against the Department's deciding officers are deemed to be wrong decisions by the appeals officers. I would have hoped that a substantial number of such decisions were right in the first place. There will always be 10% or 20% of such cases that claimants will win on appeal. However, in respect of many cases the appeal officer's time is wasted going through all this and claimants who have been disallowed payment must endure unnecessary hardship and have to seek assistance from a welfare officer in the health board to tide them over in the meantime.

The Department is not doing anyone any service by not fully investigating a case and its officers are too quick to reach a conclusion. The proof is that 50% of these decisions are upheld on appeal. I refer not only to decisions on medical grounds but to those on means assessment. Too many of these decisions are being overturned. That puts a question mark over the original decision-making process. The Accounting Officer might comment on that. If 50% of the decisions of a local authority were being overturned by An Bord Pleanála, people would be entitled to ask what kind of a planning officer we had, given that half of his or her decisions were being overturned when it came to an independent examination. That is too high a percentage. What is the Department doing to learn from the decisions of the appeals officer, to make sure that in future its deciding officers' decisions will tend to reflect the independent assessment?

Mr. Hynes

The Deputy referred to two types of cases; there are means assessment cases and medical cases. Table 54 refers to medical cases. In the case of means assessment, it is reasonable to expect that the person's circumstances might have changed between the time the original decision was made and the time it came to appeal. That may, to some extent, explain——

Deputy Fleming

How could it? That is a fudge if the Accounting Officer does not mind my saying so. An appeal is made against the original decision made on a particular date; it is not being made on the basis of changed circumstances that arose after the appeal. If circumstances had changed, the Department would advise the applicant to put in a new claim.

Chairman

It is backdated to the date, is it not?

Deputy Fleming

It can be and then it goes back to the health board.

Chairman

It has to be based on the original means.

Deputy Fleming

Yes.

Mr. Hynes

It would be open to the appeals officer to look for another assessment if he or she felt that was justified. That is what I am talking about. In the case of medical appeals, there would have been a medical assessment originally when the deciding officer made his or her decision, but when the appeals officer makes his or her decision, another review would be made by another medical referee. In both cases, the medical review process would have intervened and a different medical assessor would have expressed a view.

I take the point that the fact that 50% of appeals are upheld may indicate there was some problem with the original assessment. On the other hand, it indicates that the system is responsive and that if people appeal they will get a good hearing. We are reviewing the medical assessment process. That is one of the issues we will look at in that context.

Deputy Fleming

I wish to raise two other points. Table 59 on page 128 of the report indicates that overpayments not disposed of at 31 December 2003 amount to €86 million and that, of that, €27,000 dates from prior to 2001, namely from 2000 and earlier. Does the Accounting Officer know how much of that €27 million was collected during the past year?

Mr. Hynes

I could not give the exact figure. I do not have it available.

Deputy Fleming

Perhaps it could be supplied later. I am concerned that much of it will be uncollectable. If it is five to eight years old now and a large percentage of that €27 million, notwithstanding write-offs in various years, might never be recovered.

Mr. Hynes

It is difficult to recover moneys from people who are still on the social welfare system. In practice, we may recover small amounts over a long period of time.

Deputy Fleming

That is why I would welcome that information. The last point relates to people on disability schemes where they can, subject to certain conditions, undertake therapeutic or rehabilitative work while still retaining their payment. I believe it is known as a section 5 exemption.

I have discovered, from my experience as a public representative, that there appears to be a substantial clamp down recently in granting these exemptions, although I do not have statistical information to that effect. In the past, people could get ten to 15 hours work. I get the impression from the cases I have encountered that the Department is trying to discourage the use of that exemption. Perhaps the Department believes it is being abused.

How many people got that exemption? How much was being earned under the exemption? Is the Department trying to cut back on use of the exemption due to over use? The exemption is a stepping stone for people to get back into full employment and by preventing people availing of the exemption, the Department is preventing them from moving off disability payment when it should be trying to encourage them back to work.

I understand the Department calls a decision by the medical referee or officer, when dealing with this exemption, an administrative decision. It cannot, therefore, be appealed to the social welfare appeals officer. Will Mr. Hynes discuss that? I got confused when I saw this in correspondence from the Department.

Mr. Hynes

There is no policy in place to reduce the number of exemptions allowed.

Deputy Fleming

How many are there?

Mr. Hynes

In 2004, there are 2,800 exemptions on invalidity pension. There are approximately 6,000 on disability allowance. In the case of disability benefit, which is a short-term payment, there are approximately 1,800 people on exemptions. These are people on community employment schemes and so forth. There is no policy of reducing the exemptions. The Act states that the Minister may exempt people so it is a ministerial decision. In the normal course of events, deciding officers and appeals officers make decisions on social welfare payments. However, this section of the Act is not subject to that regime. It is a departmental decision, as it were. Legally speaking, it is a decision of the Minister.

Deputy Fleming

It is not appealable to the social welfare appeals officer.

Mr. Hynes

It is not appealable under the deciding and appeals machinery. However, if there is an issue about it, we would certainly look at it. Another officer of the Department would review the case if there was an issue about it.

Deputy Fleming

Mr. Hynes cannot comment on policy but he has indicated that there are at least 11,000 exemptions in use at present. It seems unfair that there is not a right of appeal to the social welfare appeals officer in respect of those who, for some reason, are the subject of a ministerial decision that is not appealable, unlike a deciding officer's decision. Mr. Hynes might take that point on board. Some people feel disadvantaged in that they have no right of appeal to an independent appeals officer.

Mr. Hynes

We take a reasonable approach to these things. We certainly do not go out to try to refuse people. However, the legislation provides that these exemptions are given where people are taking up rehabilitative employment. There is a decision to be made or a view to be expressed by the medical assessor as to whether the employment somebody takes up is rehabilitative or ordinary employment. That is an issue. Once it is decided that the employment is of a rehabilitative or therapeutic nature and in the interests of the person in terms of getting them ready for eventual employment——

Deputy Fleming

Mr. Hynes will understand my point. In those cases the medical officer made a decision and that decision cannot be appealed to the social welfare appeals officer. Is that correct?

Mr. Hynes

Correct.

Deputy Fleming

We have just been discussing those cases decided by medical officers that can be appealed to the appeals officer. Some 50% of them are overturned. Does Mr. Hynes see the problem I have as a Deputy? There are thousands of cases where the deciding officer is making the decisions and 50% of those decisions do not stand up but there is no mechanism for appeal. I believe I am right in this because that is what I see in my clinics. Mr. Hynes is confirming it. Mr. Hynes can understand our concern.

Mr. Hynes

I can. However, I would be surprised if there was a significant difficulty about the——

Deputy Fleming

Perhaps Mr. Hynes could give us information on the number of applications for this exemption in 2004, the number granted and the number refused. That information will explain the position. Perhaps that information could be supplied as urgently as possible to the committee.

Chairman

Will you be able to provide us with that information?

Mr. Hynes

Certainly.

Chairman

The portion of the Comptroller and Auditor General's report that I found most astounding was the initiative on lower back pain. In 2002, 17% of claims for disability benefit were based on lower back pain. That is a high percentage.

The Department decided to target a particular group. It selected 1,532 people in Dublin and Cork to be called for medical review. I presume the Department made a public announcement first because before the people were called, 172 of the 1,532 sent in final certificates and walked away from the scheme. When the Department issued notification of examination, another 48% or 736 people sent in final certificates and were miraculously cured. Another 197 did not attend the medical examination.

Of the original cohort of 1,532, a total of 1,115 walked away from the scheme without pursuing their claim any further. When the Department conducted the review, only 154 of the original 1,532 qualified due to lower back pain. A further 127 qualified for reasons other than back pain. Of the total cohort, therefore, only 281 people maintained the allowance. That is dramatic.

There is an indication in the report that the Department extended the project to another 2,775 cases. There are no results from that. Can you report on the second initiative? Was it still Dublin and Cork or was it throughout the country? Was there the same level of fall-out?

Mr. Hynes

The figures speak for themselves. The experience is that whenever people are called for assessment, whatever the incapacity, a percentage will not attend. They will either become capable of work in the meantime or will not attend for some other reason. It is generally accepted nowadays, from a medical point of view, that back pain is something that is amenable to an early return to work and that an early return to work is in people's interest. It is obviously in the interests of the Department if people return to work.

As regards the project we undertook, the additional numbers we have taken on are in Dublin, Cork and Galway. I do not have the exact numbers in the format, but they are in the report, concerning the initial pilot project. The results have been broadly similar so we hope to extend this project. As I said in my earlier remarks, it takes a bit more time for medical assessors because the examination they have to do is more detailed. We are examining the possibility of extending it as far as we can across the country.

Chairman

The figures are astounding. Of a cohort of 1,532 only 154 were deemed to qualify for disability benefit on lower back pain grounds. That is just 10%, so 90% gets wiped out as soon as you begin to focus. You are saying that of the 2,775 cases dealt with subsequently, it is still around 10%.

Mr. Hynes

Yes.

Chairman

Do you think this abuse — because there is no other word for it — is confined to lower back pain or are there other areas of disability benefit that are equally suspect if they were focused on?

Mr. Hynes

I suppose there is a medical element. In previous times, the medical advice would have been that if one had back pain one did not work or that one went to bed. Nowadays, that view has changed. This project arose from that medical view, that it was more appropriate, or better, for people to stay on their feet, provided their level of back pain was not severe. That is where this project arose from. People with this condition will go back to work at some stage. The main effect of the project was to speed up the return to work. Part of the reason we have done it is because, from a medical treatment viewpoint, it is better for people to return to work in terms of being cured. It is a broader issue than simply a matter of control of the disability benefits system.

Chairman

I notice that when you commented on the report of the Comptroller and Auditor General, you said that the Department was establishing a control unit. Could you fill us in on what is involved in that? Has the unit been set up at this stage?

Mr. Hynes

The unit is being set up in our Longford office, which is where we operate the long-term disability payments, such as the disability allowance and invalidity pension. Last year, we moved one of our schemes — the maternity payments scheme — from the Longford office to the Letterkenny office, which freed up a number of staff in the Longford office and enabled us to set up a control unit. The idea of the control unit is to focus on reviews and control activity in a more focused way than we had been doing previously. It will enable us to identify suitable cases for medical review or other review activity in the Longford office. It does not directly relate to the lower back pain project because that relates to disability benefit, which is run from the Dublin office.

Chairman

Are you talking about just two or three people doing paper reviews or have you got a heavily staffed control unit that will make an impact?

Mr. Hynes

There will be between eight to ten people in the unit. Arising from the last year's discussion on the Comptroller and Auditor General's value for money examination of our control activity overall, we are doing a risk management assessment of all our schemes. This year, we plan to do such an assessment on the disability allowance scheme, in which that unit will be closely involved. The idea will be to try to focus our review activity on cases where we are likely to get more of a return, or cases that are more subject to abuse. That is the idea of getting staff specifically looking at control issues, rather than having it absorbed with the others.

Chairman

My concern is that the amounts of money you put through your hands is enormous. Your Estimate for 2005 must be very close to €12 billion.

Mr. Hynes

Over it.

Chairman

Over it now? That is a huge amount of money, so even if a very small element of abuse — such as fraudulent claims — or overpayments occur, it runs into very large sums of money because the overall budget is so big. I have one last question. The surplus on the social insurance fund is now being handled by the NTMA, is it not?

Mr. Hynes

Yes.

Chairman

It is being invested. Is there a fund or is it just the surplus that goes to the NTMA? I mean, is there a fund at all or is it just a fiction?

Mr. Hynes

There is a fund which is managed by the Department of Finance. The fund has been in surplus for several years. I do not think one could regard it as a fiction; it is a legally established fund. For a long period of years the fund was in deficit and the Exchequer had to make up the difference. In recent years it has gone into surplus and will be in surplus for quite a number of years to come — until the end of this decade when it will begin to go into deficit again as the number of pensioners rises.

Chairman

I am just trying to establish the mechanisms. RSI payments go to the Revenue, the Department of Finance, and there is a fund. Is that right?

Mr. Hynes

That is correct.

Chairman

Then drawdowns come to the Department of Social and Family Affairs, and the surplus goes to the NTMA. I can never figure out, in terms of hard cash, whether there is a fund in the bank, is it invested or is it just a paper amount in the Department? Is it just an accountancy procedure or is there €4 billion or €5 billion going in and out all the time?

Mr. Hynes

Revenue pays the money over to us and there is not a fund held in the Department, as such. The Minister for Finance controls it. It is held in the Bank of Ireland, which is the banker for the social insurance fund.

Chairman

Yes.

Mr. Hynes

I am not able to tell you the precise mechanisms for managing the fund. However, we draw down the funds as we require them, for expenditure obviously, in the Department.

Chairman

Perhaps Mr. Purcell can help us.

Mr. Purcell

Yes, Chairman. The social insurance fund is a legal entity and stems from the Social Welfare Act 1953. It is subject to audit by me and is subject to review, as well, by this committee. The 2003 account of the social insurance fund, while it had been in arrears in previous years for many reasons, is now up to date. Towards the end of last year, I certified the account of the social insurance fund for 2003. For the future, when the committee lists the Vote for examination, it might be no harm to have the social insurance fund before you, Chairman, also. This is because about half the total expenditure under the aegis of the Department is from the social insurance fund. As well as that, there is an investment account into which surplus moneys go at any one time. That is under the superintendence of the Minister for Finance but the NTMA basically uses it as part of the general Government balance available for investment. There is a legal basis for that investment account which is also subject to audit by me. That has been audited, as far as I recall. I do not think the 2003 social insurance fund and investment account have yet been presented to the Dáil. I imagine it is fairly imminent — it is just a matter of printing. I remember certifying it just before Christmas. The details are all there and would be very instructive for the committee. I have a copy here, but it has not been presented yet.

Chairman

It will come to us in due course. Does Mr. Purcell think it more appropriate that we discuss it with the social welfare Vote or the finance Vote?

Mr. Purcell

It would be much more appropriate to the social welfare Vote because it is, in a sense, the other half of its activity. The investment is not something that should concern the committee in that a bundle of money is there, but it is used as part of the general amounts of money available to the National Treasury Management Agency. In fact, there is interests on those investments. In 2003, for instance, the social insurance fund investment account received interest of €40.7 million. The fund itself increased by €250 million from 2002 to 2003.

Chairman

On the Vote, the Department had a Supplementary Estimate in 2003 of €85 million. At the end of the year, it surrendered a surplus of €29 million. Is that not double counting? What were the circumstances that led to a reasonably large Supplementary Estimate and then a surrender at the end of the year?

Mr. Hynes

In the context of the sums of money for which we are responsible and that were mentioned, €29 million is significant but not huge. Sometimes it is difficult to predict with accuracy the actual outturn at the end of the year, particularly in areas such as the live register, which can fluctuate and some of the short term payments where there can be considerable fluctuation in activity right up to the end of the year. It is difficult to predict the actual outturn. That is the reason we might look for a Supplementary Estimate at the time they are being considered if we think we may need additional funds. That was the case in 2003.

Deputy Curran

Before I ask about the Vote in general, I wish to go back to a minor point. It follows on the issue of back pain. It sums up an issue on which it is worth commenting. The Chairman went through it and, more or less, indicated that of that sample figure, 10% were entitled to retain the payment and 90% were not and were deemed capable of work. I note in the Comptroller and Auditor General's report that of a sample of 950 people found capable of work in the period January to May 2004, they did not go back to work but ended up on other schemes. Some 900-odd were on unemployment benefit or assistance while 40-odd were on supplementary welfare.

I suppose my question is more to Mr. Purcell. Six months on, of that 950 people, is there any way of knowing where they have gone? Have they progressed to work or what are their circumstances? One of the underlying concerns I have with all this is that we are moving people from short-term disability to long-term disability and back on to maybe a different scheme and that people are going around in circles. What is available and into what category do they fall? Are we changing the goal posts or are they changing them? There seems to be much movement, although I appreciate there are 50 schemes and different types of benefits and payments.

It would be worth looking in a little more detail at what is going on. I was surprised to see that 950 people found capable of work in the first few months of this year did not go back to work but went on to other schemes. That is a trend we need to analyse. I do not know if that is appropriate to the Department or to the Comptroller and Auditor General. I do not believe it is sufficient to leave it and to think we are dealing with medical reviews. There is an underlying issue that should be investigated.

Mr. Hynes

The Deputy has put his finger on a feature of the system, which is that where people are refused a certain payment, they may well go on to another one. I am not sure how many of those 950 people may have been on unemployment payments previously. They may have been unemployed people who became sick and went on to disability benefit for a time and then went back to unemployment payments. However, there is much movement from one payment to another. Obviously, many of the people found capable of work may not be successful in getting employment and may end up back in the system.

Deputy Curran

My concern is that none of them were in the short term figures. We need to analyse that a little more. Six months on, none of that cohort of 950 people found capable of work had gone back into the workforce.

Mr. Hynes

Yes.

Mr. Purcell

We just took a snap shot. It was to illustrate the point that the fact somebody is found capable of work as a result of a medical examination does not necessarily mean the State has that saving because, in many cases, he or she will go on to another benefit. We wanted to look at the extent of that. It is possible to track those individuals. Given the computer systems, one could track them and see exactly what they are doing now. However, we felt it was interesting to follow up and, in a sense, to underpin the point the Accounting Office made to us that these were not necessarily savings to the Exchequer.

Deputy Curran

The original figure for the supplementary welfare allowance was €560 million and there was a supplementary sum of €70 million. When one is talking about social welfare, the figures are very large but in percentage terms, that was a substantial supplementary sum. What was going on or why did that happen?

Mr. Hynes

The supplementary welfare allowance scheme comprises basic payments, rent supplements and other supplements for which people may qualify such as exceptional needs payments and so on. The main increase in expenditure in recent years has been on rent supplement. It has been very difficult to predict how expenditure on rent supplement payments will go. In 2003, there was a substantial increase in that due to more people qualifying for assistance with their rent payments and the cost of rent payments increasing. That is the main reason.

Deputy Curran

The bulk of the €70 million was on rent supplement.

Mr. Hynes

Yes.

Deputy Curran

The issue of risk management was the one on which I began my contribution. The budget is so large that risk management is everything and I am pleased the Department has an internal audit function in place headed by a professional accountant. The work of the internal audit is overseen by an audit committee that includes two external members. How many people are involved in the internal audit unit and how does it function?

Mr. Hynes

As the Deputy said, it is headed by a professional accountant.

Deputy Curran

How many staff are there?

Mr. Hynes

There are approximately ten staff — I do not have the exact number with me. The unit carries out audits throughout the year on various schemes or local offices of the Department to ensure internal control procedures are being followed and produces reports on its activity. These reports are reviewed by management in the Department and referred to the audit committee. A programme of audits, etc., to be carried out by the internal audit unit is decided upon at the beginning of each year. We are trying to adopt a risk management approach, as recommended by the Comptroller and Auditor General and in the Mullarkey report, to allow us to take a more systematic approach and identify key risks. The internal audit unit is assisting in this process. We hope to concentrate our control activity more effectively in the future by identifying the key risks.

Deputy Curran

Has the unit made specific recommendations which the Department has already implemented?

Mr. Hynes

We have set up a risk management unit — separate from the internal audit unit — to manage the risk assessment process and co-ordinate it centrally. On a systematic basis we are obliging the schemes and business areas throughout the Department to carry out risk assessments, identify the key control and other risks in their areas and inform us of the action they propose to take to address them. That process is ongoing.

From time to time the internal audit unit produces reports on the key faults it identifies in the system throughout the Department or the key issues that arise in its audits. We circulate these reports to managers and try to ensure the points raised are followed up and addressed.

Mr. Purcell

To take up the important point made by Deputy Curran about enhancing internal controls, this entire area has been formalised as a result of the so-called Mullarkey report. At the beginning of the volume of the appropriation accounts there is a standard statement by Accounting Officers from this particular year — 2003 — onwards. They are obliged to submit, with their appropriation accounts, a descriptive statement on internal financial controls. The Department of Finance arrived at a template for such statements, following much discussion and a great deal of haggling with line Departments about their contents. Instead of reproducing the statement with each account, it is located at the beginning of the volume. If the Deputy does not have a copy, we can supply one to him.

In addition, each Accounting Officer involved with the account is obliged to state what he or she is doing in enhancing internal controls. Over a three year period this is intended to bring all Departments into line with best practice in this area. As the Accounting Officer stated, it is a combination of internal financial controls and risk management. It is very important and will be included with each account for the coming years.

I wish to comment on one point raised. I refer to how one decides what is attributable to fraud or suspected fraud. In many ways, this is quite subjective. There are certain guidelines within the Department. For example the Department took a decision a few years ago in respect of what we call "estate cases". The latter arise in instances where the will of a deceased pensioner shows that he or she had a great deal more in means than he or she disclosed when he or she was awarded or was in receipt of old age non-contributory pension. Until a few years ago, these were treated and classified as fraud cases. However, a policy decision was taken by the Department that they should not be classified in this way. One could argue either way.

Deputy Fleming referred to one family payments. Cases where recipients have income over and above what is allowed tend not to be treated as fraud. Invariably, however, in some cases recipients may have had fraudulent intent. Others would not have had such intent and would merely have neglected — through ignorance or for some other reason — to inform the Department of their level of income. Where we say, therefore, that one third of the detected overpayments represents fraud, it probably should be taken with a grain of salt.

Chairman

If no one has anything further to add, I propose that we dispose of chapters 13.1 to 13.3, inclusive, and note Vote 40. Is that agreed? Agreed.

The witnesses withdrew.

Chairman

We will meet in private session on Wednesday next to consider the draft Committee of Public Accounts report on the Residential Institutions Redress Board. On Thursday next, 3 February, we will consider the Comptroller and Auditor General's report on the Department of the Environment, Heritage and Local Government — Vote 25, chapter 8.1 — electronic voting and vote counting.

The committee adjourned at 1.40 p.m. until11 a.m. on Thursday, 3 February 2005.