Nebraska state audit reports nearly $278,000 went wrongfully to public retirees who already had died

Posted at 10:10 PM, Mar 21, 2022
and last updated 2022-03-21 23:10:54-04

Nearly $278,000 from the Nebraska Public Employees Retirement Systems was wrongfully sent to 11 people — before authorities figured out those people were no longer alive.

One woman had been dead for seven years. That’s 83 months of benefit payments worth $105,250, according to an audit released this week by the State Auditor of Public Accounts.

No money has been recouped in the case of the NPERS member who died in 2014. Her payments were halted in 2021, and the case has been forwarded to the Nebraska Attorney General’s Office.

‘Potential fraud’

A law enforcement investigation is underway for potential fraud, said Craig Kubicek, deputy state auditor.

“For it to go on that long is probably unusual — we’re talking seven years,” he said.

No names or responses from families of the deceased were included in the audit report. While some plans may allow benefits to go to a beneficiary after a death, Kubicek said these plans were not those types.

He said new procedures, based upon auditor recommendations, have been put in place to avoid future mistakes in the syste, which covers public employees of schools, judges and the Nebraska State Patrol.

In the past, NPERS relied on two checks to determine whether a member had died: obituary sections in three newspapers; and a vendor who performed a “death audit” every other month that cross-referenced member names with public sources.

New vendor

Kubicek said state auditors noted inefficiencies in that process in 2020, and NPERS switched to a different vendor. That new provider identified the cases of the woman who had died in 2014 as well as seven others. Her payments halted in February 2021, as did six others.

The state audit team found three additional cases and recommended that NPERS strengthen its procedures further by obtaining a list of death certificates from the Department of Health and Human Services for comparison against benefit payment records. NPERS agreed.

With regard to the woman who had died in 2014, the audit team found that NPERS had processed two changes to the member’s banking information – one a few months after she died, and the other in early 2019 — “without adequate documentation from the member.” In both instances, NPERS received notification of the changes from the Department of Administration Services but did not confirm the changes with the member prior to making the changes in the system.

Kubicek said loss of NPERS funds can pose financial risk beyond members. If the fund would ever come up short, he said, the state might be asked to kick in financial assistance.

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