01/09/2011 10:34 am ET | Updated May 25, 2011

A Great Government Investment

With all the talk about cutting budgets, the federal, state and local governments should invest more in an activity with a terrific ROI - aggressively investigating disability fraud. Fraudulent disability claims cost millions, where the payments often come from taxpayer-funded retirement programs or disability insurance. Just a few weeks ago, an active North Carolina fireman was found to be receiving $2,500 a month in disability payments from the NJ Police and Firemen's Retirement System.

Here are two personal stories:

Tom, a 40ish private investigator, contacted me last year for help on a case. He picked me up in his new Audi and we swapped life stories during our day together. Tom was a retired NYC police detective who left on disability due to a back injury. "How's your back now?" I asked. "Great! I can deadlift more today than when I was in college." Tom feigned embarrassment while continuing, "I didn't want to go out on disability but my boss pushed me to." I followed up, "Isn't it a problem for you to work this full time job while receiving disability pay from the police department?" Tom laughed, "My business is completely on the books so if anyone bothered to spend an hour looking at my finances or just followed me around they could-". Tom suddenly stopped talking.

Frank, my boss when I part-timed at a deli in high school, had "fallen off a truck" during his sanitation department days. He was cashing his disability checks while working full-time off the books at the deli and playing touch football on weekends. Frank played poker every month with the doctor who had certified his injuries.

Many honest citizens retire on disability because they can no longer work. Others have conditions which permit them to be reassigned to a desk job will others are just scam artists, thriving off the lax fraud investigations. I say it's time to put an end to the millions of tax payer dollars wasted by the Toms and Franks.

In the corporate world, we built predictive models to identify fraud and then sent the most likely fraud cases to our investigations unit. Our models would provide the investigator with some information as to why the person was suspicious and our skilled investigators would then go to work. Given the limited effort it takes to build decent fraud detection models and the short time it can take an investigator to gather proof, government investment in disability fraud detection would certainly be highly cost effective.

Disability fraud losses are small compared to the waste associated with corporate handouts and useless pork-barrel projects - but if you aren't willing to pick up the dollar you can see clearly under the streetlight then you will never search for the rest of the wallet that's hidden in the dark.

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