Social Security Administration officials failed to recognize basic signs of disability fraud, such as huge clusters of people in the same area with the same fake affliction sharing the same lawyer.

The result was millions of dollars lost to fraudulent schemes before anyone at the agency took notice, according to an annual report released Thursday by the Social Security Administration's inspector general.

Officials overpaid Social Security recipients by billions thanks to a series of administrative and reporting errors, the watchdog found. The agency managed to recover $3.4 billion in overpayments, but spent $0.07 chasing every dollar it got back and ended the year with $18.5 billion in uncollected payments.

That included $46.8 million that was paid to Social Security recipients who had already died.

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