Congress Strengthens Penalties for Social Security Fraud “Facilitators”

Beyond the Numbers

Monday, November 23, 2015
Posted by: 
The Communications Division

Social Security “fraud facilitators” will face harsher criminal penalties—such as longer prison terms and increased fines—because of a newly enacted Federal law.

Congress often asks us for input on legislative proposals that can help us carry out our mission to protect Social Security’s programs and beneficiaries. Recently, that collaboration was demonstrated in the Bipartisan Budget Act of 2015, which the President signed into law earlier this month.

The law primarily establishes a two-year framework for the Federal budget, but it also includes several provisions that we recommended to implement stronger penalties for people who facilitate Social Security fraud and to deter others from committing similar crimes.

Specifically, the budget agreement:

  • Creates a new felony offense for conspiracy to commit Social Security fraud, punishable by up to 5 years in prison, fines of up to $250,000, or both. 
  • Increases the maximum felony penalty from 5 years in prison to 10 years in prison for people in positions of trust—such as doctors, translators, claimant representatives, and current or former SSA employees—who use their specialized knowledge to steal from taxpayers by defrauding Social Security. 
  • Increases the maximum civil monetary penalty that we can impose against individuals in positions of trust from $5,000 to $7,500 for each false statement, representation, or omission made to SSA to fraudulently apply for or receive Social Security benefits. 

Facilitator Fraud Investigations

We recommended these provisions to support our efforts to reduce and prevent facilitator-based Social Security fraud schemes. You might remember our investigations into large-scale disability fraud cases, including a New York conspiracy to get benefits for people not really disabled, and a Puerto Rico scheme to provide false medical reports for disability applicants.

These cases put the spotlight on individuals we call fraud facilitators—they’re the people behind the scenes or in the background who abuse their positions of trust to commit disability fraud. They network together:  attorneys or claimant representatives refer people to doctors, who then provide false medical reports to SSA. If their client is awarded benefits, then the facilitators typically collect a portion of the benefits awarded.

Our investigations in New York and Puerto Rico revealed the significant reach and impact these schemes can have. In the wake of these cases, we recommended to Congress that stricter penalties could help efforts to prosecute guilty parties and prevent others from engaging in similar conspiracies.  

Judicial actions are ongoing in both cases.

  • In New York, of the 134 individuals who were indicted, 103 have been sentenced, and the court has ordered about $24.5 million in restitution to SSA.
  • In Puerto Rico, of the 101 people indicted, 84 have been sentenced, and the court has ordered almost $2 million in restitution to SSA.

We’re moving forward with our investigative and audit work in our mission to fight facilitator fraud, and we’ll continue to consider and propose other legislative fixes that can help us do our job.

The new and harsher penalties included in the budget agreement will help us hold fraud facilitators accountable and protect Social Security’s programs and beneficiaries from fraud and abuse. You can help, too, by reporting suspected Social Security fraud to the OIG