I-1-3-15.Adjudicating Fraud or Similar Fault Issues
Last Update: 6/7/22 (Transmittal I-1-102)
The information in this section applies when an adjudicator is deciding an issue of fraud or similar fault.
Several issues involving fraud or similar fault, based on different statutory or regulatory authority, may come before an Administrative Law Judge (ALJ) or the Appeals Council (AC). These may include:
When an ALJ or the AC considers reopening a prior determination or decision at any time on the basis that a preponderance of the evidence shows it was obtained by fraud or similar fault. See Hearings, Appeals, and Litigation Law (HALLEX) manual I-2-9-65, I-3-9-60, and I-3-10-7;
When the Social Security Administration (SSA) receives an Office of the Inspector General (OIG) referral of information pursuant to section 1129(l) of the Social Security Act (Act) or information from a criminal prosecutor with jurisdiction over potential or actual related criminal cases. See HALLEX I-1-3-25 and I-1-3-26;
When SSA initiates an unscheduled continuing disability review to consider whether a prior determination or decision was fraudulently obtained per 20 CFR 404.1590(b)(9), 404.1594(e)(1), 416.990(b)(9), and 416.994(b)(4)(i); or
When a field office imposes administrative sanctions on an individual after determining they made false or misleading statements, or withheld information per 20 CFR 404.459 and 416.1340. See HALLEX I-2-10-16 and I-3-10-11.
One or more of the above corrective actions may be appropriate depending on the circumstances of the case.
For hearings level procedures regarding adjudicating cases involving fraud or similar fault, see HALLEX Chapter I-2-10. For AC procedures, see HALLEX Chapter I-3-10. Adjudicators at all levels should ensure that any applicable standards and procedures are followed as warranted by the issues before them.
The information in the below section does not apply to administrative sanction actions (HALLEX I-2-10-16 and I-3-10-11), or, unless otherwise instructed, to cases involving OIG referrals of information pursuant to section 1129(l) of the Act or information from a criminal prosecutor with jurisdiction over potential or actual related criminal cases (HALLEX I-1-3-25 and I-1-3-26).
If an Office of Hearings Operations (OHO) or Office of Appellate Operations (OAO) employee or adjudicator observes action that may constitute fraud, the employee or adjudicator must follow the applicable provisions in HALLEX I-1-3 to refer the matter to the OIG.
The main difference between “fraud” and “similar fault” is that fraud requires an intent to defraud, whereas similar fault does not.
Adjudicators must be careful to distinguish fraud or similar fault from allegations and statements that lack persuasiveness. Statements and allegations that are not persuasive may be the result of a misunderstanding, confusion, or nervousness, with no intent to knowingly mislead or defraud.
1. Definition of Fraud
Fraud exists when an individual, with intent to defraud, either makes or causes to be made, a false statement or misrepresentation of a material fact for use in determining rights under the Act; or conceals or fails to disclose a material fact for use in determining rights under the Act.
Adjudicators must distinguish between the definition of fraud used by SSA in administrative proceedings (as defined above) and the general use of “fraud” in the criminal context. Generally, criminal “intent to defraud” is established only when an involved party pleads guilty or is convicted of a criminal offense involving fraud in connection with the claim under consideration. For SSA's administrative purposes, it is not necessary for a party to admit guilt or to be convicted of a crime before the fraud standard may be used.
2. Definition of Similar Fault
Similar fault occurs when an individual knowingly makes an incorrect or incomplete statement that is material to the determination or decision; or knowingly conceals information that is material to the determination or decision.
“Knowingly” describes an individual's awareness or understanding regarding the correctness or completeness of the information the individual provides us, or the materiality of the information the individual conceals from us. See Social Security Ruling (SSR) 22-2p, Titles II and XVI: Evaluation of Claims Involving Similar Fault in the Providing of Evidence. “Knowingly” does not mean an individual “should have known” that a statement material to the determination or decision was incomplete or inaccurate, or that material information was being concealed.
3. Definition of Material
Material describes a statement or information, or an omission from a statement or information, that could influence SSA in determining entitlement to monthly benefits under title II or eligibility for monthly benefits under title XVI of the Act. See SSR 22-2p, Titles II and XVI: Evaluation of Claims Involving Similar Fault in the Providing of Evidence.
C. Standard of Proof
1. Reason to Believe
When adjudicating fraud and similar fault issues under sections 205(u) and 1631(e)(7), the adjudicator will use the “reason to believe” standard. “Reason to believe” means reasonable grounds to suspect that fraud or similar fault was involved in the provision of evidence. The reason to believe standard requires more than mere suspicion, speculation, or a hunch, but it does not require a preponderance of evidence. See SSR 22-2p.
2. Preponderance of the Evidence
When considering whether the conditions for reopening exist under HALLEX I-2-9-65 and I-3-10-7, the adjudicator will use the “preponderance of the evidence” standard to determine whether a determination or decision was obtained by fraud or similar fault. “Preponderance of the evidence” means that after considering the evidence as whole, the existence of the fact to be proven is more likely than not. See 20 CFR 404.901 and 416.1401.
For example, when an individual has been convicted in Federal or State court of a criminal offense involving a false or fraudulent claim for Social Security benefits, it is likely that there exists a preponderance of evidence that a prior determination or decision was obtained by fraud or similar fault.
D. Considering Evidence
Under sections 205(u) and 1631(e)(7) of the Act, evidence must be disregarded if there is reason to believe that fraud or similar fault was involved in the providing of the evidence. Before SSA disregards evidence at the hearings level of the administrative process, an adjudicator will consider an individual's objection to the disregarding of evidence.
An adjudicator will use the similar fault standard when deciding whether to disregard evidence. This is because the issue of fraud involves the complex subordinate issue of intent to defraud, and that issue generally does not need to be evaluated to determine whether to disregard evidence. Detailed procedures regarding considering evidence within OHO and OAO are set forth in HALLEX I-2-10 and I-3-10.