Acquiescence Ruling 19-1 (6)
Effective Date: February 4, 2020
Federal Register, Vol. 85, No. 23, page 6255
Hicks v. Commissioner of Social Security, 909 F.3d 786 (6th Cir. 2018), reh'g en banc den. (Mar. 29, 2019): Disregarding Evidence During Redeterminations under Sections 205(u) and 1631(e)(7) of the Social Security Act.
Issue: Sections 205(u) and 1631(e)(7) of the Act require us to redetermine entitlement to or eligibility for benefits if there is reason to believe fraud or similar fault was involved in an application for benefits. When we redetermine entitlement or eligibility, or we make an initial determination of entitlement or eligibility, these sections of the Act also require that we disregard any evidence if there is reason to believe that fraud or similar fault was involved in providing that evidence. Do we have to consider an individual's objection to disregarding the evidence before we disregard the evidence?
Statute/Regulation/Ruling Citation: Sections 205(u) and 1631(e)(7) of the Social Security Act (42 U.S.C. §§ 405(u) and 1383(e)(7)); Social Security Ruling (“SSR”) 16-1p, 81 Fed. Reg. 13436 (Mar. 14, 2016); SSR 16-2p, 81 Fed. Reg. 13440 (March 14, 2016).
Circuit: Sixth (Kentucky, Michigan, Ohio, Tennessee).
Applicability of Ruling: This ruling applies to decisions we make when we disregard evidence under sections 205(u) and 1631(e)(7) of the Social Security Act (Act) at the hearings level of our administrative review process for individuals who reside in a State within the Sixth Circuit.
Description of Case: Plaintiff Amy Jo Hicks and several other plaintiffs whose cases were consolidated for purposes of appeal applied for and were awarded Social Security Disability Insurance Benefits (DIB) or Supplemental Security Income (SSI) payments based on disability, after being represented by an attorney who provided evidence on their behalf. After the plaintiffs and nearly 2000 other claimants had been found disabled and entitled to or eligible for benefits, the Office of the Inspector General (OIG) informed us, in accordance with section 1129(l) of the Act, that it had reason to believe fraud was involved in the applications and in the providing of evidence. The United States District Court for the Eastern District of Kentucky subsequently convicted the plaintiffs' attorney, the administrative law judge who decided the plaintiffs' claims, and a doctor who provided evidence in support of the applications of perpetrating a large-scale fraud scheme on the agency. Based on these criminal convictions, the district court sentenced each defendant to terms in Federal prison for their respective roles in this massive fraud scheme.
As required by sections 205(u) and 1631(e)(7) of the Act, we redetermined the entitlement to and eligibility for benefits of the individuals whom the OIG referred to us. During the redeterminations, we held new hearings and in each case disregarded evidence OIG told us that it had reason to believe involved fraud. In making the redetermination, we considered the rest of the evidence in the plaintiffs' claims files, any new evidence related to the relevant period that plaintiffs submitted, and we heard argument regarding each plaintiff's entitlement to DIB or eligibility for SSI payments based on disability.
Plaintiffs argued that during the redeterminations, they should have been given the opportunity to show that fraud was not involved in providing evidence in their claims.
In Hicks v. Commissioner of Social Security, 909 F.3d 786 (6th Cir. 2018), reh'g denied (Mar. 29, 2019), the Court of Appeals for the Sixth Circuit held, in a 2-1 decision, that before disregarding evidence during a redetermination, we must provide a factual basis for the reason to believe fraud was involved in providing evidence, and plaintiffs must have a chance to rebut our assertions before a neutral decisionmaker.
Statement as to How Hicks Differs from the Agency's Policy
Under our interpretation of sections 205(u) and 1631(e)(7) of the Act, when we disregard evidence in cases OIG refers to us because there is a reason to believe fraud was involved in the application and in the providing of evidence, we do not consider the individual's objection to disregarding the evidence.
The court of appeals' decision differs from our policy because it held that when we disregard evidence under sections 205(u) and 1631(e)(7) of the Act, we must provide the affected individual the opportunity to challenge the reason to believe that fraud or similar fault was involved in the provision of evidence in his or her case.
Explanation of How We Will Apply Hicks Within the Circuit
This Ruling applies only to cases in which we disregard evidence based on a referral from OIG under section 1129(l) of the Act and the affected individual resides in Kentucky, Michigan, Ohio, or Tennessee at the time we make the decision at the hearings level of our administrative review process.
In these States, before we disregard the evidence pursuant to sections 205(u)(1)(B) and 1631(e)(7)(A)(ii) of the Act at the hearings level of our administrative review process, we will consider the individual's objection to the disregarding of that evidence.
Our adjudicators will decide whether there is a reason to believe that fraud or similar fault was involved in providing evidence in the individual's case. We define a “reason to believe” as reasonable grounds to suspect that fraud or similar fault was involved in the application or in the provision of evidence. The “reason to believe” standard requires more than a mere suspicion, speculation or a hunch, but it does not require a preponderance of evidence. Adjudicators may make reasonable inferences based on the totality of circumstances, such as facts or case characteristics common to patterns of known or suspected fraudulent activity. For us to disregard evidence, it is not necessary that the affected beneficiary or recipient had knowledge of or participated in the fraud or similar fault.