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House Committee Moves Forward On SSI Fraud And Abuse Prevention Legislation

Chris Marshall 703-524-7600
For Immediate Release
17 Feb 99

The House Ways and Means Committee is currently developing legislation designed to crack down on fraud and abuse in the Supplemental Security Income (SSI) program – a critically important cash benefit, safety net program for people with severe disabilities, including adults with serious brain disorders. On February 10, the House Ways and Means Subcommittee on Human Resources unanimously approved the legislation (HR 631). The full Ways and Means Committee is expected to endorse the bill after Congress returns from its current Presidents’ Day recess.

The SSI Fraud and Abuse Prevention Act contains a number of provisions of concern to NAMI. Foremost among these are new efforts to recover overpayments, new administrative sanctions against persons engaged in programmatic fraud, new penalties against doctors, consultative examiners and other middlemen involved in the program and restrictions on eligibility for certain types of asset transfers into self-funded trusts.


Perhaps what is most important about this legislation is what is not in the bill. Last year, the Ways and Means Committee considered a package of reforms that would have directly impacted beneficiaries with severe mental illnesses. NAMI opposed many of these proposals out of concern that they went far beyond combating and fraud and abuse, and would have resulted in real harm to deserving beneficiaries. Among these provisions were benefits cuts of up to 40% for adults living in group homes and other congregate living arrangements and doubling the current ceiling on the amount of monthly recovery for an overpayment. In response to concerns raised by NAMI and other national disability organizations, these proposals are not included in this year’s bill (which now enjoys bipartisan support).

A summary of HR 631 prepared by the House Ways and Means Committee staff is included below.

  1. Provisions pertaining to overpayment of benefits: (a) representative payees who do not return payments made after the death of a beneficiary would be held primarily liable for repayment, (b) the Social Security Administration (SSA) would offset lump sum payments to previous recipients who apply for and receive new benefits by at least 50 percent to recover prior SSI overpayments, and (c) SSA could use credit bureau reports, private debt collection agencies, State and Federal intercepts, and other means deemed effective by the Commissioner to facilitate collection of overpayments.

  2. Provisions on prisoners: (a) SSA would be required to share its prisoner database with other Federal departments and agencies to prevent the continued fraudulent payment of other benefits (e.g., food stamps, veterans' benefits, unemployment benefits, and education aid) to prisoners, (b) SSA could not grant prisoners or fugitive felons a hardship waiver, (c) fugitive felons or former prisoners who knowingly fail to disclose to SSA at the time of reapplication their prior receipt of overpayments while a prisoner or a fugitive felon, or fail to agree to and abide by a repayment schedule, would be ineligible for benefits for 10 years, and (d) SSA would be allowed continue overpayment collection efforts while prisoners are in jail.

  3. Provisions concerning applicant resources: (a) trusts would be considered to be resources in determining SSI eligibility (subject to rules and exceptions similar to those in Medicaid law), and (b) if resources are disposed of at less than fair market value within 36 months before the date of application for SSI, the applicant would be ineligible for benefits for the number of months equal to the uncompensated value of the resources divided by the maximum monthly SSI benefit (subject to rules and protections similar to those in Medicaid law).

  4. Provisions giving new authority and responsibility to SSA: (a) new SSA administrative process (subject to due process protections) would be established to determine whether individuals have fraudulently claimed benefits, especially in cases now considered too small to take to court (if individuals have attempted to gain or increase benefits through fraud, they would be barred from eligibility, with increasing penalties of 6, 12, and 24 months of ineligibility for the 1st, 2nd, and 3rd offenses, respectively), (b) doctors and attorneys convicted of fraud or administratively fined for fraud involving SSI eligibility determinations would be barred from further program participation for at least 5 years (10 years for a second conviction, and permanently for a third), (c) SSA would be required to collect overpayments, in addition to civil and monetary penalties, from doctors who commit fraud by helping individuals collect benefits they do not deserve, (d) State disability determination services would annually evaluate consultative examiners to prevent patterns of fraud and abuse and to ensure compliance with program rules, and (e) to facilitate data sharing with States, SSA standards on data privacy would be deemed to meet all state standards for sharing data. The bill also requires SSA to undertake a report on legislative and administrative reforms that would reduce or prevent SSI and SSDI fraud and overpayments.

  5. Provisions related to providing new sources of information to SSA: (a) SSA would conduct periodic comparisons between Medicaid and Medicare data and SSI rolls to ensure that nursing home residents are not receiving full SSI benefits, and (b) as a condition of eligibility, applicants for or recipients of SSI would be required to authorize SSA to obtain financial record information retained by financial institutions that will assist in determining the individual's eligibility for and amount of benefits.

For the full text of the bill, go to the NAMI website Key Bills in Congress chart at

At a hearing on HR 631 held on February 3, 1999, NAMI board member Gerald R. Tarutis offered the following testimony outlining NAMI’s views on SSI fraud and abuse prevention legislation.





FEBRUARY 3, 1999

Chairwoman Johnson, Representative Cardin and members of the Human Resources Subcommittee, I am Gerald R. Tarutis of Seattle, Washington. In addition to serving on the Board of the National Alliance for the Mentally Ill (NAMI), I am also an attorney in private practice. I am pleased to have the opportunity to share NAMI’s views on the SSI Fraud Prevention Act of 1999. NAMI believes that there is much to be gained from an on-going dialog that allows different perspectives to be brought to the table in discussions of any potential changes to the laws and regulations governing the Supplemental Security Income (SSI) program.

In over 25 years of practicing law, I have represented many clients with severe disabilities who have been claimants for Social Security cash benefits. While some of my clients’ cases before Social Security were dealt with in a fair and straightforward manner, many others found the experience of endless appeals, examinations and bureaucratic delays frustrating and in many cases, humiliating. This is especially true for adults with severe mental illnesses and other disabilities that are not readily apparent to the staff of Social Security Administration (SSA) field offices.

Too many adults with severe mental illnesses find their dealings with the SSA on matters ranging from appeals for denial of eligibility, to reporting wages, to seeking a straight answer regarding an alleged overpayment to be intimidating. Beyond the laudable goal of preventing fraud in the SSI program, NAMI also believes that this Subcommittee should closely examine ways that SSA could improve its performance as a customer service agency, from simplifying its correspondence with beneficiaries to upgrading its retrospective wage reporting systems.

SSI is a means-tested income supplement program intended to help people with severe disabilities who meet specific income and assets tests. The federal government provides a base amount of income that states are allowed to supplement. In nearly every state, eligibility for Medicaid is tied to the receipt of SSI cash benefits. The federal government’s eligibility standards for disability for the SSI program are among the toughest in the world – total disability based upon an inability to work at any job in the national economy. For adults with serious brain disorders – including schizophrenia, manic-depression, major depression and severe anxiety disorders -- SSI serves as a critical federal safety-net program that is essential to meeting the most basic needs for food, clothing and shelter.

At the outset, I would like to make clear that NAMI is very concerned about the impact of fraud and abuse on both the SSI and SSDI programs. Improper overpayments, manipulation of existing benefit standards and lax oversight of the eligibility rules are issues that the NAMI membership believes both Congress and SSA should pay more attention to. NAMI is troubled by reports from agencies such as the General Accounting Office and the Office of Inspector General at SSA that fraud continues to occur in both the SSI and SSDI programs.

Because so many people with the most severe and disabling mental illnesses rely on SSI and SSDI for basic support to live in the community, NAMI believes that every effort should be made to ensure that cash benefits go only to those who meet the program’s rules governing eligibility and benefits. Fraud and abuse in these programs only serves to undermine the integrity of SSI and SSDI and thereby endanger the future of a critical piece of the safety net for the most vulnerable people in our society. From NAMI’s perspective both as taxpayers, and as people with severe disabilities who must rely on the SSI and OASDI programs, it is critical that precious funding not be wasted on fraud or abuse. NAMI applauds the Subcommittee’s efforts both to root out existing fraud and abuse and to change the law to prevent such fraud and abuse in the future.

However, NAMI would also like to urge members of the Subcommittee to measure both these proposals as well as all future fraud and abuse prevention efforts against a standard of how they target documented patterns of fraud and abuse. Proposals that are unrelated to fraud and abuse should, in turn, be left for future reform efforts for SSI and SSDI. More importantly, NAMI urges the Committee to be careful to ensure that policy changes do not unfairly target beneficiaries who legitimately receive benefits and rely on these programs for basic needs. Again, NAMI would like to caution that not all errors in the system are caused by people acting with fraudulent intent; therefore, statutory provisions should be carefully crafted to ensure that they do not harm innocent people who are the intended beneficiaries of the program.

NAMI would like to respond to a number of provisions in a draft of the SSI Fraud Prevention Act of 1999 that were made available to us by the Subcommittee last week.

Overpayments to Beneficiaries and Recovery of Overpayments by SSA

Before making some specific recommendations regarding overpayments and collection of overpayments, we would like to note that NAMI and many of our colleague organizations in the disability community have been concerned about overpayments for quite some time. However, we view the overpayment problem from a different point of view, seeing it as less a problem of fraud and more of a problem of inadequate reporting and recording systems in the SSA structure.

First, given the retrospective accounting that takes place in SSI, it is to be expected that a certain number of overpayments and corrections would take place on a regular basis. This is particularly true given SSI provisions (such as Sections 1619(a) and (b)) that encourage work often cause fluctuations in monthly benefits that must be reconciled after the fact with fluctuating monthly earnings.

Adults with severe mental illnesses struggle with the inability of SSA’s reporting and recording systems to keep pace with the fluctuating income of beneficiaries. There is no specific way in which SSA requires earned-income reports to be made. They can be made in writing, by calling the 800 number, or by stopping in to report at an SSA field office. There is no particular form to file and no official record for the beneficiary to use to prove the report was made. In addition, there appears to be no effective internal system for recording the income that beneficiaries report. Finally, as I note above, the program rules and formulas are so complex that when an individual reports income and there is no change in the benefit amount, the individual may not be aware that an overpayment is occurring. As a result of the system’s inefficiencies and the consequences to the individual of an unexpected overpayment, NAMI views the potential for overpayments as a strong disincentive to employment for many consumers.

In my personal experience, beneficiaries will report monthly earnings on or about the first month when they are paid. At best, this information will be processed by SSA some 2 or 4 months later. This means that earnings from, say January of a given year will result in a reduction in benefits the following May. At this point in time, an individual with a severe episodic mental illness, e.g. schizophrenia, may not be employed and will likely not have sufficient income to survive. Additionally, even with timely and accurate reporting, many of my clients continue to receive SSI or SSDI checks for months to years after finding full-time work. Unbelievably, mailing or returning the checks does not cure the problem, payments continue to be made. Even the most strong willed and honest find themselves tempted to spend this money when faced with the types of economic crises that are all too often experienced by adults with severe disabilities.

A nightmare that occurs often for adults with severe mental illnesses is when they receive a notice from SSA stating the existence of an overpayment that amounts to thousands, if not tens of thousands, of dollars that accumulated over several years. Even for those people on SSI who are savvy enough to realize that an overpayment is occurring, it may be hard to fix. Perhaps the biggest problem is that reports to SSA and requests to adjust benefits often go unheeded by SSA. Yet, because they are on SSI, beneficiaries cannot "save" the excess for ultimate pay-back to SSA without risking excess "resources" and loss of basic SSI eligibility. An additional nightmare can be the request from SSA to produce pay-stubs and receipts going back many years.

NAMI and a number of colleague organizations in the disability community have raised these issues with SSA. We recognize that SSA is operating under certain limitations, such as the fact that certain reports are only available to SSA on an annual basis. While there are some administrative improvements that SSA can make, we believe that it is critical to make some statutory changes to help solve the problem. SSA should be required to make improvements in its reporting and recording systems to ensure that beneficiaries are notified of overpayments in a timely manner. A reasonable time period should be allowed for SSA to notify the beneficiary and correct the overpayment. Where there is no suggestion of fraud, overpayments that are not corrected and about which beneficiaries are not notified within the time limits should be waived.

We are pleased that you have included a study in this legislation (Section 17 of the bill) that addresses measures to improve processing of reported income changes by beneficiaries. In reviewing GAO reports, I have not found any discussion of what actually happens, or does not happen, to the earnings reports that beneficiaries make. NAMI believes that this is where the real crux of the problem lies. Until systems inadequacies are minimized, it will be difficult to ferret out cases of true fraud. Streamlining SSA’s procedures to ensure that the information received is acted upon immediately could eliminate many overpayments (or substantially reduce the amount of overpayments), reduce the administrative hassle involved in overpayments for SSA and recipients, and prevent the disastrous personal circumstances that arise when SSA withholds much-needed funds. Since NAMI views the majority of large overpayments as the result of SSA’s administrative practices, our comments (below) on other overpayment issues reflect that perspective.

Increased Collection of Certain SSI Overpayments

NAMI believes that the 50-percent minimum for collection of overpayments from lump sum payments may be too high. Often people awaiting receipt of their benefits go without basic necessities and/or incur debts that need to be repaid (i.e., the landlord waits for the rent, the corner grocer extends a little more credit, the telephone company hasn’t been paid and is about to terminate service). A lower minimum (such as 20 percent) with statutory language requiring SSA to consider these types of circumstances would help people in these difficult circumstances.

Increased Collection of SSI Overpayments to Convicted Criminals

NAMI believes that it is important to protect people with severe mental illnesses who are currently, or have been, incarcerated and who may not fully understand the complex SSI rules. Thus we believe there is a need for a requirement in which SSA specifically asks for information about past overpayments on the application and records the individual’s answer. SSA should have an affirmative responsibility to inquire about the needed information and to assist people in understanding the request.

In addition, NAMI urges you to consider giving the Commissioner discretion to waive the penalty when the Commissioner finds that the individual’s impairment itself is part of the reason for the individual’s failure to properly report. Finally, NAMI believes that any attempt to impose a stiff sanction such as 10-year bar on eligibility for failure on the part of prisoner to notify SSA of an overpayment or agree to a repayment plan, should include some minimal protections. For example, SSA should be required to prove that a beneficiary either knew of a previous overpayment, or knowingly refused to repay or meet obligations of a repayment agreement.

Further, NAMI is concerned about the potential impact on a prisoner’s family of the requirement that SSA continue debt collection while the individual is incarcerated. The Commissioner appears to have some flexibility in this legislation and we urge that such flexibility remain. Otherwise, we can imagine scenarios where SSA would be required to attach resources or assets that other family members are dependent upon, such as a home or car.

Added Debt-collection Tools

While we understand the need for SSA to have debt-collection tools for situations in which a beneficiary has left the program, we urge that notice and an opportunity to contest the overpayment be given to the individual before the matter is turned over to a collection agency. Given the view that people with disabilities hold in regard to SSA’s in the occurrence of overpayments, it would be particularly harsh for people to discover an overpayment and action against them in the normal course of conducting their personal business, such as applying for a first mortgage or a car loan.

Treatment of Assets Held in Trust and Preventing the Disposal of Resources for Less Than Fair Market Value

Adults with severe mental illnesses and their families typically face many varied and complicated decisions regarding long-term planning for supports and housing. Congress has spent a great deal of time in recent years ensuring that beneficiaries (both current and future) do not game the system by either hiding or transferring assets solely for the purpose expediting eligibility for SSI and Medicaid. Most recently, Congress tightened the rules governing transfers of assets and trusts for Medicaid eligibility as part of the OBRA 1993 legislation. NAMI would like to thank the Subcommittee for its work in incorporating those Medicaid transfer of asset and trust exceptions into the corresponding SSI provisions included in this bill.

Regarding the prohibition on transfers of assets, we believe that the penalty period formulation in the bill (time barred from benefits as related to the value of the transfer) should be limited to no more than the former two-year statutory bar. However, since even this two-year bar could be life-threatening for many people who are severely disabled, we applaud the inclusion of authority for SSA to waive the bar in cases of undue hardship. Further, if assets incur a penalty period in both SSI and Medicaid, there should be coordination of the penalty periods to prevent the same amount of funds from being "double-counted" as if the person could have covered his/her own SSI and Medicaid expenses with the same finite amount of money. We appreciate your consideration of this issue.

Administrative Sanctions Process

In the section addressing the sanctions for criminal conviction for fraud, we urge that the loss of benefits period for a beneficiary be made consistent with that for the attorneys’ and physicians’ first conviction (five years) rather than the ten years now included in the draft.

Annual DDS Evaluation of Performance of Consultative Examiners

NAMI believes that one additional performance criteria should be included for evaluation of consultative examiners by SSA and the Disability Determination Service: evaluation of the performance of consultative examiners for the "completeness of exams" they perform. Too often, the exams are so cursory as to be meaningless, resulting in needless administrative waste.

Computer Matches with Medicaid and Medicare Data

While there is certainly the need for better data matching, we believe that some protections need to be incorporated since data may not be accurate or up-to-date. For example, when someone has a very short stay in a psychiatric hospital, nursing home, or other institutional setting, the matched data may not reflect more recent events, such as discharge. NAMI therefore urges that SSA be required to corroborate and verify any information before it relies upon it for changing benefits.

Referrals of Fraud to the OIG and Authority to Contract Out

NAMI believes that this provision should be limited to cases in which there is a strong suspicion that fraud is an issue. NAMI advises against allowing numerous private investigators, working on commission, disrupting the lives of innocent, law-abiding citizens.

Evaluation of 18-year-olds

Finally, we urge the Subcommittee to consider a provision to correct an application of the law that encourages 18-year-olds to leave school before completion of secondary-level education. Current law requires a redetermination of an 18-year-old’s SSI eligibility under the adult standard. For those young people who need to remain in school due to their disability, application of the work-based adult standard is inappropriate. We urge the Subcommittee to consider delaying the application of the adult standard until the young person has completed secondary-level education.


Mr. Chairman, thank you for the opportunity to share NAMI’s views on this important legislation.