The “Stop Disability Fraud Act of 2014”

Yesterday, Rep. Sam Johnson (R-TX), Chairman of the House Ways and Means Subcommittee on Social Security introduced a bill to combat Social Security Disability fraud.  Yay!  The “Stop Disability Fraud Act of 2014” is a result of some very high-profile cases involving massive disability fraud rings, and the fact that a record 11 million (see my reports on disability here and here) people are on disability and the program’s trust fund will be exhausted in just two years. The bill includes much stiffer penalties for fraud and stricter criteria for being authorized to physically/mentally diagnose a claimant or represent a claimant in court, such as:

  • Courts must order claimants who commit fraud to pay full restitution (requiring restitution is optional under current law.)
  • Penalties, including fines and prison time, are increased for individuals in positions of trust (health care providers, claimant representatives, SSA employees) who commit fraud.
  • Opinions and diagnoses may only be provided by licensed health care practitioners (was this not happening already?)
  • Attorneys representing claimants may not have any felonies in federal or state courts, or disbarments from any court.

Furthermore, the bill requires the Commissioner to update the medical-vocational guidelines that assist in determining one’s disability status.  Shockingly, these guidelines were last published in 1979, and do not reflect newer workplace technologies and medical treatments.  I perused the guidelines myself and, while they are somewhat vague, they certainly don’t reflect today’s older working population (particularly age 50+), who are able to do much more than the guidelines give them credit for, disabled or not.

I applaud the Subcommittee for their efforts to save the runaway disability program and stiffer penalties may cause fraud committers to think twice.  However, as with other entitlement programs, there is still little incentive for any agent to do the right thing.  Unlike the Chilean disability system, claimants have no skin in the game.  In fact, once they are on disability they qualify for a host of other federal and programs, such as Medicare and housing subsidies.  Furthermore, will Social Security Disability administrators have the incentives, resources and time to implement the new requirements and penalties?  It remains to be seen. If they do, what is their reward for doing so?  Private disability insurers are rewarded with profit.  That is why they have entire departments devoted to fraud detection, require annual follow-up exams for those receiving benefits and provide vocational programs for moving recipients to jobs that suit their abilities.

But the SDFA is a start.  I will be watching its progress.

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