GN 02604: Penalties
TN 23 (01-17)
The following lists frequently asked questions concerning administrative sanctions.
A. Administrative sanction case with double check negotiation
We consider duplicate check overpayment (O/P) cases for sanction where the evidence indicates that the beneficiary knowingly made a false statement about receiving the original check. Field offices (FOs) document these cases as they do any other sanction cases. How do we handle these cases at the program service centers (PSCs)?
ANSWER: We consider duplicate check overpayment (O/P) cases for sanctions when the evidence indicates that the beneficiary knowingly made false statements about receiving the original checks. The PSCs document all the evidence they have that the person knowingly stated that he or she did not receive the checks. Include as evidence a copy of the endorsed original checks. The PSC then refers the information to the servicing FO. The FO will initiate the sanction action. For additional information on PSC, Teleservice Center (TSC), Disability Determination Services (DDS), and Office of Hearings Operations (OHO) roles in administrative sanctions, see GN 02604.447G (in this section).
B. Administrative sanction case with earnings and overpayments
QUESTION: The FO has a report and proof that the number holder (NH) worked. The NH has not reported his work. If the FO asks the NH about working and he denies it, should the FO have the NH sign a statement that he or she is not working prior to telling the NH about the evidence we have?
ANSWER: The FO should not have the NH sign a statement prior to disclosing that we have evidence of his or her work. At the time of disclosing the work evidence, inform the claimant that the agency can impose sanctions if he or she knowingly makes a false statement about working. Also, advise the NH that knowingly failing to disclose future work might result in a sanction. The FO should document and review the NH’s reason for not reporting the work and determine if late reporting penalties or sanctions are appropriate.
QUESTION: A Title II wage earner (WE) knowingly makes a false statement and the FO imposes a sanction period. He has auxiliaries in pay (Ledger Account File (LAF) C) not affected by the sanction. He returns to work during the sanction period and incurs excess earnings. Do we charge the excess earnings against the auxiliaries during the WE’s sanction period?
ANSWER: Yes, we charge the excess earnings against the auxiliaries during the WE’s sanction period. The amounts withheld from auxiliaries should be the same as they would be if we were not sanctioning the WE.
C. Administrative sanction case with incarceration
QUESTION: If a jailed claimant released during the sanction period is due a partial month payment on Title XVI, does the partial month count as a sanction month?
ANSWER: Yes, the partial month payment is for a sanction month. Once the sanction period begins, it continues for 6, 12, or 24 months regardless of intermittent months of ineligibility or partial payment.
QUESTION: If we sanction a claimant for 6 months on Title II and Title XVI and he or she is in jail and not yet convicted of a felony, do we begin sanctions on Title II before the conviction and sanction the Title XVI benefits after his or her release?
ANSWER: When the claimant is eligible and entitled to receive payment under either title, the sanction period will begin. The sanction will apply for the same 6 months under both titles, even though the claimant is due payment on only one title.
D. Administrative sanction cases with Medicare and Medicaid eligibility
QUESTION: A Title XVI recipient, who is a 1619b (no cash—only Medicaid) recipient, knowingly makes a false statement during a redetermination (RZ). Would this be a deferred sanction case since the recipient is currently not receiving a Title XVI benefit amount? ANSWER: A 1619b beneficiary must be otherwise eligible for Title XVI, but for the fact of work. The administrative sanctions policy applies to a false statement during an RZ to determine this eligibility, and this would be a deferred sanction case. We will not impose the sanction until the person is eligible to receive payments.
QUESTION: If claimants retain Medicare eligibility while sanctioned, do we sanction only their monthly benefit payment, or will they owe Part B Medicare premiums when the sanction period ends?
ANSWER: We are sanctioning their total monthly benefit payment, which includes the premium payment. Claimants are responsible for paying the Part B Medicare premiums during the sanction period.
E. Administrative sanction case and notices
QUESTION: We sanctioned an applicant in 2000 and denied the claim. Therefore, we deferred the sanction. The claimant became entitled in October 2013, and the sanction period began October 2013. Even though the claimant received a due process notice back in 2000, do we need to provide the claimant with an additional notice of the intended action before we suspend the benefits?
ANSWER: It is not necessary to send another notice of our action with appeal rights. REMINDER: There is no limit on how long we wait to impose the sanction.
F. Administrative sanction cases with omission of fact and failure to report
QUESTION: In Title II, when does a non-report of a material fact, such as going back to work, become an omission of fact material to payment that would trigger a sanction?
ANSWER: We mail reports to students and re-contact notices to widows and widowers to allow them to report any changes. These forms provide opportunities for Title II claimants to report changes. If a claimant returns one of these forms but does not report a change, e.g., a marriage, that omission may be sanctionable. If a person knowingly fails to report the material information, the FO may consider imposing a sanction regardless of whether SSA sent a report form or not.
QUESTION: What is the difference between making a statement that the person knows or should know is false or misleading or omits a material fact, which could warrant an administrative sanction, and a failure to report an event?
ANSWER: The distinction no longer matters, because after 11/27/06, we may sanction both for a false statement, and for a failure to report. If the person makes that statement and knowingly omits a material fact from that statement, then he or she is subject to sanctions. In this situation, he or she is taking an action and making an affirmative statement that he knows is misleading, rather than merely failing to submit a report.
If during the RZ, we specifically ask the person questions about his continuing eligibility and he responds but omits information, then he has made a statement that he knows omits a material fact. This is an example of omitting a material fact from a statement and it is reason for a sanction, see EXAMPLE 9 in GN 02604.410A. The failure to disclose the information is enough to warrant a sanction if it affects the amount of or eligibility for the benefit or payment.
QUESTION: In Title II disability (DIB) cases, the NH often fails to report earnings. How does the FO handle Title II failure to report work activity after we discover the first failure to report?
ANSWER: Prior to 11/27/06, we did not sanction failure to report even if it was apparent that the claimant was aware that he must report (work activity, in this case). On or after 11/27/06, we may sanction failure to report the work activity.
G. PSC, TSC, DDS, and Office of Hearings Operations (OHO) roles in administrative sanctions
QUESTION: Employees in the PSC, TSC, DDS, and OHO can identify possible fraud or similar fault situations that could result in administrative sanctions. Will the agency additional instructions be issued outlining the role of the non-FO components and the workflow?
ANSWER: Any person in the TSC, DDS, OHO and PSC can identify a potential sanction. They can identify the problem, document their findings and refer fraud cases to OIG for investigation. They will forward a copy of the referral to the appropriate FO. The FO makes the determination on all sanctions.
QUESTION: The PSC is responsible for Title II post-entitlement (PE) events. What are some examples of PE events that could result in sanctions?
ANSWER: Some reporting events include the receipt of workers compensation (WC) and work reports. In Title II, we mail student report Forms SSA-1372 (Student Statement Regarding School Attendance) to students, re-contact notices to widow(er)s, and continuing disability review (CDR) mailers. Sanctions may be appropriate if the person knowingly makes a false statement or representation or omits a material fact on these forms.
QUESTION: Who at the PSC would coordinate these cases? Should the PSC refer all of these cases to the FO?
ANSWER: Whoever in the PSC detects a potential sanctions case should refer the case to the Office of the Inspector General using the e-8551.
H. Administrative sanctions in reconsiderations and appeals cases
QUESTION: Who is responsible for the reconsideration decision on sanctions?
ANSWER: An employee in the FO who did not make the original sanction determination will make the reconsideration decision.
QUESTION: If a claimant requests a reconsideration of the sanction after 60 days, alleging good cause for late filing, do we stop the sanction?
ANSWER: If we find that good cause applies, we will stop the sanction and pay any benefits withheld until we issue a determination on the reconsideration. However, we do not delay imposing administrative sanctions if a hearing is pending.
I. Administrative sanctions in representative payee or authorized representative cases
QUESTION: How do we impose sanctions involving representative payees or authorized representatives?
ANSWER: Sanctions apply to any person who fails to report material information or makes a false statement in connection with any claim for benefits, continuing right to benefits, or benefits amounts. If a representative payee or authorized representative makes a false statement on another person's claim, we may sanction the representative payee or authorized representative on his or her own SSN when benefits are payable.
QUESTION: Translators assist some claimants, recipients and beneficiaries. How will we impose administrative sanctions in these cases?
ANSWER: The translator is only translating. We impose sanctions only on the record of the person who made the false statement or failed to report material information.
J. Administrative sanctions in Title XVI cases
QUESTION: If a claimant is due a monthly benefit of only $1, will sanctions apply?
QUESTION: When we deny a Title XVI claim medically and determine a sanction applies, how do we post the N24 payment status to the pending reconsideration?
ANSWER: N24 is a suspense code, not a denial code. The appropriate denial code, N32, will be the payment status (PSY) code. The sanction information will appear in the “Remarks” section of the Title XVI record. If the reconsideration reverses the initial disability decision, change the PSY to N24 for the sanction period.
QUESTION: We made the decision to impose a six-month sanction on a Title XVI claimant. At the end of the sanction period, we completed an RZ before reinstating benefits and found that the claimant worked during the six-month sanction period and had excess income for four of the six sanction months. Would we apply four months of sanctions to future Title XVI benefits since he was not eligible for benefits for four of the six sanction months? If yes, what would we do in terms of notices and future effective month of PSY N24? Do we go back and remove the PSY N24 for the months the NH was actually N01?
ANSWER: Once the six-month sanction period starts, it continues regardless of the intermittent periods of ineligibility. The record, however, should reflect N01 for the periods of N01 during the sanction period.
QUESTION: If the FO sanctions one member of a Title XVI couple and we continue paying the other member at 1/2 the couple's rate, will systems automatically generate this payment or will this be a force-due case? ANSWER: It will be a force-due case.
QUESTION: According to our administrative sanctions policy, a sanctioned Title XVI recipient technically remains eligible for Title XVI; we just suspend payments for up to 24 months. If a Title XVI claimant becomes ineligible after 12 months of sanctioning, would we then have to wait until he or she reapplies to continue the sanction in the case of the 24-month sanction?. How do we ensure continuing Medicaid eligibility if we allow the case to terminate? How do we conduct RZs to ensure the claimant meets all the eligibility factors for Medicaid purposes if SSA terminates the case?
ANSWER: The sanction period of 6, 12, or 24 months runs continuously regardless of any intermittent periods of ineligibility. We treat RZs for N24 cases like any other non-pay case and exclude them from selection process. We continue to monitor cases to ensure they meet the other factors of eligibility for the continuation of Medicaid.
In the event of a 24-month sanction case, the FO notifies the state manually as to the continued eligibility of the sanctioned recipient for Medicaid. Most states monitor income and resources for Medicaid recipients in Title XVI payment status N24. Per the instructions on suspending Title XVI benefits in GN 02604.440A.2, if another event occurs that requires termination, take the appropriate action and change the N24 to the appropriate payment status. While this reference makes it clear that we can change the payment status from N24, the FO will monitor these cases via the RZ process. If we discover ineligibility for any month during the sanction period, the FO will change the PSY code from N24 to the applicable ineligibility code, which will inform the state of SSI ineligibility for Medicaid purposes.
QUESTION: What happens if the FO sanctions an individual, but the individual is ineligible for benefits, and he or she files two years later for Title II and Title XVI disability benefits? When approved, the Title XVI benefits will begin immediately but there will be a five-month waiting period for Title II. How will we apply the sanctions?
ANSWER: Sanctions begin the first month the individual is eligible for Title XVI benefits and continue for six months. The FO would sanction the individual's Title II benefits for the sixth monthly.
QUESTION: If the recipient is in PSY N24 for six months, do we need to develop income and resources during that period because benefits were not paid? ANSWER: Yes, complete a full RZ prior to reinstatement after a 6-month sanction period.
QUESTION: For a case in suspense for 12 or 24 months, we will take a new application. Other than the look-back period for transfer of resources, we do not review the period of sanction at all. Therefore, we would not know of any other event that would cause ineligibility to Title XVI or Medicaid. Are we under any obligation to review the N24 period?
ANSWER: Sanctioned recipients are technically eligible while in suspense. PSY N24 records no longer terminate at 12 months. When completing a full RZ review, the period includes the entire sanction period to determine whether the recipient met the eligibility requirements to continue Medicaid.
QUESTION: We imposed a sanction on a denied Title XVI claim. Therefore, we defer application of the sanctions period until the claimant is eligible in the future. Later, she files a new Title XVI claim, which we approve at a hearing with eligibility after the sanction decision. Will the FO apply sanctions to the past due benefits on the subsequent claim?
ANSWER: Yes, the FO can withhold the sanction from past due benefits. First, we need to determine when the sanction period will begin and end, (e.g., first month eligible for payment).
EXAMPLE: A claimant files for SSI and is denied. However, we imposed a 6-month sanction for the first occurrence. The claimant receives a letter notifying him of an administrative sanction on October 1, 2016. The claimant has until November 30, 2016 to request reconsideration. If the claimant fails to file a request for reconsideration, the sanction period will begin with the latest of the following:
the first day of the second month following the month the period for requesting a reconsideration ends; or
the first month that the claimant is due at least $1 under Title II or Title XVI.
In such a case, we defer the sanction period since the claimant is not due any benefits at this time.
The claimant files a new claim for Title XVI payments after the sanction decision and we approve the claim at the hearing level. This time, the Administrative Law Judge finds that the claimant is eligible for payments for a period prior to the date of the sanction. The sanction period will begin with the first month that a payment is due and will last for 6 months, except the sanction period cannot begin earlier than January 1, 2012. The sanction can apply to a prior period of eligibility, but cannot apply prior to the date the sanction becomes final—in this case, January 1, 2012.
K. Administrative sanctions and Title II systems
QUESTION: FOs will have to access the Title II and Title XVI records on each person who files a claim to see if a sanction exists. Have you considered a link to the Integrated Client Data Base so it will automatically come up on the application screens?
ANSWER: FOs will use the new Administrative Sanctions Tool to track all administrative sanction cases.
QUESTION: How do we suspend Title II benefits for sanctions?
ANSWER: FO and PSC employees can suspend benefits through the Post Entitlement Online System (POS) by choosing, "Administrative Sanctions (LAF-S9), from the POS Suspensions/Terminations and Reinstatements (PEST) screen. For additional information on PEST, see MS T2PE 003.013.
QUESTION: Have you considered another LAF code rather than the miscellaneous suspension code of S9? The miscellaneous suspension code S9 could apply to anything.
ANSWER: We have considered this issue, and have proposed it as a future systems enhancement. In the interim, we identify sanction months by the reason for deductions (RFD) code of 9 and the work indication code (WIC) of A, B or C in the PAYMENT HISTORY portion of the MBR. While we withhold payments due to sanctions, the LAF will be S9 and the reason for suspension/termination (RFST) code will be ASANCT.
QUESTION: Perhaps an alert similar to the Prisoner Update Processing System (PUPS) alert could appear on MBR, SSID, etc.
ANSWER: We are considering making future enhancements, subject to the availability of resources.
QUESTION: How should we annotate the SSR and MBR if there is a termination or a suspension event during the sanction period? Should the termination or suspension annotation override the suspension LAF/PSC?
ANSWER: If during the sanction period the beneficiary becomes ineligible for another reason, the SSR or MBR should reflect that reason. Failure to do so would allow any auxiliaries or recipients on the record to continue to receive benefits. Use the special message field of the MBR to indicate the sanction months. Once a sanction period begins, the sanction months run consecutively regardless of whether or not there are periods of ineligibility during the sanction period.
L. Administrative sanctions and Title XVI System
QUESTION: What is the PSY code for Title XVI cases and what is the process?
ANSWER: The PSY code is N24. For more information about suspending Title XVI benefits, see GN 02604.440A.2.
QUESTION: We apply sanctions beginning the second month after the end of the appeals period. Is this the case when the appeals period ends prior to the systems cutoff date?
ANSWER: Example: An appeals period expires 12/2/11 and we complete the input 1/2/12 to stop the 2/1/12 payment. Benefits will stop beginning 2/1/12 if the appeals period ends anytime from 12/1/11 to 12/31/11. By applying sanctions with the first day of the second month following the close of the appeals period, we ensure timely inputs consistently regardless of the systems cutoff dates.
QUESTION: A sanctioned Title XVI claimant goes to work during the sanction period; the work continues into the last 2 months of the sanction period. Will the system correctly compute the payment based on retrospective monthly accounting (RMA), or is force payment required when we resume benefits?
ANSWER: The system will correctly compute the payment based on RMA. After a six-month sanction, with benefits resuming in the seventh month, the budget month will be the month of the resumption of benefits. This follows the normal computation rules when we resume benefits after a period of federal non-eligibility. The Title XVI claimant files a new application after a 12- or 24-month sanction and the normal computation rules will apply.