TN 5 (07-15)

A. Definitions of terms used in this section

1. Fraud

For the definition of fraud, please see GN 04105.005B.

2. Similar fault

For the definition of similar fault, please see GN 04105.005B.

3. Similar

In a legal sense, the definition of “similar” is “nearly corresponding; resembling in many respects; somewhat like; having a general likeness.”

4. Fault

“Fault” is “an action proceeding from an inexcusable negligence or ignorance that is considered nearly equal to fraud.”

However, SSA policy restricts the definition of “fault” to where there is “knowledge on the part of the claimant or any other person,” because SSA policy is not to penalize a person for ignorance of the law.

5. Person

The person may be the claimant or any other person. It is not necessary that the other person have any relationship to the claimant or be acting on behalf of the claimant.

EXAMPLE: Fraud or similar fault by an employer or by an appointed representative of an employer in reporting as “wages” that which was not “wages” is a valid basis to reopen and revise.

6. Preponderance of evidence

This term means such relevant evidence that as a whole shows that the existence of a fact to be proven is more likely than not. Preponderance is established by that piece or body of evidence that, when considered, produces the stronger impression and is more convincing as to its truth when weighed against the evidence in opposition. Thus, preponderance does not require that a certain number of pieces of evidence (e.g., five or six) must be present. It is possible that just one piece of evidence may be so convincing that it outweighs more than one piece of evidence in opposition.

B. Principles related to fraud

1. Establishing the existence of fraud

Determinations of the existence of fraud are necessary in SSA matters for three purposes:

1. Reopening

2. Correcting an earnings record (E/R) under section 205(c)(5)(E) (statute of limitation)

3. Prosecution

NOTE: The instructions in this section do not deal with determining fraud for prosecution purposes.

2. Proving fraud

Even though the definition of fraud is the same whether the issue is reopening a determination, correcting the E/R, or prosecution, legally there is a difference in proving the existence of fraud. The difference is the degree of proof one needs to prove the existence of fraud.

Generally, in civil matters (reopening initial determinations and correcting E/R's under the statute of limitations) there must be a preponderance of evidence to prove the existence of fraud.

In criminal matters (prosecution), the evidence must show beyond a reasonable doubt that fraud exists.

Therefore, in a particular case, it is possible that we reopen a determination or correct an E/R (civil matters) based on a finding that fraud exists, and in the same case, there is a determination that fraud does not exist for prosecution purposes. In other words, there may be a preponderance of evidence to prove the existence of fraud (civil matters), but the same evidence may not show beyond a reasonable doubt that fraud exists (criminal matters).

In either determination, the finding of the existence of fraud is a matter of judgment and is based on the evidence and facts in each case.

C. Principles related to similar fault

To understand the concept of similar fault, you must understand its relation to fraud.

If we cannot establish fraud for reopening (no preponderance of evidence establishing knowledge and intent), but we can establish by a preponderance of evidence that the claimant or any other person did something wrong (knowingly, but we cannot establish fraudulent intent), then we can establish similar fault and you may reopen. Again, as in fraud, the finding that similar fault exists is a judgment decision and is based on the facts in the case.

NOTE: We only make similar fault determinations with regard to reopening initial determinations. In criminal matters and correcting E/R's under the statute of limitations, (section 205(c)(5)(E) determinations) there is no such term as similar fault.

EXAMPLE: Claimant filed an SSA-1-BK, Application for Retirement Insurance Benefits, on February 17, 1976 and stated her earnings for 1975 were $5,372.83, the amount she received from one employer. She furnished a W-2 (Wage and Tax Statement) verifying that amount. On March 16, 1976, we made an initial determination entitling her to benefits and imposed work deductions.

In 1982 during a quality review, we discovered that she had failed to report that she had also worked for an additional employer in early 1975 and earned $603.44. Therefore, we had computed the work deductions for 1975 incorrectly, and we overpaid her. The second employer had gone out of business early in 1975, and she never received a W-2 from that employer. When we contacted her in 1982 during the quality review (seven years after she worked for the second employer), she did not deny that she worked for that employer in 1975 and, in fact, she was able to furnish details concerning the employer going out of business.

It is reasonable to conclude that she knew in February 1976 that she worked for that employer in 1975 (only one year earlier), just as she knew in March 1982. It is also reasonable to conclude that she knew that the fact that she did not have a W-2 from that company did not mean that earnings from that employer did not have to be included in the total earnings for 1975. She could have at least estimated her earnings from the employer. As stated in GN 04020.010C, “fault” means “knowledge on the part of the claimant.” Although she may not actually have had fraudulent intent (fraud), the evidence shows that she knowingly made an incorrect and incomplete statement when she completed the SSA-1-BK (similar fault). We cannot excuse the claimant for ignorance of the law (GN 04020.010C) because we specifically asked about her employment via a specific question on the application. Therefore, we can reopen the March 1976 initial determination on the basis that similar fault exists, and we can recompute the 1975 work deductions using the correct earnings for 1975.

D. Procedures to follow once you suspect fraud or similar fault

1. Documentation and general principles

When we reopen and revise a case because we determine that fraud or similar fault exists, this can produce a large overpayment. Therefore, it is extremely important that SSA adjudicators make sure to document the folder well when we reopen a case on the basis of fraud or similar fault. That is, we should not think, suppose, suspect, or speculate that fraud or similar fault exists; we should be able to prove it. We should also take into account whether the person has a physical, mental, educational, or linguistic limitation (including lack of facility with English).

2. Case flow if you suspect fraud

1. If you suspect that fraud is an issue in a case and you have the authority to reopen the determination, proceed to GN 04020.010D.2.b. in this section.

   If you do not have the authority to reopen the determination, refer the case to the processing component and job position with the authority to reopen as in GN 04001.020 (e.g., a benefit authorizer (BA) may refer the case to a claims authorizer (CA)).

2. The component with the authority to reopen will develop the issue.

3. Once the component with the authority to reopen completes development, if fraud is still potentially an issue, that component should then report the potential violation according to the specific instructions for that type of component in GN 04111.000.

3. Case flow if you suspect similar fault

1. If you suspect that similar fault is an issue in a case and you have the authority to reopen the determination, proceed to GN 04020.010D.3.b. in this section.

   If you do not have the authority to reopen the determination, refer the case to the processing component and job position that has the authority to reopen as in GN 04001.020 (e.g., a BA may refer the case to a CA).

2. The component with the authority to reopen decides whether to initiate similar fault development and makes similar fault determinations.

3. If the component with the authority to reopen decides to initiate similar fault development, once development is complete, that component will:

   • prepare an SSA-553 (Special Determination), which will state whether the evidence in file is sufficient to find similar fault; and

   • scan the completed SSA-553 (Special Determination) and supporting documentation into the Non-Disability Repository for Evidentiary Documents (NDRED).

4. Provide the claimant with notice

Notify the claimant when we make a determination that fraud or similar fault exists. Send the claimant a notice that includes specific details about our determination including what evidence we used to prove our finding. (See GN 03001.015 - Notices Required Before and After Taking a Title II Adverse Action.) Include the appropriate appeals language in the notice.