I-2-10-16.Administrative Sanction Cases

Last Update: 5/13/14 (Transmittal I-2-108)

A. General

Under section 1129A of the Social Security Act, a person may be subject to a penalty if the person makes false or misleading statements, or withholds information. The penalty for these actions is nonpayment of benefits that would otherwise be payable to the person under title II, and ineligibility for cash benefits under title XVI. See 20 CFR 404.459 and 416.1340.

1. When an Individual May Be Subject to a Penalty

An individual may be subject to a penalty if:

  • He or she makes, or causes to be made, a statement of material fact, for use in determining any initial or continuing right to, or the amount of, monthly insurance benefits under title II or benefits or payments under title XVI, that he or she knows or should know is false or misleading; or

  • He or she makes a statement or representation of a material fact for use as described in bullet one, with knowing disregard for the truth; or

  • He or she omits from a statement or representation made for use as described in bullet one, or otherwise withholds disclosure of a fact that he or she knows or should know is material to the determination of any initial or continuing right to, or the amount of, monthly insurance benefits under title II or benefits or payments under title XVI, if he or she knows, or should know, that the statement or representation with such omission is false or misleading or that the withholding of such disclosure is misleading.

2. The Definition of “Knowing”

It is important to distinguish the definition of “knowing” in an administrative sanction case (see 20 CFR 404.459 and 416.1340) and the definition of “knowing” when evaluating an issue of fraud or similar fault. For the definition when evaluating fraud or similar fault, see Social Security Ruling 00-2p: Titles II and XVI: Evaluation of Claims Involving the Issue of “Similar Fault” In the Providing of Evidence and Hearings, Appeals and Litigation Law manual I-1-3-15 B.

In administrative sanction cases, “knowingly” means that the person knows, or should know, that a statement is false, misleading, or omits a material fact, or that the statement is made with a knowing disregard for the truth.

B. When an Administrative Sanction Is Before an Administrative Law Judge (ALJ)

Administrative sanctions are imposed by the local Social Security field office. Administrative sanction actions are before an ALJ only when the claimant has filed a request for hearing based on his or her disagreement with the determination on the issue. When considering an administrative sanction action, the ALJ is evaluating:

  • Whether a claimant has committed an abuse that supports the imposition of an administrative sanction; and

  • If so, whether the appropriate penalty was applied under 20 CFR 404.459 and 416.1340.

For more information about administrative sanction cases, see Program Operations Manual System GN 02604.000.

C. Processing an Administrative Sanction Case

When evaluating an administrative sanction case under 20 CFR 404.459(e) and 416.1340(e), the ALJ will determine whether a preponderance of the evidence establishes that the individual:

  • knowingly (knew or should have known or acted with knowing disregard for the truth) made a false or misleading statement, or omitted or failed to report a material fact; and

  • knew, or should have known, that the omission or failure to disclose was misleading.

The decision must be based on the evidence and the reasonable inferences that can be drawn from the evidence, not on speculation or suspicion. The ALJ must also consider any physical, mental, educational, or linguistic limitations (including any lack of facility with the English language) that the individual may have had at the time. In determining whether the individual acted “knowingly,” the ALJ will consider the significance of the false or misleading statement or omission or failure to disclose in terms of its likely impact on benefits.