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Here’s One Simple Way to End Social Security Disability Fraud

by Jerry Robinson on October 8, 2013 · 24 comments

When taxpayer dollars that are reserved to protect the most vulnerable of our society are siphoned off by able-bodied fraudsters, it’s time to rethink the system. Here’s one creative way to stop the crooks.

 
by Jerry Robinson

Last weekend, Senator Tom Coburn (R-OK) was interviewed on 60 Minutes regarding his investigation into claims of Social Security Disability fraud. While such fraud is clearly not a new phenomenon, what is new is that the Federal government is actually taking the threat of people gaming the entitlement system more seriously.

I highly encourage you to watch this interview. If you are like most people, you will be disgruntled, if not outraged.

SSDI fraud takes on many forms, including:

- Making false statements on an application for disability
- Using falsified documents in an effort to obtain benefits
- Concealing information to prevent a loss of benefits. (For example, not reporting your Uncle Louie’s death while you continue to cash his checks)
- And the misuse of benefits by those entrusted with providing care to the disability recipient

Throw in some shrewd attorneys who know the system’s weak points and you have a major fraud on your hands.

This week, Sen. Coburn led a Senate hearing into the latest allegations regarding the ongoing disability fraud. The findings were outrageous, showing widespread corruption and rampant fraud.

What makes these revelations so egregious is that some of the latest projections show that the Social Security Disability Trust Fund is expected to be depleted within 18 months. When the money runs dry, what then?


(Source: Cato Institute)

As you can see from the above chart, the number of people on disability is growing at a breakneck pace.

During President George W. Bush’s eight years in office, annual government spending on Social Security disability benefits (SSDI) exploded by over 90%, from $56 billion in 2000 to $107 billion in 2008.

Over the last five years under President Obama, spending on SSDI has increased another 34%. And based upon current trends, SSDI benefits will continue to engulf an even larger portion of taxpayer dollars in the future.

As of this writing, the Social Security Administration (SSA) provides disability income benefits to just over 14 million Americans.

This summer, the SSA acknowledged it’s sending out checks to 1.3 million beneficiaries without even verifying they are still disabled.

According to Tad Dehaven of the Cato Institute:

“The number of people enrolled in SSDI has expanded rapidly in recent years, even as the share of the U.S. working-age population reporting a severe disability has remained stable. In addition, medical advances have aided people with disabilities and fewer workers are engaged in hard physical labor… The ratio of SSDI beneficiaries to all working-age people has doubled in the last two decades.”

As an American taxpayer, I want to live in a society that protects the weak and the vulnerable. The widows and orphans should be cared for. And I believe that those who have debilitating diseases or ailments that prevent them from engaging in economic activity should be protected.

But when the money being extracted from taxpaying citizens to protect the most vulnerable of our society is being siphoned off regularly by able-bodied fraudsters due to lax oversight and internal corruption, it’s time to rethink the system.

But how?

The Government is Bribing You With Your Own Money

Everyone needs an incentive. In fact, the entire world economy is driven by incentives. In his voluminous work, The Wealth of Nations, 18th century political economist Adam Smith referred to man’s propensity towards self-preservation and self-interest as the “hidden hand” that guided a free and open marketplace.

As rational economic creatures, we all seek to maximize our own benefits, and those of our clan, albeit to a lesser extent.

Put simply, if given a choice in dictating government policy, nearly all Americans would opt to receive more benefits than they have actually paid for. Who wouldn’t?

In fact, it is this driving self-interest that leads to both the rise and fall of an economic power.

It was once said this way:

“A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

This explains why America has entered such treacherous economic waters. In essence, American politicians have come to the realization that they can bribe the people with their own money!

A Simple Solution – Create an Incentive to End the Fraud

Several years ago, the Department of Homeland Security rolled out its “See Something, Say Something” campaign. While I personally find the concept repugnant, I have no problem with it, if it is specifically used to save taxpayer money.

It is worth noting that current Federal law prohibits the Social Security administration from paying a financial reward to an American citizen who reports a case of Social Security disability fraud.

How counterintuitive!

The government can immediately address this issue by providing Americans with a monetary reward for alerting authorities to a specific act of fraud, assuming that it leads to the recovery of taxpayer money.

Medicare provides such a reward. Those who report a specific act of Medicare fraud that leads to a recovery of at least $100 in Medicare money can receive up to $1,000 financial incentive payment.

Even cable theft is taken much more seriously than disability fraud! If you get caught stealing cable TV, you can face up to a $10,000 fine and/or prison time. Some cable companies even offer a financial reward for tipping them off to a genuine act of cable theft.

My suggestion? The Social Security administration should begin by launching a full-scale “See Something, Say Something” advertising campaign offering a $1,000 reward to anyone who rats out a friend or family member that is gaming the system.

These ads should be placed on daytime television for the maximum effect. I’m talking the Price is Right, The View, and all of the other mind-numbing programming that unemployed or retired Americans subject themselves to on a daily basis.

To begin weeding out the fraud, the Social Security Administration could provide a 90 day grace window allowing those who are knowingly receiving benefits in a fraudulent manner to opt-out of the system and get a job.

Then, once the 90 day grace window is gone, the ads begin running on daytime television.

SUGGESTED AD COPY: “Do you know someone who is receiving disability payments despite being completely able to work? Call the Social Security Fraud Hotline right now at (800) 269-0271 with your tip and receive up to $1,000 in COLD HARD CASH!”

I believe an ad like this would work magic in weeding out many of the scam artists who make their living by gaming the system.

Currently, the Social Security Act provides steep penalties for those who commit acts of fraud. SSDI beneficiaries who receive a monthly disability check despite being healthy can face a fine of a few thousand dollars. If the act is determined to be a felony, the fine can soar up to $250,000 and/or imprisonment!

If the government wants to stop fraud, it has to provide Americans with a clear channel to report such fraud along with a financial incentive. After all, many Americans pay relatively little in federal taxes and would never think to report fraudulent activity unless cold hard cash were dangled in front of their face.

Of course, such a solution would likely fall on deaf ears in Washington. After all, their goal seems to be making Americans more, not less, dependent upon the government.

Regardless, I appreciate Sen. Coburn’s efforts to keep the topic of Social Security Disability fraud in the spotlight. But if the Senate fails to recognize the power of a well-laid incentive in combatting the robbery of taxpayer dollars, I am afraid that their best solutions will fail in accomplishing their goals: namely, protecting those who desperately need disability benefits from the crooks and cons that seek to game the system into a state of complete bankruptcy.



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Jerry Robinson
Jerry Robinson is the author of Bankruptcy of Our Nation: Your Financial Survival Guide In 2010, Jerry created FTMDaily.com with a mission to wake up Americans and share with them the principles of true financial and spiritual liberty. Every Saturday he hosts the FTMWeekly Radio, a one hour podcast covering economic and geopolitical topics. Jerry has been blessed to be able to lecture around the globe on the topic of economic and geopolitical trends. He holds a degree in Economics from the University of Tulsa and resides in the beautiful Ozark mountains with his beautiful wife and newborn son. Jerry is a licensed life insurance agent. See more
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{ 24 comments… read them below or add one }

jane October 9, 2013 at 5:31 pm

As a disability examiner, I can tell you that there are many ways to improve the system. Just last week I was told I couldn’t use a federal query to verify the Claimant’s work history because it unfairly affects poor stupid people who can’t remember what they did at a job once held. When this is the direction you get, you begin to resent your job. And now you have insight into why government employees are disgruntled.

Reply

Jerry Robinson October 9, 2013 at 6:12 pm

Jane, thanks for sharing. I have heard many similar stories to yours over the years.

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susan ehlen October 9, 2013 at 7:26 pm

If I were lucky enough to have your job, I could do it without getting disgruntled! People in your job need huge heart. A lot of people are not very smart — they are born that way and they can’t take care of themselves.

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Elaine Wilhelm October 10, 2013 at 2:15 pm

They don’t tell you how many people are fraudulently denied for years and when they go to court they are strong armed into less settlement than they deserve. If they would work on educating doctors on integrative medicine we wouldn’t have so many people who become disabled for life! Worker’s comp disables more people than they help according to the lawyer I had.

Doctors have not been educated about chronic fatigue/fibromyalgia root causes when fibro goes on for too long you have nerve damage, they have also found elevated cytokines and chemokines in people with fibromyalgia along with damage to the ventrioles that supply blood to the skin.

For those that don’t believe this is a disabling disorder they should have to deal with it! Many are dealing with exposures to toxic heavy metals and chemicals from work!

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Don October 9, 2013 at 6:22 pm

Tell the Republicans to stop tearing down world trade centers – and shipping steel to china for manufacturing – and shipping jobs to china.

Start paying a Living Wage and you will see how many people get off disability – when people make more on disability and unemployment what would you do…

Most people on disability put their money back into the economy – unlike the Billionaires who put their money in offshore bank accounts.

Most people on disability are on SSI – and these people pay into it – and 60% of the people are turned down…

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fibromyalgia October 9, 2013 at 6:31 pm

I would agree with the reward system as long as the accused has the right to face his accuser in court.
If a person is straightforward and has the moral high ground they do not need the anonymity if the Brownshirt system.
Something tells me the author would prefer to avoid this accountability that IS guaranteed by the US Constitution.

But then again,it’s “Just a **damn piece of paper,” right GB?

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Jerry Robinson October 9, 2013 at 7:11 pm

Agreed on right to face your accuser. However, based on the Senate investigation, many of the fraudulent disability claims are bogus on their face. Sen. Coburn said that nearly 25% of the disability claimants he reviewed were clearly erroneous claims. There are apparently numerous mistakes, errors, and dead people still receiving checks. My point is that many of the frauds could be easily detected, and cut off, by a simple review. A heavily advertised fraud hotline could help federal workers find these bogus claims.

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Marie October 9, 2013 at 6:44 pm

The problem with someone’s judgement on someone else’s health is obscured. Many like myself can some days maintain then after trying to vacuum or do physical work I’m in pain for days. By the way with lyme and thoriac outlet and 59 years of age I was denied disability. It’s very hard to get. Set up a line for corporate fraud you would get support from me more than this bs!

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Jerry Robinson October 9, 2013 at 7:26 pm

Despite the rapid growth in Social Security disability claims, a full 60%+ are still denied on their first attempt. It is extremely difficult to receive and is one of the reasons that insurance companies were able to succeed with providing private disability plans. Unfortunately, doctors, judges, and attorneys have worked together to scam the system by getting disability benefits for their ineligible clients and all the while bilking millions of dollars out of the federal government in legal fees.

Reply

fibromyalgia October 9, 2013 at 6:46 pm

Also,if Jane were really a disability examiner,she would have full access to all work history,as that is needed to set the amount
of the payment of the claim.
The one (real) disability examiner actually said;”If you can sit in a wheelchair and sell pencils from between your teeth
you do not qualify.”
Luckily the Federal Judge knew the law,which is you cannot hold down a job for the full 8 hr 40 hr workweek on a reliable basis.
Also education comes into play,one who made money doing labor and had a bodily injury is more likely to be
compensated because that person had no experience making money at a desk job.
Just as a desk job person who has a mental injury can no longer perform that function.
The most common disabling injury is to the back/spinal column.
That is invisible to your *suspicious* eye,and you cannot know the experience of crippling back pain anymore than
you could know the frightening manifestations of PTSD,shell shock,battle fatigue,or whatever the PC wording is today.
Why change the wording?
To take away the acceptance of the veracity of the manifestation.
Chronic fatigue,Gulf war illness,FM,myofascial,PTSD,all of these,in fact MOST disabling injuries/illnesses are invisible
to the suspicious eye.
That is why I am demanding accusers not be allowed to snipe from the shadows,these hateful bigots need to held accountable for the damage they do to legitimately disabled persons,if not by the court,then by other means.

Reply

susan ehlen October 9, 2013 at 7:21 pm

I had a cousin on disability. Doctors at the Mayo Clinic in Minnesota said he had terminal lung cancer. Doctors in Seattle also said he had terminal lung cancer. Everyone, including him, thought he was going to die. He refused the remedies they offered. But he then tried a homeopathic remedy instead, and his cancer disappeared. Anyway, he stayed on disability because he just always thought the cancer would come back and he would die quickly. His cancer never came back, and he died 10 years later of an aneurysm!

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bosborneIL October 9, 2013 at 7:30 pm

Send a disability investigator to every bowling alley in the nation. Amazing how many “disabled” people can regularly swing a 16 lb. bowling ball with no difficulty!

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Nick October 10, 2013 at 12:40 am

Yes this scam has to be stopped. We can’t allow the little guy to get a nickel! The money is needed in much more important places.

It costs a lot for the air force to scrap brand new planes. Hundreds of millions of dollars. The navy did the same thing with new ships. You see, we don’t have money to waste!

We need more money to support our bankers and our Wall Street billionaires. It’s not easy to be a billionaire. Let’s have another bail out or better yet a bail-in (using YOUR savings deposits).

The government planned to have snipers assassinate the leaders of the Occupy protestors. It’s expensive to train and equip snipers to kill the serfs. Don’t you realize how much it costs to provide armored vehicles to the local police?

We need the money for more wars. Why there’s a whole world out there to be destroyed! We can’t waste money on people trying to feed themselves by ripping off the system!

What about more foreign aid for Israel? A few million dollars a day just isn’t enough!

Our government spends more to close the public parks than it costs to keep them open. See there’s no money to waste! It’s expensive to hide park rangers in the bushes to catch hikers and joggers in a closed park. See how important this work is?

I say that we should abolish Social Security completely! If people are injured then let them get a job! Food stamps have finally been cut and now it’s time to abolish the rest of these scam programs. Abolish all Social Security, abolish the minimum wage, abolish unemployment checks, abolish retirement funds and the rest of these scams. Let the serfs attend to their own needs. Donate the money to the Rothschilds.

So get out there and start reporting your family, your friends, your neighbors and everyone you can think of! The Rothchilds depend on YOU to do the right thing.

Our Senators, like Sen. Coburn have their own private retirement and don’t have to contribute to Social Security. Isn’t that a relief? The Congress deserves a big annual pay raise for all the hard work they do for the few days they are in session. So get out there and snitch, snitch and snitch!

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Freemanontheland October 10, 2013 at 1:28 am

I don’t agree with the system of people informing on others….it’s wrong. Apart from the fact, you are not adressing the real issue of where all the money is disappearing. These few billion dollars that are caused by social security fraud at least end up back in the system. The people spend the money on food, heating whatever. Go after the real money hole…like the Military-Industrial and Security-Industrial complex, the international banksters. Thats where the money is going. Getting people to rat on each other is degrading for both parties. What a sick idea.

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A Pedant October 10, 2013 at 7:18 am

Good article, let down by lack of care/diligence…

FYI its “egregious” not “aggregious”.

There are free spell checkers available if you can’t afford to buy one ;-)

HTH

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Jerry Robinson October 10, 2013 at 8:11 am

Oops… It’s fixed. Good eye. Thanks!

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Kevin October 10, 2013 at 8:35 am

What happens when they catch the culprits who are committing fraud? Throw them in jail? Well that will be more expensive. What percentage of people are collecting because they have zero options for a job? How about getting back the 30 million jobs sent overseas since 1992??? That might help!The politicians sold us out. Sending jobs overseas equals less money in the economy and less tax revenue at the local.state,and federal levels, not to mention more people on the dole.
Disability fraud is a drop in the bucket compared to the trillions printed to prop up the banks. Disability fraud is a symptom of off shoring jobs and fraudulent bailouts. Treat the cancer not the symptom.

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JWRebel October 10, 2013 at 12:45 pm

Obviously the huge surge in disability is driven by the lack of jobs. Nobody is about to solve that problem !!

It means you are better off disabled than able-bodied but unemployed. [Whenever I need to park I notice that there are too few disabled (always empty spots for invalids that don't show up).] It is hard to blame desparate people for committing fraud when the whole of society is based on fraud [government deficit spending, corporate welfare, dead-beat public (and private) employees, class justice, early retired public servants on pensions additionally collecting more than 100.00 for doing their old job, etc]

That is particulary true of older people who go to work despite significant health issues: many of them are not in better health than others who have decided to apply for disability benefits. It is also really difficult to decide who is disabled and who is not in a fair and even-handed manner. In practice there are huge unfair differences. Going after some people places many such people even more at the whim of civil “servants”.

And 140$b is still less than 1% of the economy.

That said, just like you I abhor the people who are undermining our social solidarity with those who cannot help themselves.
But these things are never that simple to solve, unless you think it is simple to have enough well-paying jobs around to make disability benefits seem a poor choice.

Adam Smith was not saying that self-interest was the invisible hand that guided a free market-place. Quite the opposite. He was saying that a truly free market place (i.e., one with no privileges, monopolies or (financial/bank) fraud and with strictly enforced rules to keep the playing field even; one where it would be almost impossible to earn a profit due to competition) was the invisible hand that would even transform pure self-interest into public benefit!

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Elaine October 10, 2013 at 2:29 pm

The Bible tells us that when God returns he will judge those who have control over others lives most harshly and for those who have done grievious harm to the disabled I am sure there will be a swift and justified punishment!

I don’t believe social security ever gives disability to someone who isn’t disabled!

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Jane October 10, 2013 at 10:24 pm

I don’t believe social security ever gives disability to someone who isn’t disabled!

You are either a shill or naive? Keep believing that myth.

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Jane Thomsen February 13, 2014 at 3:42 am

I know people who are on disability that are 33 collect 700 a month in child support 8 hundred a month in food stamps are married receive that money too but say they do not live with there spouse and get disability for their 12 year old child as well. They make more money then me and I have a college degree and work. This program needs to be looked at. This woman got a quack doctor who approved her for disability then took the child in too. What the hell is wrong with this system. Same scenerio as a drug dealer….why work when there is easy money…..Lazy people need to be looked at and lazy is not a disability ….dont they do EXTENSIVE reviews and why not….

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joan February 17, 2014 at 5:33 pm

Jane Thomsen, If you are aware of fraud, why haven’t you reported it?

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Gary Primo February 25, 2014 at 4:04 pm

The problem with paying people to report fraudsters is that some people will file false claims simply to receive the reward or act out revenge for something. Any reward would have to be withheld until the case is investigated and it is determined whether or not the claimant really is committing fraud or not. And, of course, there should be punishment for falsely reporting someone. However, I will say this, I know that (here in Canada) a recent trend in disability applicants is that they are mostly filing for mental disabilities (depression, anxiety or agoraphobia). All they have to do is look up all the symptoms for a specific mental disorder and tell their doctor they are having these symptoms. The doctor sends them to a shrink. The shrinks thinks up a condition for that person and they have it made. How does one prove that type of fraud. The shrinks think we are all nuts anyway. (Case in point – snoring is now a medical condition).
I am all for weeding out the fraudsters but not at the expense of denying legitimate claims. I have seen plenty of that too. Perhaps some TV commercials depicting evil fraudsters screwing things up for the legitimately disabled will shame them into changing their ways.
Anyway, you are absolutely right. Something has to be done. The only question is what will satisfy all concerns the best.
G.Primo
Ontario Canada

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James April 21, 2014 at 9:09 pm

I recently left my girlfriend. It was mostly because of her kids. 35, 30, and 27 year old kids. The two younger are getting SSI to support their own kids. How crazy is that? On top of that, the oldest just got out of jail and is applying for SSI to have his back child support erased. All of them are plenty able to work. This system has some serious problems that need to be fixed. The two that are getting paid to support their own kids, don’t even want them. The way their kids are being raised is a crime.

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