TN 27 (02-09)
GN 02201.055 Overpayment Recovery after Fraud Conviction
When a fraud case is successfully prosecuted in criminal court, the individual is usually placed on probation and restitution is ordered as part of the terms of probation. The probation period may be for only one year or for as much as five years or more. Enforcement of collection of the overpayment is greatest when the probation period has not ended. Therefore, court-ordered restitution cases must be monitored and controlled until the full overpayment has been refunded or otherwise resolved.
When an overpaid person is convicted of fraud, the court usually determines an amount which must be repaid to SSA as part of the sentence (i.e., court-ordered restitution). This amount may be less than the total overpayment made to the person; it may include a penalty or fine; or it may include the benefits overpaid to any auxiliary on the same earnings record whose overpayment was caused by the convicted individual's action(s). Or, the court may not order any restitution.
If the court addresses repayment of only the convicted person's debt and does not order restitution, or specifies a figure less than the full amount of the overpayment, the convicted person's liability is limited to the incorrect benefits he or she received (as determined by SSA) plus any received as a representative payee. Fraud conviction overpayment and recovery policies apply.
If the court orders the convicted person to repay not only his or her own overpayment, but also that of any auxiliary who was overpaid as a result of the convicted person's action, we must first attempt recovery from the auxiliaries. If recovery from the auxiliaries is waived, we will seek recovery from the convicted person.
SSA is not authorized to seek restitution of fines or penalties imposed by the court. In overpayment or follow-up notices to the convicted person, request only the amount of the overpayment.
Consistent with section 207 of the Social Security Act, SSA cannot withhold under sections 204 (and 1631(b)) more than the overpayment amount from benefits payable to an individual. However, SSA may retain any restitution that the individual pays to the court and the court (or the Financial Litigation Unit (FLU)) of the U.S. Attorney’s office sends to SSA, so long as the amount retained does not exceed the total amount of the restitution ordered by the court. If more than the amount of the overpayment is refunded because the court ordered restitution of an amount greater than the overpayment (e.g., a fine), credit the excess to the trust fund on which the overpayment occurred (for instructions for crediting the trust funds, see HI 01015.040).
Return to the individual any amount that SSA receives in excess of the total restitution ordered by the court.
1. Case returned from OIG after prosecution
OIG returns the files to the appropriate Regional and OCO addresses. The file should contain the Judgment and Commitment orders. Review the prosecution documents to determine if the court ordered restitution to SSA and if so, the individual’s probation period. If this information is not in file, contact OIG to obtain the documentation.
Examine the file to determine whether an overpayment notice has been sent. If not, send an overpayment notice reflecting the full amount of the overpayment (as determined by SSA). (This amount may be different from the amount of court-ordered restitution.)
If appropriate, explain in the overpayment notice that, even though the court-ordered restitution is less than the overpayment, the overpaid person is liable for repayment of the full amount of the overpayment. Exclude language regarding waiver rights from the overpayment letter to the person convicted of fraud. If a waiver request has already been filed, indicate that waiver is no longer available because the fraud conviction precludes a finding of “without fault.”
If the overpayment notice has already been sent and the court-ordered restitution is less than SSA's overpayment amount, send a second notice explaining that:
regardless of the amount of restitution ordered by the court, the overpaid person is liable for repayment of the full amount of the overpayment (as determined by SSA); and
waiver is no longer available because the fraud conviction precludes a finding of “without fault.”
Include waiver rights in overpayment letters to other individuals whose overpayments result from the fraudulent actions. Because a fraud conviction precludes a finding of “without fault,” this section provides an exception to Developing a Request for Waiver GN 02250.200. If the representative payee requesting waiver on behalf of auxiliaries is convicted of fraud for the action that caused those auxiliaries to be overpaid, restrict the request for waiver to recovery from the auxiliaries.
2. Court-ordered restitution applies
Establish a ROAR diary control. If the probation period is for one year, prepare a 60-day diary. If the probation period is for two years or more, prepare a one-year diary. When the diary matures, review ROAR to determine if payments are being received.
3. No payments posted
Contact the Financial Litigation Unit (FLU) of the appropriate U.S. District Court. If the FLU is not identified in the documents returned to SSA, input the following: http://www.justice.gov/usao/districts/. If the court is receiving payments but has not yet distributed the funds to SSA, determine when SSA can expect disbursement.
If the FLU indicates that no payments have been received and sufficient time from the sentence date has elapsed, contact the assigned Probation Office to determine if a repayment schedule has been established with the individual. The address and telephone number for the Probation Officer can be found on the court documents in the file OIG returned to SSA. Maintain a 60-day diary until the Probation Officer has established the schedule of payments and the court has received the first payment. Document all contacts with the FLU and the Probation Office, including names and telephone numbers.
4. Monitoring the receipt of restitution funds
Establish a ROAR control by generating a TC91. The Diary Alert should be generated every 6 months during the length of the probation period.
a. ROAR diary alert matures
When the diary matures, review the overpayment record. If the court-ordered refunds are being made, re-diary for the next 6 months. Continue to re-diary every 6 months for the duration of the probation period.
If the ROAR record indicates that payments are not being received, review the file to determine if initial contact was made with the FLU and the Probation Officer. If contact was not made, follow GN 02201.055C.5. in this section.
If contact was previously made, re-contact the FLU to determine if the court has received refunds that have not been sent to SSA. If the FLU indicates no pending refunds, re-contact the Probation Officer. The U.S. District Court is responsible for enforcing collection when the individual is still on probation. Keeping in contact with the Probation Officer helps to ensure that individuals continue to make the refund payments.
Determine if the case should be returned to the court for non-compliance of the restitution order if:
b. Critical restitution cases
It is important that SSA fully monitor court-ordered restitution refunds during the probation period because collecting the overpayment becomes more difficult after the court has no further influence over the individual. Therefore, it becomes a “Critical Court Ordered Restitution Case” when the probation period ends within 14 months or less and:
No payment has been made; or
Monthly refund payments are past due (i.e., the most recent payment was made at least 60 days prior to the current date).
The above cases are time sensitive. Immediately contact the FLU and the Probation Officer. If contact does not result in timely refunds, request referral of the case back to the U.S. Court for non-compliance of the sentencing order.
5. Probation period expires
When the probation period has expired, the court no longer has the authority to enforce repayment of the overpayment to SSA. However, the Department of Justice (DOJ) keeps the case open for 20 years. Contact DOJ to request civil action against the convicted individual to collect the debt ordered by the court. . For instructions on contacting DOJ in Title II and Title XVI cases, see GN 02215.150, GN 02215.170, and SI 02220.035. If DOJ closes the case, resume normal recovery actions.
6. Benefits become payable after fraud conviction
If any benefit payments become due after conviction, withhold them at the full monthly benefit payment until the overpayment is recovered. However, do not withhold more than the overpayment. At the time the “E” Protest Code and “Y” Fraud Indicator are removed, automated recovery efforts will begin. Of course, apply the usual exceptions to pursuing full recovery:
If the debtor is deceased and the estate is less than the overpayment amount, limit recovery to the amount of the estate (for information on the liability of the estate, see GN 02215.050 - GN 02215.070);
If a U.S. Attorney (or Central Justice) accepts a compromise settlement, accept the settlement as full payment of the debt (see Authority to Make Compromise Settlements GN 02215.100A.).
7. Liability — Overpayments on the same earnings record
Charge an individual convicted of fraud with responsibility for repaying SSA all benefits overpaid (as determined by SSA, including those paid to any auxiliary) if all of the following apply:
The convicted person's fraudulent action caused the
auxiliary(ies) to be overpaid;
Recovery from the auxiliary(ies) is not possible (e.g., the auxiliary has died or was granted waiver);
Recovery from the convicted person has not been inadvertently waived; and
The court specifically ordered the convicted person to repay the auxiliaries' overpayments. In so doing, the court may either order repayment of an amount that equals the overpayments to all persons or the court may stipulate that the convicted person must repay the overpayment of each person overpaid because of the fraudulent action.
If all of the above conditions are met,
Send the convicted person a notice requesting refund of the total overpayment amount and, when appropriate, proposing adjustment on the same earnings record. Advise that SSA is looking to the convicted person for repayment of the family's overpayment(s) in accordance with the court order. Provide the date of the court order.
Update ROAR to reflect the waiver for the auxiliary(ies) and the increase in the convicted person's overpayment liability amount (see ROAR SM 00610.000, and Overpayment Recovery after Fraud Conviction SM 00610.785).
If the convicted person dies, consider recovery from his or her estate in accordance with Liability of Deceased’s Estate GN 02215.050.
If recovery from the convicted person was inadvertently waived, make no further recovery efforts. However, any voluntary refunds are acceptable.