TN 22 (10-24)

GN 03970.013 Definitions and Examples of Violations of the Rules of Conduct and Standards of Responsibility for Representatives

A. Definitions of violations

1. Fee violations

A fee violation occurs when a representative, including an entity's point of contact (POC), knowingly charges, collects, retains, or arranges to charge, collect, or retain, from any source any fee for representational services in violation of an applicable law or regulation (see GN 03970.010C.2). The representative's actions may be direct or indirect, and the unauthorized fee collection may be total or partial. For the procedures to develop and refer individual representatives and POCs for suspected fee violations, see GN 03970.017.

For instructions concerning excess or erroneous fee payments made to an entity, see GN 03920.052

NOTE 1: 

When an entity wants to receive direct payment of authorized fees through assignment, the entity selects a POC to speak and act on the entity’s behalf in dealings with us (see 20 CFR 404.1703 and 416.1503). A POC’s role is to assist us in the resolution of fees or fee errors. Although a POC need not be appointed to any claim, matter, or other issue, they are considered a “representative” for purposes of the Rules of Conduct and Standards of Responsibility for Representatives. A sanctioned individual is not eligible to serve as a POC. The POC may be subject to suspension, disqualification, and in rare circumstances, criminal prosecution; however, they will not be held financially responsible for repayment of excess or otherwise erroneous fees paid to the entity. POCs will generally not be sanctioned if their entity does not remit excess or erroneous fees unless they act in a manner that violates our Rules of Conduct and Standards of Responsibility for Representatives. For example, a POC who does not make a good-faith effort to timely cooperate with us or actively refuses to assist in remitting excess or erroneous fees could be considered to have committed a non-fee violation. However, a POC may be referred for a suspected fee violation if they collect and retain an excess, erroneous, or unauthorized fee for providing representational services in an individual capacity. For further information about assigning direct payment of fees, including the roles and responsibilities of POCs, refer to GN 03920.021.

NOTE 2: Some non-profit organizations have internal rules prohibiting individuals working on their behalf from requesting or receiving fees for their services. Because we recognize individuals and not organizations as representatives, we do not involve ourselves in the business processes of these organizations. It is not a violation of our fee rules for a representative, whom a non-profit organization employs, to seek our authorization for, or direct payment of, an authorized fee under either the fee agreement or fee petition process.

a. Total unauthorized fee collection

A total unauthorized fee collection occurs when a representative collects a fee directly from the claimant, any affected auxiliary beneficiary or eligible spouse, or another individual (whether related or unrelated to the claimant, any affected auxiliary beneficiary, or eligible spouse) without our prior authorization.

NOTE: 

Payments to a representative by third-party entities are an exception to our general authorization requirement. For more information on fees that are not subject to our authorization, see 20 CFR 404.1720(e) and 416.1520(e), and GN 03920.010.

b. Partial unauthorized fee collection

A partial unauthorized fee collection occurs when we authorize a fee based on a fee agreement or fee petition, but a representative collects an amount in excess of the fee we authorized. The amount over the authorized fee is a partial unauthorized fee collection.

NOTE: If we pay a representative in error and the representative does not return the excess fee on receipt or after notification of the error, the direct payment error may result in an unauthorized fee collection. This unauthorized fee collection could be “partial” or “total.”

2. Non-fee violations

A non-fee violation occurs when a representative, including a POC, fails to comply with an affirmative duty or commits a prohibited action, as defined in GN 03970.010B and GN 03970.010C, that is not a fee violation.

For procedures for development and referrals of suspected non-fee violations, see GN 03970.017 and DI 31001.010.

3. Criminal violations

In addition to violating our rules and standards, there are some actions that may also violate provisions of the Social Security Act (Act) or other laws that provide criminal penalties for such violations.

NOTE: The Office of the Inspector General (OIG) has responsibility for investigating criminal violations. See information on violations of the Social Security Act and fraud in GN 04100.000. Regardless of whether OIG decides to seek criminal prosecution, the Office of the General Counsel (OGC) reviews all referrals for possible administrative sanctions. Therefore, refer conduct involving potential criminal violations to both OIG and OGC using the instructions in GN 03970.016.

B. Fee violations: Examples of possible violations of our rules on charging, collecting, or retaining representative fees

1. Collecting an excess fee

A representative petitioned for a fee of $1,950. We authorize a fee of $1,500. Through error, we directly paid the full $1,950 amount to the representative, even though we only authorized $1,500 for the representative's fee. Once we realized the error, we immediately sent a notice to the representative requesting refund of the excess amount, not including the user fee. If the representative does not return the excess amount after we notify them of it, the representative is knowingly retaining an amount in excess of the authorized fee in violation of our rules.

NOTE: 

If the representative in this example validly assigned direct payment of their fee to an entity, and we erroneously paid the entity $1,950, we would send the notice requesting refund only to the entity’s POC. The assigning representative has not violated any of our rules in these circumstances. If the POC does not return the excess amount on behalf of the entity after notice, refer to the instructions in GN 03920.052D. We will not refer the POC for disputing in good faith an excess or otherwise erroneous fee on behalf of the entity. The POC, however, may have engaged in prohibited actions and conducted dealings with us in a manner that did not further the efficient and prompt correction of a fee error in violation of our rules, which would be a non-fee violation. Although we may refer the POC for possible sanctions for such a violation (see Note 1 in GN 03970.013A.1. in this section and GN 03970.017), we will not hold the POC financially responsible for the repayment of excess or otherwise erroneous fees paid directly to the entity.

2. Collecting a fee on behalf of a representative through a Power of Attorney (POA)

A representative submits a POA to receive a fee on behalf of a former partner. The representative also submits a fee petition for the former partner's work along with the POA. While we generally do not accept or process a POA or fee petition from anyone other than the appointed representative (i.e., the former partner), the representative has not violated our rules by requesting authorization from us to collect a fee on behalf of the former partner through a POA.

However, if the representative attempts to collect or actually collects the former partner's fee without our authorization, the representative may be in violation of our rules.

NOTE: In limited circumstances, we may accept a fee petition submitted by someone other than the representative. For more information on petitioning for a fee, including these limited circumstances, see GN 03930.020.

3. Collecting a fee without our authorization

A representative enters into an agreement with a claimant allowing the representative to charge a fee equal to 25 percent of the claimant's past-due benefits (PDBs) if we allow the claim, or nothing if we deny the claim. The representative tells the claimant that they want to avoid the "long delays" involved with our direct payment of the fee. The representative tells the claimant that if we award benefits, the claimant should bring the first check from us to the representative's office to pay the representative's fee. We approve the claim on reconsideration, which results in the reopening of a prior denied claim and an award of retroactive benefits. The representative does not submit a fee agreement or fee petition to us and assures the claimant that we "routinely authorize representative fees of 25 percent of retroactive benefits." The claimant pays the representative a fee consisting of 25 percent of the PDBs. The representative has engaged in prohibited conduct because the representative knowingly charged, collected, and retained a fee without our authorization.

4. Collecting a fee from an escrow account that exceeds the authorized amount

Claimants may willingly enter into an agreement to deposit money into a trust or escrow account before we authorize a fee, and the money must be held in the trust or escrow account and not withdrawn until after we authorize a fee. Any amount the representative collects from such an account must not exceed the amount we authorize. For more information on trust and escrow accounts, refer to GN 03920.025.

5. Failure to refund an unauthorized fee involving a duplicate fee payment by us

A representative receives a properly authorized direct payment of $1,800 from withheld PDBs for services representing a disability claimant before us. Inadvertently, we certify duplicate payment of the fee to the U.S. Treasury. The representative receives a second check for $1,800 and deposits it into their account. After the field office (FO) or payment center (PC) sends a notice to the representative notifying them of the duplicate fee payment and requesting a refund, the representative does not act on the notice and does not refund the duplicate payment. The representative has engaged in prohibited conduct because they have knowingly retained a fee in excess of the amount we authorized.

NOTE: If the representative in this example had validly assigned direct payment of their fee to an entity and we paid the duplicate fee to that entity, the FO or PC would notify only the entity's POC of the duplicate fee following the instructions in GN 03920.052. If the entity’s POC conducted dealings with us in a manner that did not further the efficient and prompt correction of a fee error in violation of our rules, the POC may have committed a non-fee violation. However, we will not hold the POC financially responsible for repayment of any excess or otherwise erroneous fees paid directly to the entity. Furthermore, in this example, the assigning representative has not violated any of our rules. For instructions concerning excess or otherwise erroneous fee payments made to an entity, see GN 03920.052.

6. Charging and collecting an unauthorized fee based on a contract with a minimum fee

A representative enters into a signed fee contract with a claimant, stating that the "minimum" fee for their services is $1,000. The fee contract does not state that we must authorize this fee. After we approve the claim, the representative sends us a fee petition requesting $1,000 for their services. However, we only authorize a fee for $700, and the representative then seeks the additional $300 from the claimant, based on the fee contract. The representative has engaged in prohibited conduct because they charged a fee in excess of the amount we authorized, misled the claimant by asserting that there can be a minimum fee for representation, and failed to inform the claimant that we have to authorize any fee.

7. Indirect collection of a fee through third party payments and without our authorization

The claimant has a private insurance policy that pays them benefits when they are unable to work. The insurance company informs the claimant that the terms of the policy requires the claimant to file for Title II Disability Insurance Benefits (DIB). The insurance company assures the claimant that it will provide a representative to assist them at no charge.

Later, we award the claimant DIB benefits. The representative, who contracted with the insurance company to represent the claimant, informed us on the Form SSA-1696 that they waived their right to charge and collect a fee from the claimant, any affected auxiliary beneficiary, or any other source. Following the terms of the policy, the claimant notifies the insurance company about the award. The insurance company then pays the representative a fee for their representation of the claimant before us and deducts the same amount from the claimant's insurance policy benefits. If the representative knows the insurance company charged the claimant and the representative retains the fee, then the representative has engaged in prohibited conduct, because they knowingly violated our rules, which state that when a third party pays a representative's fee, the claimant and any affected auxiliary beneficiary must be free of liability directly or indirectly, as described in GN 03970.010C and GN 03920.020 (see also 20 CFR 404.1720(e) and 416.1520(e)).

8. Arrangements to charge, collect, or retain a fee directly from a claimant's bank account

A non-attorney representative who is not eligible for direct payment, asks a claimant to agree to one of the following:

  • Allow the representative to sign checks or use a prepaid debit card against an account into which we directly deposit DIB or Supplemental Security Income (SSI) payments;

  • Request that their DIB or SSI payments be directly deposited into an account that requires the representative to co-sign checks with the claimant before the claimant can withdraw funds from that account; or

  • Enter into an agreement that allows the representative to make electronic withdrawals from an account into which we directly deposit the claimant's DIB or SSI payments without the need to obtain the claimant's express permission for each withdrawal.

All three options violate our rules. Under our rules, the representative cannot have a financial interest in the bank account where we deposit the claimant's DIB or SSI payments. A representative must obtain authorization from a claimant to access a bank account after we pay DIB or SSI payments into the account and before each withdrawal. Here, the representative is collecting or arranging to collect the fee from directly deposited benefits or payments without obtaining the claimant's express permission after the funds are in their account.

If the representative collected a fee from the claimant without our prior authorization, then they have charged and collected an unauthorized fee and also violated our regulations under 20 CFR 404.1720, 404.1740(c)(2), 416.1520, and 416.1540(c)(2).

A representative who inappropriately gains control of the claimant's Social Security benefits may also be in violation of sections 207 and 1631(d)(1) of the Act, which prohibit the transfer or assignment of the right of any person to any future payments (benefits) under our titles. For more information about assignment of benefits and permission requirements, refer to GN 02410.001D.2.

C. Non-fee violations: Examples of possible violation scenarios related to other rules of conduct and standards of responsibility

Although the following examples do not cover every situation, they illustrate how a representative may violate their affirmative duties or may engage in prohibited conduct. In addition to these examples that involve individuals providing representational services, NOTE 1 in GN 03970.013A.1 (in this section) provides an example of a non-fee violation involving an entity’s POC.

1. Failure to provide competent representation

At the hearing, the representative is uninformed about a relevant issue, the applicable laws and regulations, and/or the facts of the case. The representative is also unprepared to ask questions or argue the issue, and cites irrelevant regulations and rules. Based on these facts, the representative has violated the affirmative duty to provide the claimant with competent representation.

2. Failure to file requests for appeals electronically

Representatives who are eligible for and request direct payment of their fees are required to file certain appeals electronically, using our iAppeals portal.

  • Example 1: A representative routinely submits paper appeal requests on medically denied initial claims and reconsideration claims, but requests direct payment of fees on all cases. The representative advised us that they do not like using the Disability Appeal (iAppeals) portal because they consider it unreliable and prefer filling out information on paper. Based on these facts, the representative has violated the affirmative duty to conduct business with us electronically by deliberately failing to file these appeals electronically.

  • Example 2: A representative always asks their clients to submit a paper request for reconsideration or a hearing before the representative submits the Form SSA-1696, indicating the representative intends to seek direct payment of their fee. By routinely asking the claimants to file these appeals in paper and then requesting direct payments, the representative is circumventing the affirmative duty to file certain appeals electronically and is violating our direct payment rules.

3. Failure to use the Appointed Representative Services (ARS) System

Representatives who are eligible for and request direct payment of fees are required to use the ARS system to access and obtain all information and evidence in claims with certified electronic folders pending at the hearing or Appeals Council levels unless one of the exceptions in GN 03970.010B.4. applies.

  • Example 1: A representative has 150 disability claims pending at the initial and reconsideration levels and requests CD copies of all the claim(s) files. Even if this representative requests direct payment on all of their cases, they are not in violation of our rules because the representative is not required to use the ARS system at these levels. However, after receiving several initial and reconsideration denial determinations, the representative requests hearings for their clients and again requests CD copies of all the files instead of using the ARS system. Unless a limited exception applies (see GN 03970.010B.4, NOTE 2), the representative has now violated our mandate to use the ARS system to access the claim(s) files.

  • Example 2: Five claimants have Social Security claims pending at the Appeals Council level and have appointed the same representative. Each claimant separately writes us to request CD copies of their claim(s) files. The claimants are not under the mandate to use ARS and we will provide them with the requested copies of their files. However, if claimants who are clients of a particular representative routinely request CD copies of their files, the representative may be in violation of our mandate to use the ARS system to access the claim(s) files when the circumstances suggest that the representative is directing this activity to circumvent the obligation to use the ARS system.

4. Failure to inform us about or submit required evidence

  • Example 1: A representative advises their client about the duty of a claimant to inform us about, or submit, all known evidence that relates to whether or not the claimant is blind or disabled. The claimant gives the representative a stack of medical records that includes copies of several test results. The following day, the representative uploads the documents to the claimant's electronic file, but removes a recent test containing normal findings, as they believe this evidence would unfavorably affect their client's disability claim. Based on these facts, the representative has violated our rules because they knowingly failed to submit all known evidence that pertains to whether the claimant is blind or disabled.

  • Example 2: A representative advises a client to not respond and complete the Form SSA-3368-BK (Disability Report - Adult) they received from us, stating that we oftentimes do not even look at that form. Based on these facts, the representative violated our rules because the representative suggested non-compliance with our request for information or evidence.

5. Delay proceedings without good cause

A representative is chronically late in submitting required reports because their office is short staffed. They also routinely submit late filings and requests for good cause based on short staffing. The representative's late submissions have delayed the case processing for a number of claimants. Based on these facts, the representative may have violated our rules by unreasonably delaying or causing to be delayed the processing of these claims because a lack of staffing is not good cause for missed deadlines under 20 CFR 404.911(b) and 416.1411(b).

6. Withdraw in a manner that disrupts the processing of the case

On the day before a scheduled hearing, a representative sends a letter to us and the claimant, stating that they are withdrawing as the claimant's representative in the case. In the letter, the representative provides no reason for the withdrawal. The next day, the claimant arrives for the hearing, but informs the administrative law judge (ALJ) that they do not feel comfortable continuing without a representative. The ALJ postpones the hearing to allow time for the claimant to obtain a new representative. Based on these facts, the representative may have violated our rules because the representative withdrew their appointment after the hearing was scheduled and failed to identify extraordinary circumstances for the withdrawal, which disrupted our processing of the claimant's case.

7. Failure to provide evidence as soon as practicable

Soon after appointing a representative, a claimant provides the representative with relevant medical and work history evidence that they need to submit to us. The representative has the evidence for six months but makes no effort to provide the evidence to us, finally providing it to an ALJ only two business days before the date of the claimant's hearing. Based on these facts, the representative has violated our rules because they failed to provide us the required evidence "as soon as practicable." Moreover, as the representative did not inform us about or submit this evidence at least five business days before the date of the scheduled hearing, the ALJ may decline to consider this evidence (see Social Security Ruling 17-4p: Titles II and XVI: Responsibility for Developing Written Evidence).

8. Misrepresentation of facts

  • Example 1: A disability applicant receives unreported cash payments for housecleaning work they routinely do for several families in their neighborhood. Their representative advises them not to report this work in their Social Security application because the work and earnings will negatively affect their claim for disability. Based on these facts, the representative has violated our rules because the representative participated in the making or presentation of false evidence about the claimant's work and earnings.

  • Example 2: The claimant owns a new automobile, which the claimant won in a contest and stores at an aunt's house in a different state. The claimant knows that the asset will count as a resource and decides not to mention it on their SSI application. Their representative agrees with the claimant that doing so is a good idea, and the claimant continues to conceal this asset. Based on these facts, the representative has violated our rules because the representative participated in the making or presentation of false or misleading statements about the claimant's resources.

9. Failure to properly disclose required information about opinion evidence

A representative referred a claimant to a doctor for a medical examination and medical source statement. A few days later, the doctor sends the report of the examination, including a completed form with a medical opinion, to the representative. The representative submits the medical report and opinion to us the following day, but does not disclose in writing that they referred the claimant to the doctor for an examination and opinion. Based on these facts, the representative has violated our rules by failing to inform us of the referral.

10. Failure to oversee individuals assisting on claims when the representative has managerial or supervisory authority over these individuals

A claimant's representative who is a partner at a law firm asks their paralegal to submit relevant medical evidence that the claimant needs to submit to us. The paralegal forgets and does not submit the evidence by the date of the administrative hearing. Instead, the paralegal submits this evidence a week following the hearing. As a result, the ALJ declines to consider the untimely submitted evidence. Based on these facts, the representative violated our rules because they did not ensure the individual assisting them complied with our rules and standards.

D. Examples of violations subject to criminal prosecution

The following examples provide a non-exhaustive sample of situations that may indicate that a representative has engaged in prohibited conduct. Some actions that violate the Rules of Conduct and Standards of Responsibility for Representatives may also violate laws that have criminal penalties.

1. Knowingly make or participate in making a false statement or representation

  • Example 1: A mother files for benefits on behalf of a two-year old child, alleging that a deceased Number Holder (NH) is the child's father. The mother is unable to establish the child's relationship to the NH or provide proof that the NH supported the child before their death, so we deny the claim at the initial level. The mother appoints a representative to appeal the unfavorable determination. The representative submits four affidavits from individuals alleging to have first-hand knowledge of the NH’s paternity. We award the child survivor’s benefits, but later learn that the individuals only had casual acquaintance with the NH, that they had no knowledge of the paternity issue, and that the representative persuaded them to sign the affidavits in return for $50 each. Based on these facts, the representative engaged in prohibited conduct by knowingly making false statements and presenting false evidence, subjecting them to suspension or disqualification from practicing before us and possible criminal penalties, including a fine and incarceration (see section 208 of the Act).

  • Example 2: A claimant calls the FO to state that a representative filed a claim on their behalf without authorization. The representative had submitted an online first-party application on the claimant's behalf following a phone call in which the claimant only inquired about the possibility of filing for SSI. Based on these facts, the representative appears to have impersonated the claimant and engaged in prohibited conduct that could subject them to suspension or disqualification and possible criminal penalties, including a fine and incarceration (see section 1106 of the Act).

2. Unauthorized disclosure of beneficiary information

A representative shares an office with an independent insurance agent. The insurance agent proposes to pay the representative a “finder's fee” for the name, address, and monthly benefit amount of each of their clients whom we award benefits. The agent sees these beneficiaries as prospective customers for the medical insurance plans they are selling that will supplement the coverage provided by State and Federal programs. The representative agrees to the proposal and, without obtaining consent from any beneficiary, provides a list containing personal information of their clients. Based on these facts, the representative engaged in prohibited conduct because they divulged information that they obtained from us, which contains personal information of beneficiaries, without any beneficiary’s written consent (see GN 03970.010C). This conduct could subject the representative to suspension or disqualification from practicing before us, and possibly criminal penalties such as fine and incarceration, (see section 1106 of the Act).

3. Knowingly charging or collecting unauthorized fees

After we approve $3,000 in representative fees for a successful Title II claim, a representative contacts their client to collect the fee from the beneficiary directly. The representative demands $4,000 from the beneficiary, stating that the fee approved by us does not truly represent the time and effort they had put into this case. Based on these facts, the representative engaged in prohibited conduct by charging (and potentially collecting and retaining) a larger fee than we authorized, subjecting them to possible suspension or disqualification from practicing before us and possible criminal penalties based on this conduct (see section 206 of the Act).

NOTE: If the representative had assigned direct payment of their fee to an entity, and the entity’s POC was the one to demand $4,000 from the beneficiary, the assigning representative did not engage in any prohibited conduct. Instead, the POC has violated our rules by charging (and potentially collecting and retaining) a larger fee than we authorized. The POC may be subject to possible suspension or disqualification and possible criminal penalties, but is not financially responsible for repayment of any excess fee the claimant paid to the entity. If the POC collected and retained any part of the excess fee themselves, however, they would be financially responsible for repayment of that amount to the claimant. If the entity fails to remit the excess fee, see GN 03920.052.

 


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GN 03970.013 - Definitions and Examples of Violations of the Rules of Conduct and Standards of Responsibility for Representatives - 10/08/2024
Batch run: 10/08/2024
Rev:10/08/2024