Disability Fraud Reduction and Unethical Deception (FRAUD) Prevention Act

Summary: Disability Fraud Reduction and Unethical Deception (FRAUD) Prevention Act  Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act (SSAct) to authorize the Social Security Administration (SSA) to disqualify or suspend immediately from appearing as a claimant representative before it any individual who has been convicted of a felony in a federal or state court, or, in the case of an attorney, upon the individual's disbarment from any court or bar to which he or she was previously admitted to practice. Amends SSAct titles II, VIII (Special Benefits for Certain World War II Veterans), and XVI (Supplemental Security Income) to subject to criminal penalties for fraud any conspiracy to commit specified offenses, and increase criminal as well as civil monetary penalties for certain individuals in positions of trust who commit fraud. Amends SSAct title II to direct the SSA to establish rules under which fines and other appropriate sanctions may be imposed on claimant representatives for failure to comply with the SSA rules and regulations. Amends SSAct title XI to: (1) establish a civil monetary penalty for any claimant representative who knowingly charges for services rendered in excess of the maximum fee prescribed by the SSA or allowed by a court, and (2) direct the SSA periodically to adjust civil monetary penalty maximum amounts for inflation. Requires federal courts (which currently are merely authorized) to order defendants convicted of Social Security fraud to provide restitution to victims in certain cases. Amends SSAct title II to ban any payment of benefits to individuals on whom a civil monetary penalty is imposed for fraudulently concealing work activity. Directs the Inspector General of the SSA to conduct biennial reviews of the practices of a sample of the highest earning claimant representatives to ensure compliance with SSA policies.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Disability Fraud Reduction and 
Unethical Deception (FRAUD) Prevention Act''.

SEC. 2. IMMEDIATE SUSPENSION OF CLAIMANT REPRESENTATIVES UPON FELONY 
              CONVICTIONS OR DISBARMENT.

    Section 206(a)(1) of the Social Security Act (42 U.S.C. 406(a)(1)) 
is amended--
            (1) in the third sentence, by striking ``disbarred or'' 
        each place it appears; and
            (2) by inserting after the third sentence the following: 
        ``Upon conviction of an individual for a felony in a Federal or 
        State Court or, in the case of an attorney, upon disbarment 
        from any court or bar to which he or she was previously 
        admitted to practice, the Commissioner may, after due notice, 
        immediately disqualify or suspend the individual from appearing 
        as a claimant representative before the Social Security 
        Administration, pending an expedited hearing.''.

SEC. 3. NEW AND STRONGER PENALTIES.

    (a) Conspiracy To Commit Social Security Fraud.--
            (1) Amendment to title ii.--Section 208(a) of the Social 
        Security Act (42 U.S.C. 408(a)) is amended--
                    (A) in paragraph (7)(C), by striking ``or'' at the 
                end;
                    (B) in paragraph (8), by adding ``or'' at the end; 
                and
                    (C) by inserting after paragraph (8) the following:
    ``(9) conspires to commit any offense described in any of 
paragraphs (1) through (8),''.
            (2) Amendment to title viii.--Section 811(a) of such Act 
        (42 U.S.C. 1011(a)) is amended--
                    (A) in paragraph (3), by striking ``or'' at the 
                end;
                    (B) in paragraph (4), by striking the comma and 
                adding ``; or'' at the end; and
                    (C) by inserting after paragraph (4) the following:
    ``(5) conspires to commit any offense described in any of 
paragraphs (1) through (4),''.
            (3) Amendment to title xvi.--Section 1632(a) of such Act 
        (42 U.S.C. 1383a(a)) is amended--
                    (A) in paragraph (3), by striking ``or'' at the 
                end;
                    (B) in paragraph (4), by adding ``or'' at the end; 
                and
                    (C) by inserting after paragraph (4) the following:
    ``(5) conspires to commit any offense described in any of 
paragraphs (1) through (4),''.
    (b) Increased Criminal Penalties for Certain Individuals Violating 
Positions of Trust.--
            (1) Amendment to title ii.--Section 208(a) of the Social 
        Security Act (42 U.S.C. 408(a)), as amended by subsection (a), 
        is further amended by striking the period at the end and 
        inserting ``, except that in the case of a person who receives 
        a fee or other income for services performed in connection with 
        any determination with respect to benefits under this title 
        (including a claimant representative, translator, or current or 
        former employee of the Social Security Administration), or who 
        is a physician or other health care provider who submits, or 
        causes the submission of, medical or other evidence in 
        connection with any such determination, such person shall be 
        guilty of a felony and upon conviction thereof shall be fined 
        under title 18, United States Code, or imprisoned for not more 
        than ten years, or both.''.
            (2) Amendment to title viii.--Section 811(a) of such Act 
        (42 U.S.C. 1011(a)), as amended by subsection (a), is further 
        amended by striking the period at the end and inserting ``, 
        except that in the case of a person who receives a fee or other 
        income for services performed in connection with any 
        determination with respect to benefits under this title 
        (including a claimant representative, translator, or current or 
        former employee of the Social Security Administration), or who 
        is a physician or other health care provider who submits, or 
        causes the submission of, medical or other evidence in 
        connection with any such determination, such person shall be 
        guilty of a felony and upon conviction thereof shall be fined 
        under title 18, United States Code, or imprisoned for not more 
        than ten years, or both.''.
            (3) Amendment to title xvi.--Section 1632(a) of such Act 
        (42 U.S.C. 1383a(a)), as amended by subsection (a), is further 
        amended by striking the period at the end and inserting ``, 
        except that in the case of a person who receives a fee or other 
        income for services performed in connection with any 
        determination with respect to benefits under this title 
        (including a claimant representative, translator, or current or 
        former employee of the Social Security Administration), or who 
        is a physician or other health care provider who submits, or 
        causes the submission of, medical or other evidence in 
        connection with any such determination, such person shall be 
        guilty of a felony and upon conviction thereof shall be fined 
        under title 18, United States Code, or imprisoned for not more 
        than ten years, or both.''.
    (c) Increased Civil Monetary Penalties for Certain Individuals 
Violating Positions of Trust.--Section 1129(a)(1) of the Social 
Security Act (42 U.S.C. 1320a-8(a)(1)) is amended, in the matter 
following subparagraph (C), by inserting after ``withholding disclosure 
of such fact'' the following: ``, except that in the case of such a 
person who receives a fee or other income for services performed in 
connection with any such determination (including a claimant 
representative, translator, or current or former employee of the Social 
Security Administration) or who is a physician or other health care 
provider who submits, or causes the submission of, medical or other 
evidence in connection with any such determination, the amount of such 
penalty shall be not more than $7,500''.
    (d) Establishment of Sanctions for Violations by Claimant 
Representatives.--Section 206(a)(1) of the Social Security Act (42 
U.S.C. 406(a)(1)) is amended by inserting after ``or who violates any 
provision of this section for which a penalty is prescribed.'' the 
following: ``The Commissioner of Social Security shall establish rules 
under which fines and other sanctions the Commissioner determines to be 
appropriate may be imposed and collected for failure to comply with the 
Commissioner's rules and regulations.''.
    (e) Civil Monetary Penalty on Claimant Representatives.--Section 
1129(a) of the Social Security Act (42 U.S.C. 1320a-8(a)) is amended by 
adding at the end the following:
            ``(4) Any person (including an organization, agency, or 
        other entity) who, while acting as a claimant representative 
        pursuant to section 206, knowingly charges, demands, receives, 
        or collects for services rendered in excess of the maximum fee 
        prescribed by the Commissioner of Social Security or allowed by 
        a court in connection with proceedings before the court to 
        which section 206(b)(1) is applicable, shall be subject to, in 
        addition to any other penalties that may be prescribed by law, 
        a civil monetary penalty of not more than $7,500 for each 
        violation. Such person shall also be subject to an assessment, 
        in lieu of damages sustained by the United States resulting 
        from the improper payment, of not more than twice the amount of 
        any payments so received.''.
    (f) Inflation Adjustment of Certain Civil Monetary Penalties.--
Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is amended 
by inserting after section 1129B the following:

``SEC. 1129C. CIVIL MONETARY PENALTY INFLATION ADJUSTMENT.

    ``(a) Adjustment by Regulation.--The Commissioner of Social 
Security shall, not later than 180 days after the date of enactment of 
the Disability Fraud Reduction and Unethical Deception (FRAUD) 
Prevention Act, and at least once every 4 years thereafter--
            ``(1) by regulation adjust the maximum amount of each civil 
        monetary penalty by the inflation adjustment described under 
        subsection (b); and
            ``(2) publish each such regulation in the Federal Register.
    ``(b) Amount of Adjustment.--The inflation adjustment under 
subsection (a) shall be determined by increasing the maximum amount of 
each civil monetary penalty by the cost-of-living adjustment. Any 
increase determined under this subsection shall be rounded to the 
nearest--
            ``(1) multiple of $1,000 in the case of penalties greater 
        than $1,000 but less than or equal to $10,000; and
            ``(2) multiple of $5,000 in the case of penalties greater 
        than $10,000 but less than or equal to $100,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) the term `civil monetary penalty' means--
                    ``(A) a penalty imposed by paragraph (1), (3), or 
                (4) of section 1129(a); and
                    ``(B) a penalty imposed by paragraph (1) or (2) of 
                section 1140(b); and
            ``(2) the term `cost-of-living adjustment' means the 
        percentage (if any) for each civil monetary penalty by which--
                    ``(A) the Consumer Price Index for all Urban 
                Consumers (CPI-U) for the month of June of the calendar 
                year preceding the adjustment, exceeds
                    ``(B) the CPI-U for the month of June of the 
                calendar year in which the amount of such civil 
                monetary penalty was last set or adjusted pursuant to 
                law.
    ``(d) Application of Increase.--Any increase under this Act in a 
civil monetary penalty shall apply only to violations which occur after 
the date the increase takes effect.''.
    (g) Mandatory Restitution in Social Security Fraud Cases.--
            (1) Amendments to title ii.--Section 208(b) of the Social 
        Security Act (42 U.S.C. 408(b)) is amended--
                    (A) in paragraph (1), by striking ``may order'' and 
                inserting ``shall order'';
                    (B) in paragraph (2), by striking ``3663'' and 
                inserting ``3663A'';
                    (C) by striking paragraph (3); and
                    (D) by redesignating paragraphs (4) and (5) as 
                paragraphs (3) and (4), respectively.
            (2) Amendments to title viii.--Section 811(b) of such Act 
        (42 U.S.C. 1011(b)) is amended--
                    (A) in paragraph (1), by striking ``may order'' and 
                inserting ``shall order'';
                    (B) in paragraph (2), by striking ``3663'' and 
                inserting ``3663A'';
                    (C) by striking paragraph (3); and
                    (D) by redesignating paragraph (4) as paragraph 
                (3).
            (3) Amendments to title xvi.--Section 1632(b) of such Act 
        (42 U.S.C. 1383a(b)) is amended--
                    (A) in paragraph (1), by striking ``may order'' and 
                inserting ``shall order'';
                    (B) in paragraph (2), by striking ``3663'' and 
                inserting ``3663A'';
                    (C) by striking paragraph (3); and
                    (D) by redesignating paragraph (4) as paragraph 
                (3).
            (4) Effective date.--The amendments made by paragraphs (1), 
        (2), and (3) shall apply with respect to violations occurring 
        on or after the date of the enactment of this Act.
    (h) No Benefits Payable to Individuals for Whom a Civil Monetary 
Penalty Is Imposed for Fraudulently Concealing Work Activity.--Section 
222(c)(5) of the Social Security Act (42 U.S.C. 422(c)(5)) is amended 
by inserting after ``conviction by a Federal court'' the following: ``, 
or the imposition of a civil monetary penalty under section 1129,''.
    (i) Improved Collection of Civil Money Penalties and Assessments.--
            Section 1129(e) of the Social Security Act (42 U.S.C. 
        1320a-8) is amended--
            (1) by redesignating paragraphs (1) and (2) as paragraphs 
        (2) and (3), respectively;
            (2) by inserting before paragraph (2) the following:
            ``(1) Civil money penalties and assessments imposed under 
        this section may be compromised by the Commissioner of Social 
        Security.''; and
            (3) in paragraph (2) (as redesignated by paragraph (1) of 
        this section), by striking ``Civil money penalties and 
        assessments imposed under this section may be compromised by 
        the Commissioner of Social Security and may be recovered--'' 
        and inserting ``To the extent that the Commissioner of Social 
        Security determines to seek recovery of a civil money penalty 
        or assessment imposed under this section, the Commissioner 
        shall promptly seek such recovery--''.

SEC. 4. REVIEW OF HIGHEST-EARNING CLAIMANT REPRESENTATIVES.

    Not later than 1 year after the date of the enactment of this Act 
and biennially thereafter, the Inspector General of the Social Security 
Administration shall conduct biennial reviews of the practices of a 
sample of the highest earning claimant representatives to ensure 
compliance with the policies of the Social Security Administration.