Disability Fraud – Challenging Stereotypes

Disability Fraud – Challenging Stereotypes

Author: Attorney Lonnie Roach
Update 1/27/2023

There is a perception, perpetuated mainly by right-leaning politicians and media outlets, that the Social Security Disability program is heavily burdened with fraud.

The former Social Security Administration Commissioner, Michael J. Astrue, estimated that less than one percent of disability claims are fraudulent.

Some politicians even characterize individuals who receive Social Security Disability Insurance as “gaming the system”. This perception is both harmful and false. It is disrespectful to those who collect disability to assume they are capable of working but too lazy to do so. The entire point of the disability determination process is to weed out false claims and ensure only those who really need help are getting it. Fraudulent Social Security claims are very rare, and it is important for voters and policy makers to have a rational perspective of the issue.

It is right to be angry at those who would take advantage of a program like Social Security Disability Insurance.

If someone who is not disabled lies to collect benefits, they are drawing money from the system that should be used to help someone more deserving. Cases of fraud should be thoroughly investigated and diligently prosecuted. However, actual cases of fraud are very rare. The former Social Security Administration Commissioner, Michael J. Astrue, estimated that less than one percent of disability claims are fraudulent. Perception affects policy. If the public thinks those on Disability are “gaming the system” they will vote for politicians who advocate cutting funding of benefits programs. The Social Security System is very efficient and effective at preventing fraud; they are operating on a minimal budget as is.

Someone on disability is three to five times more likely to die in a given year than someone else in their age bracket.

It seems redundant, but if you look at those on disability as a demographic, it’s clear they are more likely to suffer serious health problems than the general population. Those on disability have much higher rates of physical inactivity, which leads to higher rates of obesity and heart disease. An individual collecting disability is more than twice as likely to live below the poverty line as someone who is not disabled. Nearly 30% of disability beneficiaries live in poverty, and the majority of beneficiaries are unemployed. People claim disability because they are unable to work, not because they are unwilling.

It is harder to collect disability in America than almost any other first-world country.

It is very difficult to get on disability; even to the point where many who need it are having trouble qualifying.

Compared to similar programs internationally, it is harder to collect disability in America than almost any other first-world country. The Center for Disease Control reports that 18.7% of people have a disability and over 12% have a severe disability. In contrast, only about 5% of Americans collect benefits from Social Security. This suggests that the opposite problem exists. Not that too many people are faking aliments to get on Social Security, but that the requirements of Social Security are too strict and not enough people are being helped.

Some politicians will claim that we are becoming a nation of “takers” instead of a nation of “makers” and growing numbers of Americans on disability programs is a sign of entitlement culture.

This is false; the increase in Americans participating in the Social Security program is due to demographics. The baby boomer generation is aging, and policy changes will need to be made as a result. In the past, congress has handled demographic shifts by reallocating revenues from other programs.

Public perception is important.

Social Security Disability Insurance is a program that all tax payers have paid into. It is not a welfare program, it is an insurance program. As many as one third of workers become disabled or die over the course of their careers. Only 7% of low-wage workers have an employer-provided disability plan. This problem is compounded when you consider that low-wage professions in retail, construction, and transportation have high rates of on-the-job accidents. Employer disability coverage is disproportionately extended to those is low-risk white-collar professions.

The recession caused an increase in Social Security disability applications but only a 5 percent increase in accepted applicants.

Many attribute the recent increase in disability applicants to the economic downturn. The ugly implication in naming the recession as the cause of an increase in benefit payouts is that people are receiving benefits out of economic desperation and not actual inability to work. The Social Security Administration claims the recession caused only a five percent increase in the number of accepted applications. However, application rates increased significantly. This shows that the recession did have an impact on the number of people applying for benefits, but because the system is designed to help only those who need it most, the increase in applications did not result in an equally significant increase in beneficiaries.

Nobody is becoming rich from their Social Security payouts. The average benefit payment for an unmarried individual is $1,483.

Social Security disability payments are minimal but crucial to those who receive them.

The Social Security Administration’s administrative budget is only 1.4%. This means they are spending only 1.4% of the millions of dollars distributed through the program to ensure those dollars are distributed properly. Even with this tight margin, cases of fraud are very rare. The average benefit payment for an unmarried individual is $1,580 in 2025. For half of beneficiaries this payment is 90% or more of their income. Nobody is becoming rich from their Social Security payouts. However, as meager as these benefits are, they are essential to the financial security of those receiving them. Even more unfortunate is that the majority of those who were denied benefits went on to earn less than $1,000 per month.

Is the Social Security Administration doing all it can to stop disability fraud? – Disability Allowance Rates Continue to Fall

Two thirds of initial applications are rejected.

Those applicants who appeal must wait months, possibly even years, before seeing an Administrative Law Judge (ALJ). At this stage, applicants with technical disqualifications- i.e.; insufficient work history- have been filtered out and the ALJ makes a determination of disability on the basis of the applicant’s medical records.

Some say that ALJs are “out-of-control” and approve everyone rather than take the time to look at cases.

Unfortunately, at one point this did have some truth to it. vALJs were only measured by their ability to process cases quickly, which incentivizes speed over accuracy. In response to allegations that this dynamic led to “rubber-stamping” claims, the Social Security Administration has made efforts to improve oversight of Administrative Law Judges.

Under the current system, any judge with an allowance rate of over 85% is subject to being audited and possible disciplinary action.

Additionally, the Office of Disability Adjudication and Review provided software to Administrative Law Judges to help them monitor their approval rates in comparison to their fellow judges. During the first few years of the programs, one judge did not have their contract renewed, two were suspended, and 14 received some sort of reprimand or additional training. At the beginning of the oversight initiative in 2007, 44 judges had approval rates over 85%. The program has been successful- as of 2013, only 7 judges have unusually high approval rates.

Now that judges with anomalously higher approval rates have been brought in line, the average approval rate at this stage has fallen.

From 2000 to 2014, the approval rate for claims at the hearing level dropped from nearly 60% to below 50%. It is likely that part of this drop was due to the recession as well. In a bad economy, more people try to get any public assistance they can and apply for disability. This leads to more cases being denied because many of the new applicants do not meet the standard for disability.

Author: Attorney Lonnie Roach has been practicing law for over 29 years. He is Superlawyers rated by Thomson Reuters and is Top AV Preeminent® and Client Champion rated by Martindale Hubbell. Through his extensive litigation Mr. Roach obtained board certifications from the Texas Board of Legal Specialization. Lonnie is admitted to practice in the United States District Court – all Texas Districts and the U.S. Court of Appeals, Fifth Circuit. Highly experienced in Long Term Disability denials and appeals governed by the “ERISA” Mr. Roach is a member of the Texas Trial Lawyers Association, Austin Bar Association, and is a past the director of the Capital Area Trial Lawyers Association (Director 1999-2005) Mr. Roach and all the members of Bemis, Roach & Reed have been active participants in the Travis County Lawyer referral service.