Order Code RS21448
Updated April 2, 2003
CRS Report for Congress
Received through the CRS Web
The Social Security Protection Act of 2003
Analyst in Social Legislation
Domestic Social Policy Division
On April 2, 2003, the House of Representatives passed H.R. 743 (the Social
Security Protection Act of 2003, H.Rept. 108-46), as amended, by a vote of 396-28. A
substitute amendment offered by Rep. Green of Texas was defeated by a 196-228 vote.
One month earlier, H.R. 743 was considered by the House under suspension of the rules,
and it failed to receive the two-thirds majority vote required for passage. H.R. 743
closely resembles H.R. 4070 from the 107th Congress. H.R. 4070, which passed the
House unanimously and the Senate with amendment under unanimous consent, did not
receive final passage before the 107th Congress adjourned. H.R. 743 is a bipartisan
measure that would impose stricter standards on individuals and organizations serving
as representative payees for Social Security and Supplemental Security Income (SSI)
recipients; make non-governmental representative payees liable for “misused” funds and
subject them to civil monetary penalties; tighten restrictions on attorneys representing
Social Security and SSI disability claimants; limit assessments on attorney fee payments;
prohibit fugitive felons from receiving Social Security benefits; modify the “last day
rule” under the Government Pension Offset; and make other changes designed to reduce
Social Security fraud and abuse. The Congressional Budget Office estimates that the
measure would result in net savings of $655 million over 10 years. This report will be
updated as legislative activity occurs.
On February 12, 2003, Rep. E. Clay Shaw, Chairman of the House Ways and Means
Subcommittee on Social Security, introduced H.R. 743, the Social Security Protection Act
of 2003 (H.Rept. 108-46).1 H.R. 743 closely resembles H.R. 4070 from the 107th
Congress, which was passed by the House by a vote of 425-0 in June 2002. A substitute
amendment to H.R. 4070 (S.Amdt. 4967) was passed by the Senate under unanimous
consent in November 2002. The measure did not receive final action in the House before
H.R. 743 is a bipartisan measure co-sponsored by Rep. Matsui, the Ranking Democrat on the
Social Security Subcommittee and 30 other Members. On Feb. 25, 2003, Sen. Jim Bunning
introduced a companion measure in the Senate (S. 439).
Congressional Research Service ˜ The Library of Congress
the 107th Congress adjourned.2 On February 27, 2003, the House Ways and Means
Subcommittee on Social Security held a hearing on the bill. On March 5, 2003, the House
considered H.R. 743, as amended by the Chairman, under suspension of the rules (debate
was limited to 40 minutes, floor amendments were not allowed and a two-thirds majority
vote was required for passage).3 Following debate in which many Members expressed
strong opposition to a provision that would modify the “last day rule” under the
Government Pension Offset (described below), the measure failed by a vote of 249-180.4
On March 13, 2003, the House Ways and Means Committee held a markup on H.R.
743, as amended. Rep. Jefferson offered an amendment that would incorporate H.R. 887
into the bill. Under H.R. 887, sponsored by Rep. Jefferson and co-sponsored by 109
Members, individuals whose combined monthly income from a noncovered pension and
a Social Security spousal benefit is $2,000 or less would be exempt from the Government
Pension Offset (GPO). In addition, the Jefferson amendment would hold the Social
Security trust funds harmless (i.e., the increased cost to the Social Security system as a
result of the change would be paid from general revenues). At the markup, Rep. Jefferson
stated that the proposal would cost an estimated $19 billion over 10 years.5 The Jefferson
amendment was defeated by a vote of 14-21. Rep. Stark offered an amendment that would
reduce the GPO from two-thirds to one-third of the government pension.6 As under the
Jefferson amendment, the increased cost to the Social Security system would be paid from
general revenues. The Stark amendment was defeated by a vote of 15-22. H.R. 743, as
amended, was approved by the Committee by a vote of 35-2.
On April 2, 2003, the House considered H.R. 743, as amended, for a second time.
The measure was considered under a rule (H.Res. 168, H.Rept. 108-54) that provided for
one hour of debate on the measure and 40 minutes of debate on a substitute amendment
by Rep. Green of Texas. The Green amendment would strike from the bill the provision
that would modify the GPO “last day rule” (section 418, described below). It would
make no other changes to the measure. The Green amendment failed by a vote of 196228, mostly along party lines. A motion by Rep. Green to recommit the bill to the House
Ways and Means Committee with instructions to report the measure back to the House
with an amendment addressing the concerns of federal, state and local government
employees with respect to the GPO also failed by a vote of 203-220. H.R. 743, as
amended, was then passed by the House by a vote of 396-28. The major provisions of
H.R. 743, amended, as passed by the House are described below. The Congressional
For information on H.R. 4070, see CRS Report RS21225, Social Security Program Protection
Act of 2002 (H.R. 4070), by Dawn Nuschler.
The bill did not go before the House Ways and Means Committee or the Subcommittee on
Social Security for markup before consideration in the House on March 5, 2003.
The provision affecting the “last day rule” under the Government Pension Offset was not
included in the version of H.R. 4070 that passed the House unanimously in the 107th Congress.
It was included in the Senate-passed version of the bill.
The hold harmless provision is not included in H.R. 887. For more information, see CRS
Report RS20148, Social Security: The Government Pension Offset, by Geoffrey Kollmann.
A reduction in the GPO to one-third of the government pension is included in Rep. Shaw’s
Social Security reform bill (H.R. 75, the Social Security Guarantee Plus Act of 2003).
Budget Office estimates that the measure would result in net savings of $655 million over
10 years (fiscal years 2004-2013).
Major Provisions of H.R. 743, Amended, as Passed by
Representative Payees. The Social Security Administration (SSA) may
designate a “representative payee” to accept monthly benefit payments on behalf of Social
Security and Supplemental Security Income (SSI) recipients who are considered physically
or mentally incapable of managing their own funds, or on behalf of children under age 18.
In December 2001, an estimated 10.5% of Social Security recipients and 34.1% of SSI
recipients had representative payees. In most cases, a family member or friend of the
recipient serves as the representative payee. Other individuals and organizations that may
serve as representative payees include members of community organizations; public
agencies or non-profit institutions that have custody of the recipient; noncustodial federal
institutions; and private, for-profit organizations licensed under state law that have custody
of the recipient.7
SSA is required to reissue benefits misused by an individual or organizational
representative payee if the Commissioner of Social Security (the Commissioner) finds that
SSA negligently failed to investigate or monitor the payee. H.R. 743 would eliminate the
requirement that reissuance be subject to a finding of negligence on the part of SSA. As
a result, SSA would be required to reissue any payments misused by an organizational
payee, or by an individual payee representing 15 or more recipients. Such payments would
be reissued directly to the recipient or to an alternative representative payee. The “misuse
of benefits” occurs when payments are used by the representative payee for purposes other
than the “use and benefit” of the recipient. The bill would authorize the Commissioner
to prescribe by regulation the meaning of the term “use and benefit.”
Representative payees are not liable for misused funds. H.R. 743 would make
individual payees and non-governmental organizational payees (those other than federal,
state and local government agencies) liable for the reimbursement of misused funds. Such
funds would be treated as overpayments to the representative payee (not the recipient),
subjecting them to current overpayment recovery procedures in the Social Security Act.
Although an individual may not charge a fee for serving as a representative payee,
certain organizations (such as Department of Veterans Affairs hospitals, nursing homes
and nonprofit agencies) may charge a fee for serving in this capacity. The fee is based on
a statutory formula and deducted from the recipient’s benefit payment. H.R. 743 would
require the organization to forfeit fee payments for any month for which the Commissioner
or a court of jurisdiction finds that the organization misused all or part of a recipient’s
For more information, refer to: SSA, Office of the Inspector General, “Organizational
Representative Payee Program.” Testimony by Inspector General James G. Huse, Jr. before the
Senate Special Committee on Aging, May 2, 2000; and Testimony by Susan Daniels, Deputy
Commissioner, Disability and Income Security Programs, before the House Committee on Ways
and Means, Subcommittee on Social Security, May 4, 2000.
The Commissioner may impose a civil monetary penalty and an assessment on
persons who knowingly provide false information, or knowingly withhold information, to
obtain Social Security benefits. The civil monetary penalty may be up to $5,000 for each
violation; the assessment may be up to twice the amount of benefits wrongfully paid to the
individual. H.R. 743 would clarify that such penalties may be imposed on persons who
withhold information that they know, or should know, affects their eligibility status or
benefit amount. It would require the Commissioner to issue a receipt acknowledging
notification of changes in a recipient’s work or earnings status until SSA has implemented
a centralized computer file to record the date on which changes in work or earnings status
are reported. In addition, the measure would impose the same penalties on representative
payees who misuse benefits (a civil monetary penalty of up to $5,000 for each violation
and an assessment of up to twice the amount of misused benefits).
Non-governmental fee-for-service organizational payees must be bonded or licensed,
but they are not required to submit proof of such certification. H.R. 743 would require
such representative payees to be bonded and licensed (if licensing is available in the state)
and to submit proof of such certification annually (along with a copy of any independent
audit performed on the organization since the previous certification). In addition to
existing periodic onsite reviews of state institutions, H.R. 743 would require periodic
onsite reviews of individual representative payees who serve 15 or more recipients; nongovernmental fee-for-service organizational payees; and any other agency that serves as
a representative payee for 50 or more recipients. The bill would require the Commissioner
to submit an annual report to Congress on the findings of such reviews, including
problems identified and any action taken or planned to correct those problems.
Individuals are disqualified from serving as a representative payee if they have been
convicted of fraudulent conduct involving Social Security programs. H.R. 743 would
extend the restriction to individuals convicted of an offense under federal or state law that
results in imprisonment for more than 1 year (unless the Commissioner determines that
the individual’s designation as a representative payee would be appropriate despite the
conviction) and to individuals fleeing prosecution, custody, or confinement for a felony.
The measure would require the Commissioner to prepare a report on the adequacy of
existing procedures and reviews.
Representative payees are required to complete an annual accounting report
describing how a recipient’s benefits have been used. If misuse is suspected, a report may
be requested by the Commissioner at any time. H.R. 743 would authorize the
Commissioner to require a representative payee to collect the recipient’s benefits in person
at a local SSA office if he or she fails to submit annual accounting reports.
Claimant Representatives. Social Security and SSI disability claimants may
choose to have an attorney or other qualified individual represent them in proceedings
before SSA. The representative may charge a fee for his or her services, but the fee must
be authorized by SSA under either the fee petition process or the fee agreement process.
Under the fee petition process, the representative must file a fee petition with SSA after
completing work on a claim (in addition, a copy must be sent to the claimant). SSA
determines the amount of the fee, which is limited to 25% of past-due benefits awarded,
based on factors including the complexity of the case and the type of services performed
by the representative. Under the more simplified fee agreement process, the representative
and the claimant must file a written fee agreement with SSA before a decision is made on
the claim. In fee agreement cases, the representative’s fee is limited to the lesser of 25%
of past-due benefits awarded or $5,300.
If a Social Security claimant is awarded past-due benefits and his or her
representative is an attorney, SSA withholds the attorney’s fee from the benefit award and
pays the attorney directly. If the representative is not an attorney, or the claim is for SSI
benefits, SSA pays the total benefit award to the claimant, and the representative must
collect his or her fee from the recipient. To cover the administrative costs associated with
the direct fee payment process, SSA charges an assessment of up to 6.3% of the attorney’s
fee and deducts that amount from the attorney’s fee payment.8 H.R. 743 would cap the
assessment on attorneys’ fees at $75 (the cap would increase each year thereafter with the
rate of inflation) and extend the attorney fee payment process to SSI claims. The extension
of the attorney fee payment process to SSI claims would expire 5 years after
implementation. In addition, the bill would require the General Accounting Office to
conduct a study regarding fee withholding for non-attorney representatives.9
An attorney who is currently licensed to practice must be recognized by SSA as a
claimant representative, even if he or she has been disbarred in another jurisdiction. H.R.
743 would authorize the Commissioner to refuse to recognize as an attorney representative
(or disqualify if already recognized) an attorney who has been disbarred or suspended from
any court or bar to which he or she was previously admitted to practice, or has been
disqualified from participating in or appearing before any federal program or agency. H.R.
743 would authorize the Commissioner to refuse to recognize (or disqualify if already
recognized) an attorney who has been disbarred or suspended from any court or bar to
which he or she was previously admitted to practice as a non-attorney representative.
Social Security Benefits for Fugitive Felons. The Commissioner is
authorized to withhold SSI benefits from fugitive felons.10 In addition, upon written
request, SSA is required to provide the current address, Social Security number and
photograph of an SSI recipient in fugitive status to federal, state and local law enforcement
officials to assist in the individual’s apprehension. H.R. 743 would authorize the
Commissioner to withhold Social Security benefits from fugitive felons and would require
The assessment on attorney fees was established under the Ticket to Work and Work Incentives
Improvement Act of 1999 (P.L. 106-170) and set at 6.3% effective January 31, 2000. For each
calendar year thereafter, the rate is set at the level (not to exceed 6.3%) needed to cover full
administrative costs. In calendar years 2001-2003, the rate has remained 6.3%.
For more information on the attorney fee payment process, refer to: U.S. General Accounting
Office (GAO), “Paying Attorneys Who Represent Disability Applicants,” testimony by Barbara
D. Bovbjerg before the House Ways and Means Subcommittee on Social Security, June 14, 2000;
and “Systems Support Could Improve Processing Attorney Fee Payments in the Disability
Program,” testimony by Barbara D. Bovbjerg before the House Ways and Means Subcommittee
on Social Security, May 17, 2001.
As defined under Section 1611(e)(4) of the Social Security Act, a fugitive felon is “an
individual fleeing to avoid prosecution, or custody or confinement after conviction, under the
laws of the place from which the person flees, for a crime, or an attempt to commit a crime,
which is a felony under the laws of the place from which the person flees, or which, in the case
of the state of New Jersey, is a high misdemeanor under the laws of such state; or violating a
condition of probation or parole imposed under federal or state law.”
SSA to share information about such persons with law enforcement officials. In some
cases, the Commissioner would be allowed, with good cause, to pay withheld Social
Security benefits. Terms governing payment of withheld Social Security benefits would
be prescribed by regulation.
Trial Work Period. Social Security disability recipients are entitled to a “trial work
period” in which they may have earnings above a certain amount ($570 a month in 2003)
for up to 9 months (which need not be consecutive) within a rolling 60-month period
without any loss of benefits. Under H.R. 743, an individual who is convicted of
fraudulently concealing work activity during a trial work period would not be entitled to
receive benefits for trial work period months and would be liable for repayment of those
benefits, as well as any other applicable penalties, fines or assessments.
Government Pension Offset. If an individual receives a government pension
based on work that was not covered by Social Security, under a provision of current law
called the Government Pension Offset, his or her Social Security spousal or survivor
benefit is reduced by an amount equal to two-thirds of the government pension.11
However, under the “last day rule,” an individual is exempt from the GPO if he or she
worked in a government job that was covered by Social Security on his or her last day of
employment. H.R. 743 would require individuals to work in a government job that is
covered by Social Security for the last 60 calendar months of employment to be exempt
from the GPO.12 (For more information, see General Accounting Office, “Social Security
Administration: Revision to the Government Pension Offset Exemption Should Be
Considered,” Aug. 2002 (GAO-02-950).
Miscellaneous Provisions. H.R. 743 would make a number of other changes
designed to reduce fraud and abuse within the Social Security program, such as requiring
individuals and businesses to notify prospective customers that a product or service being
offered for a fee is available directly from SSA free of charge. Other provisions would add
Kentucky to the list of states authorized to have retirement systems that have either Social
Security or non-Social Security-covered positions, and provide compensation to Social
Security Advisory Board members. Finally, the measure would make several clarifying
and technical amendments to the Ticket to Work and Work Incentives Improvement Act of
1999 and other aspects of the program.
If an individual receives a pension based on work that was covered by Social Security, his or
her Social Security spousal or survivor benefit is reduced by 100% of his or her Social Security
benefit earned as a worker, under a feature of current law known as the “dual entitlement rule.”
Federal government workers who switched from the Civil Service Retirement System (which
does not have a Social Security component) to the Federal Employees Retirement System (FERS)
must have at least 5 years of service under FERS to be exempt from the GPO.