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Failure to Report Settlement to Social Security Results In Woman Facing 15 years in Federal Prison

It’s been a long time since we have seen this scenario and surprising that it still happens. You need to know if your client receives government benefits. Inform them the settlement can affect their entitlement, and encourage them to meet with me to obtain the best planning advice.

Scenario: a child is injured during the birth process. The mother applies to SSA and the child is approved to receive monthly SSI benefits; the mother is the representative payee for those benefits and has a duty to inform SSA of any change in financial circumstance. A conservatorship (like a guardianship) was established when the lawsuit was settled. The conservatorship received the first payment of $164,290. in 2005. The mother concealed the information from SSA (and provided false statements in order to continue receiving the benefits for her child until 2012). When the conservatorship purchased a home in 2008 that information was also not reported to SSA.

The federal law governing the SSI program limits the parent (and the minor child) to having no more than $2,000.00 in countable resources and having limited income (currently no more than $735.00/month). She has been charged with receiving overpayments of $56,138.00 in benefits. Consequently, the mother is facing a sentence of up to 15 years in federal prison without parole.


Here are some tips to incorporate into your practice:

  1. Include a question on your intake form that asks whether the client is receiving or has applied for government benefits such as SSI, Medicaid, Food Stamps or HUD housing. Request copies of the government notices.
  2. Inform the client in person and in writing that the receipt of a settlement can cause a loss of government benefits and that it must be reported.
  3. If the client requests that you make the check payable to someone else inform the client that you cannot participate in perpetrating a fraud.
  4. Encourage the client to seek my guidance as a Board Certified Elder Law Attorney to help the client navigate through the different options to find the one that is best for them.
  5. Allow me to partner with you as early as possible (prior to mediation).
  6. Consider a team approach to meeting the client’s goals and include an experienced care manager to help the client maximize benefits to which they are entitled and advocate for them in the healthcare system.

To read more about the case click here. To learn more about how you can provide value added benefit to your clients contact me to provide a lunch and learn session at your firm.

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