Fraudulent Receipt of Additional Benefits: Welfare Business Exploits Loophole in the System

Editorial

15:50 JST, May 6, 2026

It is absolutely unacceptable if the operator abused the employment support system for people with disabilities in order to gain profits unfairly. The central and municipal governments that allowed such massive fraudulent claims to go unchecked also bear a heavy responsibility.

The Osaka municipal government has revoked the designations of four facilities operated by subsidiaries of Kizuna Holdings, a welfare-related company based in Osaka City, citing that they had fraudulently received ¥15 billion as additional benefits in the employment support subsidies systems for people with disabilities from fiscal 2024 to 2025. The city government also demanded the return of the additional benefits.

These facilities are known as “Type A continuous employment support” facilities and are operated using subsidies from the central and local governments. Under this system, people with disabilities engage in light-duty work as users of the facilities, acquiring skills with the goal of securing employment at companies and other entities. Additional benefits are provided to the facilities after a person has been employed for six months.

Starting around 2020, the Kizuna side repeatedly engaged in a practice in which it would hire users as operational staff of the facilities for six months, then temporarily return them to the status of users, and later rehire them as staff, thereby obtaining substantial additional benefits.

Consequently, the city government determined that this practice deviated from the original purpose of the system. According to the disabled individuals involved, even though they were “employed” for six months, there was no work to do and all they had to do was open a laptop.

The Kizuna side intends to challenge the city government’s claims in court, stating that it “has different views.” However, it is obvious that accumulating merely nominal employment records does not benefit people with disabilities. It cannot avoid the accusation that its motive was simply to obtain the additional benefits.

The city government became aware of a sharp increase in additional payment claims from the Kizuna side in fiscal 2021. When it consulted the Health, Labor and Welfare Ministry, it was told that since the eligibility criteria for the benefits at the time were simply “six months of employment” and there were no regulations questioning the actual nature of the work or repetitive employment, the practice could not be deemed illegal.

Subsequently, a rule was established that a disabled individual who has been employed by a company is not eligible to receive additional benefits again for three years. However, payments to the Kizuna side continued because even after the establishment of this rule, the city government failed to adequately check applications for additional benefits.

There appears to be no doubt that there were systemic flaws regarding this issue. In addition, the response from the central and municipal governments after the problem came to light can only be described as inappropriate.

The operation of welfare facilities for people with disabilities, including Type A ones, is now open not only to social welfare corporations but also to other entities, such as for-profit business corporations.

While many facilities continue to provide support based on the specific needs of people with disabilities, if there are facilities that view people with disabilities merely as a means of making money, that is a serious problem.

The central and local governments must establish systems that do not tolerate fraudulent acts, through such means as strengthening screening processes for new entrants to facility operations and enhancing oversight of applications for additional benefits.

(From The Yomiuri Shimbun, May 6, 2026)