Government tries to clean up disability program
SSDI payments have risen dramatically in recent years. A combination of the economic downtown driving more unemployed workers to the program and liberal awarding of benefits by some judges has raised SSDI rolls 20 percent in the last six years to 12 million people, with an annual budget of $135 billion.
At this rate, the disability program will have spent all its reserves by 2016, forcing either an increase in payroll taxes or a cut in benefits.
The Journal reports that the administrative law judges (ALJ) will no longer have “complete individual independence.” Instead, they will be subject to supervision and management from the Social Security Administration (SSA).
The Association of Administrative Law Judges (AALJ) , the union representing the judges says it fears that will open the process to political interference, but that’s a straw man. Many of these disability judges need someone looking over their shoulder.
The poster boy for waste, fraud and abuse in SSDI is ALJ D.B. Daugherty of Huntington. As a Social Security administrative law judge, Daugherty awarded benefits in virtually every case… thousands of them. He worked closely with attorney Attorney Eric Conn, who advertised heavily in West Virginia and Kentucky, looking for potential clients.
According to the Journal, Daugherty once told a colleague, “Some of these judges act like it’s their own damn money we’re giving away.” Daugherty resigned after the Journal first reported the story in 2011.
During the Great Depression, when Congress was first considering a federal insurance program for the disabled (the law didn’t pass until almost 20 years later), a Social Security Advisory Council actuary warned of costs beyond “anything that can be forecast.”
The fear was that well-intentioned assistance for any person with impairments of mind or body that would keep him from being gainfully employed for their rest of his life would devolve into a version of unemployment.
That warning has proven prophetic as this country’s Social Security Disability Insurance (SSDI) program has spun out of control and is now on course to run out of money by 2016.
Sunday night, CBS 60 Minutes aired a segment entitled “Disability USA,” which probed the abuse of SSDI. Steve Kroft reported that SSDI rolls have risen 20 percent just in the last six years to 12 million people, with a budget of $135 billion.
West Virginia, despite a small population, is a big contributor to the SSDI rolls. The AP reports that “West Virginia leads the nation in the percentage of adults receiving government assistance for disabilities.”
A big reason for the surge in SSDI is that people who have had their claims denied are hiring law firms that specialize in winning appeals.
According to 60 Minutes, “Last year, the Social Security Administration paid a billion dollars to claimants’ lawyers out of its cash-strapped disability trust fund. The biggest chunk–$70 million—went to Binder & Binder, the largest disability firm in the country.”
Jenna Fliszar, a lawyer who used to work for Binder & Binder and represent clients from West Virginia and other states, told CBS, “I call it a legal factory because that’s all it is. They have figured out the system and they’ve made it into a huge national firm that makes millions of dollars a year on Social Security Disability.”
In 2011, the Wall Street Journal’s Damian Paletta reported on one Huntington-based disability judge who nearly always sided with the claimant. Judge David B. “D.B.” Daugherty awarded benefits in all but four of 1,284 cases during one fiscal year. The national average is 60 percent approval.
A report by the Committee on Homeland Security and Government Affairs estimates that Daugherty awarded more than $2.5 billion in benefits in the last 7 years of his career.
The Journal reported that Daugherty worked closely with lawyer Eric Conn, who advertises heavily in southern West Virginia and eastern Kentucky, looking for potential clients. Daugherty resigned after the Journal’s reports. Conn, who continues a thriving practice in SSDI cases, was evasive in a brief interview with 60 Minutes about his relationship with the former judge.
The abuse of the SSDI system has caught the attention of the Senate Committee on Government Affairs. It held a hearing Monday and issued a report finding “a raft of improper practices by the Conn law firm to obtain disability benefits, inappropriate collusion between Mr. Conn and a Social Security Administrative Law Judge (Daugherty), and inept agency oversight which enabled the misconduct to continue for years.”
The Committee report says Daugherty’s bank records show $96,000 in cash deposits from 2003 to 2011, for which Daugherty refused to explain the origin or source of the funds.
As one of the SSDI administrative judges said, “If the American public knew what was going on in our system, half would be outraged and the other half would apply for benefits.”
Frankly, it’s predictable that Americans hit by hard economic times are tempted to latch on to any government help they can, especially when there is an alliance of lawyers, doctors and judges willing to shepherd them through the system.
In doing so, however, they are squandering taxpayer dollars and bankrupting a legitimate program.
Meanwhile, earlier this year federal authorities arrested 75 people in Puerto Rico on charges of defrauding SSDI out of millions of dollars. A former Social Security employee teamed with complicit doctors to falsely diagnose individuals as mentally incapable of working.
But the problem is not just the outliers like Daugherty and the Puerto Rican scam.
As the Journal reports, there is widespread disparity in how judge’s rule. “Dozens of judges awarded benefits in 90 percent of their cases, while others were much less likely to find someone unable to find work, denying benefits in more than 80 percent of their cases, data showed.”
SSDI is an essential part of the country’s safety net. Those who are impaired, either in mind or body, and cannot work are entitled by law to support. However, it’s important to remember that SSDI is not another option for the unemployed, nor should it be an easy target for scammers.
Politicians like to say they can save taxpayer dollars by tightening up on waste, fraud and abuse–it’s easier than proposing real budget cuts–but in the case of SSDI, they’re right about the profligate misspending.
A top lawmaker January 16 demanded a top-to-bottom review of the Social Security Administration’s management structure, following a series of disability scandals that have rocked the agency and led to widespread government scrutiny.
Rep. Sam Johnson (R., Texas), who chairs the House subcommittee that oversees Social Security, directed the Social Security Administration’s inspector general to launch the review.
The demand comes one week after the Manhattan District Attorney’s office brought a case alleging more than 100 people – including former firemen and police officers – were cheating the Social Security Disability Insurance program by improperly collecting benefits when they shouldn’t have.
In August, the U.S. Attorney in Puerto Rico brought another large case alleging widescale disability fraud — one of the largest sweeps since the program was created in the 1950s and the first major case since the program’s rapid expansion during the financial crisis.
And the Justice Department is also looking into whether there was an improper relationship between a former Social Security judge (Daugherty) in West Virginia and a disability lawyer in Kentucky.
The Social Security Administration primarily authorizes two kinds of benefits, one for older Americans and another for people who are no longer able to work because of health problems.
The disability program pays close to $140 billion in benefits to roughly 11 million people, making it one of the government’s largest – but least known – entitlement programs.
A number of Democrats have joined Republicans in demanding more answers from top Social Security Administration officials, as the recent scandals come at a time when the SSDI program is quickly exhausting its reserves. Its trust fund is projected to run out of money in 2016.
Mr. Johnson called for the review during a hearing at which SSA acting commissioner Carolyn Colvin and SSA inspector general Patrick O’Carroll testified. Though Mr. O’Carroll’s division is responsible for overseeing and even investigating the agency’s operations, the IG has stopped short of criticizing any of the agency’s actions with regard to the cases in New York, Puerto Rico, and West Virginia. In fact, in recent months, senior SSA officials have told Congress that disability fraud is very rare, and the IG’s office hasn’t refuted that view.
A top-to-bottom review, as demanded by Mr. Johnson, could create a more adversarial relationship between the IG and top SSA brass than has existed in recent years.
As the disability program has grown, it has faced a number of strains. Millions of Americans applied for benefits during the economic downturn, straining the agency’s resources and forcing many judges to ramp up their workload for processing appeals. This has created a growing tension between a number of judges and senior SSA management, leading to at least one lawsuit. Meanwhile, the agency has taken steps to tighten its control over the administrative law judges.
Ms. Colvin is running the agency until the White House nominates a commissioner, and the White House has not signaled when it might move on the vacancy.