Tuesday, May 16, 2017

Judge Daugherty Pleads Guilty To Taking Bribes

A Social Security Administration (SSA)  Administrative Law Judge (ALJ) involved in one of the biggest Social Security frauds in history pleaded guilty Friday, 13 May 2017 admitting that he helped scam the federal government out of potentially more than half a billion dollars in bogus disability payments.
David B. Daugherty, a former administrative law judge, approved at least 3,149 disability cases filed by a single lawyer in eastern Kentucky. More than 1,700 of those have been deemed fraudulent by government investigators, obligating the government to pay out more than $550 million in lifetime benefits.
Daugherty pleaded guilty to two counts of receiving illegal gratuities. The charge is similar to bribery, though the payoff is made after the fact, not before.
“This admission that a judge in a position of trust took over a half-million dollars in cash from a crooked lawyer is outrageous,” said Rep. Sam Johnson, chairman of the House Ways and Means subcommittee that oversees the program. “This case proves once again that more needs to be done to stop disability fraud across America. I’m committed to working with my colleagues to help protect taxpayer dollars and prevent disability fraud.”
Disability fraud appears to be growing, with some of the biggest scams being detected in recent years. But the one Daugherty was involved in was staggering in its brazenness.
The 81-year-old David Black Daugherty pleaded guilty Friday May 13, 2017 in federal court in Lexington to two counts of taking illegal gratuities. Daugherty agreed to pay the government $609,000 as part of his plea.
                                       (Above, see Judge David Black Daugherty)
But Judge Daugherty worked for Frank Cristaudo, who was the Chief Administrative Law Judge. (CALJ). 
                                      (Above, see SSA CALJ Frank Cristaudo)

They both worked for Social Security Commissioner Michael Astrue.
                                 (Above, see SSA Commissioner Michael Astrue)
Judge Daugherty was working to eliminate the "back log".
The Chief Administrative Law Judge had and has day-to-day oversight of all of SSA's's hearing operations.
Judge Cristaudo testified before Congress that he wanted to implement a comprehensive plan to eliminate the backlog of hearings. By eliminating the backlog, he would improve hearing office productivity and the timeliness of SSA hearings and decisions.
Judges like ALJ Dave Daugherty were at the heart of his operation. He testified that he would be monitoring the workloads of these Judges and their cases carefully.
He had selected a number of excellent judges including Judge Daugherty. He needed more judges like Judge Daugherty who were well-suited to SSA's type of work - judges who were capable of thriving under the workload demands of SSA's high-volume, electronic hearing operation. Judge Daugherty was the most prolific high producer that he had.
After successfully eliminating SSA's 1,000 or more day-old cases in FY 2007, he focused on reducing the 900 or more day-old cases by the end of FY 2008.  He testified that he believed a backlog of aged cases interfered with the normal hearing office workflow. Productivity was up because of Judge Daugherty and others who decided cases without holding Hearings.  The new judges  were trained by the highest-producing judges in SSA's ALJ corps, judges like Judge Dave Daugherty.
The complete text of Chief Judge Frank Cristaudo's testimony can be read at:
(See   https://www.ssa.gov/legislation/testimony_091608.html)
Judge Daugherty instructed Attorney Conn on how to write up bogus applications so he could approve them without ever needing to have the applicants appear for an in-person hearing, according to court documents, speeding the process along.
Conn, who pleaded guilty earlier this year, admitted he submitted false IQ tests and had the doctors rubber stamp bogus medical diagnoses for many of his clients.
Federal prosecutors said rejections of bad applications, if they ever happened, were rare.
Conn collected more than $7 million in payments for filing bogus applications while the scam was operating from 2004 to 2011, and paid Daugherty $609,000 during that time.
They would meet in the parking lot of a restaurant or gas station so Conn could hand over the cash, which was carefully structured to keep just under the level that might draw attention from financial regulators, according to court documents.
At a rate of nearly $100,000, Daugherty was adding a tremendous supplement to his annual pay as an administrative law judge. In 2004 they averaged $137,000 a year, rising to $155,000 in 2011, according to FederalPay.org.
Conn, in his case, had said Daugherty was the orchestrator, with the administrative law judge first approaching the lawyer and making clear he had an extraordinary amount of power over Conn’s cases.
Conn’s plea agreement said Daugherty suggested an initial $5,000 payment, which he said was to help a relative in rehab. The two men later worked out an arrangement to pay for each approved application.
Social Security officials testified to Mr. Johnson’s subcommittee last month that they can’t give even a ballpark estimate for how much fraud exists in the $150 billion-a-year disability program.
The program told The Washington Times that it has gone back and disapproved more than half of the applications filed — but officials would not say whether they’ve stopped the payments, nor whether they have been able to claw any of the mis-paied money back.
Sean Brune, assistant deputy commissioner at the Social Security Administration’s budget office, also said during last month’s hearing that the SSA doesn’t have the power to strip Daugherty of his government pension.
We do not have under current statute authority to revoke his pension,” he said.
Still, Mr. Brune said that the former judge if convicted the court can order restitution, meaning his pension could be garnished to cover those costs.
Rep. Tom Rice, a South Carolina Republican who said the former judge is now living in his district in Myrtle Beach, asked if Congress should pass a law to cancel pensions of Social Security employees who abet fraud.
“We’d be happy to talk to you about that,” Mr. Brune said.
Daugherty will be sentenced Aug. 25, 2017.

- The Washington Times - Sunday, May 14, 2017) 

(Law360 (March 21, 2018) A Kentucky federal judge on Tuesday granted whistle blowers acting on behalf of the government a partial win in a civil suit against a convicted administrative law judge, who was found guilty of conspiring with a local attorney to approve Social Security claims, regardless of the merits.

U.S. District Judge Karen K. Caldwell ruled that evidence provided by Jennifer Griffith and Sarah Carver, along with evidence from the criminal trial, provided sufficient basis to determine that David Daugherty had violated the False Claims Act .

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