Jan 16, 2014

The New York City Fraud Allegations

     Here is the description of the alleged disability fraud conspiracy  in New York given by Social Security's Inspector General to the House Social Security Subcommittee today:
Upon retiring from the NYPD [New York Police Department] or FDNY [New York Fire Department] (a few of the defendants are other public employees), retirees would contact Esposito or Minerva, who were known within the New York City law enforcement community as men who could assist individuals in obtaining disability or retirement benefits. Esposito and Minerva were the recruiters, and generally instructed the potential applicants that, in order to obtain SSDI, their claim needed to include a psychiatric illness; and that they could create a convincing version of such an illness based on events that occurred while they were working, such as the September 11, 2001 terrorist attacks .
Once they had a new client reeled in, Esposito and Minerva would connect applicants with Hale, a disability consultant who would schedule the applicant with a psychiatrist or psychologist. Since a qualifying disability must be expected to last for a year or more (or result in death), these applicants would generally undergo treatment for a full year before applying. This medical evidence would be included in the applicant’s SSDI [Social Security Disability Insurance] claim, which would be completed and filed by Hale and by Lavallee , who would be the applicant’s attorney of record.
Esposito instructed applicants to exhibit symptoms of depression, anxiety , and related disorders during doctor visits . He coached them on how to act at an SSA consultative examination: how to dress, how to behave, and how to fail a concentration test. Finally, he coached them on specific claims to make, such as that they couldn’t concentrate or sleep, didn’t go out, and even that they were afraid of planes and large buildings, if they were claiming to be disabled based on their participation in the events following the 9/11 terrorist attacks. ...

Because they were treated for a year before even applying for benefits, their ultimate SSDI award included a lump sum retroactive benefit payment from the alleged disability onset date. These lump sum initial payments were between $10,000 and $50,000 . 
The law currently limits a representative's fee to $6,000 of an applicant’s lump - sum retroactive benefit , and with Lavallee listed as the attorney of record, he would generally receive a payment of $6,000 directly from SSA . However, the a greed-upon “fee” paid to the facilitators by these fraudulent beneficiaries was generally 14 months’ worth of benefits, as much as $45,000. 
To make these payoffs, Esposito instructed applicants to withdraw cash from their banks in small amounts so as not to trigger IRS reporting requirements or any suspicions on the part of their financial institutions. The applicants would then make cash deliveries to Esposito and/or Minerva of an amount equal to 14 months’ worth of benefits, less the $6,000 Lavallee had already received from SSA . Esposito and Minerva would then split the cash with their co-conspirators.
      Maybe it all went down exactly like this but it sounds bizarre to me. A few questions:
  • Why were there all these middlemen?
  • Why undergo a year of psychiatric treatment before filing the claim? You don't have to do that. The standard advice from reputable Social Security attorneys for claimants with psychiatric problems who are not in treatment is to file the claim now and get in treatment now. Don't delay doing either one.
  • Here's the big question: I have a hard enough time persuading clients who unquestionably have psychiatric problems (and these include people with a history of multiple involuntary commitments due to mental illness) to get in treatment and stay in treatment yet the allegation here is that people who did not have psychiatric problems voluntarily submitted to seeing a psychiatrist over the course of a full year and repeatedly making false assertions to the psychiatrist. Would you do that?
  • Why would these allegedly fraudulent claimants voluntarily pay vastly inflated attorney fees?


Anonymous said...

if you can't believe this scheme, you are pretty naive. Attending psych appointments for a year, knowing that you will get benefits for 15 years is an easy trade-off. Just go in, complain about PTSD and anxiety and they give you meds...15 mins, once a month.

People do a lot more to get drugs when they have no impairments. THe added incentive of getting paid makes this seems like a good choice for these guys (aside from the fraud).

Anonymous said...

To answer all your questions: because they are crooks.

Anonymous said...

In response to your question about why anyone would undergo a year of mental health treatment prior to filing the disability claim:

A claim of mental illness looks more credible if there is a history of mental health treatment prior to the application for benefits; the longer the history, the better. If treatment commenced after the application date, then I am inclined to think that the claimant only started treatment because she was trying to bolster her claim (usually at the urging of an attorney), not because she was actually trying to manage disabling mental health symptoms. This is the standard view at the Appeals Council even among claimant-friendly analysts and judges. I would assume that it is the prevailing wisdom at hearing offices as well.

Anonymous said...

@ 2:39

I work at a hearing office as an attorney. I have a somewhat opposing view. Typically, when I see long-term treatment prior to the app, I conclude that the claimant was able to work with the impairment and thus should still be able to work (absent evidence of increased symptoms).

Treatment that begins at or after the onset is more credible as it indicates increased problems that were not present when the claimant was working.

Anonymous said...

"Why undergo a year of psychiatric treatment before filing the claim?"

I agree it is bad perception to begin psychiatric treatment at the initiation of a claim. But more importantly, many of these conditions can be treated with the proper medication regimen. And such medications generally do not work overnight but can be effective within several months. As a result, it would not be unreasonable to conclude that such an applicant who initiates treatment at the time of filing, would lack a showing that the impairment in its severity would meet the 12 month requirement.

Anonymous said...

"Typically, when I see long-term treatment prior to the app, I conclude that the claimant was able to work with the impairment and thus should still be able to work (absent evidence of increased symptoms)."

In most cases (and ideally), the claimant would continue to work if they had the functional capacity rather than roll the dice with an uncertain and lengthy disability process.

In other scenarios, such as when the factory shuts down, you would have to agree that a claimant with a longstanding medical history would have more credibility than an individual who commences treatment at the time of filing a disability/unemployment claim.

Anonymous said...

In addition to the social security benefit, the mental disorders could bump up the disability retirement these guys might have been receiving from NYPD. So the short answer to why go through all this trouble is CASH. Why the elaborate scheme? There was nothing wrong with them, and as cops, they knew that had to do all that they could to cover their tracks.

Anonymous said...

I'm appalled by the lack of insight and the cynicism by the people in the AC and ODAR on the application date vs. the beginning of psychiatric treatment. Repeatedly, I see new clients who have been treated with medications for depression/anxiety by family physicians for years without improvement; community stigma and pride ["I aint crazy!] among less educated working class people keeps them from seeking necessary psychiatric/psychological evaluation and treatment. IF they have such symptoms, I make it a condition of my representation that they at least go to a mental health clinic for an evaluation to see if treatment is necessary. This is NOT "gaming the system." It is the ETHICAL DUTY of a COMPETENT attorney to ensure that ALL of his client's evidence is developed for evaluation.

Anonymous said...

1) so many middlemen? do you know how new york corruption works? lots of hands, every palm gets greased.

2) i dunno, this back and forth about what the timing of mental health treatment does for you credibility-wise as an SSA attorney (i am an odar attorney, as well) seems silly. i don't think i have a predisposition either way--some claimant's don't have good access, and only start Tx after their rep recommends it. some folks' symptoms got worse. some folks are trying to beef up their claims with Tx notes. it's a variety of factors for each case, and i find it interesting that people have such rigid, automatic beliefs about it.

3) think, Charles. these people are perfectly mentally healthy (well, maybe personality disorders or something). they are using rational thought to say "i will attend these visits because they will result in a huge payday." 15 minutes with a psych every month, every three months? it's the very regular therapy that would be hard to tolerate...your actually afflicted clients worry about stigma, feel they do not need treatment, etc.

4) my best guess is these guys are kinda stupid or lazy. it really isn't too tough to research all the ways to act mentally ill, go through the motions of treatment, etc. etc. independently. it was a machine, spread through word of mouth. if your buddy charlie did it and it worked, you'll do it too. plus, don't you like to talk about how difficult, scary, long, complicated, etc. the application process is? unless one has knowledge of the process (by working for SSA or a rep's office, maybe?), it probably seems daunting to pull off such a fraud by ones self.

Anonymous said...

It ain't Greek Boys, it's SSR 96-2p, treating physician rule. The claimant's have been treating with the physician a fair amount of time, his opinion is well supported and not inconsistent (at least not too inconsistent) the tie goes to the runner and "pop" another claimant gets paid and the backlog goes down by one.. Judges have to look for the easy way out and a year of Psych treatment is hard to resist..

Anonymous said...

@ 4:31, if they stopped working "when the factory shut down" they probably aren't disabled.

Anonymous said...

I wonder if any of these claimants were in fact working close to the World Trade Center on 9/11.

Is the retirement for NYPD and NYFD really so awful that they would need to do this? I guess these are men and women who cannot easily work into their 50s and 60s. Pension consultants perpetuating fraud is pretty nasty and I'm sure that they all had themselves pretty well-convinced that this was their entitlement. The slick pension consultants taking huge fees are the worst, though.

Is ODAR going to review every case in this scheme?

Anonymous said...

For Anon 5:48 Jan 16,
Your comment “….it's SSR 96-2p, treating physician rule. The claimants have been treating with the physician a fair amount of time, his opinion is well supported and not inconsistent (at least not too inconsistent) the tie goes to the runner and "pop" another claimant gets paid…”

Joke, right? HA HA HA HA HA HA. Here’s an example of someone who probably never set foot in an ALJ Hearing.
Most judges slap an inconsistent label on the AP evidence and cherry pick anything negative in clinical findings and “pop” another claimant gets denied. Merits of the case be damned. SSR 96-2p is a joke and the Appeals Council is a joke because they support this fa├žade and return less than 18% of ALJ decisions.
SSR 96-2p, yea, and Tie goes to the runner, yep that’s the ticket. Right.