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?