Miscellany

      Some stories from the weekend:

• Washington Post article on Social Security's field office problems;
• Nancy Altman urges an end to the "starvation" of Social Security's field offices;
• Binder and Binder -- the law firm -- gets a big payday.
  

My Top Eight List

     I've finally gotten around to the sort of list you've seen a lot of in the last couple of weeks -- the most important things that have happened in the Social Security world in the last decade. Below is my list but feel free to post your own list. I came up with eight and didn't want to pad it to make it ten.

1. Constant administrative under-funding of the Social Security Administration accompanied by frequent shutdown threats and occasional actual shutdowns. Agency performance suffered as a result. Service has deteriorated to levels that would have once been thought unimaginable;
2. After the number of Social Security disability claims soared in the 2000-2009 decade, the number of claims started declining in 2010. That decline is continuing. We think we know why claims soared from 2000-2009 -- primarily the aging of the baby boomer population -- but no one has a good handle on why the number of disability claims filed has gone down so much since then or why the decline continues;
3. The Eric Conn debacle which led to a general climate of hostility towards Social Security disability claimants;
4. Social Security went more than six years without a confirmed Social Security Commissioner because Republican Senators wouldn't confirm an Obama nominee and Trump was so slow in nominating anyone;
5. The ongoing story of Social Security's Disability Case Processing System (DCPS) which may or may not ever work;
6. The deal to extend the life of the Social Security Disability Insurance Trust Fund;
7. Social Security's ongoing refusal to deal with the obsolescence of the Dictionary of Occupational Titles;
8. The collapse of Binder and Binder. Yes, I know there's a stub of Binder and Binder left but it's nothing like what it was. A 60 Minutes hit piece hurt Binder and Binder but the bigger problem was that it was based upon a business model that could not succeed at a time when the number of disability claims was going down and it was becoming progressively more difficult to get a claim approved. The ironic thing was that the 60 Minutes hit piece damaged Social Security attorneys generally even though we were appalled by Binder and Binder long before the rest of the world was. At least the original owners sold out to a private equity company -- which I still find astounding -- before the bottom dropped out and have now bought back the stub.

And Now The Problem Will Be Solved In 24 Hours

     From Forbes:

Mrs. Jimmy Rogers of Houston, Texas, was disabled in 1996 in an aircraft accident while working for American Airlines. To this day she is unable to sit, stand, or walk for more than thirty minutes without extreme pain. After the accident, she applied for and received Social Security disability benefits. Four years later, she was able to work a few hours per day in her husband’s business doing some administrative tasks, always earning less than the substantial earnings amount that would disqualify her for receipt of those benefits. 

Starting in 2007 and for four of the following five years, Jimmy received [A1] shareholder distributions from her ownership of stock in her husband’s company. As Social Security Administrative Law Judge Timothy Suing recently confirmed, these payments were not labor income, but simply income from assets – no different than income Jimmy might have received had she owned government bonds.  

But in 2007, Social Security mis-instructed Jimmy, who understood very little of the distinction between asset income and labor income, to revise her tax return and report these shareholder distributions as taxable labor earnings. Jimmy did as she was ordered, but, on the advice of her husband, filed an appeal. 

Compliance with Social Security’s incorrect order triggered an unbelievable bureaucratic nightmare that is surely causing Franz Kafka to writhe in his grave.  

Over the past 13 years, Jimmy and her husband, Larry, have, thanks to Social Security’s acknowledged mistake, been deprived of tens of thousands of dollars in Social Security disability and spousal benefits. Jimmy has been forced to pay extra Social Security payroll taxes she didn’t owe. Jimmy has been forced to pay extra federal income taxes she didn’t owe. Jimmy and Larry’s company has been forced to pay extra FICA taxes they didn’t owe[LR2] . Jimmy retroactively lost her Medicare healthcare coverage and is now being told to pay for years of healthcare treatment coverage. But the icing on the cake is that Social Security has been and is still, to this day, sending Jimmy and her husband a bill for over $120,000 for disability and spousal benefits that they rightfully received (before their benefits were incorrectly terminated), but were falsely told that shouldn’t have received, even though Social Security’s own Administrative Law Judge says the benefits were properly paid (although slightly higher than what they should have been due to the downward adjustment in Jimmy’s income after the shareholder distributions were no longer included in her earnings record). ...

Huge Layoffs At Binder And Binder

     From Newsday:

Binder & Binder plans to lay off 100 of the 147 employees at its Hauppauge headquarters, a state regulatory filing says. ...

The layoffs are planned for Dec. 11.

In addition, Binder & Binder plans to close its Long Island City, Queens, office and lay off all 90 employees, also on Dec. 11, a separate WARN notice says....

The Binder And Binder Saga Goes On

     There's been an important filing in bankruptcy court in the matter of Binder & Binder. Read it yourself but it looks to me like Charlie Binder and Harry Binder as individuals (or through an entity controlled by the two of them) will be buying the Social Security assets of the Binder and Binder corporation for $3.5 million. Remember, Binder and Binder as a corporation is distinct legally from the two brothers as individuals.

Charlie Binder Has An Objection

     Below is a letter I have received from an attorney representing Charlie Binder. You can click on each thumbnail to see it full size.

     Binder is objecting to my post Proposed Rules Of Conduct For Appointed Representatives where I wrote that "This [proposal regulation] is just overkill. I'm not Eric Conn or Charlie Binder. Don't treat me like them. I don't deserve it." Binder feels that I have accused him of certain conduct that the proposal would ban and that I am associating him with the allegedly criminal behavior of Eric Conn. 

     I have no problem saying that I have no knowledge that Charlie Binder or anyone else at Binder and Binder has done anything illegal and that I don't know that this proposal would have any more effect upon Binder and Binder than it would have on my firm.  It would not have taken a three page letter from Binder's attorney to get me to say this. A simple e-mail from Binder himself would have been enough.

     My point in using the names of Eric Conn and Charlie Binder was not to say that their behavior has been the same or similar. My point was to express my concern that each, for different reasons, has generated negative attitudes towards Social Security attorneys on the part of upper Social Security management. I am concerned that these negative attitudes are behind recent Social Security regulatory actions. The issues at Binder and Binder, while not criminal, are magnified in importance by the prominence of that entity. I thought about going through the issues at Binder and Binder but decided there was no point. Almost all my readers already know enough about Binder and Binder to have their own opinions.

     The ironic thing is that Charlie Binder doesn't like to be lumped together with Eric Conn. I don't like being lumped together with either Conn or Binder.

Read Charles Binder's Employment Contract With Binder And Binder

     For those interested in learning what's going on in the Binder and Binder bankruptcy, take a look at this objection filed by Charles Binder. It's hard to follow but attached to it are copies of contracts that Charles Binder had with Binder & Binder – The National Social Security Disability Advocates (NY), LLC which may be of more interest. By the way, the link I'm giving will only be good until July 15 so download it while you can!

This Corpse Isn't Worth Fighting Over

     The Binder and Binder bankruptcy drags on. At the moment the hedge fund that has already sunk a lot of money in Binder and Binder wants to take it over but is being rebuffed.

     Take a clue from someone who knows a thing or two about these things, Binder and Binder's business model never made sense in anything other than a very favorable environment and we've got an extremely harsh environment at the moment. Even in the unlikely event of the return of a favorable environment, Binder and Binder's "good will" is so far into the red that recovery is out of the question. The idea that the hedge fund that took Binder and Binder into bankruptcy is going to turn this thing around is preposterous. 

Oh The Irony

     The United States Court of Appeals for the Second Circuit has affirmed two District Court decisions that held that Binder and Binder is barred from suing the Social Security Administration because the agency refused to pay attorney fees after the claimants that Binder and Binder had represented had their debts discharged in bankruptcy. The Court ruled that sovereign immunity barred the lawsuits. Of course, the irony here is that Binder and Binder is itself now in bankruptcy.

At Least Somebody Is Hiring

     From a job posting:

Binder & Binder Disability caseworker
Quikaid, Inc. - Saint Petersburg, FL
$35,000 a year

Our firm is seeking 1-2 disability caseworkers with experience working in the disability field, particularly with a firm such as Binder & Binder. Binder & Binder is in bankruptcy, and our firm has made an offer to purchase Binder & Binder's assets from the bankruptcy estate. While that offer is being reviewed, we continue to grow aggressively and are seeking to build our staff. ...

Binder And Binder Struggling To Stay Afloat Even In Bankrutpcy

     This is an article on Law 360 dated February 11:

Social security disability firm Binder & Binder LLP asked for approval of a new $6 million loan on Tuesday as it navigates through the Chapter 11 process, claiming that its existing lenders would rather see the company liquidate than allow it to restructure. 

 Binder & Binder ... says that its existing loan has hamstrung its ability to intake new clients at a sufficient clip and keep the business afloat as federal disbursements have slowed under new government scrutiny. The firm asserts that new financing terms would be the only way for it to avoid liquidation, given the harshness of its current loan. ...

But the $6 million loan, which would be obtained from Stellus Capital Investment Corp., comes with the stipulation that Stellus gets the first lien position on all of Binder & Binder’s assets. The disability firm said it has shopped around and there is no “middle ground” in that regard. ...

Binder & Binder said that the slowdown in social security disability and veterans’ benefits has sapped its cash flow. It described the firm as being at a “critical juncture,” lacking the funds to pay its next payroll on Feb. 17, 2015. ...

Despite a prohibition on new advertising, one of the terms of its current loan, Binder & Binder said it is still handling approximately 1,000 new social security cases each month, and needs to keep its staff levels up to maintain the business. ...

Charles Binder Responds

     I have received an e-mail from Charles E. Binder of Binder and Binder today. Here's part of it:

You have written that Binder & Binder "can no longer afford to update medical records" because of its bankruptcy filing.  That is completely untrue and I have no idea what the basis for your statement could be.  Although Binder & Binder is in bankruptcy, its primary concern remains to ensure that its clients are competently represented.  That remains my personal goal as well.

Binder & Binder's policy on medical records remains unchanged.  There are multiple components.   First, the most crucial evidence is not usually medical records, which are often illegible, vague and rarely address the client's disability, although Binder & Binder routinely seeks the doctors' office notes from treating sources.  What Binder & Binder really wants is a narrative from a treating doctor summarizing the client's history, treatment, diagnosis, prognosis, etc.  If that is not possible, Binder & Binder asks the treating doctor to fill out a questionnaire answering the questions that the SSA deems crucial when deciding disability claims.  When the doctors' records are important and Binder & Binder can not get them or the client cannot afford to pay for them, Binder & Binder asks the SSA to issue subpoenas for the records.  I note that our client retainer agreement has long provided that the client is responsible for payment for medical records.  Nonetheless, Binder & Binder routinely pays the cost of obtaining narratives and answers to questionnaires (and medical records too) when clients cannot afford to pay the doctors' bills to get the information.

     I believe that obtaining existing medical records relating to a claimant's disability which have not already been obtained by Social Security is a crucial part of representing a Social Security disability claimant. Fronting the costs of obtaining those records is a traditional part of representing Social Security claimants. Even looking at it from a strictly selfish point of view, refusing to front the costs of obtaining existing medical records seems irrational to me. The costs of obtaining the records are modest. The risk of losing because the records aren't obtained is significant. The fees from one additional case won will pay for the expenses of obtaining records for dozens of claimants. Besides, in most cases it's possible to obtain reimbursement from the client after they've been paid by Social Security.

Details On Binder And Binder Bankruptcy

     A non-attorney group has a website about the Binder and Binder bankruptcy. It urges those affected to "Fire Binder And Binder Now." It has some information about Binder and Binder's bankruptcy including a document showing that Binder and Binder is planning a lot of layoffs:

• 20 Advocate employees will be fired by December 2016
• ALL 109 call center employees will be fired in the next six months
• 113 clerical employees will be fired by December 2016
• 10 Fee employees will be fired by December 2016
• 118 Hearing Casework employees will be fired by December 2016
• ALL 75 IA/Recon employees will be fired in the next year
• 14 IA/Hearing employees will be fired by December 2016
• ALL 28 Interview employees will be fired in the next six months
• 18 Management employees will be fired by December 2016
• ALL 52 Open Files employees will be fired in the next six months
• 12 Operator employees will be fired by December 2016
• 4 Travel employees will be fired by December 2015
• 34 Writer employees will be fired by December 2016
• IN TOTAL, 611 people will lose their jobs because of Binder & Binder’s bankruptcy

     According to the website, Binder and Binder came into Chapter 11 behind on health care insurance and utility payments.

     By the way, the Binder and Binder website says nothing about the bankruptcy. I suppose they don't know what to say. In the best of times the Binder and Binder website was like their TV ads, amateurish.

Binder And Binder No Longer Getting Medical Records

     I'm hearing that Binder and Binder, which is in Chapter 11 bankruptcy, is telling Social Security's hearing offices that it can no longer afford to update medical records on the people it represents. Binder and Binder is asking Social Security to do it. 

     Social Security isn't going to do it, at least not routinely. Many decades ago the agency could do this but not today. The staffing isn't there. This means that Binder and Binder's clients won't be competently represented. Most people would argue that they never were but now there's no argument.

     This raises some questions in my mind:

• What kind of idiots are running Binder and Binder now? The company is still in business. They're still paying their employees. They're still paying rent on their offices. They're still paying for phone service. How can they continue to stay in business if they're not going to pay for medical records? It's basic to what they do. Getting medical records is not inexpensive but it's not that big a deal. It only runs to about 2% of my firm's total expenditures, far less than what my firm pays in salaries and rent.
• Charles Binder is listed as the attorney of record for most of the claimants that Binder and Binder represents. While the Binder and Binder that just went into Chapter 11 bankruptcy isn't a law firm, Charles Binder is definitely licensed to practice law. What are his ethical obligations as an attorney when he knows that he is incapable of providing them with competent representation? Doesn't he have an ethical obligation to withdraw from representing them or at least to warn them? If Binder and Binder is sending letters to Social Security saying that it can no longer pay for medical records, is it sending copies of this letter to its clients? Shouldn't Charles Binder insist that this letter be sent to his clients?
• What are Social Security's obligations in this situation? Should it warn Binder and Binder's clients? Is there anything more it can do? Could it contact the New York bar about the situation since that is where Charles Binder is licensed?

Binder And Binder Bankruptcy Details

     A few more details are emerging on the Binder and Binder bankruptcy. As I predicted, they have discontinued advertising. They're still taking on new cases, however. They say that their revenues last year were 20% below their projection, which makes it surprising that they were able to avoid bankruptcy so long. They've shut down offices in Atlanta, Brooklyn, Chicago, Newark, N.J., Raleigh, N.C., and Seattle. More of their offices will close in June.

A Few Details On The Binder and Binder Bankruptcy

     A few details are emerging about Binder and Binder's bankruptcy. The company, which is not a law firm, listed its assets and liabilities as being between $10 million and $50 million. The biggest creditor was Stellus Capital Management at $16.7 million. However, the company had to get a secured loan of $23 million from US Bank and Capital One to stay in business.

Binder and Binder In Bankruptcy

     The Wall Street Journal is reporting that Binder and Binder filed for Chapter 11 bankrupcty last night. I wonder what they're telling their employees.

What's Going On With The Binder And Binder Bankruptcy?

     I have no inside information about the impending Binder and Binder bankruptcy but I think I can give the most likely answers to three key questions.

Is Binder and Binder going out of business?

Not now. In Chapter 11 the debtor stays in business and tries to reorganize. Maybe Binder and Binder can reorganize so they can stay in business indefinitely but I would be surprised if they can. My guess is that they stop taking cases and work down the cases they already have. That would take around three years. Their expenses would drop dramatically since they would no longer be paying for advertising and they could start laying off employees but their gross receipts would stay almost the same for a couple of years. They would be making money as they wind down. Maybe they could hope to crank up the ads later if times got better.

Why is Binder and Binder going bankrupt?

In the best of times, representing Social Security claimants is a high overhead, low profit margin business. This is the worst of times to be representing Social Security claimants. There is almost no profit to make. Add in the fact that Binder and Binder owes about $40 million and the question isn't why they're going into bankruptcy but how they've stayed in business so long. This comes as no surprise to me.

Why is it such a tough time to be representing Social Security claimants?

Social Security's Administrative Law Judges are approving a much lower percentage of disability claims than they did a few years ago. Because of inadequate staffing backlogs are climbing rapidly at Social Security. If you think this means that Binder and Binder should be doing better since their fees would be increased by the delay, you'd be naive. The slowdown in getting to the eventual payday completely overwhelms the importance of the somewhat larger paycheck. If the backlog gets two months longer over the course of a year, you lose two months of gross income but your expenses are largely unchanged. A 5% or 10% larger fee isn't nearly enough to make up the difference.

I Was Kind Of Expecting This

     Binder and Binder may be about to enter Chapter 11 bankruptcy.

Charlie Binder Has More To Say In Response To Sixty Minutes

     Charlie Binder has more to say in response to the Sixty Minutes piece although that may not be apparent until the last paragraph.