A Grabbag From OIG

     Social Security's Office of Inspector General issued a group of reports yesterday. Apart from the one I posted about yesterday, I'd say none is important, but here are the others so you can judge for yourself:

• Status of the Social Security Administration's Earnings Suspense File 
• Old-Age, Survivors and Disability Insurance Overpayments Pending Collection
• Congressional Response Report: The Social Security Administration's Anti-fraud Training
• Supplemental Security Income Overpayments Pending a Collection Determination by the Social Security Administration 
• Single Audit of the State of Michigan for the Fiscal Year Ended September 30, 2014 

Hearing Backlog Soars

     From a report by Social Security's Office of Inspector General (OIG):

SSA [Social Security Administration] efforts have not been successful in eliminating the pending hearings backlog nor reducing APT [Average Processing Time] to 270 days. As of March 2015, SSA had about 1 million claims awaiting a decision, and the APT was approximately 450 days. We have identified four factor s that contributed to this worsening situation: (1) an increase in hearing requests, (2) a decrease in administrative law judge (ALJ) productivity, (3) a decrease in senior attorney adjudicator decisions, and (4) a recent decrease in the number of available ALJ. ...

ALJ productivity decreased by 14 percent from FYs 2012 to 2014. ...

After we provided our draft report to Agency managers, they shared the Agency’s eight-point tactical plan outlining SSA’s priorities through the end of FY 2016. One of the plan’s goals was to reduce pending hearings by (1) increasing adjudicatory capacity, (2) improving process and decisional quality, (3) increasing accountability and the focus on aged cases, and (4) leveraging technology improvements. This tactical plan included 35 initiatives. We determined 21 of these 35 initiatives were variations of the initiatives we discussed earlier in the report. Among the other new initiatives, ODAR planned to conduct pre-hearing conferences using SAAs [Senior Attorney Advisors], establish judge-only video hearing sites, and reconsider an earlier regulation stipulating that evidence must be provided 5 days prior to a hearing. The Agency was still finalizing performance measures related to this new tactical plan. ...

     The elements of the tactical plan listed are laughably inadequate. Senior attorney decisions could help a lot but they're only talking about pre-hearing conferences. To use a tired metaphor, this is just rearranging the deck chairs on the Titanic. The problem, in addition to an inadequate budget, is that Social Security is far more worried about accusations that they're "paying down the backlog" than they are about the backlog itself.

I Keep Asking: Does This Look Out Of Control?

     Kathy Ruffing at the Center on Budget and Policy Priorities (CBPP) has compiled a report on the many safeguards against fraud and abuse in Social Security's disability programs. The chart to the left is from the report.

     The report correctly notes that while there is actually little fraud and abuse in Social Security disability that if Congress really wants to do more to combat whatever fraud and abuse there is, the agency should get better administrative funding. For instance, inadequate funding is limiting continuing disability reviews.
     Unfortunately, additional funding is unlikely to happen with this Congress. The GOP is only interested in using the relatively rare cases of fraud or abuse to justify their 80 year old losing battle against the concept of social insurance. They really don't care about the fraud and abuse itself. Good government isn't their thing.

Great Start For Hearings For Eric Conn's Former Clients

     Social Security has just started holding hearings for former clients of Eric Conn who are being threatened with benefit termination. I'm hearing that at least one Administrative Law Judge (ALJ), William Wallis, is refusing to consider or even admit into the record any evidence that is dated after the prior decision. Attorneys are submitting evidence but the ALJ is refusing to make exhibits of the evidence.  This is one way of interpreting the instructions that ALJs have been given that they cannot find that a claimant first became disabled after the prior ALJ decision but is this what Social Security intended? And, of course, the instructions to consider the claimant's condition only up to the date of the prior ALJ decision are clearly at odds with 42 U.S.C. §402(j)(2) but I suppose that the plain language of the Social Security Act doesn't matter when Congressional Republicans demand mass terminations.
     Update: The ALJ refusing to admit any evidence dated after the prior decison is not William Wallis but Sandra DiMaggio-Wallis. ALJ William Wallis might be doing the same thing but I don't have a report about him. By the way, the ALJs hearing these cases have been put into a difficult spot. They've been given weird instructions which many of them may be uncomfortable with. I don't want to be too critical of the ALJs. The problems were created much higher up at Social Security.

Former Social Security Employee Sentenced To 21 Months In Prison For Benefits Fraud

     From the Chicago Sun-Times:

A former Social Security Administration employee was sentenced to 21 months in federal prison Monday for cashing her dead mother’s Social Security checks for almost 30 years.

Georgia Thompson, 68, of Chicago, received $419,644 in fraudulent Social Security benefits from the checks between 1986 and 2014, according to a statement from the U.S. attorney’s office. ...

The Social Security Administration discovered the fraud in 2014 after realizing Thompson’s mother hadn’t used her Medicare benefits in several years, prosecutors said. ...

Acquiescence Ruling Issued

     The Social Security Administration has issued Acquiescence Ruling 15-1(4). The agency is acquiescing to the decision of the 4th Circuit Court of Appeals in Radford v. Colvin, which was decided on October 29, 2013. Radford dealt with the requirements of Social Security's Listing 1.04A. The acquiescence ruling only applies in the 4th Circuit region -- Maryland, North Carolina, South Carolina, Virginia and West Virginia.

     Mr. Radford was represented by Charlotte Hall, an attorney at my firm. I'll have to repeat here what I've been saying since Charlotte came to my firm. She's not my daughter. We're not related. The similarity in our names is coincidental.

Allsup Gets Sued For Breach Of Fiduciary Duty

     A lawsuit has been filed in St. Clair County, Illinois against Allsup, a large non-attorney group that represents Social Security disability claimants, as well as Aetna Life Insurance Company. The lawsuit alleges "breach of fiduciary duty, fraudulent misrepresentation and concealment—failing to disclose conflicts of interest and material facts, and striving to reduce or eliminate the plaintiff’s bargaining power, as well as failing to refund" money owed the plaintiff.
     Allsup does most of its work for Social Security disability claimants at the behest of large insurance companies like Aetna. These companies write Long Term Disability (LTD) insurance policies which are mostly provided as part of an employee benefits program. LTD policies always contain an offset for Social Security disability benefits. This gives a big incentive for LTD insurers to demand that LTD recipients file Social Security disability claims and pursue them aggressively with representation, with providers such as Allsup.
     If a claimant who has been drawing LTD is approved for retroactive Social Security disability benefits, the claimant's LTD is reduced not just for the future but also retroactively. The LTD insurer wants to recoup some or all of the money it has already paid the claimant.
     The insurance company has a problem in collecting money out of the claimant's retroactive Social Security disability benefits. The Social Security Act forbids attachment of Social Security benefits for this reason. Allsup came up with a plan to get around this obstacle. They would use their representational relationship to cajole claimants into allowing their back benefits to be deposited into a bank account. In theory, it was a joint account but as a practical matter Allsup has complete control over the account. Allsup would quickly siphon off the money owed to the LTD insurer as soon as the deposit came in from Social Security. Allsup is so proud of this scheme that they patented the idea! Social Security has acquiesced in this dubious practice even though the Federal Deposit Insurance Company (FDIC) has found that a bank which participated in a similar scheme was engaging in an "unsafe and unsound bank practice." It's not hard to figure out why LTD insurers like Allsup far more than law firms. Law firms wouldn't engage in this sort of behavior. At least, I hope they wouldn't!
     Michael Garavalia of Flynn, Guymon & Garavalia in Belleville, IL is representing the plaintiff.

Help For Claimants With Ancient Overpayments

     There have been news reports about the Social Security Administration attempting to collect decades old overpayments by seizing benefit payments and tax refunds. Often the alleged debtor had no idea there was an overpayment. Social Security has just put out an "Emergency Message" which says that in determining whether to grant waiver of an overpayment that if the agency is "unable to locate and review documentation of the relevant facts to support the finding of the overpayment, [the agency should] assume the debtor is without fault and approve the waiver request."

     I think this Emergency Message is significant. To explain why I'll have to give a boring explanation of how Social Security deals with cases in which a claimant objects to an alleged overpayment. Once an overpayment is alleged, the claimant can do two things. One is to appeal the overpayment, saying that they really weren't overpaid or that the overpayment isn't as much as claimed. I have one of these cases now. By the time it's over, there will probably be no overpayment and Social Security will probably owe money to my client. One big problem with appealing an overpayment is that the claimant only has 60 days to appeal. In the ancient overpayment cases, the time period to appeal was over many years ago, assuming the agency properly notified the claimant of the overpayment, which the agency will assume it did. The other way for a claimant to deal with an overpayment is to request waiver of the overpayment. To oversimplify the waiver process, the claimant has to prove that he or she wasn't at fault and that paying it back would cause hardship. One important fact about waiver requests is that there's no time limit on filing the waiver request. A claimant isn't limited to either contesting the fact of the overpayment or requesting waiver. The claimant can do both, either at the same time or sequentially.
     When a claimant wishes to contest an ancient overpayment, they will have a hard time appealing the overpayment itself since the agency will say that the time period for appealing ended many years ago. As a practical matter, this limits the claimant to the waiver process. This new policy eases the waiver process for ancient overpayment cases since the agency will usually lack documentation of the overpayment. To get waiver, the claimant will merely have to show that repayment would cause hardship.

The Wealthy Get More Out Of Social Security Than The Poor

     The National Academies of Sciences, Engineering and Medicine has issued The Growing Gap In Life Expectancy By Income: Implications For Federal Programs And Policy Responses. It's well known that persons with higher incomes live longer than those with low incomes. As an example, for those born in 1960, life expectancy at age 50 was 28.3 years for those in the lowest 20% of income but 41.9 years for those in the highest 20% of income. Naturally, if you live longer, you're going to receive more Social Security and Medicare benefits. The effect of this is that the value at age 50 of those benefits for males was $391,000 for those in the lowest 20% of earnings but $522,000 for those in the highest 20% of earnings. For females, the comparable numbers were somewhat less dramatic, $452,000 for those in the lowest 20% of earnings and $480,000 for those in the highest 20% of earnings.

     It would be possible to correct this bias in favor of persons with high incomes by reducing their Social Security benefits but that's unlikely to happen. The other possible way would be to increase benefits for lower income people. I'd say that while that's unlikely, it's not out of the question. Populist campaigns seem to be in vogue this campaign season.

Variability In Social Security Reserve Fund Performance

     You may not have heard of it but there's an International Social Security Association (ISSA). It recently released a report on the performance of larger social security reserve funds, most of which are mostly invested in stocks and non-governmental debt obligations. The nations involved aren't identified by name. I'm not sure if the U.S. Social Security Trust Funds are included in the report. In any case, what the report shows to me is huge variability. Note that the time period selected is after the 2008 crash. This was a time period in which stock and bond markets went up significantly. Below is a table from the report.

Not Happening Here

     There have been suggestions that the United States should emulate the Netherlands which was able to dramatically "cut" the costs of the disability benefits it pays. Elaine Fultz, at the Center on Budget and Policy Priorities (CBPP), has done a report showing how implausible this is. Dutch disability expenses were several times higher than in the U.S., leaving far more space for cutting than would be possible in the U.S. Even after the Dutch "cuts", their costs remain vastly higher than in the U.S. The biggest problem is that the Dutch "cuts" weren't really cuts. The most important way that the Netherlands "cut" costs was by shifting the costs from the government to private employers. Employers were also burdened with the trouble and expense of trying to rehabilitate disabled workers. This had the effect of making it harder for people with health problems to find employment. Many with health problems were shifted to temporary jobs to get around the rules.

     I think there are those on the right who read that the Netherlands dramatically cut its expenditures for disability benefits and read no further. That's the problem. All they were interested in was cutting. They had no concern for the details. Just cut. The right has no Social Security experts much less Social Security disability experts to warn them off something so unworkable in the U.S.

Hearings Begin Today For Eric Conn's Former Clients

     From WYMT in Kentucky:

Starting Thursday, as many as 1,787 people in our region who receive federal disability benefits will be required to participate in hearings to redetermine their eligibility.

They were represented by Floyd County lawyer Eric C. Conn, who Congressional investigators believe used fraudulent information to help secure the benefits. ...

Matty Slone has received disability benefits since a spine condition forced him to stop working seven years ago.

Slone, who lives in the Betsy Layne community of Floyd County, received a letter from the Social Security Administration mandating he attend a hearing Oct. 8 to determine whether the financial assistance will continue.

"My heart beats really fast, the nerves, the stress ...I go to bed crying every night," Slone said. "I've got so much riding on my back with this."

Slone said he would have "no hope" if his benefits are taken away. 

Lawyers for the hundreds of people who had their benefits temporarily suspended earlier this year have sued the SSA, asking a federal judge to stop the hearings.
There's no timetable for the judge's decision. ...

The Number Keeps Growing

     The word had been that Social Security was trying to cut 1,470 people who had been clients of Eric Conn off disability benefits. Social Security is now saying the number is 1,787. The hearings are beginning even as a motion for preliminary injunction is pending in U.S. District Court.

     So far, the only instructions I've seen for how these hearings are supposed to progress were issued last summer. Those instructions seem less than comprehensive to me. I keep wondering if there are more instructions that haven't been released to the public, perhaps some instructions issued just to the St. Louis National Hearing Center office that will be handling most of these cases. If there are such additional instructions, I'd love to see them. They shouldn't be a secret. 

     And, by the way, some of these claimants have moved out of the Kentucky-West Virginia area where they were living at the time they went on benefits. I assume that those hearings will be conducted by an Administrative Law Judge in the area where they now live, rather than by the St. Louis National Hearing Center, right?

Republican Candidates On Social Security -- I'm Noticing A Wedge Issue

     Take a look at the views of the Republican Presidential candidates on Social Security:

• Jeb Bush: Increase full retirement age, possibly to 70
• Ben Carson: Wants people who don't need the money to opt out of receiving Social Security
• Chris Christie: Increase full retirement age to 69 and means-test benefits
• Ted Cruz: Partially privatize Social Security, increase full retirement age and cut cost of living adjustment 
• Carly Fiorina: Increase full retirement age 
• Jim Gilmore:  Put a cap on benefits; praised George W. Bush for proposing partial privatization of Social Security
• Lindsey Graham: Increase full retirement age to 70 and cut benefits for some recipients
• Mike Huckabee: Does not favor Social Security changes.
• Bobby Jindal: Partially privatize Social Security
• John Kasich: Partially privatize Social Security 
• George Pataki: Increase full retirement age
• Rand Paul: Increase full retirement age to 70 and means test benefits 
• Marco Rubio: Increase full retirement age by one year; also believes that benefits should "grow more slowly" 
• Rick Santorum: Privatize Social Security, increase full retirement age, means test benefits
• Donald Trump: Does not favor Social Security changes
• Scott Walker: Increase full retirement age

     Every Republican Presidental candidate other than Carson, Huckabee and Trump supports either raising full retirement age or partially privatizing Social Security. Carson may want such changes but he hasn't yet spoken on Social Security issues in any meaningful way. Encouraging people to voluntarily forego their Social Security benefits? Few people can afford to do so and far fewer would do so. I think he'll be asked specific questions about Social Security in the near future.

     What's going to happen when the Republican race starts narrowing down? If Trump remains the front runner, we can expect to see negative ads from his opponents. How does Trump respond? Social Security seems to be a wedge issue he could use to attack almost any of his Republican opponents. Raising full retirement age and partially privatizing Social Security may be popular ideas with big Republican donors but these ideas are unpopular with rank and file Republicans. The polling we have shows 62% of Republicans in favor of increasing Social Security benefits and 74% of Republicans willing to preserve Social Security even if it means raising taxes. Only 26% of Republicans favor increasing full retirement age to 70. An intra-party debate on Social Security could be devastating for Republicans.

Many Children Disabled By Mental Disorders Not Drawing The SSI They Deserve

     Dr. James Perrin, professor of pediatrics at Harvard Medical School, was on the Here and Now radio program talking about the Institute of Medicine study on Supplemental Security Income (SSI) benefits for children disabled by mental disorders. Perrin was one of the researchers for the study. The main takeaway from Dr. Perrin: the biggest problem with SSI child benefits for mental disorders is that there are many children who should be on benefits who aren't receiving them.

NCSSMA Proposals On Comp Offset

     The National Council of Social Security Management Associations (NCSSMA), an organization of Social Security management personnel, has been kind enough to send me a copy of their draft position paper on simplifying the workers compensation offset which is applied when a claimant receives both Social Security Disability Insurance Benefits and workers compensation at the same time. I've posted their position paper on the Social Security Perspectives blog (which I rarely use).

     I think everyone who has to deal with the workers compensation offset wishes it could be made simpler but, so far, there's been no consensus on how to do that. NCSSMA recommends either simplifying the offset by applying a uniform offset amount regardless of the amount of workers compensation benefits paid or somehow forcing reverse offsets on the states. 

     Applying a uniform offset amount would simplify matters some but it still leaves plenty of complexity. In some cases, Disability Insurance Benefits will be reduced by considerably more than the claimant is receiving in workers compensation. Probably the biggest problem is how to apply a uniform offset when a claimant receives a lump sum settlement of workers compensation benefits. Current law allows lump sum payments to be considered as spread over the claimant's remaining life expectancy. This has been a bit controversial but if the lump sum payment is for the claimant's disability over the claimant's remaining life expectancy what's wrong with spreading the lump sum amount over the remaining life expectancy? However, applying a flat rate reduction for the rest of a claimant's entire life would clearly be unfair. 

     Some states now reduce workers compensation benefits as a result of the receipt of Disability Insurance Benefits. Social Security does not apply an offset when the state has applied an offset. Current law limits the reverse offset to 15 states who had a reverse offset before a certain date in the past. This limitation could be removed but there is no way to force states to implement reverse offsets. Also, the NCSSMA plan would require a reverse offset for public disability benefits. That's applied to foreign social security benefits under contributory plans so you'd need to get every country in the world with a contributory social security scheme to adopt a reverse offset to eliminate thatt offset. Nationwide reverse offsets would cost the Disability Insurance Trust Fund a fair amount of money. International reverse offset would cost a little more. I'm pretty sure the reverse offset idea is going nowhere.

"Rude Shocks" For Widows

     The New York Times reports on the "rude shocks" that Social Security can provide for widows.

SSA Seeks Comments On Vocational Factors In Disability Determination

     The Social Security Administration is publishing an "advanced notice of proposed rulemaking" in the Federal Register on Monday asking for public input on how the agency should consider the vocational factors of age, education and work experience in determining disability. There's no proposal now. They're just asking for comments. Here's the agency's explanation of the comments it is seeking:

Specifically, given today’s work environment and advances in technology and medicine, we are seeking public input, research, and data about the following: 

1. Is the factor of age predictive in determining an individual’s ability to work or to adjust to other work? If it is predictive, what are the vocationally significant age milestones we should consider? If it is not predictive, what data support that assertion? 

2. When determining if age affects an individual’s ability to work or to adjust to other work, what other factor s or combination of factors should we consider? 

3. Does an individual’s education al level affect an individual’s ability to do work or to adjust to other work? If so, how? What data support the conclusion that an individual’s educational level does or does not affect an individual’s ability to do work or to adjust to other work? How does literacy affect an individual’s ability to do work or adjust to other work? 

4. Does the skill level of an individual’s past work affect his or her ability to adjust to other work? If so, how ? What data support the conclusion that the skill level of an individual’s past work does or does not affect an individual’s ability to do work or to adjust to other work? How does the skill level of an individual’s past work considered along with an indiv idual’s educational level affect this adjustment? 

5. Are there other vocational factors or combinations of vocational factors that we should consider when determining an individual’s ability to do work or to adjust to other work?

Study On Child SSI For Mental Illness

     The Institute of Medicine (IOM) has released a 394 page report on Supplemental Security Income (SSI) for children with mental disorders. The study was commissioned by the Social Security Administration. Here are some findings from the report that stuck out to me:

• The percentage of poor children drawing SSI decreased from 2004 to 2013. 
• The total number of children drawing SSI increased from 2004 to 2013. The increase in the number of children receiving SSI due to mental illness closely matched the increase in the number of children receiving SSI due to physical conditions.
• Roughly 60% of children who are likely eligible for SSI due to intellectual disability receive SSI. The percentage is decreasing. At the same time there has been a significant increase in the number of children qualifying for benefits due to autism spectrum disorder. These two trends may be related. Children who once would have been diagnosed with intellectual disability are now diagnosed with autism spectrum disorder.
• Only about 3% of children who are potentially eligible for SSI benefits due to a mood disorder (usually bipolar disorder) are receiving SSI benefits.
• Approximately half of all children receiving SSI were found disabled due to a mental disorder.
• There is considerable variation from state to state in the rate at which SSI claims are filed for children based up on mental illness and the rate at which these claims are approved. The number of claims approved per 100,000 poor children ranges from 107 in Nevada to 744 in Pennsylvania. There's a pronounced geographic tilt. A far greater number of children apply for and qualify for benefits in the Eastern half of the United States than the West. I really wish that I could display the chart and map here but the report in a format that makes this impossible, at least for me. They're on pages 76 and 77 of the report. If you go to the report, do not miss these pages!
• Between 2004 and 2013 the average rate of child SSI determinations decreased by 2%. However, the rate increased by 48% in Rhode Island but decreased by one-third or more in Minnesota, North Dakota, Kansas and Nevada. 
• Diagnosis of mental illness was significantly more common in white children than in African American or Hispanic children. The rate was lowest for Asian-American children.

     Update: A reader was kind enough to help in getting pages 76 and 77 into a format I can post here. Click on each to view full size.

Guilty Plea In Philadelphia

     There has been a guilty plea in the Philadelphia case of a woman accused of holding disabled adults in captivity so that she could, among other things, steal their Social Security disability benefits.