RICO Claim Against UNUM Allowed To Go Forward

Law.com reports that UNUM lost a big one. The Third Circuit Court of Appeals allowed a lawsuit to go forward against the company under the Racketeer Influenced and Corrupt Organizations (RICO) Act. The lawsuit concerns UNUM's practices in terminating Long Term Disability (LTD) benefits. Damages under RICO can be ruinous. Additionally, losing a RICO suit gives a company the taint of criminality.

LTD benefits are typically reduced because of the receipt of Social Security disability benefits. While LTD is of no direct concern to the Social Security Administration, it is of huge concern to many people receiving Social Security disability benefits. UNUM is, by far, the largest writer of LTD insurance.

The Mirage Of Rehabilitation As A Solution For Disability

The Government Accountability Office (GAO) has just released a study it has done on the effects of Vocational Rehabilitation (VR) on Social Security disability benefits recipients. The results are not encouraging for those who believe that rehabilitation holds dramatic promise for reducing the number of people drawing Social Security disability benefits. VR is clearly of only modest benefit. Once the costs of VR are figured in, it hardly pays for itself, even without considering the often transitory effects of VR.

The only rational response to this study should be to eliminate the Ticket to Work program. Ticket to Work is only of limited value. There are much better ways to spend that money. The program has never been based upon much more than the naive dreams of people who know little about those who receive Social Security disability benefits. The response that has traditionally been given to this dream by those with first hand experience with Social Security disability recipients has been along the lines of: "If you require claimants to be half dead or seriously crazy to get on benefits, why would you expect many of them to go back to work?" It is a simple question, but the proponents of Ticket to Work have never had a good answer for it.

Here is a summary from the GAO report:

• Earnings outcomes were mixed in the year following VR [Vocational Rehabilitation] and also over time. Approximately 40 percent of the over 303,500 SSA disability beneficiaries in our study increased their earnings compared to the year prior to VR services, while 32 percent did not have any earnings and another 28 percent had fewer earnings. In comparison to DI [Disability Insurance Benefits] and concurrent beneficiaries, more SSI beneficiaries—42 percent versus 36 and 39 percent—increased their earnings in the year following VR. Of the disability beneficiaries who exited VR in fiscal year 2000, 33 percent sustained some level of earnings through 2004, although their median earnings decreased by 12 percent over this period.

• Most beneficiaries’ annual earnings remained below annualized SGA [Substantial Gainful Activity, which would be enough earnings to eventually cut off benefits] in the year following VR. Specifically, 88 percent of all disability beneficiaries in our study had annual earnings below annualized SGA in the year following VR. Only a small percentage (5 percent) of beneficiaries from each cohort had annual earnings just below annualized SGA (i.e., earning over 75 percent of, but less than annualized SGA) in the year after VR. However, this does not provide evidence that beneficiaries either were or were not “parking”—i.e., deliberately remaining just below program income limits to retain benefits. Because SSA did not collect monthly earnings for DI beneficiaries during the timeframe of our study, we used annualized earnings for both DI and SSI beneficiaries, thereby limiting our ability to determine the extent of “parking” on a monthly basis.18 For beneficiaries who had earned income in the year after VR, their median annual earnings were $4,476.

• Some beneficiaries in our study earned enough to have their benefits reduced in the year after VR, resulting in decreased DI and SSI program expenses. Benefit reductions from DI and concurrent beneficiaries in our four cohorts who did not receive DI benefits for 1 or more months due to work in the year after VR resulted in an estimated reduction in DI benefit payments of over $106 million. The average annual reduction in DI benefits due to work was $26.6 million. Of the 70,302 SSI and concurrent beneficiaries in our study who had earnings gains from the year before VR to the year after VR, almost 50,000 (71 percent) had a reduction in their SSI benefits. However, we were unable to reliably estimate SSI benefit reductions for SSI and concurrent beneficiaries because SSI benefit amounts can be affected by other factors besides earnings increases (e.g., changes in unearned income, spouse’s income, etc.), and, due to data limitations, we could not isolate the effect of beneficiaries’ earnings increases on their SSI benefit levels.

• For the 2000 and 2001 exit cohorts, 10 percent of beneficiaries were able to leave the rolls at some point by 2005; however, about a quarter of those who left also returned for at least 1 month. While the SSI program saw the most departures, the lower rate of DI and concurrent beneficiaries leaving the rolls may be due to several factors. For example, DI beneficiaries are generally afforded a much longer working period before cash benefits are completely discontinued, and delays in the reporting of beneficiaries’ earnings data to SSA are much more likely to occur for DI beneficiaries. The median annual earned income for all beneficiaries leaving the rolls was $12,027.21 By way of comparison, the average annualized SGA was $9,618, and the average annualized disability benefit was $8,460 for the DI beneficiaries and $4,452 for the SSI beneficiaries in our study in the year after VR.22 Those who returned were off the rolls for an average of 16 months.

GAO Report On Court Remands And An Interesting Longhand Response From The Commissioner

The Government Accountability Office (GAO) has issued a report entitled "SSA Has Taken Steps to Address Conflicting Court Decisions, but Needs to Manage Data Better on the Increasing Number of Court Remand." Some excerpts:

Over the past decade, the number of disability appeals reviewed by the district courts and the proportion of remands increased, and SSA subsequently granted benefits to claimants in many of the remanded cases. Between 1995 and 2005, the number of cases reviewed by federal district courts grew by 20 percent—from about 10,300 to some 12,400—which roughly corresponds to workload increases at SSA during the same period. During this period, the courts upheld SSA’s decisions to deny benefits in 44 percent of cases on average and reversed 6 percent. However, the most frequently occurring decisions were remands back to the agency for further review (50 percent), essentially resulting in additional work for SSA. The proportion of reviewed cases that were remanded increased by 36 percent over this period, with 1998 being the pivotal year when the proportion of remands exceeded affirmations. According to some SSA officials, this notable increase may have been due to new national guidelines for SSA adjudicators—known as the process unification rulings—that may have also led to federal courts using more remands to ensure that the guidelines were followed. With regard to the disposition of cases by geographic jurisdiction or judicial circuit, there was substantial variation in 2005, the year for which detailed data were available. Federal district courts in the Second Circuit—which serves part of the Northeast—affirmed 19 percent and remanded 74 percent of cases, while district courts in the Sixth Circuit—which serves Michigan, Ohio, Kentucky, and Tennessee—affirmed 61 percent and remanded 35 percent. According to SSA officials, case outcomes may vary from circuit to circuit because of differences such as judges’ interpretations of laws and the volume of cases that circuits examine. We also found that once cases were remanded back to SSA for re-adjudication, the majority of claimants—66 percent—were awarded benefits. According to agency officials, the changing nature or severity of claimants’ disabilities over the often lengthy period of appeal may contribute to the extent of allowances for remanded cases. ...

... many stakeholders said SSA decision makers had failed to properly consider the opinions of treating physicians. Many agency officials as well as outside stakeholders attributed the errors resulting in remands to a heavy workload. For example, ALJs we spoke with expressed the view that their caseload—around 50 to 60 cases per month—undermined the quality of their written decisions.

Social Security gave a written response to the GAO report, as is normal. The cover letter for that response is from Commissioner Astrue, who wrote the following in longhand at the bottom of the letter:

We are in the process of reevaluating DSI and looking at more direct ways to reduce backlogs. Your analysis will be helpful to that effort. -- Thanks!"

Why TIFF?

Social Security is transitioning to the eDIB paperless document management system. The eDIB system is based upon TIFF files. TIFF seems at first glance to be an archaic type of file that has few users. It looks to be a legacy format, something used in the early days of scanning documents, but largely abandoned today. The type of file used by most of the world is the PDF (portable document file) that goes along with Adobe Acrobat software. Is there a rational reason why Social Security went with TIFF?

The PDF Zone has an interesting discussion of PDF versus TIFF, which may help support Social Security's decision. Here are some excerpts:

Deciding whether to go PDF or TIFF with your documents seems like a no-brainer for many users. But there's a time and a place for both document formats. And, increasingly, companies are evaluating whether to switch to using TIFF in their document workflows.

TIFF, or tagged image file format, is a popular format for high-color depth (32-bit) images. ...

For the majority of users who are putting text in their documents, the PDF is hands down a better choice. It is a universally accepted format that any recipient can view using the free Acrobat Reader utility. ...

[PDF] is also a much more secure file format that offers the ability to control factors such as who can read or alter your document.

You can alter a PDF much more easily than a TIFF file. Between the features available in Acrobat, Acrobat Pro and third-party add-ons, you can do several things not possible with TIFFs, such as:

• Add bookmarks, notes and highlighting without altering the original file
• Insert hyperlinks to other documents
• Index a PDF for complex searches. ...

But don't count TIFF out yet. TIFF is a great choice for archiving images, and may be a better choice in the long run than PDF. ...

The major drawback of TIFF is that, because it has been neglected by Adobe, it lacks standardized support for advanced imaging features that have been developed in the last few years. ...

"A TIFF connected to a database with OCR provides the same capability as a PDF with OCR that has been catalogued," says George Thornton, managing partner of On Site E-Discovery. On Site's clients are law firms with hundreds of thousands of pages of documents that need to be scanned into digital format, then OCRed and searched for keywords to provide evidence in a case. These databases can grow into multiple terabytes, so saving space is crucial. "When I have a large document collection I use TIFFs with a database," says Thornton. "For business purposes, I tend to send PDFs."

We have some themes here:

1. Normally, using PDF files is a "no-brainer." It is much more widely used. The Adobe Acrobat software used with PDF files is far more advanced than the TIFF software.
2. TIFF has advantages when one is dealing with photographs.
3. TIFF has advantages (that are unexplained by this article) when used in conjunction with a database, particularly a large database.

The only one of these that might explain Social Security's use of TIFF is the last one, that TIFF has advantages when used with large databases. Clearly, Social Security intends to use its scanned files with very large databases. However, the reasons why TIFF may be better than PDF when used with large databases are unclear. It is also unclear how big an issue database compatibility is.

It is also unclear how much thought was given to the fact that Social Security's document imaging system will never stand in isolation as most document imaging systems do. Social Security's imaging system has to interact extensively with the outside world. Claimants and their attorneys must be able to view records. Social Security must be able to receive medical and other records from outside the agency that are already scanned in PDF. Eventually, claimants and their attorneys are likely to be able to view their files over the internet, which will be difficult with TIFF files. And there has to be the question of whether TIFF really has any future.

Going with TIFF was a crucial decision for Social Security, which has implications for decades to come. If the decision to go with TIFF was a mistake, the transition to PDF is going to be terribly expensive. The TIFF decision deserves attention from Social Security's Office of Inspector General (OIG), the Government Accountability Office (GAO) and Congress. It may seem boring, technical and confusing, but, in the end, it was probably the most consequential decision made by former Commissioner Barnhart. As far as I know, no one who was not directly involved has taken an in depth look at the choice of TIFF.

New Fee Regulations

The Social Security Administration has published innocous final regulations on fees for attorneys and others who represent Social Security claimants. The new regulations implement the temporary extension of fee withholding to SSI benefits and to certain non-attorney representatives of Social Security claimants. The new regulations do nothing more than state what is already in the statutes.

China Grove Man Goes To Jail For Social Security Fraud

From the Salisbury, NC Post:

A China Grove man was sentenced recently to 18 months in federal prison for defrauding the Social Security Administration of $45,000 in benefits.

Alan Motley Sr., 49, was sentenced Thursday in U.S. District Court in Greensboro.

In addition to prison time, a judge sentenced Motley to two years of supervised release, assessed a court fee of $200 and ordered him to pay $45,186.40 in restitution to the Social Security Administration. ...

Federal officials believed Motley was working while also receiving Social Security disability benefits. He concealed his employment by working under his son's Social Security number, according to Ozella Bundy, Public Affairs officer for the Social Security Administration in Greensboro.

Baucus Denounces Biggs Recess Appointment

From the New York Times:

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, denounced Bush for making Andrew Biggs, a leading proponent of privatizing the Social Security retirement program, deputy commissioner of Social Security.

``Prospects for getting real Social Security reform anytime soon just took a big hit,'' Baucus said. ``This administration is clearly not serious about leaving behind the failed schemes of the past and moving on to constructive discussions about the future of Social Security.''

Andrew Biggs Gets Recess Appointment As Deputy Commissioner

A few days after Commissioner Astrue appointed Andrew Biggs to a position as Deputy Commissioner for Policy, a position which does not require Senate confirmation, President Bush has used the Congressional recess to give Biggs a recess appointment as the number two position at Social Security, Deputy Commissioner, according to Dow Jones Market Watch. The Deputy Commissioner slot normally requires Senate confirmation. The Chairman of the Senate Finance Committee had earlier made it clear that Biggs' nomination to become Deputy Commissioner would not be go forward. With a recess appointment Biggs can serve as Deputy Commissioner of Social Security until the end of the current Congressional session.

This recess appointment can only complicate Commissioner Astrue's life. Biggs's only interest in the Social Security Administration has appeared to be in dismantling the agency in favor of private accounts. It puts Biggs in a position to try to use the resources of the Social Security Administration to push privatization. Commissioner Astrue will have the constant worry that Biggs is going to do something that will cause embarrassment.

It seems unlikely that Astrue had much warning that this was coming, since he appointed Biggs to a position that did not require confirmation just a few days ago.

Astrue's patience may be tested in coming months -- and there are many signs that Michael Astrue is not a patient man.