Privatized Chilean Social Security System Not Working So Well These Days

     From Michael Hiltzik at the Los Angeles Times (emphasis added):

Promoters of privatizing the U.S. Social Security system have never tired of holding up Chile’s privatized program as an example of how this can make workers rich. The trick is that they never ask ordinary Chilean workers and retirees how they feel about it.

That may be because they know what the answer would be. It was visible last month in the streets of the capital, Santiago, where crowds estimated at 100,000 to 200,000 marched to demand reform. ...

The Chilean program was promoted relentlessly by its creator, Jose Pinera, who got himself a sinecure at the Cato Institute [a right wing think tank in the United States, not Chile] out of the deal. From there he fed American conservatives’ fantasies of “an obvious free market solution that works,” he wrote for a Cato audience in 1997. (In that same article he declared that “America’s Social Security system will go bust in 2010.” Umm, no.) He boasted of how he single-handedly “decided to undertake a structural reform [of Chile’s bankrupt retirement system] that would solve the problem once and for all.” ...

Pinera and his fans talked up the Chilean workers’ apparent gains during the system’s early years, when it seemed to be delivering double-digit returns and lavish pensions to its lucky beneficiaries. What the promoters never much emphasized was how the program actually had been made to work. As I explained in a 2005 book, everyone entering formal employment after 1981 was required to deposit 10% of earned wages into individual accounts managed by a handful of investment companies appointed by the Pinochet regime. Workers enrolled in the old system were goaded into abandoning it by cuts in existing benefits. Chile financed the transition by draining its large government surplus. An unprecedented bull market in Chilean stocks did the rest. 

But the seams soon showed. The World Bank determined that fees charged by those favored investment firms consumed fully half the pension contributions of the average worker retiring in 2000. The government surplus disappeared, and those outsized stock market gains faded away.

Interesting Study On Federal Court Litigation

     The Administrative Conference of the United States (ACUS), a federal agency that does legal research and makes recommendations for federal agencies, has released A Study of Social Security Litigation in the Federal Courts. Here are a few excerpts (footnotes omitted): 

• This investigation revealed one obvious fact: federal judges know little about the path social security claims follow from initial filing to their chambers.
• District and magistrate judges tend to march in lockstep within districts. Districts with one judge who remands a lot of cases to the agency tend to have other judges who do so as well. Very few individual judges have decision patterns that depart significantly from what their district colleagues produce.
• Circuit boundaries are associated with a good deal of district-level variation. For example, the fact that the Eastern District of New York remands more cases than the Southern District of Florida seems to be significantly related to the fact that, over all, districts in the Second Circuit remand a greater share of cases than do districts in the Eleventh Circuit.
• A number of factors – judicial ideology, the degree of a district’s urbanization, the assignment of cases to district versus magistrate judges, ALJ [Administrative Law Judge] case loads, and others – have little association with case outcomes. 
• Most of the twenty-four ALJs we interviewed subscribe to what one labeled a “just in time” approach to case review.  An ALJ using this method first looks at a case anywhere from one day to a week before the hearing. 
• The agency can always appeal the district court’s decision, but it almost never does so. The courts of appeals might receive somewhere in the neighborhood of 650 social security appeals each year, no more than twenty of which are affirmative appeals by the Commissioner. In FY [Fiscal Year] 2014, the agency filed exactly one appeal. Several reasons might explain this low incidence of appeal, but one institutional fact is surely important: the Solicitor General of the United States must sign off on any appeal the SSA [Social Security Administration] might want to take.
• The hearing office that we studied in the low remand district came off as a model of institutional health. “I can’t begin to think of a better place to work,” one decision writer told us. The office has stable management, with a long serving Hearing Office Chief Administrative Law Judge (“HOCALJ”), and ALJs tend to stay once they are assigned there.
• Most of the hearing office personnel from the high remand district described a very different and more problematic work environment. Several ALJs complained of poor quality decision writing, and several expressed a preference for decisions written off-site in national case assistance centers. An ALJ described unstable, volatile management at a hearing office for much of the past decade, and ALJs and a claimant representative complained of the office’s capacity to perform basic administrative tasks. Some personnel described communication difficulties between ALJs and decision writers.
• Recommendation 1. Congress should give the Social Security Administration independent litigating authority. 
• Recommendation 2. Congress should enact enabling legislation to clarify the U.S. Supreme Court’s authority to promulgate procedural rules for social security litigation. The Judicial Conference should authorize the appointment of a social security rules advisory committee, and the U.S. Supreme Court should approve a set of social security rules drafted by this committee.
• Recommendation 3. A uniform set of procedural rules for social security litigation should contain (a) a rule requiring the claimant to file a notice of appeal instead of a complaint; (b) a rule requiring the agency to file the certified administrative record instead of an answer; (c) a rule requiring the parties to exchange merits briefs instead of motions; (d) a rule setting appropriate deadlines and page limits; and (e) a rule creating a presumption against oral argument. 
• Recommendation 4. The Administrative Office of the United States Courts, the Federal Judicial Center, the Administrative Conference of the United States, and the Social Security Administration should cooperate on several initiatives to improve communication among the agency, claimant representatives, and the judiciary, and to educate the judiciary in important aspects of the claims adjudication process. These initiatives should include the creation of social security standing committees for each district and the drafting of an introductory manual on social security law and processes.
• Recommendation 5. Congress should not replace the existing system of judicial review with a specialized court for social security appeals. The Appeals Council should issue opinions in a set of appeals each year that will benefit from Chevron deference and thereby reduce circuit-level variation. 
• Suggestion 1. The agency should investigate further the relationship between hearing office performance and work environment, on one hand, and remand rates in district courts, on the other. 
• Suggestion 2. The agency should add bottom-up, localized experiments to their quality assurance initiatives. This experimentation could include a pilot project in several hearing offices that uses district court decisions for guidance and critique.
• Suggestion 3. The Social Security Administration and the Administrative Office of the U.S. Courts should provide the federal judiciary with a database listing district and magistrate judge decision rates. 
• Suggestion 4. The Social Security Administration should attempt to quantify the “false positive phenomenon,” or the number of court remands that, once adjudicated again, do not result in the payment of benefits. 
• Suggestion 5. To the extent possible, the Social Security Administration should require that hearing offices assign court remands to the same decision writers who worked on the cases the first time.
• Suggestion 6. The Social Security Administration should study the issue of an OGC [Office of General Counsel] attorney’s ethical obligations and, where appropriate, provide clearer guidance.
• We nonetheless believe that only a dramatic reduction in ALJ caseloads could permit significant, across-the-board improvements in decision-making quality sufficient to cause the federal court remand rate to plummet sharply. To avoid a spike in the backlog of claims, the size of the ALJ corps would have to increase. Ultimately, this may be the most important reform of all.

Click on chart to view full size

No More CDs

     Social Security has sent out a directive that Social Security employees will no longer provide CDs of hearing files for attorneys and others representing claimants at the hearing level. The only exception of consequence is for cases that are not electronic.

     I wish the directive had said explicitly that this does not apply to prior case files. Many, perhaps most, hearing office employees are unaware that Social Security's systems do not allow electronic access to prior files. They can easily see prior files on their system but attorneys and others representing claimants cannot see prior files unless someone at the agency provides them on a CD. This is one of many annoying problems with the current system.

Sounds Legit: Beneficiaries Serving as Rep Payees Who Have Their Own Rep Payee

     I think the title of this report from Social Security's Office of Inspector General (OIG), Beneficiaries Serving as Representative Payees Who Have A Representative Payee, tells you the story. It's only 381 representative payees nationally who have their own representative payee, which really isn't that many considering how many representative payees there are, but it's still 381 too many.
     In fairness to Social Security, in many cases it's hard to find anyone who is able and willing to be a representative payee for an incompetent claimant.

Social Security Backs Away From Requiring Text Message ID Verification

     USA Today reports that Social Security is no longer requiring that claimants using its online systems verify their identity by copying a code from a text message they receive on their cell phone. It turns out that many people don't have cell phones or have poor cell phone reception or found the new process cumbersome.

Proposed Rules Of Conduct For Appointed Representatives

 The Social Security Administration will publish proposed Revisions to Rules of Conduct and Standards of Responsibility for Appointed Representatives in the Federal Register tomorrow. The summary provided by Social Security includes a sentence that seems to encapsulate their approach: 

The changes to our rules are not meant to suggest that any specific conduct is permissible under our existing rules; instead, we seek to ensure that our rules of conduct and standards of responsibility are clearer as a whole and directly address a broader range of inappropriate conduct

     Social Security thinks it's important to point out that there's no representative conduct that they find permissible but plenty they want to forbid because they believe it's inappropriate? That certainly suggests as attitude.

     Here's a couple of excerpts from the proposal:

A representative should not withdraw after a hearing is scheduled unless the representative can show that a withdrawal is necessary due to extraordinary circumstances , as we determine on a case-by-case basis. ...

Disclose in writing, at the time a medical or vocational opinion is submitted to us or as soon as the representative is aware of the submission to us, if: ...

• (ii) The representative referred or suggested that the claimant seek an examination from, treatment by, or the assistance of the individual providing opinion evidence.

     Why would these be a problem?
     As to the withdrawal provision, the agency insists on recognizing only individual lawyers as representing claimants, not law firms. Prohibiting the substitution of one attorney for another after a hearing is scheduled makes it difficult for a law firm to properly allocate its resources and makes it easy for individual attorneys employed by a firm to pick up and leave their firm with the files of their clients after the firm has spent large sums of money on the cases over the many months or years that the firm has represented the claimants. I don't know what the point of this is other than to harass law firms. Let me anticipate the response from a government employee. "Law firms don't spend much money on Social Security cases -- only a few dollars obtaining medical records -- so that's no big deal." Anyone who thinks this has never run a law firm. Law firms spend almost all of their money on salaries and other overhead. The problem is that a law firm may spend thousands of dollars on the office overhead associated with a case only to see an attorney waltz away at the last minute pocketing the entire fee. Is it unreasonable for a law firm to try to make this difficult? What exactly is the problem with a law firm substituting one attorney for another after a hearing is scheduled? It doesn't delay anything.
     As to the requirement that attorneys notify Social Security if they suggest medical treatment, if I tell my client that he or she ought to get in psychiatric treatment, I'm supposed to disclose this to Social Security if the psychiatrist later offers an opinion? What if I tell my client to get back to the doctor he or she used to see? Am I supposed to carefully track the advice I give clients about medical treatment?
     This is just overkill. I'm not Eric Conn or Charlie Binder. Don't treat me like them. I don't deserve it.
     This is merely a proposal. The public can comment upon it. Social Security is supposed to consider those comments. A new administration and a new Commissioner will be in office before anything is adopted, if it ever is.

Happy 81st Birthday, Social Security!

The Living Dead

     Even the New England Journal of Medicine is reporting on the problems of Social Security's Death Master File.