Explosion of disability payouts hobbles program
Few of the petitioners who appear before Administrative Law Judge Manny Smith hear the word “no.”
Smith grants benefits in close to 80 percent of the Social Security disability claims he hears, nearly twice as often as other administrative judges in Western Pennsylvania and much higher than the national average of 58 percent, federal data show.
Analysts estimate each of the 292 disability awards Smith approved from October through June will cost taxpayers about $300,000 over the long term. As disability applications hit highs and a Social Security trust fund approaches exhaustion, judicial outliers such as Smith have fallen under congressional scrutiny.
“If we don’t do something, in four years it won’t be able to pay full benefits,” said Sarah Swinehart, a spokeswoman for the House Ways and Means Committee. Its Social Security Subcommittee has held five hearings on disability insurance over the past year.
Smith, one of 10 local administrative law judges, declined an interview with the Tribune-Review. Federal rules keep most active law judges from talking with reporters, and disability appeal hearings are closed to the public.
“The whole procedure may have made sense 20 years ago, when most people were honest and didn’t know about” the disability program, said James Bukes of Mt. Lebanon, who retired in January after two decades as an administrative law judge. “But now it’s become such a big business.”
Judges are under heavy pressure to resolve claims, and it’s fastest for them to approve an appeal and move on, Bukes said. However, “no structure has been put into effect to penalize people who are granting too many.”
Legislation to change the system might emerge this fall. Lawmakers want to ensure Social Security keeps paying those who need help while safeguarding taxpayer dollars, Swinehart said.
Pushing to the brink
Congress in 1956 created the Social Security Disability Insurance program for people with long-term mental or physical problems that keep them from working. Payouts started small — $57 million in 1957 — but by 2011 soared to $128.9 billion, part of a growing entitlement system that consumes about 10 percent of the gross domestic product. Disability payouts account for 1 percent, supporting 10.6 million disabled workers and their dependents.
Left unchecked, the trends could push the program to the brink within the decade, said researcher Richard J. Pierce, a George Washington University law professor. The Disability Insurance trust fund is on pace to run out in 2018.
The rise in disability applications to 2.88 million in 2011 stems from a half-dozen sources, including the economic downturn and a surge in legal representation for applicants, Pierce said. He said lawyers earn about $1.4 billion a year by representing disability appellants, about 85 percent of whom have private counsel.
Only about 20 percent of the applicants had a lawyer in the 1970s.
“Certainly, lawyers who are increasingly desperate for sources of revenue are working very hard to get the word out,” said Pierce, who testified this summer before the congressional subcommittee.
States are encouraging applicants for state unemployment benefits to consider disability claims instead, shifting the tax burden to the federal budget, Pierce said.
Duquesne economics professor Matthew Marlin said disability insurance often provides more generous payments than unemployment.
“So there’s an incentive, if you’re unemployed, you’re looking and desperate,” to file for disability, Marlin said.
Judges began approving fewer disability appeals in recent months — overall award rates are down about 5 percentage points from five years ago — probably because some jobless people seek it when they don’t qualify, said Chuck Martin, president at the National Organization of Social Security Claimants’ Representatives.
“I’ve seen too many people end up homeless and living under bridges because Social Security had a hard time believing they couldn’t work,” said Martin, an attorney in Decatur, Ga.
“I’ve had clients who were faking,” Martin said. “But by and large, most people in our society — they share the mores of our society, which places a great value on work.”
Former Administrative Law Judge Lloyd King decried “this increasing drumbeat to try to demonize disability claimants.” Rank-and-file Social Security workers reject about 65 percent of initial disability applications, and a year can pass before a judge decides on an appeal, he said.
“Almost all (claimants) have to rely on support of friends and relatives,” said King, an attorney in Raleigh who handles disability claims.
King said the aging of baby boomers is another key to the disability boom. Eligibility rules shift for those older than 50, a threshold most boomers have reached.
Growth in the number of insurance-eligible women help propel disability claims, too, according to a congressional briefing. Other driving factors might include a jump in recognized ailments, attorneys said.
The explosion in disability has brought new attention to the once-obscure administrative law judges who each year hear 600,000 appeals.
Between 85 percent and 90 percent of the judges approve about half the appeals before them, Martin said. The rest vary. Among the 10 judges in Western Pennsylvania, the average was 42 percent for the nine months ending June 29. Smith clocked the highest award rate at 78 percent; Judge Leslie Perry Dowdell, the lowest at 15 percent, federal data show.
“How can we trust the fairness of ALJ decisions when even some of their own co-workers say that the decisions could be influenced by … political views and personal biases?” said U.S. Rep. Sam Johnson, R-Texas, speaking in prepared remarks in February. He chairs the House Subcommittee on Social Security.
The inspector general also found discrepancies in motivation, work ethic, staffing and case development through the appeals process.
The Social Security Administration opened a review of “inconsistent adjudication of similar claims across the country,” said lead researcher Harold J. Krent, dean at the Kent College of Law in Chicago. He hopes to complete a draft by the fall, including suggestions for change.
The Social Security Administration has moved toward more standardized decision-making, said Assistant Deputy Commissioner Jim Borland. He said the number of judges who allow nearly all claims has fallen by more than half since 2007.
“We have created new tools to focus on quality,” Borland said. “Each quarter, we train our adjudicators on the most complex, error-prone provisions of law and regulation.”
Still, a 2011 review by the administration identified concerns with about 22 percent of sampled award decisions by law judges and attorney adjudicators. Officials used a random pool of 3,692 decisions in that review. The review did not identify specific judges.
An internal Social Security Appeals Council overturned law judges’ orders in 2 percent of appealed cases in 2010. Four percent of decisions taken to the next appeals level — federal court — were overturned.
Split on changes
Pierce has suggested the government drop law judges from the process. He estimates their salaries and benefits cost more than $2 billion a year.
That money could go toward reviewing past awards and slashing benefits for “many thousands of beneficiaries who do not actually satisfy the standard of disability in the Social Security Act,” Pierce wrote in the journal Regulation last year.
But two law judges argue the problem sits with Congress and the Social Security Administration. Judge Jeffrey Wolfe of Oklahoma and Judge Dale Glendening of Georgia have called for a “top-to-bottom review” of the disability program. Appeals have flooded the system as a “direct result of expanded legislation” and private legal representation, they wrote.
Bukes, the retired judge in Mt. Lebanon, suggested strengthening the role of the Social Security inspector general to more aggressively investigate claimants.
“People in Congress, and people who run the Social Security Administration, don’t seem to care about matters of integrity and doing the right thing,” Bukes said. “They just want to get people off their back — and they just want to take the pressure off themselves.”
Adam Smeltz is a staff writer for Trib Total Media. He can be reached at 412-380-5676 or [email protected].