Improper disability claims cost taxpayers $2 billion

WASHINGTON — A small group of Social Security judges have improperly approved disability claims for nearly 25,000 people who didn’t qualify, costing taxpayers $2 billion over the past seven years, government investigators conclude in a report being released Monday.

The price tag will grow by nearly $300 million next year because many of these people are still getting benefits, the report said.

Social Security’s office of inspector general is scheduled to release a report on the judges Monday. The Associated Press obtained a copy Friday.

Investigators examined cases decided by 44 judges who had been approving disability claims at unusually high rates. The judges were labeled “outliers” because they had approved 85 percent of the claims they had heard in at least two of the previous seven years. During these years, the judges decided at least 700 cases a year.

The judges represent about 4 percent of the administrative law judges, or ALJs, who decide disability claims for Social Security, the report said.

“The Social Security Administration’s failure to conduct timely medical eligibility reviews has resulted in rubber-stamped decisions that have and will continue to cost taxpayers billions in improper awards,” said Rep. Darrell Issa, R-Calif. “In failing to take meaningful disciplinary action at the Social Security Administration, even after the most egregious cases of mismanagement, taxpayers are left to wonder, who is looking after their tax dollars?”

Issa, who chairs the House Oversight Committee, requested the inspector general’s investigation, along with Rep. James Lankford, R-Okla., who chairs one of the panel’s subcommittees.

“These results demonstrate the fact that our greatest concerns have been true for years,” Lankford said. “SSA has allowed ALJs to carry large case loads and has encouraged quantity over quality.”

Social Security spokeswoman LaVenia LaVelle said it is important to note that administrative law judges have “qualified” independence in their decisions, “which allows them to issue decisions consistent with the law and agency policy, rather than decisions influenced by pressure to reach a particular result.”

“The primary purpose for the ALJs qualified decisional independence is to enhance public confidence in the essential fairness of an agency’s decision-making process,” LaVelle said.

The report said the Social Security Administration has improved oversight of judges in the past several years, reducing the number of judges that approve claims at unusually high rates.

The report also noted that 15 of the 44 judges have been disciplined, including one who was let go when his or her contract expired. None of judges was identified in the report.

Once investigators identified the 44 judges who were approving large numbers of claims, they randomly selected 275 claims that had been approved by these judges. Of these cases, investigators determined that 38 should have been denied or dismissed. Another 108 should have been sent back to the judge for further consideration. In all, investigators found “quality issues” with 216 of the cases — nearly 80 percent.

“Extrapolating these results to all the allowances by the 44 outlier ALJs over a 7-year period, we estimate these ALJs improperly approved disability benefits in approximately 24,900 cases, resulting in questionable costs of more than $2 billion,” the report said.

Social Security has been swamped with disability claims in the past several years, as millions of baby boomers near retirement. At the same time, the agency has been working to reduce a backlog of claims.

By the time disability cases reach an administrative law judge, the claims have been rejected at least once and often twice by workers in state offices.

It is often easier for a judge to approve a claim than to deny it, said a report issued by the House Oversight Committee earlier this year. Denials can be appealed, so judges must meticulously document their reasons. Approvals are generally accepted, ending the judge’s role in the case.

The union that represents administrative law judges complains that Social Security pressures judges to decide between 500 and 700 cases a year. The agency said the threshold is a goal.

D. Randall Frye is president of the Association of Administrative Law Judges and a judge in Charlotte, N.C. He said Friday that judges have to decide about two cases a day to meet what he calls a quota. Case files average about 500 pages, he said.

“If you consider the fact that a judge is under extraordinary pressure from the agency to do numbers, then you can understand how some errors get made,” Frye said. “How many people can read and comprehend and understand and then conduct a hearing on the evidence in those thousand pages? It’s an enormous task.”

The report comes as Social Security’s disability program edges toward the brink of insolvency. The trust fund that supports the disability program is projected to run out of money in 2016. At that point, the system will collect only enough money in payroll taxes to pay 80 percent of benefits, triggering an automatic 20 percent cut in benefits.

Congress could redirect money from Social Security’s much bigger retirement program to shore up the disability program, as it has several times in the past. But that would worsen the finances of the retirement program, which is facing its own long-term financial problems.

Nearly 11 million disabled workers, spouses and children get Social Security disability benefits. That’s a 45 percent increase from a decade ago. The average monthly benefit for a disabled worker is $1,146.

In order to qualify, people are supposed to have disabilities that prevent them from working and are expected to last at least a year or result in death.

“It’s unconscionable that judges have awarded $2 billion in questionable payouts,” said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. “After all, every dollar misspent or wrongly awarded depletes resources for those who are truly in need.”