House investigators: Disability judges are too lax, follow-up reviews not done

WASHINGTON -- Social Security is approving disability benefits at strikingly high rates for people whose claims were rejected by field offices or state agencies, according to House investigators. Compounding the situation, the agency often fails to do required follow-up reviews months or years later to make sure people are still disabled.

Claims for benefits have increased by 25 percent since 2007, pushing the fund that supports the disability program to the brink of insolvency, which could mean reduced benefits. Social Security officials say the primary driver of the increase is demographic, mainly a surge in baby boomers who are more prone to disability as they age but are not quite old enough to qualify for retirement benefits.

The disability program has been swamped by benefit claims since the recession hit a few years ago. Last year, 3.2 million people applied for Social Security Disability or Supplemental Security Income.

In addition, however, management problems "lead to misspending" and add to the financial ills of the program, investigators from the House Oversight and Government Reform Committee say.

"Federal disability claims are often paid to individuals who are not legally entitled to receive them," three senior Republicans on the House committee declared in a March 11 letter to the agency. Among the signers was the committee's chairman, Rep. Darrell Issa of California.

Social Security acknowledges a backlog of 1.3 million overdue follow-up reviews to make sure people still qualify for benefits. But agency officials blame budget cuts for the backlog, saying Congress has denied the funds needed to clear it.

Social Security spokesman Mark Hinkle said the agency follows the strict legal definition of disability when awarding benefits. To qualify, a person is supposed to have a disability that prevents him from working and is expected to last at least a year or result in death.

"Even with this very strict standard, there has been growth in the disability program, and the primary reason for this growth is demographics," Hinkle said. He noted approval rates have declined as applications for benefits have increased.

The most common claimed disability was bone and muscle pain, including lower back pain, followed closely by mental disorders, according to the program's latest annual report.

"Pain cases and mental cases are extremely difficult because -- and even more so with mental cases -- there's no objective medical evidence," said Randall Frye, a Social Security administrative law judge in Charlotte, N.C. "It's all subjective."

Nearly 11 million disabled workers, spouses and children receive Social Security disability benefits. That's up from 7.6 million a decade ago. The average monthly benefit for a disabled worker is $1,130.

An additional 8.3 million people receive Supplemental Security Income, a separately funded disability program for low-income people.

If Congress doesn't act, the trust fund that supports Social Security disability will run out of money in 2016, according to projections by Social Security's trustees. 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 did in 1994. But that would worsen the finances of the retirement program, which is facing its own long-term financial problems.

The House oversight subcommittee on entitlements is scheduled to hold the first of several hearings on the disability program Thursday. The hearing will focus on the role of administrative law judges in awarding benefits.

Most Social Security disability claims are initially processed through a network of local Social Security Administration field offices and state agencies, usually Disability Determination Services, and most are rejected. If your claim is rejected, you can ask the field office or state agency to reconsider. If your claim is rejected again, you can appeal to an administrative law judge, who is employed by Social Security.

The hearing process takes an average of a little more than a year, according to Social Security statistics. The agency estimates there are 816,000 hearings pending.

So far this budget year, the vast majority of judges have approved benefits in more than half the cases they've decided, even though they were reviewing applications that had typically been rejected twice by state agencies, according to Social Security data.

Of the 1,560 judges who have decided at least 50 cases since October, 195 judges approved benefits in at least 75 percent of their cases, according to the data, which were analyzed by congressional investigators.

"This is not one or two judges out there just going rogue and saying they are going to approve a lot of cases," said Rep. James Lankford, R-Okla., chairman of the House Oversight Subcommittee on Energy, Policy, Health Care, and Entitlements. "This is a very, very high rate" of approving claims.

The union representing administrative law judges says judges are required to decide 500 to 700 cases a year in an effort to reduce the hearings backlog. The union says the requirement is an illegal quota that leads judges to sometimes award benefits they might otherwise deny just to keep up with the flow of cases, according to a federal lawsuit filed by the judges' union in April.

"I wouldn't want to suggest publicly that judges are not following the law or the regulations," said Frye, the North Carolina law judge who also is president of the Association of Administrative Law Judges. But, he added, "Would you want your surgeon to be on a quota system, to have to do so many surgeries every morning? Mistakes are going to be made when you force that kind of system on professional folks whose judgment, skill and experience are critical to coming to a good result."

The agency denies there is a case quota for judges, saying the standard is a productivity goal. The agency has declined to comment on the lawsuit. Former Social Security Commissioner Michael Astrue said he set the goal in 2007 to help reduce the hearings backlog.

Once people get benefits, their cases are supposed to be reviewed periodically to make sure they are still disabled. The reviews are called continuing disability reviews, or CDRs.

For people whose disabilities are expected to improve, CDRs should be done in six to 18 months, according a 2010 report by the agency's inspector general. If improvement is possible -- but not necessarily likely -- reviews should be done every three years. People with disabilities believed to be permanent should get reviews every five to seven years.

At the end of 1996, there was a backlog of 4.3 million overdue reviews. In response, Congress authorized about $4 billion to fund a seven-year effort to wipe it out, and the backlog was erased in 2002.

But after the funding dried up, the number of annual reviews performed by the agency decreased and the backlog grew. Last year, the agency conducted 443,000 continuing reviews.

President Barack Obama's proposed budget for next year includes $1.5 billion to address the backlog, a nearly 50 percent increase over present funding. With the increase, the agency says it would be able to conduct slightly more than 1 million reviews.

"We have completed every CDR funded by Congress, but our administrative budget has been significantly reduced, resulting in three straight years of funding levels nearly a billion dollars below the president's budget requests," Hinkle said. "As a result, we have lost more than 10,000 employees since the beginning of [fiscal year] 2011. We currently have a backlog of 1.3 million CDRs, which we would be able to address with adequate, dedicated program integrity funding from Congress."

------

Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap