[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

FOURTH IN A HEARING SERIES ON
SECURING THE FUTURE OF THE SOCIAL
SECURITY DISABILITY INSURANCE PROGRAM

=======================================================================

HEARING

before the

SUBCOMMITTEE ON SOCIAL SECURITY

of the

COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

JUNE 27, 2012

__________

Serial No. 112-SS18

__________

Printed for the use of the Committee on Ways and Means

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COMMITTEE ON WAYS AND MEANS

DAVE CAMP, Michigan, Chairman

WALLY HERGER, California SANDER M. LEVIN, Michigan
SAM JOHNSON, Texas CHARLES B. RANGEL, New York
KEVIN BRADY, Texas FORTNEY PETE STARK, California
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
GEOFF DAVIS, Kentucky XAVIER BECERRA, California
DAVID G. REICHERT, Washington LLOYD DOGGETT, Texas
CHARLES W. BOUSTANY, JR., Louisiana MIKE THOMPSON, California
PETER J. ROSKAM, Illinois JOHN B. LARSON, Connecticut
JIM GERLACH, Pennsylvania EARL BLUMENAUER, Oregon
TOM PRICE, Georgia RON KIND, Wisconsin
VERN BUCHANAN, Florida BILL PASCRELL, JR., New Jersey
ADRIAN SMITH, Nebraska SHELLEY BERKLEY, Nevada
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas
ERIK PAULSEN, Minnesota
KENNY MARCHANT, Texas
RICK BERG, North Dakota
DIANE BLACK, Tennessee
TOM REED, New York

Jennifer Safavian, Staff Director and General Counsel

Janice Mays, Minority Chief Counsel

______

SUBCOMMITTEE ON ON SOCIAL SECURITY

SAM JOHNSON, Texas, Chairman

KEVIN BRADY, Texas XAVIER BECERRA, California
PATRICK J. TIBERI, Ohio LLOYD DOGGETT, Texas
AARON SCHOCK, Illinois SHELLEY BERKLEY, Nevada
RICK BERG, North Dakota FORTNEY PETE STARK, California
ADRIAN SMITH, Nebraska
KENNY MARCHANT, Texas

C O N T E N T S

__________

Page

Advisory of June 27, 2012, announcing the hearing................ 2

WITNESSES

Panel 1:

The Hon. Michael J. Astrue, Commissioner, Social Security
Administration, Testimony...................................... 7

Panel 2:

Ethel Zelenske, Director of Government Affairs, National
Organization of Social Security Claimants' Representatives, on
behalf of the Consortium for Citizens with Disabilities Social
Security Task Force, Testimony................................. 38
The Hon. D. Randall Frye, President, Association of
Administrative Law Judges, Testimony........................... 50
Jeffrey Lubbers, Professor, American University Washington
College of Law, Testimony...................................... 63
Richard J. Pierce, Jr., Professor, The George Washington
University Law School, Testimony............................... 87

SUBMISSIONS FOR THE RECORD

David McCaskey................................................... 141
Disability Law Center, Inc....................................... 143
Federal Administrative Law Judges Conference..................... 145
Federal Bar Association.......................................... 147
Max Rae.......................................................... 157
National Organization of Social Security Claimants'
Representatives................................................ 159
Scott Daniels.................................................... 163

MATERIAL SUBMITTED FOR THE RECORD

Questions for the Record:

The Honorable Michael J. Astrue 1................................ 165
The Honorable Michael J. Astrue 2................................ 173
Ethel Zelenske 1................................................. 182
Ethel Zelenske 2................................................. 199
The Honorable D. Randall Frye.................................... 202
Richard J. Pierce, Jr............................................ 219

FOURTH IN A HEARING SERIES ON
SECURING THE FUTURE OF THE SOCIAL
SECURITY DISABILITY INSURANCE PROGRAM

----------

WEDNESDAY, JUNE 27, 2012

U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The subcommittee met, pursuant to call, at 2:00 p.m., in
Room B-318, Rayburn House Office Building, the Honorable Sam
Johnson [Chairman of the Subcommittee] presiding.
[The advisory of the hearing follows:]

HEARING ADVISORY

Chairman Johnson Announces the Fourth in a Hearing Series on Securing
the Future of the Social Security Disability Insurance Program

Wednesday, June 27, 2012

U.S. Congressman Sam Johnson (R-TX), Chairman of the House
Committee on Ways and Means Subcommittee on Social Security today
announced the fourth hearing in the series entitled, ``Securing the
Future of the Disability Insurance Program.'' This hearing will focus
on the disability appeals process. The hearing will take place on
Wednesday, June 27, 2012, in room B-318 Rayburn House Office Building,
beginning at 2:00 p.m.

In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Subcommittee and
for inclusion in the printed record of the hearing.

BACKGROUND:

Applications for disability benefits have reached historic levels
resulting from more women in the workforce, the recession and slow
recovery, and baby boomers reaching their disability-prone years. The
2012 Annual Report of the Board of Trustees projects that the
Disability Insurance (DI) program will be unable to pay full benefits
beginning in 2016.

In fiscal year (FY) 2011, the examiners at the State Disability
Determination Services (DDS) made an initial determination on almost
3.3 million disability claims. According to the Social Security
Administration's (SSA) longitudinal data, 79 percent of all disability
benefit awards are made at the DDS.

Claims that are not approved by the DDS, whether at the initial or
reconsideration level, can be appealed to the hearing level, where the
claimant has the opportunity for a face-to-face hearing before an
Administrative Law Judge (ALJ). In FY 2011, 662,765 hearing requests
were completed with 58 percent of requests awarded, 29 percent denied,
and 13 percent dismissed. The average waiting time for an ALJ decision
is 354 days. Today, 77 percent of ALJs are meeting the agency's annual
productivity expectation of 500-700 cases. Currently, individual ALJ
award rates vary from 1 to 99 percent.

Individuals whose claims are denied by an ALJ may appeal to the
SSA's Appeals Council (AC), which is the final step in the
administrative process. In addition, the AC may on its own motion
review an ALJ decision. In FY 2011, the AC made 103,681 decisions,
awarding benefits in 2 percent of its cases, denying benefits in 74
percent, and remanding 21 percent back to the ALJ level. Individuals
who are denied at the AC may pursue an appeal through the federal
district court, the federal court of appeals, and the U.S. Supreme
Court. In FY 2011, the federal courts decided 13,271 cases, awarding
benefits in 3 percent of cases, denying benefits in 42 percent, and
remanding back to the SSA 46 percent of cases. Of those remanded cases,
67 percent were subsequently allowed by an ALJ.

Further, over years the federal circuit courts have issued
decisions that conflict with the SSA's interpretation of the Social
Security Act (Act). In response, the SSA may appeal the decision or
implement the circuit court's decision through an acquiescence ruling.
While such rulings allow cases to be treated similarly within the
circuit, the result is that claimants are treated differently in
different circuits. There are currently 42 acquiescence rulings in
effect.

Under the Act, the ALJ decides on behalf of the Commissioner
whether benefits are due, and is required to apply the SSA's
regulations and policies; under the Administrative Procedure Act (APA),
the ALJ is an independent decision-maker whose work product cannot be
questioned. This tension between the Act and the APA makes program
oversight and quality review of outcomes difficult for the agency to
assess and manage.

In announcing the hearing, Social Security Subcommittee Chairman
Sam Johnson (R-TX) said, ``Those sidelined from working because of a
disability must be able to count on a fair and timely hearing by a
Social Security judge. Americans need to know that the same rules apply
to everyone. This hearing will tell us whether the appeals process we
have today works and if not, what changes ought to be made.''

FOCUS OF THE HEARING:

The hearing will focus on the Social Security appeals process
including its history, legal requirements, and the degree to which the
current process provides fair, accurate, and consistent outcomes while
balancing the needs of claimants and taxpayers.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note: Any person(s) and/or organization(s) wishing to submit
for the hearing record must follow the appropriate link on the hearing
page of the Committee website and complete the informational forms.
From the Committee homepage, http://waysandmeans.house.gov, select
``Hearings.'' Select the hearing for which you would like to submit,
and click on the link entitled, ``Click here to provide a submission
for the record.'' Once you have followed the online instructions,
submit all requested information. ATTACH your submission as a Word or
WordPerfect document, in compliance with the formatting requirements
listed below, by the close of business on Wednesday, July 11, 2012.
Finally, please note that due to the change in House mail policy, the
U.S. Capitol Police will refuse sealed-package deliveries to all House
Office Buildings. For questions, or if you encounter technical
problems, please call (202) 225-1721 or (202) 225-3625.

FORMATTING REQUIREMENTS:

The Committee relies on electronic submissions for printing the
official hearing record. As always, submissions will be included in the
record according to the discretion of the Committee. The Committee will
not alter the content of your submission, but we reserve the right to
format it according to our guidelines. Any submission provided to the
Committee by a witness, any supplementary materials submitted for the
printed record, and any written comments in response to a request for
written comments must conform to the guidelines listed below. Any
submission or supplementary item not in compliance with these
guidelines will not be printed, but will be maintained in the Committee
files for review and use by the Committee.

1. All submissions and supplementary materials must be provided in
Word or WordPerfect format and MUST NOT exceed a total of 10 pages,
including attachments. Witnesses and submitters are advised that the
Committee relies on electronic submissions for printing the official
hearing record.

2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.

3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental
sheet must accompany each submission listing the name, company,
address, telephone, and fax numbers of each witness.

The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.

Note: All Committee advisories and news releases are available on
the World Wide Web at http://www.waysandmeans.house.gov/.
Chairman JOHNSON. Welcome to the committee. Good afternoon.
It is our fourth hearing on Securing the Future of the Social
Security Disability Insurance Program. Today we will focus on
how Social Security disability claims are appealed and whether
the process works as well as claimants and taxpayers have a
right to expect.
In earlier hearings, we have highlighted the explosive
growth of the program. At a time when the number of workers
paying into the system has increased nearly 70 percent between
1970 and 2011, the number of people receiving disability
benefits has increased by over 300 percent, from 2.6 million
people to 10.4 million. By 2021, the number of beneficiaries
will exceed 12 million. By then, total benefits paid will reach
$196 billion. That is a 52 percent increase over the $129
billion paid in benefits over the last year.
Besides the overall workforce, more women in the workforce,
aging of the baby boomers into their disability-prone years,
and relaxed eligibility requirements have all contributed to
this growth.
The continued growth is putting a real strain on Social
Security disability. As we heard from the Public Trustees at
our hearing last week, without Congressional action the
Disability Insurance Trust Fund will only be able to pay 79
percent of benefits beginning 2016, just 4 years away. The path
we are on is unsustainable.
Further, disability applications have spiked even higher
than expected due to recession and the snail's pace recovery,
reaching an unprecedented 3.3 million last year. Resulting
appeals have further increased pressure on an appeals process
that is struggling to keep up.
Americans are also paying more for Social Security to
administer its programs. Costs are up 68 percent compared to 10
years ago, and last year administering disability programs cost
nearly $7 billion, two-thirds of Social Security's operating
budget of $11.4 billion.
Turning to the appeals process, those whose initial claims
for benefits have been denied have the right to appeal through
four levels of appeal: Reconsideration by the State agency,
hearing by an Administrative Law Judge, review by the Appeals
Council, and Federal court review. An open record allows
claimants to add new evidence to the file through every step of
the appeals process. Even though about 79 percent of all awards
are made at the State Disability Determination Services,
according to Social Security, last year about 860,000 claimants
filed appeals to appear before an Administrative Law Judge.
Americans are rightly paying attention to the hearing
process. Even though claimants are waiting close to a year on
average for a decision, almost 12 percent of ALJs decide 200 or
fewer cases per year. This is in spite of the fact that Social
Security has asked these judges to do 500 to 700 cases
annually. Also, the decisions of so-called outlier judges who
deny or allow most of the cases they hear can't be questioned.
The claimants' representatives are part of a billion
dollar-plus a year industry encouraging appeals and making a
living by collecting their fees from benefits awarded their
clients. Further, when cases are appealed to Federal courts,
the courts have taken it upon themselves to reinterpret what
the Social Security Act requires, resulting in varying policies
applied in different parts of the country in what is supposed
to be a national program.
Now, I know some of my colleagues believe that all of these
problems can be solved if we will just give Social Security
more money. In fact, over the last 6 years, funds have been
poured into the hearing level for ALJ hiring, staff hiring, new
offices, and technology fixes. And while service has improved,
it seems success is always just a little further down the road
and depends on even more resources.
Yet, in these tough fiscal times, Social Security has done
well. Its operating budget increased this year compared to last
year despite a 1.5 percent decrease in the discretionary
spending cap. In fact, while Social Security is subject to the
same long-term domestic spending limit enacted in the Budget
Control Act, that same bill authorized an additional $11
billion over the budget caps for Social Security to increase
continuing eligibility reviews in its disability programs.
There were 95 Democrats, including the minority leader and the
ranking member of the full committee, who supported the bill.
Understanding why the appeals process works the way it does
is just as important as making sure that those who deserve
benefits receive them. So let us ask the hard questions to
determine if we can fundamentally do better. Why do over 20
percent of the claimants who are ultimately awarded benefits
have to wait at least a year for a decision? How can benefits
be awarded to those who qualify as soon in the process as
possible, and why does Social Security channel so many of its
resources to the most expensive step in the appeals process,
even when the cost to process a case before an ALJ is more than
twice what it costs a State agency to make the same decision?
Why aren't claimants' attorneys doing a better job of
submitting all of the evidence earlier? Should representatives
be able to encourage a client who has waited months for a
hearing to wait even longer so they will get a judge who is
more likely to award them benefits? And why do some judges hold
hearings for 10 minutes and others for 2 hours? And some of
them don't even hold them.
Today, we have a number of outstanding witnesses before us,
including the Commissioner who has done more to engage the
attention of Congress on a wide array of needed improvements to
the appeals process than any other Commissioner in decades. So,
let us take a good look at all sides of this process and find
out what we can do better for everyone. I want to thank you
again for being here.
And I now recognize the ranking member, Mr. Becerra, for
his opening remarks.
Mr. BECERRA. Mr. Chairman, thank you very much, and thanks
for calling this fourth hearing in our series focusing on
Social Security's Disability Insurance Program. Before we delve
into the details of Social Security's appeal process, I want to
first take a step back and look at the big picture.
Social Security is vital to millions of severely disabled
American workers and their families. The benefits are modest,
averaging just over $13,000 a year or about $35 a day for a
typical disabled worker. These benefits, however, are a
lifeline for the more than half of the disability insurance
recipients, the DI recipients, who would live in poverty
without Social Security.
DI recipients are only a small fraction of the most
vulnerable Americans with disabilities and serious illness. The
eligibility criteria to qualify for Social Security disability
are tough. Social Security's appeals process helps ensure that
all workers who are eligible and who have earned DI receive it.
The disability application process begins with the State
Disability Determination Service, or DDS, which makes a
decision on the application. The DDS is an important part of
the disability determination process, but alone, it is not
always sufficient to ensure that individuals get the disability
benefits that they have earned. The decision about whether an
individual is disabled enough to qualify for benefits can be a
difficult one.
In addition, there can be complicating factors in
individual cases. For example, some people with disabilities do
not have access to medical care and therefore they do not have
the medical records needed to prove their case. Recognizing
these realities and challenges, Congress and the Social
Security Administration created an appeals process to help
ensure that everyone who meets the eligibility requirements
gets the benefits that they have earned.
The current appeals process has a number of strengths, and
of course there is always room for improvement. It is designed
to be fair and accessible. It is non-adversarial so judges can
focus on fact finding and applying the law. It is impartial
because independent judges take a fresh look at the case, and
their decisions are not based on meeting certain allowances or
denial rates, and it is face to face, and that may be the first
time that a person who is claiming disability may see an
evaluator face to face and actually be able to talk to that
particular evaluator.
We are going to hear a number of ideas today about how to
improve the appeals process. I will be evaluating those
different ideas using a very simple standard. Will it ensure
that Americans who are eligible for benefits are able to get
them or will it create procedural hurdles or other obstacles
that would deny access to benefits that they have otherwise
earned?
Budget decisions by Congress also affect whether Social
Security is fair to hardworking Americans and their families.
We have seen how the Social Security Administration can reduce
waiting times when Congress provides adequate funding for SSA
to process claims quickly and accurately. In 2008, waiting
times for appeals hearings were at an all-time high of 535 days
of waiting. In fiscal year 2009 and 2010, Congress, then under
Democratic control, provided SSA with a total of $2.2 billion
worth of new resources to reduce backlogs, and waiting times
dropped to 340 days. Still a lot, but compared to 535 days, far
better.
This current Congress has cut the Social Security
Administration's budget in 2011 and 2012. With less funding and
fewer employees, it is inevitable that hardworking Americans
will have to wait longer to receive the benefits that they have
earned. We are already starting to see the negative effects of
these budget cuts. Waiting times for initial benefit decisions
are on the rise and are likely to go from 111 days to over 130
days by the end of this year. Waiting times for appeals
hearings have crept up from the 340 days in October of 2011 to
the current wait time of 350 days. So once again, we are
heading in the wrong direction when it comes to Americans
getting the benefits they have earned.
SSA is now facing an even bigger cut under what is called
sequestration, the automatic cuts scheduled by the Budget
Control Act passed last year. Although Social Security benefits
are protected, under sequestration if Congress doesn't act
soon, SSA's operating budget will be cut by more than $1
billion on January 2 even though 100 percent of the costs of
administering Social Security is paid for by workers through
their Social Security taxes that they pay and put into the
trust fund. A billion dollar cut to SSA would translate into 40
days where SSA offices would be closed over the course of a
year. No one should be surprised if these harsh cuts to SSA's
budget damage Social Security's well-earned reputation and
undercut SSA's ability to continue to capably serve Americans
as it has for over 77 years.
Mr. Chairman, the most immediate threat to the Social
Security disability appeals process is the budget cuts that
would prevent appeals from being heard at all. I hope we can
work together to make sure Americans get the Social Security
benefits that they have earned and deserved, and I today look
forward to our witnesses' comments on how the appeals process
itself can be improved.
And with that, I yield back.
Chairman JOHNSON. Thank you. As is customary, any member is
welcome to submit a statement for the record. And before we
move to our testimony, I want to remind our witnesses to please
limit your oral statement to 5 minutes. However, without
objection, all the written testimony will be made part of the
hearing record.
We have two panels today. The first one is a single
witness, Commissioner of Social Security, Michael J. Astrue.
Welcome, Commissioner. You may proceed.

STATEMENT OF THE HONORABLE MICHAEL J. ASTRUE, COMMISSIONER,
SOCIAL SECURITY ADMINISTRATION

Mr. ASTRUE. Thank you, Mr. Chairman.
Mr. Chairman, Ranking Member Becerra, Members of the
Subcommittee. During my first week as Commissioner in February
of 2007, I testified before this subcommittee about the
hearings backlog. To put it mildly, you were extremely upset
about the delays your constituents faced while waiting for a
disability decision. The backlogs had steadily risen throughout
the decade, and the plan I inherited to fix those backlogs was
draining resources and making the problem worse.
At that time, over 63,000 people had been waiting over
1,000 days for their hearing, some of them were waiting as long
as 1,400 days. We were failing the public.
Rather than devise yet another signature initiative that
would not stand the test of time, we went back to the basics.
We developed an operational plan that focused on the nitty-
gritty work of truly managing the unprecedented hearings
workload. We made hundreds of incremental changes, using video
more widely, improving information technology, simplifying
regulations, standardizing business processes, and establishing
ALJ productivity expectations to name just a few. We also
committed the resources our employees needed to get this work
done and done right.
This plan has worked. Average processing time which stood
at 532 days in August of 2008 steadily declined for more than 3
years, reaching its lowest point of 340 days in October 2011.
In 2007, filing rates had been stable for some time. So
looking at the number of pending cases was a reasonable, if
imperfect, method to measure progress. As the recession hit and
the number of requests for a hearing dramatically increased, we
steadily improved our performance when measured by average
processing time, the best metric for tracking progress,
particularly in times when filings were changing rapidly.
Like a line in a store, the customer's experience depends
not on how many other people are waiting, but on how quickly we
help them. In August 2008, people waited an average of 532
days. Today, that is about 350 days.
Average processing times also became more uniform around
the country. The most dramatic improvements have occurred in
the most backlogged offices. Average processing time in Atlanta
North dropped from 900 days to 351 days. Oak Park, Michigan,
improved from 764 days to 254 days. Columbus, Ohio, went from
881 days to 351 days. Currently, no office in the country has
an average processing time greater than 475 days. Fifteen
offices have hit our ultimate goal of 270 days or less, and
many others are getting close.
These numbers are even more impressive because we have
given priority to the oldest cases which are generally the most
complex and time consuming. Five years ago, we defined an aged
case as one waiting over 1,000 days for a decision. Through the
steady work of our employees, we now define an aged case as one
taking over 725 days to complete. Next fiscal year, our
management goal is to raise the bar on ourselves again by
focusing on completing all cases over 675 days. This emphasis
on eliminating aged cases increases average processing times.
So we also look ahead to see how long people in the queue have
been waiting for a hearing. Today, that number is just 208
days, and we are hopeful that figure will drop again next year.
By contrast, the average wait was 324 days at the beginning of
fiscal year 2007.
Despite our employees' hard work, the progress in
addressing our hearings backlog is happening more slowly than
the public deserves. If we are not adequately funded and we
cannot timely hire enough qualified ALJs and support staff, our
progress will erode. We have already had to make decisions that
have slowed progress such as canceling our plans to open eight
new hearing offices in Alabama, California, Indiana, Michigan,
Minnesota, Montana, New York, and Texas.
Amid huge economic and budgetary unpredictability, we have
stayed focused on eliminating the causes of your moral outrage
in 2007. Now we need Congress to enact the President's budget
request so that we can meet our commitments to the American
public.
Thank you, and I will be happy to answer any questions you
may have.
[The prepared statement of Mr. Astrue follows:]

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Chairman JOHNSON. Thank you, sir. Appreciate your
testimony. And since this may be your last meeting with us, we
thank you for your service to Social Security and to the
government.
Mr. ASTRUE. Thank you very much. I have been actually
waxing a little sentimental. I realized it has been 27 years
since I first testified before the Ways and Means Committee,
and it is a real privilege to work with an institution that
touches the American public in so many ways from taxes to
health care to Social Security to trade.
Chairman JOHNSON. Thank you. As is customary, for each
round of questions, I will limit my time to 5 minutes and ask
my colleagues to also limit their questioning to 5 minutes as
well.
Options that would allow Social Security to better manage
the hearing process, Commissioner, protections are included in
the Administrative Procedures Act to ensure that Administrative
Law Judges are able to make decisions without agency
interference. In our next panel, Judge Frye testifies that
using an APA official protects a claimant's constitutional
right to due process, but Professor Lubbers from our next panel
says the Supreme Court has not agreed with this rationale in
the case of hearing for benefits. Also, Professor Lubbers
testifies that ALJs are not required by Social Security law.
You have said that ALJ decisional independence places
limits on your ability to manage the performance of judges even
when some judges process far fewer or far more cases than peers
or award or deny far more or fewer cases than their peers. And
you have also discussed your challenges with the Office of
Personnel Management providing you with qualified ALJ
candidates, including the fact that they don't do background
checks, even for lifetime appointments.
And you have also told us that disciplinary action against
an ALJ takes up to 2 years to process while the judge can stay
home with full pay and benefits. Given all of this, why do we
need ALJs at all to do the work?
Mr. ASTRUE. I was trying to figure out what the question
was going to be.
I think the question has been asked several times before,
and I know we got Professor Lubbers' testimony right before the
hearing so I did take a quick look at the statute. The general
authorizing language for conducting hearings doesn't specify
administrative law judges. That didn't stop me from trying to
look at the statute, and I think there is some--we will get
back to you on the record, but it looks to me, and I will be
interested in what my friend, Mr. Lubbers, and what Judge Frye
have to say, it does look to me in other places in the statute
that Congress has assumed that the ALJs are now part of the
process, and I think we will have to go back and give you a
formal opinion for the record on that. But I am looking
specifically at 42 USC 423(h) as one example where Congress
seems to assume that they are in fact embedded in the process
at this time.
[The information follows: Transcript Insert 1]

[GRAPHIC] [TIFF OMITTED] T0262.016

Chairman JOHNSON. Yeah. I don't think it is mandatory at
all under congressional edict. Professor Pierce on our next
panel recommends eliminating the role of ALJs as decision
makers or at least amending the law to make it clear that
Social Security has the power to evaluate the performance of
judges and take needed action. And in my opinion, you don't
have that.
What are the pros and cons of changing the law to make
clear that Social Security has the power to hire their own
judges and evaluate their performance?
Mr. ASTRUE. Well, I certainly think that when this
committee was regularly reviewing the performance of the Office
of Personnel Management regarding the ALJ process, that was
very constructive from my point of view. We saw real progress
that we had not seen in the previous decade. Since the last
time that we testified together, I think that it has not--that
change has disappeared. And so I do think--Commissioners have
been testifying since 1977 before this committee about
difficulties with OPM on the administrative law judge process.
I think that you need to look at this with some intensity and
say has that agency consistently and timely provided quality
judges, not only for us, but for all Federal agencies.
And I think that the definition of qualified that they use
is totally inappropriate because in order to be a judge, there
is a high level of professional accomplishment and a high level
of moral character that should be required. And when we say
well qualified, we are using a different standard from what the
Office of Personnel Management has been using, and I think the
fact that we have made so much progress in the last 5 years
comes from using that higher standard.
Something that I think you should be pleased about, Mr.
Johnson, because I know it has been one of your concerns, is
the number of outliers has been reduced dramatically in the
last 5 years. If you look, you have used the 85 percent
standard. We have gone from almost 20 percent to about 5
percent that are allowing more than 85 percent of those cases,
and that is largely the influence of hiring right. A judge who
is arrogant, who behaves badly, is also not going to apply the
statute that you have enacted faithfully.
So I think the emphasis on quality in the judges is
important, and I have to say, over decades I don't think the
standard of the Office of Personnel Management has been high
enough.
Chairman JOHNSON. Well, I think they have no requirements
for judges, and we need to get some in. I am going to ask one
more question.
Last December, the Wall Street Journal published an article
entitled ``Two lawyers strike gold in U.S. disability system.''
The article is about a law firm, Binder & Binder, which
collected $88 million in fees, all paid from claimants' past-
due benefits. In their testimony, Professors Pierce and Lubbers
of our next panel refer to the incentive representatives may
have had to drag out cases since the fees are a percentage of
the client's past-due benefits.
Is it true that the longer it takes to get a decision, the
higher the representatives' fee will be?
Mr. ASTRUE. Yes, it is, Mr. Chairman.
Chairman JOHNSON. And you don't agree with that, do you?
Mr. ASTRUE. Well, I think it has been a concern for many
years. In I think it was 1987 when this subcommittee took up
the attorney fee matter, I was part of the team on the other
side that raised some concerns about the economic incentives of
the current system. So it is clearly a risk.
I think most of the attorneys and representatives most of
the time are very honorable about not abusing the system, but
the incentive is there, and I think we do see a significant
minority of representatives abusing the system from time to
time, both in this and manipulation of assignment of judges.
Chairman JOHNSON. Part of the problem is they are appointed
for life. You can't get rid of them.
Mr. Becerra, you are recognized for 5 minutes.
Mr. BECERRA. Mr. Chairman, thank you, and Commissioner,
thank you for being here and also thank you for your years of
service to the people of this country.
Let me make sure, I want to be clear on something. The FICA
tax, which everyone pays when they get their paycheck every
week or month, they see a deduction for FICA, that is the money
that goes into Social Security and Medicare, the FICA tax that
we see, the contribution that workers make and have been making
for 77 years to the Social Security Trust Fund and the Social
Security system.
That FICA tax money, which is used to cover Social
Security, covers benefits and also your operating expenses.
Mr. ASTRUE. Yes. It is a specific appropriation. We can't
just tap that money. It is a specific appropriation that is
then drawn from the trust fund, yes.
Mr. BECERRA. So Congress sends you money, it is
appropriated money, and ultimately Congress gets reimbursed by
the trust fund for the money it has given to you to operate.
Mr. ASTRUE. I am not sure I fully follow the question, Mr.
Becerra.
Mr. BECERRA. So the money for you to pay your employees and
to cover all of your overhead, your lights, your computers, you
don't get extracted directly from the trust fund. The trust
fund has the money. You get an appropriated amount, then
Congress makes sure that the trust fund covers what the
appropriation was?
Mr. ASTRUE. Yes, I think that is essentially right.
Mr. BECERRA. So essentially workers, when they make that
tax contribution, the FICA tax contribution, they are paying
for the cost not just of the benefits for today's Americans who
are retired and getting a pension benefit through Social
Security or who are disabled and getting a benefit, those
workers through their FICA taxes are also paying for the cost
of administering all of the Social Security program?
Mr. ASTRUE. Yes, that is right.
Mr. BECERRA. Yet, we are finding that Congress, and I think
you said something in your testimony, that Congress so far this
year is--you are going to be getting a lower amount than you
requested in your budget. I think you said something in your
testimony. I was struck by it. Something over the past 2 years,
the gap between what the Social Security Administration needs
to serve the American public and the resources actually
appropriated by Congress was the biggest, the gap was the
biggest it had been in 20 years. So as I say, it has been more
than $2 billion short of what it needed to process all claims
promptly, reduce wait times for disability cases, answer its
phones and perform all of the other work it does to serve the
American public.
So no matter how hard your employees at SSA work or how
well you prioritize, eventually Americans are going to be
paying the price for the shortchanging of your agency when it
comes to the budgetary needs that you have. And so when you
mentioned the wait times for these appeals hearings or the wait
times to have your initial application processed, that is the
consequence of not having the resources to get the work done.
Mr. ASTRUE. Yes, and let me stress that I think we are
different from most other Federal agencies in that because of
demographics and because of the recession our workloads have
gone up dramatically. You know, we are not like certain other
agencies that can simply prioritize things differently. When
people come and apply for benefits we have to process those
claims, we have to process the appeals. We are taking in more
than a million applications more each year between disability
and retirement than what we had originally projected driven by
the recession, and I think in fact if this recession had been
less deep and less long, it would have made a huge impact on
the hearings backlog. I think we would be at the 270 by now if
the recession hadn't been so deep and long.
Mr. BECERRA. So the recession is making the problem deeper
and more people are applying but you are getting less money to
try to operate and provide those services. My understanding is
that you have already had to close a case processing center and
that you have had to cancel the opening of eight new hearing
offices and a telephone service center that could have served
quite a few of these folks who are applying for services and
benefits.
Let me ask one other question with regard to your ALJ
policy, the policy for these judges, and thank you, by the way,
for your commitment to review some of the policy changes that
you are trying to move forward with, and in this case with
regard to the disclosure of the names of these judges at the
hearing level in advance of the hearing, we had a conversation
about that. Can you real quickly, and my time is going to
expire soon, just give me a sense of the status of your review
and when do you expect to take steps to revise this policy in
light of the concerns that have been raised about the perhaps
over broad nature of the policy itself and how it might be
detrimental to those applicants for disability benefits.
Mr. ASTRUE. Right. We viewed the policy, I think, and have
from the get-go really as a stopgap until we come up with a
broader, more effective solution. I think this is an issue that
caught us a little bit off guard. I don't think until our
management information got better we didn't realize how much
the system was being manipulated and in how many ways and at
what cost to the integrity of the system.
We have a team working on this. I have met with the team.
We are meeting again the second week in July. I think on the
initial reaction, we don't think--the good news is we don't
think that we need to come to Congress for statutory changes.
We think that we can address this with a pretty complicated mix
of administrative initiatives and regulatory initiatives. What
the exact mix of those are and whether the administrative
things that we could do more quickly make sense without some of
the regulatory initiatives, we are not sure yet. So we have, to
say we have a plan at the moment would be overstated. I think
we have more of a plan to have a plan. But I think we will have
a better sense late July, early August. But it would have to go
through the rulemaking process on key parts of it. That will
mean it will be a little slow. It is a particularly difficult
time of the year to get things through the rulemaking process
but we are working on it. We will do the best we can as fast as
we can.
Mr. BECERRA. Thank you. Thank you, Mr. Chairman.
Chairman JOHNSON. Thank you. Mr. Marchant, you are
recognized.
Mr. MARCHANT. Thank you, Mr. Chairman. Welcome,
Commissioner. Thank you for your visit last week. We had a good
visit.
Mr. ASTRUE. It was indeed.
Mr. MARCHANT. I appreciate it. State Disability
Determinations award roughly 79 percent of all awards at a cost
of about a third of what it costs a judge to process a request
for a hearing. Beyond compassionate allowances and quick
determination screenings that you already have in place, what
can be done, what more can be done to resolve the deserving
claims at the State level?
Mr. ASTRUE. I think that is a great question. I think--and
very timely. We just issued a press release I believe on Monday
on what I think is one of the most significant things will
change the basic paradigm of how we do business.
An enormous amount of our administrative budget is spent
chasing down, collecting, and organizing stray, generally paper
medical records. And we often don't know for sure that we have
them all. So it is not only a big cost, a big source of cost
and delay but also of inaccurate decisions. When we move to a
world where most Americans have a completely electronic medical
record, it will enormously improve what we are doing. We have
done some small pilots with a few of the providers and insurers
who are already there. What we have started now with Kaiser
Permanente is our first large-scale effort in this area, and I
think this is going to be tremendously important, and it is
going to take probably 3 to 5 years to work out the
arrangements, and the private sector is moving slowly for a
variety of reasons. But we are going to get there, and you will
see 3 to 5 years from now a dramatic improvement I think in our
costs, our speed, and our quality when we can essentially push
a button and in most cases get a complete medical record
electronically.
Mr. MARCHANT. And during the entire process, the medical
record stays open throughout the entire appeals process?
Mr. ASTRUE. Yes, that is right.
Mr. MARCHANT. So is there any merit to closing the records
at some point so that somebody that is making the decision can
actually make a decision without having to the next day take in
new information and make another decision? Is there a fair
process where you close the case?
Mr. ASTRUE. Well, we thought so, and in the New England
region, we still have closure of the record before the ALJ 5
days before the hearing.
To use the phrase from the testimony, to put it mildly,
this subcommittee took umbrage when we tried to propose that
notice and comment rulemaking and made it extremely difficult
for the agency to pursue that. But we proposed that and had to
withdraw that in 2008, I believe.
Mr. MARCHANT. Okay. And the last question I have for you,
and I come from a State legislative background, and I believe
that the local, State determinations are probably the most
efficient ones. But with the rise of disability claims that we
have seen in the last few years and with the State having an
integral part of the qualification for unemployment benefits
and the State also having an escalating Medicaid expense, have
you noticed, or is there a trendline where States are trying to
shift people from unemployment into disability and then from
disability where they stay on disability, I think it is 2
years, and then they go from Medicaid to Medicare, and the
State then basically can shift them from the Medicaid element
where they are putting a match in over into the Medicare
element? Do you see States that are developing a philosophy
towards that?
Mr. ASTRUE. Anecdotally, we think the answer to that
question is yes to some extent. Maybe not so much unemployment
as TANF. We actually brought in an academic expert a few years
ago to help us try to track and document that. It has been very
difficult to provide hard evidence of that. But we do think
that there are States that for their own budget reasons are
putting up barriers to State benefits and requiring an
application to us for disability even though there is no reason
to believe that the person is disabled. So we do see some of
that. How big, how big a factor that is, I don't think that we
know. I think it is relatively small, but it is an abuse that
exists and we wish that States would not do that.
Mr. MARCHANT. Thank you, Mr. Chairman.
Chairman JOHNSON. Thank you. Mr. Brady, you are recognized.
Mr. BRADY. Thank you for the discussion, Representative
Marchant, about the need to make these determinations as early
as possible. But Commissioner, thank you for your service and
leadership of the agency and wish you well.
Mr. ASTRUE. Thank you.
Mr. BRADY. Going forward.
You have a great servant's heart. So thanks for what you
are doing.
Mr. ASTRUE. Thank you.
Mr. BRADY. Two questions. One dealing with fraud both at
the front end and those applying for it at the back end. There
are people who are capable of working but--and do but defraud
us in the process of continuing disability reviews. What is the
status of our efforts to fight fraud within disability and what
more can we do again to capture the money we really need for
people who are truly disabled?
Mr. ASTRUE. Sure. So, I know that I and other Commissioners
have been through this in the past. And I know that there have
been efforts to come up with a mechanism that would allow us to
do this that hasn't been successful yet. But the single most
important thing is timely review of existing beneficiaries. We
all know that there is an enormous payback to the taxpayer from
timely continuing disability reviews. Those have dropped
dramatically in the years before I got here. They have gone up
dramatically. But remember, I don't set them. I come and I
plead and I beg here in Congress, and I have been somewhat
successful so the number has gone up pretty significantly and
substantially but it is not where it should be. And this past
year we had to reverse, we were geared up, we thought, both
committees in appropriations passed 582,000 and then at the
last minute the bill passed and the number was 435. And we had
to not only not hit a more appropriate level, we had to
reallocate a lot of resources halfway through the fiscal year.
Coming up with a mechanism so that the agency has the
resources to do that work is, I think, tremendously important.
I think some of the new technologies that we have put in place
have very high returns as well. We have ways now of checking
assets with banks. The early returns were 20 to 1 return. We
don't think we are going to see that on an ongoing basis. We
don't know yet what the return is, but the return on that is
very high. We are trying to come up with a similar system for
other types of assets, real estate assets, and things like
that.
Also, I put in a pitch for the Inspector General for budget
reasons, the number of CDI units which are these joint SSA, IG,
local law enforcement units which have been very successful, I
think, on the whole. The number of those that we have are going
down rather than up, and I think that is penny wise and pound
foolish.
Mr. BRADY. How about at the front end? One, thank you for
that comment on timely reviews. How about on the front end and
through the process, not just those who are hiding assets but
those, and providers who are enabling those to try to defraud
the system with medical disabilities. What percentage of
applicants are we now identifying through the process on the
front end?
Mr. ASTRUE. Right.
Mr. BRADY. You know, who are attempting to defraud the
system?
Mr. ASTRUE. It is relatively small, but the disability
examiners are actually quite good about being alert on these
things and they do do a significant number of referrals. Some
of our administrative law judges have been very sharp about
this, too. One of the more spectacular ones that we are working
on now came because of a very alert ALJ.
I would say if you were going to focus on one thing, I
think that the treating physician rule historically, you know,
relied on a different paradigm. You know, there was a time when
we all had a Marcus Welby as a personal physician, and that is
not true anymore. In fact, we are increasingly seeing
physicians who are essentially extensions of the lawyers doing
the representation, I mean often sometimes physically housed
within those complexes.
I don't know that those kinds of physicians should be given
the same deference that the court interpretations of your
statute require us to do, and the courts are also all over the
place in terms of treating physician.
I know there is always a lot of skepticism about the
agency's view on this. So what I would say to you is get some
good outside advice on that. At least reconcile the conflicting
court interpretations so that we do this uniformly and fairly
around the country. But I think it is also a fair question to
ask, given how the world has changed, is the rule that struck
people as appropriate 34 years ago still appropriate today.
Mr. BRADY. Are there significant resources and are there
insignificant punishments for either physicians who are
complicit or complainants' reps who are complicit? Do you think
we have what is needed in place to prevent that type of fraud?
Mr. ASTRUE. Probably not. I think we have tried to do more.
I will be candid with you. I think that there is probably more
we can do administratively. We are struggling with the
resources, I think, but we are trying to do that. I think there
probably are some places where we could use some more help from
the Congress. So if I could get back to you on the answer for
the record on that I think it would be a better response.
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Mr. BRADY. Great. Thank you, Mr. Chairman.
Chairman JOHNSON. Thank you. Mr. Doggett.
Mr. DOGGETT. Thank you, Mr. Chairman. And thank you,
Commissioner.
I have a follow-up on the same two concerns that Mr.
Becerra raised.
Mr. ASTRUE. Sure.
Mr. DOGGETT. First with reference to your budget, the
moneys that finance your budget are from taxes that have
already been paid and are being paid. Those taxes are not going
down. It is a question of whether we provide the resources to
Social Security to effectively and efficiently provide the
services that a worker who has the misfortune of disability
would expect. And you mentioned some goals on appeals, for
example.
Is it correct that currently, that you do not have the
resources to replace Social Security Administration employees
who retire or depart to another job?
Mr. ASTRUE. As a general matter, Mr. Doggett, yes, that is
correct. We have got a hiring freeze in place with some very
limited exceptions that relate to backlog reduction.
In addition, we have, and I will give you the exact number
for the record, probably slightly over a thousand temporary
employees that basically we are waiting to see what happens
with sequestration. We have gone up to the 1 percent statutory
limit more or less on the retired annuitants. We have also, to
the extent that we have made exceptions in the hiring over a
lot of objections from some of my people, I have said the
people that have been with us the longest, that is where our
obligation is first. So to the extent that we have done hiring
in the last 6 months it has been temporary so that if we have a
deep cut under sequestration, we will let those people go and
take less out of the people that have been working for us for
20, 30 years. So we have got a large group of people who are
hanging in the balance waiting to see what happens with
sequestration.
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Mr. DOGGETT. And while your oral testimony referred to the
significant progress you have made in reducing the backlog on
the time that an appeal takes, those numbers are beginning to
trend back up, aren't they? In recent months they have gone up
from the low that you talked about last October?
Mr. ASTRUE. Slightly. And I think statistically I would
call it approximately level. And there is some wobble. I am
swearing in 40 judges tomorrow and we have got some more
coming. So I think that by the end of the year there is a good
chance that we will be essentially level for most of the year.
Mr. DOGGETT. Is it unlikely that you can meet your
objective of 270 days unless your budget is fully funded?
Mr. ASTRUE. Yes. So let me, let me be totally forthcoming.
I think we were making extremely good progress on the 270.
There were doubters. So Congress asked GAO to look at it and
they gave us a 78 percent probability a couple of years ago of
hitting it. I will be honest with you, it is very unlikely we
are going to hit the 270 on time now. And it is a combination
of the recession, timely judges from OPM, and funding for
staff. I am doing all I can on each of those three things, but
those are the critical factors.
Mr. DOGGETT. Let me turn to my second concern, and that is
the question of the change that was made last December so that
someone who is coming to bring an appeal can find out who the
judge is.
Mr. ASTRUE. Right.
Mr. DOGGETT. And I have been a judge before coming to
Congress and I have also been a litigator, and it was always
important to me whether I was bringing a claim or defending a
claim to know who I would be presenting that claim to. As it
relates to in-person conferences, not video conferences, is
there any good reason why the practice that Social Security has
followed in the past of letting someone know before they walk
in the hearing room who the judge is, why that ought not to be
continued?
Mr. ASTRUE. Yes. So I think in fact it embodies a fairly
important principal of justice. And again, I think if we had
realized the extent to which random assignment was being
manipulated, we would have acted sooner, and that is because
when you have as much manipulation as we are concerned that we
have, the consequence of that is that the 15 percent of the
claimants who are not represented are, by definition, getting
the stingiest judges. And I don't think, I mean, these tend to
be the people who are the least sophisticated and tend to be
the people who are the most impoverished. And I don't know how
you can say----
Mr. DOGGETT. If it is in fact random assignment, why can't
you announce who the judge is before you walk in the room?
Mr. ASTRUE. But Mr. Doggett, it is not random assignment.
What we have discovered is that claimants' reps have found a
number of ways to manipulate the system and that the principle
of random assignment has been violated in any of a number of
ways. This is why it is taking us so long to come up with a
fix. It is not just the video hearings, it is not just, you
know, the particular problem we had at Huntington. As we have
dug into this, there are a variety of problems around the
system that come from nonrandom, you know, the random
assignment being violated. And what we are trying to do is get
a handle on that as best we can with a permanent solution. But
in the meantime, I don't think it is fair or appropriate that
the people who are, as a general matter, on the bottom end of
the spectrum get the judges that are least likely to award them
benefits. I just don't--I mean, we are supposed to be
representing these people, too. And that is what judges are
supposed to do when they come into hearings. They are not
supposed to be----
Mr. DOGGETT. I hope you will supplement the record on
specifically what--if there is random assignments, specifically
what has occurred that you can't resolve in some other way than
denying an opportunity to find out who the judge is before you
walk in the room and on video conferences specifically so long
as there is agreement that if you agree to a video conference,
you get the judge that is assigned in the video conference,
what is wrong with that?
Mr. ASTRUE. If you allow a friendly amendment to your
request, what I would like to do is come up and brief staff
because several of these issues that have come up which are not
public have or potentially have a law enforcement dimension to
them. So I would rather not lay that out in the record. And I
also would rather not--to the extent that we are being
defrauded or the system is being abused, I would rather not lay
out publicly how it is done as a roadmap for others until we
can do this. So what I would like to do, and hopefully we can
do this on a friendly, bipartisan basis with the majority and
minority staff, is come up and go through some of these other
things that we have come across that have given us the basis
for significant concern.
Mr. DOGGETT. Thank you.
Chairman JOHNSON. There is a little bit of manipulation
among the law firms, too, that represent some of these people.
They are in it for the money.
Mr. BECERRA. I think that is more on the video.
Mr. DOGGETT. And that is why because he really didn't
respond on the video part. If you agree to a video hearing and
you get whatever judge is to be assigned at random from one of
the national centers, why isn't that sufficient protection on
video?
Mr. ASTRUE. Well, because under the current rules, you are
allowed to manipulate and pick and choose. You can see who you
get on the video and then you could decide to decline.
Mr. DOGGETT. But if you are restricted and your only
choice, and you change it and your only choice is to get the
judge assigned on the video, why isn't that sufficient?
Mr. ASTRUE. Well, we are looking exactly at doing that, but
I believe that my, at least interim advice from general counsel
is that I need to do that through notice and comment
rulemaking. The other thing, again without compromising what is
happening, the other technique, and I am concerned also about
this on some other levels from a claimant's perspective, is
that a number of reps who have gotten into the practice of
simply withdrawing an appeal and then refiling. And that is
another way in which random assignment has been manipulated in
some part. And some of this is our fault. Some of this, you
know, I don't know that we have been entirely consistent even
in applying our own rules. So it is a difficult problem. It is
an important principle of justice to get this right. And we are
trying to take the time to do this right. And in the interim I
think what we are doing we acknowledge it is not perfect and we
have not represented that we want to continue to do it
indefinitely. I would be delighted to go back to telling people
who the judge is. I don't think it is the--I think the
criticism is a little bit overwrought in that, you know, it is
the same, VA, NLRB, I don't believe you get notice of the
judge. Most worker's comp you don't get notice.
I, too, was a trial attorney in my reckless youth. In the
Massachusetts Superior Court, at least in 1985, when I tried my
first case, you didn't know who your trial judge was until you
walked in and then it changed on a monthly basis. So you know
you couldn't really design a case for the predilections of a
judge because a judge would change multiple times over the
course of a trial.
So again, I am not defending what we are doing. And I have
been, I think, straightforward. I don't want to continue. I
would be perfectly happy to put the judge's name back on. But I
don't want to do it until I fix things that are important for
the integrity of the system.
Mr. DOGGETT. Thank you. Thank you, Mr. Chairman.
Chairman JOHNSON. That was a good answer. Thank you so
much. And, you know, during your term you have worked with two
different administrations and your dedication to doing the job
to the best of your ability has never wavered in my view. The
American people and we are grateful for your focus on the
disability program. During these challenging times and along
with your achievements, thanks for your service, your
leadership.
I have one final question. Based on your experience, what
advice would you give your successor?
Mr. ASTRUE. Buy a flak jacket. I think that the most
important thing is to realize that you do take a lot of
criticism in this job. And it is because Social Security is
such an important institution to the public and the
expectations are very high. We are in a world where it is going
to be very hard to satisfy those expectations in the coming
years.
What I would urge my successor to do would be in part to
urge all of you, you know there are several ways to try to do
this better. You know, one is to spend more money on the status
quo. The other is simplification, and we have tried to do what
we can from a regulatory point of view. This committee I don't
think has ever gone systematically back through the Social
Security Act and say, well, is what we made sense in 1964,
1977, 1992, doesn't make sense today. And it is an
extraordinarily complicated act. And I think that there are
opportunities where we shouldn't come--any kind of partisan
divide where we can say look, let us just make it simpler. I
mean, one of the things that saved us the first year, we did
administratively, is we realized for 30 years we have been
requiring original birth certificates brought into the office
or mailed to us with every retirement application and we did
not need that because we could authenticate through other more
modern needs. It made sense in 1965, but it did not make sense
in 2007.
I think there are a lot of opportunities to straighten out.
This is only one small part. This is probably only about 10
percent of the Social Security Act right here, and I think that
we can find opportunities--maybe you should get some outside
expert advice, but I think you could find a lot of ways to
simplify it that would lower our administrative costs. So if
you don't want to give us the money, there are other ways to do
it. And I think that, I actually regret that I hadn't given
this speech a little bit earlier and asked you to consider
doing that. And I think for the next person I think it is good
advice.
Chairman JOHNSON. Modernize the system. We can do that.
I forgot Mr. Smith. I apologize. I forgot Mr. Doggett
first. So you are the second one. You are recognized.
Mr. SMITH. Thank you, Mr. Chairman, and thank you,
Commissioner, for your service, and certainly for your time
here today.
Going back to I think what Mr. Doggett was talking about a
little bit, my office has worked with a situation where it is
our understanding that an applicant's attorney recommended the
applicant request a delay of their hearing because they felt
they would get a different, perhaps a more favorable hearing
from a different ALJ. Obviously this raises questions and some
were touched on a bit earlier, certainly about the uniformity
of the system and perhaps what you could point to in addressing
that uniformity. But I would say even more so when we talk
about the workload, if one judge has prepared to hear a case
and then ends up not doing anything with it and then someone
else has to prepare and who knows what circumstances will
surround that as well. How should we address this? What would
you have to say about moving forward and perhaps on the judge
anonymous policy that was touched on earlier as well?
Mr. ASTRUE. I think the thing to do is to work with us to
try to get some consensus on particularly the things that we
need and notice and comment rulemaking. I have been surprised
at least a few times where things that looked like there was
consensus and not very controversial became very controversial
in the rulemaking process, and sometimes the Congress
contributed to that.
So I think what we are trying to do is to try to figure out
as much of a consensus approach as possible, and I do want to
give some credit to the, to NOSSCR, the attorneys group,
because they have already come to us and put some things on the
table which I think we would have thought were unlikely to try
to help us to fix this problem. And I want to commend them for
you know taking that step in the public interest. And I think
if we can all work together on this to try to devise a
combination of administrative and regulatory approaches to
straighten this out and just get it done and get it over with
as quickly as possible, then I think the world will be better
off.
Mr. SMITH. Okay. Thank you. I yield back.
Chairman JOHNSON. Thank you. Thank you for your testimony.
We will proceed to our second panel now.
And will the witnesses please on the second panel take your
seats?
Ethel Zelenske, Director of Government Affairs, National
Organization of Social Security Claimants' Representatives, on
behalf of the Consortium for Citizens with Disabilities Social
Security Task Force on the left, or your right.
The Honorable Randall Frye, President, Association of
Administrative Law Judges. Welcome back.
Jeffrey Lubbers, who is Professor at American University
Washington College of Law.
And Richard Pierce, who is Professor at the George
Washington University Law School.
Thank you all for being present.
And Ms. Zelenske, you are recognized. Please go ahead with
your testimony.

STATEMENT OF ETHEL ZELENSKE, DIRECTOR OF GOVERNMENT AFFAIRS,
NATIONAL ORGANIZATION OF SOCIAL SECURITY CLAIMANTS'
REPRESENTATIVES, ON BEHALF OF THE CONSORTIUM FOR CITIZENS WITH
DISABILITIES SOCIAL SECURITY TASK FORCE

Ms. ZELENSKE. Chairman Johnson, Ranking Member Becerra, and
Members of the Subcommittee. Thank you for inviting me to
testify today on behalf of the CCD Social Security Task Force.
Title II and SSI cash benefits are the means of survival
for millions of individuals with severe disabilities. In the
past, I represented claimants at all administrative levels and
in Federal court. My experience made me all too aware that
behind the numbers are individuals whose lives have unraveled
while waiting for decisions.
I recently received an email from a gentleman who appealed
to the hearing level. This is how he described the appeals
process from a claimant's perspective: ``I just don't
understand why everyone is denied two times and forced to wait
to have a hearing. I was very prepared from the onset with my
documents. SSA was sent letters from my neurosurgeon,
neurologist and two separate pain management doctors who I have
been going to on a monthly basis for the past 8 years. Being
denied was mind numbing. We lose everything we worked for over
the years during the waiting process. I am currently over
$100,000 in debt and have sold everything of value, including
our wedding rings. My car was repossessed, and now my home of
18 years is in jeopardy.
The pressures of my medical issues have caused our marriage
of 18 years to collapse. I have never been a fragile man. I am
educated with a university degree. I have been active in my
community and even own my own small company. It is hard enough
for a family or a person just to deal with an illness, but it
is harder when the government can keep your life on hold while
you are ill.''
While the wait for a hearing is still too long, processing
times have been significantly reduced over the past few years,
now around 350 days, dropping more than 6 months. We support
the Commissioner's goal of reaching 270 days by the end of next
year. However, we are deeply concerned that any progress will
be stymied due to a lack of adequate resources for SSA, thus
putting that goal and other critical workload benchmarks at
risk. We appreciate the subcommittee's past support to provide
SSA with adequate funding and urge support for the President's
fiscal year 2013 request that will allow SSA to continue to
move forward.
Central to the fairness of the SSA appeals process is a
claimant's right to a hearing before an ALJ. While ALJs have
recently come under increased scrutiny, it is important to
recognize several points. Favorable ALJ decisions account for
only about one in five allowances with the vast majority made
by DDSs. The overall ALJ allowance rate has been dropping, and
it is at the lowest level in years. There are many legitimate
reasons why ALJs reverse DDS decisions, as detailed in my
written statement. And favorable ALJ decisions are being
reviewed by SSA to determine compliance with agency rules and
policies but in a manner consistent with the law ensuring the
independence of ALJs.
We do not support proposals to have the government
represented at hearings. The longstanding view of Congress, the
Supreme Court and SSA is that the process is informal and not
adversarial. SSA had a previous pilot where the agency was
represented. I represented clients at a hearing office in the
pilot and can confirm Congress' findings at the time that the
pilot did not achieve its purported goals. It led to longer
processing times, did not improve the quality of decisions and
did not result in better prepared cases. While radically
changing the process, the expense was enormous, costing more
than $1 million per year in 1986 dollars for just five hearing
offices. Today there are more than 140 hearing offices.
We support many of the Commissioner's initiatives to reduce
processing times and make the process more efficient, including
technological improvements, such as online access to electronic
claims folders and the ability to file appeals and submit
evidence electronically. Also, there are a number case
screening mechanisms that expedite decisions without
sacrificing accuracy.
I am glad to report that the gentleman I described earlier
was found eligible through one of these hearing level screening
initiatives. My written statement discusses our recommendations
for improving the process for people with disabilities, such as
increasing the time for hearing notices and helping claimants
to obtain representation earlier in the process to assist with
development of the claim. We also provide recommendations to
better develop claims at the initial levels so that the correct
decision can be made at the earliest point possible and then
the unnecessary appeals can be avoided. Thank you and I would
be happy to answer any questions.
Chairman JOHNSON. Thank you.
[The prepared statement of Ms. Zelenske follows:]

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Chairman JOHNSON. Randall Frye you are recognized.

STATEMENT OF THE HONORABLE D. RANDALL FRYE, PRESIDENT,
ASSOCIATION OF ADMINISTRATIVE LAW JUDGES

Judge FRYE. Thank you very much.
Mr. Chairman, Ranking Member Becerra and Members of the
Subcommittee, thank you very much for the opportunity to be
here this afternoon to talk about some very important issues
with respect to the disability adjudicatory system at the
Social Security Administration.
I am president of an organization that represents 1,400
judges, and I feel like the weight of all 1,400 are on me every
day because I hear from them on a regular basis, and I
understand the trauma that is ongoing dealing with a rather
significant backlog.
There are some good things, however, that are happening at
the agency, good things that result from your actions: 3 years
ago you responded favorably in a budget context that permitted
the agency to appoint several hundred additional judges and
staff, and we have dealt with the backlog. We have worked
exceptionally hard.
It is troubling to hear or to think that come January, the
bottom may fall out of this progress. So I urge you on behalf
of all of the American people to, please, do what you can to
ensure that this agency is funded so we can continue with the
disability backlog.
While I think the judges and the staff have worked well,
there are some things that haven't worked so well, and we have
some ideas that we would like to share with you. What isn't or
hasn't worked well, quite frankly, is that--and believe me, we
understand the importance and need for goals in everyone's
life, personal and professional. Goals have driven this
democracy to the highest levels. What we have been faced with
as judges, however, are not goals; they have been quotas.
Quotas are destructive, and they force decisions before they
are ready. If you understand the process, as you most certainly
do, under the present structure, judges have the responsibility
of wearing three hats, incredible responsibilities in wearing
three hats, representing the government or the people,
representing the claimant's interest and of course ensuring
that the law is applied correctly to a decision. That is a heck
of a burden if you think about it.
It requires the judge to engage in rather aggressive and
vigorous examination of a claimant. Oftentimes that puts one at
loggerheads with the claimants and claimant's represent--it
almost places the judge in truly an adversarial relationship in
the process. That is not a healthy judicial environment. It is
not good in my view to have the judge wear three hats.
It is certainly good that the record is developed. Indeed,
without record development, we cannot make a decision.
An answer we think to this problem and an answer that at
long term would save money is to have the government
represented. If you think about it, and I have said this
before, how many corporations or companies that you know of
would go to court, facing a lawsuit where the plaintiff is
seeking $300,000, without representation? That is what is
happening in our courtrooms. The government comes without
representation.
Indeed, I recognize part of my responsibility is to
represent the government, but what I am trying to communicate
to you is that it is a very difficult process. It is a balance
that sometimes gets skewed.
We believe the advocacy of a government rep would be
important, but even more important from the claimant's
perspective, a government representative would be assigned the
cases early in the process. The government representative would
develop or ensure development of evidence is in the record. The
government representative would work with the claimant and the
claimant's attorney to pay the case as early as possible,
without a hearing. Thus saving the more expensive time for
conducting a hearing and having to issue a written decision
after a hearing.
The government rep has a lot of value. It is the individual
that would be designated in a hearing office that the attorney
on behalf of a claimant could call and talk to about a case to
find out the status of a case. Right now, if you talk to many
representatives, it is quite difficult to talk to anyone in a
hearing office; not because we are unfriendly, it is just that
everybody is swamped with work.
The problem with the quotas is particularly perplexing to I
think anyone, any professional who has to have time to consider
important and complex issues. What has happened to us is
because with all of the wonderful programs the agency has
established over the last few years, the easier cases are
getting addressed before a hearing or many of them are. The
cases we hear are far more difficult.
Chairman JOHNSON. Can you close? Your time has expired.
Judge FRYE. I am sorry, I will indeed. I have other points
that I made in my statement. And I would like if at all
possible to submit a statement on the APA and its applicability
to our hearings at the close of hearing.
Chairman JOHNSON. Sure.
Judge FRYE. Thank you very much.
Chairman JOHNSON. Thank you, sir.
[The prepared statement of Judge Frye follows:]

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Chairman JOHNSON. Mr. Lubbers you are recognized.

STATEMENT OF JEFFREY LUBBERS, PROFESSOR, AMERICAN UNIVERSITY,
WASHINGTON COLLEGE OF LAW

Mr. LUBBERS. Thank you, Mr. Chairman, Ranking Member
Becerra, for inviting me to be here today. I am a Professor of
Practice in Administrative Law at American University
Washington College of Law where I have taught since 1996. As I
note in my biography from 1975 to 1995, I worked at the
Administrative Conference of the United States, ACUS, and am
now serving as special counsel at the revived Administrative
Conference. However, I want to emphasize that my views I am
expressing today are just my own and as an administrative law
professor and should not be ascribed in any way to the
Administrative Conference.
The growth of the SSA disability adjudication program has
been phenomenal.
Chairman JOHNSON. Is your mike on?
Mr. LUBBERS. The growth of SSA disability adjudication has
been phenomenal. In 1973, the then president----
Chairman JOHNSON. I forget mine, too.
Mr. LUBBERS [continuing]. Of the Association of ALJs
reported that the number of disability proceedings reaching the
hearing level had, quote, ``jumped to an unbelievable 56,000.''
That year the per judge disposition rate was 143 cases per
year. Today those numbers seem miniscule.
Commissioner Astrue has said that he expects the case load
to reach 832,000 in fiscal year 2012 with about 1,400 ALJs. The
per judge disposition rate has more than quadrupled to 594. And
this rise in caseload shows no sign of slowing down.
Now to sketch out the legal context of the program, I would
mention that although SSA benefits once received are an
entitlement, which means that the government cannot terminate
benefits without a formal hearing. It is not so clear, based on
Supreme Court case law, whether that level of due process
applies to initial applications and denials of benefits. The
Supreme Court has never held that an applicant for public
benefits possesses a property interest protected by due
process.
Another unresolved issue is whether the formal adjudication
provisions of the APA are applicable to SSA disability
adjudications. While this is an interesting legal and
historical question, it is one that I don't think is all that
crucial to resolve because, ultimately, the issue of the APA's
applicability is up to Congress, and the APA itself gives both
Congress and the agency a lot of flexibility.
But to clarify my own answer to this question that you
mentioned, I think that if you just look at the language of the
Social Security Act, an APA hearing would not be mandatory, but
that analysis is probably trumped by the clear message Congress
and this subcommittee sent in the 1970s when it converted the
temporary SSI judges into full-fledged ALJs.
Now, over the years, I have urged a number of key process
reform proposals that I summarize in my testimony, many of
these ideas were included in SSA's 2006 DSI reform proposal.
However, other than a couple of the proposals, the rest of the
DSI program was prematurely terminated apparently due to
resource constraints caused by the crush of caseload pressures
that worsened after 2006.
I would like to see a renewed effort to implement these
process reforms. However, that may not be possible now. So I
have suggested some possible options and approaches in dealing
with some of these caseload pressures. Some of them are
incremental, such as increasing the use of rulemaking and
increasing the use of video communications technology, and some
more fundamental. Some of the more fundamental change options
might include modifying the role of Appeals Counsel to increase
the quality control review of grant cases and to use selected
appeals counsel decisions as systemwide precedents; second,
replacing both the Appeals Counsel and the district court
stages with a Social Security court; third, making SSA hearings
adversarial, although I am not convinced that that would be
cost beneficial; and fourth, taking advantage of the APA
provision that allows specially designated administrative
judges, even in APA hearings.
Now this last option requires a bit more explanation. If
Congress does become persuaded that circumstances require that
hiring more ALJs is no longer the tenable answer, Congress
could specially provide for or designate another type of
adjudicator under the APA. Congress has done this occasionally.
A prime example is the special authority given to the Nuclear
Regulatory Commission to use atomic safety and licensing board
panel members to hear nuclear licensing cases. In those cases,
Congress wanted to provide the agency with the flexibility to
not only use law trained judges to hear licensing cases, but
also scientists. Now some have suggested using doctors as
adjudicators. I am not sure that is a good idea, but I do think
that there are enough problems with the ALJ program to perhaps
lead Congress to suggest that there is a need for a specially
tailored SSA ALJ program. And in doing that, Congress could
allow SSA to basically hire its own judges, using the OPM
process. They have done that with the NRC and with boards of
contract appeals.
Congress could also consider departing from the current ban
on performance appraisals for ALJs. I know there are arguments
on the other side of that issue.
So there are a number of things Congress could do if they
specially designated Social Security ALJs. My overall point
here is that the SSA's ALJ program size and perhaps the
character of its cases may now require some special treatment.
By providing the menu in my testimony with some commentary
along the way, I hope I can assist this committee in performing
its historical role in protecting the viability of this
historic program.
Chairman JOHNSON. Thank you, sir.
[The prepared statement of Mr. Lubbers follows:]

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Chairman JOHNSON. Mr. Pierce you are welcome aboard. Go
ahead.

STATEMENT OF RICHARD J. PIERCE, JR., PROFESSOR, THE GEORGE
WASHINGTON UNIVERSITY LAW SCHOOL

Mr. PIERCE. Chairman Johnson, Ranking Member Becerra, and
other Members of the Committee, thank you for giving me the
opportunity to share my views on this important topic. To me,
there are two major problems at present with the present Social
Security disability program. One is that it is increasingly and
unsustainably generous. The proportion of the population that
has been determined to be disabled has doubled. The cost of the
program has more than quadrupled, and that is primarily due to
ALJ grants after two denials by State agencies.
The other problem is related to that; there is massive
variation in the ALJ grant rates. The latest numbers I have
seen were 8.6 percent grant rate for one judge; 99.7 percent
for another judge. This is a problem that has been extremely
well documented for over 35 years. A book written by six
reachers in 1968-1978, excuse me, concluded that the identity
of the judge is far more important than facts of the case in
determining the outcome of the case. If you don't address that
problem in some way, 35 years from now, someone else is going
to be telling you that it still exists.
I think there are three sources of the problem. First of
all, let me back up and say that one of the reasons this is so
difficult is most of the cases that are in the subject of dual
denials at the State level and grants at the ALJ level involve
one of two disabilities, mental disease and pain. And the
National Institute of Medicine and the National Institute of
Mental Health tell us that over half the population suffers
from one of those conditions. Obviously, we cannot have a
situation in which over half of the population is qualified as
permanently disabled.
What judges have to do, and it is difficult for any
decisionmaker, judge or not, is to figure out whether someone
is so severely mentally ill or so severely subject to chronic
pain that they are not able to work. And when you look at the
variation in the ALJ grant rates and you look at the overall
increase in the grant rates over time, it is quite obvious that
while some judges are continuing to grant disability only to
those with severe mental illness or severe pain, some now grant
them routinely to people with minor mental illness and minor
chronic pain.
And by the way, I fit in both categories, so I suppose I
should have applied a while back. The sources of the problem
are three: First of all that the administrative law judges
cannot be subjected to any process of evaluation or system of
quality control. You are in a position to correct that problem
and I hope you will.
The second is that this whole system of decision making was
designed to operate without lawyers. Well, today, 85 percent of
the applicants are represented by lawyers or other professional
representatives. This has changed the nature of the process
dramatically and certainly as a contributor both to the wide
variation in grant rates and to the increase in the number of
people who are determined to be disabled. Something needs to be
done about that.
What I think you need to do, what I would urge to you do,
is reduce the extremely generous fees that are now available
that, as I read a report the other day, amounted to $1.5
billion last year and change the method of calculating the fees
to eliminate this problem of a major economic incentive to
delay cases.
The third source is, frankly, the courts. The courts pay no
attention to what you say in your statutes about scope of
review. I have in my testimony citations to studies that show
the courts absolutely do not pay any attention. What I would
urge at least initially there is that the Social Security
Administration start taking cases, more cases, to the United
States Supreme Court. It has shown over the years far more
respect for your views about scope of review than have the
district courts and the circuit courts. It may take two or
three cases, but I think that is what has to be done.
And to help that along, I am going to file a petition for
rulemaking at SSA next week to urge them to take an action that
most certainly will get them into court. And I hope the United
States Supreme Court will then get the lower courts back doing
what you have told them to do. Thank you.
Chairman JOHNSON. Thank you, sir. I appreciate that.
[The prepared statement of Mr. Pierce follows:]

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Chairman JOHNSON. Judge Frye, the agency has published its
expectations to do 500 to 700 cases a year. In your testimony,
you say the current misplaced emphasis on numbers has perverted
our system of justice. So are you saying there should be no
expectations?
Judge FRYE. No.
Chairman JOHNSON. That judges should take as much time as
they like as claimants wait in line?
Judge FRYE. Absolutely not, as I indicated earlier, I
strongly believe in goals, but the better standard a wider
range. If you just do the numbers, if you can look at a paper
file of 600 pages of medical evidence, do you want a judge to
spend 2 hours on that or do you want a judge to spend whatever
time he or she needs to understand the case? That is the
problem with you have to do 500; you have to do 700. Judges
work hard--to do those numbers, they are working 7 days a week.
I get emails every week complaining and asking for some help.
So, no, we are working hard, and we believe in goals, and
judges are responding to goals. Most professionals don't work
well with unreasonable quotas.
Chairman JOHNSON. How many did you do last year?
Judge FRYE. You know, I don't know. I have--I am 90 percent
on official time, but I honestly don't know, probably somewhere
around 50 to 100.
Chairman JOHNSON. Okay. Well, I was in the office in
Dallas, and I can tell you that one judge out of 12 was working
a normal day.
I understand one of the ALJ union vice presidents in the
Buffalo hearing office told judges not to process more than 300
cases a year. Is the union pushing that?
Judge FRYE. I have never heard that statement, and I
honestly find it incredible.
Chairman JOHNSON. Thank you.
And earlier this year, after the Inspector General reported
that claimants or their representatives were declining video
hearings so that a case would be assigned to a judge who
allowed more cases, Social Security is now not identifying the
ALJ until the day of the hearing. Do you think that is right or
wrong?
Judge FRYE. I think all of our hearings should be
transparent, should be open to the public. I think our notice
of hearing should clearly set forth all of the issues of the
hearing, including the judge's name. The government can't do
its business in secret.
Chairman JOHNSON. I hear you.
Ms. Zelenske, do you know why claimant representatives
would cancel hearings for their clients who had been waiting
months to see a judge?
Ms. ZELENSKE. There are many legitimate reasons why people
ask for a continuance if that is what you are asking. I mean,
the claimant may be ill and unable to travel to the hearing
that day. I mean that is usually the most typical reason that
people ask for a continuance of the hearing. I mean, I get from
the reports we get from our members, it wouldn't normally be
because the evidence----
Chairman JOHNSON. What percentage of them are done by TV
nowadays, do you know? Any of you?
Ms. ZELENSKE. SSA has that information. I think I saw--I
think it may be around 5 percent.
Chairman JOHNSON. So, is that all?
Ms. ZELENSKE. I could be wrong.
Chairman JOHNSON. They have it rigged for more than that.
Professor Lubbers, with a program this large and this
complex, does it make sense that Social Security can't oversee
the performance of judges for consistency? And are there any
other programs that you know of that do it right?
Mr. LUBBERS. I think, and I have written on this government
wide, that I think that administrative law judges should be
subject to some sort of performance appraisal in a peer review
way conducted by the chief judges at the agencies. And doing
that properly would not infringe on their independence.
I think in this particular program where the caseload
pressures are so great and efficiency is such an important
value, I think there is even a stronger reason do it in a
Social Security Administration program.
Chairman JOHNSON. Thank you.
Mr. Becerra, you are recognized.
Mr. BECERRA. Chairman, thank you.
And to the witnesses, thank you very much for your
testimony.
Judge Frye, I want to ask you about some of your comments
about this current informal process that is used. I have deep
concern with what you said about moving toward an adversarial
system. Let me tell you why, we just heard the commissioner
tell us that he has a very tight budget, a budget that doesn't
allow him to do everything he needs to do, which is putting a
greater load on many of your fellow judges.
Where would we get the money to pay for the new now
government attorneys that you would want to have conduct these
adversarial hearings where now you would have a more formal
presentation of documents, and it seems to me, not only do you
increase the cost of going through that administrative appeals
process now, but you probably prolong it to the point of maybe
having appeals to the appeals hearing to the different stages
going up to the Federal courts, in which case now Social
Security is now having to pay for representation at the court
level, Federal court level as well.
I would think that we would want to recognize that, one, we
are talking about typically the poorest folks in America who
are the sickest, probably the frailest, who probably do not
have money to hire really high-powered attorneys, maybe hire an
attorney, but we are not talking about hiring, you know, the
Jones & Jones law firm. My sense is that it would be better to
give you quite a bit of power to conduct the informal hearing
to try to extract as much information as you can from the
individual or his or her representative. And therefore, you
feel comfortable that you can go at that individual if have you
to go at them pretty harshly or treat them with a little bit
more care because they may be very ill, in which case what you
are trying to do is extract the information as best you can, so
you can come out with the decision. Ultimately, that individual
still can go above you if he or she is not satisfied with your
decision, but at least what we do is give you quite a bit of
discretion to try to come up with a good decision and then, of
course, deal with the outlier judges who are granting too many
or too few.
Judge FRYE. I could give you so many different answers to
each of the points you make.
I think, however, with respect to government representation
and the cost, there would be so much savings from the appeals
of cases at the higher range that was mentioned earlier, 99
percent, I suspect you would save billions ultimately. Now,
there is another built-in savings----
Mr. BECERRA. Do me a favor, send me whatever you can to
corroborate what you just said.
Judge FRYE. We will do the math. And I would be most happy
to.
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The other savings, quite frankly, and it is a huge savings,
we are one of the--my background is with the National Labor
Relations Board. And I well know the regional office structure
there and how they function. This agency also has a regional
office function, the district offices. But in addition, we have
ODAR, Office of Disability Adjudication, having regional
offices that performed no direct case adjudications. These are
very expensive. They are in the most expensive cities in the
government, occupying the most expensive space. Maybe 30 years
ago, that layer of management and that layer of bureaucracy was
okay. I don't think we can afford it anymore. Those resources
should be in direct----
Mr. BECERRA. Now, you are going into a little beyond what I
asked, but fair. I think anything you can tell us that will
help us reduce cost, I--we would love to hear it. I am
concerned about moving what is an informal hearing process into
a very formal adversarial process.
And Ms. Zelenske, let me see if I can ask you the same
question because you represent or your organization helps
represent a lot of claimants that go before the Social Security
agency for these benefits, disability benefit hearings. What is
your opinion about moving toward, from an informal non-
adversarial hearing process to a more formal adversarial
process, where you would have attorneys on each side going at
it in front of a judge?
Ms. ZELENSKE. I did have experience with that in the pilot
in the mid-1980s, and it didn't really work out the way it was
intended. It was cases weren't allowed more, and they weren't
better developed, which I think was one of the bigger issues
about it.
If you think about it, the people, the claimants going into
a hearing are asked very personal questions about their lives
and what is going on in their lives. And I think you want to
keep it more as informal as possible. It is still nerve-
wracking for them when they go into a hearing. It is their day
in court. It is their day dealing with the government. And you
want to try to keep it informal.
I mean, I have to say that from my experience, when I did
hearings, most of the ALJs weren't adversarial with the
claimants. They were trying to elicit the information or have
the representative help get the information out that is
necessary to make the determination to see if they are eligible
under the statutory definition of disability. And I think that
this is why you don't want to turn it into an adversarial
process.
Mr. BECERRA. Mr. Chairman, thank you very much. And thank
you all for your testimony. Please, any information you can
provide us to help guide us, we would very much appreciate it.
Chairman JOHNSON. Mr. Marchant, you are recognized.
Mr. MARCHANT. Thank you, Mr. Chairman.
Mr. Pierce, can you explain to this member of the committee
the disincentive or the incentive for a lawyer that takes a
disability case to resolve the case quickly as opposed to over
a period of a year or two?
Mr. PIERCE. As I understand it, there is no incentive to
resolve it quickly. There is the opposite incentive because the
fee is dependent on the amount of the past benefits that are
awarded. And so there is a natural incentive to delay as long
as possible in order to maximize the potential fee.
Mr. MARCHANT. So it is just a pretty simple math equation
for most of the lawyers?
Mr. PIERCE. That is my understanding.
Perhaps Professor Lubbers has looked at it in more detail
than I have.
Mr. LUBBERS. No, but I think Mr. Astrue reaffirmed that
position when he talked about most claimants' representatives
didn't do this, but that some minority did.
Mr. MARCHANT. And Judge, what was the average age or what
is the average age of a case once you sit down and begin to
focus on it? What is the time that has elapsed from the time
the person called the State, made the claim from that date, and
then what is the average time of the mature claim, once they
get to the appeal process?
Judge FRYE. Of course, it varies depending on the office
staffing and so forth, but the typical case that I have been
hearing is somewhere close to 2 years old from the time it was
filed. And what typically happens once the process that the
State agencies process the case and they come to the hearing
level, usually that is when the attorneys get involved and far
more development is done at that point. I think that is also a
reason that you see judges' decisions that disagree with some
of the DDS. It is not because they made a bad decision; it is
just that there is more evidence at the time the hearing is
conducted. I think, in most cases, I think you are looking at 2
years by the time you file the application.
Mr. MARCHANT. So that person either has a support system in
place, are the claimants allowed to advance fees, advance
expenses to the claimants?
Judge FRYE. No, no. They may in certain circumstances, such
as I know some lawyers will assist the claimant in getting an
examination by a medical doctor, for example. But I don't know
about any direct payment.
Mr. MARCHANT. Is it legal or illegal?
Judge FRYE. That is a very good question. I have never had
it come up before.
Mr. MARCHANT. That is a very common practice in other parts
of law. I wondered if it had pervaded this element.
Judge FRYE. I----
Mr. MARCHANT. You talk about--what would be the claim
amount at 2 years?
Judge FRYE. What would be the attorney's fee at 2 years?
Mr. MARCHANT. No, the claim.
Judge FRYE. It would depend on the earnings of course of
the claimant. It would be the monthly benefit times the--
whatever number of months back benefits would be payable, so
there could be a lump payment of $10,000. I have had it as high
as $30,000 and $40,000.
Mr. MARCHANT. So we are talking in the $10,000 to $40,000
range, usually?
Judge FRYE. Right.
Mr. MARCHANT. So that is not enough of a financial
incentive for a lawyer to go out and advance living expenses to
someone while their case was developing?
Judge FRYE. I am not sure I can answer that. I don't know.
If wouldn't be for me, but I am not sure. I couldn't answer for
all lawyers.
Mr. MARCHANT. Do any of you know of any situations where
that is the case?
Ms. ZELENSKE. I don't think attorneys would be allowed to
advance, I guess, what you are talking about sort of the cost,
the benefits, the possible benefits.
What does happen and I used--my practice was with legal
services so I never charged claimants fees. And what we would
do--I think attorneys do that now is there is an agreement if
you are going to get an independent examination or you have to
pay for medical records, you have an agreement with the
claimant that if they win the claim, that they will pay you
back. We do that even at my Legal Aid office. We didn't have a
lot of money, but we wanted to get that examination. But I
don't think you would be allowed to advance living costs like
you described.
Mr. MARCHANT. So most lawyers that appear before you,
Judge, are they single practitioners? Are they in law firms
that advertise on Sunday nights, late, that have hats on?
Judge FRYE. All of the above. I think typically it is a
boutique, small law firm. There are a number of solo
practitioners, but usually a small firm of three to four to
five individuals. Oftentimes, it is combined with workers' comp
practice because they kind of overlap to some extent. For the
most part, they are highly skilled and competent attorneys who
appear before us in cases.
Mr. MARCHANT. I have a sister that I assisted through this
process years ago, and I found that to be the case. It was a
sole practitioner. This was his practice. He certainly could
not have become rich off of this process and seemed sincere in
trying to get it resolved as quickly as possible, yet it took 2
years, and it was finally resolved.
And a big part of our case work still in our district
offices is this, referring people and assisting people.
Judge FRYE. I am sure.
Mr. MARCHANT. After they have been turned down.
Thank you, Mr. Chairman.
Chairman JOHNSON. Thank you.
Professor Lubbers, it is my understanding that the district
courts should uphold the agency decision if there is evidence
in the file that supports the decision. Do you believe
magistrate justices are applying that standard of review?
Mr. LUBBERS. Well, the APA standard is that if there is
substantial evidence to support the agency's decision, it
should be upheld, the substantial evidence test. And I think
the statistics show that in the Social Security caseload area,
the district courts are either remanding or reversing at a much
higher rate than in other programs.
So why that is, many of these cases do go to the magistrate
judges first and then to the Social Security judge. Professor
Pierce made some comments about the courts not holding the
statutory standard. It may be that these judges don't see that
many cases individually, so they feel sorry for the claimants
in those cases.
Chairman JOHNSON. Is that right?
Mr. LUBBERS. I think the statistics do show that they do
not affirm the agency as often as courts do in other programs.
Chairman JOHNSON. How much fraud do you reckon is in this
system? Do you have any estimate at all?
Mr. LUBBERS. I think you should ask the IG.
Chairman JOHNSON. Yeah, the IG is into it.
What is the role of the appeals council in setting
procedural decisions or establishing quality control?
Mr. LUBBERS. Well, as I understand it, the appeals council
does mostly hear cases where the claimant has been denied and
makes an appeal to the Appeals Counsel. But in a small number
of cases, very small number of cases, the appeals counsel does
review granted cases, just for quality control purposes. But
because of their caseload and the denied cases, they can't do
much of that. So I would like to see them do more of that, and
I would also like to see them write some decisions that would
be used as precedent decisions and that those precedent
decisions would be circulated throughout the administrative law
judge----
Chairman JOHNSON. So all the judges could follow them?
Mr. LUBBERS. Follow it. They would be supposed to follow
them. And that is, for example, the way--not that this is the
greatest comparison--but the Board of Immigration Appeals does
have certain decisions that they make precedential and are
supposed to be followed by the immigration judges.
Chairman JOHNSON. Professor Pierce, how is Social Security
supposed to balance the fact that ALJ decisions should not be
interfered with as the Administrative Procedure Act requires
with ensuring consistent outcomes and productivity needed to
administer this national program?
Mr. PIERCE. Well, I would start by saying I certainly don't
think that anybody in the Social Security Administration should
attempt to influence the outcome of any individual case.
But it is pretty easy to do what, for instance, the vast
majority of law schools do to their law professors and say that
your grades have to be in a particular range, and it is pretty
easy to conform to those norms. And if the alternative is what
we now have, an 8.6 percent probability of a yes before one
judge and a 99.7 percent probability before another, I don't
think there is any question that due process and equal
protection of law would be served very well by establishing
some boundaries within which we expect judges to have grant
rates.
Chairman JOHNSON. I appreciate that comment, thank you.
Mr. Becerra, you have another question.
Mr. BECERRA. Yeah, a couple questions.
I want to make sure I dispel any notion that there aren't--
judges, Judge Frye don't you have some template that you get to
use? We have Federal district court decisions that have been
handed down that give you some guidance. My understanding is
the Social Security Administration also tries to provide you
with a template where there are screens where you all can sort
of go through some threshold questions that you have to get--
you have to answer yourself through these hearings to figure
out if the claimant has answered those adequately to be able to
get to the point of saying yes or no, that they should be
entitled to benefits. So I think the point that Mr. Lubbers
makes, which I think is a good one, is to try to standardize
this more so that judges aren't left to their own devices. And
I think Mr. Pierce has gone to that as well. So you have some
way of evaluating when a judge does or doesn't grant these
benefits.
But I want to stress something, and I think it came out in
some of the earlier testimony, we are not talking about rich
folks. And even if these folks win these benefits, we are not
talking about them getting millions of dollars. As you
mentioned, it is maybe $10,000 a year, and maybe because they
didn't get the benefits for the longest time because the
process took a year or two to finish, they are getting $20,000.
But most of that is money that they probably have to use to pay
back family and friends and others that they borrowed money
from to provide for their assistance while waiting to see if
the Social Security Administration would grant their disability
claim.
The reason I point that out is because I fear that we are
going to start to treat this the way we treat the regular legal
system, where we have attorneys going at it, and you figure you
better get the higher priced attorney who does this all the
time and you better be prepared to go after them really hard
because you want to win your case. This is the not the case
where you are going to come down with a six figure judgment.
This is very basic benefits, and the folks we are talking about
are the frailest of the frail.
And I asked staff to get me some information on the whole
process itself, and this is from the Social Security
Administration, where they go through and give their--this is
2011's disability workloads. They can't give us 2012 because it
is still ongoing. So, at the initial level, how many people
submit an application for disability benefits? Excuse me,
3,295,806 disability decisions were issued by the Social
Security Administration in 2011. How many of those decisions
were to allow benefits? Thirty-four percent. Two-thirds, 66
percent, were to disallow at that initial stage. So, right
away, two-thirds of all those applicants were denied benefits.
Of those two-thirds that are denied, some of them say, okay,
you deny it, that is it. Many will say, wait a minute, I that
you made the wrong decision, I want you to reconsider. So they
go to the next level of appeal, which is in many cases
reconsideration; not every jurisdiction has that interim level
of reconsideration.
Appeals to reconsideration--how many of those appeals to
reconsideration did the Social Security Administration
receive--853,142. They issued 819,710. Of the 819,710 decisions
on reconsideration, how many of those were to grant benefits at
that stage now? Twelve percent; 88 percent of those individuals
who sought benefits after that initial rejection at the second
level, how many at the second level of 819,000 decisions, how
many were allowed? Only 12 percent. So now have you 88 percent
that is denied. They say, wait a minute, we still think you are
wrong; what can I do to appeal that? Now you can get to that
ALJ. This is now at the administrative appeal level. So you are
now at the third level where you are constantly narrowing down
the universe of folks who are appealing, and by the way, you
are now probably getting to the more complicated cases, where
it is not a simple clear fact of whether you get the benefits
or not. At the administrative judge level, the hearing level,
662,775 cases were decided. How many were allowed? Fifty-eight
percent of those cases were allowed; 13 percent were dismissed;
29 percent were denied. There are still two other levels of
appeals, the so-called appeals council, which is much smaller,
only 103,000 in decisions. Only 2 percent of the individuals
got allowance of benefits, and then, of course, you go to the
Federal court from there, where the allowance rate for 13,271
decisions was 3 percent.
My point here is to say this: There are different steps
along the way and every time you narrow the number of folks who
are appealing because the cases are probably more complicated,
more severe, and so you have a lot of work, Judge Frye, to do
because you are dealing with folks that after two stages of
being told no, they still believe yes, and so you are making
some very important decisions. That is why some of us believe
you should be able to be aggressive through an informal
process, where you can do all the questioning, as Ms. Zelenske
mentioned, of that individual, the personal questions. Try to
make it as easy as possible for SSA to come out with a
decision. But it is a tough process, and I hope we recognize
that we are dealing with folks who are for the most part very
poor and very frail. We appreciate your testimony and anything
you can do to help enlighten us on how to move forward would be
appreciated.
Mr. Chairman, it has been a great hearing, as have been the
previous hearings on this matter. With that, I yield back.
Chairman JOHNSON. Thank you. I would like to ask unanimous
consent to enter into the record a report by the Congressional
Research Service which provides an overview of Administrative
Judges and how they differ from ALJs and some examples of how
administrative judges are used by other agencies. Everybody has
received a copy of that.
Without objection, so ordered.
[The information follows: Transcript Insert 5]

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Chairman JOHNSON. Again, I want to thank you all for being
here today and for your testimony. I look forward to continuing
this discussion on ways to secure the future of this important
program at our next hearing. You know, Social Security is a
vital part of this Nation, so we need to protect it, and I
thank you all for being here. With that, the committee stands
adjourned, thank you very much.
[Whereupon, at 3:53 p.m., the subcommittee was adjourned.]

[Submissions for the Record follow:]

David McCaskey

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Disability Law Center, Inc.

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Federal Administrative Law Judges Conference

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Federal Bar Association

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Max Rae

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Organization of Social Security Claimants' Representatives

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ScottDaniels

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MATERIAL SUBMITTED FOR THE RECORD
Questions for the Record:
The Honorable Michael J. Astrue 1

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The Honorable Michael J. Astrue 2

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Ethel Zelenske 1

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Ethel Zelenske 2

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The Honorable D. Randall Frye

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Richard J. Pierce, Jr.

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