U.S. GOVERNMENT PRINTING OFFICE

67–585 CC WASHINGTON : 2000

PROCESSING OF ATTORNEY FEES BY THE SOCIAL

SECURITY ADMINISTRATION

HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

JUNE 14, 2000

Serial 106–70

Printed for the use of the Committee on Ways and Means

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ii

COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

SCOTT MCINNIS, Colorado

RON LEWIS, Kentucky

MARK FOLEY, Florida

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

LLOYD DOGGETT, Texas

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY

E. CLAY SHAW, JR., Florida, Chairman

SAM JOHNSON, Texas

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

JIM MCCRERY, Louisiana

ROBERT T. MATSUI, California

SANDER M. LEVIN, Michigan

JOHN S. TANNER, Tennessee

LLOYD DOGGETT, Texas

BENJAMIN L. CARDIN, Maryland

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records

of the Committee on Ways and Means are also published in electronic form. The printed

hearing record remains the official version. Because electronic submissions are used to

prepare both printed and electronic versions of the hearing record, the process of converting

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process

is further refined.

iii

C O N T E N T S

Page

Advisory of June 17, 2000, announcing the hearing ............................................. 2

WITNESSES

Social Security Administration, William C. Taylor, Deputy Associate Commissioner Office of Hearings and Appeals ............................................................... 5

U.S. General Accounting Office, Barbara D. Bovbjerg, Associate Director,

Education, Workforce, and Security Income Issues, Health, Education, and

Human Services Division; accompanied by Debra Sebastian, Assistant Director, and Valerie Melvin, Assistant Director, Accounting and Information

Division ................................................................................................................. 28

Consortium for Citizens with Disabilities, Marty Ford ........................................ 54

Lieberman, Lyle D., Lieberman & Gutierrez, P.A. ............................................... 50

National Organization of Social Security Claimants’ Representatives, Nancy

G. Shor .................................................................................................................. 45

National Senior Citizens Law Center, Jenny Kaufmann ..................................... 56

SUBMISSIONS FOR THE RECORD

Advocates for the Disabled, Inc., Phoenix, AZ, Sue Shaafsma, and Pat Campbell, letter .............................................................................................................. 70

Ament, Wulf & Frokjer, S.C., Merrill, WI, William A. Wulf, letter .................... 71

American Bar Association, Chicago, IL, Edward E. Kallgren, letter .................. 72

American Disability Representation Specialists Association, Hattiesburg, MS,

Frank P. Edwards, letter ..................................................................................... 72

Barrow, Roscoe L., II, David Allen & Associates, Sacramento, CA, letter ......... 74

Brown, Kinsey & Funkhouser, P.L.C., Mason City, IA, Dolores J. Bowers,

letter ...................................................................................................................... 73

Campbell, Pat, Advocates for the Disabled, Inc., Phoenix, AZ, letter ................. 70

Cebula, Ray, Disability Law Center, Inc., Boston, MA, letter ............................. 76

Comerford, Barbara B., Law Office of Barbara B. Comerford, P.A., Ridgewood,

NJ, letter ............................................................................................................... 88

Cornaghie, Chris A., Esq., Memphis, TN, letter ................................................... 73

David Allen & Associates, Sacramento, CA, Roscoe L. Barrow II, letter ........... 74

Disability Law Center, Inc., Boston, MA, Ray Cebula, letter .............................. 76

Edwards, Frank P., American Disability Representation Specialists Association, Hattiesburg, MS, letter ............................................................................... 72

Federal Bar Association, Kathleen McGraw, letter .............................................. 77

Feldman, Thomas A., Esq., Denver, CO, letter ..................................................... 80

Felps, Mary Ellen, Esq., Austin, TX, letter ........................................................... 80

Flexer, A. Scott, Ward White & Associates, Holiday, FL, letter and attachment ...................................................................................................................... 90

Friedman, Joel F., Jerome, Gibson, Stewart, Friedman, Stevenson & Engle,

P.C., Phoenix, AZ, statement and attachments ................................................. 84

Ginger Lanigan and Associates, Inc., Brockton, MA, Ginger Lanigan, letter .... 81

Heard, John R., Esq., San Antonio, TX, statement .............................................. 81

Jennings, Joan, Esq., Sacramento, CA, letter ....................................................... 84

Jerome, Gibson, Stewart, Friedman, Stevenson & Engle, P.C., Phoenix, AZ,

Joel F. Friedman, statement and attachments .................................................. 84

Kallgren, Edward E., American Bar Association, Chicago, IL, letter ................. 72

Lanigan, Ginger, Ginger Lanigan and Associates, Inc., Brockton, MA, letter ... 81

Law Offices of Barbara B. Comerford, P.A., Ridgewood, NJ, Barbara B.

Comerford, letter .................................................................................................. 88

McGraw, Kathleen, Federal Bar Association, letter ............................................. 77

Pekoe, Reed, Wright & Associates, Inc., Winter Park, FL, Ron Pekoe, letter .... 89

Page

iv

Schaafsma, Sue, Advocates for the Disabled, Inc., Phoenix, AZ, letter .............. 70

Ward White & Associates, Holiday, FL, A. Scott Flexer, letter and attachment ...................................................................................................................... 90

White, Robert G., Esq., Chicago, IL, letter and attachments .............................. 92

Wulf, William A., Ament, Wulf & Frokjer, S.C., Merrill, WI, letter ................... 71

(1)

PROCESSING OF ATTORNEY FEES BY THE

SOCIAL SECURITY ADMINISTRATION

WEDNESDAY, JUNE 14, 2000

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON SOCIAL SECURITY,

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:10 p.m., in room

B–318, Rayburn House Office Building, Hon. E. Clay Shaw, Jr.

(Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE

June 7, 2000

No. SS–18

Shaw Announces Hearing on

Processing of Attorney Fees

by the Social Security Administration

Congressman E. Clay Shaw, Jr., (R–FL), Chairman, Subcommittee on Social Security of the Committee on Ways and Means, today announced that the Subcommittee

will hold a hearing on the processing of attorney fees by the Social Security Administration (SSA). The hearing will take place on Wednesday, June 14, 2000, 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. Witnesses will include representatives

of the U.S. General Accounting Office (GAO), SSA, and individuals affected by the

procedures for processing attorney fees. However, any individual or organization not

scheduled for an oral appearance may submit a written statement for consideration

by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

Individuals seeking Social Security benefits may choose to have attorneys or other

individuals represent them in their claims. The Commissioner of Social Security

through regulation establishes a limit on the amount of the representation fee that

may be charged and approves each fee charged by any representative. In favorable

decisions, the Commissioner withholds the attorney’s fee from the claimant’s pastdue benefits and payment is made directly to the attorney. Prior to 2000, the costs

associated with the processing, withholding, and approving direct payment of attorney fees were absorbed in the administrative budget for the SSA.

The Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106–170)

requires the Commissioner to cover the costs of paying attorney fees directly to attorneys out of the fees collected. Attorneys are prohibited from recouping this cost

from their clients. Effective February 1, 2000, the assessment for calendar year 2000

is 6.3 percent of the approved attorney’s fee. For future years, the assessment will

be set at a rate to achieve full recovery of the costs of determining, processing, withholding, and distributing payment of fees to attorneys, but it may not exceed 6.3

percent. The legislation also eliminated a 15-day delay before attorney fees could be

paid and directed a study by the GAO of a number of issues related to representation and payment of attorney fees with a report due by December 2000.

Increasingly, many attorneys have expressed concerns about long wait times for

attorney fee payments. For many small practices, these delays have caused serious

financial setbacks, resulting in attorneys giving up their practice representing Social

Security applicants.

In announcing the hearing, Chairman Shaw stated: ‘‘People wait a lifetime to be

able to claim Social Security benefits. They shouldn’t have to wait again to get the

benefits they are entitled to. That the Social Security application process is so complex people feel obliged to hire an attorney to help them is in itself a serious problem. It is especially troubling given the expected rapid growth in the number of apVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
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plicants and beneficiaries with the aging and eventual retirement of the Baby

Boomers. Much work remains in the area of simplifying the application process,

which will benefit applicants, the SSA, and ultimately taxpayers. For now, though,

a good start would be finding a better way to pay claimants’ representatives and

to have SSA process this workload as quickly and efficiently as possible.’’

FOCUS OF THE HEARING:

The hearing will focus on the timeliness and accuracy of SSA’s processing of attorney fee payments, the impact of recent legislation on this process, and recommendations for additional changes to improve the process.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed

record of the hearing should submit six (6) single-spaced copies of their statement,

along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format,

with their name, address, and hearing date noted on a label, by the close of business, Wednesday, June 28, 2000, to A.L. Singleton, Chief of Staff, Committee on

Ways and Means, U.S. House of Representatives, 1102 Longworth House Office

Building, Washington, D.C. 20515. If those filing written statements wish to have

their statements distributed to the press and interested public at the hearing, they

may deliver 200 additional copies for this purpose to the Subcommittee on Social

Security office, room B–316 Rayburn House Office Building, by close of business the

day before the hearing.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement

or exhibit submitted for the printed record or any written comments in response to a request

for written comments must conform to the guidelines listed below. Any statement or exhibit 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 statements and any accompanying exhibits for printing must be submitted on an IBM

compatible 3.5-inch diskette in WordPerfect or MS Word format, typed in single space and may

not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee

will rely 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. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments

by the Committee, must include on his statement or submission a list of all clients, persons,

or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, company, address,

telephone and fax numbers where the witness or the designated representative may be reached.

This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing.

Statements and exhibits or supplementary material submitted solely for distribution to the

Members, the press, and the public during the course of a public hearing may be submitted in

other forms.

Note: All Committee advisories and news releases are available on the World

Wide Web at ‘‘http://waysandmeans.house.gov’’.

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.

f

4

Chairman SHAW. I am sorry we are a few minutes late starting

the hearing this afternoon. Welcome to today’s hearing on processing of attorney fees by the Social Security Administration.

Filing for Social Security benefits, especially disability benefits,

is so complicated that many people must hire attorneys to help

them through the process. The mind-boggling complexity of the Social Security application process is itself a serious problem that I

think needs to be addressed, and perhaps it will be addressed in

future hearings. But today we will focus on how attorneys are paid

once an individual is awarded benefits.

Attorneys may choose to receive their benefits directly from the

Social Security Administration. Under this option, SSA deducts the

fee from the claimant’s past-due benefits and forwards it to the attorney. Prior to this year, taxpayers picked up the tab for SSA’s

costs of processing, withholding, and forwarding this fee to the attorney.

The Ticket to Work and Work Incentives Improvement Act

changed that. Many people on both sides of the aisle thought that

having lawyers, not taxpayers, pay for Social Security’s processing

of their paychecks was the right thing to do.

In addition to requiring that attorneys pay their own processing

costs, the law also required the General Accounting Office to examine a number of related issues, including how these costs should be

assessed. Although the General Accounting Office report is not due

until the end of this year, today they will share with us an interim

progress report of their findings.

Since the passage of the Ticket to Work legislation, I have become increasingly concerned about the delay in SSA’s processing of

attorney’s fees. Attorneys should not have to wait months or sometimes years to receive their payment from the agency.

That is why ranking member Matsui and I, with the support of

several members of this subcommittee, introduced H.R. 4633 last

week. This bill would allow SSA to impose the assessment of attorney’s fees only if the fee is processed and approved for payment

within 30 days of benefit approval.

Today, I look forward to the hearing of our witnesses’ views regarding this proposal, as well as other suggestions that we may

have for improving the attorney’s fee process.

Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. I do not have anything

to add to what you put in. I will just submit my statement for the

record, but I have endorsed the legislation and I appreciate the fact

that we have done it together.

Chairman SHAW. We are doing too much, Bob.

Mr. MATSUI. I know. We are the only ones, though. [Laughter.]

[The opening statement follows:]

Opening Statement of Hon. Robert T. Matsui, a Representative in Congress

from the State of California

I want to thank Chairman Shaw for holding this hearing today. I think it is very

important that we examine the issue of Social Security benefit claimant attorney

fees as it has been raised many times over the last year. In particular, we have

5

heard from numerous individuals and groups about this topic since we passed the

Ticket to Work and Work Incentives Improvement Act of 1999 last fall.

The Ticket to Work and Work Incentives Improvement Act imposed a new administrative assessment upon direct payments from the Social Security Administration

to attorneys. I think it is our duty to review the Social Security Administration’s

procedures for determining, withholding, and certifying such payments and to examine possible improvements to those procedures.

I am also very pleased that a number of Members of the Committee on Ways and

Means—Democrats and Republicans alike—came together in a bipartisan fashion

last week to introduce legislation to make one improvement to SSA’s procedures for

paying attorneys’ fees. Our legislation is simple—it would prohibit the Social Security Administration from charging an attorney the new 6.3 percent administrative

assessment unless the agency certifies his or her fee for payment within 30 days

of the award of past-due benefits to his or her client.

Some maintain that the new 6.3 percent assessment is necessary to cover the

costs that SSA incurs in withholding and processing fee payments for attorneys. If

this is indeed the case, and the 6.3 percent assessment is simply compensation for

services rendered, then it is reasonable to expect that SSA will process fee payments

to attorneys in a timely fashion. Our legislation simply seeks to put that reasonable

expectation into law.

As we review SSA’s procedures for making attorney fee payments and as we consider ways to improve those procedures—including the legislation I just described—

I think we can all agree that our first priority must be to ensure that benefit claimants—whether they are filing a claim for Old-Age Insurance, Disability Insurance,

or Supplemental Security Income—receive the benefits to which they are entitled.

Given the complexity of these programs, achieving this goal requires that benefit

claimants have access to skilled legal professionals to help them with their claims.

All too often, claimants must rely on an attorney or another representative in order

to negotiate the claims process successfully. Therefore, I think we can agree that

simplification of the administration of the OASDI and SSI programs and the maintenance of a pool of qualified legal representatives must be one of our top priorities.

Finally, we must be cognizant of the workloads that programmatic or administrative changes may create for SSA. As we all know from the hearings the Subcommittee held earlier this year, SSA faces a number of long-term challenges in preparation for the aging of the Baby Boomers. However, the agency does not have the resources it requires to meet those challenges. The Labor, Health and Human Services

Appropriations bill reported for FY 01 by the Appropriations Committee would provide $156 million less for SSA’s administrative budget than the President’s request.

We cannot continue to ask the Social Security Administration to do more with less

each year.

I look forward to hearing from our witnesses this afternoon and, in particular, to

hearing their views on possible improvements to SSA’s attorney fee procedures.

ministration will be Dr. William C. Taylor, who is Deputy Associate

Thank you, Mr. Chairman.

Chairman SHAW. Our first witness from the Social Security Adf

Commissioner for Hearings and Appeals.

Dr. Taylor, welcome to the hearing. We have your full statement

which will be made part of the record, and we invite you to summarize as you see fit.

STATEMENT OF WILLIAM C. TAYLOR, DEPUTY ASSOCIATE

COMMISSIONER, OFFICE OF HEARINGS AND APPEALS, SOCIAL SECURITY ADMINISTRATION

Mr. TAYLOR. Thank you, Mr. Chairman. If I could begin with a

slight correction, I am not a doctor.

Chairman SHAW. Well, they’ve J.D. You are a doctor.

Mr. TAYLOR. Oh, thank you very much. [Laughter.]

Mr. TAYLOR. I have never had the courage to say that.

Chairman SHAW. And so are we.

6

Mr. TAYLOR. Mr. Chairman, Mr. Matsui, and members of the

subcommittee, good afternoon. I am William Taylor, Deputy Associate Commissioner for SSA’s Office of Hearings and Appeals. I have

been with the agency for almost 30 years and in my present position since 1995.

Thank you for the opportunity to discuss the process by which

the Social Security Administration approves and pays attorney

fees. It is an important, multifaceted issue. Last year about 57 percent of all cases at the ALJ hearing level involved claimants with

attorneys, and in 1999, SSA paid almost 200,000 fee payments totaling more than $450 million to attorney representatives.

We are working to make this payment process as fair, efficient,

and timely as possible. My written statement details the history of

the attorney fee process, SSA’s implementation of the recent fee

payment legislation, and planned payment process improvements.

I ask that my written statement be placed in the record.

Last year, the Ticket to Work and Work Incentives Improvement

Act of 1999 eliminated the 15-day waiting period for certification

of an attorney fee. In addition, it allowed SSA to charge an assessment, not to exceed 6.3 percent of the direct payment amount to

recover the costs for determining withholding and certifying fees to

attorneys.

In other words, the current 6.3 percent assessment is the cost of

providing the attorney with the service of calculating withholding

and paying the fee. SSA began charging the assessment in cases

in which the decision was made on and after February 1, 2000.

SSA has not received any additional resources with which to address this issue, hindering our ability to make significant improvements to our current performance. While we did clear out our attorney fee claim backlogs before the user fee became effective, we

had to redirect limited resources that could have been used to provide better overall public service, for example, on our 800 telephone

number.

With the heightened awareness of the attorney fee process generated by the enactment of the 6.3 percent assessment has come

an increase in the number of complaints from attorneys about the

fee process. We recognize the importance of timely payment to attorneys who successfully represent their clients. In fact, we have

taken several measures to clear the backlog of outstanding fee

claims. Among these measures are providing 111 work years to

technical staffs, diverting resources from other workloads to process attorney fee claims, giving priority to those outstanding fee

claims to see if they can be paid immediately.

These measures have worked. By March 21 of this year, SSA had

reviewed approximately 79,700, or about 93 percent, of the 85,991

claims that were outstanding as of February 2 of this year. Based

on these reviews, we immediately paid fully developed claims.

When additional development was needed, we requested it on a priority basis.

Furthermore, as of May 15 of this year, SSA had paid 167, or approximately 84 percent, of the 197 fee claims that were brought to

our attention by this subcommittee. We plan to resolve the outstanding claims soon. Although we have resolved many of these

cases, we realize that there continue to be concerns about delays

7

in paying attorney fees. That is why the commissioner has requested a review of the attorney fee process that is currently underway.

The current fee payment process, whether fee agreement or fee

petition, requires manual action and considerable coordination between hearing office functions and processing center functions. Because this is a complex process involving many steps, manual actions and even mailing time, the new legislation would require that

SSA forfeit the amount we assess the attorney in two-thirds of the

attorney fee cases. My written statement describes this process in

more detail.

The legislation enacted last year did not allow SSA to deposit the

fees raised as a result of the assessment in our LAE account. In

the absence of that provision, the 6.3 percent assessment is directed back to the Title II trust funds. Thus, any restriction on

SSA’s ability to impose the assessment will result in a loss to the

trust funds. For instance, in the case of a 30-day time limit, our

actuaries estimate that about two-thirds of the payments would be

lost.

In conclusion, Mr. Chairman, the Social Security Administration

needs more resources. Lack of adequate resources affect our ability

to timely process not only attorney fees but all agency workloads.

The Commissioner has presented SSA’s FY 2001 budget to the

House Appropriations Subcommittee on Labor, Health and Human

Services and Education.

That subcommittee has, however, recommended a reduction of

$156 million below the President’s request. This reduction is even

greater when compared to the Commissioner’s budget request. The

Commissioner is on record as saying that funding at this level

would seriously undermine stable staffing and performance for the

agency.

As to attorney fee processing, we are committed to providing the

best service possible to the attorneys who represent our claimants,

but we face serious challenges as we work to improve our performance in this area. Without the benefit of additional administrative

funds, we must shift existing resources to balance the needs of this

workload to pay attorneys with other workloads serving applicants

and beneficiaries.

Last year we estimated that we could pay attorneys generally

within 60 days the first year after enactment and 45 days the second year if adequate resources were provided. Until our review of

the attorney fee process is complete, we do not know what our level

of performance will be. As I have pointed out, however, the 30-day

time restriction imposed by the bill could result in the loss to the

Social Security trust funds in excess of $80 million over five years.

We look forward to working with you and other members of the

subcommittee to find ways to meet our resource needs. I will be

happy to answer any questions that you may have. Thank you, Mr.

Chairman.

[The prepared statement follows:]

Statement of William C. Taylor, Deputy Associate Commisssioner, Office of

Hearings and Appeals, Social Security Administration

Mr. Chairman, Mr. Matsui, and Members of the Subcommittee:

8

Thank you for inviting me to discuss the process by which attorneys may request

that the Social Security Administration (SSA) approves and pays attorney fees. We

recognize the importance of timely payment to attorneys who successfully represent

their clients. Representatives are entitled to world class service, as are all of SSA’s

customers, and in 1999, SSA made 200,000 fee payments to attorneys totaling almost more $450 million. Today, I will discuss with you the history of the attorney

fee process, SSA’s current process, implementation of the new law, and some

planned improvements in this area. In addition, I will present SSA’s views on H.R.

4633, which would make further changes to the attorney fee process.

History of Attorney Representation and Fee Approval

The Social Security Act has recognized a role for attorneys as claimants’ representatives since 1939, with the enactment of the Social Security Amendments of

1939. Pursuant to statutory authority, the Social Security Board’s Administrator

promulgated rules and regulations governing representatives of claimants and set

the maximum fee attorneys could charge. At first, the maximum an attorney could charge was $10 unless a petition was

filed and a higher amount was authorized. In 1960, the amount an attorney could

charge without approval was increased to $20 for representation before the Bureau

of Federal Old-Age Benefits with amounts up to $50 for representation before the

Bureau and a hearing examiner and/or the Appeals Council. Disability cash benefits

had begun in 1956 and more and more appeals were on disability claims.

The Social Security Amendments of 1965 provided for withholding up to 25 percent of past-due benefits for direct payment to an attorney in court cases to ensure

that claimants had access to effective legal representation at a fair rate of compensation. The Social Security Amendments of 1967 required the Secretary to approve ‘‘reasonable’’ attorney fees, not to exceed 25 percent of the past-due benefits,

for services rendered in administrative proceedings, and authorized the Secretary to

certify payment directly to an attorney from a claimant’s past-due benefits.

When the Ways and Means Committee designed the Supplemental Security Income (SSI) program in 1972, it decided not to authorize any similar withholding

from a claimant’s past-due benefits. The Committee concluded that such a withholding would be ‘‘contrary to the purpose of the program.’’ This conclusion still makes

sense. To paraphrase Justice Brennan in the Supreme Court’s decision in Bowen v.

Galbreath in 1988, given the extreme financial need of SSI beneficiaries, one can

conclude that withholding past-due benefits under the SSI program will cause greater hardship than withholding past due benefits from insured individuals under the

Old-Age, Survivors and Disability Insurance programs.

The Omnibus Budget Reconciliation Act of 1990 created the fee agreement process

to streamline payment of attorney fees by permitting SSA to routinely approve fees

that were within certain limits (the lesser of $4,000 or 25 percent of past-due benefits) if the representative and client both agreed in writing to the fee. Payment of

the fee could not be certified pending a 15-day administrative review period after

receipt of the award notice. The 1990 legislation also continued the exclusion of SSI

claims from the direct payment of attorney fees from a claimant’s past-due benefits.

The Ticket to Work and Work Incentives Improvement Act of 1999 eliminated the

15-day waiting period for certification of an attorney fee and allowed SSA to charge

an assessment, not to exceed 6.3 percent of the fee, to recover the costs for determining and certifying fees to attorneys. In other words, the current 6.3 percent assessment is the cost of providing the attorney with the service of calculating, withholding, and paying the fee. SSA began charging the assessment on cases on which

the decision was made on or after February 1, 2000.

Process in General

Section 206 of the Social Security Act provides that a representative may not

charge or collect, directly or indirectly, a fee in any amount not approved by SSA

or a Federal court. SSA, under either the fee petition or fee agreement process, approves the fee that may be charged to represent a claimant for Social Security and

SSI benefits in administrative proceedings. At each level of the determination process, applicants may be represented by an attorney or other individual in pursuing

their claim. Over the last 20 years, the proportion of applicants with representation

at the hearing level has increased dramatically; and in fiscal year 1999, about 57

percent of all cases decided at the Administrative Law Judge (ALJ) hearing level

involved attorneys.

Obtaining payment from clients is often difficult for attorneys, who sometimes

have to expend considerable resources to get paid. In virtually all successful Social

Security claims, SSA ensures that the attorney receives payment. By paying attorneys from withheld past-due benefits, SSA is providing a valuable service to attorVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
9

neys, guaranteeing payment of all or a portion of any fees due. In SSI cases, the

attorney must look to the claimant for payment.

Representatives may request payment for services through either a fee petition

or a fee agreement process.

Fee Petition Process

After completing his or her services for the claimant, the representative (attorney

or non-attorney) must request the Commissioner’s approval of fees. Each fee petition

requires an individual evaluation by an ALJ or other authorized personnel of the

worth of the services. Adjudicators, in authorizing a fee, consider factors such as the

extent and nature of the services performed, the complexity of the case, and the

amount of time the representative spent on the case. Fees over $5,000 require additional review.

After SSA authorizes a fee, we notify the claimant and their representative of the

authorized fee and their right to administrative review. Because of the highly involved nature of this process, fee petition claims are very rarely paid within 30 days.

While we do not routinely track data on the use of fee agreements and fee petitions, we have just completed a special systems run on a sample of attorney fee

cases. That data show that the percentage of fee payments that were withheld and

paid using the fee petition process has steadily declined from 1995 through 1999,

from 30 percent in 1995 to just 13 percent in 1999. In addition, that decline appears

to be continuing in 2000. From January 2000 through the end of May 2000, the percentage of fee petitions fell to just under 12 percent.

What this tells us is that more attorneys are electing to receive their fees through

the fee agreement process, which I will discuss next, even though fees received

through that process are capped at a specified amount. The decline in the number

of fee petition requests filed suggests that, contrary to some reports, attorneys are

not seeking to have their fees paid through the fee petition process because they

can get a higher fee than what they could receive under the alternate process. In

fact, in addition to the decline in the number of attorneys requesting payment

through fee petition, 91 percent of fee petition payments approved are for less than

$4,000 (generally, the amount which a fee under an approved agreement may not

exceed).

Fee Agreement Process

The fee agreement process was developed to be a simpler alternative to the fee

petition process. Under the fee agreement process, if the representative and claimant sign and submit a written agreement as to the amount of the fee, SSA will generally approve the agreement if the specified fee does not exceed the lesser of 25

percent of the claimant’s past-due benefits or $4,000. SSA does not withhold pastdue benefits for non-attorney representatives or in SSI cases, but still must approve

the fee. The Commissioner then notifies the respective parties of the maximum fee

and right to request administrative review. This is usually the quicker and more

common method to set the fee.

Based on the sample run just completed, the number of fee agreement cases accounted for almost 87 percent of fee payments processed in 1999. The sample for

1995 showed 70 percent were fee agreement cases. The percentage for this year

through the end of May rose to 88 percent. Obviously, more and more attorneys prefer to use the more streamlined process, which suggests that attorneys are not concerned about the $4,000 limitation. The $4,000 limit was put in place based on a

recommendation that SSA adopt a rebuttable presumption that a fee equaling 25

percent of the claimant’s past-due benefits, up to $4,000, is reasonable. In 1999, the

average payment under the fee agreement process was $2,555.

Implementation of the New Law

With the heightened awareness of the attorney fee process generated by enactment of the 6.3 percent assessment has come an increase in the number of complaints from attorneys about the fee process. We recognize the importance of timely

payment to attorneys who successfully represent their clients. With elimination of

the 15-day waiting period, some cases are being paid more quickly. Other cases,

however, are only being helped marginally.

To address this issue, we have taken several measures to clear the backlog of outstanding fee claims. Among these measures are providing 111 work years to technical staffs, diverting resources from other work loads to process the attorney fee

claims, and giving priority to these outstanding fee claims to see if they can be paid

immediately.

These measures have worked. By March 21, 2000, SSA had reviewed approximately 79,700 (or 93 percent) of the 85,991 claims that were outstanding as of FebVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
10

ruary 2, 2000. Based on these reviews, we immediately paid fully developed claims.

When additional development was needed, we requested it on a priority basis.

Furthermore, as of May 15, 2000, SSA had paid 167 (or approximately 84 percent)

of the 197 fee claims that were brought to our attention by this subcommittee. We

plan to resolve the outstanding claims soon. Although we have resolved many of

these cases, we realize that there continue to be concerns about delays in paying

attorney fees.

The legislation introducing the attorney assessments is being implemented in

phases, beginning with an all manual process, with plans to automate steps of the

process as time and resources were to permit. This is not unlike implementation of

many SSA legislative initiatives. The process of paying the attorney in Title II cases

is not completely manual, although it does require a manual review and input to

begin the Treasury payment process.

SSA’s systems are set up to contain information on the primary numberholder

and any auxiliary beneficiaries only. Information about third party payments, such

as attorney fee payments, is not captured on SSA’s Master Beneficiary Record

(MBR) system.

If the Agency decides to automate attorney payments, the effort would be extremely significant, involving major redesign of the Title II data structures and client files. One requirement for paying non-beneficiaries would be to develop and

record some discrete identifier for each payment and payee to maintain a good audit

trail. This might be the attorney’s SSN or a firm’s Tax ID number or Employer ID

number. Up to now, the attorneys and their advocacy groups have been adamant

that they not be required to supply this or similar identifying information to SSA.

Proposal to Change the Attorney Fee Process

H.R.4633, recently introduced by you and other members of the Subcommittee,

would not allow SSA to impose the attorney fee assessment if payment is not made

to the attorney within 30 days after the initial certification of payments to the beneficiary.

The current fee determination process, whether fee agreement or fee petition, requires manual actions and considerable coordination between hearing office functions and processing center functions. Because this is a complex process, as I will

describe, involving many steps, manual actions, and even mailing time, the new legislation would require that SSA forfeit the amount we assess the attorney in twothirds of the attorney fee cases.

While some fee agreement cases may require only limited development, and SSA

may even pay the attorney and the claimant at the same time, that is not always

the case. Many fee agreement cases require additional development (for instance,

if a workers’ compensation computation is needed to calculate the proper amount

of past-due benefits or if we need to develop applications for the children or spouse

of the claimant), and the claimant is awarded ongoing benefits pending determination of past-due benefits. In those cases the attorney is not paid until past-due benefits are awarded.

In fee petition cases, direct payment to the attorney must await both the calculation of the past-due benefits and authorization of the fee. Once past-due benefits

have been calculated and the fee has been approved, direct payment is made to the

attorney.

Fee authorizations for larger amounts can also take longer to process because

they often occur in difficult, complicated cases involving a lengthy appeals process.

This results in SSA having to consider a long, detailed record of all the services that

were performed in order to determine a ‘‘reasonable fee.’’ In addition, fee authorizations for more than $5,000 involve an additional step, i.e., our policy requires a review and an approval by the Attorney Fee Officer in the Office of Hearings and Appeals, a Regional Chief ALJ, or the Deputy Chief Administrative ALJ.

As you know, SSA does not have a tracking system in place from the start to the

finish of the process to measure the time it takes us to pay attorney fees; however,

attorney fees in fee agreement cases have generally been paid within 90 days of the

award notice. As a result of changes that we have already made, including the

elimination of the 15-day pre-payment holding period for fee agreement cases, payment of attorney fees can now generally be made within 60 days of the award notice.

As I mentioned, H.R.4633 would not allow SSA to impose the attorney fee assessment if payment is not made to the attorney within 30 days after the initial certification of payments to the beneficiary. There are cases in which we are not able to

pay the attorney until completion of the additional development I have described.

Any time limitation that would restrict SSA from imposing the user fee assessment

11

should exclude both fee petition cases and fee agreement cases for which there is

outstanding development.

While we agree that, in general, attorneys should receive their fees timely, there

are cases in which the extra time needed to process the attorney fee payment is not

within SSA’s control. These cases include not only fee agreement cases with outstanding development, but virtually all fee petition cases, since the attorney is not

required to file a request for payment until 60 days from the date of the decision,

and may even request an extension beyond the 60 days. In addition, some cases

take significantly longer to pay because of the need to develop additional evidence,

such as proof of workers’ compensation payments. The estimated $123 million in proceeds from the 6.3 percent assessment over the

first 5 years would be directed to the title II trust funds. Thus, any restriction on

SSA’s ability to impose the assessment would result in a loss to the trust funds.

For instance, in the case of a 30-day time limit, the Actuaries estimate that about

two-thirds of the payments would be lost.

Extending Attorney Fee Withholding to the SSI Program

SSI is a means-tested program providing cash assistance to aged, blind, and disabled individuals whose incomes and resources are below minimal levels set by law.

Currently, individuals with countable income above $512 a month and countable resources above $2,000 are not eligible for SSI. As you can see, SSI beneficiaries are

among the most vulnerable Americans in that they have little in the way of other

income or personal savings.

Arguably, SSI applicants are even worse off in that they often have very small

amounts of monthly income and are even poorer than SSI beneficiaries. Any income

or resources that they do have is needed for food, clothing and shelter. It is likely

that they may go into debt while they are waiting for their SSI applications to be

processed.

When they finally receive their SSI benefits, those benefits often are used to pay

bills or repay loans that they incurred during the months that their SSI applications

were pending. We are concerned that withholding 25 percent of accumulated benefits might take away funds needed for basic needs. It would also eliminate the option that SSI beneficiaries and their attorneys could work out agreements to pay

the fee out over time.

In addition, there are other implications with regard to direct withholding from

SSI payments apart from the financial impact on SSI beneficiaries. There are also

serious workload implications for SSA regarding extending the service we offer attorneys representing Social Security claimants to SSI claimants. For instance, it

would require major systems changes to existing SSA programs, and would require

our field office employees to take direct actions to pay the attorney fees, which they

do not currently do, as well as responding to requests for information regarding payments to SSI attorneys and explaining notices. At this time, we do not have an estimate for the number of workyears we will need to implement direct withholding of

attorney fees in SSI cases.

Review Process

Our procedures to pay attorneys, particularly in fee petition cases involving large

amounts, are admittedly complex. That is why the Commissioner has requested a

review of the attorney fee process that is currently underway.

Part of the Commissioner’s review will be to study ways in which we can better

measure our performance in attorney fee processing. This review will allow us to

identify those areas in which we may be able to improve that performance. You can

be assured that we will share the results of that review. It is expected to be completed by the end of this year.

Until our review is completed, however, I urge you not to make changes in the

current process. We need time to evaluate the current assessment process, which

has been in place for a very short time. Until we have the results of our review,

we would view any further changes to the program with extreme hesitation.

Our review of the process will cover a number of issues, including:

• Gathering more current data on the attorney fee process, including a comparison of fee processing before and after the elimination of the 15-day waiting period

and the imposition of the 6.3 percent assessment;

• Ascertaining how best to assemble and maintain management information

about the fee authorization and payment process;

• Reevaluating the need to increase the $4,000 cap;

• Reevaluating our rules for approving fees, especially additional review for larger

fees; and

12

• Studying how best to coordinate fees among multiple representatives and within law firms.

We hope to use the results of this review to significantly improve the process. I

will keep you informed of our progress. I would also point out that the legislation

allows SSA to lower the 6.3 percent assessment if the cost of administering the attorney fee process is less than the revenue raised by the assessment. As part of our

overall review, we are beginning a study to see whether our original estimates of

the costs of providing the attorney fee payment process and the 6.3 percent assessment are still roughly equal. If they are not, we will lower the assessment.

Prompt Payment Act

You asked me to comment on the applicability of the Prompt Payment Act to the

attorney fee process. The Prompt Payment Act, enacted in 1982 and amended in

1988, ensures that companies providing goods or services to the government are

paid in a timely manner. Under Section 3901 of title 31 of the U.S. Code, a business

can collect an interest penalty on late payments from the government. According to

regulations, the Prompt Payment Act applies in the areas of procurement contracts,

vendor payments, utility payments, and Commodity Credit Corporation payments.

According to the plain language of the statute and its regulations, SSA’s direct

payment of attorney fees on behalf of Social Security claimants is not subject to the

Prompt Payment Act. Through the direct payment system, SSA merely serves as an

intermediary to facilitate and ensure payment of attorney fees owed by the client,

the Social Security claimant. In fact, SSA does not use its own funds to make direct

payment of attorney fees, but simply issues the payment on the claimant’s behalf

through the Treasury Department. Consequently, Section 3901 does not apply to

SSA’s unique relationship with claimants’ attorneys, and SSA is not required by

that law to add interest to the attorney fees it directly pays.

Conclusion

In conclusion, Mr. Chairman, the Social Security Administration needs sufficient

resources in order to process its work effectively. Lack of adequate resources affects

our ability to timely process not only attorney fees but all Agency workloads. The

Commissioner has presented SSA’s FY 2001 budget to the House Appropriations

Subcommittee on Labor, Health and Human Services and Education. That subcommittee has, however, recommended a reduction of $156 million below the President’s request. This reduction is even greater when compared to the Commissioner’s

budget request. The Commissioner is on record saying that funding at this level

would seriously undermine stable staffing and performance for the agency.

As to attorney fee processing, we are committed to providing the best service possible to the attorneys who represent our claimants, but we face serious challenges

as we work to improve our performance in this area.

Until our review of the attorney fee process is complete, we do not know what

our level of performance will be. As I have pointed out, however, the 30-day time

restriction imposed by the bill could result in a loss to the Social Security trust

funds in excess of $80 million over five years.

We look forward to working with you and the other members of the Subcommittee

to find ways to meet our resource needs. I will be happy to answer any questions

you may have.

Chairman S

Mr. COLLINS

HAW

. Thank you, Mr. Taylor. Just kind of walk me

. Mr. Collins.

f

through the fee process itself, please.

Mr. TAYLOR. Certainly. Our fee process consists of two basic

ways that attorneys can have fee arrangements with their clients.

The first, and the one that has been in existence for the longest,

is the fee petition process whereby the attorney typically has a contingency arrangement with the client and submits after the successful conclusion of the claim the attorney submits a petition detailing the services that were provided to that claimant, and that

petition is then subject to review through a review process. Usually

in our case, it is by the administrative law judge who held the

hearing.

13

The other basic process is the fee agreement process which was

begun in 1991 and that is a more streamlined process whereby the

claimant and the attorney agree up front prior to the decision that

the attorney will accept either 25 percent of the past due benefit

payment or $4,000, whichever is less, so effectively there is a

$4,000 maximum.

If that agreement is approved, and they almost always are, by

the administrative law judge that completes the first stage of the

fee authorization payment process. After that, the fee agreement

along with the favorable decision is sent to a processing center. We

have six processing centers plus another processing center located

near the Social Security Administration headquarters in Baltimore.

It is their job to then determine the amount of past due benefits

that are payable to the claimant. In a direct payment case under

title II they will make a rough determination of the past due benefit amounts and will issue an award notice to the claimant, put the

claimant in continuing benefit status, and pay a past due benefit

amount. At the same time they will withhold 25 percent of that

past due benefit for eventual payment to the attorney subject to

final approval of the fee.

In the fee petition process and in the fee agreement process, the

final amount is subject to some adjustments depending upon such

things as the receipt of workers’ compensation benefits by the

claimant. That information has to be obtained, if it has not already

been obtained, and considered in calculation of the actual past due

benefit amount and adjustments are made, and when that process

has been completed, the final determination of the 25 percent can

be made and the direct payment can be made to the attorney of the

attorney’s fee.

Mr. COLLINS. You may have stated it. What percent goes with

first the fee petition and what percentage of claimants go with the

fee agreement? Do you have any idea?

Mr. TAYLOR. Yes, congressman, I do.

Mr. COLLINS. And is there a cap on the fee petition?

Mr. TAYLOR. To answer the second question first, there is no cap

on the fee petition process. SSA will only withhold 25 percent of

past-due benefits, but there is no cap on the actual amount of the

fee that can be authorized. Anything over the 25 percent must be

collected directly by the attorney.

In terms of the use of the fee agreement versus the fee petition

process, currently it is running about 88 percent of the fee payments are made pursuant to the fee agreement process and about

13 or 12 percent under the fee petition process. That is a substantial change from the situation that existed several years ago. The

usage of the fee agreement process has been increasing in recent

years and continues to increase and that, I think, was the intention

of the legislation that the process would be streamlined and that

most, if not all, of the fee payments would be made pursuant to

this simplified process.

Mr. COLLINS. Okay. Well, I see my time is about out, but I appreciate that very much. Thank you. I may have another question.

Chairman SHAW. Mr. Matsui.

14

Mr. MATSUI. Thank you, Mr. Chairman. Mr. Taylor, you get the

claimant’s check out once the case is resolved within how many

days on the average?

Mr. TAYLOR. I do not know that I have that information readily

available.

Mr. MATSUI. But it is less than 30 days?

Mr. TAYLOR. Well, I am not sure that it—

Mr. MATSUI. It is not?

Mr. TAYLOR. I am not sure that it is less than 30 days.

Mr. MATSUI. Really. So in other words, if somebody has a $5,000

claim that is adjudicated and it is awarded, the disabled individual

then may have to wait more than 30 days, and I know you do not

have the exact number, but I am trying to—

Mr. TAYLOR. I can certainly get the information for you. If you

are going from the date of the decision, the favorable decision,

which must then be transmitted to the processing center where the

past due benefits are calculated, I cannot say for sure that it is always within 30 days, but I would be happy to obtain the average

time. I am sure that we maintain that.

[The information follows:]

We estimate that the average processing time for hearing-level cases from the

date of the decision to payment effectuation/award notice to the claimant is about

30 days.

Mr. MATSUI. Does the check to the claimant usually go out at the

same time the check to his or her attorney goes out or is it two

separate actions?

Mr. TAYLOR. It may go out at the same time, but in those cases

in which there is a need to develop additional information, such as

cases regarding workers’ compensation or auxiliary beneficiaries

who may be entitled, before that final past due benefit amount can

be exactly calculated. In cases such as these the payment to the attorney would be made later than the payment to the claimant.

Mr. MATSUI. In normal cases, later, because you have to calculate

how much you are going to take off the top to the claimant; is that

right? And then after that—

Mr. TAYLOR. Well, to make the exact calculation in cases where

the processing center has to do additional development to determine the past due benefits, they would make the payment to the

claimant when they make the initial payment, but they would not

release the payment to the attorney until they had made a final

calculation of past-due benefits after development. And then there

may be adjustments made to the claimant’s payments as well at

that time.

Mr. MATSUI. So you really cannot do all the checks at the same

time, it sounds like, because you have too many calculations?

Mr. TAYLOR. I believe there are instances in which we can do it

at the same time, but we could not—

Mr. MATSUI. When there are no other claims on the—

Mr. TAYLOR. That is right. We cannot do that all of the time

under our current process.

Mr. MATSUI. It is hard to argue that the attorney should be paid

sooner than the claimant, although I guess you could see a few

cases where that could happen given the 30 day requirement but

no requirement with respect to the claimant. But let me ask you

15

this. The check to the claimant has to be—that is a very high priority, I would imagine, right, in the department?

Mr. TAYLOR. Absolutely.

Mr. MATSUI. Now, how high of a priority is it to pay the attorneys? I mean, you know, again, I know you cannot calculate it on

a scale one to 1,000 or something like that.

Mr. TAYLOR. Certainly.

Mr. MATSUI. But there must be some evaluation that goes into

how you allocate your budget?

Mr. TAYLOR. We do, of course, consider these to be matters of priority, but as you have suggested, we have a number of competing

priorities.

Mr. MATSUI. Right.

Mr. TAYLOR. And these attorney fee payment processes, as much

as we want to make them as quickly as we can, have to be handled

with competing workloads such as the payments to claimants. I

think—

Mr. MATSUI. In a way, your testimony puts us in a dilemma because what we wanted to do is avoid a deficit in the trust fund and

that is why we came up with this.

Mr. TAYLOR. I understand.

Mr. MATSUI. But now you are suggesting, and obviously you are

right, if what you are saying is correct, and I am assuming that

it is, we are going to create a deficit in the trust fund anyway because the money will not be paid into the trust fund.

Mr. TAYLOR. Under the proposed legislation, we sacrifice the fee

with the 30-day limit, yes, that is correct.

Mr. MATSUI. It creates a real problem for us. And obviously the

appropriations, $156 million short of what you are asking, plays a

role in that, although I do not know if the $156 million would solve

this problem because I think your request probably came before we

made this decision or at least simultaneously.

Mr. TAYLOR. I do not know that I could say it would solve this

problem, but again it allows us to address the competing workloads

a little more easily than we are able to do so now.

Mr. MATSUI. See the problem is that I do not think any of us

want to micromanage. On the other hand, we want to try to come

up with a resolution of this and it does not sound like—and again

maybe when we hear from others—but it does not sound like you

are offering us any hope for some solution to this problem right

now.

Mr. TAYLOR. Well, I—

Mr. MATSUI. I understand the problem which you raise and I certainly appreciate that. On the other hand, it would seem to me

that, you know, we are trying to fix something right now, and there

are obviously some industry groups out there that have a problem,

and we would like to solve it without doing too much damage to

anybody, particularly the administration.

On the other hand, I think you have an obligation to at least try

to give us some ideas instead of saying, you know, we are kind of

stuck. We need $156 million more, you know.

Mr. TAYLOR. Congressman, I apologize if I have given that impression.

16

Mr. MATSUI. Maybe what you are suggesting is the fact that you

have no solution and you are not going to come up with one, in

which case we just have to make a tough decision, but it just seems

to me that—

Mr. TAYLOR. I would not want to leave you with that impression

because, as I believe I referenced briefly in my statement, we do,

first of all, consider this to be a process that needs attention and

it may be subject to improvement, and for that reason the Commissioner has requested, and we are currently in the process of doing,

a review of the entire process and looking for ways in which we can

streamline and make improvements that may allow us to address

this workload in a more expeditious manner than we have thus far.

Mr. MATSUI. I appreciate your offer there. My time has run out,

but I just want to make a suggestion that all of us on this subcommittee want to work this out in a way that is reasonably acceptable to all parties. I mean nobody is trying to be adversarial

on this area.

Mr. TAYLOR. We would be anxious to cooperate.

Mr. MATSUI. And we would hope that we can find some way to

achieve that goal.

Mr. TAYLOR. We would be very anxious to cooperate with the

subcommittee in trying to work out a solution.

Mr. MATSUI. I thank the chairman.

Chairman SHAW. Thank you. You say that in 1999, the SSA processed 200,000 fee payments to the attorneys. Could you tell me

why your Freedom of Information Officer, Mr. Blevins, said that

the SSA does not maintain this data when it was requested by one

of our later witnesses, Ms. Shor? Are you familiar with that letter?

Mr. TAYLOR. I am not familiar with that response by Mr. Blevins.

[The information follows:]

March 2, 2000

NOSSCR

Attn: Nancy Shor

6 Prospect Street

Midland Park, NJ 07432

RE: Freedom of Information Act (FOIA) Request

Dear Ms. Shor:

This is in response to the subject request for a copy of the data reflecting the

number of attorney’s checks issued in each month CY1998 and CY1999.

We are unable to comply with your request since we do not maintain the data

you requested.

If you disagree with this decision, you may request a review. Any appeal should

be mailed within 30 days of receipt of this letter to the Associate Commissioner for

the Office of Program Support, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235 in an envelope marked ‘‘Freedom of Information

Appeal.’’

Sincerely,

DARRELL BLEVINS

f

Freedom of Information Officer

Mr. TAYLOR. Mr. Chairman, just looking at the request, I notice

that the request was for data month by month during calendar

years, and it may be that the data that was available was not

maintained on a monthly basis, but I do not know.

17

Chairman SHAW. Could you follow up on that?

Mr. TAYLOR. I certainly will be happy to follow up on that.

Chairman SHAW. And fill it in for the record.

[The information follows:]

The request was for data month by month during calendar years, but we do not

maintain that information for each month.

Chairman SHAW. As you know, the administration proposed

charging the attorneys for the cost related to the processing of their

fees. These costs, on average, were estimated to equal 6.3 percent

of the fee and this percentage is now established in law. The General Accounting Office will testify that the SSA has developed a

way to capture actual costs and that you currently do not have a

way to determine costs? Is that a correct statement?

Mr. TAYLOR. I am not sure that it is exactly correct. We did—

Chairman SHAW. How did you arrive at the 6.3 percent?

Mr. TAYLOR. Mr. Chairman, in arriving at the 6.3 percent, we

took available data that we had regarding the attorney fee process

including the number of petitions and the number of fee agreements and information that we obtained about how much time it

took to process those two things and we looked at the average payments that had been made under those processes on a yearly basis,

and I believe using those two bases of information, and then extrapolating from some debt collection information that we had access to, we came up with a figure of 6.3 percent. Basically we did

the best calculation we could to figure out what the cost of the

process had been in past years and then taking the number of payments and the average fee payment based on historical data, what

percentage of that would cover those costs?

I might add that as a part of the review process that is underway

now, we are going to develop a better methodology for examining

and capturing those costs so that we can carry out the obligation

of updating that fee assessment figure if it turns out it is not—it

is overstating, for example, the true cost of the process.

Chairman SHAW. Mr. McCrery.

Mr. MCCRERY. Mr. Taylor, have you considered issuing just one

check to the attorney, made out jointly to the beneficiary and the

attorney, as a possible way to make the system more efficient, to

cut down on the time it takes to process these things?

Mr. TAYLOR. This is a possibility that has been given consideration in the past. We have not considered it recently. I would just

say that we have a couple of reservations about that, one of which

is that by doing so, if my understanding is correct, we would be

issuing a check in the full amount of past due benefits that would

be jointly drawn to the claimant and to the attorney, and when it

was negotiated, the attorney would then take the fee out of those

funds.

One of our concerns is that would then place outside of the Social

Security Administration’s control the actual payment of Social Security benefits to the beneficiaries and we would have lost any control over the actual amount or the timing. We would be depending

upon a process outside of the Social Security Administration to do

that.

The second, major consideration is one of operational issues. It

would be a substantial operations and systems undertaking to deVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
18

velop a system that would efficiently prepare and execute twoparty checks involving attorneys who are third-parties who are not

anywhere in our database presently. There would be a substantial

amount of work that would be involved in doing that, but in answer to your question we have not recently considered that possibility, but those are a couple of the reservations that we had when

this was considered some time ago.

Mr. MCCRERY. Well, of course, outside of the Social Security

arena, in lawyers’ offices everyday checks are made payable to both

the claimant in a personal injury case and the attorney, and the

division is made in the attorney’s office. And it happens everyday.

So I do not know why you could not enlist the services of the attorney representing the client to effectively do what you are doing in

Baltimore by dividing the check and issuing two checks. He could

do all that for you. All you would have to do is withhold the 6.3

percent of 25 percent. Just something to consider. I frankly, I just

got it from this list of questions that somebody handed me and it

seemed like a good idea to explore.

Mr. TAYLOR. Okay.

Mr. MCCRERY. I am an attorney and I do not trust all attorneys

either, but generally they are honorable people and they will do

what they should do with their clients and if they do not, they can

get in a lot of trouble. So, you know, maybe we could make it a

federal crime not to divide the payment properly.

Mr. TAYLOR. I was trying to avoid mentioning the third reason.

Mr. MCCRERY. Well, that was implicit in your first reason, but

anyway something to think about.

Chairman SHAW. Mr. Hulshof.

Mr. HULSHOF. Thank you, Mr. Chairman. Are you an attorney,

Mr. McCrery? I am a recovering attorney myself. Let me ask a

question regarding something that is in your extensive statement,

Mr. Taylor, on page eight that indicates in the middle of the page

that SSA does not have a tracking system in place from the start

to finish of the process to measure the time it takes to pay attorneys’ fees.

You say generally, though, the fees can be paid within 60 days

and I guess, forgive me, a very simplistic question, how do you

know if you have no tracking system?

Mr. TAYLOR. That is a great question. The answer is both things

are true. We do not have a tracking system. This 90 days was done

from a special study that we did just before the legislation that enacted the 6.3 percent assessment, and that is what the special

study showed and I do not have the exact data that the study disclosed. I am sure we could make that available, if necessary.

Mr. HULSHOF. Let me ask, too, that the legislation that the

chairman and Mr. Matsui have introduced, that I have cosponsored

and others on this committee, you indicate that the Social Security

Administration might forfeit as much as two-thirds of the attorney

fees assessments, and again how do we know that if you cannot

track the processing time?

Mr. TAYLOR. Again, I would have to confirm this. It may have

been based upon the results of this special study. Looking at the

number of cases that were done within 30 days versus those that

were done outside of 30 days.

19

Mr. HULSHOF. Do you have available or maybe some of your folks

behind you of what percentage of SSI cases are represented by

counsel? Do you have that available?

Mr. TAYLOR. Yes, I do. According to data that we maintain, in

fiscal year 1999, just over 43 percent of SSI cases that went to a

decision before an administrative law judge were represented by attorneys. Now there were more that were represented by non-attorneys, but for counsel that is the figure.

Mr. HULSHOF. Refresh my recollection how that compares to the

percentage in disability cases?

Mr. TAYLOR. 731⁄2 percent of what we would normally call the

title II disability cases were represented by attorneys.

Mr. HULSHOF. I know that the General Accounting Office reports

that the Association of Administrative Law Judges believed that

extending the direct payment of attorneys’ fees to SSI cases would

actually benefit the claimants because cases with attorney representation in their belief have a better chance of receiving a favorable decision. Do you have an opinion, agree or disagree with that

report?

Mr. TAYLOR. I have not seen that report. I have heard the speculation that that might account for some of the disparity and I cannot say that it does not account for some of the disparity. I would

be hard-pressed to say that it accounts for all of it because there

are other factors involved in whether or not a claimant is represented.

Attorneys, I am sure, exercise a screening function of their own

in determining whether or not to take a case for representation.

There are requirements in many states where interim assistance is

being provided that claimants pursue their claims, at least through

the hearing level, so there may be some less likely favorable decision cases reaching hearing levels in higher proportions.

Mr. HULSHOF. My time is about to expire so probably this would

be my final question. Would the Social Security Administration

support extending attorney fee withholding to the SSI program or

not?

Mr. TAYLOR. Our present position is that we would not support

that and I would be happy to share some of the reasons if you

would like.

Mr. HULSHOF. If you could do that—

Mr. TAYLOR. Very quickly.

Mr. HULSHOF.—I will give you the opportunity, yes, sir.

Mr. TAYLOR. Sure. First of all, it has been the position ever since

the SSI program was enacted that—and this was done specifically

by the Congress—that these cases because of the purpose of the

program and the needs of the claimants, would not be appropriate

for a withholding process of their initial payment.

I think that is probably the main reason and it goes to the fact

that many of these claimants, while they have been waiting for

their case to be decided, have many pressing needs of basic necessities and that to remove this 25 percent from the initial payment

might put them in a worse position, at least temporarily.

Secondly, as I mentioned before, many claimants are receiving

interim assistance and they have agreements to reimburse the

states for that assistance and if 25 percent of accumulated benefits

20

were carved out for direct payment off the top, we are not sure how

the choice would be made as to who got paid first if there had to

be a choice made.

And finally, this is a substantial operational endeavor for us because it would require our 1,300 field offices to get into the business of making attorney fee payments and they do not currently

have to do that. Currently, the payments are confined to the small

number of half a dozen or so processing centers. You would have

to bring up a manual process, at least initially, and over 1,300 offices would be very difficult to manage.

We have done a very quick estimate of the impact and cost of doing this, and it runs at $23 million and 400 work years annually.

This is our initial rough estimate of what it would cost to extend

the direct payment to title XVI cases, and, of course, those work

years would be competing against work years that are needed for

other priority workloads.

Mr. HULSHOF. Thank you.

Chairman SHAW. Mr. Taylor, I want to pursue a question, the

questioning that Mr. Matsui was doing awhile ago, because frankly

the answer you gave I think was not totally in response to what

he was saying, what he was trying to get at. And that question is

why do you not just write the fee at the same time that you write

the settlement figure? All you are doing is requiring someone to go

back to the file a second time. And why can’t all that be done at

the same time?

Now you talked about there may be other litigants and what not.

But if you have an assigned fee arrangement, at that point you

know at least exactly what that particular litigant is entitled to.

Why not just go ahead and write the fee at the same time?

Mr. TAYLOR. Mr. Chairman, I am sorry if I was not—

Chairman SHAW. Well, you may have been and I may have not

understood it. So explain it to me. I do not mean to say that you

were not responsive, but—

Mr. TAYLOR. Let me just try. We want to make accurate payments to claimants and we want to make accurate fee payments to

attorneys. And those two things have to go hand in hand.

Chairman SHAW. Now if they have a fee agreement and it is a

certain percentage with a $4,000 cap, what is so difficult about

that?

Mr. TAYLOR. In fact, the average fee agreement is not $4,000.

The average fee agreement paid is about $2,500. So—

Chairman SHAW. Well, it is a percentage with a $4,000 cap.

Mr. TAYLOR. And my point is that the fee agreements are most

often paid based upon a percentage of the past due benefits and in

order to calculate accurately the past due benefits in many cases,

there is additional development that must be done such as the calculation of the offset by workers’ compensation, for receipt of workmen’s compensation.

Chairman SHAW. But you do not pay the claimant until you

know how much you owe them.

Mr. TAYLOR. Well, we have placed a priority in the Social Security Administration upon making prompt payments to the claimants because we figure they have been waiting for these payments.

Chairman SHAW. Right.

21

Mr. TAYLOR. So we take a risk that there may need to be an adjustment at some point a little ways down the road of the claimant’s payments. We want to get them in payment status and give

them as much of the past due benefits as we can.

Chairman SHAW. Well, would it not be just as easy to go back

and get the overage from the attorney as it is the claimant? Probably easier; would it not? I mean you are talking about lesser dollars and you are talking about deeper pockets in most cases. So I

mean if you overpay a claimant, in all probability it is going to be

very difficult to get any of the money back except deduct it from

future payments.

If you overpay the lawyer, to begin with, you are talking about

a maximum of $4,000, and if there is a calculation that has to be

made where the lawyer has to return a certain percentage of that,

I do not see the difference, and I think this may be probably the

nut of the problem here is that if you wait until there is very little

possibility of an offset, and then you pay the attorney—I do not

think that is quite fair. I think you should, as you pay the claimant, go ahead and pay the attorney.

And I would guess that the little bit of money that you may lose

would be more than offset by the administrative costs that you

would save in not having to go back to the same file and calculate

it. As long as you got the papers spread out, figure out what you

owe everybody and get rid of it.

Mr. TAYLOR. Do it all at once.

Chairman SHAW. If you would look into that—I think somebody

is handing you a note there. In fact, I know she handed you a note.

Mr. TAYLOR. I better read it. Well, I have had the record corrected for me here. The current payment that is made, the initial

payment, is simply to put the claimant into current payment status. I was in error. The back payment is made at the time that the

payment is made to the attorney. So I think I may have misled

you.

Chairman SHAW. Wait a minute. What you are saying is the

amount that the attorney’s fees would apply to in the arrearages,

I assume—I assume there is no attorney’s fees on what goes forward.

Mr. TAYLOR. That is right.

Chairman SHAW. It is only on the arrearages—that then is made

at the time?

Mr. TAYLOR. At the time the past due payment is made to the

claimant.

Chairman SHAW. Oh, okay.

Mr. TAYLOR. So I am sorry if I—

Chairman SHAW. Well, then that makes sense.

Mr. TAYLOR. Okay.

Chairman SHAW. Okay. Do you have anything further to followup on that?

Mr. MATSUI. I am sorry. In view of the fact that I did not get

the answer that I thought I understood, if I could follow up on this.

So, in other words, the initial payment to the claimant is not the

amount adjudicated. Is the amount that from certain date forward

the claimant received money to keep him or her in a state of where

22

they can survive? Is that kind of the purpose of that initial payment?

Mr. TAYLOR. Get them in payment status.

Mr. MATSUI. Okay. Then when is the final adjudicated payment

made to the claimant? How many days usually goes by? Because

I think that is a critical issue as well. Do you happen to know that

number?

Mr. TAYLOR. I do not know that number off the top of my head.

Mr. MATSUI. See the reason I am asking that, I mean I know

they need the initial payment, but most of these people, if you are

disabled, and it is a five, six, seven, $10,000 amount of the adjudicated claim that is awarded, it would seem to me that they need

that money, too, because they are probably in arrearage on rent

payments and a lot of other things at the same time. How many

days goes by before they receive that amount?

It seems to me that is kind of an important factor because I

mean if your priority is to pay the claimant, you know, I would

hope that somebody would know that. Perhaps somebody knows in

the back there because—on average, you know, is it six months or

six weeks? From what—and again, maybe—this letter to Mr.

Doggett dated February 16 this year from Mr. Apfel says that the

average processing time for these cases from the date of decision

to payment and the award notice to the claimant is about 30 days.

So is that a correct figure? So basically what is it that then the

entire—

[The information follows:]

February 16, 2000

The Hon. Lloyd Doggett

House of Representatives

Washington, D.C. 20515–3217

Dear Mr. Doggett:

This is in response to your letter concerning the implementation of the new attorney user fee. You requested specific information concerning the length of time it

usually takes for fees to be paid, what actions are being taken to speed up that process, when the actions will be implemented and what the specific goals are for paying

the fees.

The majority of cases involving the payment of attorney fees are decided at the

hearing level. The average processing time for these cases from date of decision to

payment effectuation/award notice to the claimant is about 30 days. Prior to the recent legislative changes, the Social Security Administration (SSA), as required by

law, provided a 15-day administrative review period after the receipt of the award

notice, so the claimant, representative and the administrative law judge or other adjudicator could review the approved fee amount. This requirement delayed the processing of attorney fees by at least 30 days after the date the claimant received pastdue benefits. In addition, after the decision is made that the individual is eligible

for benefits, SSA cannot calculate the past-due benefits due to the claimant and pay

the attorney until all the development on the nondisability factors of the case is

complete. So in some cases, we begin paying current benefits to the beneficiary

pending completion of development and then pay the past due benefits later.

SSA does not have a direct measurement of attorney fee processing times, however, attorney fees are generally paid within 90 days of the award notice. Some

cases take significantly longer to pay because of the need to develop additional evidence, such as proof of worker’s compensation payments. SSA estimates that as a

result of changes that we have made while implementing P.L.106–170, including the

elimination of the 15-day pre-payment holding period for fee agreement payments,

payments of attorney fees can now generally be made within 60 days of the award

notice. After effectuating payment to the beneficiary, a separate action is required

to process the attorney fee. We manually compute the fee, then the user fee, and

finally update systems and effectuate payment through a separate manual payment

23

process. The new attorney fee process, as described above, was implemented on February 1, 2000.

You may be interested to know that last year, when the Administration proposed

legislation to improve the attorney fee payment process, it included a provision to

deposit the funds raised as a result of the 6.3 percent user fee to SSA’s Limitation

on Administrative Expenses (LAE) account. We intended to use the funds raised by

the fee to improve the administration of the payment process. However, when the

provision establishing the user fee was passed, as part of P.L. 106–170, it did not

provide for the fees to be deposited in SSA’s LAE account. Therefore, we are not

receiving additional resources, which hinders our ability to make additional significant improvements on our current performance.

We implemented the changes described above to reduce the attorney fee processing time as much as possible, consistent with maintaining the program’s integrity,

and in concert with the other automation improvements currently underway within

the Agency.

Thank you for your interest. I hope this information is helpful to you.

Sincerely,

KENNETH S. APFEL

Commissioner

f

of Social Security

Mr. TAYLOR. I am advised that the payment is made on average

within 60 days.

Mr. MATSUI. 60 days, not 30 days.

Mr. TAYLOR. Which is about the same time that we think we can

make the payment to the attorney which would be made at the

same time.

Mr. MATSUI. Okay. I guess this 30 days then refers to the kind

of initial payment?

Mr. TAYLOR. Well, it could refer to—I’m not sure what it refers

to actually.

Mr. MATSUI. Yeah, you may want to look at this letter.

Mr. TAYLOR. I will.

Mr. MATSUI. Because it is different from your letter, from what

you just said.

Mr. TAYLOR. Yes.

Chairman SHAW. What percentage of the claimants is Workers’

Comp involved; do you know the percentage of that?

Mr. TAYLOR. We do not maintain that information.

Chairman SHAW. I understand from the people behind you that

you just flat do not have that information.

Mr. TAYLOR. Yes.

Chairman SHAW. Well, at prior hearings we went through this

claims process, from the day the petition was filed to the day of settlement. So I mean we have traveled through this and it is terribly

long. I mean it is unconscionably long particularly when you are

talking about people many of which are desperate. As Bob said,

their rent is in arrearage and what not. I mean they can really be

devastated during this period of time.

I think we need ways, once the case has been adjudicated, why

you have to go 60 days. I mean if you or I were the defendant and

went 60 days and there was an appeal involved, our bank accounts

would have been frozen and everything else, and there is no reason

why we cannot pay these claims efficiently. Obviously, and I think

we probably all agree, you do not want to pay the attorney before

24

you would pay the client. However, it should be done simultaneously and really it should not take 60 days.

Mr. TAYLOR. Well, I would like to have the opportunity to provide

exact information on that.

Chairman SHAW. I do not understand. Perhaps we will have to

have another hearing to really zero in on that information, so that

we are well advised as to what exactly—what is going wrong here,

and it should be that these payments should be made very expeditiously. I think Mr. Collins had another question.

Mr. COLLINS. Mr. Taylor, I am a non-lawyer member of this committee. So my question will not be in favor of the lawyers. My understanding is that their fee is based on the back payment that is

due.

Mr. TAYLOR. That is correct.

Mr. COLLINS. What is the length of time that it takes to process

a claim from an applicant that is represented by an attorney or a

lawyer versus those who are not?

Mr. TAYLOR. Congressman, I am not aware of a report that

makes that distinction. There may be one. I am not aware of one

that makes that distinction. I have no reason to believe that there

is a great distinction, but I really cannot answer your question.

Mr. COLLINS. But the length of time that it takes to process the

claim also determines the back pay?

Mr. TAYLOR. In general, that is right, yes.

Mr. COLLINS. Okay. It seems to me that the lawyer’s fee ought

to be based on the date of a calculation that would be back payment from the time the first claim was filed to the day the attorney

took the case so that any extended period of time to process that

claim would not increase the attorney’s fee. You might get your

claims processed a little bit faster by the attorney because I am

told by the administrative law judge that a lot of these attorneys

do not come to the hearings prepared and it drags out the case and

the longer you drag it out, the percentage goes up with the amount

of back payment.

Mr. TAYLOR. Congressman, I am sure that happens in some instances, but in other instances, many instances, I believe, attorneys

who represent clients do a fine job before our administrative law

judges.

Mr. COLLINS. Well, I tell you what. It just bothers me that we

have a government agency that a person who is entitled to benefits

from that agency would have to go hire a lawyer to represent them

before the agency, because I understand all of the questions that

become involved in it, too. Someone has to make a judgment. Sometimes the judgment is not according to the applicant’s intent.

But I just, you know, it bothers me, too, that the longer you drag

it out and processing the system, through the system, the larger

the payment is, or the larger the fee is, and if you could handle

the thing up front or have a set fee that when that lawyer took the

case, they would not be enhanced by a longer period of time or

dragging it out. Maybe they would get their stuff together, their act

together when they went before these administrative law judges

and help this process along much better than it has been done in

the past. Thank you.

25

Chairman SHAW. Is there a process by which these cases can be

reviewed so that some of them can be kicked out as deserving of

payment before you get to that hearing process? Do you have to go

through the hearing process on all of them? Is there a review process once these claims are filed where SSA may say well, gee, this

one should have been allowed in the first place and just kick it out

without a hearing? I mean pay it.

Mr. TAYLOR. Well, yes, within our existing process, we always

have the option to decide the case favorably without holding the

hearing and that happens in a significant number of cases currently.

Chairman SHAW. For the record, and we went through this once

before, once somebody actually files their claim, what is the period

of time before the hearing?

Mr. TAYLOR. The time from the request for hearing to the date

the hearing is held?

Chairman SHAW. I guess the claim is the request for hearing. I

suppose that is what it is.

Mr. TAYLOR. The reason I asked if you went from the date that

the initial application for benefits was filed and took it forward to

the date that the—

Chairman SHAW. Well, it has got to be denied by—

Mr. TAYLOR. That is right.

Chairman SHAW. And then once it is denied, that is when it gets

into your court.

Mr. TAYLOR. That is right.

Chairman SHAW. So this is, in effect, an appeal process?

Mr. TAYLOR. Our current average processing time, and I would

be happy to give you the exact figure, and I am quoting this from

memory, is something slightly in excess of 300 days from the date

the request for hearing is filed to the date that the decision is

issued. Now this is an average of all cases, favorable and unfavorable.

[The information follows:]

Average processing time from the date of the request for a hearing to the date

the decision is issued is 301 days.

Chairman SHAW. So you add 60 days to it, it is going to be a year

for you to get a hearing.

Mr. TAYLOR. And we have done a great deal, Mr. Chairman, in

the past several years to bring that figure down.

Chairman SHAW. And what percentage of the appeals prevail?

Mr. TAYLOR. About 55 percent prevailed in the past year. Again,

I could give you the exact number, but I think that is pretty close.

[The information follows:]

Including partially favorable decisions, 54.5 percent of hearing level cases are allowed.

Chairman SHAW. That is close enough. Okay. Anybody else have

anything else?

Mr. MCCRERY. Mr. Chairman, just one more question.

Chairman SHAW. Okay.

Mr. MCCRERY. Mr. Taylor, I am told that there are two arrangements that an attorney can make for being paid a fee. One is a

straight 25 percent of the arrearages and the other is that he could

26

itemize his expenses and submit that to the Social Security Administration for payment; is that right?

Mr. TAYLOR. That is correct.

Mr. MCCRERY. Can you tell me how many attorneys opt for the

latter, itemizing the expenses, the percentage?

Mr. TAYLOR. Congressman, I cannot tell you how many attorneys, but I can tell you that as a percentage of fee payments that

are made, our most recent data current through this year is that

about 12 percent of the payments are based upon that fee petition,

the detailed itemization process, and 88 percent are fee agreements.

Mr. MCCRERY. And I assume it takes longer to process the

itemization—

Mr. TAYLOR. That is correct.

Mr. MCCRERY.—arrangement?

Mr. TAYLOR. That is correct.

Mr. MCCRERY. Does the bill that we are considering make a distinction between the two types of reimbursement?

Chairman SHAW. I do not think so, no.

Mr. MCCRERY. We probably should do that. If an attorney chooses to itemize—

Chairman SHAW. That is a good point.

Mr. MCCRERY.—I do not think he should be surprised that it is

going to take longer to get his payment. Thank you.

Chairman SHAW. I think also—and this is giving me a little trouble right now—that we do not want to get the attorneys’ fees out

in front of the claimants’ payments, but I do not think either one

should go 60 days unless there is some complicating factor. I think

we need to look further into that.

Mr. Taylor, thank you.

Mr. TAYLOR. Thank you.

[Questions submitted by Chairman Shaw, and Mr. Taylor’s responses, are as follow:]

1. If representatives are entitled to world class service, why hasn’t SSA developed

performance standards for this workload and developed methods for measuring this

performance before now?

SSA believes that attorneys are entitled to world class service. However, SSA uses

separate systems to track decision dates and attorney fee payment dates, and these

two systems are not compatible. Moreover, the main system arranges its records according to the beneficiary’s data only. This increases the difficulty of tracking attorney payment data. Therefore, although SSA can conduct special runs to obtain fee

payment processing data, it cannot obtain this data on an ongoing basis. Because

of competing priority workloads, SSA did not routinely conduct these special runs.

Therefore, SSA did not develop these performance standards.

2. Recently, I wrote to the Commissioner regarding whether SSA should increase the

$4,000 limit under the fee agreement process. He agreed that an updated assessment

of the issue is appropriate. What is the status of this assessment?

A recommendation regarding action on the $4,000 limit is in preparation for the

Commissioner’s review.

3. Does SSA maintain data on attorney fees charged in SSI and disability cases? Is

there anything to show, as indicated by the National Senior Citizens Law Center,

that many attorneys lower fees for SSI cases? If so, what is the difference in fees?

SSA does not maintain a central data pool on fees for representation. We have

no evidence that attorneys generally charge lower fees for working on SSI cases.

4. Why did SSA originally recommend that the attorney fee assessment be set as a

percentage of the fee as opposed to a flat fee? Do you have information to show that

27

SSA’s costs increase as the amount of the fee increases? What are your views regarding expressing the user fee as a fixed amount instead of a percentage? Why?

SSA designed the current rate to recover $26 million, the estimated cost in 1995

of processing attorney fee payments and collecting the assessment. SSA does not

have information which shows that processing costs increase as fee amounts increase. However, we prefer the current method of assessment to a flat rate for several reasons. A fixed dollar amount would be unfair to those who had small fees,

because the flat assessment would represent a very large proportion of the attorney’s fee. In fact, some members of Congress objected to a fixed dollar amount in

the past for this reason. An equal percentage for all cases distributes the cost of

the service proportionately among the cases. Furthermore, charging a fixed rate for

all cases would prevent SSA from covering the rising cost of processing fees.

5. Some critics of the present attorney fee payment process have proposed that the

Prompt Payment Act provisions be expanded to cover attorney fee payments so that

interest and late charges can be assessed on SSA when payment are not made timely.

What is SSA’s position on this proposal?

The Prompt Payment Act (PPA) allows vendors from whom the government purchases goods or services to collect interest on late payments for those sales. However, SSA does not purchase services from the claimants’ attorneys. Instead, it provides a service by collecting and paying their fees. SSA does not support expanding

the PPA to include late fee payments. Certain fee actions, such as fee petitions or

cases involving offset computations, require longer to process. Therefore, it is possible that SSA would have to pay an interest penalty even when it properly processed an action.

6. Based on what you have learned from your review of the attorney fee process so

far, do you expect the rate to be reduced for 2001?

Our review of the attorney fee process is not yet complete. It would be premature

at this time to judge whether the rate should be reduced.

7. Testimony from Ms.Shor said that when SSA pays electronically, it pays the

claimant but does not pay the attorney at the same time. Why is this? In what percentage of cases, theoretically, could the benefit and the fee be paid at the same time?

In what percentage of cases are they actually paid at the same time? Please explain

any difference in the two figures.

The SSA mainframe payment system is designed to recognize only beneficiaries

and store data that is based on the beneficiary’s social security number. In order

to pay a non-beneficiary, we must use a manual payment process. Therefore, we

cannot pay the beneficiary and attorney at exactly the same time.

8. What was the Administration’s position on the disposition of the proceeds of the

attorney fee assessment? Specifically, did OMB and SSA agree on the proposed legislative language on the issue?

OMB and SSA agreed on the proposed legislative language to deposit the funds

raised as a result of the 6.3 percent user fee to SSA’s Limitation on Administrative

Expenses Account (LAE). OMB and SSA also agreed on the final legislative language to deposit the funds to the Trust Fund.

9. How much time elapses in attorney fee cases, on average, between the issuance of

the favorable decision and the issuance of the first check to the claimant?

We estimate that the average processing time for hearing-level cases from the

date of the decision to payment effectuation/award notice to the claimant is about

30 days.

10. What percentage of attorney fee cases involve worker’s compensation issues? What

other types of issues require additional development by SSA before the past-due benefits can be computed and paid? What percentage of the attorney fee caseload do these

other issues constitute?

Based on a special system selection for the month of May 2000, we estimate that

25% of the attorney fee payment cases involved worker’s compensation. The other

types of issues requiring development before the past-due benefits could be calculated are prisoner suspension, verification of military service and subsequent auxiliary development. Unfortunately, we do not maintain management information on

these workloads with respect to attorney involvement.

11. Why was SSA unable to provide information about the number of attorney fee

checks issued in each month in calendar year 1998 and 1999 in response to Nancy

28

Shor’s Freedom of Information Act request when you were able to provide some of

these data at the June 14 hearing?

The request was for data month by month during calendar years, but we do not

maintain that information for each month.

ing Office. We have got Barbara Bovbjerg, who we welcome back.

Chairman SHAW. Our next witness is from the General Accountf

She is the Associate Director, Education, Workforce and Income Security Issues, and she is accompanied by Debra Sebastian and Valerie Melvin. Welcome and again, you are familiar, Barbara, with

this committee. We welcome you back. Again, we have your full

testimony and you may proceed as you see fit. I finally mastered

your name.

Ms. BOVBJERG. I noticed that. I was very impressed.

Chairman SHAW. I had to work on it.

Ms. BOVBJERG. I have a unique identifier besides a Social Security number.

STATEMENT OF BARBARA D. BOVBJERG, ASSOCIATE DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY

ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOMPANIED

BY DEBRA SEBASTIAN, ASSISTANT DIRECTOR, AND VALERIE

MELVIN, ASSISTANT DIRECTOR, ACCOUNTING AND INFORMATION MANAGEMENT DIVISION

Ms. BOVBJERG. Mr. Chairman and members of the subcommittee,

I really am pleased to be back before this body to discuss issues

regarding payment of attorney fees in Social Security’s disability

programs. The Disability Insurance and Supplemental Security Income programs provide benefits to millions of people with severe

long-term disabilities. At any time during SSA’s disability determination process, applicants may seek help from an attorney in

pursuing their claim and attorneys are entitled to be paid if the

benefit claim is successful.

Under the DI program, SSA pays attorney fees directly from any

past-due benefits awarded to the claimant. Complaints about the

timeliness of these payments coupled with a new 6.3 percent user

charge on attorneys has raised questions about this payment process.

Although my written statement covers a variety of issues related

to the attorney fee payment, I would like to focus my oral remarks

on just three aspects of this topic: the process itself, the costs associated with it, and the proposed changes to the way the user charge

is assessed.

My testimony is based on our ongoing review of the attorney fee

payment process mandated by the Ticket to Work Act.

First, let me talk about the process. Although SSA has been paying attorney fees from past-due benefits for 30 years, the process

remains inefficient and involves many steps, a lot of them manual.

Once an applicant is found to be disabled and SSA officials approve

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the attorney fee in principle, the case will be forwarded to an SSA

processing center for determination of benefits.

SSA must calculate not only what benefits have been earned, but

also to what extent they should be offset by any other payments

like workers’ compensation. This process can take six months or

more to complete.

Once the benefit amount is determined, SSA prepares an award

notice to the beneficiary which also states how much will be paid

to the attorney and how much is for past-due benefits. At this

point, for SSI cases, SSA pays beneficiaries all of the past-due benefits and the beneficiaries assume responsibility for paying the attorney.

For DI cases, however, SSA pays the beneficiary but withholds

the attorney’s fee for separate payment. This process involves a

manual calculation of the 6.3 percent user charge to be withheld

and hand carrying lists of attorneys and the fees owed to them to

staff, who then enter these data manually into a system that ultimately gives Treasury the information to write and mail a check.

We do not know what this process costs. The 6.3 percent user

charge specified in the Ticket to Work Act and designed to recover

SSA’s costs came from an SSA estimate made in 1994. Actual costs

are not known because SSA was not previously required to capture

them in its information systems and so had no methodology to do

that.

For the future, however, SSA is indeed developing such a methodology. They told us last month that they would capture the costs

of withholding and paying the attorney fees but not the costs of the

ALJ time spent reviewing and approving the fees, although these

are costs that the law appears to require and were included in the

original 6.3 estimate.

However, in commenting on a draft of my statement yesterday,

SSA has said that they do plan to capture these other costs, but

now we have not had time to determine really which approach is

ultimately to be taken. But if SSA indeed is to recover the ALJ review costs, it will be important not only to begin collecting this information right away but also to separate the costs associated only

with DI cases so the DI attorneys are not shouldering costs associated with SSI claims. We hope to be able to report more on these

issues in December.

Finally, let me turn to the proposed changes in the user charge,

specifically whether to waive the charge if the payment is not timely. SSA has struggled with making timely payments to attorneys.

Legislation is proposed that would require the attorney fees to be

paid within 30 days or the user charge would be waived. The available data suggest that SSA will have trouble meeting this deadline.

While it is possible for SSA to increase the efficiency of the process,

it will be important for attorneys to understand that some factors

that delay payments are outside the agency’s control and are unlikely to change regardless of a time limit.

In conclusion, SSA is still in the early stages of implementing

changes required by the Ticket to Work Act and data are not yet

available on the effects of these changes or on the underlying cost

of processing attorney fees. We look forward to learning more about

this process and working with SSA to complete our evaluation. And

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1P.L. 106–170 primarily focuses on strategies to help disabled beneficiaries work by providing

access to vocational rehabilitation, employment, and other support services.

that concludes my statement. We are happy to answer any questions you have. I am the program person, but I was afraid of having to have a lot of notes passed up, too, and so I have brought

with me Debra Sebastian, who is our audit and accounting expert,

and Valerie Melvin, who is our systems expert.

[The prepared statement follows:]

Statement of Barbara D. Bovbjerg, Associate Director, Education, Workforce, and Income Security Issues, Health, Education, and Human Services Division, U.S. General Accounting Office

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss issues involving the Social Security

Administration’s (SSA) process for paying attorneys representing applicants for disability benefits. SSA operates the nation’s two largest programs providing benefits

to people with severe long-term disabilities—the Disability Insurance (DI) program

and the Supplemental Security Income (SSI) program—which together provide an

important economic safety net for individuals and families. At any point in the disability determination process, applicants may seek help from an attorney or other

individual as they pursue their claim. In many instances, when applicants are found

eligible for DI benefits, SSA will pay the attorney directly from the beneficiaries’

past-due benefits. Complaints about the time it takes SSA to pay attorneys coupled

with recent legislative changes to the attorney payment process—changes that include collecting a user fee for paying the attorney—have raised questions about

whether additional changes are needed to the payment process.

As you requested, today I will discuss three areas of the attorney payment process: the process itself, including the costs of processing the payments; possible

changes to the way the user fee is charged; and changes being considered for the

attorney fee payment process overall. My testimony is based on our ongoing review

of the attorney fee process, which was mandated by the Ticket to Work and Work

Incentives Improvement Act of 1999 (the Ticket to Work Act).1 Our final report is

due to the Congress by December 2000.

In summary, while SSA has been paying attorney fees from beneficiaries’ pastdue benefits for over 30 years, the payment process remains inefficient, and little

historical data are available to help us analyze proposed changes. Under the current

procedures, the inefficiencies in processing fee payments to attorneys result from

using a number of different staff in different units and various information systems

that are not linked, and are not designed to calculate and process all aspects of the

attorney fee payment, thus necessitating manual calculations. The Ticket to Work

Act includes a provision that requires SSA to charge an assessment—referred to in

my statement as a user fee—to recover the costs of this service. We have only begun

to analyze the estimate that was used as a basis for the current user fee, and SSA

does not know the actual cost it incurs in processing attorney fees; however, the

agency is currently developing a methodology to better capture these costs.

SSA has trouble with making timely payments to attorneys, and some have questioned the appropriateness of charging a user fee for a service that takes so long.

A recent legislative proposal calls for eliminating the user fee if SSA does not pay

the attorney within 30 days. In many cases, it will be difficult for SSA to meet these

timeframes. Attorneys need to realize that, while it is possible for SSA to improve

the efficiency of the process it uses to pay them, some factors that delay their payments are outside SSA’s control and are unlikely to change at this time.

Three possible changes to the attorney fee payment process include whether (1)

joint checks for past-due benefits should be issued to the beneficiary and the attorney, (2) the dollar limit on certain attorney fees should be raised, and (3) SSA’s attorney fee payment process should be expanded to the SSI program. These changes

would have both policy and administrative implications that need to be considered.

Some of the changes could increase attorney representation for disability applicants,

according to attorneys we spoke with. However, not everyone agrees with this

premise. Moreover, there are some drawbacks to these changes. For example,

issuing joint checks to the beneficiary and the attorney might delay payments to the

beneficiary and might increase the chance that attorneys would short change beneficiaries. Finally, SSA indicated it may need to make significant modifications to its

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2Some DI benefit recipients have incomes low enough to qualify them for SSI as well and

receive benefits from both programs. 3Data from fiscal year 1997 show that the percentage of favorable hearings decisions for

claimants with representation was about 58 percent, compared with 39 percent for individuals

without representation; however, because attorneys might select only cases that they feel will

result in a favorable decision, the data might be misleading. 4 In certain fee agreement cases, attorneys may request fees up to $5,000 if they feel that work

on the case warrants a higher fee.

information systems to issue joint checks or pay attorneys who represent SSI recipients.

BACKGROUND

The DI program, created in 1954, provides monthly cash benefits to workers who

have become severely disabled and to their dependents and survivors. These benefits are financed through payroll taxes paid by workers and their employers and by

the self-employed. In fiscal year 1999, 6.5 million individuals received DI benefits.

The SSI program was created in 1972 as an income assistance program for aged,

blind, or disabled individuals whose income and resources are below a certain

threshold. SSI payments are financed from general tax revenues, and SSI recipients

are usually poorer than DI beneficiaries. In fiscal year 1999, about 5.3 million blind

and disabled individuals received SSI benefits.2 For both programs, disability for

adults is defined as an inability to engage in any substantial gainful activity because of a severe physical or mental impairment. The standards for determining

whether the severity of an applicant’s impairment qualifies him or her for disability

benefits are set out in the Social Security Act and SSA regulations and rulings.

SSA’s disability claims process is complex, multilayered, and lengthy. Potential

beneficiaries apply for benefits at any one of SSA’s local field offices, where applications are screened for nonmedical eligibility: applicants for DI must meet certain

work history requirements, and applicants for SSI must meet financial eligibility requirements. If the applicants meet the nonmedical eligibility requirements, their applications are forwarded to a state disability determination service (DDS), which

gathers, develops, and reviews the medical evidence and prior work history to determine the individual’s medical eligibility; the DDS then issues an initial determination on the case. Applicants who are dissatisfied with the determination may request a reconsideration decision by the DDS. Those who disagree with this decision

may appeal to SSA’s Office of Hearings and Appeals (OHA) and have the right to

a hearing before one of the administrative law judges (ALJ) located in hearings offices across the country. Individuals who disagree with the ALJ decision may pursue

their claim with SSA’s Appeals Council and ultimately may appeal to a federal district court.

This process can be both time-consuming and confusing for the applicants and

may compel many of them to seek help from an attorney. Obtaining representation

for a pending case has become increasingly popular because disability representatives have been successful in obtaining favorable decisions for their clients upon appeal.3 In fiscal year 1997, about 70 percent of all cases decided at the ALJ-hearing

level involved representatives.

The fees attorneys representing DI and SSI applicants can charge are limited by

law and must be approved by SSA. In order to be compensated, attorneys must file

either a fee agreement—a formal contract signed by the applicant and the attorney

setting the fee as a percentage of the applicant’s past-due benefits—or a fee petition

that details the specific costs associated with the case. Past-due benefits are calculated by multiplying the monthly benefit amount by the total number of months

from the onset of the illness or injury to the time when the beneficiary begins receiving monthly payments. When fee agreements are filed, attorney fees are limited

to 25 percent of the applicant’s past-due benefits, up to $4,000 per case.4 In fee petition cases, however, SSA can approve any fee amount as long as it does not exceed

25 percent of the beneficiary’s past-due benefits. For DI cases, SSA usually withholds the amount of the fee from the beneficiaries’ past-due benefits and pays the

attorneys directly, in effect guaranteeing payment for the attorney. In SSI cases,

however, SSA does not have the authority to pay attorneys directly, and only calculates the amount an attorney is due. Attorneys must instead collect their fees

from the SSI recipients.

Effective February 1, 2000, the Ticket to Work Act imposed a 6.3 percent user

fee on attorneys for SSA’s costs associated with ‘‘determining and certifying’’ attorney fees on the basis of beneficiaries’ past-due benefits. This amount is deducted

from the approved attorney’s fee. The act also directed us to study a number of

issues related to the costs of determining and certifying the attorney fees, ‘‘effiVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
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5 All parties involved—SSA, the beneficiary, and the attorney—may question the amount of

the attorney’s fee, and the fee may be changed if warranted.

ciencies’’ available to reduce these costs, changes to the attorney fee requirements,

and the new user fee.

THE PROCESS AND COST OF PAYING ATTORNEYS

While SSA has been paying attorney fees for over 30 years, the payment process

itself is inefficient, and the costs of the process are not known. Approving and paying attorney fees is a complex process that involves many steps; a number of staff

in different units and locations; and various information systems that are not linked

and that, therefore, require considerable manual intervention. Regarding the costs

to administer this multistep process, we have not yet fully determined whether

SSA’s past estimate appropriately captured the costs associated with administering

attorney fees; however, the agency is currently developing a way to capture actual

costs.

The Payment Process Involves Many Steps

Attorneys are compensated for their services through either a fee agreement or

a fee petition. Attorneys told us that the fee agreement is usually an easier, quicker

way to get paid and that, although the fee petition is useful, it is also a more cumbersome tool used primarily when potential fees exceed the statutory limits or when

attorneys were unable to file a fee agreement at the beginning of a case. In 1999,

fee agreements accounted for about 85 percent of attorney payments, and fee petitions accounted for the balance.

Figure 1 shows the steps involved in processing attorney fee agreements. First,

officials in SSA’s field offices or ALJs in OHA—depending on where the case is

being determined—review fee agreements for DI and SSI cases to assess the reasonableness of the attorney fee charges.5 If a favorable decision is made on the case

and SSA approves the fee agreement, both items—the applicant’s case and the fee

agreement—are forwarded to a processing center for payment.

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At the processing centers, SSA takes the steps necessary to effectuate payment

to the beneficiary and calculate the attorney fees. For both DI and SSI cases, the

processing center staff first place the beneficiary in current-pay status so that he

or she can begin receiving monthly benefits as soon as possible. The processing center also calculates the attorney’s fee—25 percent of past-due benefits up to $4,000.

The processing center then sends the beneficiary an award notice, which states the

amount of benefits the beneficiary will receive and the amount of money that the

beneficiary agreed to pay the attorney as stipulated in the fee agreement. A copy

of the award notice is also sent to the attorney.

In some cases, however, SSA must obtain additional information to determine the

final amount of the beneficiary’s benefits, which also affects the amount the attorney receives. In these cases, the agency withholds past-due benefits until this additional information is obtained, as the beneficiary’s past-due benefit amount may be

reduced—or offset—by other payments that have been made to the beneficiary, such

as workers’ compensation payments. Additionally, in cases in which the applicant

was determined eligible for both DI and SSI, benefit amounts to be paid by the two

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programs need to be adjusted before the final past-due benefit payment is made.

These offset and coordination activities involve manual steps—such as dealing with

payers of workers’ compensation insurance—and can take as long as 6 months to

complete. When SSA has had to take extra steps to determine the final past-due

benefit amount and the amount the attorney should receive, the agency prepares

and mails another award notice to the beneficiary and the attorney. At the time this

award notice is sent, the beneficiary’s past-due benefits are also processed for payment on one of SSA’s information systems. These information systems—the Modernized Claims System (MCS) and the Modernized Supplemental Security Income

Claims System (MSSICS)—are designed to process payments for beneficiaries or

their representatives only—they are not designed to effectuate payments for nonbeneficiaries, such as attorneys.

In DI cases only, after the award notice has been mailed, and if the attorney has

elected to have SSA withhold his or her fee from the past-due benefits, SSA begins

steps to have the Department of the Treasury issue a check to the attorney. Staff

must manually calculate the 6.3 percent user fee and deduct it from the total fee

amount. Then various information systems and many manual steps are involved in

communicating the attorney fee information to Treasury. For example, data from

one information system on the amount of each attorney payment are copied by hand

to form a list of payees. Staff then deliver the list to another part of the processing

center where the payee data are then manually entered into another information

system for further processing. As soon as all the attorney fee information has been

verified, SSA sends the information to Treasury so that a check can be issued.

For SSI fee agreement cases, the beneficiary and attorney receive an award notice

similar to the one for DI cases—that is, the amount of past-due benefits is stated

as well as the amount of money that the beneficiary agreed to pay to pay the attorney. SSA is not authorized to withhold and to direct payment for SSI cases. The

attorney must obtain payment directly from the beneficiary.

When a fee petition is involved, the attorney submits a statement detailing his

or her charges for the case following a favorable decision. The petition is usually

reviewed by an ALJ. If the ALJ approves the fee, the petition is sent to the processing center, where it is processed in the same manner as the fee agreements.

The Cost to SSA of Paying Attorneys Is Unclear

The Ticket to Work Act requires SSA to impose an assessment, or user fee, to pay

for the costs the agency incurs when paying attorneys directly from a claimant’s

past-due benefits. For calendar year 2000, the act established the user fee at 6.3

percent of the attorney fees; for calendar years after that, the percentage charged

is to be based on the amount the Commissioner determines necessary to fully recover the costs of ‘‘determining and certifying’’ fees to attorneys, but no more than

6.3 percent.

The actual costs of administering attorney fees are not yet known because SSA

was not required to capture these costs in its information systems and did not have

a methodology to do so. The 6.3 percent user fee found in the law was based on

an estimate prepared by the agency. Documentation SSA provided us indicates that

the percentage was computed by multiplying the numbers of fee petitions and fee

agreements the agency processed in 1994 by the amount of time SSA determined

it spent on various related activities. When data were not available on the volume

of activities or the time spent on them, SSA used estimates. The agency’s overall

cost estimate included both the time spent by the ALJs reviewing documentation

to support the attorney fees—that is, the fee petitions and fee agreements—as well

as the processing centers’ costs associated with calculating the fees, choosing the notice language, and preparing the notices. In addition, the agency included the cost

of administering the user fee itself. We recently received information on the basis

for SSA’s 6.3 percent user fee calculation and have only begun to analyze the assumptions the agency used to compute it.

In order to comply with the Ticket to Work Act, SSA is currently in the process

of developing a methodology to capture the current costs of administering the attorney fee provisions. These costs could then provide the foundation for the agency’s

decisions about what the rate should be to achieve full recovery of costs. SSA has

established a work group to identify the components of administering attorney fees

and to develop its new methodology. Thus far, the work group has identified four

components associated with the cost of administering attorney fees: (1) the time that

SSA field office staff spend informing claimants that they are entitled to legal representation when filing an appeal; (2) the time it takes an ALJ to review and approve the fee; (3) the charges incurred by SSA’s Office of Systems to program systems to track attorney fee cases and related computing time to generate a payment

file/tape for Treasury to use to pay the attorney; and (4) the process for calculating

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6 NOSSCR is an interest group for Social Security lawyers.

the attorney fee, entering relevant attorney and other key data into SSA’s information systems, and certifying related amounts for payment.

In April and May of this year, SSA work group officials told us that they do not

plan to capture cost information from the first two components because it would be

time-consuming to do so, and the methods currently available to SSA for capturing

these two types of costs may not produce reliable results. For the third component,

SSA officials told us they can readily gather cost information related to time spent

on programming SSA’s systems to track attorney fees. However, SSA does not have

a cost allocation methodology in place to determine related computing time for processing attorney fees. SSA officials indicated that computing time would constitute

an insignificant portion of SSA’s total costs to administer attorney fees. To capture

data on the fourth component, SSA modified one of its information systems in February 2000 to determine the number of attorney fee cases it administers. Using the

number of cases it processes, SSA is working on a methodology to estimate the costs

involved in this fourth component for paying attorneys. SSA plans to have this cost

data available by the end of fiscal year 2000.

However, in commenting on a draft of this statement, SSA officials told us that

they do plan to capture costs for the second component—the time it takes the ALJ

to review and approve the fee. In reviewing the law, the cost of ALJ time spent reviewing and approving fees appears to be part of the cost of ‘‘determining and certifying’’ fees and may represent a significant portion of the total costs. As SSA determines the ALJ costs in its current approach, it will need an allocation methodology

that accurately allocates the costs associated with DI cases for which SSA is paying

an attorney directly to those cases. Attorneys we talked with told us they are concerned now that they are paying more than their fair share of the cost of the process.

POSSIBLE CHANGES TO THE WAY THE USER FEE IS CHARGED

Attorneys have expressed concern about the length of time it takes SSA to process

their fees and have questioned the appropriateness of charging a user fee for a service that takes so long. In regard to the user fee, you specifically asked us to look

at issues surrounding (1) linking the amount of the user fee to the timeliness of the

payment to the attorney and (2) expressing the user fee as a fixed amount instead

of a percentage. When considering one or both of these changes, certain policy and

administrative implications would need to be addressed.

Timeliness of Payments to Attorneys

According to the National Organization of Social Security Claimants’ Representatives (NOSSCR),6 individual attorneys, and SSA officials, SSA often has trouble

making timely payments to attorneys. Processing attorney fees represents a small

part of SSA’s overall activities—in 1999, we estimate that SSA processed about 6

billion beneficiary payments and SSA reported it processed less than 200,000 attorney payments. Additionally, SSA officials told us that they view such responsibilities

as paying beneficiaries as more directly linked to their mission than paying attorneys. As a result, SSA has not routinely gathered and monitored performance data

on the length of time it has taken to pay attorneys. However, recently tabulated

data show that from January 1995 through May 2000, only 10 percent of attorney

fees for fee agreements were paid within 30 days from the time of the beneficiary

is put on current-pay status to payment of fees. As figure 2 shows, there is a wide

range of elapsed processing times for payments.

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7 Before the Senior Citizen’s Freedom to Work Act of 2000, when retired beneficiaries worked,

benefits were lowered according to a formula based on their earnings. Under the new law, beneficiaries at the full retirement age of 65 can earn any amount without reductions in their benefits. Adjusting benefits and notifying affected beneficiaries created a temporary surge in SSA’s

workload.

This sometimes lengthy payment process can be attributed to a number of factors—some within and some outside SSA’s control. Factors within SSA’s control include the actual processing steps and systems used as well as the relative priority

attorney fee payments are given compared with other SSA activities. As mentioned

earlier, SSA’s process for administering attorney payments includes many manual

steps. For instance, staff manually record attorney fee information—names, addresses, and amount to be paid—on SSA forms and then physically walk the information

to different units for processing. This manual intervention is needed because SSA’s

information systems are not currently programmed to handle this work. Manual

processes leave room for human error and require additional work to check for accuracy, which results in a longer fee processing time. Additionally, we were told that

it can take months for an ALJ to review and approve fee petitions; during this time,

the attorney waits for payment.

Competing work priorities can also contribute to payment delays. Processing technicians have responsibilities other than their attorney fee workload. When these

other workloads grow, attorney fee payment processing may receive less priority.

For example, recently SSA had to redirect the work of a substantial number of processing technicians to handle the temporary workload increase that resulted from the

new law eliminating the earnings test for individuals who receive retirement benefits and continue to work.7 In addition to work surges caused by legislation, some

processing center staff routinely answer SSA’s 800 number during peak hours.

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8SSA would need information such as attorneys’ Social Security numbers or tax identification

numbers to make direct deposit payments to attorneys.

These staffing fluctuations may result in a temporary halt to attorney fee and other

work while the priority workload is completed.

Some payment delays are outside SSA’s control, such as when SSA is waiting for

information from other agencies or individuals. After a favorable decision, SSA processes the case for payment of past-due benefits and for attorney fees. SSA refers

to dealing with all outstanding issues as ‘‘developing the case.’’ This must be done

before the amount of past-due benefits are finalized and the attorney fees can be

determined and payments processed. Issues such as dealing with payers of state

workers’ compensation insurance can substantially increase processing times. Further, in fee petition cases, SSA has to wait until after the attorney files the petition

before beginning payment action for the attorney.

However, one recent change may actually speed up processing times for attorney

payments. The Ticket to Work Act eliminated a compulsory 15-day waiting period

that had been in place to permit the beneficiary, SSA, or the attorney to protest

the attorney fee amount. While these affected parties still have the option to protest

a fee, SSA is no longer required to wait to process the attorney’s fee. NOSSCR and

some individual attorneys told us that it appears SSA’s fee processing has been faster since February 1, 2000, when the agency began implementing this change; however, data are not available to compare the current time frames with the ones

shown in figure 2.

Linking the User Fee to the Timeliness of Attorney Fee Payments

To address timeliness concerns, a recent legislative proposal (H.R. 4633) would

permit the user fee to be assessed against attorneys only if SSA pays attorneys

within 30 days from the time of initial certification of benefits. Figure 2 above shows

that from 1995 to the present, SSA has only been able to meet this timeframe in

10 percent of the cases. However, certain issues related to this proposal should be

clearly understood by both SSA and the attorneys. All parties involved must clearly

understand at what point in the process the clock starts ticking, when it stops, and

what activities are performed during this period. When considering the current legislative proposal or contemplating other options, concerned parties need to weigh

the attorneys’ right to be paid in a timely manner with SSA’s need to ensure the

accuracy of its payments.

While SSA’s current process is inefficient and the agency can make some improvements, not all factors are within SSA’s control, such as awaiting fee petition information from attorneys and coordinating workers’ compensation offsets. The current

legislative proposal states that the clock starts ticking with initial certification of

benefits—also referred to as the point when the beneficiary is put in current-pay

status. At this point, SSA might be developing the case for final calculation of pastdue benefits and might not have control over processing times. Attorneys need to

realize that because the proposal starts the clock with initial certification, and additional work may still need to be done to develop the case, the total elapsed time

from favorable decision to attorney fee payment might not actually be decreased. Information on these issues needs to be clearly communicated or the frustration and

complaints with the process are likely to continue. In addition, having the clock

start before SSA has complete control over the process could create perverse incentives that may actually delay payments to attorneys. Because SSA does not have

control over all the activities that occur following initial certification of benefits, it

is conceivable that some attorneys might view this as an opportunity to delay providing needed information to SSA in hopes of avoiding the user fee.

Further Efficiencies Are Possible

Aside from the delays that are outside its control, SSA is aware that there are

steps it could take to make the process more efficient. For example, agency officials

have said that instituting direct deposit of attorney fees is more efficient; it could

shorten the time it takes for the fee payment to reach the attorney, and could eliminate delays that result when attorneys change their addresses without notifying

SSA.8 SSA currently pays 65 percent of beneficiaries by means of direct deposit and

wants to expand this approach to all its transactions.

Possible improvements to SSA’s information systems may also help reduce processing times. For instance, enhancements to SSA’s information systems could eliminate much of the manual workload involved in processing and certifying attorney

fees. As stated earlier, various information systems are currently used to process

SSA’s attorney fee workload associated with DI cases. These systems capture data

on various aspects of the disability claims process, but are not linked to one another

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9The Office of Systems is in the early planning and analysis phase for this modification effort.

Therefore, the extent of the actual modifications and when the work will be completed have not

yet been determined.

and, thus, require some manual intervention. As a result, without linked systems

or a more streamlined process it is difficult for SSA to capture the data required

to measure the timeliness of the total range of activities involved in paying attorneys. To efficiently administer user fees that are based on timeliness of fee payments to attorneys, SSA will need to develop new software code to link these standalone information systems, or develop a new system to process the entire attorney

fee workload.

SSA currently has plans for systems enhancements to improve the attorney fee

process, which should help improve case processing time. According to SSA, these

enhancements would automate the steps in order for systems to recognize attorney

fee agreement cases, compute and withhold the 6.3 percent user fee, pay the actual

attorney fee, and release the remainder of the past-due benefits immediately to the

beneficiary.9 If SSA were to make the proposed system enhancements to process attorney fees, it may be advisable to revisit requirements for how quickly the agency

could be expected to process an attorney fee.

Expressing the User Fee as a Fixed Amount Instead of a Percentage

A number of issues surround the question of whether the user fee should be expressed as a fixed amount or as a percentage, and these are linked in large part

to the question of what costs the user fee should cover. On one hand, expressing

the user fee as a percentage of the attorney fee, as is currently the case, assumes

that the costs SSA incurs in processing user fees grow in proportion to the fees. This

could be the case, for example, if an ALJ spends extra time reviewing a fee petition

in cases involving more activity and larger fees. On the other hand, expressing the

user fee as a fixed amount assumes that the costs of processing the attorney fees

are relatively the same and, therefore, a higher attorney fee does not translate into

higher processing costs. This could be the case if the costs are fixed and do not vary

from case to case.

To adequately weigh the relative merits of both options, we need to further study

the cost estimate information SSA used to develop the 6.3 percent user fee, the cost

data that SSA is currently capturing, and the percentage of DI versus SSI cases

processed. This analysis will be included in our final report, due to the Congress

by the end of this year.

CHANGES BEING CONSIDERED FOR PAYING ATTORNEY FEES

Attorneys, NOSSCR, and advocates have discussed various changes related to attorney fees: issuing joint checks for past-due benefits to both the attorney and the

beneficiary, raising the $4,000 limit on attorney fees allowable under the fee agreement process, and extending the statutory withholding of attorney fees to the SSI

program. Each of these proposals involves trade-offs that should be considered before its implementation.

Joint Checks: Attorneys May Get Payments Sooner, but Policy and Practical Issues

Arise

Under the current process, when an individual receives a favorable DI decision,

SSA makes an effort to issue the beneficiary’s past-due benefits as soon as possible

and withholds the amount of the attorney fee. After the fee is processed, Treasury

issues a check to the attorney. Individual attorneys have suggested changing this

process from one in which two separate payments are made to one in which a single

check for the total amount of the past-due benefits—made out jointly to the beneficiary and the attorney—is sent directly to the attorney. The attorney would deposit

the check into an escrow account and pay the past-due benefits, minus his or her

fee, to the beneficiary. Attorneys told us that joint checks would help expedite the

attorney fee process because the beneficiary’s money and attorney fees would be

linked, and SSA views paying beneficiaries as a priority.

Such a change could have serious policy implications, however. For instance, SSA

currently attempts to pay the beneficiary as soon as possible following a favorable

decision. Issuing joint checks might delay payment to the beneficiary because the

beneficiary would have to wait until after the attorney deposited the money into an

escrow account to receive benefits. In addition, when SSA controls the payment, it

is assured that no more than 25 percent is deducted from the past-due benefits.

Sending joint checks to the attorney would reduce SSA’s ability to enforce attorney

fee limits and could increase the risk that attorneys would short change beneVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
39

10The Association of Administrative Law Judges represents about 700 of the 1,100 administrative judges at SSA.

ficiaries. In turn, control over payment to the beneficiary would shift to the attorney, while accountability for the payment would remain with SSA.

In addition, a number of administrative issues dealing with the implementation

of joint checks would need to be addressed. First, SSA needs to know when the beneficiary receives his or her benefits. SSA is responsible for sending out benefit statements, SSA–1099s, to beneficiaries because sometimes Social Security benefits are

taxable. With joint checks, SSA might have difficulty tracking when beneficiaries received their benefits. If attorneys were responsible for paying the past-due benefits

from their escrow accounts, SSA would need a system certifying when—in which tax

year—the beneficiary was paid. This reporting system would be needed to ensure

the accuracy of the SSA–1099s.

Another administrative consideration is that the current information system used

for processing DI cases—MCS—would need to be modified so that joint payments

could be issued. As noted earlier, this system is designed to effectuate payments to

the beneficiary or his or her representative payee only.

Adjusting the $4,000 Cap on Attorney Fees in Fee Agreements

Another change being discussed is raising the $4,000 cap on attorney fees for the

fee agreement process. As I explained earlier, under the fee agreement process, attorneys can receive 25 percent of the past-due benefits up to $4,000, whichever is

less. By statute, the Commissioner of SSA has the authority to adjust the cap at

his or her discretion.

Debate on this issue centers around how legal representation for DI applicants

might be affected. Attorneys we spoke with told us that higher fees would increase

the attractiveness of DI claims. According to this argument, attractive fees could result in more attorneys for DI cases, which could increase the rate of representation

for this population. Further, an increased rate of representation might result in

more favorable decisions for DI applicants.

The opposing argument is that representation is readily available to DI applicants. According to an SSA official, the agency has not raised the cap because it

determined that a higher cap was not needed to support representation.

In either case, evaluating this issue is difficult in the absence of such data as historical and current representation rates and without knowing the proportion of applicants who could not secure representation and why.

Issues With Expanding Withholding of Attorney Fees to SSI Cases

A final change being discussed would be to expand withholding to the SSI program. SSA currently calculates the amount of attorney fees due in SSI cases but

does not withhold the fee from beneficiaries’ past-due benefits. Current law explicitly differentiates between DI and SSI regarding attorney fees, stating that withholding and paying attorney fees is only permissible for DI cases.

Many believe that extending withholding to SSI is appropriate because it would

increase representation for SSI applicants and alleviate a perceived equity imbalance for attorneys who represent both DI and SSI applicants. Because there is no

guarantee that attorneys will receive fees due to them for SSI cases, some attorneys

told us that they are reluctant to accept SSI cases. The attorneys maintained that

expanding withholding to SSI would increase the attractiveness of the cases, and

representation would increase. In fact 1999 data show that at the hearing level, applicants for DI and combined DI/SSI benefits were more likely to be represented by

an attorney than those applying for SSI only. Additionally, according to an official

from an association of ALJs, expanding withholding to SSI would be beneficial to

the applicants because cases with representation are better presented and have a

better chance of receiving a favorable decision than nonrepresented cases.10

Proponents of extending withholding to SSI also told us that the current situation

is unfair to attorneys representing SSI applicants. According to this view, it is inequitable for attorneys to be guaranteed payment for DI cases but not for SSI cases.

As with the DI cases, the SSI recipient has an obligation to pay for his or her legal

services; however, in DI cases, SSA ensures that this happens. For SSI cases, the

attorney must obtain payment directly from the beneficiary.

The opposing view of extending withholding to SSI is based on the relative economic status of DI beneficiaries and SSI recipients. SSI recipients tend to be poorer

than DI beneficiaries, and some advocates have expressed concern that taking

money from a recipient’s past-due benefits to pay attorneys would be detrimental

to the recipient’s economic well-being. SSI recipients often have many financial obligations, such as overdue rent and utility bills that need to be paid. Advocates mainVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
40

tain that deducting the attorney fee from the past-due benefits might make it impossible for recipients to pay these bills. However, if an attorney successfully appeals a case for an SSI recipient, the recipient should be in a better position financially.

From an administrative standpoint, if SSA was required to withhold attorney fees

for SSI cases, it will need to develop new information systems or significantly modify existing systems to process this new workload. However, as with any system effort, SSA’s ability to carry out this task will depend on its available resources and

the priority that it gives to this initiative.

Mr. Chairman, this concludes my prepared statement. At this time, I will be

happy to answer any questions you or other Members of the Subcommittee may

have.

GAO CONTACT AND STAFF ACKNOWLEDGMENTS

For information regarding this testimony, please contact Barbara Bovbjerg at

(202) 512–7215. Individuals who made key contributions to this testimony include

Yvette Banks, Kelsey Bright, Kay Brown, Abbey Frank, Valerie Freeman, Valerie

Melvin, Sheila Nicholson, Daniel Schwimer, and Debra Sebastian.

Chairman S

Mr. MATSUI

HAW

. Thank you, Mr. Chairman. Thank you, Ms.

. Mr. Matsui.

f

Bovbjerg. I am learning, too. Do you happen to know from your research on this issue how quickly the claimant is paid his or her full

amount after the adjudication of the claim is resolved?

Ms. BOVBJERG. The data we have on how long it takes is in figure two of our statement and we got this from SSA. This represents processing time, times taken from January 1995 to May

2000, and my understanding is that the time is measured from the

point when the individual goes into current pay status—that is,

when they can begin the process of getting their monthly benefit.

Mr. MATSUI. Okay.

Ms. BOVBJERG. And then SSA begins to develop the case and figure out whether there is a benefit offset and what the past-due

benefits might be. From that time, the average is somewhere between 30 and 90 days.

Mr. MATSUI. 30 and 90 days.

Ms. BOVBJERG. The figures that we have say only ten percent of

cases are processed in less than 30 days.

Mr. MATSUI. Ten percent is within 30 days and the balance is—

most—okay. But 58 percent of them are between 31 and 80 days

and I guess that cannot be broken down. Is that right? Oh, 56. 56

percent. I am sorry. That is a wide number. 31 to 90 days. And you

said that the method is manual and it is somewhat inefficient, I

think, in the first part of your testimony.

Ms. BOVBJERG. Yes.

Mr. MATSUI. And you are suggesting, I guess, by that statement

that they can improve without additional resources or if they became more efficient and came up with a better process. Is that

what you are suggesting? Without identifying it yet because you

are still in your study.

Ms. BOVBJERG. Well, there are some things that are within the

agency’s control in this process and some things that are not. And

I know earlier Chairman Shaw mentioned the workers’ comp program. Waiting to figure out what kinds of workers’ compensation

benefits people may have applied for and received is not really

41

within the agency’s control and that can take a long time. There

are other things that could be done differently, but it will take time

and resources to do that.

Now whether the resources are new resources, as you suggest, or

whether they are taken from somewhere else, we have not done

any work on that. But there are the many manual steps and there

is a lot of opportunity for error. The process takes time. The ALJs

can take a long time to review cases and, as I believe Mr. Collins

pointed out, it depends on how complex the case may be and

whether it is a fee agreement or a fee petition. Petitions might still

take longer, but SSA could improve their information systems to

help eliminate the manual steps and streamline the process.

How complex that might be depends on the approach that SSA

takes and what other things, what other priorities, are competing

for systems resources.

Mr. MATSUI. I think it was Mr. McCrery that raised the issue of

a check to both the attorney and the claimant. Is that something

that you looked into or is that just purely a discretionary matter

for us to make?

Ms. BOVBJERG. Well, we know that people are thinking about it

and we did ask about it when we talked to attorneys.

Mr. MATSUI. Right.

Ms. BOVBJERG. And we talked to people at SSA about issuing

joint checks. Our understanding of this is that you would have the

single check made out to both parties, sent to the attorney, the attorney would deposit it in an escrow account and then withhold

their attorney fee but pay the beneficiary his/her share. I know

that attorneys expressed a view to us that because the beneficiaries

do get paid more quickly, the attorneys thought that this could

speed up their payment.

We did hear, however, that it may, in fact, delay the payment to

the beneficiary. So there is the other side. Whether or not this is

a good idea, we cannot say, but that SSA may not issue the check

as quickly as they would to the beneficiary because they do need

to be sure that it is accurate. They do have some recourse with

beneficiaries that they do not always have with attorneys. So that

might delay the joint check.

And whether the attorney sends the dollars to the beneficiary

right away, you know, SSA loses some control there. SSA cannot

fulfill its responsibility to make sure the beneficiary is paid.

Mr. MATSUI. If I could just ask—I know my time has run—

Chairman SHAW. It does not sound like SSA is really

concerned—

Ms. BOVBJERG. Well, there are some administrative issues for

them as well in doing something like this.

Mr. MATSUI. What would make SSA have to delay for purposes

beyond their control if they just made one check out? I mean after

calculating all the offsets and everything, that is when they decide

what the attorneys’ fees are, in any event, so you get that gross

amount, and they send that check out. I do not know what—what

could result in a delay?

Ms. BOVBJERG. Well, part of the problem is a systems problem.

The system that they tell to pay the beneficiary does not have the

attorney fee capability in it.

42

Chairman SHAW. Are we talking about a computer program?

Mr. MATSUI. Yeah, it sounds like it.

Ms. BOVBJERG. That is part of it.

Mr. MATSUI. But I think that could be fixed? Can it? I mean computers, I mean—

Ms. BOVBJERG. Things can be fixed, but they will take time.

There are separate systems involved.

Mr. MATSUI. We can implement the legislation, you know, give

them that time, you know, implement it, months, whatever it is.

That does not seem to be a real problem. Now in terms of the—

we can put a provision, I guess, or, you know, maybe SSA can have

regulations, and if the attorney does not, upon receipt of the check,

does not disburse the check to the claimant within ‘‘x’’ number of

days or hours even, you know, that person could be barred from

bringing cases before SSA for a year or two years or a hundred

years or whatever it may be. So there are penalties that you can

put to the attorney to make sure—besides an attorney can be, you

know, if the attorney takes the money and runs away with it, there

is even more severe penalties.

And so it would seem to me that there are some built-in safeguards in terms of the speedy effort to put it in the trust account

and then disburse it immediately, particularly with electronic

transfer.

Ms. BOVBJERG. You are correct. None of these things is insurmountable. They are just there.

Mr. MATSUI. Yeah. That is why I mean it is so hard to deal with

this issue. It seems like there is some—not with you—but there

has been so much resistance in terms of, you know, something

pretty simple all of a sudden becomes so complex and then we find

out it is a computer problem—I do not know—or software problem.

But I do not know. I mean I cannot see why we cannot figure this

one out. I mean this is pretty simple to me, but maybe it is beyond

my ability to understand. But thank you. I appreciate your testimony and look forward to the balance of it as well.

Ms. BOVBJERG. Thank you.

Chairman SHAW. Mr. Collins.

Mr. COLLINS. You heard the question I asked Mr. Taylor about

the time of processing the claims. Have ya’ll done any type of study

as to how long it takes to process claims with attorneys involved

versus claims with non-attorneys?

Ms. BOVBJERG. We have not done exactly that. We did do some

work for you on looking at whether attorneys were delaying the

process by not showing up or not providing the information on

time, whether they were lengthening the time it took to reach a decision on a case. And we found that, anecdotally, people think, particularly some ALJs, that this is true. We simply could find no documentation of that. It is just not the kind of record that is kept in

the files.

We did speak to some attorneys who said that it was not worth

it to them to delay because they were not being paid enough to

begin with. So we could see that there were at least two sides to

this issue. What the Office of Hearings and Appeals staff did say

to us was that they thought that there were other things that

caused delay: they identified the open record, that you can always

43

add more information and more evidence to a case, and the fact

that frequently the Office of Hearings and Appeals is asked to develop the case, that the attorneys do not do very much of that, and

they are asked to go out and get the medical information. So there

are many things that could contribute to the length of time that

it takes.

Mr. COLLINS. But there was no documentation by the ALJs as to

delay?

Ms. BOVBJERG. No. We heard talk about it. One of the things we

did report back is that there are means by which ALJs can sanction attorneys and that those means were not really being used.

They can deny them their fee, for example, if they think that they

really have not done a good job. At the time of that report, there

were new standards of conduct that came out for attorneys that the

ALJs were looking forward to, and we have not gone back to look

and see how effective they have been.

Mr. COLLINS. Okay. Well, asking the attorneys is like asking the

fox to guard the hen house.

Ms. BOVBJERG. We have to talk to both sides.

Chairman SHAW. You are surrounded, Collins. [Laughter.]

Mr. MATSUI. Hey, I am with you.

Mr. COLLINS. I am packing; are you? Oh, no, you know, I do, I

am very much more concerned about the applicant and their receiving their benefits versus the attorney and the attorney receiving

his or her fee. Usually it is the case of the applicant has much

more need than the attorney has. But we appreciate your coming

today and thanks for your testimony.

Ms. BOVBJERG. Thank you, sir.

Chairman SHAW. Mr. Hulshof.

Mr. HULSHOF. Thank you, Mr. Chairman. Ms. Bovbjerg, in the

figure two and your chart that Mr. Matsui referred to, does that

processing time include delays by the ALJ? You mentioned at the

bottom of page nine that it can take months for an ALJ to review

and approve fee petitions. Is that also included in your chart?

Ms. BOVBJERG. Only fee agreement cases are included in the

chart; no ALJ time or delays associated with review and approval

of fee petitions are included in the chart.

Mr. HULSHOF. Also it is interesting to note on the top of page ten

that sometimes—you mention competing work priorities and, in

particular, with the Senior Citizens Freedom to Work Act of 2000,

which, of course, was taking the earnings limit off 65 to 69, and

then SSA redirected the work of a substantial number of processing

technicians to handle that workload increase. I think everybody

agrees that was a fairly unique situation that we are not likely to

see again.

But let me just ask you regarding this legislation and the 30 day

period when, in your view, should the clock start ticking to measure SSA’s processing time?

Ms. BOVBJERG. I think it depends on what you want to achieve

with the time limit. A 30-day limit based on the data here—now

I know that Mr. Taylor was using other data suggests that they

will only get their fee in ten percent of the cases. A lot of the cases

will not be done faster if workers’ comp or something like that is

the problem. If you want to think about getting SSA to change

44

things that are under its control, I do not know if the 30 day limit

is the right one because it is so dramatically different from what

is happening right now and it is binary. It is on/off. You either get

the fee or you do not. So if SSA does not think it can even get close

to the 30 days, there may not be an incentive to improve.

Mr. HULSHOF. I asked of Mr. Taylor the possibility of withholding attorneys’ fees in SSI cases. Can you generalize for me what

issues may be associated with expanding withholding of attorneys’

fees to SSI cases?

Ms. BOVBJERG. Yes, I can. We did talk to a number of people who

are involved in some way in the SSI program, attorneys, advocates,

people at SSA, and we found that some believe that because SSI

claimants are by definition low income that you should not withhold attorney fees for the past-due benefits because that makes

their situation worse.

There are others who think that if you extend the withholding

to the SSI program, that you will increase representation among

SSI claimants. Right now, the figures that we got from Social Security suggest that representation is about 50 percent for SSI claimants, whereas it is around 70 percent for DI claimants. I think that

one of the things to think about and I hate to keep bringing this

up, but you would have to think about how long it would take to

implement that change because the SSI system, which is a different one than the Title II system, is not set up to withhold attorney fees.

Mr. HULSHOF. As someone who started his legal career actually

in the public defender system, which is, again, representing indigent cases, is it your belief that the sources of low cost legal representation or free legal representation for SSI claimants, has the

availability of those services gone up or gone down over the last

several years?

Ms. BOVBJERG. I do not know the answer to that question. You

can think about this as being either a loss to them if you withhold

attorney fees, that instead of getting $5,000 in past-due benefits,

they get three something, or you can think that if attorney representation improves claimants’ chances of reaching a favorable decision, then they are getting 3,000 something that they might not

have had otherwise. It is difficult to know what effect representation has on favorable decisions. There is some evidence that something like 60 percent with attorneys get favorable decisions versus

about half that for those without attorneys. But you do not know

to what extent there is cream skimming in who accepts what client.

Mr. HULSHOF. Thank you, ma’am.

Chairman SHAW. Thank you.

Ms. BOVBJERG. Thank you.

Mr. COLLINS. Are you a lawyer, Ms. Bovbjerg?

Ms. BOVBJERG. I am not a lawyer.

Mr. COLLINS. Great. [Laughter.]

Ms. BOVBJERG. You could tell.

Chairman SHAW. The final panel—and I have been told that we

are going to have a vote on the floor in about ten minutes so we

are going to try to at least get well into the testimony of this next

panel before we are called out of here—Nancy Shor, who is ExecuVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
45

tive Director of the National Organization for Social Security

Claimants from Midland Park, New Jersey; Lyle Lieberman, who

is either in my district or close to it, is a Social Security practitioner, Law Offices of Lieberman and—

Mr. LIEBERMAN. Gutierrez.

Chairman SHAW. Okay. Offices in Miami, Florida, and I have

also been told he has got offices in Fort Lauderdale, Boca Raton

and West Palm Beach, all of which are in my district; Jenny Kaufmann, staff attorney of the National Senior Citizens Law Center;

and Marty Ford, who is co-chair of the Social Security Task Force

Consortium for Citizens with Disabilities. Again, we have your

written testimony and you all may proceed as you see fit. Ms. Shor.

STATEMENT OF NANCY G. SHOR, EXECUTIVE DIRECTOR, NATIONAL ORGANIZATION OF SOCIAL SECURITY CLAIMANTS’

REPRESENTATIVES, MIDLAND PARK, NEW JERSEY

Ms. SHOR. Thank you, Chairman Shaw. As executive director for

the National Organization of Social Security Claimants’ Representatives, which we for obvious reasons refer to as NOSSCR, I thank

you very much for the opportunity to speak today at this important

hearing. The issues you are discussing this afternoon are of great

importance to claimants, to beneficiaries, and to those whom they

choose to represent them.

By way of background, NOSSCR is an association of attorneys

and non-attorneys who represent Social Security and SSI claimants

in proceedings before the Social Security Administration and in

federal court. Our current membership of 3,400 is committed to the

highest quality legal representation for claimants in an increasingly complicated disability determination process.

My name is Nancy Shor. It has been my privilege to serve as executive director of NOSSCR since its inception 20 years ago. For

three years prior to that, I represented Social Security claimants

on Cape Cod.

I want to turn first to questions about the user fee. The new 6.3

percent assessment on attorney fees paid by the administration is

now, as you know, in effect. To explain it, to illustrate, if an attorney is authorized a fee of $500 for legal services, the amount of the

check that Social Security sends to that attorney is now $468.50.

If the attorney is authorized a fee of $4,000, the amount of the

check that SSA sends is $3,748.

As we did when the user fee was enacted, we continue to oppose

it. We fail to understand the rationale for why a service that the

statute has required SSA to perform for more than 35 years at no

charge now has a charge. The balance that the attorneys’ fee statute at Section 42 of the Code has traditionally struck is that on the

one hand the amount of the attorney fee is regulated by Social Security, while on the other hand fee payment by the agency is assured.

This balance has now gone awry. We do not understand how the

6.3 percent amount was derived as the cost of providing a check or

why the cost of providing a check varies with the amount of the

check. Even more discouraging to our members is the statement by

the commissioner that there is no what I call ‘‘closed circuit,’’ that

is, revenues generated by the user fee do not return to the compoVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
46

nents inside Social Security that process fees to enable them to provide any better service.

In a March 3 letter that you, Chairman Shaw, received from Social Security, the following statement was made: When we proposed legislation to improve the attorney fee payment process—I

underscore improve—we included a provision to deposit the funds

raised as a result of the 6.3 percent user fee into our Limitation

on Administrative Expenses account. We intended to use the funds

raised by the fee to improve the administration of the payment

process. However, when Congress passed the provision establishing

the user fee, it did not provide for the fees to be deposited in the

LAE account. Therefore, we are not receiving additional resources,

which hinders our ability to make additional significant improvements on our current performance.

Since the amount of the user fee is not tied to the cost of writing

a check and user fee funds do not return to the check writing components at SSA, it seems clear that this user fee is simply a new

tax on attorneys’ fees, which we oppose as unfair. We believe that

if a user fee is to be assessed, it should be kept at no more than

$25 per check, a figure that appears eminently reasonable in light

of SSA’s statements that the cost of writing and mailing an individual benefit check is 42 cents.

Second, I would like to briefly touch on a way to improve access

for SSI claimants to legal representation. And the question is: why

is it that a Social Security disability claimant can usually find an

attorney, but in many parts of the country, a similarly situated SSI

claimant cannot? What is the reason according to SSA’s data for

fiscal year 1999, 83.4 percent of Title II claimants were represented

at the OHA level while only 57.1 percent of Title XVI claimants

were represented?

We maintain a large part of the answer lies with the difference

between the Social Security and SSI programs with regard to payment of attorneys’ fees. In both programs, the amount of fees is

regulated and ultimately set by SSA. But only in the Social Security program is the fee paid directly by SSA out of the claimant’s

past due benefits.

In the SSI program, the successful claimant is responsible for

payment of the approved fee, but unfortunately often does not

make that payment. The concern that we have is as a result of that

history, many private attorneys will decline to represent SSI claimants with meritorious cases.

This is particularly true in light of the revenue decrease engendered by the user fee. In light of the revenue decrease with their

Social Security cases, many attorneys who used to take SSI cases

on a pro bono basis now feel they can no longer continue to do so.

Many attorneys who used to represent SSI claimants with the

knowledge that some cases would produce no fees now feel they can

no longer afford to do so.

I want to be clear that we wholeheartedly support all the existing services, representation services from legal services, from attorneys working on a pro bono basis, from state-funded advocacy programs, from any and every source that provides legal representation to claimants. We want to be the lawyers of last resort. We

want to be there for the SSI claimant who cannot find free repVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
47

resentation from any other source. To assist these individuals, we

advocate extension of the fee payment process used in Social Security cases to SSI claims.

We know from the referral service that NOSSCR maintains we

get dozens of calls a day from claimants with SSI cases all over the

country who are not able to find any free legal help and we are

often not able to find them a private attorney who is willing to take

the case because of the uncertainty of payment.

An additional hurdle has been a consequence of the installment

payments contained in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which directs Social Security

to issue past due SSI payments in installments if they are over a

certain amount, approximately $5,500.

There is a provision, a statutory provision, that the first installment of $5,500 will be increased when the recipient can document

unpaid shelter, food and medical bills. We suggest that one approach to the problem is to add the amount of the authorized attorney fees to the list of items for which the first installment payment

may be increased.

Third, I would like to touch on the need for an inflationary adjustment to the current attorneys’ fee cap. The attorney fee statute

was significantly amended in 1989 to create a fee agreement system which provides that the attorney and client can enter into a

streamlined attorney fee world where fees are capped at 25 percent

or $4,000, whichever is lower.

Authority was given to the commissioner as part of that statute

to adjust that $4,000 cap for cost of living adjustments given to

beneficiaries over the years. Ten years have passed with no adjustment. The consequence is that the number of cases being processed

as fee petition cases could be decreased. Those could be processed

as fee agreement cases which is much less expensive for the administration, but the fee petition cases have started to go up because

attorneys have more time in on the cases than the $4,000 ceiling

will compensate them for.

We are not advocating the increase in fees. We are advocating an

increase in use of the fee agreement system and if the COLA adjustment were made to the fee agreement cap, we maintain the

number of fee petitions would be decreased.

Chairman SHAW. Okay. Ms. Shor, you are going to have to wrap

up now. You have gone way over the time that we have set aside.

Ms. SHOR. We are very enthusiastic about the bill that you have

introduced that links performance by Social Security to the payment of the user fee. As I am sure you know from the cascade of

letters that your office receives, attorneys currently have absolutely

no mechanism to use to avail themselves of when the fee payments

are not made and we certainly support efforts to make a linkage,

but always—and let me be clear—always the beneficiary is paid

first. Nobody has any sort of notion that the attorneys would get

paid first. Thank you very much.

Chairman SHAW. Thank you.

[The prepared statement follows:]

48

Statement of Nancy G. Shor, Executive Director, National Organization of

Social Security Claimants’ Representatives, Midland Park, New Jersey

As Executive Director for the National Organization of Social Security Claimants’

Representatives, I thank you for the opportunity to speak today at this important

hearing. The issues you are discussing this afternoon are of great importance to

claimants, to beneficiaries, and to those whom they choose to represent them. As

requested by the Subcommittee, I state that neither NOSSCR nor I have received

any government grants or contracts in the past two years. A copy of my curriculum

vitae is attached.

NOSSCR is an association of attorneys and non-attorneys who represent Social

Security and SSI claimants in proceedings before the Social Security Administration

and in federal court. Our current membership of 3,400 is committed to the highest

quality legal representation for claimants.

My name is Nancy Shor. It has been my privilege to serve as Executive Director

of NOSSCR since its inception more than twenty years ago. For three years prior

to that, I represented Social Security claimants in Massachusetts.

Rationalize the Amount of the ‘‘User Fee’’

The new 6.3% assessment on attorneys’ fees paid by the Administration is now

in effect. To illustrate, if an attorney is authorized a fee of $500.00 for legal services,

the amount of the check that SSA sends is $468.50. If an attorney is authorized a

fee of $4,000.00, the amount of the check that SSA sends is $3,748.00.

As we did when the user fee was enacted, we continue to oppose it. We fail to

understand the rationale for why a service that the statute has required SSA to perform for more than thirty-five years at no charge now has a charge. The balance

that the attorneys’ fee statute at 42 U.S.C. has traditionally struck is that, on the

one hand, the amount of the attorney’s fee is regulated by SSA while on the other,

fee payment by the agency is assured. This balance is now awry.

We believe that no case has been made to explain how the 6.3% amount was derived as the cost of providing a check or why the cost of providing a check varies

with the amount of the check.

Even more discouraging to us is the statement of the Commissioner that there

is no ‘‘closed circuit,’’ that is, the revenues generated by the ‘‘user fee’’ do not return

to the offices that process fees to enable them to provide better service. In his March

3, 2000 letter to Chairman Shaw, Charles H. Mullen, Associate Commissioner of

SSA’s Office of Public Inquiries, states, ‘‘[W]hen we proposed legislation to improve

the attorney fee payment process, we included a provision to deposit the funds

raised as a result of the 6.3 percent user fee into our Limitation on Administrative

Expenses (LAE) account. We intended to use the funds raised by the fee to improve

the administration of the payment process. However, when Congress passed the provision establishing the user fee, it did not provide for the fees to be deposited in

the LAE account. Therefore, we are not receiving additional resources, which

hinders our ability to make additional significant improvements on our current performance.’’

Since the amount of the ‘‘user fee’’ is not tied to the cost of writing a check, and

the ‘‘user fee’’ funds do not return to the check-writing component at SSA, then this

‘‘user fee’’ is clearly and simply a new ‘‘tax’’ on attorneys’ fees. We oppose it as unfair. We believe that, if a ‘‘user fee’’ is to be assessed, it should be capped at no more

than $25.00 per check, a figure that appears eminently reasonable in light of SSA’s

statements that the cost of writing and mailing an individual benefit check is fortytwo cents.

Improve Claimants’ Access to Assistance with SSA’s Complex System

Why is it that a Social Security claimant with a disability case usually can find

an attorney, but in many parts of the country, an SSI claimant with an identical

disability case cannot? What is the reason that, according to SSA’s data for FY

1999, 83.4% of Title II claimants were represented at the OHA level, while only 57.1

% of Title XVI claimants were represented?

A large part of the answer lies with the difference between the Social Security

and the SSI programs with regard to payment of attorneys’ fees. In both programs,

the amount of the attorneys’ fees is regulated and ultimately set by SSA. But only

in the Social Security program is the fee paid directly by SSA out of the claimant’s

past-due benefits. In the SSI program, the successful claimant is responsible for

payment of the approved fee. Unfortunately many do not pay fees.

Our concern lies with those SSI claimants who want to be represented but who

at present are unable to hire a lawyer, not because of the lack of merit of their claim

but because of the lawyer’s concern about the uncertainty of eventual fee payment.

49

We recently surveyed our members and learned that one no doubt unintended

consequence of the new ‘‘user fee’’ is that many attorneys are changing their practice with regard to SSI cases. In light of the revenue decrease with their Social Security cases, many attorneys who used to take SSI cases on a pro bono basis now

feel they can no longer afford to do so. Many attorneys who used to represent SSI

claimants with the knowledge that some cases would produce no fees now feel they

can no longer afford to do so.

We wholeheartedly support all of those currently providing representation to SSI

claimants, including the legal services programs, the attorneys who accept SSI cases

on a pro bono basis, the state-funded advocacy programs, and the state-created fee

payment systems for interim assistance recipients. All of these are invaluable resources that should be preserved or extended. But we know that many SSI claimants who want to be represented are not able to find it through these sources. To

assist these individuals, we advocate the extension of the fee payment process used

in Social Security claims to SSI claims. Our intention is to provide a supplement

to the existing sources of representation.

Another hurdle for an attorney who is asked to take an SSI case lies with the

recent statutory provisions for installment payments of large retroactive SSI benefits that result in multiple smaller payments for beneficiaries. At a minimum, we

recommend that a change be made in the installment payment provision enacted

in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

Currently, when an SSI recipient’s past-due benefits exceed the amount of one

year’s benefits, the agency pays the past-due benefits in installments, at six-month

intervals. The first installment is capped at an amount equal to one year’s benefits;

there is a statutory provision that the agency will increase the amount of the first

installment when the recipient can document unpaid shelter, food, and medical bills.

We advocate that the amount of the authorized attorney’s fee be added to the list

of items for which the first installment may be increased.

Inflationary Adjustment to the Attorneys’ Fee Cap

The attorneys’ fee statute was significantly amended in 1989 to create a new process known as the ‘‘fee agreement.’’ The ‘‘fee agreement’’ was enacted as an alternative to the long-standing ‘‘fee petition’’ system, which was seen as an expensive

use of limited administrative time. The ‘‘fee agreement’’ process has proved to be

popular with representatives.

In 1990, Congress created the streamlined fee agreement process, and set a cap

of $4,000.00, with the following, ‘‘The Secretary may from time to time increase the

dollar amount under clause (ii)(II) to the extent that the rate of increase in such

amount, as determined over the period since January 1, 1991, does not at any time

exceed the rate of increase in primary insurance amounts under section 215(i) since

such date. The Secretary shall publish any such increased amount in the Federal

Register.’’ 42 U.S.A. § 406 (a)(2)(A)(iii). Ten years have passed with no adjustment.

For this reason, use of the ‘‘fee agreement’’ process has begun to decrease, and at

the same time, the number of fee petitions filed has started to rise. The time has

come for an adjustment in the cap, to return the effectiveness of the statute to what

Congress intended when enacting it.

We are not advocating an increase in fees. Currently, the representative who

wishes to charge a fee between $4,000.00 and $5,000.00 files a fee petition and generally is authorized a fee in the amount requested. But it often takes the agency

adjudicators upwards of a year to act on a fee petition and issue the fee authorization. Adjusting the fee agreement cap would reduce some of this fee petition workload for the agency. Adjusting the cap would of course in no way diminish the current fee agreement provision that an aggrieved claimant can protest the amount of

the fee.

Improve Efficiency of SSA’s Attorney Fee Payment System

Attorneys have long complained about the length of time the Social Security Administration takes to pay their attorneys’ fees. When either the fee setting or feepayment processes are unreasonably delayed, attorneys who have earned these fees

and who rely on their receipt find themselves in financial distress. Many have been

compelled to borrow money; others are deciding to leave the practice altogether.

Short of filing mandamus actions in federal court and bombarding their Members

of Congress with requests for help, they presently have no recourse. Our members

report that the slowdown in payment processing happens regularly each year during

the months of November and December; they report that the number of fee payments diminishes, sometimes to none. (In response to our FOIA request for the

number of attorney’s fee checks issued each month during 1998 and 1999, we reVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00053 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
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ceived the following response, ‘‘We are unable to comply with your request since we

do not maintain the data you requested.’’).

One reason for the attorneys’ dismay at the enactment last December of the 6.3%

‘‘user fee’’ was that there was no linkage, express or implied, to improved service.

We believe that it is eminently fair to tie assessment of any ‘‘user fee’’ to a performance standard on the agency’s part. We suggest that the agency be permitted to assess any ‘‘user fee’’ only if the attorney’s fee payment is made within 30 days of certification of payment of past-due benefits to the claimant.

The pace of attorneys’ fee payments has increased somewhat since the first of this

year. We believe that this is due in part to the interest in this matter that Chairman Shaw and this Subcommittee have expressed to the agency. It is also due to

another provision in the Ticket to Work and Work Incentives Improvement Act that

eliminated an unnecessary waiting period from SSA’s effectuating procedures for

cases in which the attorney used the fee agreement process. The faster payments

seen earlier this year demonstrate that the agency is capable of meeting the proposed 30-day deadline.

Another way to enhance SSA’s efficiency in fee payments and reduce its administrative expenses would be to implement a joint check system where payments are

not electronically transmitted. Many comparable programs in both the public and

private sectors utilize joint checks, that is, a single check payable jointly to the

claimant and the attorney. This includes most state workers’ compensation programs and virtually all personal injury cases. Upon the endorsement of both the client and the attorney, the proceeds of the check are placed in an escrow account and

then apportioned according to the statute and regulations (public sector) or the litigants’ agreement (private sector). Where claimants’ benefits are electronically transmitted, we believe it only fair and equally efficient to require that the attorneys’ fee

be electronically transmitted at the same time. If the agency were to determine that

the cost of administering a program of joint checks is significantly less expensive

than the current two-check system, we would support its use.

In conclusion, we thank the Chair and all the members of this Subcommittee for

your interest in these issues. I would be pleased to respond to any questions you

go ahead and give us your remarks and then we are going to have

may have.

Chairman SHAW. Mr. Lieberman. And what will happen you will

f

to recess to go make this vote and then we will come back and try

to wrap up.

STATEMENT OF LYLE D. LIEBERMAN, SOCIAL SECURITY PRACTITIONER, LIEBERMAN & GUTIERREZ, P.A., MIAMI, FLORIDA

Mr. LIEBERMAN. Thank you, Chairman Shaw, and good afternoon

to you and members of the committee. My name is Lyle Lieberman.

I am an attorney in private practice with the firm of Lieberman

and Gutierrez in Miami, Florida, and represent Social Security

claimants primarily from Dade and Broward counties, but also

Palm Beach County, and I appear frequently at administrative

hearings at the Social Security Administration’s Office of Hearings

and Appeals in Fort Lauderdale, Miami and West Palm Beach.

I hope that my observations will be useful to you today. They

come from my tenure as administrative law judge with the Social

Security Administration’s Office of Hearings and Appeals, from my

28 years of private practice in representing Social Security claimants, and indeed in my 42 years of private practice and being

proud to be a member of both the Illinois and Florida bars.

From my tenure as an ALJ, I learned that good legal advocacy

is a boon to the decision-making process. Good advocates develop

and marshal the evidence and present arguments at a hearing.

From my many years in private practice, I have learned that good

advocacy is much more. It includes a great deal of time in speaking

51

with potential clients to explain how the Social Security process operates and what to expect in their cases, other benefits and community services which might be available to them, and in some instances informing them why they are not going to be found eligible

for benefits notwithstanding their particular impairments.

I also answer many questions and provide information that my

clients would otherwise try to seek from the Social Security Administration, and as you know from previous hearings, the amount of

time that SSA personnel spend with individual claimants and their

questions has become very limited.

I would like to just briefly address the new user fee which Ms.

Shor has discussed. This charge we have now just begun to feel its

impact because the agency did not start it until February 1. The

figure of 6.3 percent may not seem a lot and indeed when I first

saw it, I did not think it was that much until we realized that it

translates in the reduction of our net revenue of about 20 percent

because I cannot reduce payments to anyone of my staff including

our landlord, our publisher, the legal documents, the post office; no

one except myself.

And my colleagues who practice in this field and I are certainly

very distressed by this user fee because it simply appears to be a

tax. I have never seen an explanation of why it costs $250 for the

agency to write a check when the attorney’s authorized fee is

$4,000. The Miami office of one of our private payroll services

charges $3 to write each employee’s payroll check for an office with

ten employees which includes calculating and processing the appropriate payroll deductions. I would think that this service is quite

comparable to SSA’s in writing attorneys’ fee checks and if there

must be a charge for SSA’s costs in writing the check, I do not understand why the fee should be more than the $3 charged by this

private service.

I also think there should be some performance required of SSA.

Over the years, I have generally received payments from SSA more

than six months after the award notices were issued. I have experienced annual slowdowns from the agency when no checks were received for months. Recently, I am pleased to report that this has

improved somewhat, but there is no way to determine that this improvement will continue, and it is nothing more than temporary in

many instances.

The requirement that SSA may not assess the user fee until the

attorney’s fee is paid within 30 days of a certification for payment

of retroactive benefits to the claimant would no doubt provide SSA

with a necessary inducement to ensure proper payment. This payment would be made 30 days after the certification was made that

the claimant should be paid.

I think it is only fair that once the representation for the client

has been completed and all of SSA’s other requirements are complied with, that prompt payment should be utilized. The fee agreement process is a good one. Compared with the fee petition process,

it is certainly more streamlined. It saves time for the administration. It saves time for the lawyers and indeed statistics show that

most lawyers utilize this process. For many years before 1990, the

only methodology was the fee petition process and it was very

52

lengthy and many times the fee was not paid for at least a year

or more.

But I do not use the fee agreement process as often as I once did because of the current cap of $4,000. I am now filing more fee petitions, which many other attorneys are doing, which SSA is extremely slow in processing, particularly at levels below the ALJ

hearing level and the attorney fee branch.

The cost of living cap has not changed in ten years, but I would suggest that the cap and the statute be increased to $5,000. The

result would be that many of the fee petitions currently being submitted would disappear and the attorneys would choose to use the

streamlined fee agreement process instead. And indeed most of the

cases under the fee agreement process would be below the $5,000

figure anyway.

And finally with regard to SSI claimants, my office receives

many calls from claimants with SSI cases. Because there is no direct withholding and direct payment of attorneys’ fees, with great

reluctance, I do not accept SSI claimants as clients unless they

have concurrent cases with Title II benefits available or when, in

a lot of situations, I just cannot turn these people away.

The SSI cases that our office handles constitute all of our pro

bono efforts that I and my associates do. And we wish we could do

more. We get referrals from Legal Aid Services because they are

so burdened with cases and do not have the support to do them.

They ask us particularly if we have a particular interest, which I

do, in cases that involve lupus or multiple sclerosis, and we will

handle those cases on a pro bono basis.

But we would handle SSI cases if there was a fee petition or

withholding in place once we learned that Legal Aid could not handle those cases. Thank you for holding this hearing today and providing me with the opportunity to testify and I would be happy to

answer any questions the chairman has.

Chairman SHAW. Thank you, Mr. Lieberman.

[The prepared statement follows:]

Statement of Lyle D. Lieberman, Social Security Practitioner, Lieberman &

Gutierrez, P.A., Miami, Florida

Good morning. My name is Lyle Lieberman. I am an attorney in private practice

with the firm of Lieberman & Gutierrez in Miami, Florida. I represent Social Security claimants primarily from Dade and Broward Counties. I appear frequently at

administrative hearings at the Social Security Administration’s Offices of Hearings

and Appeals in Fort Lauderdale and in Miami.

Thank you very much for the opportunity to appear before you today. I hope that

my observations will be useful to you. They come from my tenure as an Administrative Law Judge with the Social Security Administration’s Office of Hearings and Appeals and from my 28 years of private practice in representing Social Security claimants. To comply with the rule referenced in the Subcommittee’s invitation, I have

provided a copy of my curriculum vitae with this statement. I have received no government grants or contracts in the past two years.

Role of Representation

From my tenure as an ALJ, I learned that good legal advocacy is a boon to the

decision-making process. Good advocates develop and marshal the evidence and

present arguments at hearing. From my many years in private practice, I have

learned that good advocacy is much more. It includes a great deal of time in speaking with potential clients to explain what how the Social Security process operates

and what to expect in their cases; other benefits and community services might be

available to them; and in some instances, informing them why they are not going

to be found eligible for benefits, notwithstanding their particular impairments. I

53

also answer many questions and provide information that my clients would otherwise try to seek from the Social Security Administration. As you know from previous

hearings, the amount of time that SSA personnel spend with individual claimants

and their questions has become very limited.

The New User Fee

A charge of 6.3% of the amount of the attorney’s fee was enacted last December.

We have just begun to see the impact of this new fee, because the agency did not

begin to apply it until February 1. A figure of 6.3% may seem not significant to you.

But in private practice, a reduction of 6.3% of our gross revenue translates into an

almost 20% reduction in our net revenue. This is because I cannot reduce payments

to anyone, including my landlord, my legal publisher, the post office, or my office

staff by 6.3%—no one except myself.

My colleagues who practice in this field and I are certainly very distressed by this

user fee. It seems to us to be simply a tax. I have never seen an explanation of why

it costs $252.00 for the agency to write a check when the attorney’s authorized fee

is $4,000. I cannot fathom this. The Miami office of a private payroll services company charges approximately $3.00 to write each employee’s payroll check for an office with ten employees (this includes calculating and processing the appropriate

payroll deductions). I would think that this service is quite comparable to SSA’s in

writing attorney’s fee checks. If there must be a charge for SSA’s cost in writing

the check, I do not understand why any fee charged should be more than $3.00.

I also think that there should be some performance required of SSA. Over the

years, I have generally received payments of my fees from SSA more than six

months after the Award Notices were issued. I have experienced annual slow-downs

from the agency when I received no checks at all for several months. Recently I am

pleased to report that this has improved somewhat. But I have no confidence at all

that this improvement will continue, and that it is nothing more than temporary.

A requirement that SSA may not assess any user fee unless the attorney’s fee is

paid within thirty days of the certification for payment of retroactive benefits to the

claimant would no doubt provide SSA with the necessary inducement to ensure

prompt payment. I think it is only fair that once I have finished the representation

for my client and complied with SSA’s fee approval process that I should be able

to count on prompt payment of the authorized fee.

Fee Agreement Process

The fee agreement process is a good one. Compared with the fee petition process,

it is certainly more streamlined. The fee agreement saves time for the Administration and saves time for lawyers. It preserves the opportunity for claimants to object

if they feel they have been overcharged.

But I do not use the fee agreement process as often as I once did, because of the

current fee cap of $4,000. I am now filing more fee petitions, which SSA is extremely

slow in processing, particularly at the levels below the administrative hearing and

at the Attorney Fee Branch. The fee cap has not changed in ten years; I would suggest that the cap in the statute be increased to $5,000. The result would be that

many of the fee petitions currently being submitted would disappear; the attorneys

would choose to use the streamlined fee agreement process instead.

Representation for SSI Claimants

My office receives many calls from claimants with SSI cases. But there is no withholding and direct payment of attorneys’ fees in SSI cases. This is the reason that,

with great reluctance, I can not accept SSI claimants as clients, except those who

have a concurrent Social Security claim (where I will receive direct payment for my

services on the Social Security disability portion of the claim), or when it is a person

whom I just can’t turn away. My experience has taught me that I am not likely to

be paid for my time. I am not able to expand my pro bono commitment, especially

in light of the reduced revenue caused by the user fee.

If a fee payment procedure were in place, could I accept the cases from the many

SSI claimants who call my office? My answer is yes, if the person were not able to

obtain free legal representation from the legal services programs in my area.

Thank you for holding this hearing today and for providing me with the opportunity to testify. I would be pleased to answer any questions you might have.

f

54

Chairman SHAW. We have got about five minutes to make this

vote so we will stand in recess for about—we should be gone about

ten or 15 minutes. Thank you.

[Recess.]

Chairman SHAW. Okay. There may be another vote in about ten

or 15 minutes, maybe 20 minutes, so I would like to try to finish

up with ya’ll so you will not have to sit around here waiting on us.

We are waiting for Ms. Kaufmann. She is not here. So we will go

to Ms. Ford.

STATEMENT OF MARTY FORD, CO-CHAIR, SOCIAL SECURITY

TASK FORCE, CONSORTIUM FOR CITIZENS WITH DISABILITIES

Ms. FORD. Thank you, Chairman Shaw, and members of the subcommittee for this opportunity to testify. I am here today in my

role as co-chair of the Social Security Task Force of the Consortium

for Citizens with Disabilities. The CCD Social Security Task Force

urges the subcommittee to support a statutory change that would

allow SSI claimants to voluntarily enter into an agreement with attorneys for SSA to withhold and provide direct payment of attorneys’ fees from their past due SSI benefits.

We support such a provision because it will help ensure that

claimants have adequate representation to appeal their cases. The

disability determination and adjudication system is a complex,

multi-level process involving the evaluation of medical and vocational factors and the process is simply too complicated for many

claimants to navigate on their own.

However, because there is no direct payment of attorneys’ fees in

SSI cases, many attorneys are unable to provide representation in

these cases. Since SSI benefits cannot be attached if the client does

not pay, claimants with significant physical and mental impairments who are in difficult financial circumstances must often fend

for themselves with SSA.

We recognize that there may be reluctance to consider the withholding of attorneys’ fees from SSI claimants who by definition

have extremely low income and assets, if any. It could be argued

that SSI claimants would be better off using pro bono legal services

or relying on legal services attorneys or protection and advocacy

system attorneys to pursue their claims.

The CCD Social Security Task Force acknowledges these concerns and we strongly support the valuable service that these programs provide claimants, but we do not see this proposal as affecting their efforts in any way. Since legal services and P&A system

resources, as well as the availability of pro bono legal services, are

significantly limited, we concluded that SSI claimants would benefit from voluntary access to the attorneys’ fee payment system as

an additional resource, especially where they have been unsuccessful in finding legal assistance elsewhere.

Further, we believe that the potential loss of eligibility and benefits due to a lack of experienced legal representation is a far greater harm or burden to the claimant than payment of reasonable attorneys’ fees out of the back benefit.

55

Given the low income and resources and limited ability of many

SSI claimants to successfully pursue their own claims, we can see

no compelling reason not to create parity in the payment system,

especially since many individuals could be eligible for SSI, Title II,

or both, depending upon when they apply.

The withholding and direct payment mechanism in the Title II

program has helped to ensure that there is a pool of private attorneys who are willing and have the expertise to pursue claimants’

cases. We urge you to establish a similar mechanism in SSI cases

to provide these claimants with the same opportunity to obtain representation and the benefits to which they are entitled. And we

would be happy to work with you to ensure that issues specific to

the SSI population, such as the repayment of interim benefits, are

taken into account in crafting such a provision. Thank you.

Chairman SHAW. Thank you, Ms. Ford.

[The prepared statement follows:]

Statement of Marty Ford, Co-Chair, Social Security Task Force, Consortium

for Citizens with Disabilities

ON BEHALF OF:

Adapted Physical Activity Council

American Association on Mental Retardation

American Association of University Affiliated Programs

American Network of Community Options and Resources

Association for Persons in Supported Employment

Brain Injury Association

International Association of Psychosocial Rehabilitation Services

National Alliance for the Mentally Ill

National Association of Developmental Disabilities Councils

NISH

National Mental Health Association

National Organization of Social Security Claimants’ Representatives

Paralyzed Veterans of America

Research Institute for Independent Living

The Arc of the United States

Title II Community AIDS National Network

Chairman Shaw, Congressman Matsui, and Members of the Subcommittee, thank

you for this opportunity to testify about the collection of attorneys fees in the Social

Security disability programs.

I am Assistant Director of the Governmental Affairs Office of The Arc of the

United States. I am testifying here today in my role as co-chair of the Social Security Task Force of the Consortium for Citizens with Disabilities. CCD is a working

coalition of national consumer, advocacy, provider, and professional organizations

working together with and on behalf of the 54 million children and adults with disabilities and their families living in the United States. The CCD Social Security

Task Force focuses on disability policy issues and concerns in the SSI program and

the Title II disability programs.

The CCD Social Security Task Force urges the Subcommittee to support a statutory change that would allow SSI claimants to voluntarily enter into an agreement

with attorneys for SSA to withhold and provide direct payment of attorneys fees

from their past due SSI benefits. The CCD Social Security Task Force supports such

a provision because it will help ensure that claimants have adequate representation

to appeal their cases. The reasons behind the withholding and direct payment of attorneys’ fees in Title II cases apply with equal force to SSI cases.

The disability determination and adjudication system is a complex, multi-level

process, involving the evaluation of medical and vocational factors. The process simply is too complicated for many claimants to navigate on their own. Most claimants

seek representation only after their own efforts to pursue applications have resulted

in denial of their claims.

However, because there is no direct payment of attorneys’ fees in SSI cases, many

attorneys are unable to provide representation in these cases. Since SSI benefits

cannot be attached, an attorney cannot collect a fee from a successful client if the

client has only SSI income and does not pay. Due to the resulting limited number

56

of attorneys willing to take SSI cases, claimants with significant physical and mental impairments who are in difficult financial circumstances are often left to fend

for themselves with SSA.

We recognize that there may be reluctance to consider the withholding of attorneys’ fees from SSI claimants, who, by definition, have extremely low income and

assets, if any. It could be argued that SSI claimants would be better off using pro

bono legal services or relying on legal services attorneys or protection and advocacy

system attorneys to pursue their claims.

The CCD Social Security Task Force acknowledges these concerns. We strongly

support the valuable service these programs provide SSI claimants in offering representation and do not see this proposal as affecting their efforts in any way. However, since legal services and P&A system resources, as well as the availability of

pro bono legal services, are significantly limited, we concluded that SSI claimants

would benefit from voluntary access to the attorneys fee payment system, as an additional resource, especially where they have been unsuccessful in finding legal assistance elsewhere. Further, we believe that the potential loss of eligibility/benefits

due to a lack of experienced legal representation is a far greater harm or burden

to the claimant than the payment of reasonable attorneys’ fees out of the back benefit. Given the low income and resources and the limited ability of many SSI claimants to successfully pursue their own claims, we can see no compelling reason not

to create parity in the payment system, especially since many individuals could be

eligible for SSI, Title II, or both, depending upon when they apply.

The withholding and direct payment mechanism in the Title II program has

helped to ensure that there is a pool of private attorneys who are willing and have

the expertise to pursue claimants’ cases. We urge you to establish a similar mechanism in SSI cases to provide these claimants with the same opportunity to obtain

representation and the benefits to which they are entitled.

Chairman S

STATEMENT OF JENNY KAUFMANN, STAFF ATTORNEY,

HAW. Ms. Kaufmann.

f

NATIONAL SENIOR CITIZENS LAW CENTER

Ms. KAUFMANN. Thank you, Chairman Shaw. Thank you for providing me with the opportunity to present the position of the National Senior Citizens Law Center and SSI advocates throughout

the country on expanding the withholding of attorneys’ fees to SSI

claimants.

We are opposed to the elimination of the current protection for

SSI recipients from attorney fee withholding. As a recently former

legal services attorney, I represented SSI claimants and some SSDI

claimants at all stages of the SSA disability appeals process for

more than six years.

I also represented them on other legal issues as well. We were

and I was a one-stop shop for SSI claimants. These clients represent the most vulnerable members of our society and the legal

problems they encounter are numerous, complex and invariably

tied to their financial situation. The proposal to withhold attorneys’

fees from retroactive SSI awards would create undue hardship and

defeat the very purpose of the SSI program which is to provide a

minimum subsistence level that falls below the poverty level.

This issue has been considered by Congress in the past and it

has concluded that withholding past due benefits from financially

needy individuals under Title XVI would cause greater hardship

than Title II withholding. This is just as true today as it has been

in the past.

The Social Security Administration would be put in the untenable position of serving as a collection agent who is required to

automatically place the payment of an attorney fee debt before leVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00060 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
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gitimate debts, necessary debts, to a landlord, to a grocer, to a

health care provider or even a neighbor who provided transportation to doctors’ appointments and other places.

Many times my only negotiating tool to delay or waive legal proceedings was the fact that I could verify with a creditor that I

would not receive a fee for my services. Payments or loans for food

and shelter are the outstanding debts that SSA requires a claimant

to verify under penalty of perjury to avoid a reduction in SSI benefits. These are the in-kind support deductions. Often an SSI retroactive award is fully consumed by the repayment of these necessary debts.

The payment of attorneys’ fees when coupled with repayment of

a state interim assistance grant would effectively wipe out the retroactive award especially the first installment. As an example, a

Virginia claimant who has only waited a year to obtain SSI benefits normally would be entitled to $6,144 in a retroactive award if

there were no other deductions for in-kind support or other countable income.

A 25 percent attorney fee would reduce that award to $4,608. If

the claimant also received interim assistance during this time,

which is only $220 a month in the Commonwealth, the state would

be entitled to direct payment of $2,640 leaving less than $2,000 for

a claimant to repay any rent that is owed to her landlord or any

other payments to creditors.

Further complicating the calculation is that at a minimum, an

SSI claimant who does not receive a government subsidized housing grant must incur a rental liability and verify under oath that

liability to SSA. If they do not, they face a reduction in their SSI

benefits. Arguably, that rental liability at a minimum must equal

the value of the one-third reduction rule which for fiscal year 2000

is $170.66 or $2,048 a year. Less than $2,000 in a retroactive

award is not going to meet their minimum rental liability to avoid

a reduction in their SSI benefits.

Payment of an attorney fee and repayment of interim assistance

would not allow the SSI claimant to meet that rental obligation or

debt. A vulnerable SSI claimant should not be put in the predicament of defaulting on rental obligations or other credit obligations.

There is no evidence that the withholding of attorneys’ fees

would increase the availability of representation for SSI claimants.

Other factors go into that decision including the many income deductions that are associated with SSI benefits that may reduce the

ultimate back award.

It will, however, increase the cost to the SSI claimant who can

now negotiate for lower fees commensurate with their ability to

pay. If SSA collects a set fee, the attorney no longer needs to consider any other factors in the fee that is charged. In the absence

of solid assurance that SSI attorney fee withholding will result in

significantly greater levels of representation for SSI claimants,

Congress should not take an action that will eliminate fee negotiation and create hardship for some of the poorest Americans who

will bear the brunt of increased fees and costs.

We are sympathetic to the concerns of the private bar who must

endure long delays in payment of their hard-earned fees. But Congress should not correct this in a manner that places the burden

58

on those least able to shoulder it. There are other less burdensome

methods to do that including assurance that the attorney fees are

timely processed by Social Security.

Chairman SHAW. Thank you.

[The prepared statement follows:]

Statement of Jenny Kaufmann, Staff Attorney, National Senior Citizens

Law Center

Mr. Chairman and Members:

My name is Jenny Kaufmann. Thank you for the opportunity to present our views

to the Committee. The National Senior Citizens Law Center (NSCLC) works directly

with legal services programs and other agencies across the country, providing assistance on a broad range of issues that affect the elderly and disabled poor. The Social

Security and SSI programs have been at the core of our priorities since NSCLC was

founded in 1972. I began working at NSCLC a little over a month ago after serving

as the managing attorney of a legal services public benefits unit for almost six

years. I am making this statement on behalf of NSCLC and other SSI advocates.

We wish to express our opposition to a proposal that would abolish the existing

protection for SSI recipients and authorize the withholding of attorneys fees from

retroactive awards of SSI benefits. This proposal would create undue hardship for

an extremely vulnerable segment of society. At the same time, we are not convinced

that it would offer a countervailing increase in the availability of representation for

SSI claimants. It is highly unusual for the government to offer its services as a collection agent for a private enterprise and it is especially inappropriate for the Social

Security Administration (SSA) to serve as a collection agent for attorneys seeking

to recover fees from this uniquely disadvantaged population.

Elderly and or disabled SSI claimants constitute one of the most vulnerable segments of our population. The purpose of the SSI program is to provide a minimum

subsistence level of income to aged, blind, or disabled individuals who have little

or no income or resources to enable them to meet their basic needs for food, clothing,

and shelter. The federal benefit rate for an individual living alone is pegged at 74%

of the federal poverty level, or $512 per month. A modest state supplement is also

provided in approximately half of the states. In order to qualify for SSI, an individual’s countable income, from all sources, cannot exceed these basic subsistence benefit levels. In addition, countable resources cannot exceed $2,000.

With such extraordinarily limited income and resources, the ability of an SSI

claimant to survive for a lengthy period, while awaiting a determination of his

claim, often depends on loans from friends and relatives. These friends and relatives

are themselves often struggling on limited incomes and count on being repaid. It

is common for retroactive awards to be fully consumed by the repayment of loans

from friends and relatives, payment of past due rent to an understanding landlord,

payment of a security deposit on an apartment, or purchase of furniture or other

items the individual has foregone and will never be able to purchase on a meager

SSI grant.

In some states, SSI claimants receive interim assistance benefits to meet a portion

of their needs while they await a determination of their SSI claims. These benefits

must also be repaid from the retroactive award. The amount of the temporary assistance is withheld from the retroactive award by SSA and paid directly to the

state.

The withholding of attorneys fees from an SSI retroactive award is contrary to

the purpose of the SSI program. The payment of attorney fees when coupled with

repayment of a state interim assistance grant could effectively wipe out a claimant’s

retroactive award, leaving her little money to repay the debts she incurred for food

and shelter while awaiting a decision from SSA. For SSI children, in many instances, it would result in little, if any, money for the dedicated accounts that Congress required to be established with the proceeds of retroactive awards. These accounts, required by legislation enacted in 1996, must be used for the purchase of

items or services that improve or treat the child’s condition or otherwise relate to

the child’s disability.

There is no evidence that the withholding of attorneys fees from retroactive SSI

awards will increase the availability of representation for SSI claimants. However,

there is reason to believe that it will increase the cost of representation for those

who do have representation. In determining the fee to be charged, an attorney normally acts in the same manner as other business people and considers the cost of

providing the service and the amount the client is willing and able to pay. However,

when the attorney is in the enviable position of having the government act as his

59

1 At present, the government serves as collection agent for fees in Title II cases where the

attorney has a fee agreement with the client for a fee not to exceed $4,000 or 25% of the retroactive award, whichever is less. The result has been a total elimination of price competition in

Title II cases with almost all attorneys uniformly charging the maximum amount allowable

since collection is assured.

collection agent, there is no need to consider the client’s willingness and ability to

pay. At present, many private attorneys providing representation to SSI claimants

do so at a reduced fee, in some instances out of a genuine concern for the needs

of the SSI population and, in other instances, out of a practical realization that a

fee will be paid voluntarily only if it is set at a level that is reasonable for clients

with limited financial means. Once the government takes assumes responsibility for

collection of the fee, we can expect that almost all attorneys who accept these cases

for a fee will raise their rates and charge the maximum amount allowed under the

fee agreement. Price competition in SSI representation will be a thing of the past.1

Perhaps, the higher fees and elimination of price competition could be justified if

there were some assurance of significantly greater access to representation for SSI

claimants. We have not seen any such assurance. While we have not seen statistics

on the percentage of SSI claimants represented as opposed to SSDI claimants, we

would expect the percentage of SSI claimants with representation to be lower for

several reasons: 1) retroactive awards are significantly lower than for SSDI; 2) the

SSI population is perceived by many attorneys as being more difficult to work with;

3) medical records for SSI claimants tend to be less developed because, in many instances, they have less access to health care and are less likely to have consistent

treatment from a single medical source; and 4) SSI claimants are likely to have a

lower level of awareness concerning available options for representation. Government collection of the fee will do little to address these problems. Thus, a disparity

in the level of representation would be expected to continue even with SSI fee withholding.

In the absence of solid assurance that SSI attorneys fee withholding will result

in significantly greater levels of representation, Congress should not take an action

that will eliminate fee negotiation for SSI claimants and create severe hardship for

some of the poorest Americans who will bear the brunt of the increase in fees and

costs. We are sympathetic to the situation of those attorneys who have had a significant reduction in their income as the result of imposition of the user fee on retroactive Title II awards earlier this year. However, Congress should not correct the

situation of those attorneys in a manner that places the burden on those least able

to shoulder it.

at this hearing. I am going to ask each one of you if we could subChairman SHAW. The vote has cut down on the attendance here

f

mit questions to you and if you could reply in writing, we would

be most appreciative. I just have one area that I do want to briefly

touch on. You have heard all of us up here comment on the length

of time in which it takes one of these cases, 300 days from the day

the appeal is filed to the day that the adjudication is made, and

then roughly 60 days after that for the amounts received. That is

unconscionable length of time.

Mr. Lieberman, as a former judge in this inefficient system,

could you comment to me as to exactly why does it take this long,

how could we streamline it, and what could this committee do in

order to facilitate those suggestions?

Mr. LIEBERMAN. Well, of course, the simple answer, Chairman

Shaw, would be to give greater funding to the administration so

that they would have the personnel to do that. But absent that, one

of the reasons for the delays is that people generally, if they are

going to get representation, do not get that until the time that the

hearing is set. And under the statute, as it presently is given, 20

days notice is given before the hearing takes place. I would suggest

that 20 days be increased to 60 days because the sooner an individVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00063 Fmt 6633 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
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ual goes out and gets an attorney, they could then have the attorney do what is necessary, which is mainly developing the medical

evidence and producing it in a fashion that substantiates their entitlement to the benefits.

At one time, the time limit was ten days, and when Commissioner Bradley was associate commissioner, she changed that to 20,

but there is nothing written in stone. I would say the sooner that

the Social Security Administration gives a notice of when a hearing

is going to take place, the sooner that case can start getting developed. And that would save a considerable amount of time because

what typically happens is someone will come to my office ten days

before the hearing, say they need an attorney, and we try very

hard not to have that continued because it is hard to get on the

docket again.

But many times we are not able to get all the evidence in in that

short period of time. If we had an additional period of time to do

it, we could. The hearing would take place and there would not be

those delays and continuances that the administration abhors.

Chairman SHAW. Never having practiced in this arena, is it very

similar to a case before the bar where you go out and you do your

discovery, you take your depositions, you set up the times for the

deposition and all of this, or do you just—

Mr. LIEBERMAN. Well, the rules of evidence are greatly relaxed

because it is a non-adversarial proceeding. As a result, there are

no such things as depositions although I frequently do take sworn

statements from the medical doctors that are treating the patient.

Chairman SHAW. There is no lawyer before the judge that is taking the side to uphold the decision of the Social Security Administration?

Mr. LIEBERMAN. No, Chairman Shaw. The administrative law

judges are the only type of judiciary where they wear three hats.

They wear one hat to protect the integrity of the trust funds, they

wear a second hat to represent the claimant, even if the claimant

is represented, and they wear the third hat to be the adjudicator

in the case. It is almost impossible.

Chairman SHAW. It is almost a Chinese courtroom; is it not?

[Laughter.]

Mr. LIEBERMAN. And it is most difficult, but they do that, and

to their credit in general I think they do it well. But because the

rules of evidence are so different and because you can accept hearsay in evidence, for whatever it is worth, to an outside person who

is an attorney practicing in a different field, it all seems like a Chinese courtroom.

Chairman SHAW. Yes. That is interesting. I have a number of

questions right here and I will go ahead and submit them to you

and also give the other members of this committee, an opportunity

to submit them also.

Chairman SHAW. I want to thank you all very much for taking

the time to be with us this afternoon. There is a lot of work I think

we need to do. On the funding, in order to try to do that, it would

appear to me that unless we are getting further and further and

further and further behind, in other words, that 300 days is soon

going to be 400 days, it would seem to me that we could do something to get this backlog so we could get this thing right where you

61

at least reduce the time to six months, which it seems like an

awful lot to me even there.

Mr. LIEBERMAN. Well, there are things in place, Mr. Shaw, that

with the Hearing Improvement Process that are going to start to

be implemented throughout the country and I think that will have

some impact on the delay.

Chairman SHAW. I would like all four of you to feel free if you

have any suggestions that you want to put in writing to me of

areas that we might look into. I feel as the chairman of the subcommittee that we are really leaving the most vulnerable among us

in limbo and in harm’s way by not doing what we can to expedite

the process. I mean it is easy for us to sit here and say, well, that

is a year, but so what, you get your money, not if you are not buying groceries and not if the landlord is putting you out on the

street. That is a terrible situation and most of the people who qualify to come before this court are down on their luck, and that is

too bad.

[Questions submitted by Chairman Shaw, and Ms. Shor’s, Mr.

Liberman’s, Ms. Ford’s, and Ms. Kaufmann’s responses follow:]

NATIONAL ORGANIZATION OF SOCIAL SECURITY

CLAIMENTS’ REPRESENTATIVES

MIDLAND PARK, NJ 07432

July 13, 2000

The Hon. E. Clay Shaw, Jr., Chairman

Subcommittee on Social Security

Committee on Ways and Means

U.S. House of Representatives

Washington, D.C. 20515

Dear Chairman Shaw:

This letter provides our responses to the questions you posed in your letter of

June 22. That letter was a follow up to the hearing you conducted on attorneys’ fees

in June 14. We appreciate your on-going interest in these important issues.

The questions posed follow.

1. What suggestions do you have to improve the hearings and appeals process to

provide more timely decisions and more timely benefits in successful claims?

2. As you know, Mr. Shaw and Mr. Matsui have introduced legislation to encourage SSA to improve their processing time of attorneys fees. If the fee is not paid

within 30 days, no assessment would be charged. How would this incentive work

in your view and can the time frame be achieved?

3. You indicate in your testimony that many successful claimants in the SSI program do not pay their representatives an approved fee. Do you have any specific

data to support your claim?

4. You indicate that many SSI claimants who do not have representation would

be more likely to have representation if their attorney fees were directly paid to

them by SSA. According to your testimony, today 57% of SSI claimants are represented by an attorney compared with 83% of Social Security claimants. What improvement would you expect to see with the percent of SSI claimants represented?

5. Testimony from the National Senior Citizens Law Center indicates that there

is no evidence that the withholding of attorneys fees from retroactive SSI awards

will increase the availability of representation for SSI claimants. How do you respond?

6. You indicated that the use of fee petitions (where specific costs associated with

a case are detailed and subject to approval) has increased over the past several

years because SSA has not increased the $4,000 cap on fee agreements. Yet SSA

testified that the use of fee petitions has declined from 30 percent in 1995 to 13

percent in 1999. Do you have any problems with their numbers?

7. Do you have any suggestions on how to streamline the fee payment process?

8. You indicate that SSA sometimes takes upwards of a year to act on a fee petition. What changes to the process would you recommend to lessen this time frame?

62

Recommendations to improve the hearings and appeals process

1. Provide SSA with adequate resources to meet current and future needs by removing its Limitation on Administrative Expenses (LAE) budget authority from the

domestic discretionary spending category.

NOSSCR is concerned about SSA’s readiness to deal with the impending increase

in its workload as the ‘‘baby boom’’ generation approaches the peak age for onset

of disability and, subsequently, retirement. Testimony at the Subcommittee hearings on February 10 and March 16, 2000, painted a bleak picture regarding SSA’s

ability to deal with the increased work, at the same time that its own workforce

will reach peak retirement numbers. To exacerbate this problem, SSA’s budget continues to be cut from levels that would allow it to adequately address current and

future service delivery needs.

Most cases handled by NOSSCR members are at the hearing or Appeals Council

level. While current processing times at most Offices of Hearings and Appeals are

decreasing, they are still unacceptably high. Delays at the Appeals Council level are

far worse with many of our members reporting a wait of up to two years from the

time the appeal is filed. A claimant cannot proceed with an appeal in federal district

court until the Appeals Council has acted. Thus, while their medical and financial

situations are deteriorating, claimants are forced to wait for many months before

receiving a decision.

To improve delays, better develop cases and implement technological advances,

SSA requires adequate staffing and resources. NOSSCR strongly agrees with the Social Security Advisory Board’s unanimous and bipartisan recommendation that

SSA’s administrative budget, like its program budget, be removed from the discretionary domestic spending caps. This would allow Congress to approve funding for

SSA that would permit the agency to address current service delivery needs and

planning for the future.

2. Improve full development of the record earlier in the process

Developing the record so that relevant evidence from all sources can be considered

is fundamental to full and fair adjudication of claims. Unfortunately, very often the

files that denied claimants bring to our members show that little development was

done at the initial and reconsideration levels. Claimants are denied not because the

evidence establishes that the person is not disabled, but because the limited evidence gathered cannot establish that the person is disabled. The key to a successful

disability determination process is having an adequate documentation base and

properly evaluating the documentation that is obtained. Unless claims are better developed, the procedural changes currently being implemented by SSA will not improve the disability determination process.

NOSSCR supports full development of the record at the beginning of the claim

so that the correct decision can be made at the earliest point possible. Claimants

should be encouraged to submit evidence as early as possible. The benefit is obvious:

the earlier a claim is adequately developed, the sooner it can be approved and the

sooner payment can begin. However, the fact that early submission of evidence does

not occur more frequently is usually due to reasons beyond the claimant’s control.

Recommendations to improve the development process include:

• SSA should explain to the claimant, at the beginning of the process, what evidence is important and necessary.

• DDSs need to obtain necessary and relevant evidence. Representatives often are

able to obtain more relevant medical information because they use letters and forms

that ask questions relevant to the disability determination process. DDS forms usually ask for general medical information (diagnoses, findings, etc.) without tailoring

questions to the Social Security disability standard. The same effort should be made

with non-physician sources (therapists, social workers) who see the claimant more

frequently than the treating doctor and have a more thorough knowledge of the limitations caused by the claimant’s impairments.

• Improve provider response rates to requests for records, including more appropriate reimbursement rates for medical records and reports.

• Provide better explanations to medical providers, in particular treating sources,

about the disability standard and ask for evidence relevant to the standard.

3. Streamline the process without impairing the claimant’s right to a full and fair

hearing.

NOSSCR supports SSA’s recent efforts to reduce unnecessary delays for claimants, so long as they do not affect the fairness of the process to determine a claimant’s entitlement to benefits.

63

a. Initial and reconsideration levels

In 10 prototype states, SSA currently is testing two significant changes at the prehearing levels of the process: elimination of the reconsideration level and adding a

predecision interview, also known as a ‘‘claimant conference.’’ We believe that these

changes are positive and NOSSCR has long advocated the value of providing claimants with a face-to-face meeting with the decision maker.

However, we have concerns how the claimant conference is being implemented.

Reports from members indicate that most conferences are not in person and are conducted by phone. The content varies, depending on the particular DDS adjudicator

involved. Further, claimants should not be discouraged from pursuing an appeal if

the decision is denied.

b. Hearings and appeals levels

Current processing times at the ALJ and Appeals Council levels are unacceptably

high. In FY 99, the average processing time was 313 days at the ALJ level and 460

days at the Appeals Council level. SSA has announced plans to address the delivery

of service at both levels in the Hearings Process Improvement plan (HPI) and the

Appeals Council Process Improvement plan (ACPI). Both plans set forth goals for

processing of claims: 193 days by FY 2002 (HPI) and 90 days by FY 2003 (ACPI).

We certainly support these goals. However, we approach the HPI plan with serious concerns for any violations of claimants’ due process rights to a full and fair

hearing, as well as any encroachments on the decisional independence of ALJs. The

HPI plan, in contrast to the ACPI plan, involves a top-to-bottom reorganization of

the hearings-level process, including office organization. We urge the Subcommittee

to exercise its oversight authority to ensure that processing times in fact do improve

but not at the expense of the rights of claimants. Issues to be monitored include:

• Are ALJ functions being inappropriately removed and reallocated to non-ALJ

staff?

• What is the impact on the complete development of cases and recognition of

issues? Are cases ‘‘certified’’ as ready to hear before they actually are?

• Are cases adequately screened for early, on-the-record decisions?

• Has the claimant’s right to submit new evidence to the ALJ, including posthearing evidence been limited? Have ALJs been discouraged from admitting such

evidence?

• Will prehearing conferences have value or will they be a formality, adding another step to the process?

SSA recently announced expansion of its test to eliminate a claimant’s right to

request review of a hearing decision by the Appeals Council. We oppose the elimination of a claimant’s right to request review by the Appeals Council. The Appeals

Council currently provides relief to nearly one-fourth of the claimants who request

review of ALJ denials, either through outright reversal or remand back to the ALJ.

Review by the Appeals Council, when it is able to operate properly and in a timely

manner, provides claimants with effective review of ALJ decisions and acts as a

screen between the ALJ and federal court levels.

Given the low percentage of Appeals Council decisions appealed to federal court,

it appears that claimants largely accept the decision as the final adjudication. In

addition, elimination of Appeals Council review could have a serious negative impact on the federal courts. We agree with the Judicial Conference of the United

States’ 1994 statement opposing this plan when first proposed as ‘‘likely to be inefficient and counter-productive.’’ Access to review in the federal courts is the last and

very important component of the hearings and appeals structure. Court review is

not de novo but, rather, is based on the substantial evidence test. We believe that

both individual claimants and the system as a whole benefit from federal court review. The district courts are not equipped, given their many other responsibilities,

to act as the initial screen for ALJ denials.

4. Technological improvements

The HPI plan includes a number of improvements to enhance automation and

management data collection and analysis. It also includes a modest expansion of

videoconferencing ALJ hearings at five OHA offices. This allows ALJs to conduct

hearings without being at the same geographical site as the claimant and representative and has the potential to reduce processing times and increase productivity.

Initial reports from our members indicate that videoconferencing has worked well

and does not compromise the claimant’s right to a full and fair hearing. The ALJ

is able to observe and hear the claimant, a key factor for an adjudicator in a disability claim. Although not mentioned in the HPI plan, we would vehemently oppose

any effort to use telephonic hearings.

64

Tie timeliness of fee payment to imposition of user fee

H.R. 4633 would tie the assessment of the user fee to prompt payment of the attorney’s fee. Specifically, the user fee could be charged only if the attorney’s fee is

processed and certified for payment within 30 days of the certification of the client’s

benefits.

There was some confusion during the hearing as to the ‘‘starting point’’ for the

30-day requirement. The confusion arose because some witnesses used the date the

beneficiary is placed in ‘‘current pay’’ status as the starting point for the 30-day period; others used the date that the beneficiary’s ‘‘past-due’’ benefits are certified as

the starting point for the 30-day period.

William C. Taylor, Deputy Associate Commissioner for the Office of Hearings and

Appeals, stated in his testimony, ‘‘H.R. 4633 would not allow SSA to impose the attorney fee assessment if payment is not made to the attorney within 30 days after

the initial certification of payments to the beneficiary.’’ He indicated that only 10%

of the cases could be processed under this standard, and that two-thirds of the expected revenue from the user fee would be lost.

But the intent of the bill is to ‘‘start the clock’’ with the date that the beneficiary’s

‘‘past-due’’ benefits are certified. At this point, the amount of the attorney’s fee is

known and ready to be certified. A thirty-day time limit appears eminently reasonable, particularly in light of many attorneys’ experience in the early spring of 2000

when they were receiving their attorneys’ fees checks within 30 days of their clients’

receipt of their ‘‘past-due’’ benefit checks. This standard is reasonable, and SSA has

demonstrated an ability to meet it.

Representation for SSI Claimants

Our association maintains a referral service for claimants seeking representation.

Many of the attorneys who participate in our referral service indicate that they do

not want referrals of SSI claimants; they decline to represent SSI claimants because

of their past experience with unpaid attorneys’ fees. We routinely receive dozens of

calls daily from SSI claimants who are seeking lawyers. We often are unable to

make referrals for these callers because, although there are attorneys in their area

who accept Social Security cases, there are no attorneys in their area who accept

SSI cases.

On June 7, 2000 we surveyed a sample of our members on several topics. On the

subject of SSI cases, we asked the following question: ‘‘Do SSI claimants contact you

for representation? Do you take SSI cases? Would a withholding and direct payment

mechanism in SSI cases change your practice?’’

All of the respondents supported a fee payment mechanism for SSI cases. These

are typical responses:

‘‘I do take SSI cases but in a very reluctant manner. Since there is no guarantee

that my legal fees will be paid, I prefer the Title II cases. I would certainly increase

my practice in SSI cases if the direct payment mechanism for SSI cases were implemented. There are a lot of people who need legal representation in this area, but

because of previous bad experiences in collecting my fees, I will not get involved

with them.’’ Margarita Marchan-Mankus, Esq., Aurora, IL

‘‘Effective January 1, 2000 I stopped taking SSI claimants after twenty one years

of accepting them on the same basis as Social Security Disability clients. I stopped

taking them because I was unpaid by so many SSI clients recently that I was losing

money. If fees were withheld and paid directly, I would happily resume accepting

them on the same basis as DIB clients.’’ Charles D. Bennett, Jr., Esq., Roanoke, VA

‘‘Yes, SSI claimants frequently contact me for representation. I only take these

claims if they also have an arguable SSDI claim. I do not take straight SSI claims

because it is so hard to collect the fee. (I stopped taking SSI-only claims about 5

years ago when I was repeatedly not paid my approved fee). If a fee withholding

mechanism was instituted, I most definitely would again take SSI-only claims.’’

‘‘My office receives MANY calls from SSI claimants. I do accept some SSI cases,

however, I have had to increasingly decline to do SSI cases because many claimants

do not pay the attorney’s fee awarded. This problem has occurred particularly with

child’s SSI cases to the extent that I almost never accept a child’s case anymore.

In EACH of the last two years, I have lost more than $25,000 in fees not paid by

SSI claimants. If withholding and direct payment is instituted on SSI cases as on

Social Security disability cases, I would be happy to assist SSI claimants again.’’

Betty M. Tharrington, Esq., Norfolk, VA

‘‘SSI claimants frequently contact us for representation. We are very selective in

deciding to represent a client where there is no substantial DIB component to the

claim. This is based upon our experience of having problems collecting our fee in

SSI-only cases. A withholding and direct payment mechanism would drastically afVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00068 Fmt 6633 Sfmt 6621 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
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fect our practice in this area. We would definitely accept many more SSI cases.’’

Cynthia C. Berger, Esq., Pittsburgh, PA

‘‘We do very few SSI cases because we have a hard time getting paid. We view

SSI cases as the equivalent to pro-bono work. We take SSI cases on a case-by-case

basis due to payment problems. If fees were withheld, we would do more SSI work.’’

Michael A. Comisky, Esq., Shawnee Mission, KS

‘‘Yes, SSI claimants contact me, usually to beg me to take their case. I usually

refuse because in the majority of SSI cases, the successful claimant needs the money

more than I do, in their own minds, and they do not pay. That’s a majority of my

experience, as in about 70%. Thus, I only take an SSI case where I have some reasonable expectation of payment. I’m softer when it comes to children’s SSI cases,

but the parent usually does not pay either. I would like to take on SSI cases as I

do SSDIB cases, but I can’t do so without being paid. I think it’s terrible that the

government knowingly discriminates against the poor this way.’’ Richard D. Tolin,

Esq., Southfield, MI

‘‘A great many SSI claimants contact me for representation. I do take SSI cases,

though I take many less than I used to because I frequently have been left unpaid

for cases which I won. A withholding and direct payment mechanism would greatly

change my practice -I would no longer be reticent to take these cases.’’ Susan M.

Evans, Esq., Cleveland, OH

‘‘I do not handle SSI claims solely. If there is a dual claim, Title II and SSI, I

will handle them. I have found, in the past, because the checks are sent directly

to the claimant, they have so many other commitments for money that I am the

last to be paid and usually by the time it comes to pay me there are no funds. I

have been ’stiffed’ so often I have just refused to take anymore SSI claims. I believe

I can do a good job of handling SSI claims, but unless I have some assurance of

being compensated I cannot and will not handle a solely SSI claim. I guess if Social

Security does not want the claimant to be represented by a competent and capable

attorney, this is one way to keep them from doing it and that is seeing the attorney

is not paid.’’ Richard W. Cardot, Esq., Elkins, WV

If the attorney received assurance as to the payment of a fee for a successful

claim, I would anticipate the same rate of representation for SSI claimants as for

Social Security claimants. The administrative processes for the two types of claims,

from initial application through federal court review, are almost identical. The disability determination standards are the same. We know from SSA’s statistics that

the rate of representation for SSI claimants is significantly lower than for Social Security claimants. We know that attorneys would represent SSI claimants if the fee

payment structure of the two programs were the same. The sources of free legal representation currently available to SSI claimants are unfortunately inadequate to

fully meet the need. As Eileen P. Sweeney from the National Senior Citizens Law

Center testified before this Subcommittee at a hearing on May 13, 1987, ‘‘While the

legal services programs represent thousands of people on Social Security and SSI

issues annually, there is no way that these programs can possibly meet the entire

demand. As a result, mechanisms are needed which will assure the private attorney

that, upon successfully resolving a Social Security or SSI case, s/he will be able to

secure his/her fee. This is the only way to assure that competent counsel is available

and accessible to disabled individuals when they require assistance.’’ Attorneys’

Fees in Social Security Disability Cases: Hearing before the Subcommittee on Social

Security, page 96, 100th Cong., 1st Sess. (1987).

Fee agreement ceiling

Many claimants’ representatives report that their use of fee petitions instead of

fee agreements has increased recently because of the fee agreement’s fee cap. In his

testimony, OHA Deputy Commissioner Taylor referred to a ‘‘special systems run on

a sample of attorney fee cases.’’ We have no information as to the size of the sample

or the reliability of the extrapolated percentages.

With a COLA adjustment, the fee ceiling would be $5,000. This matches the current authority of Administrative Law Judges in fee petition cases.

Streamlining the fee payment process

Once the adjudicator, at any level of the process, has found that a claimant is eligible for benefits, the first effectuating task is for SSA to put that claimant into

‘‘current pay status’’ and to begin the on-going monthly checks. Not until this is

completed does SSA turn to payment of the claimant’s past-due benefits, or to calculation and payment of the fee. We concur that this is the appropriate priority for

administrative tasks.

66

Once the claimant is in ‘‘current pay status,’’ the most straightforward procedure

for fee agreement cases is to process the claimant’s past-due benefit payment and

the attorney’s fee payment at the same time.

Streamlining the fee petition process

Many representatives believe that the agency’s slow processing of fee petitions is

deliberate, that it is designed to discourage use of the fee petition process and to

promote use of the fee agreement process. This is a serious concern, because the

choice of fee method belongs solely to the individual representative and is outside

the agency’s purview. If the agency were to streamline its process to reduce the

number of ‘‘hand-offs’’ that occur before a fee petition reaches the adjudicator with

authority to act on it, this concern could be set aside as erroneous.

Currently, Administrative Law Judges have limited authority to approve fees.

They may approve fees up to $5,000. If they believe a higher fee is warranted, their

role is to forward the fee petition to the Regional Chief

ALJ. The length of time that fee petitions wait to be forwarded is often

inexplicably long. SSA should institute an internal tracking system to ensure that

fee petitions are, where necessary, forwarded promptly. The number of instances

where this forwarding process is needed would be reduced if the authority of Administrative Law Judges to set fees were increased.

Claimants’ representatives wait until they have received and reviewed the award

information for their clients and for any eligible dependents before they file their

fee petitions. Clearly the often-substantial delays in providing the award information will cause the fee petition process to be lengthened. Faster effectuation and notification would enable representatives to submit their fee petitions more quickly.

We appreciate the opportunity to respond to your questions. Please let me know

if we may provide any additional information.

Very truly yours,

NANCY G. SHOR

f

Executive Director

LIEBERMAN & GUTIERREZ, P.A.

MIAMI, FL 33130

July 13, 2000

The Honorable E. Clay Shaw, Jr., Chairman

Social Security Subcommittee

United States House of Representatives

Washington, D.C. 20515

RE: June 14, 2000 Hearing

Dear Chairman Shaw

Thank you for the opportunity to testify before the Subcommittee on June 14,

2000. I am pleased to respond to the written questions you have asked.

The amount of the attorney fee ‘‘user fee’’ appears to be excessive. OHA Deputy

Commissioner William Taylor testified at the hearing at 87% of fees paid in 1999

were processed under the fee agreement system. This requires approving a usually

standard contract between the parties; calculating 25% of the past-due benefits (up

to a $4,000 ceiling); inserting the form fee language into the claimant’s award notice; and notifying the Treasury of the payee and the amount of the payment. I

would characterize these as generally very routine tasks.

My own experience is that I am filing considerably more fee petitions now. Many

of my colleagues in Florida tell me that they are more frequently turning to the fee

petition process. Although we generally do receive a fee authorization for the fee

amount we have requested, we are very discouraged about the length of time this

process takes. Adjusting the ceiling for the fee agreement process would certainly

be helpful, since more cases would be submitted with a fee agreement.

Between February and June, my attorney’s fee payments speeded up considerably

and then slowed. The elimination of the 15-day waiting period for fee agreement

cases has doubtless been a positive factor.

Based on my conversations with employees in various components at the Social

Security Administration, I can report that the most frequent comment I hear is that

there are not enough personnel to process the workload. This comment comes from

personnel inside the Offices of Hearings and Appeals with regard to cases at the

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administrative hearings level, as well as from benefit authorizers who process current and past-due benefits for successful claimants.

I would endorse the specific recommendations that Nancy Shor has provided in

the written responses to her questions.

Thank you for this opportunity to respond to your questions. Please let me know

if there is any additional information that I could provide. I thank you for your leadership in considering these issues of such importance to claimants and to their representatives.

Very truly yours,

f

LYLE D. LIEBERMAN

CONSORTIUM FOR CITIZENS WITH DISABILITIES

WASHINGTON, DC 20006

July 14, 2000

The Hon. E. Clay Shaw, Chairman

Subcommittee on Social Security

U.S. House of Representatives

Washington, DC 20515

Dear Chairman Shaw:

This is in response to your letter of June 22 requesting additional information on

processing of attorneys fees by the Social Security Administration. Specifically, you

asked:

1. You indicate that the current process for the payment of attorneys fees under

title II (Social Security) cases should be extended to title XVI (SSI) cases. Could you

elaborate. Should there be restrictions as to the limit of the fee? For example, do

you believe that the current cap of $4,000 or 25% of the back pay for a fee agreement be raised?

2. How do you reconcile your position on the extension of direct payment to the

SSI program to that of Jenny Kaufmann of the National Senior Citizens Law Center? Ms. Kaufmann has indicated that withholding attorney fees from past-due benefits is contrary to the purpose of the SSI program and, when coupled with the need

to repay interim assistance agreements, could wipe out the claimant’s ability to

repay debts for food and shelter.

3. What suggestions do you have to improve the hearings and appeals process to

provide more timely decisions and more timely benefits in successful claims?

In response to your first question, I believe that the limits for SSI should be the

same as the limits for Title II cases. In addition, while the 25% overall limitation

should remain the same, I believe that the $4,000 cap should be indexed for inflation.

The CCD Social Security Task Force believes that all dollar limits in the Title II

and XVI programs should be annually indexed for inflation. These programs are designed to assist the individual to deal with the costs of everyday life when the person is restricted from working due to disability. Those everyday costs are most certainly affected by annual increases in the cost of living. The dollar figures that set

limits on income and resources and various disregards should also reflect increases

in the cost of living. Otherwise, the dollar limits become meaningless over extended

periods of time, further restricting the definition of disability annually.

The same arguments apply to the attorneys fee program designed to encourage

attorneys to represent people in difficult SSI and Title II cases. Without annual cost

of living increases, the incentive diminishes each year.

In response to your second question, the CCD Social Security Task Force position

is based upon balancing the interests of the individual in meeting his/her needs both

past and present. While the payment of attorneys fees certainly will reduce the

amount that the individual has available to meet accumulated obligations and current needs, it is important to note that, for the payment of attorneys fees to occur,

the individual would have been successful in proving eligibility for benefits and,

therefore, will be better able to meet future needs as well. We reiterate that the

system for determining disability is so complex that without the assistance of competent, experienced legal representatives, many applicants for SSI would be unable

to prove their eligibility and would, therefore, have no benefits to assist them in

meeting their obligations, past, current, or future.

In response to your final question, I believe that there are several things that can

be done to improve the process and provide more timely decisions. First, SSA must

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be provided with the resources to fully meet its administrative responsibilities. This

requires that the Limitation on Administrative Expenses budget authority be removed from the domestic discretionary spending category. In addition, better case

development before a decision is made is important. The response to questions submitted by Nancy Shor of NOSSCR includes several important recommendations for

addressing better case development. (The CCD Social Security Task Force also submitted a statement discussing some of these issues for the record of a hearing in

this Subcommittee on August 3, 1995.) Finally, SSA’s current testing for streamlining the adjudication process could yield positive results for beneficiaries. However,

we urge the Subcommittee to remain vigilant to ensure that any recommended

changes are, in fact, improvements that do not harm beneficiaries or impair their

rights to a full and fair hearing.

Thank you for this opportunity to provide additional information. Please let me

know if the CCD Social Security Task Force can provide any further information

or assistance.

Sincerely,

MARTY FORD

Co-Chair

f

Social Security Task Force

NATIONAL SENIOR CITIZENS LAW CENTER

WASHINGTON, DC 20005

July 14, 2000

The Hon. E. Clay Shaw, Jr.

Chairman, Subcommittee on Social Security

Committee on Ways and Means

U.S. House of Representatives

Washington, D.C. 20515

RE: SSI Withholding

Dear Chairman Shaw:

Thank you for your letter of June 22, 2000, posing several questions to follow up

on my testimony before the subcommittee on June 14, 2000. We have answered the

questions individually and as completely as we are able to do. If you have further

questions, I would be happy to respond to them.

1. Our statement that the fee agreement process has eliminated price competition

is not based on any study and we are not aware of any formal study having been

undertaken. Rather it is based on a large amount of anecdotal evidence, including

personal experience, which we have not heard contradicted and is supported by testimony presented by SSA (see page 5 of their written statement) and Mr. Lieberman

to the Subcommittee on June 14, 2000. The fee agreement provision makes the approval process fairly simple for the Social Security Administration (SSA). Every T–

II fee agreement we have seen or heard of, in all parts of the country, provides for

payment of 25% of past due benefits or $4,000, whichever is less.

2. The evidence that some attorneys charge reduced fees for SSI cases is based

on statements made by private attorneys, in public and private forums, as to their

individual practices. We are not able to quantify this, except to say that, from what

private attorneys tell us about their practices, there is more variation in fees

charged to SSI claimants and the methods of collecting the fee. Obviously, neither

the proponents or opponents of direct payment of fees in SSI cases have any objective quantifiable evidence as to the impact of such a change. However, under the

current system, if an attorney wishes to have the client voluntarily pay the fee, the

fee must be set at a level the client can pay. If the fee is set too high, it will conflict

with other debt obligations the client has and the client may choose to pay the landlord, the grocer and the utility company and leave the lawyer with nothing.

3. We agree with Ms. Ford of the Consortium for Citizens with Disabilities on the

importance of representation for persons seeking both Social Security and SSI Disability benefits. Indeed, a case can be made that representation is even more important for SSI claimants because of the greater complexity of the SSI program with

its income and resource rules. We agree that attorneys who provide this service

should be paid. But so should the landlord who has waited for the rent, the local

grocer who has provided food on credit, the doctor who has spent time evaluating

and diagnosing the disability, and the relative who has loaned his or her scarce

funds to enable the individual to survive while awaiting SSI benefits. Any state that

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has paid interim assistance benefits to the client pending the approval of disability

benefits also expects to be repaid those benefits. Many of these claimants have children or child support obligations that must be met and they feel an obligation to

provide for their children out of their own meager funds. We do not believe that it

is appropriate for Congress to give any one creditor priority over other creditors who

have also provided valuable services.

4. We agree with Ms. Ford and others that the available options for representation for SSI claimants are limited. At present, representation is provided by some

private attorneys, some legal services organizations, some Protection and Advocacy

programs and some law school clinic programs. Availability of representation varies

significantly from place to place and from time to time. In most places, it is not sufficient to meet the need. However, we are not convinced that a provision for withholding attorneys fees from past due SSI benefits would make a significant impact

on the availability of representation for SSI claimants even though it would have

a significant impact on loss of income and individual autonomy for those recipients.

Obviously, neither side can present any hard data on the impact of fee withholding on the availability of SSI representation. A simple comparison of statistics for

T–II claimants and SSI claimants may not be completely informative and may not

be an accurate comparison since the selection criteria are also different. Although

the disability standard is the same, the SSDI and SSI populations are different. The

SSI claimant is less likely to have well developed medical records and will ultimately receive a significantly smaller retroactive award because of the lower SSI

grant level and the inability to provide benefits for periods prior to the date of application. SSI claimants often do not have access to continuing health care coverage

or are dependent on the existence of free medical and mental health clinics who do

not have the time to complete reports for submission to SSA. SSI claimants cannot

afford to purchase costly consultative examinations that are sometimes necessary to

prove their case (e.g. neuropsychological examinations). Instead, they depend on

SSA and that state disability determination agencies to order and pay for substandard consultative examinations. Finally, there are numerous changes occurring

in the appeals process that are shortening the time a claimant must wait to appear

before an administrative law judge. In many areas, claimants are having hearings

within a year of application, substantially reducing back awards and making it more

difficult for clients to prove that they meet SSA’s strict all or nothing disability definition.

You also ask about the percentage of the our workload that consists of SSI claimants. The National Senior Citizens Law Center is not a direct provider of legal services to individual claimants for SSI, Title II or any other program. Our role is to

advocate policies beneficial to older individuals and individuals with disabilities, to

litigate cases impacting on significant numbers of individuals and to provide technical assistance to attorneys and other advocates across the country who are providing direct representation to individuals. We occasionally co-counsel with attorneys

on SSI issues of broader impact. In this latter role, we provide assistance to a large

number of attorneys who are representing SSI claimants. This includes both attorneys in private practice as well as those employed by various legal services organizations. We are familiar with the valuable, often unheralded work, being done by

both legal services lawyers and private attorneys on behalf of SSI claimants.

5. We have three recommendations to fee withholding that can be taken, both by

SSA and by Congress, to provide greater assurance that attorneys representing SSI

claimants will receive their fees.

• SSA can see to it that all attorneys representing SSI claimants receive timely

notice of payment of the past due award to their clients, so that they might be able

to contact the client while the client has the money rather than a few months later.

• Congress can amend 42 U.S.C. 1383(a)(10)(B)(iii)(I) the provision for installment payment of large past due SSI benefits, by simply providing for the addition

of attorney fees to the first installment just as outstanding debts for food, clothing,

shelter or medicine can now be added to the initial installment payment.

This amendment would be reasonable because of the statutory limitations placed

on payment of SSI benefits through installments. It would allow the beneficiary to

access more funds, up front, to repay necessary food, clothing and shelter debts and

any agreed attorney fees. It would retain the ability of the SSI claimant to sit down

and negotiate a fair attorney fee agreement.

As we stated previously, initially the back award is often consumed by debts to

landlords and family members who have been supporting the claimant pending receipt of benefits. These debts need to be repaid as quickly as possible after benefits

are awarded. This is even more true because of the smaller initial installment of

the back award. However, an SSI beneficiary can request an ‘‘advance’’ on the remaining funds to repay additional outstanding debts beyond the first installment

70

payment. It would result in no additional administrative burden to the local SSA

field offices to process these requests since they are already processing similar requests under the current rules. A client would merely have to submit a copy of the

approved fee agreement and the field office could process the request. The check is

still issued to the client but there is a greater incentive to pay the attorney because

the SSI beneficiary has signed a document verifying to SSA that this is a debt that

needs to be paid. • A third alternative is to make changes to the payment process of Title II attorney fees. Many private practice attorneys have found that they can no longer afford

to represent SSI claimants because of the increasing costs of representing claimants.

Elimination of the burdensome ‘‘user fee’’ would help.

Private practice attorneys have seen the value of their services for SSDI and SSI

recipients eroded over time. Taking these steps, in combination with allowing for advancement of attorney fees to SSI recipients from their back awards, should go a

long way in restoring the willingness and ability for the private practice bar to assume responsibility for representing SSI claimants.

6. We agree with the characterization of the complexity of the disability determination and adjudication system and certainly agree that representatives provide

a valuable service to SSI claimants as already stated above. The objection we have

is in placing the debt to an attorney before the basic living expenses that the SSI

program was enacted to cover.

7. There are many suggestions to improve the hearings and appeals process to

provide more timely decisions that would constitute a hearing in and of itself. The

most important suggestion we have is to provide SSA with the funds it needs to administer the program. We support the position of the Consortium for Citizens with

Disabilities Social Security Task Force in urging Congress to remove SSA’s limitation on administrative expenses from the domestic discretionary budget caps. SSA’s

workloads are increasing and it cannot keep up with the demands being placed on

it as the baby boomers retire and as it implements the Ticket to Work program. SSA

has been forced to downsize its workforce over the past few years just as the demands for services has increased. Without adequate staffing, the processing of applications for all benefits, not just disability benefits, is unduly delayed. The Appropriations Committees need to have the flexibility to approve adequate funds for the

administration of Social Security programs without hurting or weakening other

human services programs.

SSA and all the state disability determination programs (DDS) should have adequate funds and be required to purchase medical exams that utilize advances in

medical technology and psychiatric evaluations to document an individual’s physical

and mental functional capacities.

Respectfully submitted,

JENNY KAUFMANN,

Staff Attorney

GERALD MCINTYRE,

f

Managing Attorney, LA

Well, thank you all again and we will conclude this hearing.

[Whereupon, at 4:12 p.m., the hearing was adjourned.]

[Submissions for the record follows:]

ADVOCATES FOR THE DISABLED, INC.

PHOENIX, AZ 85012

The Honorable E. Clay Shaw, Chair

Social Security Subcommittee

Committee on Ways and Means

United States House of Representatives

Washington, D.C. 20515

RE: Social Security attorney fees

Dear Mr. Shaw:

We are administrators of a non-profit social work agency that assists individuals

with claims for public benefits provided by the state and federal governments, including Social Security Disability Insurance Benefits (DIB) and Supplemental Security Income (SSI). We are aware of the process by which lawyers are able to charge

and receive fees for work on such cases, and the relative availability of legal counsel

71

for DIB and SSI claimants. SSI claims are treated differently than DIB cases, with

no procedure for withholding and direct payment of fees to the lawyer from the

claimant’s back benefits.

It is our experience that more attorneys represent DIB claimants, and that different fee payment mechanisms is the reason for the discrepancy. If the same process currently used for DIB claims is available to SSI claimants, they will have an

easier time obtaining, and a choice of, legal representation. The recently expanded

and enhanced vocational rehabilitation opportunities for DIB and SSI recipients

makes it critical that all eligible claimants have the best chance of qualifying for

benefits. The Social Security Administration has recognized the positive contributions of legal counsel in disability cases, and we also endorse the increased participation of attorneys in these claims.

We are available to answer additional, specific questions, and hope that the proposal to add SSI cases to the current attorneys’ fee process used in DIB claims will

be approved. Thank you for your consideration.

Sincerely,

SUE SCHAAFSMA

Executive Director

PAT CAMPBELL

f

Casework Supervisor

AMENT, WULF & FROKJER, S.C.

MERRILL, WI 54452

June 27, 2000

A L Singleton

Chief of Staff

Committee on Ways & Means

US House of Representatives

1102 Longworth House Office Bldg

Washington DC 20515

Members of the Social Security Subcommittee:

I have represented individuals in social security disability cases since 1971. Over

time, inaccuracies and delays in payment of attorneys fees have become commonplace.

As I dictate this statement, I have a file before me where the claimant was paid

his benefits on or about June 10, 1999. I am dictating this statement on June 13,

2000. I have yet to receive a fee.

I have followed up with the Great Lakes Service Center any number of times,

both directly and through the Wausau District Social Security Office. For reasons

never explained to me by the Service Center, my fee remains in a back log status.

My client has not contested the fee. There is no plausible reason, whatsoever, for

payment of this fee to take this long.

In the last several years, I cannot remember an instance where I have felt that

I was paid a fee in reasonably prompt fashion. I typically have to wait at least four

months after the client gets his or her money before I receive my fee. Six months

is not at all unusual.

Another problem that arises is duplicate payment. To my recollection, at least a

couple of times a year, we are paid our fee twice on a case. Thankfully, we keep

accurate records and have returned such duplicate payments.

I feel that recently adopted assessment for payment of fees is an insult to those

of us who have continued to represent claimants despite the problems in receiving

our fees in timely fashion. Personally, I look upon the assessment as a reward for

an agency that does its job poorly.

Respectfully submitted,

WILLIAM A. WULF

f

72

AMERICAN BAR ASSOCIATION

CHICAGO, IL 60611

June 28, 2000

The Honorable E. Clay Shaw, Jr., Chairman

Subcommittee on Social Security

Committee on Ways and Means

U.S. House of Representatives

Washington, DC 20515

Dear Mr. Chairman:

I am writing to you on behalf of the American Bar Association in connection with

the hearings your Subcommittee held June 14, 2000, on processing attorneys’ fees

by the Social Security Administration (SSA). I ask that this letter be made a part

of the record of those hearings.

The ABA supports repeal of the provisions in P.L. 106–170 that impose an assessment on attorneys’ fees in Social Security Disability Insurance and Supplemental

Security Income disability cases. The attorney’s fee in these cases is already highly

regulated and capped. The additional assessment of a ‘‘user fee’’ discourages attorneys from representing claimants in these matters. Many such claimants are in poor

health, and have little education and few resources. Without representation, they

will not be able to navigate the appeals process successfully, and will not receive

the benefits to which they are entitled.

H.R. 4633 would allow SSA to impose a ‘‘user fee’’ assessment on attorneys’ fees

only if the fees are processed and approved for payment within thirty days of benefit

approval. We believe this legislation is a step in the right direction. Excessive delays

in payment of authorized fees by SSA make it difficult for attorneys to accept cases

representing Social Security applicants. H.R. 4633 would encourage the prompt payment of these fees by SSA. Thus, we would support enactment of H.R. 4633.

Please let me know if you have any questions or if I can be of assistance to your

Subcommittee.

Sincerely,

EDWARD E. KALLGREN

f

Chair

AMERICAN DISABILITY REPRESENTATION SPECIALIST ASSOCIATION

HATTIESBURG, MS 39404–5296

June 23, 2000

A.L. Singleton, Chief of Staff

Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office Building

Washington, D.C. 20515

Dear Mr. Singleton:

I am the Executive Director of American Disability Representation Specialist Association. I represent a group of non-attorney disability representation practitioners.

ADRSA Associates serve all areas of the United States including Alaska, Hawaii,

and Puerto Rico.

No non-attorney representatives have fees withheld for payment. In spite of not

having fees withheld, we continue to provide consistent high quality services and

maintain our professional practices. It is the position of ADRSA that no fees should

be withheld by the federal government to pay attorneys or non-attorneys for social

security disability representation fees. Our clients pay us direct without having

money withheld by the Social Security Administration. Our fees are approved by the

Social Security Administration before we collect them.

The quality of representation services can suffer if payment is automatic. ADRSA

Associates sit down face to face with clients and collect fees as approved by the Social Security Administration. It makes ADRSA Associates more conscientious and

promotes greater effort in the provision for our services to satisfy our clients.

73

Having the Social Security Administration collect fees prevents the individual

American taxpayer from having the opportunity to sit with the person to whom they

owe a fee and discuss the provision of services.

In addition, having to collect fees for attorneys is a burden on the Social Security

Administration’s limited staff, provides an unequal playing field for non-attorney

representatives and is a burden on the American taxpayer in supporting this group,

attorneys, that demand special privileges. No workload should be placed on Social

Security Administration employees to collect fees.

I request to appear as a witness before the Committee on Ways and Means to submit a testimony on this issue.

Sincerely,

FRANK P. EDWARDS

f

Executive Director

Statement of Dolores J. Bowers, Brown, Kinsey & Funkhouser, P.L.C.,

Mason City, IA

The following details of our recent experience with the SSA document the pressures that limit the number of attorneys available to assist claimants.

On Jan. 7, 1999, a copy of the Attorney Fee Agreement signed by the claimant

on July 16, 1998, was mailed to Judge J. Michael Johnson, Office of Hearings and

Appeals, West Des Moines, IA.

On July 21, 1999, we received Notice of Decision—Fully Favorable.

On Sept. 3, 1999, we received the Notice of Award stating that $2,801.50 had been

withheld from the first check for the lawyer’s fee.

I had been told by someone at our local Social Security Office to wait three

months before making inquiry as to why payment of fee had not been received. On

December 1, 1999, I left a message on a machine at our local Social Security Office.

A response was never received.

On Jan. 5, 2000, I called 800–772–1213 and talked to Debbie Bryant in Kansas

City. She said our attorney fee claim was in Baltimore. The Baltimore office was

behind and had not released payment yet. She said she would send our inquiry on

to Baltimore and we should follow up in two weeks. She also said that was all we

could do.

On or about Jan. 19, 2000, I called 800–772–1213 and was told our attorney fee

claim was still in the payment center and we should give it 6 to 8 weeks from December 21, 1999.

On Feb. 15, 2000, I called 800–772–1213 and was told our inquiry would be forwarded to Processing Center and someone would contact us. No one did.

On March 14, 2000, I called 800–772–1213 and was told the paperwork just went

to the Payment Center on March 6 and we should allow six weeks from March 6

to receive payment.

On March 23, 2000, Linda Hermanstorfer, Hearing Office Clerk, Office of Hearings and Appeals, West Des Moines, IA, wrote stating that if we wanted to collect

a fee, a fee petition needed to be completed.

On March 29, 2000, the fee petition was received for completion.

On April 7, 2000, the claimant signed the fee petition.

On May 2, 2000, we received Authorization to Charge and Collect Fee.

Payment has not yet been received.

Please add this statement to the record on the above-referenced hearing.

f

MEMPHIS, TN 38104

June 28, 2000

The Honorable E. Clay Shaw

Chair of the House Social Security Subcommittee

RE: H.R. 4633

Dear Congressman Shaw:

As vice chairman of the Social Security Section of the Federal Bar Association I

applaud the introduction of H. R. 4633 and the Federal Bar Association wholly endorses its passage. The ‘‘user fee’’ which took affect earlier this year will likely inhibit effective representation in Social Security matters. The Federal Bar AssociaVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00077 Fmt 6633 Sfmt 6621 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
74

tion believes that the passage of H. R. 4633 will alleviate part of the problem in

requiring Social Security to at least pay attorney fees in a timely manner, but a

better solution would be a repeal of the 6.3% user fee totally. The Federal Bar Association acknowledges and appreciates the effort by yourself and other members of

the Subcommittee and would be more than happy to work with the Subcommittee

on any issues in the future.

Very truly yours,

f

CHRIS A. CORNAGHIE

DAVID ALLEN & ASSOCIATES

SACRAMENTO, CA 95819

June 14, 2000

The Honorable E. Clay Shaw, Jr., Chairman

Subcommittee on Social Security

Committee on Ways and Means

U.S. House of Representatives

Washington, D.C. 20515

Mr. Chairman and Honorable Members of the Committee, thank you for conducting a hearing to address the manner in which the Social Security Administration

processes attorney fees and for providing this opportunity to provide comment on

this issue.

I am an attorney with David Allen & Associates, which provides representation

to disabled persons seeking Title II Social Security Disability Insurance (SSDI) and/

or Title XVI Supplemental Security Income (SSI) benefits before the Social Security

Administration. This law firm has counseled thousands of people seeking those benefits.

In announcing the hearing on this issue, you stated, ‘‘That the Social Security application process is so complex people feel obliged to hire an attorney to help them

is in itself a serious problem.’’ My experience with my clients confirms the sad accuracy of your observation. I routinely hear comments that claimants had not pursued

their applications because the Social Security representative told them that they

had no basis for their claims, or that they had given up because they kept receiving

one denial after another, or that they declined to pursue their claims because they

were treated rudely at the Social Security field office. As a result, untold numbers

of deserving claimants never have their claims heard on the merits by an Administrative Law Judge.

The fact that claimants for benefits from the Social Security Administration face

these types of obstacles is ironic, given that the claims process is supposedly nonadversarial in nature. I have had many claimants tell me that, when they mentioned to the Social Security representative that they plan to hire an attorney, the

representative states that they do not need an attorney. Yet, persons who receive

assistance from attorneys in these claims statistically have a better chance of success than do those claimants who are not represented. If the claims process is nonadversarial, why should attorney representation alter the success rate?

The answer to this question lies in part in the inherent complexity of the Social

Security system, which creates hurdles for the unrepresented claimant. These deterrents include the following:

First, claimants must often exhaust review through the initial, reconsideration,

hearing, and Appeals Council levels before achieving success. This multi-step process discourages the unrepresented claimant.

Second, the claims process takes an unacceptably long period of time. The claimant often must wait more than one year simply to have a hearing before the Administrative Law Judge. Faced with this delay, a significant percentage of claimants

abandon their claims, or simply start the application process anew, resulting in even

further delay in the consideration of their claims on the merits.

Third, the unrepresented claimant generally does not understand that it is vitally

important for the claimant to secure an assessment setting forth functional limitations from the treating physician. Without this information, the report of a consultative examiner retained on behalf of the Social Security Administration who has

seen the claimant on only a single occasion, or worse yet, the report of a non-treating physician who has not examined the claimant even once, likely becomes the

basis of the decision. Social Security Ruling 96–5p provides that the treating physician’s opinion is entitled to great weight, and in some cases to controlling weight,

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in the evaluation of a claim. Yet, the unrepresented claimant is generally unfamiliar

with this rule and may therefore not secure this important information.

Fourth, the Social Security Administration often does not secure certain critical

medical records. The claimant’s attorney ensures that such evidence is identified,

obtained, and routed to the Social Security Administration for proper consideration.

Fifth, many cases involve complex legal issues, such as whether work activity during the period of disability constitutes substantial gainful activity, whether a claimant’s disability began on or before the date on which the claimant was last insured

for SSDI benefits, and whether the claimant’s impairments meet or equal the level

of severity set forth in the Listing of Impairments (20 C. F. R. Part 404, Subpart

‘‘P,’’ Appendix 1). An attorney ensures that these complicated issues are properly developed and evaluated.

Given the multitude of ways in which a meritorious claim may be improperly denied, attorney involvement is critical to assure that deserving claimants receive

their benefits. Nevertheless, the Ticket to Work and Work Incentives Improvement

Act of 1999 (P. L. 106–170) and the way in which the Social Security Administration

is implementing the Act’s provisions are raising barriers to attorneys representing

these claimants.

The Social Security Administration had previously required the submission of a

fee petition for approval and payment of an attorney’s fee. This requirement was

eliminated by the implementation of the process which allowed payment to an attorney under the terms of the fee agreement between the attorney and the claimant.

A condition of this new procedure was that the attorney must agree to accept a fee

no greater than $4,000. Nevertheless, attorneys found incentive in agreeing to this

approach, since it implied that the Social Security Administration would effectuate

payment faster than in those cases in which the fee petition is used. Of course, a

corresponding benefit to the Social Security Administration was the elimination of

time spent processing fee petitions.

By utilizing the expedited fee payment procedure, the income which an attorney

may generate in a Social Security practice is now reduced. My practice is limited

almost exclusively to Social Security disability claims. Therefore, the fee cap on

SSDI claims requires that I maintain a substantial volume of cases for the practice

to generate even a slight profit. Public Law 106–170 has further impacted the income to attorneys, by reducing attorney fees by a ‘‘user fee’’ of 6.3%. A case which

previously would have resulted in a fee of $4,000 now results in a fee of $3,748.

This amount, in isolation, is small. However, when the amount is factored over an

entire caseload, the amount is critical.

For attorneys whose Social Security practice represents a small percentage of

their entire caseload, the ‘‘user fee’’ will likely drive them away from Social Security

practice entirely.

This office has noticed some improvement in the processing time for payment of

attorney’s fees, since the new law has been implemented. Nevertheless, we do continue to experience ongoing problems. We are still required to inquire repeatedly

from the Office of Central Operations when payment will be made. The average payment cycle still remains months.

As long as the 6.3% ‘‘user fee’’ remains the law, the Social Security Administration should be required to adhere to performance standards for entitlement to this

payment. At each stage of the claims process, claimants are required to file their

appeals to the next level within 60 days of receipt of an unfavorable determination.

If 60 days is reasonable in that context, it should be no less reasonable to require

the Social Security Administration to pay the attorney’s fee within 60 days of its

favorable determination finding the claimant medically disabled. I ask that the

Committee carefully consider the GAO’s findings, as mandated by Public Law 106–

170, to determine whether the Social Security Administration is acting appropriately for payment of the ‘‘user fee.’’

The Committee should consider legislation to address certain flaws in Public Law

106–170.

First, the ‘‘user fee’’ should be eliminated in its entirety. The funds ‘‘generated’’

by the ‘‘user fee’’ have never gone toward the purpose originally intended by the legislation. The ‘‘user fee’’ therefore has failed as a funding mechanism, a fact which

I fear may remain unknown to the vast majority of Members of Congress.

Second, the 6.3% figure is an arbitrary amount. The amount of time to compute

the attorney’s fee and issue instructions for its payment is no less in a case in which

the attorney’s fee is $1,000 than in a case in which the attorney’s fee is $4,000.

Therefore, if the ‘‘user fee,’’ which is merely a processing fee, is to remain in place,

the amount should be limited to $25, a reasonable amount for the expense associated with the issuance of the check for the attorney’s fee.

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1See, SSI Recipients by State and County 1998, Social Security Administration, Office of Policy, Office of Research, Evaluation and Statistics, SSA Pub. No. 13–11976, July 1999.

At this time, the Committee should consider revisions to existing law. Rather than

perpetuating the ill-advised concept of the ‘‘user fee,’’ Congress should consider creating incentives for attorneys to represent needy claimants. The time is long overdue for instituting withholding of attorney’s fees on not only SSDI claims but also

SSI claims. Many attorneys shy away from representing indigent clients seeking SSI

benefits, or at the very least limit the number of SSI claimants who they represent,

due to the fear of inability to guarantee payment at the favorable conclusion of the

claim. The standard for a finding of disability is no different for the SSI claimant

than for the individual seeking SSDI benefits. Why should it therefore be more difficult for an SSI claimant to obtain an attorney than for an SSDI claimant to do

so?

Public Law 106–170 continues to be a cancer. It saps the ability of attorneys to

continue to represent claimants for Social Security disability benefits at a time

when attorney representation is critical to success on meritorious claims. Amendments to its existing provisions, in line with the recommendations set forth above,

will secure attorney representation for disabled Americans at a time when that access is being seriously eroded by a well-intentioned but harmful law.

I thank you, Mr. Chairman and Honorable Members of the Committee, for the opportunity to provide this statement.

Very truly yours,

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ROSCOE L. BARROW II

Statement of Ray Cebula, Disability Law Center, Inc., Boston, MA

Chairman Shaw, Mr. Matsui, and Members of the Subcommittee, thank you for

considering these remarks during your deliberation of the proposed withholding of

attorney fees in Supplemental Security Income (SSI) cases.

I am a Senior Staff Attorney with the Disability Law Center of Boston, Massachusetts. In that role I am responsible for the implementation of the statewide Disability Benefits Project which has, since 1983, been funded to provide representation to

SSI claimants seeking disability based benefits. I have been practicing in this area

of the law for some 18 years.

I urge the committee members to reject the proposed withholding of attorney fee

in SSI cases and do so after careful thought and for several reasons. SSI applicants

are among the poorest of the poor. Generally with minimal physical, mental and financial resources, these individuals will still be living at more than 30% below the

federal poverty line even after securing SSI benefits. In Massachusetts, including

the state funded supplement, a disabled SSI recipient will receive a maximum

monthly award of $626.39. The average benefit paid in

Massachusetts is significantly lower. In 1998, the average SSI award paid in Massachusetts was only $401.38.1 The average retroactive award received by SSI claimants represented by the Disability Benefits Project in 1998 was about $8000. Using

the current attorney fee formula of $4000 or 25%, whichever is less, such a retroactive award will only produce a fee in the amount of $2000. This is hardly sufficient to attract private bar involvement in SSI work.

SSI benefits are protected from legal process by the anti-assignment clause contained within the Social Security Act. This clause provides very strict protection of

these needs-based, subsistence level payments. Appropriately, benefits that are provided and needed to meet the most basic human needs of food, clothing and shelter,

should be so well protected. Allowing an exception for attorney fees will create a

crack in this firm protection that can only grow when other special interests determine that they require access to life sustaining benefits.

Most importantly, the SSI program is not simply the disability determination

process that is very familiar to all advocates practicing before the Social Security

Administration. The SSI program is controlled by very complex income and resource

rules. Rules that create an extra level of determination in order to secure the proper

payment for an SSI applicant. These income and resource rules are foreign territory

to much of the private bar who routinely deal with Title II insurance claims having

no income or resource restrictions. A large part of my work time is taken up by the

provision of technical assistance and support to social security claimants representatives—public and private. Income and resource issues are simply not issues being

handled by the private bar. However, these issues are intimately involved with

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every SSI claim. Only through a mastery of these rules can a representative be assured that his client is receiving the correct amount of SSI. Living arrangements,

exempt resources and in-kind income are terms of art unique to the SSI program.

Knowledge of these terms is critical to proper and thorough representation.

Poor people have suffered a significant lack of access to our health care system.

The average SSI claimant has been treated at emergency rooms, clinics, or ‘‘health

stops’’ and rarely has a coherent medical history. A large portion of this population

suffer from undocumented or untreated impairments as a direct result of poverty.

Health care providers are reluctant to provide medical records or provide narrative

reports knowing that these services must be provided free of charge. An SSI claimant is unable to pay the ‘‘going rate’’ for production of a medical narrative to support

their SSI claim. These issues make the prosecution of an SSI claim often much more

difficult, and always more time consuming, than that of a disability insurance claim.

Frankly, there are better uses for retroactive SSI awards. Again, SSI recipients

are living well below the poverty line. When disability occurs, the fragile life lines

to which these claimants cling become frayed. Having lost the ability to work, the

often poorly educated SSI claimant cannot rely upon private disability policies to

provide necessary income. Rent payments are missed. Debts are incurred to meet

the need for food and clothing. Medical bills remain unpaid. It is often these basic

life needs that absorb the vast majority of the retroactive SSI dollars received by

a successful claimant. Meeting these overextended debts is a means of attempting

to secure the lives of their families and themselves.

I do not pretend that there are adequate resources to meet the representation

needs of all SSI claimants. Legal Services and Protection & Advocacy advocates can

only handle a limited number of claims each year. However, these resources are extremely talented and able to deal with ALL aspects of an SSI claim and not simply

the disability determination process. This situation is not unlike that facing a disability insurance claimant in Massachusetts. There are simply not sufficient private

bar resources to handle the need. There are very few private attorneys who handle

this type of case. Those that do are often talented and dedicated representatives.

We are fortunate to have an active coalition of social security advocates in our state.

However, together we are unable to meet the need. I do not believe that allowing

SSI fee withholding will change this situation.

As a result of these thoughts, I would encourage the Members of the Subcommittee to reject the notion of SSI fee withholding.

Thank you for your attention and consideration.

f

FEDERAL BAR ASSOCIATION

WASHINGTON, DC 20037–1416

June 28, 2000

Honorable Clay Shaw, Jr., Chairman

Subcommittee on Social Security

U.S. House of Representatives

B–316 Rayburn House Office Building

Washington, D.C. 20015

Dear Chairman Shaw:

Thank you for holding the hearing on June 14 on the processing of attorney fees

by the Social Security Administration. This matter is of considerable interest to the

membership of the Social Security Section of the Federal Bar Association, and I request that this correspondence be entered into the hearing record. The comments

presented herein are exclusively those of the Social Security Section of the FBA and

do not represent the official views of the Social Security Administration, in whose

employment I serve as an Administrative Law Judge.

As you know, the Federal Bar Association is the foremost professional association

for attorneys engaged in the practice of law before federal administrative agencies

and the federal courts. Fifteen thousand members of the legal profession belong to

the Federal Bar Association. They are affiliated with over 100 FBA chapters across

the nation. There are also over a dozen sections organized by substantive areas of

practice such as the Social Security Section, of which I am the Chair.

Unlike other organizations associated with Social Security disability practice that

tend to represent the narrow interests of one specific group, the Federal Bar Association’s Social Security Section encompasses all attorneys involved in Social Security disability adjudication. Our members include:

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• Attorney Representatives of claimants • Administrative Law Judges (ALJs) • Staff Attorneys at the Office of Hearings and Appeals • Attorneys at the Social Security Administration’s Office of General Counsel • U.S. Attorneys • U.S. Magistrate Judges, District Court Judges and Circuit Court Judges

The primary interest of the FBA’s Social Security Section is in the effectiveness

of the adjudicatory processes associated with hearings in the Office of Hearings and

Appeals (OHA), the appeal process at the Appeals Council, and judicial review in

the federal courts. We believe that representation of claimants by attorneys is a

positive contribution to those processes and should be encouraged. Since the Social

Security Administration’s handling of the payment of fees to attorneys has an impact on their willingness to accept disability cases, the matter is of considerable importance to them and the conduct of their legal practice.

Having reviewed the testimony of all the witnesses at the subcommittee’s recent

hearing, I wish to address three areas relating to SSA’s processing of attorney fee

requests: 1) extension of the withholding of fees to Supplemental Security Income

(SSI) cases; 2) the amount of the fee charged by SSA to process the fee withholding;

and 3) raising the cap in attorney fee agreements to $5000.

Extension of Fee Withholding to Supplemental Security Income (SSI) Cases

Attorneys who practice Social Security disability law overwhelmingly endorse the

extension of withholding fees in SSI cases for direct payment. There is no question

that attorneys are reluctant to take SSI cases due to the high risk of nonpayment

for services rendered. This is reflected in SSA’s 1999 statistics at the OHA level,

which show that 83.4% of Title II claimants were represented while only 57.1% of

Title XVI claimants were represented. Many attorneys simply refuse to handle SSI

cases. Those who do tend to do so out of a sense of obligation and often in the spirit

of pro bono work. Moreover, of those attorneys who now take SSI cases, it is likely

that some will discontinue doing so, given the 6.3% reduction in the amount of fees

they collect in Title II cases where there is direct payment by SSA. SSI claimants

should not have to rely upon the collective good conscience of a few attorneys for

representation.

The reality is that nearly half of SSI claimants are unrepresented. While Administrative Law Judges are charged with protecting the interests of pro se claimants

and do their best to meet that obligation, it is done in the context of a very heavy

caseload. ALJs carry hundreds of cases on their dockets. The reality is that a represented claimant, by virtue of the time, attention and expertise that a representative can provide, has a better chance of success. This is recognized by the Consortium for Citizens with Disabilities as reflected in Marty Ford’s recent testimony.

While resources such as legal services and pro bono attorney work are invaluable,

they are limited. As the CCD pointed out, the potential denial of benefits for SSI

claimants due to lack of experienced legal representation far outweighs the burden

of having reasonable attorney fees withheld from their back benefits.

SSA and others oppose the extension of withholding of attorney fees to SSI cases

in large part based upon the extremely low income status of SSI recipients. They

point to the obligation and need of SSI recipients to repay various debts incurred

during the application process such as loans for basic needs. Further, they say that

withholding of fees from past due benefits might wipe out the ability of recipients

to repay those just debts. The FBA likewise recognizes and appreciates the financial

dilemma of SSI recipients. Nonetheless, the FBA does not understand the reluctance

to view an incurred attorney fee debt as a debt equally worthy of repayment out

of an SSI recipient’s back benefits. The attorney who assisted the claimant in obtaining the benefits has a legitimate claim on the claimant’s available assets. The

bottom line is that SSI claimants are better off if awarded benefits and the likelihood of that happening rises when they are ably assisted by counsel. The FBA perceives no persuasive reason to treat SSI cases differently from Title II cases vis-avis the withholding of reasonable attorney fees from past due benefits.

The 6.3% Assessment Charged by SSA to Process the Attorney Fee

FBA historically has opposed the imposition of any SSA assessment for withholding and direct payment of attorney fees from past due benefits. The FBA on April

15, 1998, through action by its National Council, adopted a resolution in opposition

to the assessment of fees in Social Security and SSI cases, recognizing that such

fees are ‘‘likely to severely and adversely impact the ability of claimants to obtain

legal representation.’’ We communicated those views to the Subcommittee and others in Congress prior to passage of the ‘‘Ticket to Work’’ legislation, which established the 6.3% assessment.

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Indeed, we concur with the hearing testimony of Nancy Shor, made on behalf of

NOSSCR, that it is troubling that there does not appear to be any logical connection

between the amount of the fee and the actual cost to SSA to withhold and issue

a check for attorney fees. We understand that this is the subject of study by SSA

as well as GAO, and we urge that the results of those studies be applied in setting

a rational amount for the fee, should it be determined that a fee must continue to

be levied.

It has come to the attention of the FBA that attorneys are increasingly trying to

avoid the current 6.3% ‘‘tax’’ on their services by waiving direct payment and filing

a fee petition in lieu of a fee agreement. It requires no study to know that approval

of a fee agreement by an ALJ takes a matter of moments and virtually no staff time

within OHA. In contrast, when a fee petition is filed, ALJ and staff time rise dramatically—at no small cost to SSA. Yet, SSA receives no fee for processing a fee

petition if there is no direct payment of fees. Thus, if this trend continues, the imposition of the 6.3% user fee may actually create greater costs for SSA given the increased cost of ALJ and OHA staff time in handling fee petitions. Attorney attempts

to avoid what is viewed as a confiscatory tax on direct payment of their fees may

give new life to the cumbersome fee petition process that the fee agreement and direct payment were designed to avoid.

In sum, the FBA urges elimination of the user fee altogether. In the alternative,

we urge review of the user fee when the full GAO report is completed in December.

When the actual cost of processing withholding and direct payment is ascertained,

any fee should be set based on that actual cost rather than the current 6.3% of the

awarded fee.

Finally, with respect to the linkage of payment of a fee to some benchmark for

prompt payment by SSA, the FBA considers that to be a reasonable and desirable

approach. While 30 days in some instances may be unrealistic due to workers’ compensation offsets and dependent claims, we fully support the idea that imposition

of any user fee be tied to payment by SSA within a specific, realistic period of time.

Raising the Limit in Fee Agreements to $5,000

The FBA urges SSA to raise the cap in fee agreements to $5,000. While this issue

is not currently controlled by statute, we believe the Subcommittee should devote

renewed attention to revision of the cap. It has been ten years since this cap was

raised to the current amount of $4000. Inflation over the last ten years would support the need for such an increase. The reality is that with the faster processing

of claimants’ cases at OHA, back benefits are not as great as they were once likely

to be. Thus, in many cases the amount of the attorney fee is considerably less than

the current $4,000 cap. As Deputy Associate Commissioner of the Office of Hearings

and Appeals William Taylor indicated at the hearing, the average payment in 1999

in a fee agreement was $2,555. Nonetheless, in those protracted cases where 25%

of back benefits reach $5,000, there is no reason to exclude those cases from the

fee agreement process and subject them to the cumbersome fee petition process.

ALJs can approve up to $5,000 in fees when requested in a fee petition; there is

no logical reason to limit the amount approvable by an ALJ in a fee agreement to

less than that amount. To reduce time expended by attorneys, ALJs and OHA staff,

we urge that the cap on fees in a fee agreement be raised to $5000.

In closing, I want to thank you and the Subcommittee for your interest in this

issue and the opportunity to submit these comments for your consideration. The Social Security Section of the Federal Bar Association looks forward to working with

you on this and future issues relating to Social Security disability case adjudication.

Sincerely,

KATHLEEN MCGRAW, CHAIR

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Social Security Section

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DENVER, CO 80204

June 22, 2000

A.L. Singleton

Chief of Staff

Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office Building

Washington, DC 20515

Re: Attorney Fees in Social Security Disability Cases

Dear Sir or Madam:

I am an attorney at law with a solo practice in Denver, Colorado. I have been

practicing for fifteen years.

I have two areas of specialization in law practice: Social Security disability and

employment law. Over the past three years I have dealt with a business consultant

specializing in small professional practices for the purpose of advising me about

ways to improve the efficiency of my law practice. My business consultant, after reviewing all of my records, has advised me that I should reduce the Social Security

disability portion of my law practice, because of the delays in getting paid on Title

II disability cases and the occasional, but still significant, instances in which a client receiving Supplemental Security Income fails to pay my attorney fee. I have followed my advisor’s recommendation and have reduced the number of Social Security

cases that I have handled over the past year. The Administration’s recent imposition

of a user fee for Title II attorney fees has also influenced my decision to take fewer

Social Security cases.

Feel free to call me if you have any questions.

Very truly yours,

THOMAS A. FELDMAN

Enclosure

cc: Congresswoman DeGette

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AUSTIN, TX 78731

June 15, 2000

Congressman E. Clay Shaw, Jr.

Chairman, Subcommittee on Social Security

Ways and Means Committee

Re: Hearing June 14: Attorney’s Fees for Representatives of Social Security Claimants

Thank you, Congressman Shaw, for recognizing that the process for obtaining Social Security is cumbersome and costly. I have represented claimants for over twenty-five years. During that time every effort to simplify or improve the system has

only made it worse. I have often said that if private companies can process correspondence and payments efficiently, then it seems exceedingly odd that our government can make it so complicated and difficult.

A very simple solution to the problem of processing attorney’s fees is to make one

check payable to the claimant and his or her representative for the lump sum. This

has been done by insurance carriers in personal injury and worker’s compensation

cases for many years. There would be less work and cost by using one check. The

delays would be reduced. In order to avoid the representative abusing the claimant

by taking more than 25%, simply require that a statement be submitted by the representative and claimant showing the division of the check. This too has been done

by workers’ compensation agencies for many years. This one payment could cover

SSI and Title II benefits without the delay while these sums are calculated which

results in frequent errors.

The multitude of confusing letters could be reduced to one letter explaining the

payment, attorney’s fees, and Medicare/Medicaid.

This would save any number of trees as well as reducing pollution, and reducing

waste in our government. Perhaps this is too simple and easy to ever be accepted.

MARY ELLEN FELPS

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GINGER LANIGAN AND ASSOCIATES, INC.

BROCKTON, MA 02301

June 14, 2000

A.L. Singleton, Chief of Staff

Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office Building

Washington, D.C. 20515

Dear Chief of Staff Singleton:

I am an independent, Non-Attorney Social Security Representative. My Offices are

located in Brockton and New Bedford, Massachusetts, and Margate, Florida. I employ 7 full time case managers; two are Bi-Lingual. I have been in business for 51⁄2

years. I pay every tax imaginable. Because of my locations, many of my clients are

indigent.

I feel that the federal government discriminates against me each and every time

i win a case. Because i am not a lawyer, and non-attorney representatives do not

have clout behind them, the retroactive checks are sent to the claimant, and the

claimant assumes the responsibility of paying my fee.

Let’s look at one scenario: for the most part, SSI cases mean that the claimant

has no apparent work history, is probably collecting money from the state’s welfare

system, and has debts from months, if not years, of being disabled. That person’s

retroactive check will first go to pay back the state (if that person collected state

benefits), and then the remainder will go to pay off relatives and friends, etc. My

fee is long gone. I have to file court proceedings, usually reduce my fee, and then

settle for $10.00 a month payments.

Claimants who have Social Security Disability Insurance benefits are more likely

to pay my fee, although there have been numerous cases where I have had to wait

many months to be paid.

We also have instances when, inadvertently, either the Social Security District office or the payment center enters us into the computer as attorneys. In this case

scenario, the payment center holds our fee, sends a letter to the claimant stating

that very fact. . .down the line realizes that we are non-attorneys; then releases our

fee to the claimant, who, at that point, thinks we were already paid.

I deserve to be treated in the same manner as my adversaries. I would gladly pay

a user fee to insure that my fee was withheld from retroactive benefits and sent

directly to me.

Thank you for the opportunity to express my opinion.

Sincerely,

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GINGER LANIGAN

Statement of John R. Heard, Attorney at Law, San Antonio, TX

My name is John Robert Heard. I am in attorney in private practice, and I have

had the privilege of representing Social Security Disability and Supplemental Security Income claimants since 1976. These comments are submitted on my own behalf,

and not on behalf of any client, organization, or other person. Our firm currently

includes 5 attorneys who represent claimants in San Antonio, the Corpus Christi

area, and the Rio Grande Valley of Texas. I appear frequently at administrative

hearings at the Social Security Administration’s Office of Hearings and Appeals in

San Antonio. I would like to first address my comments from the perspective of a

former board member and chairman of the community mental health Center in San

Antonio, Bexar County, Texas.

I served on the board of the Bexar County MHMR Center from 1980–1990. Our

community mental health center is the primary service provider for underprivileged

people who suffer from problems of mental disability, mental retardation, and substance abuse. In the decade that I served on the community mental health center

board, I observed the tremendous lack of resources to which our clients were subjected, despite the best efforts of our agency. Unfortunately, our agency was woefully under funded, and we were only able to reach a relatively small percentage

of those individuals in greatest need for our services, who invariably had no other

resource to turn to.

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In the early 1980’s, as my experience on the board grew, parallel to my experience

as a lawyer representing Social Security and Supplemental Security Income claimants, I observed a terrible irony: Our underserved client population would have been

able to access a range of medical services by obtaining Supplemental Security Income and the Medicaid benefits which accompany SSI, but they lacked the wherewithal and resources to pursue their claim for benefits. Although the Bexar County

Legal Aid does an excellent job with limited resources, it frequently had to shut off

access to SSI clients, sometimes for months at a time, in order to prevent an administrative overload within the Bexar County Legal Aid. At the same time, the claimants were unable to obtain representation from private sector lawyers, since there

is no withholding of attorneys fees in Supplemental Security Income claims, and the

cases were regarded as difficult and unprofitable. Because the community MHMR

center lacked the resources and the expertise necessary to assist our clients in obtaining SSI benefits, these clients remained without access to ongoing medical care

or income, and frequently fell out of contact with the MHMR center, as they relocated from place to place based on the availability of sympathetic relatives, or the

necessity of seeking public shelter.

This situation continues today, and the lack of resources to assist the chronically

mentally ill in obtaining their Supplemental Security Income benefits is particularly

acute, since the private sector is understandably reluctant to assist these very difficult clients when there is no guarantee of fee payment. Nevertheless, some lawyers, including lawyers in our firm, accept these cases understanding that there will

be times when they are not paid, viewing these situations as a de facto pro bono

service. However, even that limited availability of representation of SSI claimants

in the private sector is now threatened by the 6.3% user fee imposed on attorneys

fees in Title II cases.

THE IMPACT OF THE USER FEE ON SSI REPRESENTATION

Office overhead for our firm runs at approximately 75% of gross receipts. Accordingly, a 6.3% reduction in our gross income from Title II represents a 25% reduction

in our profits, before taxes. When the user fee hit our law firm, we had no choice

but to look for areas in which we could recoup this very significant loss. We could

not layoff employees without reducing the quality of our services. Virtually all of our

other expenses are also fixed. Therefore, we have been forced to decline to accept

cases which are marginal, and in which the fee is not guaranteed. Specifically, we

have found it necessary to take fewer Supplemental Security Income cases, including especially children’s SSI cases. We are especially saddened by this later consequence, since our firm is one the few private law firms in our part of Texas which

will take children’s SSI claims.

Supplemental Security Income cases generally produce a smaller back award of

benefits than Social Security Disability (Title II) cases for two reasons: They are

only retroactive to the first day of the first full month after the month in which the

claimant applies, and the amount of SSI monthly payments is typically smaller than

the average amount of payments under the Social Security Disability program. Accordingly, as our firm looks forward to the future we have no choice but to conclude

that, unless the Congress changes the existing situation, we will be forced to decrease the size of our operations through attrition, and focus our energies on Title

II claims where there is a greater likelihood of being awarded, and actually being

paid, a reasonable fee.

THE PRESENT BILL

The passage of HR 4633 is an important first step in the direction of restoring

equity and fairness to the social security claimant and her representative. It is difficult to understand how the Social Security Administration can argue that it should

be entitled to $252.00 for preparing a check (assuming a $4,000.00 fee), without

even being required to forward that check to the attorney in a timely manner! Apparently, the Social Security Administration feels that it should be allowed to further increase its revenue by having the advantage of the float on the lawyer’s hard

earned fees. This situation is outrageous and unconscionable, and should be remedied immediately.

The protestations of the Social Security Administration regarding the inability to

pay fees in 30 days are incongruous, and are certainly inconsistent with the procedures employed by other parts of the Federal Government. If the Social Security Administration cannot design a system which will allow payment of attorneys fees

within a 30 day window, then the user fee should be eliminated entirely until such

time as the Social Security Administration can design and implement procedures

that will allow it to pay fees in a timely manner.

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OTHER ESSENTIAL CHANGES

The Congress should immediately extend fee withholding to Supplemental Security Income (Title XVI) cases. As previously stated, Supplemental Security Income

cases are less attractive to the private sector attorney, since they produce smaller

fees. Moreover, the claimants are frequently homeless, and suffer mental and emotional problems more frequently than Title II claimants.

The plight of SSI claimants seeking representation is well demonstrated by the

recent case of Maldonado v. Apfel, 55 F. Supp 2d 296 (S.D.N.Y. 1999). This case

involved children seeking SSI benefits, who were represented by their parents. However, the parents represented their children not by choice, but from necessity. As

described in the Maldonado decision:

Throughout these administrative proceedings, Ms. Maldonado represented

Rogelio. This was not, however, due to a lack of effort in trying to find an attorney.

Soon after the SSA sent Ms. Maldonado the October 13, 1995 letter containing the

list of groups that provide legal assistance to individuals seeking SSI benefits, she

and her husband began to try to find a lawyer to represent Rogelio and ‘‘contacted

every organization on the list in Manhattan and the Bronx.’’ (Maldonado Aff. ¶¶ 5–

6). None of these lawyers offered Ms. Maldonado so much as an initial appointment.

(Id. ¶ 6). Ms. Maldonado then sought the services of private lawyers who advertised

that they took disability cases. (Id.). Some replied that they did not take children’s

cases, while others said that they might take a child’s case, but only if the family

paid a retainer of $1,000. (Id.). The family, however, was not financially able to pay

the requested retainer and thus Ms. Maldonado continued to represent her son.

(Id.). Maldonado, at 299.

The other Plaintiff in the case, Ms. Olavarria, encountered similar obstacles. Unable to obtain legal representation for her child, each mother pursued the matter

to Federal Court, where they the encountered the objection of the Government that

they were not competent to represent their children, since they were not attorneys.

Ms. Olavarria continued to seek counsel:

After receiving a letter from the government dated February 24, 1999, which explained the government’s position that Ms. Olavarria may not represent her son in

these proceedings without counsel, the Court scheduled a conference for March 19,

1999. Ms. Olavarria attempted to obtain counsel to attend the conference. (Olavarria

Aff. 8–9). Both Bronx Legal Services and the Legal Aid Society informed her that

no lawyers were available to accompany her to the conference. (Id. ¶ 9). She also

contacted approximately five or six other legal aid offices, all of which informed

plaintiff that they did not handle children’s SSI cases. (Id.). Ultimately, the Court’s

Pro Se Office arranged for lawyers with Legal Services for the Elderly and Bronx

Legal Services to attend the conference. At the conference, these organizations

agreed to represent plaintiff for the limited purpose of determining whether she

could continue to represent her son without an attorney. Maldonado, at 301.

The attempts of these mothers to obtain legal services for their children are is

typical of the hurdles faced by Supplemental Security Income claimants. Many adult

SSI claimants, suffering from physical and mental disabilities, lack the persistence

of Mrs. Maldonado and Ms. Olavarria to seek legal services as diligently as they

did. Accordingly, after an initial denial or two by a private sector attorney or a legal

aid office, SSI claimants often simply give up, and accept their fate, returning to

the back streets and the back wards.

The Maldonado court ultimately allowed Mrs. Maldonado and Ms. Olavarria to

proceed, pro se, on behalf of their children. The court grounded its finding, in substantial part, on the unavailability of counsel for children’s SSI cases. The court

held:

Unfortunately, these social security appeals often ‘‘are not very attractive cases’’

to non-volunteer private attorneys. (Tr. at 36). As plaintiffs’ counsel explained: ‘‘In

general, attorneys in private practice, including members of the Social Security bar,

will not accept children’s SSI cases.’’ [FN13] (See Baker Aff. ¶ 4). Further, legal

services organizations cannot be expected to accept all of the children’s SSI cases.

Due to lack of funding, the loss of staff positions, and other responsibilities, most

organizations are operating at or near capacity. (*307 See id. ¶¶ 5–7). See also Bruce

A. Green, Foreword, Rationing Lawyers: Ethical and Professional Issues in the Delivery of Legal Services to Low-Income Clients, 67 Fordham L.Rev. 1713, 1713

(1999) (‘‘It is . . . commonly understood that the present level of government and

private funding for legal services for low-income persons is woefully inadequate to

meet the pressing legal need.’’). Maldonado, 306–307.

The holding in Maldonado was recently accepted by the 5th Circuit in the case

of Harris v. Apfel, 209 F3d. 413 (5th Cir. 2000). The court in Harris agreed with

the policy considerations articulated in the Maldonado case, and found that parents

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should be allowed to represent their children pro se in appeals from administrative

SSI decisions, in order to avoid jeopardizing the child’s statutory right to judicial

review.

CONCLUSION

The unavailability of counsel for children and adults in Supplemental Security Income appeals is well known throughout the legal and social service communities.

In order for legal services to be available to Supplemental Security Income claimants, it is imperative that withholding of attorneys fees be extended to Supplemental Security Income cases. In addition, the 6.3% user fee should be eliminated,

and replaced by a reasonable fee that more accurately reflects the actual cost for

withholding attorneys fees and certifying payment to the attorney. Congress should

act immediately to pass HR 4633, and to extend withholding of attorneys fees to

Supplemental Security Income cases, in order to remedy the longstanding injustice

suffered by our mentally and physically disabled citizens who are entitled to Supplemental Security Income assistance but who cannot receive it without legal representation.

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SACRAMENTO, CA 95821

June 21, 2000

A.L. Singleton

Chief of Staff

Committee on Ways and Means

U.S. House of Representatives

102 Longworth House Office Building

Washington, D.C. 20515

RE: Subcommittee Hearing on Processing of Attorney’s Fees by the Social Security

Administration

Dear Mr. Singleton:

Although I am a dedicated attorney with a small practice, I am becoming unwilling to represent S.S.I. recipients because Social Security has made it so hard to collect a fee. Not only are S.S.I. claimants an unstable population, on the periphery

of society, but SSA now requires that they receive their retroactive benefit in sixmonth installments. Furthermore, SSA does not issue a fee approval on a concurrent (or Title XVI and Title II) case until all the work is completed on the Title II

portion, which often takes many months. For all these reasons, I, along with many

other attorneys, am reluctant to represent S.S.I. claimants.

But attorneys are necessary to Social Security and to the judges. Attorneys weed

out undeserving cases and gather evidence and medical opinions; they also lighten

the load for the state agencies.

A 6.3% user’s fee applied to Title XVI cases to allow those fees to be automatically

withheld would ensure that attorneys take these cases and therefore would ensure

that the poor get the help they need.

It is to be noted that the S.S.I. payments are made out of the general fund, not

out of money the claimant has earned. It is public assistance. The law says that

the lawyer’s fee is contingent and to be paid out of retroactive benefits. When the

lawyer has performed this public service, it is mete and right that the lawyer be

paid out of the public fund the claimant is receiving.

Sincerely,

f

JOAN JENNINGS

Statement of Joel F. Friedman, Jerome, Gibson, Stewart, Friedman,

Stevenson & Engle, P.C., Phoenix, AZ

Chairman Shaw and members of the Social Security Subcommittee, please accept

these comments for inclusion in the public record of the hearing that took place on

Wednesday, June 14, 2000, on Processing of Attorney Fees by the Social Security

Administration.

My name is Joel F Friedman and I am an attorney in private practice with a

small law firm in Phoenix, Arizona. I have been representing Social Security DisVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00088 Fmt 6621 Sfmt 6602 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
85

ability Insurance Benefits (DIB) and Supplemental Security Income (SSI) claimants

before District and Field offices, and the Office of Hearings and Appeals, primarily

in the Phoenix metropolitan area, for nearly 18 years. I have been actively involved

in the legislative process as well, I have periodically represented the interests of a

group of private Social Security attorneys in the Phoenix area, and I am presently

a member of the Board of Directors and national Secretary of the National Organization of Social Security Claimants Representatives (NOSSCR). I am attaching to

this statement a copy of my curriculum vitae.

I am writing to you as an attorney in private practice concerned about the directions taken recently by the Social Security Administration (SSA) on matters involving the payment of benefits to successful claimants for DIB and SSI, which then

is coordinated with payment of my attorneys’ fees. I would appreciate your consideration of the following:

The representation and claims process

I represent individual adult and child claimants for exclusively DIB and SSI benefits, as well as concurrent claims in which benefits are paid under the two programs

subject to the maximum SSI benefit amount. I meet directly with and interview potential clients, explaining how the system works, including the agency review procedures, likely time frames for claim processing, and medical requirements of proving

a ‘‘disability.’’ I will also advise potential clients if I consider their claim improbable,

but I sometimes undertake even a borderline case if it is the only realistic opportunity for the individual to qualify for DIB (e.g., coverage based on work history is

expiring or has expired).

When I accept a client, I generally assist personally with preparation of required

Social Security questionnaires and forms. My staff supports Social Security and

state disability determination agency offices with gathering medical records and reports. We will advance to most clients the cost of ‘‘purchasing’’ treating source

records, narrative reports, or even consultative evaluations. These services are provided to both DIB and SSI claimants. In an SSI case, though, I must consider the

risk of not recovering individual case expenses as well as the chance of not being

paid for my time (attorneys’ fees), and we may instead request that the state agency

obtain medical proofs, which generally delays processing of the case. The recent implementation of a 6.3 percent charge against my DIB case fees has now made the

same potential for not recovering the advanced expenses a more substantial factor,

and we more frequently ask the SSA office where the claim is being processed to

obtain those documents for which we receive what we deem to be excessive billings.

I am available for all of my clients, for all of their medical or legal problems. We

refer clients to specific medical care providers if possible; we recommend other lawyers for legal matters we cannot provide direct help with; and we refer clients to

public or private agencies for assistance, including with possible vocational rehabilitation, while the Social Security claim is pending. We do not charge extra for ancillary services unless part of a separate claim (e.g., workers’ compensation, personal

injury) we can assist with, and often we informally reduce fees in one or both cases.

Comments you have received from certain individuals as a part of this legislative

hearing process suggest SSI claimants are unique in the disability system, and that

their special vulnerability somehow separates them from a ‘‘typical’’ DIB claimant.

I can provide you only with anecdotal information from my own practice, which I

can assure you demonstrates that there is no such distinction. The DIB claimant’s

loss of employment due to illness or injury is actually likely to be financially more

difficult, as that individual and his or her family is unexpectedly and suddenly no

longer able to support a lifestyle established by regular, often substantial, income

that simply cannot be and is not replaced. Private disability and workers compensation benefits replace no more than a fraction of actual earnings, and a spouse who

has not been working does not just re-enter the work force at the same income level

as a skilled trade or craftsman, for example, who has been the family’s primary provider.

The loss of employment due to disability creates very real hardship, savings may

be limited or not realistically available (e.g., pension funds to which there is no reasonable access), and it is my understanding that a significant percentage of personal

bankruptcy filings are attributable to this phenomenon. The amount of household

and personal expenses incurred while working, expecting continued employment,

are no less real than the expenses described of the SSI claimant. The DIB claimant

is equally, if not more, likely than the SSI claimant to owe both pre-and post-disability debts, and contentions that SSI claimants are indebted for ‘‘food and shelter

while awaiting’’ SSA’s decision ignores that non-working individuals probably have

qualified for other state or federal benefits, such as Food Stamps, Aid for Families

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with Dependent Children(AFDC)—Temporary Aid for Needy Families (TANF), subsidized or sheltered housing, and/or welfare—general assistance.

The Committee should not be persuaded that there is a legitimate distinction to

be made in the need for quality legal representation merely because a claimant applies for DIB or SSI. The formerly employed and now disabled are in fact more likely to have more substantial financial pressures than the never-employed, and that

is recognized by arbitrary disparities in benefits amounts. In similar fashion, the

Committee should reject unsubstantiated and illogical claims that particular segments of the disabled community, more than other essentially similarly situated demographic groups, require more ‘‘protection’’ from the very individuals who represent the claimant’s best and greatest interests—attorneys who accept these cases

with no significant financial contribution from or risk to the claimant.

Commentators demanding continued distinction between DIB and SSI claimants

on the basis of relative ‘‘vulnerability’’ also disregard agency statistics about the nature of DIB claimants’ alleged disabilities, data that have been available for many

years. In the 10 year period from 1985 to 1995, for example, ‘‘the typical new’’ recipient of DIB changed from ‘‘ a male over 50 years old with either a cardiovascular

or musculoskeletal impairment’’ to someone ‘‘younger and mentally impaired.’’ May

23, 1995 Statement/testimony of Jane L. Ross, Director—Income Security Issues;

Health, Education, and Human Services Division, General Accounting Office, (GAO)

Before the Subcommittee on Social Security, ‘‘DISABILITY INSURANCE: Broader

Management Focus Needed to better Control Caseload’’ at p. 9 (Appendix A). The

recent distribution of disabling conditions differs materially in DIB and SSI claims

populations—almost twice as many SSI as DIB claims are approved due either to

mental retardation or another mental disorder. Annual Statistical Supplement 1999,

Social Security Bulletin (SSI—58.6 percent; DIB—31.9 percent)(Appendix B). The

statistics appear at least to be compatible with the premise that lack of a consistent

work history that would qualify a claimant for DIB, relegating the claimant to SSI,

is more characteristic of chronic psychiatric patients than those who become disabled due to sudden injury or even gradual illness.

The Social Security system’s complications and intransigencies dictate that every

claimant have access to qualified legal representatives. The SSA has historical data,

moreover, demonstrating a correlation with increased representation of claimants by

attorneys and institution of a direct fee payment mechanism. The same study by

the SSA revealed that DIB claimants wanting attorney representation were able to

obtain legal counsel, ostensibly corresponding again to the direct payment of fees

from claimants’ back benefits. July 1988 ‘‘Report to Congress: Attorney Fees Under

Title II of the Social Security Act;’’ Department of Health and Human Service, Social Security Administration, Office of Hearings and Appeals, at pp. 8–9 & 13 (Appendix C).

The continued access to a variety and choice of qualified, and quality, legal representatives for disability benefits claimants, whether Title II DIB or Title XVI SSI,

should remain a paramount interest of the Committee and the SSA—it is an unequivocal interest of the disabled community. The Committee must understand the

details and nuances of legal representation in Social Security cases, which properly

is considered unique within the law, and make its decisions based on complete and

accurate information. DIB and SSI claimants are not very different at all, and they

are entitled to equal access to legal assistance.

The representative’s fee payment process

Once the reasons why legal representation is important in Social Security cases

are understood and appreciated, the significance of a direct attorney fee payment

process becomes clearer. There are valid justifications for distinctions between attorneys and non-attorneys, including the professional and economic accountability of

an attorney who negligently or intentionally harms a client. The SSA has data,

moreover, showing that claimants, when offered a choice, prefer lawyers to non-lawyers. July 1988 ‘‘Report to Congress: Attorney Fees Under Title II of the Social Security Act’’ at p. 14 (Appendix C). The Committee should thus focus its present deliberations only on the statutory mechanism for payment of fees to attorneys.

The present system is theoretically acceptable and is not fatally flawed except in

its implementation by the SSA. The principal excuse you have been offered for

delays in payment of claimants’ retroactive benefits and attorneys’ fees is the need

to develop additional information, such as receipt of workers’ compensation benefits,

after medical approval of a claim. See June 14, 2000 Hearing Testimony—Written

Comments of William C. Taylor, J.D., Deputy Associate Commissioner for Hearings

and Appeals, at p. 7; Barbara D. Bovbjerg, Associate Director—Education, Workforce, and Income Security Issues, Health, Education, and Human Services Division,

87

General Accounting Office (GAO), at pp. 5–6 & 10). The workers’ compensation benefits question is an excuse, however, and not a valid explanation.

The problem is not that the SSA does not have or cannot obtain non-medical eligibility/entitlement information at or prior to processing of back benefits. The failure

of the system is that such information provided to the agency with the medical evidence is just plain ignored. It is the policy and practice of my office to submit workers’ compensation benefits details, including from the insurance carrier, to the Administrative Law Judge (ALJ) hearing the disability portion of a case. We also solicit from outside attorneys, or provide from within our office, information about

creditable attorneys’ fees, litigation costs, and medical expenses that will reduce the

amount that lawfully can be set off against the DIB.

That information is, and generally can be, a part of the OHA—SSA file well in

advance of back benefits processing, but it does no good. We are continually asked

to submit the same information to other processing offices, sometimes on several occasions. We now transmit the information via facsimile only to a specific individual,

to assure it is actually received by a human being and not merely filed away, again,

never to be reviewed.

The system failure is that the SSA rarely, if ever, maintains any semblance of

file folder integrity, and processes the same case through different stages, at different physical locations, without coordinating what has already been submitted and

is a part of that file folder. There is no legitimate reason why back benefits payments cannot be segregated by standard percentages and/or fixed dollar amounts.

These questions you are addressing now—should we encourage lawyers to represent

Social Security claimants, do we discriminate against SSI claimants who want a

lawyer, how do we assure a supply of qualified and quality lawyers to represent disabled Social Security claimants (many of whom have severe psychiatric disorders),

is withholding and direct payment of attorney fees or a two-party check an acceptable method—have been recurrent themes in ongoing deliberations about the Social

Security system, and the SSA has chosen not to establish a computer system that

performs basic, necessary accounting functions.

My office already has a computerized accounting program that takes client workers’ compensation payments received from several insurance companies and automatically deducts the same fee and cost recovery amounts each time a check is processed. The fee deduction can be programmed as a percentage or a fixed amount, and

cost recovery deductions are generally a fixed amount. It is not difficult to modify

the distribution of money if factors change, and we have only two part-time bookkeepers performing these same functions for nearly one thousand clients every

month. The numbers of payments we process is certainly different than the SSA’s

workload, but it is safe to assume that if a small business in Phoenix, Arizona can

provide these services (and others as well) to almost 1,000 clients with approximately 250 person-hours per month, the SSA can provide equivalent service to

many more disability benefits recipients with the vastly greater resources at its disposal.

You have been told it would be difficult, at best, to incorporate into SSI cases the

same type of benefits and attorneys’ fee processing that we currently have in DIB

claims. That again is an artificial and circular rationalization—SSI claims have historically been processed differently than DIB cases so we must continue to do so regardless of enhanced technology and changes in claimant population demographics

that no longer justify continuation of inherently inefficient procedures. If SSI and

DIB case processing were coordinated, the SSA, claimants, and legal representatives

would benefit from economies of scale and centralization of the process. The same

justification for all final administrative reviews being processed at one Appeals

Council seems to be equally applicable in benefits processing, and historical inertia

and the cost of repairing it should be rejected as reasons to leave two different, both

inefficient and ineffective, DIB and SSI systems in place.

The same accountability that sets lawyers apart from non-lawyers is sufficient

reason to consider realistically the implementation of a two-party check system that

would expedite payment of both back benefits to the claimant and fees to the attorney. The claimants and their attorneys would be paid at the same time, and claimants, or representative payees when there is a question about the claimant’s competence with financial matters, are able to ascertain if the amount charged is the

same amount that would have been previously authorized, in writing. The SSA

would also be available as an oversight agency to respond to and investigate those

cases in which the claimant has additional questions not answered satisfactorily by

the attorney. The instances in which disputes require intervention are likely to be

extremely rare, a much smaller burden on the agency’s resources than the current

system.

88

There is no logical or valid reason to maintain the current distinction between

DIB and SSI fee payment processes, and the complaint that SSI claimants are more

financially vulnerable or needy is unwarranted. If a claimant is denied either type

of benefits because they are not able to obtain desired legal counsel, there simply

is no money to repay any debt. When more than 58 percent of SSI disability claims

are approved because the claimant has a mental disorder (including mental retardation), Annual Statistical Supplement 1999, Social Security Bulletin (Appendix C),

the need for qualified, and quality, legal representation that will in fact protect all

of the claimant’s interests becomes indisputable.

I thank this Committee for the opportunity to address the concerns you have demonstrated by the legislative hearing process, by submitting written comments. I

would be pleased to respond to any other questions you may have during your deliberations. Thank you.

JOEL F. FRIEDMAN

[Attachments are being retained in the Committee files.]

L

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AW OFFICES OF BARBARA B. COMERFORD, P.A.

RIDGEWOOD, NJ 07451–5107

June 9, 2000

The Honorable Marge Roukema

United States Congress

1200 East Ridgewood Ave

Ridgewood, New Jersey 07450

Re: House Ways and Means Subcommittee on Social Security

Dear Congresswoman Roukema:

I have written you before on social security topics. I feel particularly moved to

write you at this time for two reasons: the House Ways and Means Subcommittee

on Social Security is in the midst of conducting hearings on the issue of attorney

fees, and my office is relocating directly across the atrium from yours at the above

address as of July 1, 2000. Please understand that the issue of attorney fees impacts

whether thousands of New Jersey residents will be able to secure competent legal

counsel in social security cases, so I implore you to support the cause of disability

lawyers on this issue. The National Organization of Social Security Claimants Representatives, which is based in Midland Park, New Jersey, has, I am sure, collected

letters from practitioners around the nation who are as concerned as me about this

issue.

I have been concentrating my practice in the area of Social Security law for roughly fifteen years. I have written extensively on the topic and have lectured around

the country on the issue to other lawyers, lay persons, Social Security officials and

members of the bench. Indeed, I have been asked to author a book on the topic by

American Jurisprudence Trials. I also chair the Bergen County Bar Association Social Security Committee.

Historically, the fee generating cases subsidize my pro bono work which is considerable. Most of my pro bono work is done on behalf of disabled children. Indeed,

I trained attorneys throughout the state at the request of the American Bar Association and the New Jersey Bar Association on SSI childhood disability cases in the

aftermath of the Welfare Reform Act.

I have provided a brief glimpse into my professional background to explain why

I would be sickened to give up representing social security disability clients. But

like many of my colleagues, I may not be able to afford to continue my disability

practice if the law regarding attorney fees is not changed.

Under the Ticket to Work and Work Incentive Improvement Act of 1999, attorney

fees were reduced 6.3%, as a ‘‘user fee.’’ Not only must we suffer delays of several

months from the time we win the case until the time we are paid, but to ensure

payment at all, I must have one employee do NOTHING but call the attorney payment center to nag them into mailing my fees. I have an added complication in that

I changed my primary business address two years ago, and in spite of the fact that

I notified Social Security of my new address in every case, my attorney fees were

still forwarded to the wrong address. In roughly twenty-nine (29) cases, I have not

been paid in cases I have won since 1999. The level of incompetence is beyond exaggeration. And for this, my fee has been taxed 6.3%.

89

An increase in the present $4000.00 limit (and it is frequently much less because

benefits are CAPPED at $4,000.00) is long overdue. The best practitioners will not

be able to adequately represent clients if the fees remain so low, and if the delays,

which the Act was intended to correct, continue. My clients are the weakest and

most vulnerable in our society. I love my work, and they need my help. Social Security has statistics on the success rates of unrepresented claimants. It is abysmal.

While I agree with Congressman Shaw that the process should be so easy for individuals with disabilities that they no longer need attorneys, the truth is that without experienced lawyers, disabled individuals cannot succeed under the present system.

Sincerely,

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BARBARA B. COMERFORD

PEKOE, REED, WRIGHT & ASSOCIATES

WINTER PARK, FL 32789

June 14, 2000

A.L. Singleton

Chief of Staff

Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office Building

Washington D.C. 20515

Dear Mr. Singleton,

I would like to submit this written statement to you in reference to the Hearing

which is scheduled to take place today, June 14, 2000, concerning the processing of

Attorney Fees by the Social Security Administration. I have a recommendation and

suggestion which I believe can mitigate the negative response which I trust you are

receiving from Attorneys affected by the cost recovery provisions.

I am a former Social Security Administration employee who worked for the Administration for approximately 20 years. In 1992, I resigned and started my own

company which represents individuals applying for Social Security benefits. I am

not an Attorney

As you know, individuals seeking Social Security benefits may choose to have Attorneys or other individuals represent them in their claims. The Commissioner of

Social Security through regulation establishes a limit on the amount of the representation fee that may be charged and approves each fee charged by any representative.

The payment of fees to Attorneys is accomplished directly by the Social Security

Administration after a fee has been approved. However, the payment of fees to Nonattorneys is not made by the Social Security Administration after a fee has been

approved. For Non-attorneys, although the same approval process must occur, payments must be secured by Non-attorneys from the clients.

This inequity is clearly unfair and unnecessary. Since the same exact approval

process by the Commissioner of Social Security must take place for Attorneys and

Non-attorneys alike, the direct payment of any approved fees should similarly take

place.

I would suggest that rather than eliminate the recoupment fee enacted through

the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106–170)

which requires the Commissioner to cover the costs of paying Attorney fees directly

to Attorneys, that you include direct payment of approved Non-attorney fees. Inclusion of Non-attorneys will establish equity and fairness and will increase the revenue obtained from the recoupment process. This increased revenue from Non-attorneys can be used to reduce the actual percentage of recovery cost from 6.3% to a

lower figure which will be more palatable to Attorneys.

I thank you for considering my recommendations and hope that you can establish

them. Both the public and those representating them will be benefitted by these

changes. If you have any questions, please feel free to contact me at 407–647–8533.

Respectfully,

RON PEKOE

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WARD WHITE & ASSOCIATES

HOLIDAY, FL 34690–0549

June 27, 2000

A.L. Singleton,

Chief of Staff,

Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office building

Washington, D.C. 20515

Re: Technical changes to Title II,406 and Title XVI, 1383 of the Social Security Act

Dear Chairman Shaw,

I wish to thank you for allowing me the opportunity to explain the disparity in

the method of payment of fees between an attorney and a non-attorney representative in Social Security disability cases.

As presently enacted, neither the provisions of Title II nor Title XVI provides for

withholding of an ‘‘attorney’s fee’’ for non-attorney representatives. This inequity results in losses of approximately 10% of my firm’s gross revenues. It results in a loss

of revenue to the government given the current user fee legislation, and the lack

of a unified fee process creates internal havoc for Social Security Administration

personnel mandating a system within a system creating additional harm and delays

for both claimants and representatives. The proposed changes will increase the

amount of revenue the federal government receives through the user fee, and they

will insure SSA treat both attorney and non-attorney representatives equally by

withholding the ‘‘’attorney’s fee’’ due to the representative if the claimant is successful in obtaining disability benefits. (The technical changes are included in the addendum.)

Title II is an insurance policy. Enacted in 1935, it provided, among other things,

disability benefits to insured individuals irrespective of financial need. From 1935

until 1965, Title II contained no express provision authorizing an award of attorney’s tees to a claimant’s counsel. In 1965, the Fifth Circuit Court of Appeals in

Celebreeze v. Sparks, 342 F2d 286(1965), held that 42 U S.C. 405(g) implicitly authorized federal district courts to order the payment of attorney’s fees out of past

due benefits. The court’s rationale was that where a statute confers upon a federal

court full judicial power to handle litigation before it, it must be presumed, absent

any indication to the contrary, that the power allows it to provide for the payment

of attorney’s fees from past due benefits recovered by the claimant in the litigation.

In 1965, Congress codified the Sparks decision by amending 42 U.S.C. 406 by adding section (b)(1). This new subsection provided for the withholding of past due benefits to pay attorney’s fees incurred in judicial litigation under Title II.

In 1968, Congress amended section 406(a) of Title II authorizing the now Commissioner of Social Security to withhold a portion of past-due benefits to pay attorney’s

fees incurred in administrative proceedings under Title II.

Non-attorney representatives were not active in this arena of the law prior to the

mid-1970’s. Thus, the issue of whether non-attorney representatives should be paid

in the same manner as attorneys was not before the courts, nor Congress. Therefore

non-attorney representatives were not in the class entitled to receive direct payment

from past-due benefits.

The proposed changes to section 406 are merely technical in nature and recognize

the contribution those non-attorney representatives whether as individuals, or members of a partnership or corporation make in representing uninformed and/or indigent claimants. As non-attorney representatives and attorney representatives’ develop, prepare and argue their cases in an identical manner they should be paid in

an identical manner. These technical changes shall be effective on the day of enactment and the regulations amended within 60 days from the date of enactment Title

XVI is a welfare program. Enacted in 1972, it provides supplemental security income benefits to financially needy disabled individuals regardless of their insured

status.

In Bowen v. Galbreath, 485 U.S. 74, 108 S.Ct. 892, 99 L..Ed. 2d 68 (1988), the

Supreme Court referred to the Committee reports and quoted them as stating to

withhold attorney fees from past-due benefits would be contrary to the purpose of

the program.

This view has recently changed. In 1996, Congress enacted the Personal

Responsibi1ity and Work Opportunity Reconciliation Act of 1996, Public Law 104–

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193, enacted on August 22, 1996. Section 221 provides that large past-due benefits

payab1e to SSI recipients should be paid in installments not in a lump sum. This

legislative provision reflects a change in Congress’ view that withholding benefits

from Title XVI recipients wi11 not cause greater hardship than withholding from

Title II recipients. The Act also provides for a waiver provision if hardship is found.

Recognizing both the change in Congressional view and that non-attorney representatives assure claimant’s complete development and preparation of their cases,

a good opportunity to secure their benefits despite complex medical-legal issues, and

regulations, attorney and non-attorney representatives should be paid in the same

method whether a claim is filed under Title II or Title XVI. If these proposed

changes become legislation the federal government will benefit from increased revenues through the user fee and claimants will have access to competent and qualified

representatives.

At the present time, SSA is required to expend time and personnel on tracking

non-attorney representative fees. Social Security personnel are required to review

all cases awarding benefits. Cases involving non-attorney representatives are coded

differently because direct payment by SSA to the non-attorney representative is not

allowed. Often times the payment center incorrectly codes files resulting in a withholding of 25% of claimant’s benefits. In these cases, the non-attorney representative is required to make numerous telephone calls and write to SSA in an effort to

have the incorrectly withheld funds released to the claimant. There are also the

cases where SSA withholds and sends the non-attorney representative a government

check for 25% of the claimant’s past due benefits. In this case, the non-attorney representative is required to send the government’s check back to SSA and request that

a new check be re-issued to the claimant. In requesting, a new check be issued to

the claimant, the non-attorney representative will make no less than three phone

calls to the payment center to follow up on the matter until the claimant has received all past due benefits. In other instances government employees are uninformed with respect to the differences in the withholding procedures for attorneys

and non-attorneys. Uninformed government employees advise claimants the government is withholding the fee resulting in the claimant spending all past due benefits

and no longer having the resources to pay the non-attorney for the professional services rendered in securing claimant’s entitlement to benefits. Thousands of dollars

become un-collectable with claimant’s laying the blame directly on information received from the Social Security Administration workers. This can lead to additional

litigation against a claimant who has endured a tremendous amount of hardship in

securing disability benefits. If the proposed technical amendments were adopted,

they would provide positive benefits to SSA. Employees would not have to track

non-attorney representative fees and could be assigned other duties making the operation more efficient. The government would benefit generally from the additional

revenue collected from the non-attorney user fee. Finally the government would not

be risking liability from non-attorney representatives who have lost revenue due to

misinformation provided to claimants from agency employees.

Another positive benefit would be in the area of oversight over all representatives.

In select instances there are individuals who do not subscribe to the highest standards of representation of Social Security and SSI claimants’. These non-professional

individuals (attorney’s and non-attorney’s alike) cast a shadow over all conscientious

professionals who represent Social Security disability claimants. In adopting the

proposed technical changes Social Security would retain a greater level of control

over all representatives in the administrative disability arena.

Respectfully yours,

A. SCOTT FLEXER

ADDENDUM

The proposed technical changes to the Social Security Act are as follows:

TITLE II

42 U.S.C. 406 (a)(1) after the phrase ‘‘if the claimant was represented by an attorney.’’ insert the following: or non-attorney representative whether an individual,

partnership or corporation. This technical change shall be effective on the day of enactment and the regulations amended within 60 days from the date of enactment.

After the phrase ‘‘a reasonable fee to compensate such attorney’’ insert the following ‘‘or non-attorney representative whether an individual, partnership or corporation’’ This technical change shall be effective on the date of enactment and the regulations amended within 60 days from the date of enactment.

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406 (4)(A) after the phrase ‘‘the person representing the claimant is an attorney’’

insert the following: or non-attorney representative whether an individual, partnership or corporation.

After the phrase ‘‘to such attorney’’ insert the following:or non-attorney representative whether an individual, partnership or corporation. This technical change shall

be effective on the day of enactment and the regulations amended within 60 days

from the date of enactment.

406 (4)(B) after the phrase ‘‘to the attorney’’ insert the following: or non-attorney

representative whether an individual, partnership or corporation. This technical

change shall be effective on the day of enactment and the regulations amended

within 60 days from the date of enactment.

406 (c) This section is re-titled: Notification of Options for Obtaining Representation. After the phrase ‘‘options for obtaining attorney’’ insert or non-attorney representation whether an individual, partnership or corporation.

TITLE XVI

U.S.C. 1383 (d)(2)(A) Substitute the following: The provisions of section 406(a) of

this title shall apply to this part to the same extent as they apply in the case of Subchapter II.

1383(d)(2)(B) after the phrase ‘‘options for obtaining attorneys’’ insert ‘‘or non-attorney representative whether an individual, partnership or corporation.’’

f

CHICAGO, IL 60707–4429

June 22, 2000

Congressman E. Clay Shaw

Subcommittee on Social Security

Of the Committee on Ways and means

C/o A.L. Singleton, Chief of Staff,

Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office Building

Washington, D.C. 20515

Re: Fairness of 6.3% User Fee

Dear Congressman E. Clay Shaw,

To paraphrase Ronald Reagan, if you want less of something, you tax it. The 6.3%

user fee does not ensure an adequate method of securing attorney’s fees in Social

Security claims. Indeed, attorneys were very dissatisfied with the process before the

fee; they are naturally more dissatisfied with the process since they must now pay

for it. Since the fee has made no difference in the unsatisfactory process of fee withholding, it can only be concluded that the user fee is no more than a tax. A fee for

a service of no use to the payer is not a user fee, it is a tax. As Ronald Reagan’s

statement suggests, this tax will serve to ensure less representation of Social Security claimants.

I have included a current list of the attorney’s fees that have been withheld from

claimants, but which have not been paid to me. You will note that I am currently

owed over $100,000.00, interest free, with some fees owed for as long as two years.

This amount has held relatively steady for at least the past five years. This list

would be longer, except that I must pay a secretary to nag the national payment

centers on a daily basis. Otherwise, many fees would not be paid at all.

I have also enclosed sample Notices of Award. Please note that the payment centers continue to include the 15-day payment delay language in the notices, even

while collecting the user fees. Since the payment centers do not diary future actions,

a 15-day delay can often be a 15-month delay, or such delay until we call to goad

them into processing payment. You will also note that sometimes they do not withhold the fee, or they do not withhold a sufficient amount. Requiring attorneys to

pay for such a process is not fair, since the process does not lead to a fair payment

of attorney’s fees.

Unfortunately, this tax, or user fee is timed to discourage attorney’s seeking to

represent Social Security claimants, while other factors already provide a strong disincentive to this practice. We all are thankful for a good economy and for the faster

processing times of Social Security claims. Indeed, the two are related. Because of

the high demand for labor, employers are more tolerant of employees with disabilVerDate 20-JUL-2000 12:49 Nov 22, 2000 Jkt 061710 PO 00000 Frm 00096 Fmt 6621 Sfmt 6621 K:\HEARINGS\67585.TXT WAYS3 PsN: WAYS3
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ities. There are thus fewer people claiming Social Security disability, because a job

pays better. As a result, there are fewer claimants, a smaller backlog of

unadjudicated claims, and faster processing times. Faster processing times means

smaller past due benefit amounts. The practical effect on attorneys with Social Security practices is that there are fewer clients and lower fees.

Attorneys who are considering whether to continue in the practice of representing

Social Security claimants are discouraged from staying with the practice for several

reasons. Their incomes are substantially less because of fewer clients and lower attorney’s fees. Their expenses are higher as well. They have always had to pay clerical staff to track the payment of their fees. They have always had to tolerate accounts receivable with the government stretching fee payments many months, and

even years, interest free. Now, the government not only uses their money interest

free for prolonged periods of time, but also charges them a 6.3% fee for the privilege

of being abused. If you were an attorney in such circumstances, in the midst of prosperity in other areas of the law, and in many areas outside the law, you might very

well decide to feed your family in greener pastures.

The common wisdom is that in two years the baby boomers will impact the Social

Security system by increasing the volume of claims. No doubt this is true, but of

much greater significance would be a downturn in the economy. Higher unemployment rates will increase the disability claim rate more than the effect of aging baby

boomers. The combined effect will again lead to long delays in processing and poor

decisions by hard pressed bureaucrats. The need for attorneys specializing in the

representation of Social Security claimants will again be significant. Unfortunately,

those attorneys will no longer be available, until supply again catches up with demand. Until that time, people may well ask why the government had chosen to tax

away their right to competent legal representation.

Sincerely,

ROBERT G. WHITE

[Attachments are being retained in the Committee files.]

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