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CONTINUING OVERSIGHT OF THE SOCIAL 

SECURITY ADMINISTRATION’S MISMANAGEMENT 

OF FEDERAL DISABILITY PROGRAMS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY POLICY, 

HEALTH CARE AND ENTITLEMENTS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

NOVEMBER 19, 2013 

Serial No. 113–72 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON ENERGY POLICY, HEALTH CARE AND ENTITLEMENTS

JAMES LANKFORD, Oklahoma, Chairman 

PATRICK T. MCHENRY, North Carolina 

PAUL GOSAR, Arizona 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

JACKIE SPEIER, California, Ranking 

Minority Member 

ELEANOR HOLMES NORTON, District of 

Columbia 

JIM COOPER, Tennessee 

MATTHEW CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

DANNY K. DAVIS, Illinois 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

(III) 

C O N T E N T S 

Page 

Hearing held on November 19, 2013 ...................................................................... 1 

WITNESSES 

Mr. Patrick P. O’Carroll, Jr., Inspector General, Social Security Administration 

Oral Statement ................................................................................................. 6 

Written Statement ............................................................................................ 8 

Mr. Glenn E. Sklar, Deputy Commissioner, Disability Adjudication and Review, Social Security Administration 

Oral Statement ................................................................................................. 16 

Written Statement ............................................................................................ 18 

Mr. Jasper J. Bede, Regional Chief Administrative Law Judge, Region III 

Office of Disability Adjudication and Review, Social Security Administration, Accompanied by Marianna Lacanfora, Acting Deputy Commissioner, 

Office of Retirement and Disability Policy 

Oral Statement ................................................................................................. 29 

Written Statement ............................................................................................ 31 

APPENDIX 

The Hon. James Lankford, a Member of Congress from the State of Oklahoma, Opening Statement ................................................................................... 66 

The Hon. Jackie Speier, a Member of Congress from the State of California, 

Opening Statement .............................................................................................. 68 

Chart Submitted for the Record by Mr. Sklar ...................................................... 73 

(1) 

CONTINUING OVERSIGHT OF THE SOCIAL SECURITY ADMINISTRATION’S MISMANAGEMENT OF FEDERAL DISABILITY PROGRAMS 

Tuesday, November 19, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY POLICY, HEALTH CARE AND

ENTITLEMENTS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:10 a.m., in Room 

2154, Rayburn House Office Building, Hon. James Lankford [chairman of the subcommittee] presiding. 

Present: Representatives Lankford, Jordan, Walberg, Farenthold, 

Speier, Duckworth, Horsford and Lujan Grisham. 

Staff Present: Ali Ahmad, Communications Advisor; Brian Blase, 

Senior Professional Staff Member; Molly Boyl, Parliamentarian; 

Lawrence J. Brady, Staff Director; Daniel Bucheli, Assistant Clerk; 

Sharon Casey, Senior Assistant Clerk; John Cuaderes, Deputy 

Staff Director; Adam P. Fromm, Director of Member Services and 

Committee Operations; Linda Good, Chief Clerk; Christopher 

Hixon, Deputy Chief Counsel, Oversight; Mark D. Marin, Director 

of Oversight; Emily Martin, Professional Staff Member; Laura L. 

Rush, Deputy Chief Clerk; Sharon Meredith Utz, Professional Staff 

Member; Jaron Bourke, Minority Director of Administration; 

Aryele Bradford, Minority Press Secretary; Adam Koshkin, Minority Research Assistant; Suzanne Owen, Minority Senior Policy Advisor; and Brian Quinn, Minority Counsel. 

Mr. LANKFORD. The committee will come to order. 

I want to begin this hearing by stating the oversight mission 

statement. We exist to secure two fundamental principles: First, 

Americans have the right to know the money Washington takes 

from them is well spent; and second, Americans deserve an efficient, effective government that works for them. Our duty on the 

Oversight and Government Reform Committee is to protect these 

rights. Our solemn responsibility is to hold government accountable 

to taxpayers because taxpayers have the right to know what they 

get from their government. 

We will work tirelessly in partnership with citizen watchdogs to 

deliver the facts to the American people and bring genuine reform 

to the Federal bureaucracy. This is the mission of the Oversight 

and Government Reform Committee. 

Social Security Administration oversees two large Federal disability programs, Social Security Disability Insurance Program and 

2 

the Supplemental Security Income Program, both of which have 

grown rapidly over the last 25 years. The growth in these programs 

is a significant threat to the truly disabled, who are often pushed 

to the back of the line, and who face large benefit cuts in the future 

if the program is not reformed and reformed quickly. 

Rapid growth in these programs corresponds to a period of time 

when the typical job became less physically intensive, and the 

health of Americans nearing retirement improved. The consensus 

of expert academics and researchers from across the political spectrum attribute a large portion the growth of the program to a slower economy and a more subjective criteria for entry. 

In June, this subcommittee held its first oversight hearing related to the Social Security Administration’s management of these 

programs. At that hearing the committee heard testimony from two 

former and two current administrative law judges. The testimony 

revealed significant problems in the Social Security appeals process, an avenue by which more 300,000 applicants typically gain access to the program each year. 

One overarching theme of the testimony was that the agency’s 

push to reduce the backlog had an unintended consequence of 

judge putting too many people onto the program who are able to 

get back to work. In subsequent months committee staff received 

numerous briefings from agency officials and conducted three transcribed interviews with Social Security Administration law judges. 

The committee has learned that some judges employ shortcuts 

and do not consider all the evidence available prior to reversing a 

previous decision. It is important to emphasize the disability cases 

typically only reach ALJs after applicants have been denied twice 

at the local disability determination level. Moreover, for all practical purposes, an ALJ decision to allow benefits is an irrevocable 

commitment of taxpayer funds since payroll decisions are not appealed, and less than 1 percent of disability beneficiaries ever return to the workforce. 

The committee’s most recent transcribed interview is with regional Chief Administrative Law Judge for Region III, Jasper Bede. 

Judge Bede testified that if a judge’s reversal rate is anything over 

75 percent to 80 percent, or the judge disposes of more than 700 

cases a year, it raises a red flag that the judge my be issuing poorquality decisions. Two other judges interviewed by the committee 

testified that judges who decide over 700 cases a year are not doing 

a thorough job in evaluating all the evidence. 

The committee obtained Social Security adjudication data back to 

2005. Some simple statistics indicate a substantial problem. For instance, between 2005 and 2012, more than 930,000 individuals 

were approved for benefits by a judge with an approval rate in excess of 80 percent. In fact, more than a third of the agency’s judges 

have approved more than 80 percent of applicants in at least 1 

year. Between 2005 and 2012, nearly 500,000 individuals were approved for benefits by a judge who disposed of more than 700 cases 

in a year. 

During his interview Judge Bede singled out seven judges in Region III. His disposition data was indicative of a problem with their 

decisionmaking. But Judge Bede also testified that he was powerVerDate Aug 31 2005 09:38 Feb 12, 2014 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\86479.TXT APRIL
3 

less to do anything with these judges because the of agency policies 

and management. 

These problems raise three important questions: Did the agency 

fail to stop red flag judges because the agency is focused on processing as many cases as possible? Who has been held responsible 

for allowing hundreds of judges to essentially rubber-stamp people 

on the program for years? Will the agency prioritize continuing disability reviews, CDRs, for individuals who have gained access to 

the program because of one of these judges? 

In addition to prioritizing medical CDRs for individuals approved 

by red flag judges, the agency should immediately suspend several 

judges and conduct a review of the decisions and practices. 

While some reforms to correct the broken disability determination process will need congressional action, there are many steps 

the agency can unilaterally take to better protect American tax dollars and those most in need. Unfortunately the agency is moving 

very slowly to adopt needed changes and to clarify perverse regulations. 

The decision grid has not been significantly revised since the 

1970s. Although hearings are nonadversarial, the agency has not 

required that claimants and their representatives submit all evidence, favorable and unfavorable, in advance. Moreover, it should 

not take the agency more than 4 months to reply to questions for 

the record to this committee as it did for this last hearing. 

I hope today’s hearing will provide the committee with some clarity about the agency’s plan to move forward and, quite frankly, 

what we in Congress can do to help in the process. 

Social Security Disability serves the most vulnerable in our Nation, and the individuals who are sitting in front of me have committed their life to protecting those individuals and helping in any 

way we can, and we are grateful for your service. And we are hopeful that this conversation today will be a conversation on how we 

can continue to protect those most vulnerable. But we cannot ignore glaring issues that are driving the program into insolvency. If 

we do not aggressively deal with the fraud, costly mistakes and legislative fixes required, we will see those in greatest need put in tremendous risk. I believe it is time to fix the system, and we intend 

to work with this administration in a bipartisan way to prioritize 

these solutions today. 

Mr. LANKFORD. With that, I would like to recognize the very-notfeeling-good ranking member from California Mrs. Speier. 

Ms. SPEIER. Mr. Chairman, thank you. Thank you for holding 

this hearing. I thank all the witnesses for participating. And I 

want to commend the chairman for not suffering from attention 

deficit disorder, which is typically what happens here when you 

take an issue on, you have one hearing, and you go away. You’re 

sticking to it, I’m proud that you are, and as a partner want to 

make sure we fix this as well. 

Having said that, disability insurance benefits are a lifeline, a 

true lifeline, for millions of Americans who can no longer work in 

any capacity because of a serious disability. This is a benefit that 

American employees pay for, and we need to remember that, 

through their FICA taxes. While the number of applicants and 

beneficiaries have increased over the past several years, this was 

4 

an increase that was projected more than 20 years ago as a result 

of my generation of baby boomers that have become more susceptible to disabilities as they have aged and the fact that there are 

an increasing number of women in the workforce. 

Every program needs vigorous oversight and strong policies in 

place to prevent waste, fraud and abuse. Again, I commend the 

chairman for focusing on this issue. But it is also important to note 

that the Social Security Administration has initiated significant efforts to improve management, oversight and accountability for the 

disability adjudication and review process, particularly since we 

last met. 

For instance, the agency is reviewing the quality of ALJ decisions to ensure their legal sufficiency, and Appeals Council reviews 

ALJ’s decisions and provides useful feedback to individual ALJ’s regarding the quality of their decisions and to the agency regarding 

its policy guidance. 

The recently created Division of Quality conducts reviews of ALJ 

award decisions before the benefits go out and conducts discretionary reviews of denial decisions. These reviews help ensure the 

quality of ALJ decisions and allow the agency to do a focused review of specific issues related to the hearing process at a hearing 

office or with a specific ALJ. 

In addition, SSA has initiated efforts to address concerns raised 

by ALJ’s and others regarding some disability adjudication and review policies. For instance, the SSA has noticed a proposed rulemaking that will require a claimant to submit all evidence that relates to their disability claim in a timely manner. This regulation 

will enhance the accuracy of disability determination and address 

the concerns that some claimants or their representatives are withholding evidence that may not be favorable to their claims. 

The fact is that the national allowance rates have gone down 

since 2008 from 61 percent to 47 percent, its lowest rate since the 

1990s. It’s important to ensure that these determinations are done 

fairly and thoroughly, but it is equally important to ensure that ongoing benefits are proper. 

And let me emphasize this: Continuing disability reviews, which 

are periodic reviews of disability awards to determine if the beneficiary continues to meet the disability criteria, are critical—and I 

underscore that—critical to the integrity of the system. Unfortunately there are too few of them. These reviews are highly effective 

means for reducing overpayments or identifying fraud. 

We know that this system is at a tipping point. We do not want 

to see these benefits reduced for those who legitimately should be 

receiving Social Security Disability. So if we actually focus in on 

CDRs, we can save money and make sure that those who deserve 

these benefits receive it. In fact, for every dollar spent on CDRs 

yields $9 of program savings. According to the IG, SSA could have 

avoided paying $556 million in 2011 if they just performed medical 

CDRs in the backlog when they were due. So it is more than troubling to hear that there is 1.3 million backlog of scheduled CDRs 

this year. 

It borders on outrageous to learn that these benefits are still 

being paid to some who have died or who have been incarcerated. 

Let’s be clear: This is partly Congress’ fault. Funding for the SSA 

5 

has fallen dramatically in the past 2 fiscal years. It is up to Congress to provide the funding the agency needs to fulfill its mandate 

to effectively monitor program integrity and save taxpayer dollars. 

I hope my chair and colleagues would agree that given the clear 

cost-benefit analysis provided by the inspector general, we should 

ensure that the agency has sufficient funds to conduct all of its 

scheduled CDRs and continue other program improvements that 

have allowed it to reduce its backlog and increase efficiencies, 

while improving program integrity. 

But even in the context of overall improvement, there clearly is 

still abuse of the system by some bad actors. A recent investigation 

conducted by the U.S. Senate Homeland Security and Government 

Affairs Committee and the Senate Permanent Subcommittee on Investigations identified evidence related to a scheme to defraud SSA 

in implicating a law firm, an ALJ in Huntington, West Virginia, 

and doctors. As Senator Tom Carper, chairman of the committee, 

stated, ‘‘While we don’t have any evidence that this is more than 

an isolated case, one example of inappropriate action of this nature 

is one too many.’’ 

I look forward to hearing from our witnesses on how we can work 

together to continue this trend of improvement. 

Mr. LANKFORD. Thank you. 

Mr. LANKFORD. Committee members will have 7 days to submit 

open statements for the record. 

Mr. LANKFORD. We will now recognize our panel today. Patrick 

O’Carroll, Jr. is the inspector general at the Social Security Administration. Thank you for being here. 

Mr. Glenn Sklar is the Deputy Commissioner for Disability Adjudication and Review for the Social Security Administration. You 

have a return engagement for being here, so I appreciate you being 

here again. 

Judge Jasper Bede is the Regional Chief Administrative Law 

Judge for Region III, Office of Disability Adjudication and Review, 

Social Security Administration. Thank you for being here. 

Marianna LaCanfora—is that right—— 

Ms. LACANFORA. That’s right. 

Mr. LANKFORD. —is the Acting Deputy Commissioner for Retirement and Disability Policy of the Social Security Administration. 

Ms. LaCanfora is not testifying today as far an opening statement, 

but is open to doing questions. So pursuant to that, as far as answering questions as well, we swear in all witnesses according to 

committee rules. If you would please stand and raise your right 

hand. 

Do you solemnly swear or affirm that the testimony you’re about 

to give will be the truth, the whole truth, and nothing but the 

truth so help you God? 

Thank you. You may be seated. 

Let the record reflect the witnesses have all answered in the affirmative. 

In order to allow time for discussion, I’m going to ask you to limit 

your testimony to 5 minutes. You see a little clock in front of you. 

That will tick down from 5 to zero. You will a little red light that 

comes on when you get to zero. We would like to be as close as posVerDate Aug 31 2005 09:38 Feb 12, 2014 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\DOCS\86479.TXT APRIL
6 

sible. We will have a little bit leniency, but we like to have plenty 

of opportunity for questions as we go through this. 

With that, Mr. O’Carroll, we recognize you first for an opening 

statement. 

STATEMENT OF PATRICK P. O’CARROLL, JR. 

Mr. O’CARROLL. Good morning Chairman Lankford, Ranking 

Member Speier and members of the subcommittee. This fiscal year SSA projects that it will pay about $190 billion 

to 18 million disabled workers, their dependents and to disabled 

SSI recipients, and receive about 3 million new disability claims. 

Determining who’s eligible for benefits and who continues to be eligible is an overwhelming task. My office has spent over 18 years 

conducting audits and investigations aimed at helping SSA perform 

this duty as quickly, carefully and as accurately as possible. 

Looking first to those already receiving benefits, my office has 

long urged SSA to conduct more continuing disability reviews, or 

CDRs, and more SSI redeterminations. We consistently encourage 

Congress to fund these critical reviews. With the return on investment of 9 to 1, appropriations for these reviews are a sound fiscal 

policy. 

After dedicated funding ended in 2002, CDRs and SSI redeterminations declined over 60 percent, creating a significant backlog. 

While SSA has been conducting more reviews since 2009, the backlog has nevertheless continued to grow. As a result, SSA continues 

to make payments that could be avoided. For example, according to past audit work, about $3.3 billion in 

SSI payments could have been avoided in just a 2-year period, and 

up to $1.1 billion in disability benefits could have been avoided in 

2011 alone. 

The OIG doesn’t merely focus on CDRs and redetermination; we 

provide sound reasons for funding and conducting them. For example, in a recent review we found that SSA hadn’t conducted 79 percent of childhood CDRs and 10 percent of age 18 redeterminations 

within the timeframes required by law, with the cost over 4 years 

was $1.4 billion. 

Payments made because of delayed reviews of current beneficiaries are troubling because they are largely avoidable, but payments made to people who should never have been awarded benefits at all is equally troubling. We focus closely on the Office of Disability Adjudication and Review and administrative law judges in 

our audit work to help SSA ensure that undeserving applicants do 

not receive disability benefits. 

For example, we recently issued a report on risk factors at hearing offices, and we found that while ODAR had created 19 separate 

ranking reports that measured hearing office performance using individual risk factors, it did not combine these risk factors to better 

identify problem areas. As a result of that, we are conducting an 

audit that does just that. We believe the new model that analyzes 

multiple risk factors will help to identify outlier offices as well as 

hearing offices with best practices that can be emulated. 

My written statement identifies more audits planned for fiscal 

year 2004 and beyond, all aimed at helping ODAR continue to improve the timeliness and accuracy of its decisionmaking. I would be 

7 

remiss, however, if I did not point out that disability fraud is the 

issue my office confronts on a daily basis. 

Individuals committing disability fraud is disturbing enough, but 

doctors, lawyers and other third parties who facilitate fraud for 

scores or hundreds of beneficiaries is intolerable. A recent operation in Puerto Rico illustrates how a handful of facilitators can 

put many ineligible people on the disability rolls, and our work in 

the Commonwealth isn’t finished. Nor is our work elsewhere, as 

you might have seen in recent news headlines and stories. While 

I can’t discuss these open cases, I can tell you they both remain 

very much active. 

Moreover, in July, we launched a disability fraud pilot. Its sole 

mission is to identify, investigate and prosecute doctors, lawyers, 

interpreters and others who commit large-scale fraud. Meanwhile 

our long-standing and highly successful Cooperative Disability Investigations, or CDI units, continue to try and identify fraudulent 

applications before benefits are ever paid. Since the program was 

established in 1998, CDI worked nationwide and has resulted in 

projected savings of $2.5 billion. I am happy to discuss the CDI 

program in more detail today if you have any questions. 

Through our audit and investigative work, our disability fraud 

pilot and our CDI units, we will keep working with SSA and the 

subcommittee to improve the disability programs and to reduce 

fraud, waste and abuse. I thank you again for this opportunity to 

testify, and I’ll be happy to answer any questions. 

Mr. LANKFORD. Thank you. 

[Prepared statement of Mr. O’Carroll follows:] 

8 


Insert offset folio 1 here 86479.001

U.S. House of Representatives 

Committee on Oversight and Government Reform 

Subcommittee on Energy Policy, Health Care, and Entitlements 

SOCIAL SECUR TV 

ADM1NlSTRAT ON 

OIG 

Statement for the Record 

The Honorable Patrick P. O'Carroll, Jr. 

Inspector General, Social Security Administration 

November 19, 2013 
9 


Insert offset folio 2 here 86479.002

Good morning, Chairman Lankford, Ranking Member Speier, and Members of the Subcommittee. I 

have appeared before Congress many times to discuss the Social Security Administration's (SSA) 

disability programs, and how my office helps improve the effectiveness and integrity of those programs. 

I thank you for the invitation to testify today about these issues of critical importance to American 

taxpayers. 

Increasing levels of disability claims and beneficiaries in recent years have challenged SSA's ability to 

deliver world-class service, creating workloads that strain resources, causing delays and backlogs, and 

leaving the Agency vulnerable to fraud and abuse. SSA must find ways to balance service initiatives, 

such as processing new claims and appeals, against stewardship responsibilities, to ensure that accurate 

determinations are made at every level and that current beneficiaries remain medically eligible. 

Moreover, some individuals will withhold, exaggerate, or fabricate medical information to collect 

benefits that they are not eligible to receive. Sometimes, individuals involved with the disability claims 

process assist these fraudulent actions. It is critical that SSA and its Office of the Inspector General 

(OIG) be able to identify and prevent individuals and groups from defrauding the Government and these 

critical programs for personal gain. 

Today I would like to discuss the efforts of my office to address both of these challenges: audits we've 

conducted and recommendations we've made to improve the integrity and effectiveness of the claims 

and appeals process; and current investigative initiatives that target widespread fraud schemes and 

identity vulnerabilities in the claims process. 

Reviews and Recommendations 

For many years, we have identified full medical continuing disability reviews (CDRs) and Supplemental 

Security Income (SSI) redeterminations as highly effective guards against improper payments and 

disability program fraud. Full medical CDRs are effective in reducing overpayments in the Disability 

Insurance (Dl) program. SSA estimates that every $1 spent on medical CDRs yields about $9 in savings 

to SSA programs as well as Medicare and Medicaid over 10 years. 

In a March 2010 report, we determined that SSA's number of completed full medical CDRs declined by 

65 percent from Fiscal Year (FY) 2004 to 2008, resulting in a signiticant backlog. We estimated SSA 

would have avoided paying at least $556 million during calendar year 2011 ifSSA had conducted the 

medical CDRs in the backlog when they were due. 

According to SSA, the Agency conducted 443,233 full medical CDRs in FY2012, up from 345,492 in 

FY20 II. SSA's goal based on its FY20 13 budget request was to conduct 650,000 full medical CDRs, 

but given the actual funding it received, the Agency has reported that it conducted 428,568. SSA 

expected a backlog of 1.3 million full medical CDRs to remain at the end ofFY20l3. This is an increase 

over the FY20 12 year-end backlog of 1.2 million. 

In recent years, SSA increased the number offull medical CDRs conducted, but does not have a formal 

plan to eliminate the backlog. In FY20 14, SSA would like to conduct 1,047,000 full medical CDRs if it 

receives timely and sustained funding as outlined in the legislative proposal for a Program Integrity 

Administrative Expenses account, which would provide mandatory program integrity funding. We 

support this legislative proposal or any other mandatory funding for integrity activities. 
10 


Insert offset folio 3 here 86479.003

Even when a CDR is conducted and the State Disability Determination Services (DDS) determines 

medical improvement, it does not always mean that SSA terminates benefits timely, or at all. In a 

November 2012 report, we identified D1 beneficiaries and their auxiliaries and SSI recipients who 

improperly received payments after their medical cessation determinations, for a projected total of about 

$83.6 million in improper payments. We recommended that SSA enhance its systems to perform 

automated terminations following medical cessation decisions. Although SSA has not yet implemented 

this change, it has agreed to do so. 

Also, we are currently assessing SSA's adherence to the medical improvement review standard (MIRS), 

and its impact on the beneficiary rolls. During a CDR, SSA follows MIRS - mandated by the Social 

Security Disability Amendments of 1984 to determine if a beneficiary's impairment has improved 

since his/her most recent favorable determination and can perform work activities. However, if SSA 

mi'stakenly placed the individual on disability in the first place-if they were not disabled when the 

favorable determination was made-MIRS makes it difficult for SSA to take the person off'disability, 

because under current law, there is no medical improvement. Based on our sample, it appears that some 

individuals would not be disabled under SSA's rules were MIRS not in place. Our report is still ongoing; 

we expect to issue it later this year. 

In the SSI program, SSA conducts periodic redeterminations to determine whether recipients are still 

eligible for payments, and receiving the correct payment amount. In July 2009, we reported that the 

number ofSSI redeterminations conducted by SSA had substantially decreased even though the number 

ofSSI recipients had increased. Between FYs 2003 and 2008, redeterminations decreased by more than 

60 percent. We estimated SSA could have saved an additional $3.3 billion during FYs 2008 and 2009 by 

conducting redeterminations at the same level it did in FY2003. 

Following our report, SSA significantly increased the number of redeterminations completed. 

Specifically, redeterminations increased approximately 252 percent since the low in FY2007 of692,000 

to almost 2.44 million in FY2013. SSA plans to conduct 2.6 million redeterminations in FY2014, which 

the Agency estimates will result in savings of$5 for every $1 spent on conducting them. 

In our September 2013 review, ".'II High-error Profile Redeterminalions, however, we found that SSA 

was not completing all of the redeterminations identified as having the highest risk of likely 

overpayment. Each year, SSA identifies the number of high-error profile redeterminations it will 

coinplete based on the dedicated program integrity funding it expects to receive in its budget 

appropriation. Since SSA is uncertain of this amount at the beginning of the year, SSA intentionally 

selects more high-error profile redeterminations than it plans to complete. SSA's method for assigning 

redeterminations as high-error is based on the anticipated dedicated program integrity funding and the 

amount SSA allocates to redeterminations. Therefore, when actual dedicated program integrity funding 

is at or lower than expected, some high-error profile redeterminations selected are not completed. 

For example, in FY20 II, the dedicated program integrity funding SSA received resulted in the Agency 

not completing up to 20 I ,000 high-error profile redeterminations selected. If SSA had completed all 

these redeterminations, we estimate that it would have identified at least $228.5 million in additional 

improper payments, both overpayments and underpayments. We recommended that SSA continue to 

increase the number of the high-error profile redeterminations conducted as resources allow, and SSA 

agreed to do so. 

2 
11 


Insert offset folio 4 here 86479.004

In September 20 I I, we issued a follow-up report, Childhood Cominuing Disability Reviews and Age-IS 

Redeterminations, in which we found that SSA had not completed 79 percent of childhood CDRs and 10 

percent of age-18 SSI redetenninations, within the timeframes specified in the Social Security Act. SSA 

requested and received special funding for FY2009 to FY2012, but while the number of age-I 8 

redeterminations increased, the number of childhood CDRs conducted declined. 

We estimated that SSA paid about $1.4 billion in SSI payments to approximately 513,300 recipients 

under 18 that it should not have paid; and that SSA would continue paying about $461 million annually 

until reviews are completed. We recommended that SSA conduct all childhood CDRs and age-I 8 

redeterminations within legally required timeframes, and SSA agreed to do so to the extent that its 

budget and other priority workloads allowed. 

For many years, we have also focused considerable audit resources on challenges SSA faces at the 

hearings level of the claims process. A number of years ago, we issued a review, Administrative Lml' 

Judge Case load PerjiJrmance, in which we analyzed existing case disposition statistics across the entire 

AU corps, and evaluated the effect ofthese production levels on the Office of Disability Adjudication 

anti Review's (ODAR) ability to process incoming hearing requests and reduce the backlog of cases 

within five years. Without recommending any specific production level, we presented options to SSA 

and recommended that the Agency develop a performance accountability process that does not infringe 

on AU qualified decisional independence but allows AU performance to be addressed when it falls 

below an acceptable level. 

We have continued to focus on ODAR and AU performance in our recent audit work as well. In 

February 2012, we issued a Congressional Response Report, Oversight ofAdlllinistralive Law Judge 

Workload Trends, in which we focused on the productivity of24 AUs-the 12 with the highest 

allowance rates, and the 12 with the lowest allowance rates. Most SSA staff we interviewed attributed 

the variance in allowance rates to ALJ decisional independence and discretion when interpreting the 

law, as well as the demographics of the hearing office service area popUlation. In this report, we also 

found that SSA management teams at the hearing offices and regions monitored AU productivity but 

did not monitor allowance rates. 

Most recently, in a January 2013 report, Identitying and Monitoring Risk Faclors at Hearing Offices, we 

found that although ODAR had created 19 ranking reports that measured hearing office perlormance 

using individual risk factors, the Agency had not established a process to rank performance using a 

combination of risk factors. Therefore, in an ongoing audit (currently in draft and with SSA for 

comment), Analysis of Hearing Offices Using Key Risk Faclors, we have developed a model that 

measures variances among multiple risk factors. The model analyzes pertormance and outcome data 

among AUs in the same office and uses five AU-related risk factors: (1) allowance rates, (2) 

dispositions, (3) rate of on-the-record (OTR) decisions, (4) dismissal rates, and (5) average processing 

time. 

Though the Agency's current monitoring process identifies some potential workload problems, such as 

AU-specific issues, our model offers a way to evaluate the performance of individual hearing offices. 

Using our model and FY2012 workload data, we are identifying hearing offices with the highest and 

lowest variance scores. We believe outlier hearing offices provide ODAR managers with indications of 

potential processing issues (high variance) as well as potential best practices (low variance). We plan to 

recommend that SSA: 
12 


Insert offset folio 5 here 86479.005

• determine if our methodology would assist in monitoring hearing office performance, understanding 

that the number and nature of the risk factors can be adjusted to meet Agency needs; and 

• . ensure that ODAR's early monitoring system combines existing information on AU OTR decisions 

and case rotation to identify any AU who issues a high percentage ofOTR decisions with the same 

claimant representative. 

In FY2014, we are continuing our audit focus on reducing improper payments in SSA's disability 

programs; in fact, nearly half of our planned reviews address disability program integrity in some way. 

Among those reviews, we will assess whether SSA: 

• could use Medicare information to identify beneficiaries who are receiving disability benefits but 

may be deceased or not truly disabled; 

• is collecting prior overpayments on an individual's record when that person becomes re-entitled to 

benefits at some point in the future; and 

is appropriately addressing wages earned by disabled beneficiaries qfier their alleged disability onset 

date but before a favorable hearing decision. Such earnings may be an indication that an individual 

does not, in fact, meet the guidelines for benefit eligibility. 

Going forward, we are also conducting or will conduct multiple reviews focused on improving SSA's 

hearings process: 

• We are currently conducting an audit, Trends Associated with Cases Decided by High-Denial 

Outlier ALls, in which we are analyzing subsequent actions on high-denial AU decisions, as well as 

subsequent actions on denials made by other AUs in the high-denial ALl's hearing office. 

• Quality Review of On-the-Record Decisions: OTR decisions-where no hearing was necessary 

because the documentary evidence alone supported a fully favorable decision-accounted for about 

I of every 5 allowances in FY2012, We will assess the reasons OTR cases were decided upon 

receipt at the hearing office but not approved earlier at the DDS level. 

• Relationships Between lvledical Providers and Represented Claimants: We will look at trends in 

medical source information provided by claimants and their representatives at the hearing level to 

identify any questionable relationships that may merit additional Agency attention. 

Puerto Rico Disability Conspiracy 

Of course, our audits and evaluations ofSSA's disability programs are only one side of the integrity 

coin. We also conduct thousands of criminal investigations per year of potential disability fraud, 

resulting in hundreds of criminal convictions as well as benefit terminations and court-ordered 

restitution. As you may be aware. during August 21-23, we conducted an extensive arrest operation in 

Puerto Rico, as part of a complex disability fraud investigation. Working with the FBI and the Puerto 

RiCo Police Department, we arrested 75 individuals, including medical providers, beneficiaries, and a 

non-attorney claimant representative-who is also a former SSA employee. 

4 
13 


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These arrests came as the result of a thorough and far-reaching investigation, involving surveillance and 

undercover operations. We also worked closely with SSA's New York Regional Office to review 

disability claim files. Our investigation found evidence that individuals were submitting nearly identical 

medical reports for claimants who shared a common employment history with a company that was 

experiencing significant downsizing. As this matter is still an active criminal investigation, and the 

judicial process is ongoing, I am limited in the details that I can share publicly. However, one implicated 

beneficiary recently pled guilty, and faces up to five years in prison. Also, we continue to receive calls 

to a special telephone hotline we established to receive tips and other information connected to the 

investigation; and we anticipate that some of these calls will generate new investigative leads. 

OIG's Integrity Initiatives 

We have long placed a high priority on allegations of so-called "third-party facilitator" fraud, where 

doctors, interpreters, social workers, attorneys, or even judges, conspire to submit or approve fraudulent 

disability claims. As a result of the Puerto Rico operation and other cases, we have undertaken a review 

of all facilitator-fraud allegations received from SSA or DDS personnel in the last five years. This 

review is one facet of the work being undertaken by the OIG's Disability Fraud Pilot, which commenced 

in July. The pilot consists of an SSA Associate Chief Administrative Law Judge, a Deputy Assistant 

Inspector General for Investigations, and additional OIG investigative and audit personnel, all working 

to identify and develop allegations offacilitator fraud throughout the country. 

Through a variety of means, including data mining, the pilot seeks to identifY high-dollar, high-impact 

cases involving third-party facilitators conspiring with claimants to defraud SSA. The pilot team will 

explore ways to compile and analyze data that could give us insight as to how to proactively identify 

those disability claims that might be fraudulent or might involve a corrupt facilitator or even an 

employee. We are working with ODAR to analyze management information already available to that 

office, to identify irregularities in administrative law judge performance, claimant representative fees 

paid, or any other factor that could indicate potential fraud or misconduct. 

The pilot is scheduled to run through September 2014, and we will consider expanding the initiative 

after that, based on the success of investigations conducted during the pilot and an evaluation of the 

effect the pilot has on the disability process. The pilot is operating as an extension of our Cooperative 

Disability Investigations (COl) program, which has for over 15 years been successful in preventing 

fraud at all levels of the disability claims process. SSA and OIG jointly established the COl Program in 

FY1998, working with State DOSs and State or loeallaw enforcement agencies, to pool resources and 

expertise to investigate suspicious disability claims. 

Each COl Unit comprises 

an OIG special agent who serves as the Team Leader, 

• employee(s) from that State's DDS and SSA who act as programmatic experts, and 

State or local lawen forcement officers. 

Tapping the skills and expertise of each member, the COl Units receive claims identified as suspicious 

by the DDS and, where appropriate, investigate these claims using traditional investigative techniques. 

The COl program's primary mission is to obtain evidence that can resolve questions of fraud before 

benefits are ever paid; however, they also evaluate and investigate in-pay beneficiaries, often referred by 

SSA or a DDS to a COl Unit during or as the result ora CDR. 

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14 


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CD! currently consists of25 Units in 21 States and, as of August 2013, the Commonwealth of Puerto 

Rico. In FY2013, the CD! program reported $340.2 million in projected savings to SSA's disability 

programs and $246.4 million in projected savings to non-SSA programs such as Medicare and Medicaid. 

Since the program was established, CD! efforts have resulted in $2.5 billion in projected savings to 

SSA's disability programs and $1.6 billion in projected savings to non-SSA programs. Following are 

reeent examples of CD! successes: 

The Oklahoma City CD! Unit investigated a 56-year-old woman who applied for disability benefits 

claiming an injured wrist, elbow, and shoulder. In her claim, she alleged weakness and pain on the 

left side of her body, and a limited ability to walk. She also claimed she was required to use a walker 

and needed help with personal care. During a consultative examination, the woman exhibited no 

mobility in her left leg and decreased mobility of her back. She was using a walker and wearing a 

soft neek collar. The woman could not move her neck, and refused to remove the neck collar. 

When COl investigators interviewed the woman at her residence, however, she was not wearing a 

neck collar or using an assistive device to walk. She was able to sit, stand, and walk without the use 

of a walker. She told investigators she was working about 20 hours a week as the manager of a donut 

shop. The woman complained about her left shoulder hurting, but she appeared to move her shoulder 

and arm freely. Investigators later observed the woman while she worked at the donut shop, and as 

she ran errands throughout the city. Her last stop of the day was a gym, where she swam and used 

the whirlpool. At no point did she use a walker or wear visible braces on her arms or neck, and she 

walked with a normal gait. The Oklahoma DDS denied the woman's claim. 

• The Salem, Oregon COl Unit investigated a 51-year-old woman who applied for disability benefits 

alleging ADHD and headaches. Though born in the United States, she claimed not to speak English 

when dealing with SSA. After undergoing multiple evaluations, it was determined that she met a 

disability listing of Mild Mental Retardation. The claim was submitted as a proposed allowance, but 

was reviewed by a quality assurance branch. The reviewer noted inconsistencies between the 

claimant's reported functioning, her 25-year employment history, and other medical records. The 

claim was sent back to the Oregon DDS for review, and the DDS referred the case to the CD! Unit. 

COl investigators discovered that the claimant owned and managed several rental homes, and was a 

well-known businesswoman in her small town, having operated a second-hand store and a taco truck 

before starting her current restaurant business, a walk-up Mexican food stand located a few blocks 

from an SSA office. CDl investigators located over a dozen witnesses in the local community who 

had both professional and personal dealings with the woman, who they considered to be a fluent 

English speaker. In addition, she had filed numerous eviction orders-in English-related to her 

rental properties. 

The Oregon DDS denied the woman's claim, and our Office of Counsel assessed a civil monetary 

penalty of$3,000 against her for the false statements she made in connection with her claim. 

The CD! program has enjoyed great support from SSA as well as Irom your colleagues in Congress. We 

continue to look for opportunities to expand COl across the country, given available resources and 

ability to secure law enforcement partners in specific locations. 

It is also important to highlight our Civil Monetary Penalty (CMP) Program. My Office of Counsel has 

the delegated authority to enforce section 1129 of the Social Security Act, which authorizes a eMP 

6 
15 


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against anyone who makes false statements. representations. or omissions in connection with obtaining 

or retaining benefits. among other offenses. After consultation with the Department of Justice, we are 

authorized to impose penalties of up to $5,000 for each false statement, representation, conversion, or 

omission. A person may also be subject to an assessment, in lieu of damages, of up to twice the amount 

of any resulting overpayment. 

We are committed to increasing the number of such cases successfully resolved each year to punish 

wrongdoing in cases where criminal prosecution has been declined and to deter Social Security-related 

fraud. In FY2013, we successfully resolved 280 cases and imposed more than $15 million in CMPs. 

For example, in one recent case, a woman, who was the representative payee for her disabled daughter, 

conspired with her own mother to fraudulently obtain SS!. When the woman started a lucrative job that 

would have rendered her daughter ineligible for SSI, the woman's mother (the child's grandmother) told 

SSA that the disabled child had moved in with her, when in fact, the child resided with her own mother. 

The woman and her mother then shared the significant amount of money in SSI that they wrongfully 

received. We imposed a total CM!' of $78,980 against the grandmother and imposed a eMP of$81,000 

against the mother, who masterminded the scheme. 

Finally, my office continues to pursue the establishment ofa self-supporting program integrity fund lor 

the integrity activities I've discussed here, including CDRs, redeterminations, and CD! investigations. 

An existing legislative proposal would provide for indefinite appropriations to make available to SSA 25 

percent, and to OIG 5 percent, of actual overpayments collected. These funds would be available until 

spent for stewardship activities. Given the substantial return on investment of these activities, we believe 

this would be a highly effective use of limited resources. 

SSA faces many challenges to its efforts to maintain the integrity and effectiveness of its disability 

programs. It is critical that the Agency, even in this fiscal environment, allocate sufficient resources to 

ensure that only individuals eligible to receive benefits are able to do so. My office is committed to 

working closely with SSA and your Subcommittee to help the Agency achieve this goal. Thank you 

again for the invitation to testify today, and ['d be happy to answer any questions. 

7 
16 

Mr. LANKFORD. Mr. Sklar. 

STATEMENT OF GLENN E. SKLAR 

Mr. SKLAR. Chairman Lankford, Ranking Member Speier, members of the subcommittee, my name is Glenn Sklar, and I’m the 

Deputy Commissioner for the Office of Disability Adjudication and 

Review. In this capacity I oversee SSA’s hearings and appeals operations. It has been my honor to serve for over 22 years in an agency where our mission affects nearly every American. 

From my start at Social Security as one of the founding members 

of Social Security’s Office of Inspector General to my time working 

as a top executive with the quality component, to my current role 

leading the hearings and appeals operation, I have done my best 

to balance the demands of delivering high-quality work in a highvolume, public service environment. 

With me today is Jasper Bede, the Regional Chief Administrative 

Law Judge in the Philadelphia region, as well as Marianna 

LaCanfora, Acting Deputy Commissioner for the Office of Retirement and Disability Policy. 

When I came to the hearings and appeals operation in 2010, I 

found an organization that was in transition. In 2007, Congress 

made it abundantly clear that we were morally responsible for getting timely answers to Americans whose lives hung in the balance. 

Some claimants were waiting as long as 1,400 days for an answer. 

Our hearing operation has made and continues to make significant and substantial progress in addressing the quality, accountability and timeliness of our hearing decisions. We have steadily 

reduced the average wait time for a hearing decision from a high 

of 512 days in fiscal year 2007 to just 375 days in fiscal year 2013. 

This progress was made while handling a staggering 800,000 requests for a hearing annually. 

My repeated message for employees is that we’re accountable for 

providing quality decisions, meaning timely, policy-compliant, legally sufficient, and factually accurate decisions. To help our employees to meet that expectation, we’ve improved our hiring processes, updated how we train, developed tools to give judges policy 

feedback, established a Division of Quality, and begun collecting 

and analyzing data, mountains of data, to truly measure how we 

were doing. 

We have capped the number of cases an ALJ may be assigned 

to clearly signal that more than speed matters. Data, not supposition, show that we have closed loopholes and improved feedback 

and consistency. For denial decisions we have seen increasing concordance between ALJ decisions and the Appeals Council. We have 

increasing amounts of data to detect areas of noncompliance on allowances. We’re using that data to provide better feedback to our 

decisionmakers. 

Our ALJs have qualified decisional independence to enhance 

public confidence in the fairness of our process, and to ensure that 

ALJs reach their decisions free from pressure to reach a particular 

result. ALJs must, however be consistent with the law and agency 

policy. In addition, we successfully tested our authority to manage 

ALJs and hold them accountable in cases brought to the Merit Systems Protection Board. 

17 

Fortunately, most ALJs want feedback and information that will 

help them accomplish the dual responsibilities of timeliness and 

quality. To help our ALJs, we are taking a number of steps such 

as emphasizing the need for policy compliance, providing quarterly 

training on difficult topics and annual training for a significant 

percentage of ALJs, giving ALJs access to realtime data that highlight where they might be making mistakes and encouraging them 

to self-correct, in standardizing the electronic business process and 

developing an electronic bench book to help judges work electronically. 

We also established a Division of Quality that reviews a statistically valid sample of favorable determinations for accuracy and 

policy compliance before the money goes out the door. We’ve reduced the maximum number of cases that we assign to our ALJs 

each year to 840 cases per ALJ. And we started collecting and analyzing data to determine how we can make the hearings and appeals process better. 

Making disability decisions for Social Security is a challenging 

and complex task. I am proud of our ALJs to rise to the challenge 

every day. Thank you for inviting me here today, and I stand ready 

to answer any questions you might have. 

Mr. LANKFORD. Thank you. 

[Prepared statement of Mr. Sklar follows:] 

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REARING BEFORE 

THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

SUBCOMMITTEE ON ENERGY POLICY, HEALTH CARE AND ENTITLEMENTS 

UNITED STATES HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2013 

STATEMENT 

OF 

GLENN SKLAR 

DEPUTY COMMISSIONER 

OFFICE OF DISABILITY ADJUDICATIO1\' AND REVIEW 
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Chairman Lankford, Ranking Member Speier, and Members of the Subcommittee: 

I appreciate the opportunity to diseuss our management of the disability appeals proeess. 

Today, I will share with you our important progress in modernizing the process and 

improving the quality of our hearing decisions and how we are addressing some of our 

challenges. Before doing so, I will brietly discuss the vital programs that the Social 

Security Administration (SSA) administers. 

Introduction 

We administer the Old-Age. Survivors, and Disability Insurance program, eommonly 

referred to as "Social Security." which protects against loss of earnings due to retirement. 

death. and disability. Social Security provides a financial safety net for millions of 

Americans-few progranls touch as many Americans. We also administer the 

Supplemental Security Income (SSI) program, funded by general revenues, which 

provides cash assistance to persons who are aged, blind, and disabled, as defined in the 

Social Security context, with very limited means. 

We also handle lesser-know'Tl but critical services that bring millions of people to our 

field offices or prompt them to call us each year. For exanlple. we issue replacement 

Medicare cards and help administer the Medicare low-income subsidy program. 

Accordingly. the responsibilities with which we have been entrusted arc immense in 

scope. To illustrate, in fiscal year (FY) 2012 we: 

• Paid over $800 billion to almost 65 million beneficiaries; 

• Handled over 56 million transactions on our National 800 Number Network; 

• Received over 65 million calls to field oflices nationwide; 

• Served about 45 million visitors in over 1,200 field ofliees nationwide; 

• Completed over 8 million claims for benefits and 820,000 hearing dispositions; 

• Handled almost 25 million changes to beneficiary records; 

• Issued about 17 million new and replacement SociaJ Security cards: 

• Posted over 245 million wage reports; 

• Handled over 15,000 disability cases in Federal District Courts; 

• Completed over 443,000 full medical continuing disability reviews (CDR); and 

• Completed over 2.6 million non-medical redeterminations of SSI eligibility. 

When the Ameriean people turn to us for any of these vital services, they expect us to 

deliver a quality product. Our employees take pride in delivering caring, em~ctive 

service. The aging orthe baby boomers. the economic downturns, additional workloads 

like the growing demand for verifications for other programs, and tight budgets increase 

our challenges (() deliver. 
20 


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Program Integrity Work 

Further. while outside my direct scope in the Office of Disability Adjudication and 

Review. as Acting Commissioner Carolyn Colvin has explained, budgets have also 

affected our ability to conduct vital program integrity work. which helps ensure that only 

those persons eligible for benefits continue to receive them. There is a long-standing 

adage in our agency-the right check to the right person at the right time. Delivering on 

this statement is our goal because we know that when we a(:eomplish it we are 

demonstrating our stewardship and preserving the public's trust in our programs. 

Although we estimate that we save the Federal government $9 per dollar spent on 

continuing disability reviews (CDRs), we have a backlog of 1.3 million CDRs because 

we have not received annual appropriations tbat would allow us to conduct all of our 

scheduled CDRs. 

The FY 2014 President's Budget includes a legislative proposal that would provide a 

dependable source of mandatory funding to significantly ramp up our program integrity 

work. I In FY 20! 4, the proposal would provide $1.227 billion. allowing us to process 

hundreds of thousands more CDRs.2 

The Disability Insurance (OJ) program 

Before discussing the improvements we have made to the disability appeals process, I 

would like to highlight a few aspects of the Disability Insurance (OI) program. 

• First. Congress established a strict standard of disability for our disability 

programs. For example, the DJ program does not provide short-term or partial 

disability benefits. Instead, an insured claimant is eligible only ifhe or she cannot 

engage in any substantial work because of a medically determinable physical or 

mental impairment that has lasted or is expected to last at least one year or to 

result in death. 

A claimant cannot receive disability benefits simply by alleging the existence of 

pain or a severe impairment. We require objective medical evidence and 

laboratory findings that show the claimant has a medical impairment that: 

I) could reasonably be expected to produce the pain or other symptoms alleged, 

and 2) meets our disability requirements when considered with all other evidence. 

I These mandatory funds would replace the discretionary cap adjustments authorized by the Balanced 

Budget and Emergency Deficit Control Act of 1985, as amended by the Budget Control Act These funds 

would be reflected in a new account. the Program Integrity Administrative Expenses account, which would 

be separate, and in addition to, our Limitation on Administrative Expenses (LAE) account. Under the 

proposal, the funds would be available for two years, providing us with the flexibility to aggressively hire 

and train staff to support the processing of more program integrity work. 

, With this increased level of funding, the associated volume of medical CDRs is 1.047 million. although it 

may take us some time to reach that level. For comparison. we conducted abOl!l 430,000 CDRs in FY 

2013. 

2 
21 


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• In December 2012, a worker who was found to be disabled in the Social Security 

context received, on average, a little over $1,100 in SSDI benefits per month, 

barely above the current poverty income level of $) 3,000 per year. 

• Recently. there has been some growih in the DI program. Our Chief Actuary has 

explained that long-term DI program growth was predicted mallY years ago and is 

driven. for cxample. by the aging ofthe baby boom generation and the fact that 

more women have joined the labor force and have become eligible for benefits. 

Improving Public Service: Ouality, Timeliness, and Oversight 

Had we had this conversation about the hearings operation in 2007. the topic would likely 

have been. as it was at the time, the unconscionable service we were delivering to your 

constituents. Thc avcrage wait for a person to receive a hearing decision was over 500 

days. Over 63,000 people waited over 1.000 days for a hearing. Some people waited as 

long as 1,400 days. Congress made it clear that addressing untimely hearing decisions 

must be our top priority. 

In developing etlicient and effective solutions to the hearing delays, we implemented a 

comprehensive operational plan to better manage our unprecedented workload. This plan 

addressed the many issues we must balance in the hearing process - quality, 

accountability, and timeliness. We made dozens of significant changes, including 

increasing the number of AUs and support staff, increasing the number of hearing 

omees. establishing national hearing centers, expanding video confereneing to conduct 

hearings. improving information technology, and standardizing business processes, to 

name just a few. Congress provided additional resources, which were critical to 

supporting our improvements. 

Today, the results are clear that our plan has worked. We have significantly improved 

the quality and timeliness of our hearing decisions. We steadily reduced the wait for a 

hearing decision from a high of 512 days in fiscal year (FY) 2007, to 375 days in FY 

2013. While this number is still too high and is increasing tmdcr budget cuts, it is still a 

dramatic improvement from 2007. 

We have made tremendous improvement in our service to the public by focusing on our 

most aged cases. We have decided nearly a million aged cases since FY 2007, and today 

we have virtually no hearing requests over 700 days old, with the vast majority of our 

cases falling between 100 to 400 days old. 

Our improvements include modernizing our information technology infrastructure in the 

hearing operation. Not that long ago. we were an entirely paper-based organization. We 

lost precious lime and t1exibiliry mailing huge paper cases through each step of our 

disability process. Now, we are nearly entirely electronic, allowing us to more emciently 

help Americans. We conduct over ISO,OOO video hearings annually, and the 

Administrative Conference of the United States (AClJS) has cited SSA's video hearings 

3 
22 


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process as a best practice for all Federal agencies. Going electronic means that we have 

data available that we have never had before and we are using these data to inform our 

policies and improve quality. Not only do we work in a fully electronic processing 

environment, but many claimants and third parties interact with us electronically as wel!. 

We have improved the training we provide to our ALJs to help ensure that our hearings 

and decisions arc consistent with the law, regulations, rulings, and agency policy. Since 

FY 2007, our new ALJs have undergone rigorous selection and have participated in a 

two-week orientation, four-week in-person training, formal mentoring, and supplemental 

in-person training. We provide AUs with easy access to information on the reasons for 

their Appeals Council remands and other data through an electronic tool. Because we 

can now gather and analyze common adjudication errors, we provide quarterly continuing 

education training to all adjudicators that targets these common errors. In addition, we 

have continued our training program that provides in-person technical training for 350 of 

our AUs each year. 

As a result, quality is improving. This improvement is not happenstance but the result of 

these deliberate changes we have made in the way we hire, to the way we train, to the 

way we give feedback. For denial decisions, we have seen <!ver-increasing eoncordanee 

between AU decisions and the Appeals Council. We now have increasing amounts of 

data to detect areas of policy non-compliance on allowances. and we are using that data 

to provide better feedback to adjudicators to improve policy compliance. 

This improved quality means that the Appeals Council is remanding fewer cases to our 

AUs for possible corrective action. The percentage of cases appealed to Federal court is 

also decrea<;ing. While management is providing the support for adjudicators that leads 

to these results, it is the adjudicators themselves who have responded positively to the 

feedback. Perhaps Jor the first time, we have a feedback loop that allows adjudicators to 

actively participate in improving their work and in telling us about disagreements or 

problematic areas. 

We could not have realized these improvements without the dedication of our AU corps 

and all of our employees. I thank them for their hard work. 

Despite the tremendous advancement we have made. I am concerned that our 

improvements will erode, The number of hearing requests we receive each year remains 

high, and we are losing many ALJs and support staff due to attrition, whom we are 

unable to replace. We are doing what we can to hold stead) on our progress despite the 

loss of employees. However, our progress has slowed in the last year, and we were 

unable to open eight new hearing oftices planned for Alabama, California. Indiana, 

Michigan, Minnesota, Montana, New York, and Texas. 

Ensuring High Quality, Policy Compliant, and Legally Sufficient Decisions 

Over the past several decades, we have been accused of sacrificing quality by ret1exively 

denying too many disability claims or by granting them too readily. These reports ignore 

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the reality that v,c are making quicker, higher quality disability decisions, Over the past 

six years, the aliowanee and denial rates have become more consistent throughout the 

Al j corps, ret1ecting an emphasis on quality decision making, There are now 

s:gnilkantly fc\\cr ,\Us who allow more than 85 percent of their cases than there were 

in FY 2007, Meanwhile, there is less than one percent oftr.e AU corps that pays fewer 

than 20 percent of their cases, 

Let me categorically state that we have no targets or goals regarding these rates. We arc 

focused on delivering policy compliant decisions. In that regard, an AU with a very high 

or a very low allowance rate may raise a quality red nag, However, \ve have to look 

behind the data to sec the cause, With our automation efforts. we now have a process and 

the data to do so. 

Figure I: AU Allowance Rate Groups 

Number ,nd Percontage of ALJs with 100+ Dispositions in Allowanc<, Rate Groups 

(Excludes O:$tnis!)j!s) 

Z007 FY 2013 

sal 

Allowance Rate Groups 

Middle(2184% 1 

The quality of our benefit decisions is a paramount concern for the agency. We took 

aggressive steps to institute a more balanced quality review in the hearings process, Our 

first effort in this area was (0 develop serious data collection and management 

infonnation for the Office of Disability Adjudication and R~view (ODAR), We then 

revived development of an clcctrt'nic policy-compliance system for the Appeals Council 

(AC), Because the Offiee oj' Appellate Operations (OAO) handles the tina! level of 

administrative revie\\ _ it has a unique vantage point to give feedback to decision and 

policy makers. OAO developed a technological approach tn harness the wealth of 

int<mnatioJ] the i\C colkcts. turning it into actionable data, These new tools permitled 

the OAO to capture a significant amount of structured data (:oncerning the application of 

agency policy in hearing decisions. 

5 
24 


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Using these data sets, we provide feedback on decisional quality, giving adjudicators 

real-time access to their remand data. We are creating better tools to provide individual 

feedback for our adjudicators. One such feedback tool is "How MJ Doing?" This 

rcsourcc not only gives ALJs information about their AC remands. including the reasons 

for remand, but also information on their performance in relation to other ALJs in their 

office, their region, and the nation. Currently, wc are dcvcloping training modules 

related to each of the 170 identilicd reasons for remand that we will link to the "How MI 

Doing?" tool. AUs will be able to receive immediate training at their desks that is 

targeted to the specific reasons for the remand. We develop and deliver specific training 

that focuses on thc most error-prone issues that our judges must address in their 

dccisions. Data driven feedback informs business process changes that reduce 

inconsistencies and inefficiencies. and simplify rules. 

In FY 2010, OAO created the Division of Quality (DQ) to focus specifically on 

improving the quality of our disability process. While AC remands provide a quality 

measure on AI,J denials, prior to the creation of DQ, we did not have the resources tn 

look at AU allowances. Since FY 2011, DQ has been conducting pre-effectuation 

revicws on a random sample of AU allowances. Federal regulatinns require that preeffectuation reviews of AU decisions must be selected at random or, if selective 

sampling is used, may not be based on the identity of any specific adjudicator or hearing 

office. Currently, DQ reviews a statistically valid sample of un-appealed favorable AU 

hearing decisions. 

DQ also performs post-eflectuation focused reviews looking at specific issues. Subjects 

of a focused review may be hearing offices, AUs. representatives, doctors, and other 

participants in the hearing process. The same regulatnry requirements regarding random 

and selective sampling do not apply to post-effectuation focused reviews. Because these 

reviews occur after the 60-day period a claimant has to appeal the ALJ decision, they do 

not result in a changc to the decision. 

The data collected from these quality initiativcs identify for us the most error-prone 

provisions of law and regulation. and wc use this informatk'n to design and implement 

our AI.J training etforts. To ensure that all of our ALJs comply with law, regulations, 

and policies, we provide considerable training including both new and supplemental AU 

training. We train our ALJs on the agency's rules and policies, and that training is vetted 

thoroughly by various components, including the component that is responsible for 

disability policy. For the past several years, our new AU training also has included a 

session that explains the scope and limits of an AU's authority in the hearing process, 

including the AL.I's obligation to follow the agency's rules and policies. We also have 

implemented the AU Mcntor Program. whieh pairs a new AU with an experienced AU, 

\vho provides advice. coaching, and expertise. Additionall). we provide regular guidance 

to AUs through Chief Judge Mcmoranda and bulletins, Interactive Video Teletraining 

sessions. and in responses to speciHc queries from the Held. 

Additional efforts to promote policy compliance include a pilot of the Electronic Bench 

Book (eBB) for our adjudicators. The eBB is a policy-compliant web-based tool that aids 

6 
25 


Insert offset folio 16 here 86479.016

in documenting, analyzing, and adjudicating a disability casc in accordance with our 

regulations, We designed this electronic tool to improve accuracy and consistency in the 

disability evaluation process. 

These efforts are testing some longstanding traditions within ODAR. We are moving 

from training based primarily on anecdotal information as to our most significant 

problems to a data-driven identification of training. guidance. and policy gaps. We now 

develop training materials and automated tools designed to improve both the 

adjudicator's efficiency and accuracy in ca~e adjudication. We are transparent with the 

information that wc are collecting so that the AUs can more readily make use of the 

information. 

In addition, the data collected by DQ provide us with a tremendous tool to identify 

trends. We review our electronic records for anomalies; when we find them, we look to 

identify whether such anomalies can be explained or whether administrative action is 

appropriate. When we suspect fraud or other suspicious behavior, we refer the matter to 

our Omce ofInspector General. 

These new quality initiatives have given us a new opportunity to improve our policy 

guidance. We are using these data to help us identify and pursue regulatory and policy 

changes to improve our disability process. However. there are many stakeholders on 

both sides of any policy that affects our disability programs. To objectively address 

concerns about changes to vurious aspects of our disability programs, we have contracted 

with the ACUS to review severa! issues for us. ACUS has looked at challenging and 

potentially controversial issues that affect the hearings process, including the submission 

of evidence and duty of candor, the treating source rule. closing the record, and video 

hearings. We arc moving forward on many of these issues, but gathering objective 

evidence and considering input from all stakeholders takes time. 

Ensuring Timely Decisions 

Timeliness is one aspect of quality from a claimant's perspective. No claimant would say 

that waiting I AOO days or l,OOO days or even 400 days to know the outcome of their 

claim is quality service. 

As part of our cfTorts to ensure hearing decisions are legally suftlcient and timely, we 

have given AUs a range of 500-700 decisions a year as a reasonable expectation based 

on what many AUg were already doing. We have never required an AU to do 500-700 

cases per year. These judges receive lifetime appointments. They know when accepting 

the job that we will expect them to be able to deliver a policy compliant decision in a 

production environment. The public has every right to expect them to work hard, and 

most judges meet that expectation. We are responsible for providing them with the 

framework for success. For example, each AI J has between four and five staff members 

who directly contribute to a disposition. 

Our previous Chief AU established this expectation after consulting with a number of 

7 
26 


Insert offset folio 17 here 86479.017

managers and AUs about the reasonableness of the expectation. The range of 500 to 700 

dispositions wa, consistent with a prior goal set in 1981. At that time, the agency asked 

AUs to complete 45 dispositions a month or 540 a year. With significant advances in 

technology over the last 26 years and increasing the number of support staff f()r AUs, it 

was not surprising that when the agency articulated the 500-700 expectation, almost 50 

percent of AUs wcrc issuing at least 500 dispositions a year. From the start, thc 500 to 

700 expectation wa, not a quota and was not a mandate. In FY 2012, approximately 78 

pcrccnt of our AUs mct the expectation. 

I want to be very clear that I expect all dispositions to be not just timely but legally 

sufficicnt. and wc arc dcmonstrating that wc are serious about quality with our 

investments. 

Moreovcr. in a survey conducted last ycar by the Association of Administrative Law 

Judges. nearly three out of four respondents found it "not difficult at all" or only 

"somewhat difticult" to meet the expectation. When given an opportunity to explain why 

they had not met the agency's expectation, many respondents cited their status as new 

AUs. [n fact. we account for the learning curve for new AUs. We reiterate the 

importance of making the right decision and we do not ask our newly-hired AUs to meet 

the full workload expectation during their first year learning the job. 

'When an AU has workflow issues, we work with the AU on an informal basis to resolve 

those issues and to assist the AU. 

[f issues cannot be remedied informally. then we take aftinnative. and typically 

progressive. steps to address problems. including counseling. training. mentoring and, as 

a last resort, adverse action pursuant to 5 {) .S.c. 7521. With the promulgation of our 

"time and place" regulation, we have eliminated ambiguities regarding our authority to 

manage scheduling. and we have taken steps to ensure that AUs arc deciding ncither too 

few nor too many cases. By management instruction. we are limiting assignment of new 

cases to no more than 840 cases annually. 

AU Management Oversight 

AUs have qualified decisional independence. That qualified decisional independence 

allows AUs to issue decisions consistcnt with the law and agency policy, rather than 

decisions intluenced by pressure to reach a particular result. The primary purpose of an 

AU's qualified decisional independence is to enhance public contidence in thc essential 

fairness of an agency's adjudicatory process. We fully support Congress' intent to ensure 

the integrity of the hearings process. and we note that the Supreme Court has recognized 

that Congress modeled the Administrative Procedure Act after our hearings process. 

The mission of our hearing operation is to provide timely and Icgally sufficient hearings 

and decisions. For our hearing process to operate efficiently and effectively. we need 

ALJs to treat members of the public and stafI",ith dignity and respcct, to be proficient at 

working electronically. and to be able to handle a high-volume workload in order to make 

8 
27 


Insert offset folio 18 here 86479.018

swift and sound decisions in a non-adversarial adjudication setting. Let me emphasize 

that the vast majority of the AUs hearing Social Security appeals do an admirable job. 

They handle the complex cases in a timely manner, while conforming to the highest 

standards of conduct and quality. 

The law has guided our path to holding our judges accountable. In 2006, the agency 

began to seriously examine the scope of decisional independence and test our 

management authority. Since FY 2007, we have been working diligently to improve 

management oversight of our AUs to ensure that they adhcre to policies, regulations, and 

laws, while maintaining the AUs' qualified decisional independence. We expect our 

AUs to adhere to the high standards expected of them, recognizing at the same time that 

we cannot and would no! influence thcir decision in any particular case. Through the 

actions the agency brought to the Merit Systems Protection Board (MSPB). we 

confirmed, among other issues. that v<,hen management addresses case processing. 

including discipline for purposeful failure to follow policy, it does not interfere with an 

AU's qualified decisional independence. We also confirmed that ALls must adhere to 

the same standards of conduct as other fedcral employees. Over 20 AUs have separated 

from the agency through final MSPB decisions Of resolution agreements. Nearly all of 

these cases have involved serious conduct issues. 

Disciplinary Action 

Again. I must emphasize that the vast majority of our AUs are conscientious and hardworking employees who take their responsibility to the public very seriously. For these 

AUs, we can rely on current agency measures including training to address any problems 

they may have. Generally, the informal process works, but when it does not, 

management has the authority to order an AU to take a certain case processing action or 

explain why he or she cannot take such case processing actions. AUs rarely fail to 

comply with these orders. In those rare cases where the AU does not comply and where 

appropriate, we pursue disciplinary action. 

However, when AU performance or conduct issues arise, agencies such as SSA are more 

limited in the manner in which they can attempt to correct the issues. For example, 

agency managers may take certain corrective measures, such as informal counseling or 

issuing a disciplinary reprimand. However, the agency cannot take stronger disciplinary 

measures against an ALl, such as removal or suspension, reduction in grade or pay, or 

furlough for 30 days or less. unless the MSPB tinds that good cause exists. 

The current system makes it challenging to address the tiny fraction of AUs who hear Of 

decide only a handful of cases, fail to decide cases in a legally sufficient manner, allow 

cases under their control to languish, or otherwise engage in misconduct. A few years 

ago, we had an AU who failed to inform us, as required, that he was also working fulltime for the Department of Defense. Another ALl was arrested for committing a serious 

domestic assault. More recently, an ALl failed to follow his managers' orders to process 

his cases. We removed these AUs, but only after completing the lengthy MSPB 

disciplinary process that lasts several years and can consume over a million dollars of 

9 
28 


Insert offset folio 19 here 86479.019

taxpayer resources. In each of these cases. unlike disciplinary action against all other 

civil servants, the law rcquired that AUs receive their full salary and benefits until the 

case wa, finally decided by the full MSPB--even though the agency could not allow 

them in good conscience to continue deciding and hearing cases. We remain open to 

exploring different options to address this matter, while ensuring the qualified decisional 

independence of AUs. 

Conclusion 

Over fifty years ago, Congress created the disability program to help some of our most 

vulnerable citizens. The vast majority of our adjudicators care very much about making 

the right decision and being good stewards of the trust funds, and we are committed to 

helping them do their jobs eilectively. 

We thank you for your interest in helping us improve our service and ensure ongoing 

confidence in our programs. We also ask for your support for the President's budget 

request, which will provide us with funding to continue to improve our hearings process, 

to improve the integrity of our disability programs, and to reduce improper payments. 

With past support from Congress, we have made progress in both the administrative and 

prol,,,ram integrity arenas and we all benefit if that progress is not lost. 

Again, thank you for the opportunity to testify today. I will do my best to answer any 

questions you may have. 

10 
29 

Mr. LANKFORD. Mr. Bede. 

STATEMENT OF JASPER J. BEDE 

Judge BEDE. Chairman Lankford, Ranking Member Speier and 

members of the subcommittee—— 

Mr. LANKFORD. Sorry to interrupt you. Could you pull your 

microphone a little closer to you there? 

Judge BEDE. Is that better? 

Okay. Again, Chairman Lankford, Ranking Member Speier and 

members of the subcommittee, my name is Jasper J. Bede. I serve 

as the Chief Administrative Law Judge for Region III, the Philadelphia region. I have been in this position with the Social Security 

Administration since April of 2006. Prior it that I served as a hearing office Chief Administrative Law Judge in the Wilkes Barre, 

Pennsylvania, hearing office from 2002 to 2006. I was appointed to 

the position of Administrative Law Judge in 1999 after working in 

the Social Security Administration as an appeals officer, supervisory attorney advisor, and an attorney advisor. Prior to my service with the Social Security Administration, I served as an officer 

in the United States Army. 

Region III includes Delaware, the District of Columbia, Maryland, Pennsylvania, Virginia and West Virginia. The population we 

serve in Region III is a reflection of the wider population of the 

United States. We serve clients from farm laborers and coal miners 

to medical researchers and software designers. Many of the claimants who appear before our judges have unskilled work backgrounds and less than a high school education; however, we also 

see claimants who have achieved the highest level of education and 

worked in the most skilled professions. 

Region III has 18 hearing offices, 150 administrative law judges, 

and approximately currently 742 support staff. Our pending caseload is now over 99,000 cases, and in fiscal year 2013, we closed 

80,753 cases with an average processing time of 407 days. 

Region III ranks as first in the Nation in quality measures, with 

an average 87.7 percent Appeals Council agree rate, and we also 

have the first- and second-ranked hearing offices in the Nation in 

our Johnstown, Pennsylvania, and Seven Fields, Pennsylvania, 

hearing office. 

As the Chief ALJ Region III, my job is to make our offices best 

serve the claimants and contribute to ODAR’s mission of providing 

timely and quality service to the public. I frequently visit hearing 

offices in my region, and I emphasize our goals of providing timely, 

policy-compliant decisions. I set up one-on-one meetings with our 

new ALJs, any new ALJs in my region, and I make myself available to all staff. 

With regard to the ALJs, if I learn of an issue, I work with the 

hearing office Chief Administrative Law Judge to discuss the issues 

and assist the affected administrative law judge. If informal discussions with the ALJ do not correct the problem, I may counsel the 

ALJ or issue a formal reprimand. For more serious issues I can request that the Chief ALJ initiate proceedings with the Merit Systems Protection Board. 

Thank you for the opportunity to be here today, and I would be 

happy to answer any questions that you may have. 

30 

Mr. LANKFORD. Thank you. 

[Prepared statement of Judge Bede follows:] 

31 


Insert offset folio 20 here 86479.020

HEARING BEFORE 

THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

SCBCOMMITTEE ON ENERGY POUCY, HEALTH CARE AND ENTITLEMENTS 

UNITED STATES HOUSE OF REPRESENTATIVES 

NOVEMBER 19,2013 

STATEMENT 

OF 

JUDGE JASPER J. BEDE 

REGIONAL CHIEF ADMINISTRATIVE LAW JUDGE 

OFFICE OF DISABIUTY ADJUDICATION AND REVIEW 
32 


Insert offset folio 21 here 86479.021

Mr. Chairman, Ranking Member Speier, and Members of the Subcommittee: 

My name is Jasper J. Bede, and I serve as the Chief Administrative Law Judge (AU) for Region 

III (Philadelphia). I have held this position with the Social Security Administration (SSA) since 

April 2006. r was the Hearing Office Chief AU (HOCALJ) in the Wilkes-Barre, Pennsylvania 

llearing Office from 2002 to 2006. I was appointed to the position of AU in 1991, after 

working at SSA as an Appeals Officer, Supervisory Attorney Advisor and Attorney Advisor. 

Prior to my employment with SSA, I was an Officer in the United States Army. 

Region 1JI includes Delaware, the District of Columbia, Maryland, Pennsylvania, Virginia. and 

West Virginia. The population we serve is a reflection oflhe wider population of the United 

States from farm laborers and coalminers to medical researchers and software designers. Many 

of the claimants who appear before our judges have unskilled work backgrounds and less than a 

high school education, but we also see claimants who have achieved the highest levels of 

education and worked in the most skilled professions. 

Region III has 18 I learing Offices, 150 AUs, and approximately 742 support staff. Currently. 

Region III has 98,213 cases pending, ,md in tlscal year 2013, we closed 80,753 cases with an 

average processing time of 407 days. Region III ranks first in the nation in quality measures 

with an 87.7 percent Appeals Council agree rate. We also have the fIrst and second ranked 

Hearing Offices in the nation (Johnstown and Seven Fields). 

As the Chief AU in Region Ill, my job is to make sure our offices best serve our claimants and 

contribute to ODAR' s mission of providing timcly and quality service to the public. r frequently 

visit the hearing ot1ices in my region and emphasize our goals of providing timely, policycompliant decisions. I set up one-on-one meetings with all of the new AUs in my region, and I 

make myself available to all staff. With regard to AUs, if I learn of an issue, I work with the 

Ilearing Office Chief ALl to discuss the issue and to assist the AU. If informal discussions with 

the AU do not correct the problem, I may counsel the ALl or issue a formal reprimand. For 

more serious issues, I can request that the Chief AU initiate proceedings with the Merit Systems 

Protection Board. 

Thank you for the opportunity to be here today. I would be happy to answer any questions that 

you may have. 
33 

Mr. LANKFORD. We’re going to do several rounds of questioning 

today. So our goal is that everyone will have about 5 minutes to 

be able to jump in a round of questions, and after that’s concluded, 

we’ll open it up to a broader conversation for all of us. 

Mr. Sklar, there is no question you walked into a situation; your 

leadership, we’re grateful for your background, your experience. 

I’ve spoken to several people in multiple different regions across 

SSA, and they all have great respect for you. That’s a good word. 

So I’m grateful that you’re there and in that position, but you’re 

in this position to be a leader for this system, and we need a leader 

for the system. You see it full well. You’ve already taken actions 

for some of these things. 

So the push that we’re going to go have today is not personal to 

you at all. This predates you and your leadership by far, and there 

are issues that we need to deal with on this. 

We have several things that are all coming down on us. One is 

we’ve had a bottleneck of getting into the system, which is a flood 

of people that have applied through both a generational shift and 

I would say also an openness that it appears it’s easy to get on, 

and so even more people are trying to jump into the system to test 

it and find out how easy it is to be able to get on. And the second 

part of this is the CDR reviews, those reviews coming in. So we’ve 

got two bottlenecks on either side of this, and we’re getting an 

awful lot of people into the middle of it, and we have to be able 

to process this. 

I want to talk a couple of these things on it. Judge Bede, you had 

several high-performing, let’s say, judges that are in—that were in 

your district on it. Judge Bridges, who, when we run the numbers 

on it—we just looked at the testimony that you gave to us—75 to 

80 percent. If they are doing a reversal rate that high, that should 

raise some sort of a red flag, do you agree with that, if you got an 

80 percent reversal rate as a judge, of reversing the two previous 

decisions? 

Judge BEDE. Well, without being specific to Judge Bridges or any 

other administrative law judge, if we have reversal rates that high 

currently, that would raise some questions. It would be an indicator, but it wouldn’t necessarily indicate, establish that the decisions being made are wrong. Each case has to be looked at individually. And it is possible to sit on the bench and find 45 people in 

a row are disabled and 2 weeks later find 25 people in a row are 

not disabled. 

Mr. LANKFORD. Right. 

Judge BEDE. It’s each individual case. 

But a very high production rate with a very high reversal rate 

or a very low reversal rate does raise some questions. 

Mr. LANKFORD. Our observation, obviously, is they’ve already 

been denied twice. We’ve had two folks that have gone through 

their files, that have looked through, that are on the State level 

trying to evaluate it. And they go through this third process, and 

if they are reversing 80 percent of the time previous, there is either 

a problem on the previous side, or there’s a problem on the judge’s 

side, but that seems like a very high percentage. 

Judge BEDE. Since you chose a Pennsylvania judge—— 

Mr. LANKFORD. I can—— 

34 

Judge BEDE. No, I want to indicate—— 

Mr. LANKFORD. Let me just say this—— 

Judge BEDE. Because in Pennsylvania they would only be denied 

once. 

Mr. LANKFORD. Okay. That’s good to know actually. But on several of these, when I go through it, we ran just from 2005 on, a 

typical case, once they’re approved, is about $300,000 in lifetime 

benefits. And so we just tried to run through the actual cost of this. 

This is not a scientific number, this is a ballpark number. So Judge Bridges basically since 2005 has approved about $4.5 billion in benefits; Judge Daughtry, 2005 to 2011, I see $2.5 billion; 

Judge Taylor, $2.5 billion. So we are dealing with very serious dollars on it. Not all of those are incorrect, I’m not trying to accuse 

that, but there are significant amounts. If we looked at all judges 

nationwide that did an 80 percent approval rating or higher, if we 

just took maybe even the 10 or 15, almost 20 percent for some that 

are above 80 percent, there’s still about $100 billion that we have 

questions on to say this is a very high approval rating. And so a 

lot of our questions are just going to process through how is this 

happening either early in the process that they’re being denied 

when they shouldn’t be, and so it’s become more difficult for someone who is truly disabled to get into the system, or how is it there’s 

such a high reversal of that? 

Mr. Sklar, do you want to jump in on that at all just for perspective? 

Mr. SKLAR. Just to add a little bit of perspective, I would draw 

your attention to my written testimony, and there is a chart there, 

and I think you’ve seen that chart before. It may look a little bit 

different in that there’s even fewer outliers on that chart than the 

last time I was before this committee. I think it is a fairly dramatic 

retrenchment—— 

Mr. LANKFORD. But there has been a significant change in the 

last couple of years, and we’re grateful for that, just the attention 

to be paid to it. 

Mr. SKLAR. I think so. If you look at the global level, some of the 

practices we put in place are really starting to have an impact. 

Even looking at this eye chart, you notice the case cap coming into 

effect and biting down. It’s about a 50 percent reduction on the 

number of cases that at one particular ALJ was handling. 

It’s tough. It’s a very large system. It has variability bill in it; 

it’s meant to. Judges have qualified decisional independence drawing off a congressional statute, the Administrative Procedures Act. 

So you do the best you can with the system you have and try to 

put in rational ideas in light of some of the constraints we have. 

Mr. LANKFORD. Okay. Yield to the ranking member. 

Ms. SPEIER. Thank you, Mr. Chairman. 

Along the same lines let me ask you, Mr. O’Carroll, do these appear to alarm you when you have those kinds of approval rates or 

reversals of decisions made in the States? And if they do, what 

steps should be taken to determine whether or not the quality of 

the decision has been accurate? 

Mr. O’CARROLL. Ranking Member Speier, on those, again, probably where we started down the road with these was in 2008 we 

did an audit where we took a look at the hearing offices and the 

35 

rates of the different offices on it. At that time there we were taking pretty much a look at the bell curve of it and where the vast 

majority of, you know, decisions were being made, the numbers 

that were being done on it. And, again, we were trying to give management information to ODAR that they could use in terms of what 

are the outliers on it. And, again, when you’re starting to take a 

look at the outliers that are doing a lot of approvals or a lot of denials, in both cases we wanted the quality reviews for ODAR to be 

taking a look at them for a couple of reasons. 

Ms. SPEIER. I have limited time, and I’ve a lot of questions to ask 

you. What should the quality review encompass? 

Mr. O’CARROLL. Well, that should be taking a look at the encompassing on it. They can’t target, that’s the other issue, because of 

judicial independence. You can’t just say that we’re going to take 

a look at every one of the hearings of this judge because they’re at 

that level. 

What they can be doing is they can be taking a look at trends, 

they can be taking a look at high numbers or whatever and giving 

advice back. And we’ve asked them do it, and they are doing it 

now. There’s a quality review section that we work with at times 

to be—again, to find more information on the outliers. 

Ms. SPEIER. All right. So you approve of the quality review that’s 

going on right now? 

Mr. O’CARROLL. Yes, I do. 

Ms. SPEIER. Anything more that should be happening in that regard? 

Mr. O’CARROLL. Yes. We’re telling them that there’s about 19 

things that they take a look at on terms of decisions, and what 

we’re saying to them is that they ought to narrow it down to maybe 

4 or 5 major ones on it and then be taking a look at that as, again, 

to help on picking out outliers, because as it is now, it is like a 

large scoreboard. We’re telling them to take a fewer number of 

them and take a look at those specific things. 

Ms. SPEIER. Would you provide that to the committee? 

Mr. O’CARROLL. Yes, I will. 

Ms. SPEIER. All right. You referenced Puerto Rico. How did that 

come into focus for you? Was there a whistleblower, or was it just 

something you just at some point decided to review? 

Mr. O’CARROLL. I think Puerto Rice is a good example of, you 

know, government at its finest. What happened was with Puerto 

Rico—two things happened really. One was is that noted in the 

DDS in Puerto Rico, the disability determination center there started noticing that they were getting the same type of diagnoses coming in on all the different people applying for benefits at the time 

coming from this one specific doctor. They brought it to our attention, we started taking a look at it, and pretty much at the same 

time period the press was taking a look at which offices were doing 

very high—which States were coming up with very high allowances 

of disability, and that resulted in some media attention that was 

going on at the same time. 

Ms. SPEIER. So let me ask you this: When there has been, as you 

pointed out, billions of dollars of payments made inappropriately, 

when we then go back to try and get repayment or refund, what 

percentage of those individuals are in a capacity to refund, and do 

36 

we put liens on their property? What do we do to get the money 

back that they had received inappropriately? 

Mr. O’CARROLL. Well, there’s a number of ways on it. One is that 

if it’s criminal, we’ll make it a decision of the court to pay it back. 

If it’s civil, and we go in civil monetary penalties, if the person has 

resources, we’ll fine them, and we’ll be asking for fines on top of 

whatever was paid incorrectly. SSA will then establish an overpayment on it, and that overpayment will be paid back if they have 

the resources on it, or if they don’t have the resources on it, if they 

ever get any benefits in the future, it will be taken away from any 

future benefits on it. As you can probably tell, Congresswoman, a 

lot of the resources on these people here—— 

Ms. SPEIER. Is limited, right? 

Mr. O’CARROLL. It is limited. 

Ms. SPEIER. So the likelihood of getting repayment is not very 

good. So I guess I’m trying to look at ways of discouraging the 

fraudulent applicant from even coming forward. 

Mr. O’CARROLL. We agree. 

Ms. SPEIER. Whether it is a notice to them on the application 

that if, in fact, it is found that you are fraudulent in your actions 

here, that these are the kinds of things that you will be subject to, 

something to kind of scare them into not moving forward. And I’d 

love your thoughts on that at a later point. 

Mr. O’CARROLL. Okay, because we believe, as with Puerto Rico, 

it’s a good deterrent on it, and also our belief is to stop it before 

they go out in terms of what we have at the CDI units that I’ll talk 

about later to stop it before benefits—— 

Ms. SPEIER. So the CDR, there’s this huge backlog. How much 

money would we have to set aside so that these CDRs could be appropriately handled and save us $9 for every $1 we spend? 

Mr. O’CARROLL. I’d have to get back to you on the exact amount 

that what it is. What we’re asking for is them to be doing more 

than 500,000 CDRs a year. We would like that to be doubled, and 

that would then have a better effect. 

Ms. SPEIER. Maybe in an subsequent conversation we can ask 

Mr. Sklar. 

Mr. LANKFORD. I will just do that right now, if that’s okay with 

you. 

Mr. Sklar, do you know the number on that. 

Ms. LACANFORA. If I might respond? 

Mr. LANKFORD. We’ve brought a technical expert with you. 

Thank you. 

Ms. LACANFORA. So in the fiscal year 2014 President’s budget, 

we have a request. We call it the Program Integrity Administrative 

Expense Proposal, and we are asking for $1.2 billion. If we were 

to get that money, we would be able to do just over 1 million medical CDRs. 

Ms. SPEIER. And you project what kind of savings from that? 

Ms. LACANFORA. Oh, that I don’t have off the top of my head, 

but I can get you that. 

Ms. SPEIER. Well, if it’s $9 for every $1, we can basically make 

that case. 

Ms. LACANFORA. Yes. 

Mr. O’CARROLL. It could be even be more than that. 

37 

Mr. LANKFORD. Your recommendation on this is 500,000; youall’s request is a million. 

Mr. O’CARROLL. No, I had said double. 

Mr. LANKFORD. Okay. 

Ms. LACANFORA. So this year we did almost 500,000, so—— 

Mr. LANKFORD. Okay, got it. So it’s an additional 500,000 then. 

Mr. O’CARROLL. Yes, Mr. Chairman. 

Mr. LANKFORD. Thank you. 

I yield to Mr. Farenthold. 

Mr. FARENTHOLD. Thank you very much. And I would like to follow up on the CDRs for a second as well. You said there’s a huge 

backlog. Did I miss the number? Do we have the number that we 

need to be doing? 

Mr. O’CARROLL. Yes, Congressman, 1.3 million is what the backlog is right now. 

Mr. FARENTHOLD. I just want to make sure I copied that correctly. 

Now, Mr. O’Carroll, let me ask you this: So as you go through 

the CDRs, you’re finding folks who have either gotten better—but, 

I mean, how many of these are fraudulent claims to begin with 

that you’re looking at? I mean, is the money better spent looking 

at it after the fact, or is the money better spent kicking up the initial evaluation? 

Mr. O’CARROLL. Very good question. What we feel is that, one, 

once they get on, it’s very difficult to know whether they were disabled at the time that they got on, with the idea of the CDRs is 

to catch—not catch, but to identify them if they have improved. 

Mr. FARENTHOLD. I’m good with ‘‘catch,’’ because if you’re filing 

a fraudulent claim, you’re ripping off the American people. I’m 

okay with ‘‘catch.’’ 

Mr. O’CARROLL. Okay, good. 

The other one, I guess, is it’s easier—rather than letting the animal or the horses out of the barn and trying to catch them, our 

thought is to keep them in the barn or to keep people from getting 

the benefits in the beginning if they are not entitled. And that’s 

one of the reasons why we try to have our cooperative disability 

units where if a person comes in reporting to have a disability on 

it, and the disability examiners find that this doesn’t really, you 

know, track correctly on it, they refer it to this unit, and then this 

unit will be taking a look at either—a couple of things. One is the 

different types of records out there. So, for example, if a person is 

coming in saying they are extremely sight impaired, and we take 

a look and run information on motor vehicles and find out they 

have a commercial driver’s license, I guess that’s what we’d call a 

clue. 

Mr. FARENTHOLD. Right. 

Mr. O’CARROLL. Other ones that we look at is results—it’s sort 

of interesting. We are now going to social media where a person 

comes in and says that they’re incapable of walking or being in 

crowds. And we take a look at their Facebook page, and it shows 

them in a band or a social group that’s out there working all the 

time where we have pictures of them, you know, doing other 

things. 

38 

Mr. FARENTHOLD. Let’s get back to the fraud in general. We 

talked about going and getting the money paid back and getting 

fines. Are the penalties a sufficient deterrent, or do we need to be 

looking at kicking up the penalties as well? 

Mr. O’CARROLL. Congressman, I would say that the penalties 

that are out there now for people committing fraud against the government are good. They are a good deterrent on it. The problem 

with it is getting the prosecutions for it. In our cases what we’re 

finding is it’s very difficult to be able to show that much of a loss 

to government that a U.S. attorney’s office would be interested in 

putting into all the resources to take a person to trial. 

Mr. FARENTHOLD. What about penalties for enablers; that would 

be doctors or lawyers that continue to prosecute or authorize or 

document these claims? 

Mr. O’CARROLL. The penalties are there. They’re strict. I’ve got 

to tell you on one good example that we’re having, which has gotten a lot of publicity, is within Puerto Rico where we had a bunch 

of doctors and others, nonattorney reps and reps that were bringing people on. The U.S. Attorney’s Office there—I was down there 

and met with the U.S. attorney on it. She assures us that, one, the 

penalties will be strict, that they’re going to be enforced, and that 

there should be jail time involved. So I think that we’re going to 

have a very good signal that is sent on that when they use the laws 

to enforce it. 

Mr. FARENTHOLD. Again, some disabilities are temporary in nature can improve with medical treatment or technology, improve to 

where that disability is not as disabling, I guess, if you will. Do you 

think there are adequate incentives within the system for a person 

to work whatever programs, say, their physical therapist gives 

them, or to continue treatment for whatever mental disorder, or is 

there a sense, well, I’m on this for good, I’m just going to—I don’t 

have to work, I’m getting a check in the mail? 

Mr. O’CARROLL. Well, let’s put it this way: I would prefer the latter not be the word that’s out there on the street. And what we’re 

hoping to do is to send a signal that if you have improved, you 

shouldn’t be getting the benefit, and what we’re trying to do with 

that. 

By the same token—and I got to say as we monitor that, the SSA 

takes a look at what are the risks—not the risks, what are the success rates of different types of illnesses, et cetera, and then those 

are the ones that we’re saying should be brought in for the CDRs. 

Mr. FARENTHOLD. Listen, I don’t think any of us here want to 

deny benefits to somebody who needs benefits. We need to make 

sure that there’s adequate resources to provide benefits for everyone who needs it, while still encouraging people to live a good and 

fulfilling life. I find that I’m a whole lot happier when I’m actually 

out doing something and not sitting at home. 

I yield back. Thank you. 

Mr. LANKFORD. Ms. Duckworth. 

Ms. DUCKWORTH. Thank you, Mr. Chairman. 

The Social Security Disability Insurance and Security Income 

program provide a critical lifeline that allows nearly 12 million severely disabled Americans the opportunity to live dignified lives. 

The benefits that they earn through this program are very modest, 

39 

about $1,000, $1,100 a month, barely above the—at the poverty 

level. And they generally represent the majority of the income for 

the recipient. 

But knowing this, I want to make sure that people who don’t deserve it are not getting it. So, Mr. O’Connor—Mr. O’Carroll, I’m 

sorry, in your audit your office identified some issues regarding the 

termination of disability benefits following a CDS cessation determination. So even for the 500,000 that are being conducted and decisions are being made, if the decision is that—to remove the person from the—to terminate the benefits, I’d like to talk about how 

we go about doing that. And if you could talk a little bit about your 

recommendation for enhancing the ability of the processing system 

to perform automated terminations and the like. Since we do have 

a backlog, and we’re not doing quite enough, and when we finally 

do have a determination, are we actually following through? 

Mr. O’CARROLL. What we’re finding on that, Congresswoman 

Duckworth, is about—in our audit we found about 30 percent of the 

time that a person was identified as having improved and should 

have been ceased in terms of getting their benefits, that they 

weren’t enacted. And we found I think it was about half of that, 

16 percent, in the SSI side of the house. 

We made recommendations to SSA to automate that so they 

could get the word out immediately. And one of the things that we 

found when we did the audit at that time was that many times 

once the disability review was done, it was put on a piece of paper, 

put on the front of the folder for that individual on it, and then 

when it got refiled or whatever it was, the termination notice 

slipped off, was not found or whatever, and it never was enacted. 

As a result of that, we told SSA that it would make much more 

sense to automate this so that when the person is turned off when 

the record is pulled up, that it’ll show that they were declined, and 

that it would be done much more quickly. That we recommended 

to SSA, it was part of our—they agreed with us on it, and they said 

that they’ll implement it with resources allowing. 

Ms. DUCKWORTH. It hasn’t been implemented? 

Mr. O’CARROLL. I think I’ll turn to SSA on that one. 

Mr. LANKFORD. I’m going to ask you to turn your microphone on. 

Ms. LACANFORA. My apologies. 

There’s a two-part process that we’ve undertaken, and we appreciate the work that the inspector general did. It was very helpful 

for us. And the first part of our process is that although the termination of a continuing disability review is not automated, we are 

doing what we call runs. So in other words, we go into the system 

annually, and we look for those cases in the same way that the IG 

did when they identified the ones that weren’t getting terminated. 

So we have been doing that now for a couple of years, and we will 

continue to do that to make sure that there are none slipping 

through the cracks. So that’s part one. 

Part two, which is our longer-term plan, is to fully automate the 

process. It’s a little bit more complicated than meets the eye, but 

we do intend to do that. In the meantime we will do the annual 

run or the sweep to make sure we don’t have cases falling through 

the cracks. 

40 

Ms. DUCKWORTH. So if we’re looking at about 16 percent are not 

actually being carried through, roughly, Mr. O’Carroll, is that 16 

percent of the 500,000? 

Mr. O’CARROLL. That’s 16 percent of SSI. 

Ms. DUCKWORTH. Of SSI. 

Mr. O’CARROLL. And DI, the disability side, is a much higher percent. It’s almost 30 percent weren’t. And that was also, too—I got 

to say not at all, and I guess a delayed one, about 3 months at 

least. 

Ms. DUCKWORTH. Okay. Ms. LaCanfora, how much—when you’re 

going through manually and doing this review, are you catching 

the 16 percent on SSI and the 30 percent on the disability? The IG 

is saying that that’s what they’re seeing. 

Ms. LACANFORA. Yes. We didn’t corroborate their numbers, because their numbers obviously were a sample that they took, and 

then they projected those numbers against the entire universe. We 

are not, you know, tracking the percentages per se, but we are 

making sure that we capture them. So we’re using sampling criteria to look at any case where the DDS has or the ALJ has decided that that person is no longer disabled and making sure that 

that decision is carried all the way through to our payment records 

in every case. 

Ms. DUCKWORTH. What’s your projection for stage 2? How long 

is that going to take to implement, to go fully automated? 

Ms. LACANFORA. I’m very encouraged by the discussions that 

we’ve been having in the agency and our ability to do that, so while 

I don’t have a timeline, I’m hopeful that it will not be far off. 

Ms. DUCKWORTH. Five years, two years, ten years? 

Ms. LACANFORA. Two or less. 

Ms. DUCKWORTH. Thank you. 

Mr. O’Carroll, in your testimony you said that the IG’s has long 

placed a high priority on allegations of third-party facilitator fraud. 

What other initiatives are taking place to root out third-party 

facilitator fraud? 

Mr. O’CARROLL. Congresswoman, that’s sort of—one of our 

thoughts when we came up with Puerto Rico and some other places 

on it where it looked like outsiders were facilitating people getting 

onto the rolls, what we decided to do was take sort of a hybrid of 

what we use with our CDI units where we have local law enforcement as well as our agents involved, and what we’ve started to do 

was to start using automated records going through trying to look 

for any type of association, looking for the boilerplate diagnoses, 

other issues on it. 

We’ve got pilots going in the California region and the Chicago 

region right now, and what we’re doing with it is that we’re identifying anybody who’s bringing large amounts of people onto the rolls 

and making sure that all of their ways of doing it is legal, and that 

it’s not bending the rules or whatever on it. So we’ve got a team 

which we have an administrative law judge that’s assigned from 

ODAR working with our investigators on it, and we’re trying to 

look for any anomalies in terms of people coming on. Like I say, 

we’ve been doing that pilot for about 8 months now, and we’ve got 

about four different major investigations going because of it. 

Ms. DUCKWORTH. Thank you, Mr. Chairman. 

41 

Mr. LANKFORD. Thank you. 

Mr. Horsford, before I recognize you on that, just to let you 

know, when Mr. Horsford concludes, I’m going to open this up for 

colloquy for all of us to be able to engage in a conversation with 

our witnesses. So we’re going to shift from a 5-minute time period 

to just an open colloquy. So if you want to participate in that, 

you’re obviously welcome to do that as well. 

Mr. Horsford, you are recognized for 5 minutes. 

Mr. HORSFORD. Thank you, Mr. Chairman. I would like to thank 

you for your opening comments to Mr. Sklar that this is in no way 

personal, and actually, in fact, under his leadership, there have 

been major improvements on the administration side of the aisle, 

improvements that we need to keep making progress towards. 

But unfortunately, there also seems to be some misrepresentation of some of the facts that are being presented today. And so I 

want to kind of just allow the opportunity for some of our witnesses 

to bring forward all of the information that the committee should 

consider. 

Mr. Sklar and Judge—is it Bede? 

Judge BEDE. Bede. Close enough. 

Mr. HORSFORD. Apologize for that. 

Does the allowance rate of the judges the majority identifies 

today say anything conclusive about whether or not the judges correctly applied the law and agency guidance to the applications for 

disability benefits that came before them? 

Mr. O’CARROLL. I’ll take it first, and then I’ll let Judge Bede 

jump in. 

I will say the allowance rate right now is probably at a 40-year 

historic low, so that’s just an observation, and we’ve been very consistent in pushing the policy compliance message. I believe the 

judges are really responding well not just to training, but to automated tools, to feedback. They’ve shown a willingness to listen, and 

I’m really impressed. 

So, Judge Bede, other thoughts? 

Judge BEDE. No, I would agree with that and also indicate that 

the mere fact that a case has been seen twice by the State agencies 

and yet is reversed by the administrative law judge does not mean 

that either one of them was wrong. At the time the DDS, the Disability Determinations Service, ruled on the case, it may clearly 

have been that the claimant was not disabled. By the time it gets 

to an administrative law judge, time has passed, the record has 

been augmented, the claimant’s condition may have deteriorated. 

And so what was once a clear affirmation that the claimant was 

not disabled becomes a clear reversal that the claimant is now disabled. So the figures themselves may lead you to feel that you have 

to look behind the facts, but they don’t establish any correctness 

or incorrectness. 

Mr. HORSFORD. So the allowance rate alone doesn’t say anything 

about the quality of the decisions? 

Judge BEDE. Absolutely. 

Mr. LANKFORD. Would the gentleman yield for one moment? 

Would that include a judge that approves 99.4 percent of all cases, 

because we have some judges like that as well? Should that raise 

a red flag? 

42 

Judge BEDE. Well, it should raise a red flag, but it does not mean 

that any particular case was wrongly decided. 

Mr. LANKFORD. I do understand that on that, but there is some 

signal with that as well to say there may be an issue here at some 

point. 

Judge BEDE. Absolutely. 

Mr. LANKFORD. I yield back. I apologize. 

Mr. HORSFORD. I think the issue, Mr. Chairman, becomes the 

fact that we’re not providing all of the cases, and it’s my understanding that the Appeals Council’s job is to actually perform the 

reviews of judges’ decisions and collect information on the quality 

of those decisions; is that correct, Mr. Sklar? 

Mr. O’CARROLL. Yes, that’s correct. And just to provide a little bit 

of perspective, I know we spent a lot a time talking about fraud 

and antifraud measures this morning, but for perspective it is important to recognize that the fraud incidence rate in this program 

is really quite low, typically less than 1 percent, and our overhead 

cost runs about 2 percent. 

So it is a well-run program. I know in any system you can always do better, and that’s why we’re here. We’re glad the committee is having this hearing, and we welcome the feedback. 

Mr. HORSFORD. Mr. Sklar, in the presentation of the charts earlier, did the majority ever ask you for statistics on the quality of 

judges—the decisions before they put up the chart on the allowance 

rate of certain judges? 

Mr. SKLAR. I’m not aware of that particular request, no. 

Mr. HORSFORD. And so how is it, then, that we were able to then 

just see a certain select few decisions by judges rather than taking 

into account the decisions of a larger percentage that reflect all the 

work of the administration? 

Mr. SKLAR. I think it’s a fair point. Again, it’s a very large corps. 

There are over 1,500 judges, and I’m sure there are judges on the 

low end of the spectrum as well we could have put up on the screen 

with allowance rates around 10 percent. 

Mr. HORSFORD. So can you provide that information to the committee? 

Mr. HORSFORD. And, Mr. Chairman, can we have as a part of 

this conversation—I know this is the second hearing that you’ve 

held on this issue, but I think it will be worthwhile for the committee to see both the high and the low range and the full scope 

rather than just highlighting, you know, 142, which represent 

about 10 percent of all the judges’ decisions rather than, you know, 

the full scope and the range. 

Mr. LANKFORD. I would have no issue trying to provide that to 

both sides, and we try to be very fair to be able to provide everybody all the data on it. Our issue on it is, there are truly disabled 

people, that we’re about 2–1/2 years away from insolvency in this 

program, that can be hurt on this if we don’t find a way to be able 

to resolve this issue soon. And I do not want the truly disabled to 

be hurt in this process while some people, whatever small number 

that may be that we are aware of we’re not catching. 

And in the ALJ process, if we’re not able to do reviews, if there 

is a judge that’s out there that is not held to account and there’s 

not a good process to hold someone to account in that, we need to 

43 

find a way to do that. All of us have accountability, all of us, and 

so there should be clear lines of accountability that when there’s 

a problem we address it whether it’s low or high, either way. 

Ms. SPEIER. Could I just ask a follow-up question? You referenced, Mr. Sklar, that the actual fraud rate is very low, less than 

actually the administrative costs, which is important to keep in 

mind. But is that fraud rate low in part because we don’t have the 

resources to do the CDRs? And that’s a question really to you and 

to Mr. O’Carroll. 

Mr. O’CARROLL. I guess the first one, the only thing, that I always get put in the position on this one, the agency says that it’s 

less than 1 percent for the amount of fraud, is our concern on it 

is, is when you have billions of dollars going out every day, 1 percent is a very high number, and to any taxpayer any dollar that’s 

misspent is a high number to it. 

So our feeling on it is, is that, yes, we’re taking a look at—when 

you take a look at improper payments and you go across the board 

for improper payments, the improper payment level for SSA is less 

than 1 percent. That’s improper payments, and that’s ones that 

shouldn’t go out. And of that, a portion of it or a large portion of 

it is fraudulent, which is what we’re taking a look at. And our feeling on it is, is any antifraud methods that you can be doing to discourage fraud or good CDRs, as you brought up, is one. 

If we did more CDRs on it, it would have two effects. One, we 

would identify people that are being put on—or that are getting on 

the rolls that shouldn’t be put on the rolls, which would identify 

the fraud, and the other part of the CDRs is as a deterrent, just 

so that you know that when you are getting better, if it’s a 50/50 

whether you’re going to come in and say that you’re better and ask 

to be removed from it, it lets everybody know that the agency is 

going to be checking back to see if you got better. And I think 

that’s something that we all hope for is, is that we give you benefits and that you get better. 

Mr. LANKFORD. Just to clarify before I move to Ms. Lujan Grisham, we are going to recognize you for 5 as well, the 1 percent 

number, that is improper payments, in other words we sent a payment to someone that they either shouldn’t have received that or 

they’re deceased now or whatever it may be. That’s not a statement 

of we have 1 percent of people that if we were to go out and test 

in the field with CDRs, we only have 1 percent of the folks that 

are receiving disability that shouldn’t receive disability. Is that 

clear? 

Mr. O’CARROLL. Correct, Chairman. 

Mr. LANKFORD. Okay. 

Ms. SPEIER. So it could be higher? 

Mr. O’CARROLL. Yes. 

Mr. LANKFORD. Ms. Lujan Grisham. 

Ms. LUJAN GRISHAM. Mr. Chairman, thank you very much. 

And, panelists, thank you very much for being here today. 

We all agree, we want a zero percent, if that would ever be a realistic number, we want there to be no bad actors and we don’t 

want any mistakes. We don’t want constituents who are trying to 

receive disability benefits who don’t qualify, and we don’t want 

folks in the administration making mistakes. And anything that we 

44 

do in this committee, anything that you do that improves the opportunity for these programs is meaningful. And I appreciate the 

chairman’s statement that, you know, we want to make sure that 

we do everything we can to have a benefits program that’s available for future and current folks who are waiting for these disability benefits. 

But I would point out a couple of things, and one is that folks 

on disability, you know, can be stabilized, we hope, and some 

things improve, but they’re permanently disabled, they don’t get 

better. It’s kind of like the Medicaid program for persons with developmental disabilities, and across the country we require a level 

of care review every year, and as far as I know, you cannot cure 

Down Syndrome. So you have that every year unless there was a 

pretty significant misdiagnosis early on. 

People live longer. These programs are going to be more and 

more expensive. And it is something that we are going to have to 

think about as future policymakers, about what we spend, clearly, 

and how we do that, and what we can do to prevent disabilities and 

maybe get beyond a growth rate that we see in this country. And 

coming from a State where we have some of the highest disability 

populations, and just disabilities due to accidents from alcohol, significant issues that we could certainly as a State work harder to 

do a betterjob. And of course, you know, I worry as much as anyone 

about the fact that not only do you take a long time—thank you 

for improving that to a year. In my poverty law days it took 3 years 

to get somebody’s disability application approved, and then I would 

have to explain to them how they didn’t get any health care benefits for 2 years but had been deemed disabled and sick. 

So it’s still a tough, since the Medicare benefit is 24 months later 

after the disability determination, it’s a program that’s got some interesting—you get sicker before you get better, but then we’re worried about how much money we’re spending and what the efficacy 

is. And I could spend 3 more minutes before you ever get to anything about what you’re doing currently about a program that we 

just don’t do these programs right. We’re still learning how to 

make them fair and judicious, effective, and keep out fraud on all 

ends for these programs. 

So I just wanted to say I appreciate those efforts. I think they’re 

important. And like everybody here, I expect government programs 

to work, and I want to ferret out folks who are taking advantage 

at any level, both providers, judges, and the administration, and 

constituents, and however they’re taking advantage. 

Given that you have had lots of questions about the judges’ actions and what you’re doing in your quality review process, I’m 

going to talk a little bit more about the error rate, and I don’t think 

given what I’ve heard today or read that the approval rates don’t 

demonstrate whether the benefits are correctly or incorrectly denied. 

So it’s my understanding, then, Mr. Sklar, that the Division of 

Quality reviews a random sample then of the ALJ decisions to 

award benefits. Am I correct about that, that it’s all random? 

Mr. SKLAR. Yes. 

Ms. LUJAN GRISHAM. And then based on that random review, 

how often do we identify that the benefits are incorrectly awarded? 

45 

Mr. SKLAR. Again, I could supply that information for the record. 

It’s pretty technical, and I don’t want to take you down the wrong 

path. But we are using that data to inform future policies and to 

give feedback to the judges. We give it to them in real time, and 

we’re seeing significant behavioral changes on behalf of the judges. 

Ms. LUJAN GRISHAM. I would really be interested if it’s all right 

with the committee and the chairman that we continue to get that 

information because then it really goes to, as you do those random 

reviews, you’re seeing a change of behavior, I would be interested 

in what that indicates, what we think that indicates so that as 

we’re looking at resources for the CDR and related programs that 

there’s a partnership about what really makes a difference. Because as you then go to the appeals portion, how often then does 

the appeals council reverse those judges’ decisions? Do we have 

that data? 

Mr. SKLAR. So just one quick comment. There also is a second 

type of review done by the Division of Quality. We also do focused 

reviews. Those are after the money has gone out. They’re closed 

case reviews. But in that instance you actually can be a little bit 

more targeted, you can look at individual ALJs, you can look at individual hearing offices or representatives or a combination of representatives and judges working together. Whatever you want to 

look at you can look at, and we do pick areas where we think it 

will be productive. 

Ms. LUJAN GRISHAM. That would be great. So, again, with the 

committee’s approval, I would love more information about the focused reviews, and instead of asking—and this has been helpful. I 

also believe that there’s a certain number of people who don’t know 

that they should appeal, poor advocacy advice, poor legal advice, 

disability prevents them, particularly if it’s a mental health disability, can’t get it done. Is there a process to take a look at how 

many people should have been approved those disability benefits 

but are never in a position to actually do the appeal? 

Mr. SKLAR. From time to time we do take a look at unappealed 

cases. We can try to get you whatever data we have. That actually 

might fall more under the purview of our policy folks as well, but 

we’ll put together what we can on appeal cases. 

Ms. LUJAN GRISHAM. I would love that. I would love, frankly,— 

I’ve only got a couple—I think I’m over—as much information 

about what we could do and how we could do this better so that 

folks get those benefits when they need them. We’re spending less 

then on the care and services that they need, but that income gives 

them an opportunity to access the healthcare system and related 

supports, including housing as an example, and that this whole 

process is streamlined and effective so that we’re making the best 

decisions about preserving it for future beneficiaries. 

Thank you, Mr. Chairman. 

Mr. LANKFORD. Thank you. 

Ms. LUJAN GRISHAM. I yield back. 

Mr. LANKFORD. We will get into some of those conversations 

right after I recognize Mr. Walberg. 

Mr. WALBERG. Thank you, Mr. Chairman. 

46 

And thanks to the panel for being here. Sorry I missed much of 

it being in another committee hearing. But I did have some questions, especially flowing from our last opportunity on this issue. 

Mr. O’Carroll, what are the actual savings, I would be interested 

to know, associated with CDRs or redeterminations? 

Mr. O’CARROLL. Congressman, what we found with CDRs, it’s 

about a 9–1 return on investment, and with the SSI or the redeterminations it’s about a 5–1. However, last year when we went back 

and—— 

Mr. WALBERG. For each dollar spent, there’s $9 gained. 

Mr. O’CARROLL. Yeah. 

Mr. WALBERG. Or $5 gained in the case of—— 

Mr. O’CARROLL. Yes, Congressman. We figure it’s about $1,000 

to do a CDR, and then when you start taking a look at for every 

CDR that a person is turned down or is off the rolls, it’s a significant savings on it. So that’s where we’re figuring the 9–1. 

However, we went back, and that’s over a long period of time. 

Last year, I guess in 20—yeah, last year, we took a look at it again, 

just to see in a 1-year period what the return on investment of it 

was, and at that time it went up to 13–1. So it’s a very, very, you 

know, cost-effective way of doing it, these CDRs, it’s a good investment. 

Mr. WALBERG. What recommendations then have been made and 

what has SSA done to address the CDR backlog? 

Mr. O’CARROLL. Well, recommendations—and I’ll let SSA answer 

what they’ve done on it—our recommendation was to do more of 

them to reduce the backlog because when you figure for every year 

that the backlog remains where it’s at, it’s over a billion dollars 

that could have been saved by reducing the backlog on it. So we’re 

telling SSA, one, to stay current, which would be not to increase 

the backlog on it. And they’ve been doing a fairly good job of staying current on it. So the backlog hasn’t been growing. In fact, it 

was staying flat. Last year it went up a little bit. It went up about 

100,000 last year on it. So our recommendation to SSA is to put 

more resources towards CDRs so that, one, they’re staying current, 

and, two, they reduce the backlog on it. 

Mr. WALBERG. Do you feel they’ve been doing that, putting more 

resources to it? 

Mr. O’CARROLL. I think they have been doing more on it. I don’t 

know whether they’ve done—I think, to my liking, they should be 

doing more. But I’ve got to say is over the last few years that their, 

you know, integrity work that they have been doing is increasing. 

It’s staying, as I said, current, which is very good, so the backlog 

hasn’t grown. 

So, one, I guess the best thing I can say is we encourage them 

to do more. We’re asking probably also, too, is we’re in agreement 

with them, if money is earmarked or designated in the appropriation to be done on the CDRs, they will do it. And whenever they 

are given extra money to do CDRs, they are done. 

So I guess the thing that I could take away from this is, is that 

we encourage an integrity fund be established that forces them to 

do CDRs, and that way any other competing resource issues that 

they have won’t reflect on it, and they will do the CDRs and do it. 

47 

Mr. WALBERG. Okay. Before I go to Mr. Sklar, how many taxpayer dollars would be saved per year if SSA performed CDRs on 

time? 

Mr. O’CARROLL. What we’re saying right now is, is between 1 to 

2 billion dollars is saved every year by reducing the CDRs and 

doing them all on time. 

Ms. LACANFORA. May I offer a number as well that might help 

to answer your question? And this was an answer to a question 

that Ranking Member Speier posed earlier in terms of the return 

on investment. So Mr. O’Carroll said that the return on investment 

is $9 saved for every $1 spent. And another number that you may 

find handy is that in this fiscal year, fiscal year 2012, we’re asking 

for $1.2 billion to be able to do CDRs, and if we get that money 

we could do just over 1 million CDRs. And if you include the 

amount of Medicare and Medicaid savings that we would get if we 

spent that money, it would amount to $40 billion over 10 years in 

savings. 

Mr. WALBERG. Okay, thank you. 

Mr. Sklar, will the agency prioritize erasing the 1.3 million backlog of CDRs. 

Mr. SKLAR. Actually I’ll defer to my counterpart. 

Ms. LACANFORA. We share your interest in getting current with 

CDRs. We think it’s one of the most critical responsibilities that we 

have. 

Mr. WALBERG. With those type of dollars, I would hope so. 

Ms. LACANFORA. That’s right. And we have shifted resources. To 

your question earlier about have we committed and have we made 

progress, in every year since 2007, with one small exception, we 

have increased both the number of medical CDRs and SSI nonmedical redeterminations. Right now we’re at an all-time high, over a 

million SSI nondisability redeterminations performed in the last 

fiscal year. 

So what we’re asking for from the Congress is the adequate funding to be able to continue along those lines. And in terms of shifting resources, we have done that. I think this committee knows 

that we close our field offices to the public 8 hours a week. We 

close at noon on Wednesdays, we close an hour earlier every day 

than we used to. And we did that specifically so that we could focus 

more attention on program integrity work instead of dealing directly with the public, taking claims. 

Mr. WALBERG. Thank you. 

Mr. LANKFORD. For those that are here on the dais that have not 

been in one of these conversations before, what I’m going to do is 

I am just going to open it up to open conversation, not do a limited 

5-minute time period. We are going to try to run through a bunch 

of questions, and that allows interaction both here on the dais and 

with the witnesses as well. We have a lot of issues that I want to 

make sure that we get covered. It’s sometimes difficult to do in a 

structured 5-minute time period. 

And what we have talked about briefly as we started this hearing, and what I spoke with you about before the hearing started 

as well is it’s one thing to talk about the problems, we’ve got to 

talk about solutions. And so what I would like to do is run through 

some of the things that have been proposed, either the IG has proVerDate Aug 31 2005 09:38 Feb 12, 2014 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 C:\DOCS\86479.TXT APRIL
48 

posed or we have heard from Senate committees or other House 

committees here, or, Mr. Sklar, you actually laid some of these 

things out in the past, and to be able to run through what are the 

ideas of how do we fix this, where do we go. 

And so I would like to just start kind of peppering through this, 

and we’re able to interact at a new level. If you have another statement that you want to jump in on, we’ll jump in as we go. 

Let me ask the first question on it. As far as the limited dollars, 

more dollars should be invested in the CDR side of it or the CDI 

side of it or is it just at both ends? Which one gets us a greater 

bang for the buck, actually doing more investigation before they get 

in at the beginning or more investigations once they’re actually in 

the system? 

Mr. O’CARROLL. Boy, that’s a tough question. I’ve got to say on 

both of them, what we’ve asked for with the integrity fund is considering both of them, because also the other issue, what gets it a 

little more complicated is, is when CDIs are done, and if as a result 

of doing—I’m sorry, when a CDR is done, if as a result of it there’s 

something either questionable, suspicious, or anything that needs 

some follow-up investigation on it, that’s where the CDI units come 

in handy. And we found by working with judges and ODAR, if 

there’s a question that comes up in an appeal, the CDI units are 

equipped to be able to go out and be able to validate or find more 

information on it. So I’ve got to say they’re both linked very closely 

together, and if there was anything in terms of guidance from an 

integrity fund I would like them both to be considered. 

Mr. LANKFORD. Is it the assumption, if you’re talking about the 

$1.2 billion, is the assumption that it’s for both or is that just 

CDRs? 

Ms. LACANFORA. That’s strictly medical CDRs. 

Ms. SPEIER. So what’s a CDI then? 

Mr. O’CARROLL. A CDI unit is basically what we’re taking a look 

on. The bottom line is it’s about $100,000 per CDI unit, and 

that’s—— 

Mr. LANKFORD. And they’ll do how many cases with that? 

Mr. O’CARROLL. And of that we have 26 CDI units in 21 States 

at the moment on it. We would like to expand it into all the States. 

And what happens with that on it is, is the IG supports the investigator in it, SSA supports the location as well as the local investigators on it, the DDS employees, and the MSS or Social Security employees. So most of the expense goes to SSA. 

Mr. SKLAR. If I could just jump in on this, too, I’m a bit of a compromised witness on this one in that I helped set these up about 

15 years ago. I think they’re a tremendous value. They’re front-end 

fraud detection. We’ve had a lot of discussions on the podium about 

how much to get back after the money has gone out the door, and 

we all know not that much. 

Mr. LANKFORD. Right. 

Mr. SKLAR. We do the best we can. We have collection tools. But 

ultimately you’re getting pennies back on the dollar. You have to 

catch it at the front end. And it’s the type of cases, the complex 

fraud conspiracies that Mr. O’Carroll’s office has been working on 

and we try to support that you can use a CDI unit to get at the 

49 

front. So I would be a strong advocate. I’ve never understood why 

we don’t have a CDI unit in every State. 

Mr. LANKFORD. How do we fix that? Give me just a for instance 

here. When you’ve got a Judge Daugherty who is 99 percent approval, all the issues that come up, you’ve got to look at the focused 

review of the judge and how do we even get into this process, but 

a CDI should have caught this early on or some kind of process to 

say we have a problem here. So it’s either a focused review of the 

judges or it’s some kind of investigation at the beginning of it to 

determine same doctors, same judge, same process, all run out of 

a few trailers in West Virginia, maybe there’s a problem here; yes, 

there is. And obviously the IG is able to identify that and start 

working through the process. That’s part of what my question is, 

how do we get it on the front end? 

Mr. SKLAR. This is actually the infrastructure to get in on the 

front end. I’ve always been confused why we haven’t been funded 

to have one in every State. I think it’s very important. 

Ms. SPEIER. Okay, but to that point, Mr. Bede, you’re in charge 

in West Virginia, correct? 

Judge BEDE. I am not currently involved in the operation of the 

Huntington, West Virginia, office. 

Ms. SPEIER. But you were? 

Judge BEDE. I was, until the Wall Street Journal article. 

Ms. SPEIER. Okay. So in hindsight now, do you feel that there 

should be some role for a person like you in each office to review 

the work of judges to see if there is any kind of collaboration going 

on? Did you miss that? 

Judge BEDE. Well, I’m not in West Virginia, and in the local office there could be, if it becomes clear to other people—in this office 

apparently one judge was doing this, and it was not, at least at 

first, clear to other people in the office. So if he isn’t going to report 

it—— 

Ms. SPEIER. Well, he’s clearly not going to report it, right? 

Judge BEDE. Right. 

Ms. SPEIER. I mean, He’s part of the cabal? 

Judge BEDE. It makes it very difficult. 

Ms. SPEIER. So I guess I’m trying to understand, is everyone so 

autonomous that there’s no oversight of any of these judges? 

Judge BEDE. Well, no, that’s not the case. There is certainly oversight. But what we’re saying is that we cannot tell a judge how to 

decide a case. 

Ms. SPEIER. No, but we’re not asking that. 

Judge BEDE. Right. No, I recognize that. But once it’s decided, 

it falls into the purview of the Office of Appellate Operations. I 

don’t have the staff or—well, I just don’t have the staff to look at 

every judge’s decision every day. 

Mr. LANKFORD. Do you have the authority to step in, though? If 

you have a suspicion that that there’s a problem, who has the authority to step in? 

Judge BEDE. Yes, if I have a suspicion or if a suspicion is raised 

that there are unsavory activities, then we would look at that, and 

we would probably refer it to the Inspector General’s office, and obviously keep our—the Chief Judge’s office and the Deputy Commissioner’s office in the loop as well. 

50 

And that’s what we have done in other cases, and none of them 

as significant as this, but there have been other doctors who no 

longer have licenses, reports—— 

Ms. SPEIER. Some of those things are really obvious. 

Judge BEDE. —medical reports that are the same for—— 

Ms. SPEIER. I mean, if someone’s dead or someone doesn’t have 

the ability to practice medicine anymore, those are gimmes. This 

is where there’s a concerted effort, a cabal to, you know, rig the 

system. 

So, Mr. O’Carroll, you have a comment to make here? 

Mr. O’CARROLL. Thanks. One of the comments that I made 

amongst our own Office of Inspector General is, is I don’t want to 

have to be reading about another hearing office or anything else in 

the newspaper on it. I would rather us identify it in advance. And 

so as a result of that, we have a group working with Glenn Sklar’s 

office on it on trying to look for outliers or try to find, again, somebody, any type of connections between lawyers and judges or anything elsewhere where we’re taking a look at doctor providers that 

are all doing this thing. 

So, anyway, I’ve got to assure you is, is that we’re doing everything we can to be working with the office of ODAR to identify any 

anomalies out there and try to stop them before they happen. And 

I’ve got to say Huntington got by us in regard to—there’s a lot of 

issues on it that came out at the last hearing on it and different 

things about it is, is that we’re trying to find what—I guess what 

went wrong and what we can use to identify it. That’s why we have 

our pilot right now on disability fraud. 

Mr. LANKFORD. All right. Go ahead. 

Mr. SKLAR. I’m sorry, if I may. Just one comment. One thing that 

is really quite different. We have a very well developed electronic 

recordkeeping system now. We’re collecting reams and reams of 

data. And in many ways I would call it big data at this point where 

we’re going in and looking for patterns and anomalies and really 

leveraging modern technologies. We have experienced programmatic people, economists, statisticians plowing through the 

data to try to find the next problem. 

So I think if you look back, Puerto Rico is a good example of 

where we caught it, 4–1/2 years ago the employees in the Puerto 

Rico DDS found it and they turned it over to Mr. O’Carroll’s office. 

Ms. SPEIER. Four years ago, though. 

Mr. SKLAR. Well, it does take a really long time to put together 

a complex conspiracy case, and they had surveillance, and they 

needed to—there was a lot of work that needed to be done. We actually supported them many steps of the way. But Huntington was 

a little bit different. 

Ms. SPEIER. Well, how long has your big data been operational? 

Mr. SKLAR. I would say for the last 2 or 3 years, and quite frankly—— 

Ms. SPEIER. So you should have found Huntington. I guess I’m 

trying to—— 

Mr. SKLAR. Yeah. 

Ms. SPEIER. I’m not trying to—— 

Mr. SKLAR. Yeah. 

51 

Ms. SPEIER. No one is trying to beat anyone up here. We are trying to find out what we have to do to make sure that there aren’t 

more Huntingtons in our future. And we do know one thing: If 

there is a void, people find a way to fill it. If there’s a void in terms 

of finding the Huntingtons, there are going to be Huntingtons all 

over this country, because there just happen to be folks out there 

that are going to try to rip off the system. It’s just the reality. 

And, Mr. Chairman, I just asked my staff to research this, and 

I think this is very helpful to this discussion. When the Affordable 

Care Act passed one of the things that was included in it was 

money for Medicare fraud over 10 years, $350 million over 10 

years, so it’s $35 million a year. In the 3 years that it’s been operational, so a total of $100 million that has been spent, they have 

already recovered $10.7 billion in fraud. So we know that those 

folks are out there, and they’re going to prey on the Medicare system, they will prey on the social security disability system. They 

will prey on any worker’s comp systems. 

They are professional rip-off artists, and it’s our job to shut them 

down and be smarter than them in terms of shutting the door before they even get to open it. So you’ve got to provide us more kind 

of help in what we need to craft so that you can get your job done 

and so that we don’t ever have to beat you up. 

Mr. LANKFORD. I fully agree on that. 

Let me walk through a couple of things as well, and other members should feel free to be able to jump in on issues here. On the 

claimant representatives, the duty of candor, issue to clear regulations requiring claimant representatives to submit all relevant evidence in advance. Are we in agreement? I know you mentioned before on this, Mr. Sklar, that this is a pilot in some areas. How is 

that moving? Where do we go from here? 

Mr. SKLAR. Things are moving pretty rapidly. We had a wonderful study done by the Administrative Conference of the United 

States. We took that study very seriously, we have had serious discussions back at Social Security. And I can’t say very much about 

it, but let’s just say something has moved from Social Security to 

the Office of Management and Budget in that regard. 

Mr. LANKFORD. Okay. Is that something we can talk about more 

off line? 

Mr. SKLAR. Yes. 

Mr. LANKFORD. Okay. 

Mr. WALBERG. Could I just jump in on that same issue, the duty 

of candor? Who represents the taxpayer in the hearing process? As 

I understand it, both sides aren’t represented? Who represents the 

taxpayer? 

Judge BEDE. Well, as an administrative law judge, there is a 

duty to represent, to protect the taxpayer as well as to ensure that 

the claimant gets a fair hearing, and all of our administrative law 

judges are aware of that and take it very seriously, possibly with 

the exception of a few judges who allow all of their cases. But it 

is part of the job of the administrative law judge to ensure that 

benefits are not awarded frivolously and that the government is— 

the trust fund is protected. 

Mr. WALBERG. But it seems to me, advise me if I’m off base, but 

if the hearings are nonadversarial, why does only one side have 

52 

representation? Are we missing something, especially when we’re 

talking about the load, the backlog, and all the rest that goes on, 

are we missing something in not having direct representation for 

both sides? 

Judge BEDE. I personally don’t think that having the government 

represented would add a whole lot to the process. I don’t know if 

Commissioner Sklar—— 

Mr. SKLAR. If I could just chime in really quickly on the history. 

This was set up, this program was set up quite some time ago as 

a nonadversarial program, and it has been enshrined in Supreme 

Court case law as such. We did try a brief array in the 1980s with 

a government rep project and were ultimately shut down by a combination of the Federal courts and outrage in Congress. 

Since that time we have made a lot of changes. We’ve actually 

beefed up the staffing behind the judges. For example, we do have 

clerks that marshal the evidence and exhibit the file and get everything ready, we do have decision writers behind the ALJs, we have 

senior attorneys they can turn to if they have a tough policy decision and they want to work up the file. So it’s not just the ALJ by 

himself or herself anymore. There’s literally four or five people 

standing behind every administrative law judge. 

Mr. LANKFORD. Can I ask you a question on that specifically? Are 

those, all those support folks around there, are they assigned to a 

specific judge or they’re still working with the pool? Because part 

of the conversation we had with the judges was they didn’t know 

which technical person was going to be assigned to them. Just that 

relationship between the judge and their assistant doesn’t seem to 

actually happen in this particular setting. I know there are some 

issues we talked about before, them being union and supervising 

and all those kind of dynamics, but is there a need to get decision 

writers and technicians assigned to specific ALJs, that they form 

that rhythm and know what’s going on, or is it your opinion that 

should not happen, they should continue to be a pool? 

Mr. SKLAR. Actually it’s somewhat interesting. We have both 

models running right now. 

Mr. LANKFORD. Okay. 

Mr. SKLAR. In the traditional hearing office model it is a pool 

model, and for various reasons you’ve mentioned previously they 

don’t directly supervise the staff. On the other hand, we have the 

national hearing centers, there are five of them nationally, they are 

all video units, they do only video cases, and they supervise their 

law clerks. And quite frankly, the judges love the model and the 

law clerks really seem to like the model a lot. 

Mr. LANKFORD. Is that something that could be multiplied out 

that you’re finding efficiency in or just preference? 

Mr. SKLAR. Again, it’s something that certainly could be expanded, and we’ve looked at it. But we do run into labor issues 

with that as well. 

Ms. DUCKWORTH. Mr. Chairman, I wanted to add on to this. I’m 

a little confused because I want to make sure that we understood, 

I have a better understanding, on what resources you need. Some 

of these things seems like these are models and pilots you’re putting into place so that you have the capability to do it, and then 

there are some issues that have to do with funding as a resource, 

53 

which is the 2014 budget looking at the money so that you can do 

the CDRs, over 1.2 million CDRs. 

Are there other things that you need from us to help you? For 

example, Mr. O’Carroll, you talked about the MIRS, the Medical 

Improvement Review Standards, and how someone who is incorrectly put onto, has been determined as being disabled, actually 

SSA has a hard time taking them off the rolls because those standards are there. Is that fix a legislative fix or is that an SSA fix? 

Mr. O’CARROLL. That one would be, I guess, a little bit of both. 

One is, is that by law, once they’ve been found, you know, as disabled on it, it’s impossible to go back and review it again, which 

is the whole issue of the improvement on it. If you’re incorrectly 

diagnosed, there’s no way you’re going to be able to show improvement. So that’s a little bit, one, by law, they’re entitled to it, and 

two is by SSA, you know, instructions. But the agency—— 

Ms. DUCKWORTH. So if one of these doctors that’s collaborating 

says that this person is disabled but they’re not disabled and 

they’re put on to the rolls, we don’t have a way to take them off 

or MIRS makes it that much more difficult to take them off? 

Mr. O’CARROLL. We can take them off. The exception on it is 

fraud, and if we can show there was fraud in the fact that they 

were put on it, yes, we can take them off. Good example on that 

was in Puerto Rico we have identified 71 people that doctors have 

put on erroneously on it. We can take them off and did take them 

off immediately because it was fraud involved. 

Ms. DUCKWORTH. But incompetence is not an excuse? 

Mr. O’CARROLL. No. 

Ms. DUCKWORTH. Okay. 

Ms. LaCanfora. 

Mr. O’CARROLL. And the other one, though, again, I guess on this 

one here what we’re talking is, is that you were asking what resources are necessary. I just want to go on record here is, is that, 

one, we talked about the CDI units and how effective they are and 

the return on investment on it, and I agree, and that’s very, very 

important. 

Another one that I’ve got to say is, is that, you know, in our case 

here we’ve got, you know, our auditors, as we saw with all this information that we’ve been able to give you in terms of the medical 

improvements and the CDRs, et cetera, is because of our audit 

work, and then in terms of trying to prevent anything as an example of, you know, Puerto Rico or any places where there’s a systemic attack against SSA, our investigators are there doing whatever they can. 

But I’ve got to tell you, our resources are very limited. Over the 

last few years we’ve had about a 10 percent reduction in staff, simply because we’ve stayed at level funding on it. As every cost goes 

up, 90 percent of my costs are really just on salary and, you know, 

and office, brick and mortar. So all I can do really is just keep subtracting staff in order to make our bills. 

So, anyway, when you’re asking what you can do to help us is, 

one of those things is for us to be able to get a set budget where 

we can, you know, be able to at least go back up to our allotment 

of investigators and auditors to be able to look into stuff like this. 

Ms. DUCKWORTH. Ms. LaCanfora, you wanted to say something. 

54 

Ms. LACANFORA. I just want to take a very quick opportunity to 

attempt also to answer the question about what you can do for us, 

because I think it’s twofold. One is adequate and sustained funding, not just the program integrity funding to do the CDRs, but 

adequate and sustained funding for the entire administrative budget. We have been operating for the past 3 years a billion dollars 

below the President’s budget request. Since 2010 we have lost 

12,000 employees across the Social Security Administration, making it increasingly difficult for us to just do the basic work that 

we’re tasked to do, let alone trying to solve some of the more systemic problems. 

And number two, I would just like to encourage the committee 

to continue highlighting the issues you’ve been highlighting because I can speak from a policy standpoint, we have a lot of irons 

in the fire, so to speak, we have a lot of areas in the policy realm 

where we’re looking to improve upon current processes, and we can 

talk about some of those. But I think it’s, you know, to the credit 

of the committee that you’ve prompted us to continue to think 

about these things and work hard to, you know, fill gaps where 

they exist. 

Ms. SPEIER. What about the appeal of a decision by the ALJ? The 

only appeal right now is an automatic appeal if it’s denied. What 

happens—on the one hand Mr. Bede says, well, the ALJ is representing the taxpayer and the injured worker or the injured individual, but I don’t think you can represent both sides adequately, 

frankly. I think that’s a mischaracterization of what an ALJ can 

really do. So there is no appeal process. The question is, should 

there be on behalf of the taxpayer? 

Mr. SKLAR. So just to clarify, with the new Division of Quality 

we do look at roughly five to seven thousand unappealed fully favorable cases each year, and that’s new, and that adds some balance. We were looking at hundreds of thousands of denials. They 

were appeals from people who lost. But on the cases that were 

paid, nobody was looking at those cases in any systematic way in 

a large number. 

So now we’re doing that. It’s a statistically valid sample that can 

help us drive policy changes. We also feed back the data to the individual judges. But to be clear, it’s still only five to seven thousand cases when we’re running an operation that’s moving 800,000 

cases annually. So—— 

Ms. SPEIER. And just by doing that doesn’t mean that that individual doesn’t get the benefits either. 

Mr. SKLAR. Well, actually, sometimes their lawyers are very 

upset because, yes, you would, indeed, intercept the benefits in 

those live cases. 

Ms. SPEIER. You do? 

Mr. SKLAR. Yes. So that authority exists, but we’re only funded 

to do a certain number of these items or we can only afford to do 

a certain number of these cases. 

Ms. SPEIER. So of the five to seven thousand cases that you have 

intercepted, so to speak, how many of them were the benefits actually not provided in the end? 

Mr. SKLAR. I can supply that for the record for sure. We have 

that data. 

55 

Mr. LANKFORD. Okay. Can I ask how you picked that five to 

seven thousand? Was it just a random sampling or were you targeting certain—— 

Mr. SKLAR. So that’s a really good question, because under a 

1998 regulation we are not allowed to target, we are not allowed 

to target judges, we are not allowed to target hearing offices. 

Mr. LANKFORD. So let me review. Huntington, West Virginia, 

when that’s happening and you see these very high numbers, 

you’re not allowed to go back in, in targeted review on that? 

Mr. SKLAR. That’s exactly right, not on live cases. 

Mr. LANKFORD. We’ve got to fix that. 

Mr. SKLAR. And to be clear, we did sample some of those cases, 

but it was a relatively small sample, and they began to ask the 

right questions. If they were looking at dozens of these cases, I’m 

pretty confident they would have gotten to the right place. 

Ms. SPEIER. So your hands are actually tied? 

Mr. SKLAR. To a certain extent. I just want to be abundantly 

clear, though, we can look at closed cases anytime we want, but 

then the money’s gone. So you can look at closed cases for any reason, you can target cases where a judge has paid at exorbitantly 

high levels, low levels, where they have put out huge numbers of 

dispositions, tiny numbers of dispositions, you can target for any 

number of factors, but you cannot do it on live cases pursuant to 

a regulation that’s been in place since the late 1990s. 

Ms. SPEIER. To that point, if you’re doing all this data collection 

now that’s much more sophisticated and you can see trends, then 

to not be able then to drill down is counterintuitive. 

Mr. SKLAR. I just want to be precise, though. We can drill down 

on cases where the money has gone out the door, closed cases. We 

cannot drill down on live cases before the money goes out. 

Mr. LANKFORD. Well, what about targeted reviews of an ALJ or 

of a group of ALJs or questions on that? What can be done on that 

and what is being done on that? 

Mr. SKLAR. We do do focused reviews. Again, they’re on closed 

cases where the money has gone out the door already, but that is 

helpful at times, you can see what’s happening. And we will typically feed that back to the line managers if there’s a problem, and 

they will have those conversations. 

Mr. LANKFORD. And is there a way to be able to discipline a 

judge or to be able to confront them and say this is it? Or it has 

the appearance at least of several years ago that when judges were 

high producing, they were sent more cases. They would seem to affirm them to say, okay, you’re reversing a lot of cases, you’re dealing with a lot of cases, let’s send you more. That’s not true anymore, it appears? 

Mr. SKLAR. Correct. 

Mr. LANKFORD. And grateful for that. But how do we handle this 

as far as when we see there is an issue, some sort of discipline so 

that there is the accountability that’s built into it? 

Mr. SKLAR. Yeah. First, we’re going to try with voluntary compliance, we are going to give them a chance to get better, and most 

do, and most are very agreeable. They’re surprised. They’ve been 

doing this for 20 years and nobody has given them feedback. So 

we’re happy to give them that feedback. We actually set up a tool 

56 

called How Am I Doing? It’s an electronic tool. They can actually 

look at their remands coming back. So we think that is helping to 

change behavior. 

But in instances where folks refuse to comply, and occasionally 

you’ll actually have an ALJ who says, I refuse to follow the policy, 

then you’re into a whole nother realm. And there are procedures 

for conduct and performance violations, and we do use those procedures. 

Mr. LANKFORD. How often? 

Mr. SKLAR. They do take a long time. 

Mr. LANKFORD. How often? 

Mr. SKLAR. In my written testimony I’ve talked about 20 cases 

where a judge has either been terminated or left voluntarily. 

Mr. LANKFORD. We mentioned before as well that the CDR review, in going through the process of that, there’s a term that I discovered I was not familiar with, but the more that I read and the 

more people I talked to in different parts of the country in DDS offices and such I heard this term for CDRs that was used behind 

the scenes of, not then, not now. I don’t know if you’ve heard that 

before, but it’s the perception of they weren’t disabled before, 

they’re still not disabled now, but there’s nothing we can do about 

it because we can’t show that they’ve had medical improvement because they really shouldn’t have been disabled in the first place, 

and now we’re stuck. 

It seems that there’s a standard to get on disability that they 

can’t have any involvement in any vocation in the United States 

right now, that they can’t significantly function in our economy. If 

they somehow get past that, then there’s a different standard, if 

they have medical improvement or not. Am I reading that correctly, 

that once you’re in it, it’s medical improvement, not whether you 

can engage in the economy, but going into it there’s a standard 

that you have to be able to engage in the economy? 

Ms. LACANFORA. You have summarized that pretty well. And so 

this is one of the issues that we’re looking at really closely, because 

the law does require that a person show medical improvement in 

order for us to terminate benefits. There is, though, one exception 

to that, the exception that Mr. O’Carroll mentioned—— 

Mr. LANKFORD. Right, fraud. 

Ms. LACANFORA. —if it’s clearly fraud. But in addition to that 

there’s what we call the error exception, which is if we believe that 

an error was made initially, not necessarily fraudulent behavior, 

but it was just a bad decision, we do have the legal authority to 

go back and revisit that decision and terminate benefits. 

Now, what you’re hearing when you go around the country is the 

fact that adjudicators are not really doing that often. 

Mr. LANKFORD. Right. 

Ms. LACANFORA. It’s a very infrequently used provision. And 

what we’re doing now is we’re taking a sample of cases and we’re 

doing a comprehensive review to try to understand why it’s not 

being used. Is it a training issue? Is it a clarity of policy issue? Do 

we need to amend the regulations so that they give more teeth, 

let’s say, to the process? 

We’re not entirely sure how to make better use of that error exception, but we think we do need to do that. So the comprehensive 

57 

case review we have underway now will help us to—help to inform 

our next steps in terms of whether we need to go the rulemaking 

process, the training route, or a combination of those. 

Mr. LANKFORD. But you have the authority right now to do that 

as far as the error possibility, to say we believe there was an error 

made in a previous case. You already have that authority? That’s 

not something you need from us? 

Ms. LACANFORA. We do, but understand that it’s quite complicated, and we can’t, for example, substitute judgments, okay? 

The regulations are very clear on that. So you can’t say, oh, gee, 

I just think Judge Bede did a bad job and I’m going to substitute 

my judgment for his. So one of the reasons I think that adjudicators are reluctant to use it is because it’s a very complicated rubric 

that you have to go through in order to use the error exception. 

Ms. SPEIER. So what would you recommend then? 

Ms. LACANFORA. So, again, we’re doing a comprehensive case review because we want to look at real cases and figure out where 

we should have used this exception, why we didn’t, and then we’re 

going to move toward probably a multipronged approach, but we 

may need to amend our regulations to make them more clear so 

that adjudicators can use them more readily. 

Ms. SPEIER. I guess what I’m asking, though, it sounds like the 

error exception is not being used. You’re going to review that and 

see why it’s not being used. But the truth is it’s not being used. 

So if that’s the case, then we need to provide you with a tool that 

allows you to more simply and easily address cases where they 

should never have received the benefit in the first place. 

Ms. LACANFORA. I’m not saying that at this point we need legislative change. I think we may be able to make better use of the 

error exception through our regulatory process. 

Ms. SPEIER. Okay. 

Mr. SKLAR. If I could bring a little bit of light on something we’re 

trying to do at both the DDS level and at the hearings level, we 

are trying to get our adjudicators to better rationalize, memorialize, 

and explain why they allowed somebody, and that’s really, really 

important, because without a really good rationale it becomes almost impossible when a CDR comes up to take that person off the 

rolls if, indeed, they’ve shown medical improvement, because you’re 

going against nothing. You have to show medical improvement 

from a certain baseline. 

So we’ve done a couple things in this regard. We’ve introduced 

an electronic tool, the Electronic Case Analysis Tool, at the DDS 

level, the State agency level, where they actually have to memorialize and rationalize their decisions. And quite frankly I think it’s 

been exceptionally helpful both in the CDR realm and even more 

helpful for the judges, because now the judges know why the case 

was denied at the lower level. 

So if you ask me, one of the reasons why the allowance rate is 

going down at the hearings level, I think they’re actually looking 

at why the DDS denied the case. There’s now a rationale and pretty thoughtfully done. We’re actually trying to get the judges a similar type of tool, an Electronic Bench Book, so that they have a policy-compliant electronic tool to rationalize, memorialize their case 

as well. Of course they have decision writers, but we think it’s realVerDate Aug 31 2005 09:38 Feb 12, 2014 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 C:\DOCS\86479.TXT APRIL
58 

ly nice if they can get some of the work and some of the policy-compliant instructions to the writers in this tool. 

Ms. SPEIER. In the West Virginia case, without, you know, harming the actual case itself, was the bench in that West Virginia city, 

Huntington, I guess it is, did any of them come forward? I mean, 

do judges know about the work of other judges? 

Mr. O’CARROLL. That’s a tough one that I’ve got to be really cautious on because it’s an open investigation. So I can’t really talk in 

terms of the witnesses on it. But I’ve got to say, there was a culture in that office that became pretty apparent in terms of a number of, you know, people in it raised concerns over time, and a lot 

of alarm bells, you know, had gone off and just weren’t addressed. 

Ms. SPEIER. So why didn’t any of them become whistleblowers? 

Or, I mean, is there a bounty hunting opportunity for people that 

come forward in a situation like that? I mean, it sounds like there 

were people that recognized there was a problem, and then the 

management declined. And those are my words, not yours, so I’m 

not putting them in your mouth. I’m a big believer in allowing 

whistleblowers protection and compensation when they come forward. 

Mr. O’CARROLL. We agree completely on that. In fact, one of my 

jobs as the Inspector General is, is the protection of whistleblowers, 

to encourage them to come forward, to protect them after they do 

come forward, and if there is any form of retaliation to, you know, 

to prosecute management for doing it. 

So, yes, we send a signal out there, you know, for whistleblowers 

to come forward, we will protect them, and there has been examples of it. You know, as becomes apparent with any of these situations on it is, is that in retrospect when you’re looking back on it, 

you’re seeing a lot of, you know, signals that should have been addressed where people came forward with issues. I’ve got to say 

when we look back on it, they’re not always—even though you’re 

a whistleblower and you’re complaining, it may not be as specific 

as we want it. And what we found is a lot of times there’s interoffice issues that are going on with their time and attendance and 

it’s not necessarily fraud or some issue like that. So that’s where 

they get overlooked. And that’s why we’re trying now to, you know, 

to, one, send the signal out there, is if there is an issue on it, bring 

it forward, and we will investigate it. 

Mr. SKLAR. Just one quick comment, too. My personal opinion, 

the best line of defense is your front line, and we’ve really spent 

an inordinate amount of time trying to reaffirm the need to speak 

up. And having spent 8 years in the Inspector General’s office before taking this job, I’ve really been very active in that regard, and 

we’ve seen our referrals to Mr. O’Carroll’s office shoot up quite, 

quite dramatically. 

So I do think a lot of it is messaging. I do think a lot of it is 

making it safe for your employees to come forward, they feel like 

they won’t get in trouble, they won’t get second guessed. And we 

have really put a premium on making sure that if any hint of retaliation or reprisal, that’s not okay. 

Ms. SPEIER. Are they eligible for the award system that exists in 

the Federal Government when you call attention to a cost or a savings? 

59 

Mr. O’CARROLL. Yes, they are. 

Mr. LANKFORD. Let me ask Mr. Sklar something that’s not politically challenging or difficult, let’s do something simple like revising 

the grid. 

So the grid, my understanding was, several years ago tried to go 

through revision, and Members of Congress and multiple outside 

special interest groups screamed so loud about it that the whole 

thing was scuttled. And we’re still stuck with a grid from the 1970s 

where it talks about elevator operators and such as, you know, 

meaningful jobs that are out there, and more sedentary jobs like 

computers that is the top area for the jobs now are not listed on 

there because it just wasn’t a major job during that time period. 

Age issues, everything else becomes a big issue. How do we do this? 

We talked about it a little bit before about getting a study on this 

and getting going. How do we get this fixed? 

Ms. LACANFORA. Okay. So a great question and a fair characterization of the situation. We have two separate work efforts related 

underway. One is that we are updating right now the Dictionary 

of Occupational Titles, which is that book with the 12,000 jobs in 

it that you referenced. It hasn’t been updated for decades. We have 

a contract right now with the Bureau of Labor Statistics, an interagency agreement, and we have a great relationship with them. It’s 

been in place since 2010. We’ve already done three phases of data 

collection out across the country using field economists that go into 

real businesses and collect data about how jobs are done across the 

country. That process is moving along. It’s a multi year initiative 

because it’s very complicated. 

Mr. LANKFORD. Right. 

Ms. LACANFORA. The book that we end up with has to be legally 

defensible. 

Mr. LANKFORD. Done when? When’s your target date for completion? 

Ms. LACANFORA. 2016 is our hope. 

Mr. LANKFORD. Just in time for a new President to scuttle it, but 

that’s a whole different issue. 

Ms. LACANFORA. But understand, for the undertaking the timeframe is very quick. 

Mr. LANKFORD. It’s huge. 

Ms. LACANFORA. It really is, and that’s a target. 

Mr. LANKFORD. But then it has still got to go through all the 

rulemaking and all the fight and everything else or you’re seeing 

it complete by then? 

Ms. LACANFORA. We are hoping for something usable. It might 

be a phased rollout, a phased implementation. But we are not even 

sure we are going to need to modify regulations. I mean, I can’t 

make any promises, but we’re trying to update it in a way that it 

doesn’t require dramatic redesign of program rules. 

Mr. LANKFORD. Okay, so that’s one aspect of the employment 

side, but we’ve still got age, we’ve still got everything else. 

Ms. LACANFORA. Okay. So the other stuff, which really falls into 

the category of the grid, okay, which is, you know, I look at it as 

a chart that you use where you incorporate the factors that we’re 

statutorily required to consider—age, education, residual functional 

capacity, which is the ability to do work. We take those factors into 

60 

consideration, and the interplay of those factors are considered. 

And then we basically use this grid or this chart to determine, 

then, what your finding of disability is, disabled or not. 

And you’re right that we haven’t updated that in a long time. 

Right now we’re taking a very careful look at that because the reason we were unsuccessful in the past is because the changes that 

we made were not evidence based. And that’s what we learned 

from that experience, that in order to make a change to the disability programs which are going to have rippling effects for millions of people’s lives and potentially have, you know, billions of 

dollars of implications one way or another, it’s got to be evidence 

based, it’s got to be sound. 

So what we’re doing now is we’re revisiting the grid issue and 

working with the Disability Research Consortium, and this is a 

group of highly skilled economists around the country that are 

working with us to look at those factors that we have to statutorily 

consider—age, education, work experience—and how other disability systems use those factors in the government and outside of 

the government, and they’re going to give us some sort of an environmental scan and some advice on how we might want to change 

our rules. So by getting that evidence base or that research base 

beneath us, we think we will be in much better position to make 

sound changes in the grid rules. 

Mr. LANKFORD. And what’s your timing on that part of it? 

Ms. LACANFORA. The Disability Research Consortium work 

should be finished in the middle of fiscal year 2014, July, June or 

July of fiscal year 2014, and then depending on what they come 

back with we will be shaping our next steps. 

Mr. LANKFORD. So we’re talking about the middle of next year 

we’ll have some sort of proposal that’s out there, and then it’s a 

matter of a couple years to get it out or you’ve got data in from 

them by middle of next year and then it’s to start putting the proposal together? 

Ms. LACANFORA. So we have data, but we are simultaneously— 

you know, we know where the vulnerabilities are, so we’re trying 

to simultaneously work with the Disability Research Consortium 

and in house to be prepared to do what I think will end up being 

rulemaking, hopefully in fiscal year 2014. 

Mr. LANKFORD. Under 18 and over 18 at the same time or just 

all adult focused? 

Ms. LACANFORA. We’re right now focused on adults. 

Mr. LANKFORD. Okay. 

Ms. SPEIER. Can we talk about the under 18 group, because I’ve 

never seen them actually defined that way before. And I would just 

like to understand it better. Why are persons under the age of 18 

eligible for disability benefits when they probably haven’t worked 

40 quarters for starters, right? 

Ms. LACANFORA. So we’re talking about the two different programs that you mentioned in some of the opening remarks. The Social Security Disability Insurance program is the insurance program for those people who have worked and earned sufficient quarters of coverage to get benefits. The program under which disabled 

children become entitled is the SSI or the Supplemental Security 

61 

Income program, which is a needs-based program for disabled children and doesn’t require any work having been done. 

Ms. SPEIER. Are there any problems in that program? 

Mr. LANKFORD. Yes. 

Ms. LACANFORA. Well, let me just say, we think that there’s always room for improvement for sure. And we have a partnership 

right now with the Institute of Medicine, and they’re looking very 

carefully at our childhood disability program. We actually have a 

consensus committee that they have put together with medical experts that are going to help us take a really close look at the SSI 

childhood program and identify ways for improvement. 

Ms. SPEIER. Mr. O’Carroll? 

Mr. O’CARROLL. Yeah, one of the things, in fact I was thinking 

about it before when we were talking about overpayments and I 

was talking about the overpayment being in the 1 percent range, 

that was in relation to the disability side of SSA. In relation to the 

SSI side, just as the chairman just echoed, in terms of the issues 

with SSI are much higher. That’s in about the 6 percent range on 

it. And a lot of that’s because it’s self-reported income on the people 

that are benefits for it. 

As Ms. LaCanfora just explained is, is that it’s a needs-based 

program, and a lot of times, you know, it’s based on what a person 

says what their income is, is whether or not they’re eligible for the 

program. And what we’re finding now along those lines is, and I 

applaud SSA for doing it, is there’s a lot of electronic financial information out there that can be used to run people against to see 

when they’re claiming that they’re indigent to see if they do have 

resources. And SSA has been making great strides in terms of 

using financial intelligence to be able to identify people on it. But 

the SSI program does have a much higher overpayment rate. 

Ms. SPEIER. But for the disabled children, is there—— 

Mr. O’CARROLL. And the children part of it is, is one of those, because what happens with the children is oftentimes with children 

they do improve, you know, in terms of their own medical information on it. And we’re asking SSA to do more continue or redeterminations on children. And then again at age 18, that’s before they 

get into the adult portion of it, they’re mandated to be doing redeterminations on those to decide before they become an adult whether they’re going to be on the benefits for the rest of their life, and 

that’s an important one, and that’s oftentimes neglected. 

Mr. LANKFORD. This is my big issue with when we have anything 

that smacks towards an error or fraud in SSI. We have a child 10, 

11 years old that is labeled as disabled. If the redetermination 

process doesn’t go well, they carry over into adulthood, all the potential of that kid is sapped away. They are told from when they’re 

10 years old, you are disabled, you cannot, and are set aside. 

I ran into a young man about 2 years ago in his early twenties 

that had Social Security questions for me, and I asked him why 

he’s asking me that. It was very unusual for someone in their 

twenties to ask me about Social Security, and I just asked him flat 

out if he was on SSDI. And he hesitated and said yes. And I said, 

may I ask what for? Because I had this great conversation, we’re 

in this large event, he had been socializing with those people, and 

he said, well, I’m ADHD. 

62 

And my first thought was, and I said to him, we need to help 

you get a job, because we’re losing you. We’re losing all that you 

could produce and all that you could do. 

So the questions that I have on this is when I went and pulled 

the under 18 numbers, and I see the rise in two different areas, 

number one being ADHD, number two being speech language pathology and speech language delay as far as the top two reasons 

that are rising for those, both of those, there are a lot of issues and 

questions about how long. For instance, ADHD, is that they qualify 

without medication or they qualify with? Because if someone has 

medication on it and they meet these different markers without, 

but they go on medication, obviously often they’re very functional 

in a social environment and are very engaged, but if they’re off that 

medication they’re not. Do we know how that is done? 

Ms. SPEIER. Mr. Chairman, I have personal experience with 

ADHD with a child, and I think that this would be ripe for a hearing on just looking at children under the age of 18 who are eligible 

for SSI because of ADHD. And let’s really drill down on this. I’m 

stunned to hear this, really stunned. 

Mr. LANKFORD. Can you give us just an answer whether it’s before or after medication for that? 

Ms. LACANFORA. Sure. So we require that anybody, whether it’s 

ADHD or any other course, so any other disabling impairment, that 

the individual comply with the course of treatment that the physician is prescribing. If they are not complying with a course of treatment and therefore the condition is deteriorating, then that’s 

grounds for us to deny the claim. 

I would also add—— 

Mr. LANKFORD. But I’m saying do they meet the standard and 

the criteria that’s being set after medication or before medication? 

Ms. LACANFORA. After compliance with the course of treatment. 

Ms. SPEIER. So sometimes it’s behavioral, sometimes it’s pharmaceutical drugs that are prescribed. 

Judge BEDE. In these cases there’s also the issue of obviously SSI 

people are low income, and there may be no treatment because 

there’s none available to the child. 

Ms. SPEIER. Well, there should be now under the Affordable Care 

Act. 

Judge BEDE. Yes, under the Affordable Care Act there is now. 

But in the past they would be put on benefits and would then be 

entitled to Medicaid. They would get treatment, and they would 

improve, and leave the rolls. 

Mr. LANKFORD. Then what? 

Judge BEDE. They would lose their medical care and would deteriorate. And we would see that on not a lot, but we would see that 

occasionally. 

Mr. LANKFORD. Same thing for speech delay, because when you 

get into speech delay or articulation issues, that becomes a socialization issue on it. But to have a child that has a difficult time with 

articulation or a delay in articulation, that’s a completely different 

issue. To see the rise of the speech—now, language is a different 

issue, that’s mental processing, but the speech side was very surprising to me. 

Judge BEDE. And it also very often responds to speech therapy. 

63 

But personally I have not seen a lot of those cases. I take your 

word that if they show up in the statistics. And I don’t know 

whether that’s been allowed at the State agency level or at the 

hearing level, but I have not noticed a significant problem with allowing children with developmental delays. 

Ms. SPEIER. Mr. O’Carroll, have you looked at this issue, and is 

it more prevalent in some States than others? 

Mr. O’CARROLL. I’ll tell you, we haven’t done work on it. It’s on 

our work plan to be looking at it. Amongst other things there were 

a large, I guess, regional concern on it in, I think, the Massachusetts, where it got a lot of media attention and everything else 

within the last year. So it’s on our radar screen as—you know, as 

an issue to be taking a look at, but we haven’t done any work. 

Ms. LACANFORA. May I just also add, I just want to reiterate 

very briefly we are right now under contract with the Institute of 

Medicine, the National Academies of Science. They are the premier 

authority in this area, and they are looking very specifically at the 

childhood program and some of these issues. And that is under way 

as we speak and will be done in 1 year. 

Mr. LANKFORD. So we’re 1 year away from that one. Is that 1 

year away from data or from a proposal? 

Ms. LACANFORA. From their recommendations to us. 

Mr. LANKFORD. Okay. I know we’re hitting the noon hour here, 

and I’m very aware of everyone’s stomach and that you all have 

been seated for 2 hours. I’m very aware of that and want to be able 

to honor it. 

What I’d like to do on it—do you have any additional questions 

or comments? What I’d like to be able to do is follow up with Mr. 

Sklar if we can. Maybe Mr. O’Carroll can join us on this, we’ll have 

to just see on the timing on it, and whoever you’d like to invite to 

be able to join in. 

I have a long list of all the reforms that have been laid out and 

the ideas that are out there. What I’d like to do is try to figure out 

what are the things that you all are already working on? As I’ve 

already mentioned, this is already in process. What’s our time period for completion on these? What is the legislative need that the 

ranking member and I need to work on; to say where do we need 

to push on this, whether that be funding, whether that be a change 

in the law or the statute? What is it that is needed from you to 

be able to make progress on this? And what of it is managementrelated, quite frankly; to say where is it you need greater oversight 

or a push; to say if there’s an anomaly out there, how do we deal 

with that? 

So if there’s an obvious, you look after the fact to Huntington, 

West Virginia, and to say, okay, it’s obvious once you look at it 

after the fact, how do we get some of those things to ping up earlier 

and get some of the review process to be able to come through? 

As Mr. O’Carroll has already said, we never want it to happen 

again, but we’re going to have people that are going to try to run 

the system on it. It did not take us but a moment to sit down at 

the computer and just to type in Social Security Disability, and 

what came up first was an ocean of law firms telling you how to 

game the system; if you’ll use this term, this is what you need to 

submit into it, that becomes the first thing that you get when you 

64 

search on Social Security Disability. You have people after you that 

are trying to game the system. That is their bread and butter to 

do it. 

We need to protect in any way that we can to help guard the taxpayer and individuals and, most importantly in this process, those 

vulnerable disabled individuals that will take a hit 2–1/2 years 

from now and will have even more instability in their life if we 

don’t do something for this. 

So I appreciate your work on it. I’d like to have some offline conversations on some of these to see if we can’t form a list of to-dos, 

what we can do, what you can do; is that fair? 

Other questions or comments? 

Ms. SPEIER. Mr. Chairman, let me just say this has been, I think, 

one of our best hearings, and we can really work together to make 

the system work better, and that’s really our charge to do that. 

And I think it’s very clear that unless we have more money to do 

the CDRs and to fund Mr. O’Carroll’s operation, we’re not going to 

succeed. 

So it’s really important for us to do the responsible thing here, 

and I will work hand in glove with you to make it accountable, but 

also to give them the resources so they can make sure the right 

people are getting these benefits. 

Thank you. 

Mr. LANKFORD. Thank you for your time and for being here 

today. We’ll follow up and continue on through the process. 

This hearing is adjourned. 

[Whereupon, at 12:10 p.m., the subcommittee was adjourned.] 

(65) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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Insert offset folio 22 here 86479.022

Mr. Lankford Opening Statement 

The Social Security Administration oversees two large federal disability programs 

- the Social Security Disability Insurance program and the Supplemental Security 

Income program, both of which have grown rapidly over the past 25 years. The 

growth in these programs is a significant threat to the truly disabled who are often pushed to the back of the line and who face large benefit cuts in the 

future if the program is not reformed quickly. 

The rapid growth in these programs corresponds to a period of time when the 

typical job became less physically intensive and the health of Americans nearing 

retirement improved. The consensus of expert academics and researchers from 

across the political spectrum attributes a large part of the growth of the 

program to a slower economy and more subjective criteria for entry. 

In June, my Subcommittee held its first oversight hearing related to the Social 

Security Administration's management of these programs. At that hearing, the 

Committee heard testimony from 2 former and 2 current Social Security 

Administrative Law Judges. Their testimony revealed significant problems in the 

Social Security appeals process, an avenue by which more than 300,000 applicants 

typically gain access to the program each year. One overarching theme of the 

testimony was that the agency's push to reduce the backlog had the unintended 

consequence of judges putting too many people onto the program who are able to 

work. 

In subsequent months, Committee staff received numerous briefings from agency 

officials and conducted three transcribed interviews with Social Security 

Administration Administrative Law Judges. The Committee has learned that some 

judges employ shortcuts and do not consider all the evidence available prior to 

reversing a previous decision. 

It is important to emphasize that disability cases typically only reach ALJs 

after applicants have been denied twice at the local disability determination 

level. Moreover, for all practical purposes, an ALJ decision to allow benefits 

is an irrevocable commitment of taxpayer funds since favorable decisions are not 

appealed and less than one percent of disability beneficiaries ever return to the 

work force. 

The Committee's most recent transcribed interview was with Regional Chief 

Administrative Law Judge for Region 3, Jasper Bede. Mr. Bede testified that if a 

judge's reversal rate is anything over 75% to 80%, or the judge disposes of more than 700 cases in a year, it raises a red-flag that the judge may be issuing poor 

quality decisions. Two other judges interviewed by the Committee testified that 

judges who decide over 700 cases a year are not doing a thorough job in 

evaluating all the evidence. The Committee obtained Social Security adjudication 

data back to 2005. Some simple statistics indicate a substantial problem. For 

example: 

Between 2005 and 2012, more than 930,000 individuals were approved for 

benefits by a judge with an approval rate in excess of 80%. In fact, more than a 
67 


Insert offset folio 23 here 86479.023

third of the agency's judges have approved more than 80% of applicants in at 

least one year. 

Between 2005 and 2012, nearly 500,000 individuals were approved for 

benefits by a judge who disposed of more than 700 cases in a year. 

During his interview, Judge Bede singled out seven judges in region 3 whose 

disposition data was indicative of a problem with their decision making. But, 

Judge Bede testified that he was powerless to do anything with these judges 

because of agency policies and management. These problems raise three important 

questions: 

Did the agency fail to stop red flag judges because of the agency's 

focus with processing as many cases as possible? 

Who has been held responsible for allowing hundreds of judges to 

essentially rubber stamp people on the program for years? 

Will the agency prioritize continuing disability reviews for 

individuals who have gained access to the program because of one of these judges? 

In addition to prioritizing medical CDRs for individuals approved by red flag 

judges, the agency should immediately suspend several judges and conduct a review 

of their decisions and practices. 

While some reforms to correct the broken disability determination process will 

need Congressional action, there are many steps the agency can unilaterally take 

to better protect American tax dollars and those most in need. Unfortunately, 

the agency is moving very slowly to adopt needed changes and to clarify perverse 

regulations. 

The decision Grid has not been significantly revised since the 1970's. Although 

hearings are non-adversarial, the agency has not required that claimants and 

their representatives submit all evidence, favorable and unfavorable, in advance. 

Moreover, it should not take the agency more than 4 months to reply to questions 

for the record as it did from the last hearing. I hope today's hearing will 

provide the Committee with some clarity about the agency's plan moving forward. 

Social Security Disability serves the most vulnerable in our nation; we cannot 

ignore the glaring issues that are driving this program into insolvency. If we 

do not aggressively deal with the fraud, costly mistakes and legislative fixes 

required; we will see those in greatest need put in tremendous risk. 

It is time to fix this system and we intend to work with this administration to 

prioritize the solutions today. 
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Opening Statement 

Rep. Jackie Speier, Subcommittee Ranking Member 

Subcommittee on Energy Policy, Health Care and 

Entitlements 

Hearing on "Continuing Oversight of the Social Security 

Administration's Mismanagement of Federal Disability 

Programs" 

November 19,2013 

Thank you, Mr. Chairman for holding this important hearing, 

and thank you to our witnesses for being here. 

Disability insurance benefits are a lifeline for millions of 

Americans who can no longer work in any capacity because of a 

serious disability. This is a benefit that American employees 

pay for through their FICA taxes. While the number of 

applicants and beneficiaries has increased over the past several 

years, this is an increase that was projected more than 20 years 

ago as a result of demographics, the aging of the baby boom 

generation and the increasing number of women in the 

workforce. 
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Every program needs vigorous oversight and strong 

policies in place to prevent waste, fraud and abuse. The Social 

Security Administration has initiated significant efforts to 

improve management oversight and accountability for the 

disability adjudication and review process. 

For instance, the agency is reviewing the quality of ALJ 

decisions to ensure their legal sufficiency, and the Appeals 

Council reviews ALJ decisions and provides useful feedback to 

individual ALJs regarding the quality of their decisions and to 

the agency regarding its policy guidance. 

The recently created Division of Quality conducts reviews 

of ALJ award decisions before the benefits go out, and conducts 

discretionary reviews of denial decisions. These reviews help 

ensure the quality of ALJ decisions and allow the agency to do a 

focused review of specific issues related to the hearing process 

at a hearing office or with a specific ALJ. 

2 
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In addition, SSA has initiated efforts to address concerns 

raised by ALJs and others regarding some disability adjudication 

and review policies. For instance, the SSA has noticed a 

proposed rulemaking that requires a claimant to submit all 

evidence that relates to their disability claim, and in a timely 

manner. This regulation will enhance the accuracy of disability 

determinations and address the concerns that some claimants or 

their representatives are withholding evidence that may not be 

favorable to their claim. 

The fact is that national allowance rates have gone down 

since 2008 from 61 % to 47%, its lowest rate since the 1990s. 

It is important to ensure that these determinations are done 

fairly and thoroughly. But it is equally important to ensure that 

ongoing benefits are proper. Continuing Disability Reviews, 

which are periodic reviews of disability awards to determine if 

the beneficiary continues to meet the disability criteria, are 

critical to the integrity of the system. Unfortunately there are 

too few of them. These reviews are a highly effective means for 

reducing overpayments or identifYing fraud. In fact every $1 

3 
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spent on CDRs yields $9 in program savings. According to the 

IG, SSA could have avoided paying $556 million in 2011 if they 

had just performed medical CDRs in the backlog when they 

were due. So it is troubling to hear that there is a 1.3 million 

backlog of scheduled CDRs this year. It is also troubling to 

learn that benefits are still being paid to some who have died, or 

who have been incarcerated. 

Let's be clear-this is partly Congress' fault. Funding for 

the SSA has fallen dramatically in the past two fiscal years. It is 

up to Congress to provide the funding the agency needs to fulfill 

its mandate to effectively monitor program integrity and save 

taxpayer dollars. I hope all of my colleagues would agree that 

given the clear cost-benefit analysis provided by the Inspector 

General, we should ensure that the agency has sufficient funds 

to conduct all of its scheduled CDRs and continue other program 

improvements that have allowed it to reduce its backlogs and 

increase efficiencies while improving program integrity. 

But even in the context of overall improvement, there 

clearly is still abuse of the system by some bad actors. A recent 

4 
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investigation conducted by the U.S. Senate Homeland Security 

and Governmental Affairs Committee and Senate Permanent 

Subcommittee on Investigations identified evidence related to a 

scheme to defraud SSA implicating a law firm, an ALl in 

Huntington, West Virginia and doctors. 

As Senator Tom Carper, Chairman of that Committee, 

stated: "While we don't have any evidence that this is more than 

an isolated case, one example of inappropriate actions of this 

nature is one too many." 

I look forward to hearing from our witnesses how we can 

work together to continue this trend toward an improved 

disability system. 

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Insert for Page S4 

Initial Disability Determinations Denied But Not Appealed 2002 - 2010 

Source: Disability Research File Reporting System - Detail WaterfaU Report - 1112712013 

We do not know how many of the denied claims would have been allowed upon appeal. 
74 

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Insert for Page 74 

For fiscal years 2011 and 2012; the Appeals COlUlcll, through its Division of Quality (DQ), 

considered a random sanw1e of 1 0,699 caSes for possible own ~otionreview. The DQ sent 

approicimately75'pefcent of the cases for effectuation oftxmefits. The DQ took own motion 

review on about 25 percent of the cases. The Appeals COlUlcll remanded, many of the "own 

motion" cases for a new AU decision. Of the cases that have now been decided either by the 

Appeals Council or· by an AU after remand, the delilision was chang.ed 1;0 a less favorable 

d~cision in approximately 7 percent of the cases.