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89–589 2016

HEARING ON THE CHALLENGES 

OF ACHIEVING FAIR AND 

CONSISTENT DISABILITY DECISIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

March 20, 2013 

SERIAL 113–SS2 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HUMAN RESOURCES 

SAM JOHNSON, Texas, Chairman 

PATRICK J. TIBERI, Ohio 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

AARON SCHOCK, Illinois 

MIKE KELLY, Pennsylvania 

KEVIN BRADY, Texas 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

ALLYSON SCHWARTZ, Pennsylvania 


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C O N T E N T S 

Page 

Advisory of March 20, 2013 announcing the hearing ........................................... 2 

WITNESSES 

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

accompanied by Heather Hermann, National Coordinator, Cooperative Disability Investigations Program, Office of the Inspector General, Social Security Administration, Testimony .......................................................................... 8 

Arthur R. Spencer, Associate Commissioner, Office of Disability Programs, 

Social Security Administration, Testimony ....................................................... 16 

Kathy Ruffing, Senior Fellow, Center on Budget and Policy Priorities, Testimony ...................................................................................................................... 26 

(Truth in Testimony) ............................................................................................... 43 

Trudy Lyon-Hart, Office of Disability Determination Services, Vermont Agency of Human Services, on behalf of the National Council of Disability 

Determination Directors, Testimony .................................................................. 44 

(Truth in Testimony) ............................................................................................... 55 

David Hatfield, Administrative Law Judge (Retired), Wexford, Pennsylvania, 

Testimony ............................................................................................................. 56 

(Truth in Testimony) ............................................................................................... 67 


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(TRUTH IN TESTIMONY) HEARING ON THE 

CHALLENGES OF ACHIEVING FAIR AND 

CONSISTENT DISABILITY DECISIONS 

WEDNESDAY, MARCH 20, 2013 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON HUMAN RESOURCES, Washington, DC. 

The subcommittee met, pursuant to notice, at 10:07 a.m., in 

Room B–318, Rayburn House Office Building, the Honorable Sam 

Johnson [chairman of the subcommittee] presiding. 

[The advisory of the hearing follows:] 


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HEARING ADVISORY 

Chairman Johnson Announces Hearing on the 

Challenges of Achieving Fair and Consistent 

Disability Decisions 

Washington, Mar 13, 2013 

U.S. Congressman Sam Johnson (R–TX), Chairman of the House Committee on 

Ways and Means Subcommittee on Social Security, today announced a hearing on 

achieving fair and consistent disability decisions. The hearing will take place on 

Wednesday, March 20, 2013, in B–318 Rayburn House Office Building, beginning at 10:00 a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

Under the Social Security Act, disability is defined as ‘‘unable to engage in any 

substantial gainful activity by reason of any medically determinable physical or 

mental impairment which can be expected to result in death or which has lasted 

or can be expected to last for a continuous period of not less than twelve months.’’ 

The disability must be so severe that the person is unable to do any ‘‘substantial 

gainful work which exists in the national economy,’’ whether or not a specific job 

exists or the person would actually be hired. The disability must result from a physical or psychological condition that is ‘‘demonstrable by medically acceptable clinical 

and laboratory diagnostic techniques.’’ 

The responsibility for making initial disability decisions is shared by the States 

and the Social Security Administration (SSA). All 50 States, plus the District of Columbia and Puerto Rico, maintain fully federally-funded agencies, known as Disability Determination Services (DDS), which decide initial and continuing eligibility 

for benefits. In making the initial determination, DDS examiners review the available medical evidence under a five-step sequential evaluation process. 

The independent, bipartisan Social Security Advisory Board has raised concerns 

as early as its 1998 report, How SSA’s Disability Programs Can Be Improved, about 

the complex administrative structure under which the Disability Insurance (DI) program operates, as well as the fact that eligibility is ‘‘fundamentally a judgmental 

process in which different decision makers will frequently have different views.’’ In 

2001, the Board issued two reports: Disability Decision Making: Data and Materials, 

and a companion report Charting the Future of Social Security’s Disability Programs: The Need for Fundamental Change. In these reports, the Board raised questions about the fairness and the consistency of the process, noting wide and unexplained variations in outcomes between different regions of the country and different levels of adjudication, as well as major changes in how disability is determined based on court decisions that have not been overturned by Congress. 

In February 2012, the Board updated its Aspects of Disability Decision-Making: 

Data and Materials, noting the ‘‘longstanding lack of consistency in the disability 

determination process that may award benefits to individuals who do not meet the 

SSA disability criteria and deny benefits to individuals who do meet the criteria.’’ 

The Board stated that the ‘‘updated data continue to highlight significant questions 

about [the] SSA’s disability decision-making process and about the disability programs . . . .’’ 

In announcing the hearing, Social Security Subcommittee Chairman Sam Johnson 

(R–TX) said, ‘‘As we work to secure the future of this vital program, hardworking taxpayers deserve to know that disability decisions are fair, consistent and protected from con artists trying to cheat the program. In the 

past, Congress expanded the ways people can qualify for benefits. Instead 

of relying on objective standards to reach decisions, examiners and judges 

on the front lines have increasingly had to make more judgment calls. 

Given the advances in medical treatment and rehabilitation, we need to 


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fundamentally understand how agency policies may be influencing decisions and determine whether these policies still make sense for the times 

we live in.’’ 

FOCUS OF THE HEARING: 

The hearing will examine policies that have expanded the role of subjective evaluations in determining whether applicants qualify for benefits and how these policies may result in unexplained variations in decision-making, weakening public confidence in the consistency and fairness of this national program. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by the close 

of business on Wednesday, April 3, 2013. Finally, please note that due to the 

change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical 

problems, please call (202) 225–1721 or (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any supplementary materials submitted for 

the printed record, and any written comments in response to a request for written 

comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will 

be maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days’ notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

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

Wide Web at http://www.waysandmeans.house.gov/

f 

. 

Chairman JOHNSON. We are waiting on my compatriot from 

the other side of the aisle, but I am going to go ahead and get us 

started, because we are past time. I will call the meeting to order. 


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And I want to say good morning, and happy first day of spring. We 

can all smile, can’t we, because it has quit snowing, right? Wrong. 

[Laughter.] 

Chairman JOHNSON. Fairness and consistency are essential to 

ensuring America’s confidence in Social Security’s disability insurance program. Their importance has been consistently recognized 

since the disability program was created in 1956. 

As we know, Social Security’s definition of who is disabled is a 

strict one. Whether someone is disabled depends on medical evidence, and whether a severe physical or mental condition, referred 

to in the program as ‘‘impairment,’’ prevents someone from working. But for some conditions, there are also subjective criteria 

based in statute that affect the way the definition is applied. In 

these cases, making the final decision on whether an individual is 

disabled is as much an art as a science. 

In the early 1980s, there was a growing public concern about the 

increasing number of statutorily-required continuing disability reviews that removed thousands of people from the rolls. In response, 

federal courts all over the country began to step in to stem the tide 

of benefit terminations by requiring the use of a medical improvement standard in making the decision to terminate benefits. The 

courts also issued orders requiring the Secretary to apply a particular standard for evaluating disability on a statewide or a circuit-wide basis. 

Soon after, Congress passed the Disability Benefit Reform Act of 

1984, which added several new criteria that increased the importance of subjective evaluations in deciding whether someone was 

disabled, and codified the medical improvement standard against 

which medical reviews would be conducted. According to the Congressional Budget Office, the ’84 Act shifted the criteria for disability insurance eligibility from a list of specific impairments to a 

more general consideration of a person’s medical condition and ability to work. 

The amendments allowed applicants to qualify for benefits on the 

basis of the combined effect of the medical condition, each of which 

alone might not have resulted in a decision that the individual was 

disabled. The amendments also allowed symptoms of mental illness 

and pain to be considered, even in the absence of a clear-cut medical diagnosis, and revise mental impairment criteria in the listing 

of impairments. 

It is very clear that our colleagues in the 98th Congress were 

anxious about Social Security’s actions, and the increasing inconsistencies caused by so many different circuit court decisions. Their 

concern, clearly stated in conference, was to preserve the consistency and uniformity of this national program in the way it served 

those who were truly disabled. What our colleagues did not foresee 

was that easing the criteria would contribute to growing the disability insurance rolls, including increasing the number of younger 

workers on the rolls. 

Today, those with mental and musculoskeletal disorders have 

grown to 60 percent of the rolls, and those assessments are usually 

based on the more subjective steps of the evaluation process. 

The other result of the ’84 Act, and one our colleagues clearly did 

not intend, is the substantial variation among decision-makers in 


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the same offices, the same regions, and at different decision levels. 

That means two decision-makers can review the case and make a 

different decision, and yet still be right. 

So, I might look at a claimant’s file and decide that the person 

is entitled to benefits. My colleague, Mr. Becerra, could look at the 

same file and decide the person is not entitled to benefits. And as 

you will hear today, we could both be right under the Agency’s 

complex policies. If that sounds as though an award of benefits 

may come down to who is making the decision, you are right. Got 

to remember, this is the United States Government. 

It shouldn’t surprise anyone that claimant representatives, those 

who represent individuals applying for disability have figured this 

out. The Supreme Court said this system for deciding disability 

was meant to be simple enough for the average person to understand. Yet, over the last 20 years, individuals applying for disability have gone from being represented 10 percent of the time to 

over 80 percent of the time. 

Most claimant representatives are well-intentioned, and want to 

do their best. But they are quick to take advantage of confusing 

and complex policies to try to ensure an award. Their behavior underscores how far this process has moved away from a national 

program with uniform rules to one that is about who makes the decision. And they have been very successful at it. Last year the representative industry pulled in over $1 billion from back payments 

of those who need these funds the most. 

Another indicator that the rules aren’t as hard and fast and consistent as a national program should be is the fact that we have 

folks who are trying to cheat the system. Close to half the state 

disability determination services have access to cooperative disability investigating units, who investigate suspicious applications 

and, as a result of their efforts, stop crooks from getting on the 

rolls. That leaves examiners in half the country with no way of 

proving whether their suspicions are right or not. Our Inspector 

General has been doing a good job with that, by the way. 

Social Security can’t know the number of people who are receiving benefits who don’t deserve them. Yet increasingly, our constituents tell us they know someone who is receiving benefits but 

shouldn’t. That undermines the public’s confidence in the program, 

the Agency, and this body. Further, the bipartisan, independent Social Security Advisory Board has been shining a bright light on 

these issues since 1998. Since then, they have issued seven reports 

and several data updates, repeatedly raising concerns about how 

the program operates and the fairness and consistency of the process. 

In a February 2012 report update to aspects of the disability decision-making data and materials, the board states that updated 

data continue to highlight significant questions about Social Security’s disability decision-making process, and about the disability 

program, listing ongoing inconsistencies in decision-making. The 

large gap between policy and administrative feasibility, continued 

use of the outdated dictionary of occupational titles, the definition 

of disability, and the need for an in-depth assessment of the disability decision-making process among its concerns. 


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My number one priority in holding these hearings is to make 

sure we keep this program strong for those who really need it. And 

that means taking a good and hard look at what may not be working, assessing the options for changes, and taking action. 

I want to thank our witnesses for being here today, and I look 

forward to hearing your testimony later. 

Mr. Becerra, you are recognized for five minutes. 

Mr. BECERRA. Thank you, Mr. Chairman. The Social Security 

disability trust fund belongs to the workers who paid into it. So decisions about whether applicants meet the strict criteria for benefits need to be made very carefully and as consistently as possible. 

This is not always easy. Work-ending disability or illness comes in 

many different forms, from terminal illness to an accumulation of 

many physical and mental limitations that worsen with age. 

That said, some applicants will always involve close calls: people 

who are just barely able or just barely unable to work. The challenge is to decide cases as fairly and consistently as possible, but 

not at the cost of denying earned benefits, simply because certain 

disabilities, by their nature, are more difficult to assess. 

Because of the diversity of applicants, and the challenge of drawing a line between can’t work and can work, SSA needs to have the 

tools and resources necessary to make decisions that are as fair 

and accurate as possible. This means SSA needs to have clear, specific, and updated policies for disability examiners and ALJs that 

they can follow in evaluating those who apply for benefits. They 

need effective training for adjudicators at all levels, so that they 

can correctly and consistently perform the complex analysis required to make the right decision. Quality control to correct and 

prevent errors, identify training needs, and useful policy clarifications are also important. 

SSA needs the resources necessary to keep its policies up to date, 

to train its staff, and to ensure quality control. At the same time, 

because of the inherent challenges of determining whether a worker’s impairments are severe enough to render him or her unable to 

work, we must ensure due process protections for those who are 

navigating the DI program while sick and unable to work. 

As we examine the challenges SSA faces in determining who is 

eligible, especially in those close-call situations, we should keep in 

mind that most people who apply to Social Security for these disability benefits are turned down. The eligibility standard is very 

strict. It doesn’t allow for benefits for partial disability or any disability that isn’t expected to last for at least a year, or lead to 

death. 

Medical evidence must show that the condition prevents the individual from working at any job in the national economy, not just 

their previous type of work. As a result, the majority of people who 

apply for benefits do not qualify. Even after appeals, only about 4 

in 10 applicants ever qualify for benefits. It is worth noting that 

even rejected applicants who don’t get disability benefits are very 

limited in their ability to work. 

We take our responsibility to safeguard the Social Security Trust 

Fund for workers very seriously. We are very concerned about the 

decision by the House Republican Majority to block the investment 

in the program integrity system. This is the initiative within SSA 


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that helps weed out the fraud and make sure unnecessary payments are not made to people who really should be working. 

By failing to fully fund these Social Security case reviews at the 

level agreed to in the Budget Control Act of 2011, this House is 

being penny wise and pound foolish. If the agreed-upon number of 

reviews had been funded for 2013, it would have saved the taxpayers and the trust fund between $1.6 to $2.4 billion over the next 

decade. 

Mr. Chairman, I want to thank you for calling this hearing. It 

is a complicated, but important question. In the end, our most important goal must be to ensure Americans receive the Social Security benefits they have earned, and that they need to make ends 

meet. I look forward to learning more about today’s issue from today’s witnesses, and I look forward to hearing the best way that 

we can move forward. 

So, I thank our witnesses in advance for having come, and we 

look forward to hearing from you. 

Mr. Chairman, with that—— 

Chairman JOHNSON. Thank you. 

Mr. BECERRA [continuing]. I yield back the balance of my time. 

Chairman JOHNSON. We do need to get rid of fraud in the system. 

Thank you all for being here. As is customary, any Member is 

welcome to submit a statement for the hearing record. 

Before we move on to our testimony, I want to remind our witnesses to please limit your oral remarks to five minutes. However, 

without objection, all of the written testimony will be made part of 

the written record. 

We have one witness panel today. And seated at the table are 

Patrick O’Carroll, Jr., Inspector General, Social Security Administration, accompanied by Heather Hermann, National Coordinator, 

Cooperative Disability Investigations Program, Office of the Inspector General, Social Security Administration. Glad you all made it 

down here before the snow. 

[Laughter.] 

Chairman JOHNSON. Arthur Spencer, Associate Commissioner, 

Office of Disability Programs, Social Security Administration. 

Kathy Ruffing, Senior Fellow, Center on Budget and Policy Priorities. Trudy Lyon-Hart, Director, Office of Disability Determination 

Services, Vermont Agency of Human Services, on behalf of the National Council of Disability Determination Directors. David Hatfield, Administrative Law Judge—it says retired, but I had a conversation with him, he is still a judge—— 

[Laughter.] 

Chairman JOHNSON. [continuing]. Wexford, Pennsylvania. Welcome. Thanks for being here—— 

Mr. BECERRA. And Judge, when the Chairman says you are 

still a judge, you are still a judge, so—— 

[Laughter.] 

Chairman JOHNSON. Welcome and thanks for being here. Mr. 

O’Carroll, good to see you again. Please go ahead. 


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STATEMENT OF PATRICK P. O’CARROLL, JR., INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION, ACCOMPANIED 

BY HEATHER HERMANN, NATIONAL COORDINATOR, COOPERATIVE DISABILITY INVESTIGATIONS PROGRAM, OFFICE 

OF THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION 

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

Member Becerra, and Members of the Subcommittee. I am joined 

by Heather Hermann, national coordinator for our CDI program. 

In fiscal year 2012, SSA received about 3.2 million disability in- surance claims, and paid more than $135 billion in disability benefits. This is a critical time to focus on the future of the disability 

program and avoiding improper payments. 

In my written statement I discuss a number of systemic and policy issues that could save millions in dollars, including revising the 

Agency’s policy on administrative finality, terminating payments 

timely once beneficiaries are deemed ineligible, and addressing the 

concept of medical improvement. However, I would like to take a 

few minutes to discuss two of the greatest integrity tools we have 

available, the CDI program and continuing disability reviews, or 

CDRs. 

Medical CDRs determine whether a beneficiary remains disabled 

and eligible, and are critical in reducing overpayments in the disability program. SSA has a goal of conducting 435,000 medical 

CDRs this year. However, the current backlog is about 1.2 million. 

Our audit work has found that the Agency would have avoided 

paying hundreds of millions of dollars to ineligible beneficiaries if 

CDRs were conducted when they were due. 

Sometimes DDS has even asked CDI units to investigate a beneficiary during a CDR. That combines the value of our two most effective integrity tools, which is one of the many reasons we believe 

DDSs in all 50 states should have access to a CDI unit. 

In one recent example, a CDI unit investigated a man who had 

received disability for almost 18 years, and was undergoing a CDR. 

He alleged severe back problems and other ailments. When investigators interviewed the man, he showed no signs of the back pain 

or discomfort he alleged. And when the investigators looked into 

the man’s social media presence, they found he was something of 

a YouTube star, which we would like to show you. 

[Video shown.] 

Mr. O’CARROLL. As you can see, his video suggests that his 

back problems might have been exaggerated. With this information, the DDS terminated the man’s benefits. 

Special Agent Hermann will now tell you a little bit more about 

CDI. 

Heather? 

STATEMENT OF HEATHER HERMANN, NATIONAL COORDINATOR, COOPERATIVE DISABILITY INVESTIGATIONS PROGRAM, OFFICE OF THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION 

Ms. HERMANN. Thank you, and good morning. Since 1998, CDI 

has been successful in detecting abuse in SSA’s disability programs 


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and preventing payment on disability cases involving potential 

fraud. 

Since the program was established, CDI work nationwide has resulted in projected SSA savings of $2.2 billion. The process typically begins with a referral from a state DDS or SSA, or from administrative law judges during the appeals process. They refer benefit claims or reviews that have been identified as suspicious. When 

the CDI investigation is complete, they send a report detailing 

their findings to the DDS, which determines whether the person is 

eligible for benefits. 

In this case, the man with the cane was on disability, alleging 

brain and pelvis injuries. But he bought the cane on his way to a 

consultative exam. Here we see him using the new cane for support. But after the exam, we see him walking freely and carrying 

the cane in his left hand. And later that same day, we see him 

back at the pharmacy, returning the cane for a refund. With this 

information, the Missouri DDS terminated the man’s benefits, and 

found he was overpaid $11,000. This is typical of the work that our 

24 CDI units—soon to be 25, as we open a unit in Puerto Rico— 

do every day. 

The National Association of Disability Examiners and the Government Accountability Office support CDI expansion. And the program has received great support from your subcommittee, as well. 

We look forward to continuing to assist SSA in this vitally important and growing initiative. 

Mr. O’CARROLL. In conclusion, to improve the DI program we 

support CDI program expansion, investing in integrity reviews like 

CDRs, establishing a self-supporting program for stewardship activities, and policy or legislative changes that could reduce the program complexity. 

Thank you again for the invitation to testify today, and we will 

be more than happy to answer questions. 

[The prepared statement of Mr. O’Carroll follows:] 


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f 

Chairman JOHNSON. Thank you, sir. You know, those are just 

a few of the incidents that occur. We were in Dallas, listening to 

some of this, and watched a guy take a wheelchair out of the hearing, fold it up, put it in the truck, walk around the car, and get 

in and drive away. People are making a mess of our disability program. And thanks to our IG, we are getting some good information 

on it, and hopefully stopping some of it. By far, not all of it, though. 

Mr. Spencer, welcome. Please proceed, sir. 


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STATEMENT OF ARTHUR R. SPENCER, ASSOCIATE COMMISSIONER, OFFICE OF DISABILITY PROGRAMS, SOCIAL SECURITY ADMINISTRATION 

Mr. SPENCER. Chairman Johnson, Ranking Member Becerra, 

Members of the Subcommittee, thank you for inviting me to discuss 

the Social Security Disability Insurance program. I am Art Spencer, Social Security’s Associate Commissioner for Disability Programs, and responsible for disability policy. 

A lot has been said and written about the DI program in recent 

years, some true. Much, though, that is half true or even incorrect. 

I hope that I can help you today with the right information you 

need to make the best decisions about the program’s future. 

The DI program provides benefits to disabled workers and their 

dependents. Workers become insured under the program based on 

their contributions to the Social Security Trust Fund. For this reason, the DI benefit is rightfully described as an earned benefit. 

When we decide whether a person qualifies for DI benefits, we 

are required to follow the definition of ‘‘disability’’ that Congress included in the Social Security Act. The Act generally defines ‘‘disability’’ as the inability to engage in any work, substantial gainful 

activity, due to a medically-determinable physical or mental impairment that has lasted or will last for at least 12 months, or result in death. This is a very strict standard, and most people don’t 

meet it. 

While some have attributed DI program growth to loosening of 

the rules, that is simply not the case. As our Chief Actuary explained to the subcommittee last week, the aging of the population 

and expansion of the workforce are the main drivers of program 

growth. 

To apply the statutory definition of ‘‘disability,’’ we do a rigorous 

and structured analysis of each case, using five steps called the sequential analysis process, or sequential evaluation process. 

At step one, we determine whether a person is working and engaging in SGA, substantial gainful activity. If so, we deny the 

claim. 

At step two, we assess the existence and severity of a person’s 

impairment using objective medical evidence. If we do not find a 

severe impairment, we deny the claim. 

At step three, we determine whether the severe impairment 

meets or equals the criteria of one of our medical listing of impairments found in our regs. The listings describe for each major body 

system the impairments that can be considered so debilitating that 

they could reasonably prevent someone from working. We use a 

process to regularly update the listings following advances in medical science. We have updated 10 of the 14 systems, and are working hard on the final 4. 

If a person has a listings-level impairment, we allow the claim. 

If not, we proceed to step four. At step four, we consider whether 

a person’s residual functional capacity allows him or her to do any 

work that they have successfully done. If they can do any work 

that they have done, we deny the claim. 

At step five, we determine whether the claimant, given his or her 

residual functional capacity, age, education, and past work experience can do other work that exists in the national economy. If they 


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cannot do any work that exists in significant numbers in the national economy, we do allow the claim. But if they can do any work 

that exists in the economy, we deny the claim. 

Our partners at state agencies call disability determination services, make initial disability decisions. They also reconsider the decisions of denied claimants who appeal. For those claims that the 

DDSs allow, we perform an independent and comprehensive review 

of at least 50 percent of the cases before any payment is made. 

These pre-effectuation reviews allow us to correct errors before we 

issue a final decision. 

People denied benefits by the DDSs can request a hearing before 

an administrative law judge. And thereafter they can appeal to our 

appeals council or to federal district court. 

Throughout all levels of our administrative process, program experts review the quality of the decisions, re-target our feedback and 

our training to those areas where our experts find the most frequent errors. 

We have also developed technology to help adjudicators make accurate decisions. For example, our electronic claims analysis tool is 

a web-based application that guides DDS adjudicators through the 

sequential evaluation process. We are piloting a similar tool in our 

hearings offices called the Electronic Bench Book. Our hearings offices also use How MI Doing to improve their quality. It explains 

the reasons for appeals council remands, and allows adjudicators to 

view their performance in relationship to other offices, regions, and 

the nation’s. 

As we continue to improve the DI program, we need congressional support. Thank you for the opportunity to appear before you 

today, and I am happy to answer any questions that you might 

have. 

[The prepared statement of Mr. Spencer follows:] 


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f 

Chairman JOHNSON. Thank you, sir. I appreciate your testimony. 

Ms. Ruffing, welcome. Please go ahead. 


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STATEMENT OF KATHY RUFFING, SENIOR FELLOW, CENTER 

ON BUDGET AND POLICY PRIORITIES 

Ms. RUFFING. Mr. Chairman, Ranking Minority Member 

Becerra, and Members of the Committee, I appreciate the invitation to testify today about this program that is so very important 

to over 8 million people who, because of a severe medical impairment, can no longer work substantially; to members of their families; and to 150 million workers who have earned protection from 

the program, if such a misfortune should happen to them. 

The DI program has grown rapidly over the last several decades, 

and that has led some critics to charge that the program is somehow out of control or in crisis. That is not correct. We have shown, 

like the Social Security actuaries, that the overwhelming bulk of 

the growth in the program can be traced to three very straightforward demographic factors: the aging of the baby boomers into 

the fifties and sixties, the years of greatest risk for disability; the 

growing labor force participation of women who can now qualify for 

benefits on their own work; and the rise in the full retirement age 

in the Social Security program. Over five percent of people who are 

now on DI would have been called retired workers a decade ago, 

not disabled workers. 

It turns out that when you properly age and sex-adjust the rates 

of disability, the rate has, in fact, grown only very modestly. It has 

not doubled or tripled, as some critics claim. Yet program participation has grown. We can’t always quantify the reasons, but we can 

name some of them. And, of course, one of them is legislation, the 

Disability Benefits Reform Act of 1984, which Chairman Johnson, 

I think, very accurately summed up. 

I would like to add an historical note here, which is that DBRA 

of 1984 came as a reaction to the overzealous actions of the Reagan 

Administration, and that is passed both Houses of Congress unanimously. People who criticize it as somehow subjective or liberal are 

sometimes forgetting that history. 

Another factor that was, in fact, recognized in DBRA of 1984 is 

the competitive nature of today’s workplace. It is true that work is 

generally less physical than in the past. But that is a two-edged 

sword. For older workers with limited education, and for workers 

of any age with cognitive impairments, a technologically advanced 

and a fast-paced workplace is a very harsh environment. 

Other factors that have probably buoyed participation in the program include the rise in cost and declining availability of private 

health insurance, the indirect effect of the rise in the retirement 

age, and the economic downturn which, at minimum, has boosted 

applications and, to a lesser extend, awards. 

I would like to note briefly that these pressures have not affected 

the SSI program equally. That program has been quite stable since 

the mid-1990s. 

As we know, it is difficult to qualify for disability benefits. The substantial gainful activity criterion is only a little over $1,000 a 

month. That is less than 40 percent of the median wage of a highschool graduate with no college. The program does permit and even 

encourage work. And yet statistics show that most DI beneficiaries 

never work again after the onset of disability, although they are 

permitted to do so. 


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Studies of rejected applicants, studies of so-called parking behavior, and studies of beneficiaries who are converted to retirement 

benefits all point to the same conclusion: DI beneficiaries are unable to perform substantial work. 

We at the Center on Budget strongly advise that disability be addressed in the context of overall solvency for the Social Security 

program, which is a formidable but achievable goal. I would like 

briefly, though, to focus on something Congress can do right now, 

which is focus on—which is fund continuing disability reviews. 

Congress left money on the table in both 2012 and 2013. We believe that Congress can still act in time to fund those reviews properly. 

We look forward to working with you to safeguard and strengthen this vital program. 

[The prepared statement of Ms. Ruffing follows:] 


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f 

Chairman JOHNSON. Thank you, ma’am. I guess I got to push 

my button, too. Thank you, ma’am. 

Ms. Lyon-Hart, welcome again. Please proceed. 

STATEMENT OF TRUDY LYON–HART, DIRECTOR, OFFICE OF 

DISABILITY DETERMINATION SERVICES, VERMONT AGENCY 

OF HUMAN SERVICES, ON BEHALF OF THE NATIONAL COUNCIL OF DISABILITY DETERMINATION DIRECTORS 

Ms. LYON-HART. Chairman Johnson, Ranking Member Becerra, 

and Members of the Subcommittee, thank you for this opportunity 

to testify on the challenges of disability determination. I speak on 

behalf of the National Council of Disability Determination Directors, representing the management of the disability determination 


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services. We process nearly 4.8 million cases a year, working with 

Social Security to provide consistent, fair, accurate, timely, and 

cost-efficient decisions to disability applicants, and to ensure program integrity. 

The disability criteria are very strict by design. DDSs allow 

roughly a third of initial claims, about 70 percent of all favorable 

decisions, with better than 97 percent accuracy. DDSs also process 

medical continuing disability reviews, CDRs, resulting in $9 of program savings for each administrative dollar spent. 

DDSs face serious challenges. Backlogs keep rising, now nearly 

190,000 cases waiting many months to be assigned to an adjudicator while a hiring freeze continues for a third year. When we 

hire, it takes two years training to recover lost capacity. 

Budgets are challenging all across government. With tight oversight, DDSs keep expenditures mission-critical and cost-effective. 

We ask Congress for the funding to serve disability applicants and 

bring CDRs up to date in a carefully planned, strategic way. 

We also recommend considering policy changes to improve consistency and preserve integrity of this important program. My testimony today will speak to three highly complex policies that have 

the most potential for inconsistency in decision-making. I will also 

touch on the medical improvement standard for CDRs. 

The first policy is evaluation of symptoms. A medical impairment 

that could cause the symptom is required. But objective findings 

are often not sufficient to determine resulting limitations. The 

same diagnosis affects different people differently. Policy requires 

assessing credibility, evaluating the consistency and degree of support for the statements throughout the record, not a gut feeling 

about the person’s truthfulness. 

Second is medical source opinion. Treating source opinions are 

controlling only if well-supported by objective medical evidence and 

consistent with other substantial evidence. If not controlling, opinions must still receive appropriate weight, considering all facts of 

the case. 

Third is residual functional capacity, an administrative assessment of what the person can do on a sustained basis, requiring difficult judgements about function, given fluctuating symptoms and 

differing medical opinions. 

Adjudicators may interpret these policies differently in individual 

cases. The information itself is subjective. Policy defines the factors 

we must consider, but does not direct any specific decision. 

SSA and DDS work together to improve quality and consistency: 

intensive training, mentoring, performance management, technology to support case analysis, nationalized quality review, and 

centralized program consultation. All are helpful, but more work is 

needed. 

We should think carefully about changing policy. It would not be 

right or fair to many truly disabled people not to consider their 

symptoms and the opinions of the doctors that know them best. 

However, we should look for ways to decide disability with fewer 

resources and more consistency. 

A few words about CDRs and the medical improvement standard. 

This policy was developed in the mid-eighties in response to public 

outcry over the way people were being taken off the rolls. With few 


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exceptions, the policy requires significant work-related medical improvement for benefit cessation, whether or not the prior allowance 

established a truly disabling impairment. Adjudicators may not 

substitute their judgement for that used in the prior allowance. 

In practice, medical cessations are not common. We recommend 

a review of statute and policy to advance program integrity, while 

doing no harm to people who continue to qualify. Due process and 

the real effects of aging, chronic impairment, and time out of the 

workforce are important. Even under current policy, medical CDRs 

provide substantial savings. Unfortunately, funding has not been 

sufficient for timely processing of either CDRs or new applications. 

And both are critical. 

In conclusion, DDSs have long provided high-quality service and 

program stewardship. Together with SSA, we have made strides in 

consistency, despite the challenge inherent in deciding who can and 

cannot work. Sufficient resources are critical for continuing this 

work. With our knowledge of front-line adjudication, we recommend careful policy revision to improve the program. 

Thank you again for the opportunity to provide this testimony, 

and I would be glad to answer any further questions. 

[The prepared statement of Ms. Lyon-Hart follows:] 


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f 

Chairman JOHNSON. Thank you, ma’am. 

Judge Hatfield, welcome. Please go ahead. 

STATEMENT OF DAVID HATFIELD, ADMINISTRATIVE LAW 

JUDGE (RETIRED), WEXFORD, PENNSYLVANIA 

Judge HATFIELD. Thank you, sir. Chairman Johnson, Ranking 

Member Becerra, and Members of the Subcommittee, thank you for 

this tremendous opportunity to speak to you today. I am extremely 

pleased to see you are focusing on policy, and I encourage continuing congressional oversight of the disability program. 

My name is David Hatfield, I am a retired administrative law 

judge. I worked for 36 years in the Social Security Administration, 

participating in the disability process at almost every level, both in 

policy and adjudication. I am not here today representing an organization or a constituency group. I am not here to say there should 

be fewer or more people on disability. I am here as an informed, 

concerned citizen to speak plainly about disability policy, which I 

believe is the primary cause of inconsistent adjudication. 

The last large-scale reform of the program was in 1984. It shifted 

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tensive regulations and numerous clarifying rulings on pain and 

opinion evidence, many of which are restatements of court interpretations of the 1984 changes. 

The result is, frankly, a recipe for decision-making that no cook 

would dare touch. The policies have allowed too much subjectivity 

and have become overly complicated, confusing, and outdated. The 

policy has emphasized subjective factors to the point that, at the 

ALJ level, just about any case could be allowed or denied, and either decision can be written in a way that is consistent with existing Agency policy. Is that a fair process? 

Policy has also become overly complicated. Evaluation of pain 

was a short paragraph before 1988. It is now several pages, with 

more pages of rulings mandating considerations of all kinds of factors. The handling of opinion evidence has also been expanded. And 

these are not merely guidelines for evaluating evidence, but are 

specific requirements that need to be addressed in every unfavorable decision. If I don’t evaluate a neighbor’s written statement 

saying the claimant is disabled, yet there are four medical opinions 

in file saying he isn’t disabled, the case comes back. 

Lost in all these gotcha requirements is the question of whether 

the claimant is truly disabled, and whether there is substantial evidence in the record. This high burden adversely affects timeliness 

and, in my opinion, alters decision-making. 

We must stop the tail wagging the dog. The standard of review 

needs to be amended to include a harmless error component, or alternatively, change to a more deferential standard. We must put an 

end to redoing thousands of decisions that are already supported 

by substantial evidence. 

Confusing policy should also be eliminated, including the often 

misused controlling weight standard for treating source opinions, 

another concoction of the courts. It trumps all other evidence, but 

only if it is ‘‘well supported and not inconsistent with the other 

substantial evidence.’’ But what does ‘‘other substantial evidence’’ 

mean? The trump card is often misapplied. 

Finally, many policies are simply outdated, such as the medical 

vocational guidelines. They were established in 1979. It is now 34 

years later, and they remain untouched. They must be updated to 

reflect the current economy and workforce. 

Second, regulations regarding representatives. There are none. 

More than 80 percent of the claimants at the hearing level are now 

represented, yet there are no rules and no burdens placed on representatives. Evidence can be submitted at any time; it is essentially a free-for-all. This hurts claimants, as they are being cheated 

out of their due process hearings. 

Third, permanent disability. It is time to re-examine the permanence in disability. With the advances in medical science, we know 

there are many impairments that, with medical treatment, should 

not only improve but disappear. I had cases where the claimant 

met the duration requirement and was certainly disabled at the 

time of my hearing, but I knew he would be better in six months. 

I couldn’t do anything about it, as my jurisdiction ended at my decision. 

So let’s consider specified term disabilities, and let those folks 

even return to work within their time-specified period of disability 


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with no penalty. After all, helping people to get back to work 

should be our number one priority. 

Ten years ago, the chair of the Social Security Advisory Board 

told this Committee that a full-scale review of disability policy had 

not been done in twenty years. Ladies and gentlemen, it has now 

been 30 years. 

Thank you again for this opportunity to express my views and 

thoughts. 

[The prepared statement of Judge Hatfield follows:] 


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f 

Chairman JOHNSON. Thank you, sir. Thirty years, huh? As is 

customary, for each round of questions I will limit my time to five 

minutes and ask my colleagues to also limit their questioning to 

five minutes, as well. 

Members should always speak clearly into the microphone, but 

it is especially important to try to help Ms. Ruffing hear us today. 

One half of the country is disadvantaged because they do not 

have access to a Cooperative Disability Investigative unit, a CDI. 

Ms. Hermann, those state disability determination services that 

have access to local Cooperative Disability Investigative units have 

the advantage of being able to refer any suspected fraud cases to 

that unit for surveillance or other government database or social 

media. These units operate in 21 states. What happens in the other 

states? Does fraud remain undetected? And what cost to the taxpayers? 

Ms. HERMANN. In the other states who don’t have access to a 

CDI unit, they can refer those allegations to their local Office of the 

Inspector General. The Office of the Inspector General will review 

them. However, you know, the decision to investigate or not is 

based on local priorities and their local caseload. 

So, often times, the DDS must make whatever decision, based on 

the information they have available to them. 


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Chairman JOHNSON. Or they ignore them. 

Ms. HERMANN. We hope they don’t ignore them. We hope that 

they still refer them to the OIG. 

Chairman JOHNSON. I hope you are right. Judge Hatfield, you 

know representing Social Security claimants is a thriving industry. 

In fact, persons representing claimants pulled in over $1 billion in 

fees last year, all of which was skimmed right off the top of back 

benefits that were awarded those who were found disabled. I know 

most of those representatives want to do their best for claimants, 

but it seems to me they are quick to take advantage of confusing 

and complex policies to try to ensure an award. 

Is there any standard on what someone who is representing a 

claimant is required to submit to the ALJ before the hearing? 

Judge HATFIELD. No, Mr. Chairman, there really isn’t. It is 

really up to the ALJ to enforce that. Some reps are good at submitting evidence, others are not. But the—ultimately, it is the judge’s 

responsibility to ultimately ensure the record is fully developed. 

There are really essentially no rules of practice in the Social Security regulations. So what happens is that evidence trickles in, it 

can come in at the day of the hearing. I am here to ensure claimants get a good, due-process hearing. That is what the regulations 

require. And so I need to read that record. It is non-adversarial, by 

the way. So I need to read that record and be sure I can ask the 

kinds of questions to the claimant to make sure I make a proper 

decision. I can’t do that if evidence comes in at the day of the hearing, for instance, talking about a new impairment, for instance. 

So, what happens? I can delay the hearing, which is not fair to 

the claimant. I can let the representative sit, at the end of the day, 

and I have done that. Time is money. But ultimately, what I do is 

I have to read the evidence before the hearing, delaying all the 

other cases that I have for that day, so that I can ensure the claimant is having a due-process hearing. 

So, my feeling is that the record should be closed before the hearing. And it is not for the judges, it is not for—you know, to be a 

judge. It is for the claimant. It is for a due-process hearing, so that 

I can ask the right questions at the hearing. 

Chairman JOHNSON. Yes, that sounds like some of the people 

are cherry-picking the evidence and delaying giving it to you so 

they are going to get a favorable decision, probably. It might even 

slow down the decision. Is that true? 

Judge HATFIELD. That is true. And in terms of that, we rely 

on the representatives to send in the evidence. If the evidence is 

adverse to the claimant, there is nothing in the regulations at this 

point that requires a representative to submit that evidence unless 

I—you know, I know about it and I ask for it. There is no sanctions 

against a representative if they don’t submit that evidence. So—— 

Chairman JOHNSON. In your experience, did you find people 

hiding evidence from you? 

Judge HATFIELD. A couple of times. Generally—and this is in 

Pittsburgh, where the representatives are, by and large, very good, 

and they are very honorable people. But when I was the acting 

chief judge, I knew of other instances across the country where this 

happened, yes. 


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Chairman JOHNSON. Thank you. Mr. Spencer, is it true that a 

person can receive both unemployment and disability at the same 

time? 

Mr. SPENCER. Yes, sir, it is true. There is no prohibition that 

would restrict someone getting both unemployment and Social Security disability insurance. 

Chairman JOHNSON. Okay. Do you believe that is a good idea 

or not? 

Mr. SPENCER. It has never been put into our rules before. It 

has always been totally separate. 

We are [continuing]. We have looked at this, and would certainly 

be willing to continue to work with your staff and your subcommittee—— 

Chairman JOHNSON. Thank you. 

Mr. SPENCER [continuing]. If you would like to move in that direction. 

Chairman JOHNSON. I appreciate that. Mr. Becerra, you are 

recognized. 

Mr. BECERRA. Thank you all for your testimony and for helping 

us on this issue. 

I think we should make one thing clear. None of us wants to see 

the bad apples. They ruin it for everyone else. As I think you have 

all indicated, these are earned benefits. And so, any American who 

has truly lost the ability to work should be able to turn to a program that was established as a result of his or her taxes that he 

or she paid into the system for this very reason. 

But when you see a video of someone who is trying to take advantage of the system, it gets you very angry. And we have to kill 

that, because if we don’t, then it not only makes it difficult for us 

to have confidence that we are giving out these taxpayer benefits 

that have been earned when they are rightfully earned, but it also, 

I think, undermines the confidence that the public has to have in 

the system. 

And so, I want to make sure we make a point here. Mr. 

O’Carroll, you pointed out some cases—I have got some numbers 

here. Tell me if I am wrong. There were some—in 2012 some 13 

people who were subject to criminal prosecution as a result of some 

of your work, the CDI work, right? 

Mr. O’CARROLL. Yes, sir. 

Mr. BECERRA. I have a number that 19 other cases were subject to civil monetary penalties. So 19 other people were subject to 

civil monetary penalty, as a result of all your CDI work. 

Mr. O’CARROLL. That is correct. 

Mr. BECERRA. That is 32 people. The number of people that you 

investigated is somewhere around 3,300. 

Mr. O’CARROLL. Yes, sir. 

Mr. BECERRA. So of the 3,300, about 32 you found cause to go 

after them civilly or criminally. That number is based on 3.2 million people who apply for disability insurance benefits. And so I 

want to make something very clear. We have to beef up your units 

so you all can find these folks. But there were 32 that you found 

out of 3.2 million who applied for disability insurance benefits. And 

so it is not rampant, but it sure makes you mad when you find it. 

And so we have to go after those bad apples. 


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I think the judge made it very clear, as well. If you can’t have 

a system that is working well, if you start to go towards an adversarial system, which is not what we have right now, where people 

are going at it like attorneys will when you have got a case in 

court, most of these folks are going to get trampled, because most 

of these folks can’t afford to get a high-priced attorney. They are 

out of work, they are disabled, or they are very modest-income, to 

begin with. And so, I hope we never lose the non-adversarial character of these hearings, where the ALJ is extremely important. The 

judge is essentially, as you said, the gatherer of all the information. 

I do agree with you on one thing, Judge. We can’t expect you to 

make the best decisions if you are getting information at the end 

of the hearing. You should be getting as much as you can before 

the hearing. And so, when you are at the hearing you can really 

probe that applicant or his or her representative and find out, ‘‘Is 

there anything else I am missing in this file so I can make a decision?’’ And so I hope you will continue to give us some guidance 

on how we can get there. And I think all of you can provide that, 

as well. 

I want to finish by asking a little bit about these CDRs, the continuing disability reviews. And I just whispered to the chairman a 

little while ago that I think this is something we can handle 

bipartisanly. I am not here to try to go after my colleagues on the 

Republican side because they are trying to reduce the size of government and, as a result, one of the casualties is funding for these 

CDRs, which we agreed would be in the budget after the Budget 

Control Act passed in 2011. But when you save nine taxpayer dollars for every dollar invested in a CDR to make sure that someone 

who has got benefits really should continue to get it, and if we find 

through this review, the CDR review, that they no longer are disabled, and should be getting back to work, we should go after that 

with a vengeance. Because, once again, we provide integrity in the 

system. 

So, Ms. Ruffing, quick question. Is it your sense that if we had 

the investment in CDRs, that we could truly make sure that those 

who have become disabled are the ones—only the ones who are receiving the disability insurance benefit? 

Ms. RUFFING. I think that is a fair statement. Cumulatively, 

over 2012 and 2013, Congress is on track to under-fund CDRs by 

about 400 million below the Budget Control Act allowance. And a 

back-of-the-envelop estimate suggests to me that that, over the 

long run, will cost us between 2.5 and 3.5 billion. As you say, that 

is penny wise and pound foolish. 

Mr. BECERRA. So, not only is it costing us, but we are going to 

have more videos of people who shouldn’t have remained on disability insurance, which is going to make it a caustic program, because people are going to have real ambivalence about whether we 

should support it. 

I hope, Mr. Chairman, this is something that we should do 

bipartisanly, to try to make sure that we go after the fraud, those 

who are receiving the benefit when they don’t qualify. That way we 

can leave it for all those who really do deserve to have the benefit 

they paid for. 


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With that I will yield back the balance of my time, and I thank 

you all for your testimony. 

Chairman JOHNSON. I think Mr. O’Carroll feels the same way, 

and he is working that program pretty hard. 

Mr. Tiberi, you are recognized. 

Mr. TIBERI. Thank you, Mr. Chairman. I am not sure anybody 

here would be in line to answer this question, but maybe Judge 

Hatfield can. 

From my limited experience in dealing with folks I know who 

have had a disability, I want to just follow up on something Mr. 

Becerra said about claimants not being able to afford an attorney. 

My experience has been that most lawyers in this line of work actually get paid contingent on benefits being received from a claim. 

Is that your experience, Judge? 

Judge HATFIELD. Yes, that is. Almost all of the attorneys work 

under that type of arrangement. And you can see them on nightly 

television every night. 

Mr. TIBERI. I wasn’t going to mention that. But the point being if my little sister, who makes $40,000 a year, gets injured, she can 

get an attorney, a very good attorney, based upon the contingency 

of her claim and winning her claim. 

Judge HATFIELD. Yes, that is true. 

Mr. TIBERI. I thought so. 

Judge HATFIELD. That is true. 

Mr. TIBERI. Just wanted to clear that up. In your testimony on 

page seven you say it is time to re-examine—your words, not 

mine—‘‘the permanence of disability.’’ Tell us more of what you 

mean in terms of time for a change in that. 

Judge HATFIELD. It—as the chairman had described the statutory act, it is—a person has to be disabled at least one year, or it 

could result in death. It is—but in my experience, there have been 

many, many cases where the person is disabled, they meet that 

one-year requirement, they have been waiting, say a year, to get 

before me, but it has been a—say an accident, a trauma, something 

like that, where they are undergoing medical treatment, they are 

going to get better. It is clear they are going to get better. I can’t 

do anything about that. I can only decide the case at the time of 

my decision and find them ‘‘permanently disabled.’’ 

And my thought is to be able to, with the advances of medical 

science—I mean 1957 is when the disability program started. 

Things have changed much in medicine since then. It seems to me 

we should be able to get together a group of people who could identify certain impairments that should improve with medical treatment, or perhaps even disappear within a certain period of time. 

And as I suggested, those persons would get a term disability, 

based on their impairments and age, or maybe some factors involved, and then they could go to work during that time. Let them 

go to work. We expect those folks would go to work. Instead, we 

put them on permanent disability, and then do a CDR, say, 12 

years later, or 10 years later. That person is out of the workforce. 

They are never, probably, going to go back. 

So, you know, the whole point here is try to get folks back to 

work. It seems to me if we do that quickly at the front end, give 

them this sweetener of no penalty to work—and, of course, if they 


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are still disabled and they didn’t go back to work, they can always 

re-file after the expiration of their term. 

Mr. TIBERI. Thank you. You have been a judge for a long time 

before you retired. We had CBO here last week. We had the Chief 

Actuary here last week. Mr. Spencer, in your testimony you mention the growth of the program being demographics as the main 

driver of the DI program. But both Mr. Goss and the CBO have 

been clear in their testimony, the written testimony, that the 1984 

change in the law, which Ms. Ruffing mentioned again today, that 

was passed unanimously—but that that change in the federal policy is another contributing pattern to the growth of the program. 

And in fact—again, CBO’s words, not mine, that the change in 

federal policy has contributed—the ’94 Act—the ’84 Act, excuse me, 

contributed to the growth of the disability insurance program, since 

it led to a larger number of disability insurance beneficiaries with 

musculoskeletal or mental impairments, many entering the rolls at 

younger ages and staying in the program longer than the average 

beneficiary. 

Anecdotally, from your seat on the bench that you served, did 

you see an increase over the years? 

Judge HATFIELD. Well, actually, I wasn’t an ALJ prior to 1984, 

so I probably—— 

Mr. TIBERI. Hard for you to compare. 

Judge HATFIELD.—couldn’t comment on that. But yes—— 

Mr. TIBERI. In terms of those number of cases? 

Judge HATFIELD. I think there were quite a few of those cases 

that came before me, mental impairments, musculoskeletal, absolutely. And I think there was a rise in those, and I think that the 

statistics show that there was a rise in those over the years. The 

percentage of people being paid based on those two impairments 

rose significantly during that time. 

Mr. TIBERI. Thank you. So you think that should warrant a look 

at the ’84 law to see if we can tweak it? 

Judge HATFIELD. That is—that would be my suggestion, yes. I 

think that what—what I am suggesting is after 1984 the reaction 

of the courts imposed certain requirements that the Agency decided 

to adopt through ruling and regulation. And so I think it is time 

to sort of reflect as to whether that really was the intent of Congress, or whether it was just court interpretation. 

Mr. TIBERI. Thank you. I yield back. 

Chairman JOHNSON. The gentleman’s time has expired. Mr. 

Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. I want to thank the 

witnesses today for testifying. You know, I have only been in Congress a couple years, but I always like to relate back to my history 

as a private citizen and a businessman. And I know that, over the 

years, I ran into three different individuals that were collecting disability. 

And as you were talking, I was thinking of those three. One 

clearly deserved disability and was not able to work any more. The 

second definitely had some impairments, but probably could work 

at a desk, at a computer, and do some work. The third used to golf 

with me every week. And I always used to wonder how that third 

individual was collecting disability as he came to golf in a golf 


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league every week. So, you know, it is kind of interesting when you 

look back over these situations, and then you hear the testimony. 

But with those things, I guess I would like to know what is—Mr. 

Spencer, what is the definition of ‘‘severe’’ impairment? 

Mr. SPENCER. In the first place, let me start by agreeing with 

Judge Hatfield, that we don’t look at each individual impairment 

separately, we must combine the impairments to find that severe 

level. But severity, to have a severe impairment or impairments 

means it has significant impact on your ability to stand, walk, sit, 

lift, carry, get along with people, understand instructions cognitively, those type of basic functions that you need to work. Having a severe impairment does not mean that you are going to be 

granted disability benefits, it is just the first bar you must get over. 

If you don’t have a severe impairment, we stop and you do not get 

awarded benefits. 

Mr. RENACCI. And then what would be the definition of, ‘‘any 

work that exists in the economy?’’ And I use that as someone who 

might be severely impaired, but can maybe work at a computer and 

do work from that standpoint. 

Mr. SPENCER. That is a great question. Any work in the national economy means that there are jobs in the region or contiguous regions in sufficient numbers that you can do, given what you 

have left. So I mentioned sitting, standing, lifting, carrying. If we 

determine, based on all your medical evidence, including the subjective medical evidence, that you can sit 6 to 8 hours a day, that 

you can lift 10 to 20 pounds frequently, that you don’t need superfrequent breaks, that you have a regular job, we can look for sedentary work for you. And if that work exists in the economy, we 

will deny benefits. 

It is not based on whether they are hiring, it is not—these jobs. 

It is not based on whether you want to apply. It is based on whether you have the mental or physical capacity to do work that exists. 

Does that help? 

Mr. RENACCI. Yes. Mr. O’Carroll, I know my colleague brought 

up, and I thought it was a good point, the 3.2 million claims and 

32 cases that you found. Do you believe there is an opportunity to 

find more? What would be the way to find more? I mean that is 

a small number, but clearly it appears there might be a bigger 

number. 

Mr. O’CARROLL. Thanks, Mr. Renacci, for that question, because one of the things I had written with my notes here, when we 

are talking about the 32 prosecutions that we were doing of the 

millions that are—claims are out there, when—those are the ones 

that were in pay, and that is part of our CDI program that we 

identified. Obviously, with our other disability fraud investigations, 

we are prosecuting hundreds of other people. 

However, the other part of the philosophy behind the CDI program was pre-effectuation, was to be able to identify people, provide the information to the decision-makers up front, before people 

get on to the benefits. And since we are preventing it in advance, 

there is—that—none of the government money is lost that way. 

So, what we are finding with the success of the CDI program is 

that judges are asking us to do more inquiries with the CDI program, we are being asked by the disability examiners to do more. 


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And, as a result of it, we are looking at more people in pay. But 

at the moment, of people in pay compared to people on the pre-effectuation, it is about—I would say about 84 percent are pre-effectuation, so we are talking about 16 percent is where that number 

of 32 comes from. 

And then, in completion of your question on it, what we have 

been saying from the beginning is that the purpose of the CDIs is 

to provide the decision-makers with information that can be used 

on this thing. And what we have been saying all along, and this 

Committee has been very supportive on, is expanding the CDI 

units so that when the DDSs or the judges or any of the decisionmakers have questions on it, we can be providing the information 

and, again, showing the videos like we are doing here, when the 

public sees them, much like the person playing golf with you. Hopefully we have a camera following that person around on other 

times that they are doing what could be considered, you know, occupational-type things. 

Mr. RENACCI. Thank you. I yield back, Mr. Chairman. 

Chairman JOHNSON. Thank you. My friend from Texas, Mr. 

Doggett, you are recognized. 

Mr. DOGGETT. Mr. Chairman. Judge Hatfield, you suggested a 

number of forms that I want to explore. But just at the outset, I 

believe you responded previously to Chairman Johnson that most 

of the representatives that came in front of you during your time 

serving as a judge were honorable people who were doing their job 

effectively. 

Judge HATFIELD. Yes, that is correct. 

Mr. DOGGETT. And I just have to say that I do find a little troubling the use of this term, ‘‘skimmed off the benefits,’’ and the size 

for the whole country. It has been a long time since I practiced law, 

but I knew few lawyers then and know few now who would take 

a Social Security disability case. There is no recovery unless there 

are benefits, which means, often in complex cases, there is no recovery. And I believe that, from the people that I have seen in more 

recent years in my district office, over the last couple of decades 

people who had no representation, who had limited education, or, 

even if they had some education, had difficulty with the complexities of this system, that many folks would not be able to access the 

insurance benefits that they have paid over their working life to 

get, unless they had honorable representation to participate. 

It is reasonable that across this country, with the number of people who make application for benefits, that there is some compensation. And absolutely, somebody who is out of work, who is 

disabled, unless they can find someone to take their case on a contingency, they won’t have any representation at all. 

When we describe—though the term may be applicable—when 

we describe corporations who have a legal department or other department to deal with the government, we don’t refer to those individuals as having skimmed off the corporate earnings; we refer to 

it as part of the normal operating process. And I think that that 

is true here. 

I think every Member, regardless of party, on this Committee is 

strongly against fraud. I am as outraged as anyone else to see the 

program jeopardized by somebody dancing on the Internet, just as 


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we should be outraged when a pharmaceutical company steals millions of dollars from the Medicaid program, or a health care provider steals from Medicare. So, fraud, and how we ferret it out, is 

very important. But not denying benefits and not disparaging those 

who represent people who have paid into this system to get the 

benefits to which they are entitled, I think is equally important. 

Now, Mr. Spencer, you mentioned that the standard is not a low 

one to get Social Security benefits. Don’t most people who apply for 

Social Security disability benefits get denied? 

Mr. SPENCER. Trudy is right. At the DDS level it is about 33 

percent are allowed. But the important thing to really remember 

with that number is that, while the hearings allowance is higher— 

it is about 50 percent now, it has dropped—they have a much 

smaller set of cases. So, in fact, about 70 percent of all the allowances in the program are made by the DDSs, and 85 percent of 

DDS decisions end up being the final decision of the Social Security 

Administration. So, yes, only about 40 percent of folks who apply 

are awarded benefits. 

Mr. DOGGETT. And you reiterated the testimony we heard not 

from a representative for the disabled or an advocate, but from the 

chief actuary here in this very committee room recently, that, despite all the alarmist articles that the sky is falling and the disability program is about to crash, that, in fact, we have a very 

sound disability program, there is not a crisis, there is not an excess of claims, though there certainly may be some fraudulent 

claims, and there may be some fraudulent representatives out 

there that need to be ferreted out. But, in fact, with the same kind 

of transfer among the funds as has occurred in previous decades, 

this fund will be on firm footing going for decades ahead, and that 

we can continue to provide benefits to an aging workforce, and to 

a workforce that involves more women in the workplace than occurred in prior generations. 

Mr. SPENCER. Yes, you summarized Mr. Goss’s testimony. 

If I might, when we think about Judge Hatfield’s approach to 

maybe temporary disability, while you are doing that let me remind you that there are three levels of CDR diaries: one year for 

people that we know should improve; three years for people that 

we are not sure if they will improve; and seven years for people 

with terminal illnesses, or with impairments that will not improve, 

like intellectual disability. 

So, while you are planning, we could deal with a lot of these 

lengthy folks on the rolls that haven’t been reviewed by funding 

the CDR program. 

Mr. DOGGETT. My time is up. I would just like if any of the witnesses or if Judge Hatfield would like to expand on it, I wanted to 

go into the medical vocational standards and permanence of disability. You can forward further written comments if you have recommendations for how we can improve this system, make it work 

more effectively, and see that the disabled individual, as well as 

the taxpayer, is adequately protected here. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, sir. Mr. Kelly, you are recognized. 


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Mr. KELLY. Thank you, Chairman. And thank you all for being 

here. 

I think one of the concerns I have is the sustainability of these 

programs. And I don’t think there is anybody here that would ever 

say that somebody who is deserving of these benefits doesn’t get 

them. But, by the same token, it must be very difficult, Judge, sitting where you have sat all those years, to look at what is happening. I was reading in your testimony, and on page four you talk 

about some of the things. A bias has been set in the system at the 

hearing level in favor of allowance. And this is under the complicated section you had, section two. 

But I worry about it, because I will tell you. I read also in the 

notes that deciding disability is also a complex and expensive process. Administering the DI and Supplemental Security Income programs consumes two-thirds of SSA’s approximately $11.5 billion 

operating budget this fiscal year. So again, it is the sustainability 

of these programs. And that seems to me that the dollars just keep 

growing and growing. 

But for you to come up with a decision based on somebody sitting 

in front of you is very difficult. Because I am trying to figure out 

these definitions of if you are fully disabled or your definition of 

pain. Pain is pretty much subjective. There are some people who 

have a very low threshold of pain, other people have a high threshold of pain. I am like Mr. Renacci. I have friends who are on disability, but are not incapacitated. And I understand that. I understand that. 

But I read in your testimony, and I think it is incredibly important. We have seen a lot of technological advances in medicine. And 

I know in our job market, in the private sector, things that would 

have been hard to do several years ago are no longer hard to do. 

I have friends who have had to go from one form of employment 

to another because one went away. It had nothing to do with a disability, it had to do with a loss of a job. And they transform very 

quickly into another phase. 

But when you are sitting there, and you are looking at all this 

information, it is difficult. And it looks to me like it is very subjective. How do you balance those programs out, or how do you work 

with that? 

Judge HATFIELD. It is difficult. It is a difficult job. And I want 

to say that the administrative law judge court does a really terrific 

job of trying to sort that out. I mean that is what they are doing 

every day, and they are trying to achieve 500 to 700 of these decisions every year, which is the expectation, which is a lot of cases. 

And so, we are moving cases along, and we have to consider everything. We have to consider sometimes 500, 1,000 pages of medical evidence, the claimant’s testimony, of course, and all those sort 

of amorphous factors in the file, as well, what kinds of medications 

they take, what is their daily activities. 

So—and this is where I go back to the due process hearing—that 

is really the centerpiece to try and get—ferret out, based on what 

the claimant is saying. Is it consistent or inconsistent with the 

record? And that is why it is so important to have a full record before me, because it is non-adversarial. I have to ask the questions, 

I have to know what to ask in advance. In short, it is a tough job. 


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Mr. KELLY. The whole process. In your closing, you said in your 

conclusion today there is a serious gap between disability policy 

and the administrative capacity required to carry out that policy. 

Now, going back to what Stanford Ross said in 2001—and I think 

that this has been taking too long to get to where we need to be 

on this review. It just seems to me that you are kind of left hanging out there without having substantive information or an update 

in these policies to be able to make decisions that are in the best 

interest of those people who are coming before you. 

And as you say in here, the case load is so big, that there is a 

lot of other people that need to get there and can’t get there because it is so backed up. 

So, what would it take to get this review? I mean is there something that I don’t understand coming from the private sector? We 

would have to—we don’t have years to wait on things. I mean here 

we kind of measure everything in 10-year periods, the way we 

spend money, the way we are going to cut spending, everything 

else. But I would say this is a program that needs to be looked at 

sooner rather than later. 

Judge HATFIELD. I agree, and I—one of the suggestions I make 

is to have some sort of board or some body that would involve adjudicators, as well as policy experts inside and outside of SSA that 

would sit down and really work this out. 

I think it is very important to get the adjudicators’ perspective 

on this policy, as well, because we see how a policy where there 

may be some shalls and musts turns into these requirements that 

I have to put in every decision, when the bottom line is really is 

this claimant disabled or not disabled. 

Mr. KELLY. Well, listen. Again, I appreciate you all being here. 

Because I think one of the things is, as we lose—or these programs 

lose credibility with the American public, that is where we start to 

have a real problem. And I have got a lot of friends that really are 

very deserving, and we need to get to them quicker. But there has 

to be a way to speed this process up. So, thank you for being here. 

Mr. Chairman, I yield back. 

Chairman JOHNSON. Thank you. Ms. Black, do you want to 

question? 

Mrs. BLACK. I certainly do, Mr. Chairman, and thank you for 

allowing me to ask a question. Not being a member of the subcommittee, it is an honor to sit in on the subcommittee. 

I want to go to the Social Security Advisory Board, and the fact 

that they have, on a number of occasions, done reports. And in 

those reports—and I want to turn here to my notes—the first one 

in 1998 that was done, entitled, ‘‘How Social Security Disability 

Programs Can Be Improved,’’ that was done in 1998. And in that 

particular report it did say—it discusses the complexity of the administrative structure, and as well, the eligibility as fundamentally 

a judgement process is what they said in that report. 

And then again in 2001, there was another report done by the 

board, and it was entitled, ‘‘Disability Decisions-Making Data and 

Materials,’’ and there was a companion report: ‘‘Charting the Future of Social Security Disability Programs: the Need for Fundamental Change.’’ And again, in this report, they noted that there 

was a question of fairness and consistency of the process, noting 


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wide and unexplained variations in the outcomes between the different regions of the country and different levels of adjudication, 

and major changes on how disability is determined, based on court 

decisions that have never been reviewed by Congress. So Congress 

has some responsibility in this, as well. 

And then, more recently, in March of 2011 there was another report, ‘‘A Vision for the Future: Social Security Administration.’’ And 

in here, once again, they talked about the complexity of the program. And this is a quote out of the report. ‘‘After 75 years, many 

of the policies governing the SSA’s programs have become overly 

complex and, in some cases, unintentionally conflicting, thereby impeding the Agency’s ability to administer its programs effectively.’’ 

And once again—and this is the last one—in February of 2012 

the board had another updated report entitled, ‘‘Aspects of Disability Decision-Making Data and the Materials,’’ and I quote here, 

‘‘Long-standing’’—noting the, ‘‘Long-standing lack of consistency in 

disability determination process that may award benefits to individuals who do not meet the SSA disability criteria, and deny benefit to individuals who do meet the criteria.’’ 

One of the things that I continue to hear from my constituency 

is this complexity, is that it is such a weave of complexity that they 

have a hard time working through the process. And most of my 

constituents end up getting a lawyer. Very few of the cases that, 

at least I am aware of—and I am sure there are a lot of them I 

am not aware of, to be fair—do come to me, and even when I was 

at the state level, to say, ‘‘Look, this is so complex, can you help 

me?’’ 

And what I would like to know from those who may know of this 

report, these reports, if you have—and I guess, Mr. Spencer, maybe 

that first one is for you—if you are aware of these reports, if you 

have taken any of the suggestions in trying to help with that complexity. 

And, in addition to that, are there some recommendations out of 

these reports that you think that we could still apply at some point 

in time? 

And third, is there anything that we in Congress can do to help 

you to make sure it is less complex, and to help those who are applying to get through the process? 

Mr. SPENCER. I will certainly address the first. And if you could 

remind me of the second and third—— 

[Laughter.] 

Mrs. BLACK. Okay, sure. 

Mr. SPENCER. Absolutely I am familiar with the reports. We 

work very closely with the Social Security Board, both the board 

and the staff. They have got great ideas. They ask us for data, we 

share data. We meet with them very regularly. 

I think that I want to emphasize that our first goal in disability 

policy is consistency, to make sure that this very complicated program—and it is—that there is a modicum of complexity. And yet, 

to find as much simplification as you can. 

Let me just emphasize that, from my analysis over time—and I 

have been with the program a very long time—I think that it is 

very complicated primarily to serve as a protection for each individual, that it is very difficult to put an individual into certain imVerDate Mar 15 2010 01:36 Jun 24, 2016 Jkt 089589 PO 00000 Frm 00083 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\89589.XXX 89589

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pairment categories and have it always work. A good example of 

that right now is—is it Valerie Harper, the woman who played 

Rhoda on TV? She is dying. She has months to live. She looks pretty good. She looks fine, and she is on TV and talking about it. So 

it is really hard to see an individual and know that, well, this person meets the requirements of disability or not. 

What we emphasize in the policy shop is getting guidance out, 

and case-by-case guidance. Yes, we write regulations and rulings 

and we write instructions. But at the same time, we also build electronic tools that walk a person through the complexity in the DDS 

side, at the eCAT, on the hearing side we are moving forward on 

Electronic Bench Book, so that if you have got a question as you 

are looking at this document, this tool, you can actually have the 

policy come down and guide you. 

We build fake cases for adjudicators to show allowances and denials, and we gather data. We have something called the residual 

functional—I am sorry, the Request for Program Consultation Process, where people disagree on cases, and we have over 6,000 very 

difficult cases—— 

Mrs. BLACK. Mr. Spencer? 

Mr. SPENCER. Yes, I am—— 

Mrs. BLACK. I don’t mean to interrupt you. 

Mr. SPENCER. Okay. 

Mrs. BLACK. But I am reclaiming my time, which I actually 

don’t have, because I see I have a red light. 

Chairman JOHNSON. That is correct. 

Mrs. BLACK. But, Mr. Chairman, if I may ask, I think this is 

a really important question, given that there are advisory board 

recommendations. And I would like each of the panelists if they do 

have an opinion on how those recommendations could be implemented, whether it is something that we can work with them, if 

they can give us, in written form back to this Committee, their recommendations on where they think that this could occur, and how 

we might be able to help, given we are Congress and looking at 

this thing. 

Chairman JOHNSON. I know the IG can. So thank you, we appreciate it. Your time has expired. Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. Mr. Spencer, I did 

have one follow-up, and I know my time had expired. And it gets 

back to your organization. And I know the American people were 

always concerned about fraud and abuse, and you were really the 

gatekeeper in your organization at the starting point. And I heard 

your five-step approach to evaluate claimants, and I think those 

are very good approaches. 

I ask you about a sixth approach, and that is what happens— 

does your organization ever look to those that have gotten through, 

the golfer, the guy with the cane, and all these, and then bring 

those back and decide how they got through, what caused them to 

get passed? Even though you have this five-step approach, and it 

is a good approach, and you are really—looks like you are really 

attempting to do the best you can, what do you have in the process 

that says, ‘‘Let’s pull these back in and see what happened’’? 


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Mr. SPENCER. That is a super question. The DDSs and the decision-makers, especially at the CDR level, that is the first line of defense, to send referrals over to our OIG partners. 

But whenever we find fraud cases, we absolutely like to see them 

and figure out what went wrong. We do that not only on OIG cases, 

but on pre-effectuation, before decisions are made, where someone 

might recommend an allowance. And part of our review, because 

before allowance is paid, we look at at least 50 percent of all those 

allowance proposed decisions. And if we find that something looks 

funny, the case is held up, the case is referred, we investigate it 

for either fraud or similar fault. 

So, yes, the five-step process is a very broad process. But whenever we suspect fraud, the decision-makers and the policy folks go 

into that in some detail. 

Mr. RENACCI. So do you—when you re-evaluate, do you put new 

processes in place to make sure that some of these items are 

caught? 

Mr. SPENCER. Yes, we have given guidance on what to do when 

you suspect fraud, that is true. But we fully support the work of 

our OIG. I was a Disability Determination Services Director in 

New Jersey, when we started one of the very first CDI units in 

New Jersey, for example. But yes, we pay a great deal of attention, 

and learn as much as we can from every case. 

Mr. RENACCI. All right. Thank you, Mr. Spencer. Thank you, 

Mr. Chairman. 

Chairman JOHNSON. Thank you. Mr. Kelly, do you have a follow-up? 

Mr. KELLY. I do, Chairman. I wanted to go back to the administrative—and Ms. Black and I were just talking about this, and I 

am trying to understand. If two-thirds of an $11.5 billion budget 

is being funded into the administration of it, there has to be something basically or fundamentally wrong with the way it is set up. 

I mean does anybody—this doesn’t pass a smell test if we are saying, oh, it is a little bit—yes, a little bit complicated? Two-thirds 

of 11.5 billion? A little over $7 billion is going to the administrative 

costs? 

I mean to me there have to be bells going off somewhere, lights 

flashing somewhere. Who is looking at this? And how does that 

compare to other agencies and their breakdown? Because I am getting the feeling that—I know we got a big government, I know we 

got a lot to cover. But I am really concerned when administrative 

costs are eating up that amount. And anybody can tell me. Anybody have a feel for that? 

[No response.] 

Chairman JOHNSON. Don’t everybody speak at once. 

Ms. RUFFING. I will venture an opinion here, and it is the fact 

that disability determination and continuing program integrity activities are inherently complicated. There are approximately 45 

million people on the old age and survivors program, and approximately 10 million on the disability insurance program. Please correct me, but those are in the ballpark. But the retirement program 

really only requires you to verify that somebody is 62 years old or 

over, or that they were married to a deceased worker. That is pretty simple to do. There is nothing—— 


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Mr. KELLY. Well, excuse me. I mean—not to interrupt you, but 

I have to. I mean I understand the scope of it. But there is no way 

in the private sector you could look at a program where two-thirds 

of it is being eaten up by administrative costs and think that this 

is a program that is effective and efficient. It just doesn’t make 

sense. 

But, of course, I am coming from an area where you actually 

have to pay for it out of your own pocket, you don’t have these deep 

wells that you can reach into to grab revenue all the time. 

I am really concerned about this. I mean I understand the complexity of it, but there is something wrong. The administrative 

process takes up two-thirds of an $11.5 billion budget? That is almost 8 billion—Jim, you are a CPA. It comes out to, what, 7.5, 7.6? 

It is a lot of money. 

Mr. SPENCER. Our administrative costs, as a factor of our program costs, is 1.5 percent. So—— 

Mr. KELLY. Wait a minute, wait. Your administrative cost is 1.5 

percent? 

Mr. SPENCER. Of the money we pay out, the program costs. 

Mr. KELLY. The money you pay out. 

Mr. SPENCER. So—— 

Mr. KELLY. What is your total budget, though? I mean it is not 

1.5 percent of your total budget. 

Mr. SPENCER. Oh, no. 

Mr. KELLY. No. 

Mr. SPENCER. I don’t have that. 

Mr. KELLY. Okay. 

Mr. SPENCER. I can get that for you. 

Transcript Insert 

Mr. KELLY. Well, let’s compare apples to apples and oranges to 

oranges. 

Mr. SPENCER. Yes. 

Mr. KELLY. I understand what you paid out—— 

Mr. SPENCER. I think a lot of private disability insurance will 

run between a four and a five percent cost. We have significantly 

less—— 

Mr. KELLY. Of what they pay out. 

Mr. SPENCER. Of what they pay out. 

Mr. KELLY. Okay. But that is not the entire budget. 

Mr. SPENCER. No, no, no, sir. 

Mr. KELLY. Okay. Because there is nothing—there is not a 

model out there that works on a 1.5 or 4 percent administrative 

cost. I mean I worked in a lot of charities back home. If you can 

keep it somewhere under 15 percent, you are walking in rarified 

air. 

So this is alarming, though. This amount of money we are spending for administrative costs really is alarming, which goes back to 

Judge Hatfield. This has become so complicated and so complex 

and so willy-nilly, I mean what do you want the pain to be? Pain 

is what I may think what pain is, you may think what pain is. But 

permanent disability versus—maybe there is some other way to do 

it. I don’t want to take anything away from anybody, but the sustainability of these programs is in great jeopardy because of the 

structure. 


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So, Mr. Chairman, thank you. 

Chairman JOHNSON. The gentleman’s time has expired. Thank 

you for your questions. 

Ms. Hermann, what are the most common types of disability 

fraud that CDI units investigate? 

Ms. HERMANN. We investigate all types of disability fraud. But 

the most common things we see are people—it really runs the spectrum—people outright faking their disabilities to people who are 

mildly exaggerating some of their—the things they are able to do. 

And it, again, runs the spectrum from pain, generalized back pain, 

migraines, all the way to, you know, mental disorders, personality 

disorders—— 

Chairman JOHNSON. When you find somebody that is fraudulently trying to take money from the system, how fast does the 

money stop? Or is it immediate? 

Ms. HERMANN. That is actually a good question for some of the 

SSA counterparts here. Our investigations, we try to do as quickly 

as possible, but still as thoroughly as possible, so—— 

Chairman JOHNSON. Well, then you give them to him. And do 

you stop the payments? 

Mr. SPENCER. We do. As soon as fraud is suspected, payments 

can be suspended. And we re-evaluate the case, ignoring all the 

suspect evidence. 

Chairman JOHNSON. Mr. O’Carroll, what percentage of CDI investigations focus on initial claims? 

Mr. O’CARROLL. Chairman, that is about, I would say, 84 percent is initial claims. So about 16 percent are in pay. 

Chairman JOHNSON. And why is the program more focused on 

applicants, rather than those already receiving benefits? And you 

got any more videos that you want to show us? 

[Laughter.] 

Mr. O’CARROLL. I just happened to bring some extra videos 

with me. 

But to tee it up again, just as you had said, Chairman, on it, 

what we wanted to do with the CDI program at the beginning of 

it, was stop the money from going out the door. And that is why 

our focus, from the beginning of it, was to get the information to 

the decision-makers before the benefits go out. Because it is so 

hard to recoup the money once it is lost. It is better to get it on 

the front end. 

However, because of the success, and doing the videos that I will 

be showing you in a minute, it has become so good a tool for providing judges with the information, for finding the DDS people 

with the information, that we are getting more and more referrals, 

so we are doing more and more in pay. And those are the ones 

that—as came up earlier, those are the ones, when they are in pay, 

that are more likely to be prosecuted. 

But with this, we did bring a couple of other examples, and I will 

show them to you now. 

[Video shown.] 

Mr. O’CARROLL. In this first video, we have—this first woman, 

she is the lead singer in a musical group, and she claims she was 

disabled and isolated herself from others. CDI investigators located 

this tube [sic] on YouTube and then shared it with the DDS. 


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The next woman we see is jogging at a softball game, and she 

claims she suffered from chronic back pain. And she talked about 

the softball game, as well as other workouts and activities, on her 

Facebook page. 

And finally, this is the case of the drummer girl who was featured—she was featured on Fox News. The case became, as a result of a CDR on the woman, who was receiving benefits for back 

pain and other disorders. We discovered she was actually a very 

talented drummer in an all-female band. And the investigators located some videos on YouTube, and then they went to the concert 

and filmed the whole thing, which is what we used, and then we 

turned it over to the DDS and she didn’t get her benefits. 

Chairman JOHNSON. Thank you. I appreciate that. 

I think that is all I want to do at this point. Mr. Becerra, you 

are recognized. 

Mr. BECERRA. Thank you, Mr. Chairman. Thanks for letting us 

ask a second series of questions. And actually, to Mr. Kelly’s point, 

that is why there is an expense to the Administration of the DI 

program, because we have to pay your salary, and Ms. Hermann’s 

salary, and all the folks who are going to go out there to make sure 

we do this right. Then we have to make sure we pay Judge Hatfield to conduct the hearing, we have to pay Mr. Spencer and Ms. 

Lyon-Hart, to make sure that the process is done properly. 

When you think about it, in terms of the actual amount spent 

administering the program, one or two percent, that is great, in 

terms of the benefits that are doled out. And I actually think, given 

that you have to deal with tens of millions of Americans who are 

either getting survivor’s benefits, retirement benefits, or disability 

benefits, that, for the cost, I just want to say to each and every one 

of you who are working, because I don’t know if we said this to you, 

but each and every one of you who work in this field, thank you. 

Thank you for what you have done in helping make determinations, and helping process the folks, and helping make sure that 

Americans can have confidence in the system. I don’t think, often 

times, we recognize how much work you do. And so, when you find 

that person who is trying to take advantage, it is important. Because there is going to be someone who does come through the door 

of the judge who really can’t afford an attorney, who really has a 

case, but doesn’t know how to prosecute it for himself or herself. 

And that is where the judge comes in and all the folks who make 

sure that those Americans who paid into the system for years and 

years and years have a chance to make it happen. 

So, quite honestly, I think, Mr. Kelly, if we look into this, we will 

find that, for the money, you can’t find a better-administered program than what you have with the Social Security—— 

Mr. KELLY. Would the gentleman yield? 

Mr. BECERRA. Absolutely. 

Mr. KELLY. There is a huge difference between the percentage 

of what is paid out and the total percentage of the budget that is 

allotted. Administrative costs that eat up two-thirds? I can tell you, 

Mr. Becerra, coming from the private sector, there is nobody operating any business today in the private sector that looks at twothirds of the administrative—going to the administrative costs of 

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ful business. It can only be done inside Washington, and that is because we got other people that fund it for us. 

Mr. BECERRA. And, Mr. Kelly, name me another company that 

has to deal with millions of people who claim that they are disabled 

after paying benefits and have to go through the process. 

Mr. KELLY. We are comparing apples and oranges. 

Mr. BECERRA. Comcast doesn’t have to do that. AT&T doesn’t 

have to do that. Northrop Grumman doesn’t have to do that. This 

is tough. 

It ain’t easy, nor should it be easy to get those benefits. But 

Americans are entitled to get those benefits, if they worked hard 

and they can prove that they are now qualified. 

And so, I honestly think, if we look into this, no one does it better. And I guarantee you Northrop Grumman, AT&T, Comcast pay 

a lot more for attorneys than the Social Security Administration 

pays their ALJ judges and everybody else who tries to put these 

cases together. I guarantee you AT&T has a far bigger budget to 

do its investigations and so forth than does the SSA to have Mr. 

O’Carroll do that great work that he and Ms. Hermann are doing. 

And so, I think that we could put all that out there transparently. And I guarantee you that many of us would be willing to 

dive on the sword to say that SSA is working very hard to make 

sure that the system is working for Americans who paid into it. 

Let me ask a couple of quick questions. So—by the way, thank 

you. By the way, can I also, Mr. Chairman, say thank you to Kim 

and the staff on this Subcommittee? Because we have had a couple 

of great hearings, where I think we are digging deep into what we 

can do to make the program work better. And I want to thank the 

cooperation that we have seen from our staff, both Majority and 

Minority staff, in helping us really have what I think are solid 

hearings, where people want—Members of Congress want to stay 

and actually ask a second round of questions of the witnesses. So 

I want to say thank you to Kim and all the staff on our side, as 

well, Kathryn and staff. 

Judge Hatfield mentioned something that caused me some cause 

for concern, until I thought about this a little bit. Mr. Spencer, isn’t 

it the case that, with regard to those people who have a severe but 

not a permanent disability, that those are the types of cases that 

SSA most likely is going to send Mr. O’Carroll to go look at first? 

Mr. SPENCER. Well, yes but. And the reason I say, ‘‘yes but,’’ 

there are impairments that last a year, but we expect them to get 

better. So our first line of defense is, in fact, the CDR. At any time, 

if we suspect that something is not right in a claim, we refer that 

over to the OIG, because they are the experts in these type of—— 

Mr. BECERRA. And the CDRs, which we have been told save us 

nine bucks for every buck invested in that investigation, is what 

this congress chose to under-fund. And so, Mr. Chairman, there 

again, I hope we do something more about trying to make sure 

those reviews can be done. 

And final question, Mr. Spencer, lots of variation in the rate at 

which people are awarded disability benefits, because there are a 

lot of differences among those folks who apply. What are the things 

that SSA does to make sure that a person with the same type of 

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ter where he or she files, compared to someone else in another part 

of the country? 

Mr. SPENCER. We have a comprehensive quality assurance 

process. The states have an internal QA. As I said, 50 percent of 

all allowances are reviewed by a federal component before benefits 

are awarded. We take the information we gain from that, we feed 

it back as training. We gather data, we have something called a 

policy feedback system, where folks look for good case examples, 

and then we build training modules around those good cases, cases 

that should be allowed or denied. 

As I mentioned, the RPC process takes complex cases and gives 

feedback to the decision-makers, so that they know what the policy 

guidance is. Those are just some examples, sir. 

Mr. BECERRA. Thank you. Mr. Chairman, thank you very 

much. 

Chairman JOHNSON. Thank you. Ms. Black, will you close us 

out? Do you have another question? 

Mrs. BLACK. Thank you, Mr. Chairman. My last question was 

for the judge. 

Judge Hatfield, so the ALJ’s get specific training on hearing 

these cases? 

Judge HATFIELD. Yes, they do. In fact, I was the lead instructor 

for many, many years in the Agency. They get initial training, 

which is about four weeks. And then, after a year, they come back 

and have supplemental training for a week, where, after they have 

heard some cases, they are able to discuss the issues in more 

depth. 

Mrs. BLACK. And is there a review of their cases to just see how 

many cases are being approved, related to just looking at, geographically, the whole country? Because I know in some of the 

studies that I have done, it seems that certain areas of the country 

have judges that are approving more cases than others. And again, 

that is just looking at it cursorily, not looking deeply to find out 

why that is. 

But is there any sort of review to make sure that what they are 

hearing and in the cases that they are reviewing, especially if they 

are unusually high numbers, that they are reviewed? 

Judge HATFIELD. The Appeals Council, which is the administrative body above the judges, chiefly looks at cases based on denials of review, a claimant’s initiated appeals. And that has been 

their largest workload for years and years. They have expanded 

lately—tremendously, actually—to look at allowances, as well. And 

I think they are looking at more allowances at this point. 

But in terms of looking at a particular judge, there has been a 

history in the agency, sort of a bloody history, honestly, of looking 

at targeting particular judges and their allowance and denial rates. 

So it is a little tricky in that area. I will say, though, and I said 

this before in my testimony, is there is somewhat of a bias at the 

ALJ level to pay a case, because the allowances aren’t looked at as 

deeply as the denials. Denials are on appeal. Whereas, in the DDS, 

as Art said, they look at about 50 percent of the allowances. But 

in terms of the denials—so there may be a bias in that particular 

part of the process to deny a case, as opposed to pay. 


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So, I believe there isn’t quite the balance here between allowances and denials at each level that there should be. 

Mrs. BLACK. I think that is another area, when you look at the 

disparity geographically, that we might want to look at a little 

deeper to find out what the justifications are there, and why it 

seems that some areas the judges find in favor much, much more 

than other areas. 

So thank you for your testimony. 

Chairman JOHNSON. That has been a problem. As a matter of 

fact, especially in Puerto Rico. I won’t say any more than that. You 

know what I am talking about. 

Thank you, witnesses, for your testimony. I thank you also to the 

Members that are here. Understanding the challenges of achieving 

fair and consistent disability decisions is critical to making sure 

that the Disability Insurance program can keep serving the people 

it needs to serve the most. 

And, with that, this Committee is adjourned. Thank you. 

[Whereupon, at 11:47 a.m., the subcommittee was adjourned.] 

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Arthur Spencer 


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David Hatfield 


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Trudy Lyon Hart 


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Public Submissions For The Record 

Jim Grennan 

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Æ 


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