Committee on Ways and Means, Subcommittee on Social Security, 6-11-02 Testimony

Statement of Paul Verkuil, Professor of Law,
Benjamin N. Cardozo School of Law, Yeshiva University, New York, New York

Before the Subcommittee on Social Security,
House Committee on Ways and Means

Hearing on Social Security Disability Programs' Challenges and Opportunities

June 20, 2002

I am pleased to be here this morning to discuss the findings and conclusions of a recent study for the Social Security Advisory Board (SSAB) that evaluates various proposals for changes in the judicial review structure relating to Social Security disability determinations. The study was conducted for the SSAB by Professor Jeffrey Lubbers of American University, Washington College of Law and myself, and was submitted on March 1, 2002. Professor Lubbers is with me today. I believe the Committee has copies of the complete study.

Background

In the last few decades, there have been several legislative proposals to modify the current system of judicial review of Social Security Administration (SSA) disability cases, including one model that would change the review structure after the administrative law judge (ALJ) stage by creating a new Article I court structure (a “Social Security Court”) with Article III review limited to legal and constitutional issues; and another that would maintain the current district court review structure but centralize court of appeals review in a special Article III court (a “Social Security Court of Appeals”).

While these and other alternatives are not themselves new, they have become increasingly relevant in light of recent events. The number of disability claims is expected to rise in the future for several reasons: (1) the impending retirement of Baby Boomers, (2) the downturn of the economy in the last two years, (3) the resumption of continuing disability reviews (“CDRs”) by the SSA, and (4) the increasing tendency of private insurance companies to require as a condition of payments that claimants pursue their offsetting SSA disability benefits.

These caseload realities create pressure on the SSA to achieve more uniform, fair, and efficient decisionmaking and will eventually add to the caseload of the federal courts on judicial review. In addition, during the last decade, a possible model for Article I/Article III shared review of disability cases has become a reality with the emergence of a program for review of the Department of Veterans Affairs disability claims.

Finally, in 1994, Congress also made a significant structural change in the social security program, by separating SSA from the Department of Health and Human Services to “ensure that ‘policy errors resulting from inappropriate influence from outside the agency such as those occurring in the early 1980s do not recur in the future.’” As a result, the agency is now independent and better able to assist in a restructuring of the process.

The Current System of Judicial Review

After the Social Security Administration signs off on a disability case, either as a result of an ALJ decision or Appeals Council consideration, the losing claimant has an opportunity to appeal to the federal district court. While traditionally known as a trial court, the federal district court serves an appellate function in SSA disability review. In this role, it is called upon not to hear matters in a trial de novo as it traditionally does, but to apply the substantial evidence standard to the record before it. Over the years, substantial evidence reviews of disability cases by district courts (and even subsequent review of such decisions by courts of appeals) have remained a heavily contested matter.

This modification of the role of district courts is made necessary because of the size of the disability caseload, which makes the usual practice of direct review of formal administrative adjudication in the courts of appeals impractical. For example, during the decade 1990 to 2000, the number of new disability cases in the federal district courts nearly tripled from 5,000 to 15,000. In terms of impact upon the court system, during the one-year period ending September 30, 2000, Social Security cases represented 5.86 percent of all civil district court. It seems clear that the substantial judicial resources allocated to disability determinations are not used in a cost-effective manner

I do not wish to minimize the significant symbolic role (as well as a corrective one) that federal district courts play in our judicial system. But over the years, the theoretical advantage of Article III court oversight in SSA cases has become more limited in practice. District judges increasingly review disability cases not by themselves, but through surrogates: Article I magistrate judges take evidence, decide on summary judgment, or remand to the agency. In FY 1999, magistrates decided over 40 percent of disability cases.

In addition to caseload concerns within the district courts, there are genuine concerns as to uniformity of decisions around the country—not only in terms of widely varying reversal rates, but in terms of development of the law. A Social Security Court would be a remedy for both of these problems.

Possible Concerns

Opponents to such a court counter these arguments by saying that the concerns are overstated and that a new court would be inconvenient to claimants, would produce a windfall of appointments for the current President, and might become “captured” by the SSA or those that tend to favor a higher rate of denials of claims.

I understand those concerns, but believe that caseload and uniformity problems are acute enough to warrant serious consideration of changes in the current system. I believe that the current system of administrative hearings (with a somewhat revised system of administrative review), followed by review by an Article I Social Security Court, with a right of appeal on questions of law in the regular courts of appeals (as with the current Tax Court) is the best approach.^[1] Concerns about convenience can be addressed by having regional offices for the SSA Court. Concern about politicized appointments to the court would, of course, be ameliorated by the Senate confirmation process, but could be addressed more directly by requiring the judges to be appointed like commissioners of independent agencies, with one political party limited to a bare majority.

Down the road, I could also foresee the combination of such a court with the current Court of Veterans Appeals to produce a Federal Disability Court.

Next steps

Whatever happens with the judicial review proposal, we believe several steps can and should be taken at the SSA level. First, the use of attorneys for the government requires further consideration, and we are currently looking at this issue for the SSAB. Second, consideration should be given to the long pending suggestion of closing the file at the ALJ stage. Third, amending the “good cause” remand provision in the current law (section 205(g)) should also be considered, to reduce the ease with which district courts simply remand cases back to SSA.

Finally, we believe much can be done to better utilize and improve the performance of ALJs in the disability decision process, separate from the Article I court idea. An ALJ appeals process (using two or three ALJs to review their colleagues’ decisions in precedential or other selected cases) could aid uniformity and correctness, and, if it works well, could take over the error correction and quality review functions now performed by the Appeals Council.^[2] The resources currently spent on the Appeals Council (reportedly over $64 million in FY 2000) could be used to cover the additional ALJs needed for the two tier review. Additionally, some Appeals Council members might be considered for positions as ALJs or as members of the Social Security Court. Moreover, the SSA should use some of these resources to improve its policymaking through rulemaking.

I compliment the Committee for giving its consideration to these ideas and others for improving our vital but overly stratified SSA disability appeals process and would be happy to try to answer any questions about our proposals.

[1] Class actions and facial constitutional challenges could be preserved in district courts, with challenges to SSA rulemakings going directly to the courts of appeals.
[2] If the ALJ stage were to be made the final stage, then SSA should also be entitled to appeal such decisions to the Social Security Court.