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

June 27, 2012

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










June 27, 2012


Printed for the use of the Committee on Ways and Means


DAVE CAMP, Michigan, Chairman

WALLY HERGER, California
PAUL RYAN, Wisconsin
DEVIN NUNES, California
JIM GERLACH, Pennsylvania
TOM PRICE, Georgia
RICK BERG, North Dakota
DIANE BLACK, Tennessee
TOM REED, New York

RICHARD E. NEAL, Massachusetts
JOHN B. LARSON, Connecticut
RON KIND, Wisconsin

JENNIFER M. SAFAVIAN, Staff Director and General Counsel
JANICE MAYS, Minority Chief Counsel

SAM JOHNSON, Texas, Chairman

RICK BERG, North Dakota






Panel 1:

The Honorable Michael J. Astrue
Commissioner, Social Security Administration

Panel 2:

Ethel Zelenske
Director of Government Affairs, National Organization of Social Security Claimants’ Representatives, on behalf of the Consortium for Citizens with Disabilities Social Security Task Force

The Honorable D. Randall Frye
President, Association of Administrative Law Judges

Jeffrey Lubbers
Professor, American University Washington College of Law

Richard J. Pierce, Jr.
Professor, The George Washington University Law School


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

Wednesday, June 27, 2012
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.


The subcommittee met, pursuant to call, at 2:00 p.m., in Room B‑318, Rayburn House Office Building, Hon. Sam Johnson [chairman of the subcommittee] presiding.

[The  advisory of the hearing follows:]


Chairman Johnson.  Welcome to the committee.  Good afternoon.  It is our fourth hearing on Securing the Future of the Social Security Disability Insurance Program.  Today we will focus on how Social Security disability claims are appealed and whether the process works as well as claimants and taxpayers have a right to expect.

In earlier hearings, we have highlighted the explosive growth of the program.  At a time when a number of workers paying into the system has increased nearly 70 percent between 1970 and 2011, the number of people receiving disability benefits has increased by over 300 percent, from 2.6 million people to 10.4 million.  By 2021, the number of beneficiaries will exceed 12 million.  By then, total benefits paid will reach $196 billion.  That is a 52 percent increase over the $129 billion paid in benefits over the last year. 

Besides the overall workforce, more women in the workforce, aging of the baby boomers into their disability‑prone years, and relaxed eligibility requirements have all contributed to this growth. 

The continued growth is putting a real strain on Social Security disability.  As we heard from the Public Trustees at our hearing last week, without Congressional action the Disability Insurance Trust Fund will only be able to pay 79 percent of benefits beginning 2016, just 4 years away.  The path we are on is unsustainable. 

Further, disability applications have spiked even higher than expected due to recession and the snail’s pace recovery, reaching an unprecedented 3.3 million last year.  Resulting appeals have further increased pressure on an appeals process that is struggling to keep up.  

Americans are also paying more for Social Security to administer its programs.  Costs are up 68 percent compared to 10 years ago, and last year administering disability programs cost nearly $7 billion, two‑thirds of Social Security’s operating budget of $11.4 billion. 

Turning to the appeals process, those whose initial claims for benefits have been denied have the right to appeal through four levels of appeal:  Reconsideration by the State agency, hearing by an Administrative Law Judge, review by the Appeals Council, and Federal court review.  An open record allows claimants to add new evidence to the file through every step of the appeals process.  Even though about 79 percent of all awards are made at the State Disability Determination Services, according to Social Security, last year about 860,000 claimants filed appeals to appear before an Administrative Law Judge. 

Americans are rightly paying attention to the hearing process.  Even though claimants are waiting close to a year on average for a decision, almost 12 percent of ALJs decide 200 or fewer cases per year.  This is in spite of the fact that Social Security has asked these judges to do 500 to 700 cases annually.  Also, the decisions of so‑called outlier judges who deny or allow most of the cases they hear can’t be questioned. 

The claimants’ representatives are part of a billion dollar‑plus a year industry encouraging appeals and making a living by collecting their fees from benefits awarded their clients.  Further, when cases are appealed to Federal courts, the courts have taken it upon themselves to reinterpret what the Social Security Act requires, resulting in varying policies applied in different parts of the country in what is supposed to be a national program. 

Now, I know some of my colleagues believe that all of these problems can be solved if we will just give Social Security more money.  In fact, over the last 6 years, funds have been poured into the hearing level for ALJ hiring, staff hiring, new offices, and technology fixes.  And while service has improved, it seems success is always just a little further down the road and depends on even more resources. 

Yet, in these tough fiscal times, Social Security has done well.  Its operating budget increased this year compared to last year despite a 1.5 percent decrease in the discretionary spending cap.  In fact, while Social Security is subject to the same long‑term domestic spending limit enacted in the Budget Control Act, that same bill authorized an additional $11 billion over the budget caps for Social Security to increase continuing eligibility reviews in its disability programs.  There were 95 Democrats, including the minority leader and the ranking member of the full committee, who supported the bill. 

Understanding why the appeals process works the way it does is just as important as making sure that those who deserve benefits receive them.  So let us ask the hard questions to determine if we can fundamentally do better.  Why do over 20 percent of the claimants who are ultimately awarded benefits have to wait at least a year for a decision?  How can benefits be awarded to those who qualify as soon in the process as possible, and why does Social Security channel so many of its resources to the most expensive step in the appeals process, even when the cost to process a case before an ALJ is more than twice what it costs a State agency to make the same decision? 

Why aren’t claimants’ attorneys doing a better job of submitting all of the evidence earlier?  Should representatives be able to encourage a client who has waited months for a hearing to wait even longer so they will get a judge who is more likely to award them benefits?  And why do some judges hold hearings for 10 minutes and others for 2 hours?  And some of them don’t even hold them.

Today, we have a number of outstanding witnesses before us, including the Commissioner who has done more to engage the attention of Congress on a wide array of needed improvements to the appeals process than any other Commissioner in decades.  So, let us take a good look at all sides of this process and find out what we can do better for everyone.  I want to thank you again for being here. 

And I now recognize the ranking member, Mr. Becerra, for his opening remarks.

Mr. Becerra.  Mr. Chairman, thank you very much, and thanks for calling this fourth hearing in our series focusing on Social Security’s Disability Insurance Program.  Before we delve into the details of Social Security’s appeal process, I want to first take a step back and look at the big picture. 

Social Security is vital to millions of severely disabled American workers and their families.  The benefits are modest, averaging just over $13,000 a year or about $35 a day for a typical disabled worker.  These benefits, however, are a lifeline for the more than half of the disability insurance recipients, the DI recipients, who would live in poverty without Social Security. 

DI recipients are only a small fraction of the most vulnerable Americans with disabilities and serious illness.  The eligibility criteria to qualify for Social Security disability are tough.  Social Security’s appeals process helps ensure that all workers who are eligible and who have earned DI receive it. 

The disability application process begins with the State Disability Determination Service, or DDS, which makes a decision on the application.  The DDS is an important part of the disability determination process, but alone, it is not always sufficient to ensure that individuals get the disability benefits that they have earned.  The decision about whether an individual is disabled enough to qualify for benefits can be a difficult one. 

In addition, there can be complicating factors in individual cases.  For example, some people with disabilities do not have access to medical care and therefore they do not have the medical records needed to prove their case.  Recognizing these realities and challenges, Congress and the Social Security Administration created an appeals process to help ensure that everyone who meets the eligibility requirements gets the benefits that they have earned. 

The current appeals process has a number of strengths, and of course there is always room for improvement.  It is designed to be fair and accessible.  It is non‑adversarial so judges can focus on fact finding and applying the law.  It is impartial because independent judges take a fresh look at the case, and their decisions are not based on meeting certain allowances or denial rates, and it is face to face, and that may be the first time that a person who is claiming disability may see an evaluator face to face and actually be able to talk to that particular evaluator. 

We are going to hear a number of ideas today about how to improve the appeals process.  I will be evaluating those different ideas using a very simple standard.  Will it ensure that Americans who are eligible for benefits are able to get them or will it create procedural hurdles or other obstacles that would deny access to benefits that they have otherwise earned? 

Budget decisions by Congress also affect whether Social Security is fair to hardworking Americans and their families.  We have seen how the Social Security Administration can reduce waiting times when Congress provides adequate funding for SSA to process claims quickly and accurately.  In 2008, waiting times for appeals hearings were at an all‑time high of 535 days of waiting.  In fiscal year 2009 and 2010, Congress, then under Democratic control, provided SSA with a total of $2.2 billion worth of new resources to reduce backlogs, and waiting times dropped to 340 days.  Still a lot, but compared to 535 days, far better. 

This current Congress has cut the Social Security Administration’s budget in 2011 and 2012.  With less funding and fewer employees, it is inevitable that hardworking Americans will have to wait longer to receive the benefits that they have earned.  We are already starting to see the negative effects of these budget cuts.  Waiting times for initial benefit decisions are on the rise and are likely to go from 111 days to over 130 days by the end of this year.  Waiting times for appeals hearings have crept up from the 340 days in October of 2011 to the current wait time of 350 days.  So once again, we are heading in the wrong direction when it comes to Americans getting the benefits they have earned. 

SSA is now facing an even bigger cut under what is called sequestration, the automatic cuts scheduled by the Budget Control Act passed last year.  Although Social Security benefits are protected, under sequestration if Congress doesn’t act soon, SSA’s operating budget will be cut by more than $1 billion on January 2 even though 100 percent of the costs of administering Social Security is paid for by workers through their Social Security taxes that they pay and put into the trust fund.  A billion dollar cut to SSA would translate into 40 days where SSA offices would be closed over the course of a year.  No one should be surprised if these harsh cuts to SSA’s budget damage Social Security’s well‑earned reputation and undercut SSA’s ability to continue to capably serve Americans as it has for over 77 years. 

Mr. Chairman, the most immediate threat to the Social Security disability appeals process is the budget cuts that would prevent appeals from being heard at all.  I hope we can work together to make sure Americans get the Social Security benefits that they have earned and deserved, and I today look forward to our witnesses’ comments on how the appeals process itself can be improved. 

And with that, I yield back.

Chairman Johnson.  Thank you.  As is customary, any member is welcome to submit a statement for the record.  And before we move to our testimony, I want to remind our witnessed to please limit your oral statement to 5 minutes.  However, without objection, all the written testimony will be made part of the hearing record. 

We have two panels today.  The first one is a single witness, Commissioner of Social Security, Michael J. Astrue.  Welcome, Commissioner.  You may proceed.


Mr. Astrue.  Thank you, Mr. Chairman.

Mr. Chairman, Ranking Member Becerra, members of the subcommittee.  During my first week as Commissioner in February of 2007, I testified before this subcommittee about the hearings backlog.  To put it mildly, you were extremely upset about the delays your constituents faced while waiting for a disability decision.  The backlogs had steadily risen throughout the decade, and the plan I inherited to fix those backlogs was draining resources and making the problem worse. 

At that time, over 63,000 people had been waiting over 1,000 days for their hearing, some of them were waiting as long as 1,400 days.  We were failing the public.

Rather than devise yet another signature initiative that would not stand the test of time, we went back to the basics.  We developed an operational plan that focused on the nitty‑gritty work of truly managing the unprecedented hearings workload.  We made hundreds of incremental changes, using video more widely, improving information technology, simplifying regulations, standardizing business processes, and establishing ALJ productivity expectations to name just a few.  We also committed the resources our employees needed to get this work done and done right. 

This plan has worked.  Average processing time which stood at 532 days in August of 2008 steadily declined for more than 3 years, reaching its lowest point of 340 days in October 2011.

In 2007, filing rates had been stable for some time.  So looking at the number of pending cases was a reasonable, if imperfect, method to measure progress.  As the recession hit and the number of requests for a hearing dramatically increased, we steadily improved our performance when measured by average processing time, the best metric for tracking progress, particularly in times when filings were changing rapidly. 

Like a line in a store, the customer’s experience depends not on how many other people are waiting, but on how quickly we help them.  In August 2008, people waited an average of 532 days.  Today, that is about 350 days. 

Average processing times also became more uniform around the country.  The most dramatic improvements have occurred in the most backlogged offices.  Average processing time in Atlanta North dropped from 900 days to 351 days.  Oak Park, Michigan, improved from 764 days to 254 days.  Columbus, Ohio, went from 881 days to 351 days.  Currently, no office in the country has an average processing time greater than 475 days.  Fifteen offices have hit our ultimate goal of 270 days or less, and many others are getting close. 

These numbers are even more impressive because we have given priority to the oldest cases which are generally the most complex and time consuming.  Five years ago, we defined an aged case as one waiting over 1,000 days for a decision.  Through the steady work of our employees, we now define an aged case as one taking over 725 days to complete.  Next fiscal year, our management goal is to raise the bar on ourselves again by focusing on completing all cases over 675 days.  This emphasis on eliminating aged cases increases average processing times.  So we also look ahead to see how long people in the queue have been waiting for a hearing.  Today, that number is just 208 days, and we are hopeful that figure will drop again next year.  By contrast, the average wait was 324 days at the beginning of fiscal year 2007. 

Despite our employees’ hard work, the progress in addressing our hearings backlog is happening more slowly than the public deserves.  If we are not adequately funded and we cannot timely hire enough qualified ALJs and support staff, our progress will erode.  We have already had to make decisions that have slowed progress such as canceling our plans to open eight new hearing offices in Alabama, California, Indiana, Michigan, Minnesota, Montana, New York, and Texas.

Amid huge economic and budgetary unpredictability, we have stayed focused on eliminating the causes of your moral outrage in 2007.  Now we need Congress to enact the President’s budget request so that we can meet our commitments to the American public. 

Thank you, and I will be happy to answer any questions you may have. 

[The statement of Mr. Astrue follows:]

Chairman Johnson.  Thank you, sir.  Appreciate your testimony.  And since this may be your last meeting with us, we thank you for your service to Social Security and to the government. 

Mr. Astrue.  Thank you very much.  I have been actually waxing a little sentimental.  I realized it has been 27 years since I first testified before the Ways and Means Committee, and it is a real privilege to work with an institution that touches the American public in so many ways from taxes to health care to Social Security to trade. 

Chairman Johnson.  Thank you.  As is customary, for each round of questions, I will limit my time to 5 minutes and ask my colleagues to also limit their questioning to 5 minutes as well.

Options that would allow Social Security to better manage the hearing process, Commissioner, protections are included in the Administrative Procedures Act to ensure that Administrative Law Judges are able to make decisions without agency interference.  In our next panel, Judge Frye testifies that using an APA official protects a claimant’s constitutional right to due process, but Professor Lubbers from our next panel says the Supreme Court has not agreed with this rationale in the case of hearing for benefits.  Also, Professor Lubbers testifies that ALJs are not required by Social Security law. 

You have said that ALJ decisional independence places limits on your ability to manage the performance of judges even when some judges process far fewer or far more cases than peers or award or deny far more or fewer cases than their peers.  And you have also discussed your challenges with the Office of Personnel Management providing you with qualified ALJ candidates, including the fact that they don’t do background checks, even for lifetime appointments. 

And you have also told us that disciplinary action against an ALJ takes up to 2 years to process while the judge can stay home with full pay and benefits.  Given all of this, why do we need ALJs at all to do the work? 

Mr. Astrue.  I was trying to figure out what the question was going to be. 

I think the question has been asked several times before, and I know we got Professor Lubbers’ testimony right before the hearing so I did take a quick look at the statute.  The general authorizing language for conducting hearings doesn’t specify administrative law judges.  That didn’t stop me from trying to look at the statute, and I think there is some ‑‑ we will get back to you on the record, but it looks to me, and I will be interested in what my friend, Mr. Lubbers, and what Judge Frye have to say, it does look to me in other places in the statute that Congress has assumed that the ALJs are now part of the process, and I think we will have to go back and give you a formal opinion for the record on that.  But I am looking specifically at 42 USC 423(h) as one example where Congress seems to assume that they are in fact embedded in the process at this time.

[The information follows: Transcript Insert #1]

Chairman Johnson.  Yeah.  I don’t think it is mandatory at all under congressional edict.  Professor Pierce
on our next panel recommends eliminating the role of ALJs as decision makers or at least amending the law to make it clear that Social Security has the power to evaluate the performance of judges and take needed action.  And in my opinion, you don’t have that. 

What are the pros and cons of changing the law to make clear that Social Security has the power to hire their own judges and evaluate their performance?

Mr. Astrue.  Well, I certainly think that when this committee was regularly reviewing the performance of the Office of Personnel Management regarding the ALJ process, that was very constructive from my point of view.  We saw real progress that we had not seen in the previous decade.  Since the last time that we testified together, I think that it has not ‑‑ that change has disappeared.  And so I do think ‑‑ Commissioners have been testifying since 1977 before this committee about difficulties with OPM on the administrative law judge process.  I think that you need to look at this with some intensity and say has that agency consistently and timely provided quality judges, not only for us, but for all Federal agencies. 

And I think that the definition of qualified that they use is totally inappropriate because in order to be a judge, there is a high level of professional accomplishment and a high level of moral character that should be required.  And when we say well qualified, we are using a different standard from what the Office of Personnel Management has been using, and I think the fact that we have made so much progress in the last 5 years comes from using that higher standard. 

Something that I think you should be pleased about, Mr. Johnson, because I know it has been one of your concerns, is the number of outliers has been reduced dramatically in the last 5 years.  If you look, you have used the 85 percent standard.  We have gone from almost 20 percent to about 5 percent that are allowing more than 85 percent of those cases, and that is largely the influence of hiring right.  A judge who is arrogant, who behaves badly, is also not going to apply the statute that you have enacted faithfully. 

So I think the emphasis on quality in the judges is important, and I have to say, over decades I don’t think the standard of the Office of Personnel Management has been high enough. 

Chairman Johnson.  Well, I think they have no requirements for judges, and we need to get some in.  I am going to ask one more question. 

Last December, the Wall Street Journal published an article entitled “Two lawyers strike gold in U.S. disability system.”  The article is about a law firm, Binder & Binder, which collected $88 million in fees, all paid from claimants’ past‑due benefits.  In their testimony, Professors Pierce and Lubbers of our next panel refer to the incentive representatives may have had to drag out cases since the fees are a percentage of the client’s past‑due benefits. 

Is it true that the longer it takes to get a decision, the higher the representatives’ fee will be? 

Mr. Astrue.  Yes, it is, Mr. Chairman. 

Chairman Johnson.  And you don’t agree with that, do you? 

Mr. Astrue.  Well, I think it has been a concern for many years.  In I think it was 1987 when this subcommittee took up the attorney fee matter, I was part of the team on the other side that raised some concerns about the economic incentives of the current system.  So it is clearly a risk. 

I think most of the attorneys and representatives most of the time are very honorable about not abusing the system, but the incentive is there, and I think we do see a significant minority of representatives abusing the system from time to time, both in this and manipulation of assignment of judges.

Chairman Johnson.  Part of the problem is they are appointed for life.  You can’t get rid of them. 

Mr. Becerra, you are recognized for 5 minutes. 

Mr. Becerra.  Mr. Chairman, thank you, and Commissioner, thank you for being here and also thank you for your years of service to the people of this country. 

Let me make sure, I want to be clear on something.  The FICA tax, which everyone pays when they get their paycheck every week or month, they see a deduction for FICA, that is the money that goes into Social Security and Medicare, the FICA tax that we see, the contribution that workers make and have been making for 77 years to the Social Security Trust Fund and the Social Security system.

That FICA tax money, which is used to cover Social Security, covers benefits and also your operating expenses.

Mr. Astrue.  Yes.  It is a specific appropriation.  We can’t just tap that money.  It is a specific appropriation that is then drawn from the trust fund, yes. 

Mr. Becerra.  So Congress sends you money, it is appropriated money, and ultimately Congress gets reimbursed by the trust fund for the money it has given to you to operate.

Mr. Astrue.  I am not sure I fully follow the question, Mr. Becerra. 

Mr. Becerra.  So the money for you to pay your employees and to cover all of your overhead, your lights, your computers, you don’t get extracted directly from the trust fund.  The trust fund has the money.  You get an appropriated amount, then Congress makes sure that the trust fund covers what the appropriation was? 

Mr. Astrue.  Yes, I think that is essentially right. 

Mr. Becerra.  So essentially workers, when they make that tax contribution, the FICA tax contribution, they are paying for the cost not just of the benefits for today’s Americans who are retired and getting a pension benefit through Social Security or who are disabled and getting a benefit, those workers through their FICA taxes are also paying for the cost of administering all of the Social Security program? 

Mr. Astrue.  Yes, that is right. 

Mr. Becerra.  Yet, we are finding that Congress, and I think you said something in your testimony, that Congress so far this year is ‑‑ you are going to be getting a lower amount than you requested in your budget.  I think you said something in your testimony.  I was struck by it.  Something over the past 2 years, the gap between what the Social Security Administration needs to serve the American public and the resources actually appropriated by Congress was the biggest, the gap was the biggest it had been in 20 years.  So as I say, it has been more than $2 billion short of what it needed to process all claims promptly, reduce wait times for disability cases, answer its phones and perform all of the other work it does to serve the American public. 

So no matter how hard your employees at SSA work or how well you prioritize, eventually Americans are going to be paying the price for the shortchanging of your agency when it comes to the budgetary needs that you have.  And so when you mentioned the wait times for these appeals hearings or the wait times to have your initial application processed, that is the consequence of not having the resources to get the work done.

Mr. Astrue.  Yes, and let me stress that I think we are different from most other Federal agencies in that because of demographics and because of the recession our workloads have gone up dramatically.  You know, we are not like certain other agencies that can simply prioritize things differently.  When people come and apply for benefits we have to process those claims, we have to process the appeals.  We are taking in more than a million applications more each year between disability and retirement than what we had originally projected driven by the recession, and I think in fact if this recession had been less deep and less long, it would have made a huge impact on the hearings backlog.  I think we would be at the 270 by now if the recession hadn’t been so deep and long.

Mr. Becerra.  So the recession is making the problem deeper and more people are applying but you are getting less money to try to operate and provide those services.  My understanding is that you have already had to close a case processing center and that you have had to cancel the opening of eight new hearing offices and a telephone service center that could have served quite a few of these folks who are applying for services and benefits.

Let me ask one other question with regard to your ALJ policy, the policy for these judges, and thank you, by the way, for your commitment to review some of the policy changes that you are trying to move forward with, and in this case with regard to the disclosure of the names of these judges at the hearing level in advance of the hearing, we had a conversation about that.  Can you real quickly, and my time is going to expire soon, just give me a sense of the status of your review and when do you expect to take steps to revise this policy in light of the concerns that have been raised about the perhaps over broad nature of the policy itself and how it might be detrimental to those applicants for disability benefits. 

Mr. Astrue.  Right.  We viewed the policy, I think, and have from the get‑go really as a stopgap until we come up with a broader, more effective solution.  I think this is an issue that caught us a little bit off guard.  I don’t think until our management information got better we didn’t realize how much the system was being manipulated and in how many ways and at what cost to the integrity of the system. 

We have a team working on this.  I have met with the team.  We are meeting again the second week in July.  I think on the initial reaction, we don’t think ‑‑ the good news is we don’t think that we need to come to Congress for statutory changes.  We think that we can address this with a pretty complicated mix of administrative initiatives and regulatory initiatives.  What the exact mix of those are and whether the administrative things that we could do more quickly make sense without some of the regulatory initiatives, we are not sure yet.  So we have, to say we have a plan at the moment would be overstated.  I think we have more of a plan to have a plan.  But I think we will have a better sense late July, early August.  But it would have to go through the rulemaking process on key parts of it.  That will mean it will be a little slow.  It is a particularly difficult time of the year to get things through the rulemaking process but we are working on it.  We will do the best we can as fast as we can. 

Mr. Becerra.  Thank you.  Thank you, Mr. Chairman. 

Chairman Johnson.  Thank you.  Mr. Marchant, you are recognized. 

Mr. Marchant.  Thank you, Mr. Chairman.  Welcome, Commissioner.  Thank you for your visit last week.  We had a good visit.

Mr. Astrue.  It was indeed.

Mr. Marchant.  I appreciate it.  State Disability Determinations award roughly 79 percent of all awards at a cost of about a third of what it costs a judge to process a request for a hearing.  Beyond compassionate allowances and quick determination screenings that you already have in place, what can be done, what more can be done to resolve the deserving claims at the State level? 

Mr. Astrue.  I think that is a great question.  I think ‑‑ and very timely.  We just issued a press release I believe on Monday on what I think is one of the most significant things will change the basic paradigm of how we do business.

An enormous amount of our administrative budget is spent chasing down, collecting, and organizing stray, generally paper medical records.  And we often don’t know for sure that we have them all.  So it is not only a big cost, a big source of cost and delay but also of inaccurate decisions.  When we move to a world where most Americans have a completely electronic medical record, it will enormously improve what we are doing.  We have done some small pilots with a few of the providers and insurers who are already there.  What we have started now with Kaiser Permanente is our first large‑scale effort in this area, and I think this is going to be tremendously important, and it is going to take probably 3 to 5 years to work out the arrangements, and the private sector is moving slowly for a variety of reasons.  But we are going to get there, and you will see 3 to 5 years from now a dramatic improvement I think in our costs, our speed, and our quality when we can essentially push a button and in most cases get a complete medical record electronically. 

Mr. Marchant.  And during the entire process, the medical record stays open throughout the entire appeals process? 

Mr. Astrue.  Yes, that is right. 

Mr. Marchant.  So is there any merit to closing the records at some point so that somebody that is making the decision can actually make a decision without having to the next day take in new information and make another decision?  Is there a fair process where you close the case? 

Mr. Astrue.  Well, we thought so, and in the New England region, we still have closure of the record before the ALJ 5 days before the hearing.

To use the phrase from the testimony, to put it mildly, this subcommittee took umbrage when we tried to propose that notice and comment rulemaking and made it extremely difficult for the agency to pursue that.  But we proposed that and had to withdraw that in 2008, I believe. 

Mr. Marchant.  Okay.  And the last question I have for you, and I come from a State legislative background, and I believe that the local, State determinations are probably the most efficient ones.  But with the rise of disability claims that we have seen in the last few years and with the State having an integral part of the qualification for unemployment benefits and the State also having an escalating Medicaid expense, have you noticed, or is there a trendline where States are trying to shift people from unemployment into disability and then from disability where they stay on disability, I think it is 2 years, and then they go from Medicaid to Medicare, and the State then basically can shift them from the Medicaid element where they are putting a match in over into the Medicare element?  Do you see States that are developing a philosophy towards that?

Mr. Astrue.  Anecdotally, we think the answer to that question is yes to some extent.  Maybe not so much unemployment as TANF.  We actually brought in an academic expert a few years ago to help us try to track and document that.  It has been very difficult to provide hard evidence of that.  But we do think that there are States that for their own budget reasons are putting up barriers to State benefits and requiring an application to us for disability even though there is no reason to believe that the person is disabled.  So we do see some of that.  How big, how big a factor that is, I don’t think that we know.  I think it is relatively small, but it is an abuse that exists and we wish that States would not do that. 

Mr. Marchant.  Thank you, Mr. Chairman. 

Chairman Johnson.  Thank you.  Mr. Brady, you are recognized.

Mr. Brady.  Thank you for the discussion, Representative Marchant, about the need to make these determinations as early as possible.  But Commissioner, thank you for your service and leadership of the agency and wish you well.

Mr. Astrue.  Thank you.

Mr. Brady.  Going forward. 

You have a great servant’s heart.  So thanks for what you are doing. 

Mr. Astrue.  Thank you.

Mr. Brady.  Two questions.  One dealing with fraud both at the front end and those applying for it at the back end.  There are people who are capable of working but ‑‑ and do but defraud us in the process of continuing disability reviews.  What is the status of our efforts to fight fraud within disability and what more can we do again to capture the money we really need for people who are truly disabled? 

Mr. Astrue.  Sure.  So, I know that I and other Commissioners have been through this in the past.  And I know that there have been efforts to come up with a mechanism that would allow us to do this that hasn’t been successful yet.  But the single most important thing is timely review of existing beneficiaries.  We all know that there is an enormous payback to the taxpayer from timely continuing disability reviews.  Those have dropped dramatically in the years before I got here.  They have gone up dramatically.  But remember, I don’t set them.  I come and I plead and I beg here in Congress, and I have been somewhat successful so the number has gone up pretty significantly and substantially but it is not where it should be.  And this past year we had to reverse, we were geared up, we thought, both committees in appropriations passed 582,000 and then at the last minute the bill passed and the number was 435.  And we had to not only not hit a more appropriate level, we had to reallocate a lot of resources halfway through the fiscal year. 

Coming up with a mechanism so that the agency has the resources to do that work is, I think, tremendously important.  I think some of the new technologies that we have put in place have very high returns as well.  We have ways now of checking assets with banks.  The early returns were 20 to 1 return.  We don’t think we are going to see that on an ongoing basis.  We don’t know yet what the return is, but the return on that is very high.  We are trying to come up with a similar system for other types of assets, real estate assets, and things like that.

Also, I put in a pitch for the Inspector General for budget reasons, the number of CDI units which are these joint SSA, IG, local law enforcement units which have been very successful, I think, on the whole.  The number of those that we have are going down rather than up, and I think that is penny wise and pound foolish. 

Mr. Brady.  How about at the front end?  One, thank you for that comment on timely reviews.  How about on the front end and through the process, not just those who are hiding assets but those, and providers who are enabling those to try to defraud the system with medical disabilities.  What percentage of applicants are we now identifying through the process on the front end? 

Mr. Astrue.  Right.

Mr. Brady.  You know, who are attempting to defraud the system? 

Mr. Astrue.  It is relatively small, but the disability examiners are actually quite good about being alert on these things and they do do a significant number of referrals.  Some of our administrative law judges have been very sharp about this, too.  One of the more spectacular ones that we are working on now came because of a very alert ALJ. 

I would say if you were going to focus on one thing, I think that the treating physician rule historically, you know, relied on a different paradigm.  You know, there was a time when we all had a Marcus Welby as a personal physician, and that is not true anymore.  In fact, we are increasingly seeing physicians who are essentially extensions of the lawyers doing the representation, I mean often sometimes physically housed within those complexes. 

I don’t know that those kinds of physicians should be given the same deference that the court interpretations of your statute require us to do, and the courts are also all over the place in terms of treating physician. 

I know there is always a lot of skepticism about the agency’s view on this.  So what I would say to you is get some good outside advice on that.  At least reconcile the conflicting court interpretations so that we do this uniformly and fairly around the country.  But I think it is also a fair question to ask, given how the world has changed, is the rule that struck people as appropriate 34 years ago still appropriate today.

Mr. Brady.  Are there significant resources and are there insignificant punishments for either physicians who are complicit or complainants’ reps who are complicit?  Do you think we have what is needed in place to prevent that type of fraud? 

Mr. Astrue.  Probably not.  I think we have tried to do more.  I will be candid with you.  I think that there is probably more we can do administratively.  We are struggling with the resources, I think, but we are trying to do that.  I think there probably are some places where we could use some more help from the Congress.  So if I could get back to you on the answer for the record on that I think it would be a better response.

[The information follows: Transcript Insert #2]

Mr. Brady.  Great.  Thank you, Mr. Chairman. 

Chairman Johnson.  Thank you.  Mr. Doggett. 

Mr. Doggett.  Thank you, Mr. Chairman.  And thank you, Commissioner. 

I have a follow‑up on the same two concerns that Mr. Becerra raised.

Mr. Astrue.  Sure.

Mr. Doggett.  First with reference to your budget, the moneys that finance your budget are from taxes that have already been paid and are being paid.  Those taxes are not going down.  It is a question of whether we provide the resources to Social Security to effectively and efficiently provide the services that a worker who has the misfortune of disability would expect.  And you mentioned some goals on appeals, for example. 

Is it correct that currently, that you do not have the resources to replace Social Security Administration employees who retire or depart to another job? 

Mr. Astrue.  As a general matter, Mr. Doggett, yes, that is correct.  We have got a hiring freeze in place with some very limited exceptions that relate to backlog reduction.

In addition, we have, and I will give you the exact number for the record, probably slightly over a thousand temporaryemployees that basically we are waiting to see what happens with sequestration.  We have gone up to the 1 percent statutory limit more or less on the retired annuitants.  We have also, to the extent that we have made exceptions in the hiring over a lot of objections from some of my people, I have said the people that have been with us the longest, that is where our obligation is first.  So to the extent that we have done hiring in the last 6 months it has been temporary so that if we have a deep cut under sequestration, we will let those people go and take less out of the people that have been working for us for 20, 30 years.  So we have got a large group of people who are hanging in the balance waiting to see what happens with sequestration.

[The information follows: Transcript Insert #3]

Mr. Doggett.  And while your oral testimony referred to the significant progress you have made in reducing the backlog on the time that an appeal takes, those numbers are beginning to trend back up, aren’t they?  In recent months they have gone up from the low that you talked about last October? 

Mr. Astrue.  Slightly.  And I think statistically I would call it approximately level.  And there is some wobble.  I am swearing in 40 judges tomorrow and we have got some more coming.  So I think that by the end of the year there is a good chance that we will be essentially level for most of the year.

Mr. Doggett.  Is it unlikely that you can meet your objective of 270 days unless your budget is fully funded? 

Mr. Astrue.  Yes.  So let me, let me be totally forthcoming.  I think we were making extremely good progress on the 270.  There were doubters.  So Congress asked GAO to look at it and they gave us a 78 percent probability a couple of years ago of hitting it.  I will be honest with you, it is very unlikely we are going to hit the 270 on time now.  And it is a combination of the recession, timely judges from OPM, and funding for staff.  I am doing all I can on each of those three things, but those are the critical factors. 

Mr. Doggett.  Let me turn to my second concern, and that is the question of the change that was made last December so that someone who is coming to bring an appeal can find out who the judge is.

Mr. Astrue.  Right.

Mr. Doggett.  And I have been a judge before coming to Congress and I have also been a litigator, and it was always important to me whether I was bringing a claim or defending a claim to know who I would be presenting that claim to.  As it relates to in‑person conferences, not video conferences, is there any good reason why the practice that Social Security has followed in the past of letting someone know before they walk in the hearing room who the judge is, why that ought not to be continued? 

Mr. Astrue.  Yes.  So I think in fact it embodies a fairly important principal of justice.  And again, I think if we had realized the extent to which random assignment was being manipulated, we would have acted sooner, and that is because when you have as much manipulation as we are concerned that we have, the consequence of that is that the 15 percent of the claimants who are not represented are, by definition, getting the stingiest judges.  And I don’t think, I mean, these tend to be the people who are the least sophisticated and tend to be the people who are the most impoverished.  And I don’t know how you can say ‑‑

Mr. Doggett.  If it is in fact random assignment, why can’t you announce who the judge is before you walk in the room? 

Mr. Astrue.  But Mr. Doggett, it is not random assignment.  What we have discovered is that claimants’ reps have found a number of ways to manipulate the system and that the principle of random assignment has been violated in any of a number of ways.  This is why it is taking us so long to come up with a fix.  It is not just the video hearings, it is not just, you know, the particular problem we had at Huntington.  As we have dug into this, there are a variety of problems around the system that come from nonrandom, you know, the random assignment being violated.  And what we are trying to do is get a handle on that as best we can with a permanent solution.  But in the meantime, I don’t think it is fair or appropriate that the people who are, as a general matter, on the bottom end of the spectrum get the judges that are least likely to award them benefits.  I just don’t ‑‑ I mean, we are supposed to be representing these people, too.  And that is what judges are supposed to do when they come into hearings.  They are not supposed to be ‑‑

Mr. Doggett.  I hope you will supplement the record on specifically what ‑‑ if there is random assignments, specifically what has occurred that you can’t resolve in some other way than denying an opportunity to find out who the judge is before you walk in the room and on video conferences specifically so long as there is agreement that if you agree to a video conference, you get the judge that is assigned in the video conference, what is wrong with that? 

Mr. Astrue.  If you allow a friendly amendment to your request, what I would like to do is come up and brief staff because several of these issues that have come up which are not public have or potentially have a law enforcement dimension to them.  So I would rather not lay that out in the record.  And I also would rather not ‑‑ to the extent that we are being defrauded or the system is being abused, I would rather not lay out publicly how it is done as a roadmap for others until we can do this.  So what I would like to do, and hopefully we can do this on a friendly, bipartisan basis with the majority and minority staff, is come up and go through some of these other things that we have come across that have given us the basis for significant concern. 

Mr. Doggett.  Thank you. 

Chairman Johnson.  There is a little bit of manipulation among the law firms, too, that represent some of these people.  They are in it for the money. 

Mr. Becerra.  I think that is more on the video. 

Mr. Doggett.  And that is why because he really didn’t respond on the video part.  If you agree to a video hearing and you get whatever judge is to be assigned at random from one of the national centers, why isn’t that sufficient protection on video? 

Mr. Astrue.  Well, because under the current rules, you are allowed to manipulate and pick and choose.  You can see who you get on the video and then you could decide to decline. 

Mr. Doggett.  But if you are restricted and your only choice, and you change it and your only choice is to get the judge assigned on the video, why isn’t that sufficient? 

Mr. Astrue.  Well, we are looking exactly at doing that, but I believe that my, at least interim advice from general counsel is that I need to do that through notice and comment rulemaking.  The other thing, again without compromising what is happening, the other technique, and I am concerned also about this on some other levels from a claimant’s perspective, is that a number of reps who have gotten into the practice of simply withdrawing an appeal and then refiling.  And that is another way in which random assignment has been manipulated in some part.  And some of this is our fault.  Some of this, you know, I don’t know that we have been entirely consistent even in applying our own rules.  So it is a difficult problem.  It is an important principle of justice to get this right.  And we are trying to take the time to do this right.  And in the interim I think what we are doing we acknowledge it is not perfect and we have not represented that we want to continue to do it indefinitely.  I would be delighted to go back to telling people who the judge is.  I don’t think it is the ‑‑ I think the criticism is a little bit overwrought in that, you know, it is the same, VA, NLRB, I don’t believe you get notice of the judge.  Most worker’s comp you don’t get notice. 

I, too, was a trial attorney in my reckless youth.  In the Massachusetts Superior Court, at least in 1985, when I tried my first case, you didn’t know who your trial judge was until you walked in and then it changed on a monthly basis.  So you know you couldn’t really design a case for the predilections of a judge because a judge would change multiple times over the course of a trial. 

So again, I am not defending what we are doing.  And I have been, I think, straightforward.  I don’t want to continue.  I would be perfectly happy to put the judge’s name back on.  But I don’t want to do it until I fix things that are important for the integrity of the system. 

Mr. Doggett.  Thank you.  Thank you, Mr. Chairman. 

Chairman Johnson.  That was a good answer.  Thank you so much.  And, you know, during your term you have worked with two different administrations and your dedication to doing the job to the best of your ability has never wavered in my view.  The American people and we are grateful for your focus on the disability program.  During these challenging times and along with your achievements, thanks for your service, your leadership. 

I have one final question.  Based on your experience, what advice would you give your successor? 

Mr. Astrue.  Buy a flak jacket.  I think that the most important thing is to realize that you do take a lot of criticism in this job.  And it is because Social Security is such an important institution to the public and the expectations are very high.  We are in a world where it is going to be very hard to satisfy those expectations in the coming years. 

What I would urge my successor to do would be in part to urge all of you, you know there are several ways to try to do this better.  You know, one is to spend more money on the status quo.  The other is simplification, and we have tried to do what we can from a regulatory point of view.  This committee I don’t think has ever gone systematically back through the Social Security Act and say, well, is what we made sense in 1964, 1977, 1992, doesn’t make sense today.  And it is an extraordinarily complicated act.  And I think that there are opportunities where we shouldn’t come ‑‑ any kind of partisan divide where we can say look, let us just make it simpler.  I mean, one of the things that saved us the first year, we did administratively, is we realized for 30 years we have been requiring original birth certificates brought into the office or mailed to us with every retirement application and we did not need that because we could authenticate through other more modern needs.  It made sense in 1965, but it did not make sense in 2007.

I think there are a lot of opportunities to straighten out.  This is only one small part.  This is probably only about 10 percent of the Social Security Act right here, and I think that we can find opportunities ‑‑ maybe you should get some outside expert advice, but I think you could find a lot of ways to simplify it that would lower our administrative costs.  So if you don’t want to give us the money, there are other ways to do it.  And I think that, I actually regret that I hadn’t given this speech a little bit earlier and asked you to consider doing that.  And I think for the next person I think it is good advice.

Chairman Johnson.  Modernize the system.  We can do that. 

I forgot Mr. Smith.  I apologize.  I forgot Mr. Doggett first.  So you are the second one.  You are recognized. 

Mr. Smith.  Thank you, Mr. Chairman, and thank you, Commissioner, for your service, and certainly for your time here today.

Going back to I think what Mr. Doggett was talking about a little bit, my office has worked with a situation where it is our understanding that an applicant’s attorney recommended the applicant request a delay of their hearing because they felt they would get a different, perhaps a more favorable hearing from a different ALJ.  Obviously this raises questions and some were touched on a bit earlier, certainly about the uniformity of the system and perhaps what you could point to in addressing that uniformity.  But I would say even more so when we talk about the workload, if one judge has prepared to hear a case and then ends up not doing anything with it and then someone else has to prepare and who knows what circumstances will surround that as well.  How should we address this?  What would you have to say about moving forward and perhaps on the judge anonymous policy that was touched on earlier as well? 

Mr. Astrue.  I think the thing to do is to work with us to try to get some consensus on particularly the things that we need and notice and comment rulemaking.  I have been surprised at least a few times where things that looked like there was consensus and not very controversial became very controversial in the rulemaking process, and sometimes the Congress contributed to that. 

So I think what we are trying to do is to try to figure out as much of a consensus approach as possible, and I do want to give some credit to the, to NOSSCR, the attorneys group, because they have already come to us and put some things on the table which I think we would have thought were unlikely to try to help us to fix this problem.  And I want to commend them for you know taking that step in the public interest.  And I think if we can all work together on this to try to devise a combination of administrative and regulatory approaches to straighten this out and just get it done and get it over with as quickly as possible, then I think the world will be better off.

Mr. Smith.  Okay.  Thank you.  I yield back. 

Chairman Johnson.  Thank you.  Thank you for your testimony. 

We will proceed to our second panel now. 

And will the witnesses please on the second panel take your seats? 

Ethel Zelenske, Director of Government Affairs, National Organization of Social Security Claimants’ Representatives, on behalf of the Consortium for Citizens with Disabilities Social Security Task Force on the left, or your right. 

The Honorable Randall Frye, President, Association of Administrative Law Judges.  Welcome back. 

Jeffrey Lubbers, who is Professor at American University Washington College of Law. 

And Richard Pierce, who is Professor at the George Washington University Law School. 

Thank you all for being present. 

And Ms. Zelenske, you are recognized.  Please go ahead with your testimony.


Ms. Zelenske.  Chairman Johnson, Ranking Member Becerra, and members of the subcommittee.  Thank you for inviting me to testify today on behalf of the CCD Social Security Task Force. 

Ms. Zelenske.  Title II and SSI cash benefits are the means of survival for millions of individuals with severe disabilities.  In the past, I represented claimants at all administrative levels and in Federal court.  My experience made me all too aware that behind the numbers are individuals whose lives have unraveled while waiting for decisions. 

I recently received an email from a gentleman who appealed to the hearing level.  This is how he described the appeals process from a claimant’s perspective:  “I just don’t understand why everyone is denied two times and forced to wait to have a hearing.  I was very prepared from the onset with my documents.  SSA was sent letters from my neurosurgeon, neurologist and two separate pain management doctors who I have been going to on a monthly basis for the past 8 years.  Being denied was mind numbing.  We lose everything we worked for over the years during the waiting process.  I am currently over $100,000 in debt and have sold everything of value, including our wedding rings.  My car was repossessed, and now my home of 18 years is in jeopardy. 

The pressures of my medical issues have caused our marriage of 18 years to collapse.  I have never been a fragile man.  I am educated with a university degree.  I have been active in my community and even own my own small company.  It is hard enough for a family or a person just to deal with an illness, but it is harder when the government can keep your life on hold while you are ill.” 

While the wait for a hearing is still too long, processing times have been significantly reduced over the past few years, now around 350 days, dropping more than 6 months.  We support the Commissioner’s goal of reaching 270 days by the end of next year.  However, we are deeply concerned that any progress will be stymied due to a lack of adequate resources for SSA, thus putting that goal and other critical workload benchmarks at risk.  We appreciate the subcommittee’s past support to provide SSA with adequate funding and urge support for the President’s fiscal year 2013 request that will allow SSA to continue to move forward. 

Central to the fairness of the SSA appeals process is a claimant’s right to a hearing before an ALJ.  While ALJs have recently come under increased scrutiny, it is important to recognize several points.  Favorable ALJ decisions account for only about one in five allowances with the vast majority made by DDSs.  The overall ALJ allowance rate has been dropping, and it is at the lowest level in years.  There are many legitimate reasons why ALJs reverse DDS decisions, as detailed in my written statement.  And favorable ALJ decisions are being reviewed by SSA to determine compliance with agency rules and policies but in a manner consistent with the law ensuring the independence of ALJs. 

We do not support proposals to have the government represented at hearings.  The longstanding view of Congress, the Supreme Court and SSA is that the process is informal and not adversarial.  SSA had a previous pilot where the agency was represented.  I represented clients at a hearing office in the pilot and can confirm Congress’ findings at the time that the pilot did not achieve its purported goals.  It led to longer processing times, did not improve the quality of decisions and did not result in better prepared cases.  While radically changing the process, the expense was enormous, costing more than $1 million per year in 1986 dollars for just five hearing offices.  Today there are more than 140 hearing offices. 

We support many of the Commissioner’s initiatives to reduce processing times and make the process more efficient, including technological improvements, such as online access to electronic claims folders and the ability to file appeals and submit evidence electronically.  Also, there are a number case screening mechanisms that expedite decisions without sacrificing accuracy. 

I am glad to report that the gentleman I described earlier was found eligible through one of these hearing level screening initiatives.  My written statement discusses our recommendations for improving the process for people with disabilities, such as increasing the time for hearing notices and helping claimants to obtain representation earlier in the process to assist with development of the claim.  We also provide recommendations to better develop claims at the initial levels so that the correct decision can be made at the earliest point possible and then the unnecessary appeals can be avoided.  Thank you and I would be happy to answer any questions.

Chairman Johnson.  Thank you. 

[The statement of Ms. Zelenske follows:]

Chairman Johnson.  Randall Frye you are recognized.

Judge Frye.  Thank you very much. 

Mr. Chairman, Ranking Member Becerra and members of the subcommittee, thank you very much for the opportunity to be here this afternoon to talk about some very important issues with respect to the disability adjudicatory system at the Social Security Administration. 

I am president of an organization that represents 1,400 judges, and I feel like the weight of all 1,400 are on me every day because I hear from them on a regular basis, and I understand the trauma that is ongoing dealing with a rather significant backlog. 

There are some good things, however, that are happening at the agency, good things that result from your actions:  3 years ago you responded favorably in a budget context that permitted the agency to appoint several hundred additional judges and staff, and we have dealt with the backlog.  We have worked exceptionally hard. 

It is troubling to hear or to think that come January, the bottom may fall out of this progress.  So I urge you on behalf of all of the American people to, please, do what you can to ensure that this agency is funded so we can continue with the disability backlog. 

While I think the judges and the staff have worked well, there are some things that haven’t worked so well, and we have some ideas that we would like to share with you.  What isn’t or hasn’t worked well, quite frankly, is that ‑‑ and believe me, we understand the importance and need for goals in everyone’s life, personal and professional.  Goals have driven this democracy to the highest levels.  What we have been faced with as judges, however, are not goals; they have been quotas.  Quotas are destructive, and they force decisions before they are ready.  If you understand the process, as you most certainly do, under the present structure, judges have the responsibility of wearing three hats, incredible responsibilities in wearing three hats, representing the government or the people, representing the claimant’s interest and of course ensuring that the law is applied correctly to a decision.  That is a heck of a burden if you think about it. 

It requires the judge to engage in rather aggressive and vigorous examination of a claimant.  Oftentimes that puts one at loggerheads with the claimants and claimant’s represent ‑‑ it almost places the judge in truly an adversarial relationship in the process.  That is not a healthy judicial environment.  It is not good in my view to have the judge wear three hats. 

It is certainly good that the record is developed.  Indeed, without record development, we cannot make a decision. 

An answer we think to this problem and an answer that at long term would save money is to have the government represented.  If you think about it, and I have said this before, how many corporations or companies that you know of would go to court, facing a lawsuit where the plaintiff is seeking $300,000, without representation?  That is what is happening in our courtrooms.  The government comes without representation. 

Indeed, I recognize part of my responsibility is to represent the government, but what I am trying to communicate to you is that it is a very difficult process.  It is a balance that sometimes gets skewed. 

We believe the advocacy of a government rep would be important, but even more important from the claimant’s perspective, a government representative would be assigned the cases early in the process.  The government representative would develop or ensure development of evidence is in the record.  The government representative would work with the claimant and the claimant’s attorney to pay the case as early as possible, without a hearing.  Thus saving the more expensive time for conducting a hearing and having to issue a written decision after a hearing. 

The government rep has a lot of value.  It is the individual that would be designated in a hearing office that the attorney on behalf of a claimant could call and talk to about a case to find out the status of a case.  Right now, if you talk to many representatives, it is quite difficult to talk to anyone in a hearing office; not because we are unfriendly, it is just that everybody is swamped with work. 

The problem with the quotas is particularly perplexing to I think anyone, any professional who has to have time to consider important and complex issues.  What has happened to us is because with all of the wonderful programs the agency has established over the last few years, the easier cases are getting addressed before a hearing or many of them are.  The cases we hear are far more difficult.

Chairman Johnson.  Can you close?  Your time has expired. 

Judge Frye.  I am sorry, I will indeed.  I have other points that I made in my statement.  And I would like if at all possible submit a statement on the APA and its applicability to our hearings at the close of hearing.

Chairman Johnson.  Sure. 

Judge Frye.  Thank you very much.

Chairman Johnson.  Thank you, sir.

[The statement of Judge Frye follows:]

Chairman Johnson.  Mr. Lubbers you are recognized.

Mr. Lubbers.  Thank you, Mr. Chairman, Ranking Member Becerra, for inviting me to be here today.  I am a Professor of Practice in Administrative Law at American University Washington College of Law where I have taught since 1996.  As I note in my biography from 1975 to 1995, I worked at the Administrative Conference of the United States, ACUS, and am now serving as special counsel at the revived Administrative Conference.  However, I want to emphasize that my views I am expressing today are just my own and as an administrative law professor and should not be ascribed in any way to the Administrative Conference. 

The growth of the SSA disability adjudication program has been phenomenal.

Chairman Johnson.  Is your mike on?

Mr. Lubbers.  The growth of SSA disability adjudication has been phenomenal.  In 1973, the then president ‑‑

Chairman Johnson.  I forget mine, too. 

Mr. Lubbers.  ‑‑ of the Association of ALJs reported that the number of disability proceedings reaching the hearing level had, quote, “jumped to an unbelievable 56,000.”  That year the per judge disposition rate was 143 cases per year.  Today those numbers seem miniscule.

Commissioner Astrue has said that he expects the case load to reach 832,000 in fiscal year 2012 with about 1,400 ALJs.  The per judge disposition rate has more than quadrupled to 594.  And this rise in caseload shows no sign of slowing down. 

Now to sketch out the legal context of the program, I would mention that although SSA benefits once received are an entitlement, which means that the government cannot terminate benefits without a formal hearing.  It is not so clear, based on Supreme Court case law, whether that level of due process applies to initial applications and denials of benefits.  The Supreme Court has never held that an applicant for public benefits possesses a property interest protected by due process. 

Another unresolved issue is whether the formal adjudication provisions of the APA are applicable to SSA disability adjudications.  While this is an interesting legal and historical question, it is one that I don’t think is all that crucial to resolve because, ultimately, the issue of the APA’s applicability is up to Congress, and the APA itself gives both Congress and the agency a lot of flexibility. 

But to clarify my own answer to this question that you mentioned, I think that if you just look at the language of the Social Security Act, an APA hearing would not be mandatory, but that analysis is probably trumped by the clear message Congress and this subcommittee sent in the 1970s when it converted the temporary SSI judges into full‑fledged ALJs. 

Now, over the years, I have urged a number of key process reform proposals that I summarize in my testimony, many of these ideas were included in SSA’s 2006 DSI reform proposal.  However, other than a couple of the proposals, the rest of the DSI program was prematurely terminated apparently due to resource constraints caused by the crush of caseload pressures that worsened after 2006. 

I would like to see a renewed effort to implement these process reforms.  However, that may not be possible now.  So I have suggested some possible options and approaches in dealing with some of these caseload pressures.  Some of them are incremental, such as increasing the use of rulemaking and increasing the use of video communications technology, and some more fundamental.  Some of the more fundamental change options might include modifying the role of Appeals Counsel to increase the quality control review of grant cases and to use selected appeals counsel decisions as systemwide precedents; second, replacing both the Appeals Counsel and the district court stages with a Social Security court; third, making SSA hearings adversarial, although I am not convinced that that would be cost beneficial; and fourth, taking advantage of the APA provision that allows specially designated administrative judges, even in APA hearings. 

Now this last option requires a bit more explanation.  If Congress does become persuaded that circumstances require that hiring more ALJs is no longer the tenable answer, Congress could specially provide for or designate another type of adjudicator under the APA.  Congress has done this occasionally.  A prime example is the special authority given to the Nuclear Regulatory Commission to use atomic safety and licensing board panel members to hear nuclear licensing cases.  In those cases, Congress wanted to provide the agency with the flexibility to not only use law trained judges to hear licensing cases, but also scientists.  Now some have suggested using doctors as adjudicators.  I am not sure that is a good idea, but I do think that there are enough problems with the ALJ program to perhaps lead Congress to suggest that there is a need for a specially tailored SSA ALJ program.  And in doing that, Congress could allow SSA to basically hire its own judges, using the OPM process.  They have done that with the NRC and with boards of contract appeals. 

Congress could also consider departing from the current ban on performance appraisals for ALJs.  I know there are arguments on the other side of that issue. 

So there are a number of things Congress could do if they specially designated Social Security ALJs.  My overall point here is that the SSA’s ALJ program size and perhaps the character of its cases may now require some special treatment.  By providing the menu in my testimony with some commentary along the way, I hope I can assist this committee in performing its historical role in protecting the viability of this historic program.

Chairman Johnson.  Thank you, sir.

[The statement of Mr. Lubbers follows:]

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

Mr. Pierce.  Chairman Johnson, Ranking Member Becerra, and other members of the committee, thank you for giving me the opportunity to share my views on this important topic.  To me, there are two major problems at present with the present Social Security disability program.  One is that it is increasingly and unsustainably generous.  The proportion of the population that has been determined to be disabled has doubled.  The cost of the program has more than quadrupled, and that is primarily due to ALJ grants after two denials by State agencies. 

The other problem is related to that; there is massive variation in the ALJ grant rates.  The latest numbers I have seen were 8.6 percent grant rate for one judge; 99.7 percent for another judge.  This is a problem that has been extremely well documented for over 35 years.  A book written by six reachers in 1968 ‑‑ 1978, excuse me, concluded that the identity of the judge is far more important than facts of the case in determining the outcome of the case.  If you don’t address that problem in some way, 35 years from now, someone else is going to be telling you that it still exists. 

I think there are three sources of the problem.  First of all, let me back up and say that one of the reasons this is so difficult is most of the cases that are in the subject of dual denials at the State level and grants at the ALJ level involve one of two disabilities, mental disease and pain.  And the National Institute of Medicine and the National Institute of Mental Health tell us that over half the population suffers from one of those conditions.  Obviously, we cannot have a situation in which over half of the population is qualified as permanently disabled. 

What judges have to do, and it is difficult for any decisionmaker, judge or not, is to figure out whether someone is so severely mentally ill or so severely subject to chronic pain that they are not able to work.  And when you look at the variation in the ALJ grant rates and you look at the overall increase in the grant rates over time, it is quite obvious that while some judges are continuing to grant disability only to those with severe mental illness or severe pain, some now grant them routinely to people with minor mental illness and minor chronic pain. 

And by the way, I fit in both categories, so I suppose I should have applied a while back.  The sources of the problem are three:  First of all that the administrative law judges cannot be subjected to any process of evaluation or system of quality control.  You are in a position to correct that problem and I hope you will. 

The second is that this whole system of decision making was designed to operate without lawyers.  Well, today, 85 percent of the applicants are represented by lawyers or other professional representatives.  This has changed the nature of the process dramatically and certainly as a contributor both to the wide variation in grant rates and to the increase in the number of people who are determined to be disabled.  Something needs to be done about that. 

What I think you need to do, what I would urge to you do, is reduce the extremely generous fees that are now available that, as I read a report the other day, amounted to $1.5 billion last year and change the method of calculating the fees to eliminate this problem of a major economic incentive to delay cases. 

The third source is, frankly, the courts.  The courts pay no attention to what you say in your statutes about scope of review.  I have in my testimony citations to studies that show the courts absolutely do not pay any attention.  What I would urge at least initially there is that the Social Security Administration start taking cases, more cases, to the United States Supreme Court.  It has shown over the years far more respect for your views about scope of review than have the district courts and the circuit courts.  It may take two or three cases, but I think that is what has to be done. 

And to help that along, I am going to file a petition for rulemaking at SSA next week to urge them to take an action that most certainly will get them into court.  And I hope the United States Supreme Court will then get the lower courts back doing what you have told them to do.  Thank you.

Chairman Johnson.  Thank you, sir.  I appreciate that.

[The statement of Mr. Pierce follows:]

Chairman Johnson.  Judge Frye, the agency has published its expectations to do 500 to 700 cases a year.  In your testimony, you say the current misplaced emphasis on numbers has perverted our system of justice.  So are you saying there should be no expectations? 

Judge Frye.  No.

Chairman Johnson.  That judges should take as much time as they like as claimants wait in line? 

Judge Frye.  Absolutely not, as I indicated earlier, I strongly believe in goals, but the better standard a wider range.  If you just do the numbers, if you can look at a paper file of 600 pages of medical evidence, do you want a judge to spend 2 hours on that or do you want a judge to spend whatever time he or she needs to understand the case?  That is the problem with you have to do 500; you have to do 700.  Judges work hard ‑‑ to do those numbers, they are working 7 days a week.  I get emails every week complaining and asking for some help.  So, no, we are working hard, and we believe in goals, and judges are responding to goals.  Most professionals don’t work well with unreasonable quotas.

Chairman Johnson.  How many did you do last year? 

Judge Frye.  You know, I don’t know.  I have ‑‑ I am 90 percent on official time, but I honestly don’t know, probably somewhere around 50 to 100.

Chairman Johnson.  Okay.  Well, I was in the office in Dallas, and I can tell you that one judge out of 12 was working a normal day. 

I understand one of the ALJ union vice presidents in the Buffalo hearing office told judges not to process more than 300 cases a year.  Is the union pushing that? 

Judge Frye.  I have never heard that statement, and I honestly find it incredible.

Chairman Johnson.  Thank you. 

And earlier this year, after the Inspector General reported that claimants or their representatives were declining video hearings so that a case would be assigned to a judge who allowed more cases, Social Security is now not identifying the ALJ until the day of the hearing.  Do you think that is right or wrong? 

Judge Frye.  I think all of our hearings should be transparent, should be open to the public.  I think our notice of hearing should clearly set forth all of the issues of the hearing, including the judge’s name.  The government can’t do its business in secret.

Chairman Johnson.  I hear you. 

Ms. Zelenske, do you know why claimant representatives would cancel hearings for their clients who had been waiting months to see a judge? 

Ms. Zelenske.  There are many legitimate reasons why people ask for a continuance if that is what you are asking.  I mean, the claimant may be ill and unable to travel to the hearing that day.  I mean that is usually the most typical reason that people ask for a continuance of the hearing.  I mean, I get from the reports we get from our members, it wouldn’t normally be because the evidence ‑‑

Chairman Johnson.  What percentage of them are done by TV nowadays, do you know?  Any of you? 

Ms. Zelenske.  SSA has that information.  I think I saw ‑‑ I think it may be around 5 percent.

Chairman Johnson.  So, is that all? 

Ms. Zelenske.  I could be wrong.

Chairman Johnson.  They have it rigged for more than that. 

Professor Lubbers, with a program this large and this complex, does it make sense that Social Security can’t oversee the performance of judges for consistency?  And are there any other programs that you know of that do it right? 

Mr. Lubbers.  I think, and I have written on this government wide, that I think that administrative law judges should be subject to some sort of performance appraisal in a peer review way conducted by the chief judges at the agencies.  And doing that properly would not infringe on their independence. 

I think in this particular program where the caseload pressures are so great and efficiency is such an important value, I think there is even a stronger reason do it in a Social Security Administration program.

Chairman Johnson.  Thank you. 

Mr. Becerra, you are recognized. 

Mr. Becerra.  Chairman, thank you. 

And to the witnesses, thank you very much for your testimony. 

Judge Frye, I want to ask you about some of your comments about this current informal process that is used.  I have deep concern with what you said about moving toward an adversarial system.  Let me tell you why, we just heard the commissioner tell us that he has a very tight budget, a budget that doesn’t allow him to do everything he needs to do, which is putting a greater load on many of your fellow judges. 

Where would we get the money to pay for the new now government attorneys that you would want to have conduct these adversarial hearings where now you would have a more formal presentation of documents, and it seems to me, not only do you increase the cost of going through that administrative appeals process now, but you probably prolong it to the point of maybe having appeals to the appeals hearing to the different stages going up to the Federal courts, in which case now Social Security is now having to pay for representation at the court level, Federal court level as well. 

I would think that we would want to recognize that, one, we are talking about typically the poorest folks in America who are the sickest, probably the frailest, who probably do not have money to hire really high‑powered attorneys, maybe hire an attorney, but we are not talking about hiring, you know, the Jones & Jones law firm.  My sense is that it would be better to give you quite a bit of power to conduct the informal hearing to try to extract as much information as you can from the individual or his or her representative.  And therefore, you feel comfortable that you can go at that individual if have you to go at them pretty harshly or treat them with a little bit more care because they may be very ill, in which case what you are trying to do is extract the information as best you can, so you can come out with the decision.  Ultimately, that individual still can go above you if he or she is not satisfied with your decision, but at least what we do is give you quite a bit of discretion to try to come up with a good decision and then, of course, deal with the outlier judges who are granting too many or too few. 

Judge Frye.  I could give you so many different answers to each of the points you make. 

I think, however, with respect to government representation and the cost, there would be so much savings from the appeals of cases at the higher range that was mentioned earlier, 99 percent, I suspect you would save billions ultimately.  Now, there is another built‑in savings ‑‑

Mr. Becerra.  Do me a favor, send me whatever you can to corroborate what you just said. 

Judge Frye.  We will do the math.  And I would be most happy to. 

[The information follows: Transcript Insert #4]

The other savings, quite frankly, and it is a huge savings, we are one of the ‑‑ my background is with the National Labor Relations Board.  And I well know the regional office structure there and how they function.  This agency also has a regional office function, the district offices.  But in addition, we have ODAR, Office of Disability Adjudication, having regional offices that performed no direct case adjudications.  These are very expensive.  They are in the most expensive cities in the government, occupying the most expensive space.  Maybe 30 years ago, that layer of management and that layer of bureaucracy was okay.  I don’t think we can afford it anymore.  Those resources should be in direct ‑‑

Mr. Becerra.  Now, you are going into a little beyond what I asked, but fair.  I think anything you can tell us that will help us reduce cost, I ‑‑ we would love to hear it.  I am concerned about moving what is an informal hearing process into a very formal adversarial process. 

And Ms. Zelenske, let me see if I can ask you the same question because you represent or your organization helps represent a lot of claimants that go before the Social Security agency for these benefits, disability benefit hearings.  What is your opinion about moving toward, from an informal non‑adversarial hearing process to a more formal adversarial process, where you would have attorneys on each side going at it in front of a judge? 

Ms. Zelenske.  I did have experience with that in the pilot in the mid‑1980s, and it didn’t really work out the way it was intended.  It was cases weren’t allowed more, and they weren’t better developed, which I think was one of the bigger issues about it. 

If you think about it, the people, the claimants going into a hearing are asked very personal questions about their lives and what is going on in their lives.  And I think you want to keep it more as informal as possible.  It is still nerve‑wracking for them when they go into a hearing.  It is their day in court.  It is their day dealing with the government.  And you want to try to keep it informal. 

I mean, I have to say that from my experience, when I did hearings, most of the ALJs weren’t adversarial with the claimants.  They were trying to elicit the information or have the representative help get the information out that is necessary to make the determination to see if they are eligible under the statutory definition of disability.  And I this think that is why you don’t want to turn it into an adversarial process.

Mr. Becerra.  Mr. Chairman, thank you very much.  And thank you all for your testimony.  Please any information you can provide us to help guide us, we would very much appreciate it. 

Chairman Johnson.  Mr. Marchant, you are recognized. 

Mr. Marchant.  Thank you, Mr. Chairman. 

Mr. Pierce, can you explain to this member of the committee the disincentive or the incentive for a lawyer that takes a disability case to resolve the case quickly as opposed to over a period of a year or two? 

Mr. Pierce.  As I understand it, there is no incentive to resolve it quickly.  There is the opposite incentive because the fee is dependent on the amount of the past benefits that are awarded.  And so there is a natural incentive to delay as long as possible in order to maximize the potential fee. 

Mr. Marchant.  So it is just a pretty simple math equation for most of the lawyers? 

Mr. Pierce.  That is my understanding. 

Perhaps Professor Lubbers has looked at it in more detail than I have. 

Mr. Lubbers.  No, but I think Mr. Astrue reaffirmed that position when he talked about most claimants’ representatives didn’t do this, but that some minority did. 

Mr. Marchant.  And Judge, what was the average age or what is the average age of a case once you sit down and begin to focus on it?  What is the time that has elapsed from the time the person called the State, made the claim from that date, and then what is the average time of the mature claim, once they get to the appeal process? 

Judge Frye.  Of course, it varies depending on the office staffing and so forth, but the typical case that I have been hearing is somewhere close to 2 years old from the time it was filed.  And what typically happens once the process that the State agencies process the case and they come to the hearing level, usually that is when the attorneys get involved and far more development is done at that point.  I think that is also a reason that you see judges’ decisions that disagree with some of the DDS.  It is not because they made a bad decision; it is just that there is more evidence at the time the hearing is conducted.  I think, in most cases, I think you are looking at 2 years by the time you file the application.

Mr. Marchant.  So that person either has a support system in place, are the claimants allowed to advance fees, advance expenses to the claimants? 

Judge Frye.  No, no.  They may in certain circumstances, such as I know some lawyers will assist the claimant in getting an examination by a medical doctor, for example.  But I don’t know about any direct payment.

Mr. Marchant.  Is it legal or illegal? 

Judge Frye.  That is a very good question.  I have never had it come up before. 

Mr. Marchant.  That is a very common practice in other parts of law.  I wondered if it had pervaded this element.

Judge Frye.  I ‑‑

Mr. Marchant.  You talk about ‑‑ what would be the claim amount at 2 years? 

Judge Frye.  What would be the attorney’s fee at 2 years? 

Mr. Marchant.  No, the claim. 

Judge Frye.  It would depend on the earnings of course of the claimant.  It would be the monthly benefit times the whatever number of months back benefits would be payable, so there could be a lump payment of $10,000.  I have had it as high as $30,000 and $40,000.

Mr. Marchant.  So we are talking in the $10,000 to $40,000 range, usually? 

Judge Frye.  Right. 

Mr. Marchant.  So that is not enough of a financial incentive for a lawyer to go out and advance living expenses to someone while their case was developing?

Judge Frye.  I am not sure I can answer that.  I don’t know.  If wouldn’t be for me, but I am not sure.  I couldn’t answer for all lawyers.

Mr. Marchant.  Do any of you know of any situations where that is the case? 

Ms. Zelenske.  I don’t think attorneys would be allowed to advance, I guess, what you are talking about sort of the cost, the benefits, the possible benefits. 

What does happen and I used ‑‑ my practice was with legal services so I never charged claimants fees.  And what we would do ‑‑ I think attorneys do that now is there is an agreement if you are going to get an independent examination or you have to pay for medical records, you have an agreement with the claimant that if they win the claim, that they will pay you back.  We do that even at my Legal Aid office.  We didn’t have a lot of money, but we wanted to get that examination.  But I don’t think you would be allowed to advance living costs like you described. 

Mr. Marchant.  So most lawyers that appear before you, Judge, are they single practitioners?  Are they in law firms that advertise on Sunday nights, late, that have hats on?

Judge Frye.  All of the above.  I think typically it is a boutique, small law firm.  There are a number of solo practitioners, but usually a small firm of three to four to five individuals.  Oftentimes, it is combined with workers’ comp, practice because they kind of overlap to some extent.  For the most part, they are highly skilled and competent attorneys who appear before our in cases. 

Mr. Marchant.  I have a sister that I assisted through this process years ago, and I found that to be the case.  It was a sole practitioner.  This was his practice.  He certainly could not have become rich off of this process and seemed sincere in trying to get it resolved as quickly as possible, yet it took 2 years, and it was finally resolved. 

And a big part of our case work still in our district offices is this, referring people and assisting people.

Judge Frye.  I am sure. 

Mr. Marchant.  After they have been turned down. 

Thank you, Mr. Chairman.

Chairman Johnson.  Thank you. 

Professor Lubbers, it is my understanding that the district courts should uphold the agency decision if there is evidence in the file that supports the decision.  Do you believe magistrate justices are applying that standard of review? 

Mr. Lubbers.  Well, the APA standard is that if there is substantial evidence to support the agency’s decision, it should be upheld, the substantial evidence test.  And I think the statistics show that in the Social Security caseload area, the district courts are either remanding or reversing at a much higher rate than in other programs. 

So why that is, many of these cases do go to the magistrate judges first and then to the Social Security judge.  Professor Pierce made some comments about the courts not holding the statutory standard.  It may be that these judges don’t see that many cases individually, so they feel sorry for the claimants in those cases.

Chairman Johnson.  Is that right? 

Mr. Lubbers.  I think the statistics do show that they do not affirm the agency as often as courts do in other programs. 

Chairman Johnson.  How much fraud do you reckon is in this system?  Do you have any estimate at all? 

Mr. Lubbers.  I think you should ask the IG.

Chairman Johnson.  Yeah, the IG is into it. 

What is the role of the appeals council in setting procedural decisions or establishing quality control? 

Mr. Lubbers.  Well, as I understand it, the appeals council does mostly hear cases where the claimant has been denied and makes an appeal to the Appeals Counsel.  But in a small number of cases, very small number of cases, the appeals counsel does review granted cases, just for quality control purposes.  But because of their caseload and the denied cases, they can’t do much of that.  So I would like to see them do more of that, and I would also like to see them write some decisions that would be used as precedent decisions and that those precedent decisions would be circulated throughout the administrative law judge ‑‑

Chairman Johnson.  So all the judges could follow them?

Mr. Lubbers.  Follow it.  They would be supposed to follow them.  And that is, for example, the way ‑‑ not that this is the greatest comparison ‑‑ but the Board of Immigration Appeals does have certain decisions that they make precedential and are supposed to be followed by the immigration judges. 

Chairman Johnson.  Professor Pierce, how is Social Security supposed to balance the fact that ALJ decisions should not be interfered with as the Administrative Procedure Act requires with ensuring consistent outcomes and productivity needed to administer this national program? 

Mr. Pierce.  Well, I would start by saying I certainly don’t think that anybody in the Social Security Administration should attempt to influence the outcome of any individual case. 

But it is pretty easy to do what, for instance, the vast majority of law schools do to their law professors and say that your grades have to be in a particular range, and it is pretty easy to conform to those norms.  And if the alternative is what we now have, an 8.6 percent probability of a yes before one judge and a 99.7 percent probability before another, I don’t think there is any question that due process and equal protection of law would be served very well by establishing some boundaries within which we expect judges to have grant rates.

Chairman Johnson.  I appreciate that comment, thank you. 

Mr. Becerra, you have another question. 

Mr. Becerra.  Yeah, a couple questions. 

I want to make sure I dispel any notion that there aren’t ‑‑ judges, Judge Frye don’t you have some template that you get to use?  We have Federal district court decisions that have been handed down that give you some guidance.  My understanding is the Social Security Administration also tries to provide you with a template where there are screens where you all can sort of go through some threshold questions that you have to get ‑‑ you have to answer yourself through these hearings to figure out if the claimant has answered those adequately to be able to get to the point of saying yes or no, that they should be entitled to benefits.  So I think the point that Mr. Lubbers makes, which I think is a good one, is to try to standardize this more so that judges aren’t left to their own devices.  And I think Mr. Pierce has gone to that as well.  So you have some way of evaluating when a judge does or doesn’t grant these benefits. 

But I want to stress something, and I think it came out in some of the earlier testimony, we are not talking about rich folks.  And even if these folks win these benefits, we are not talking about them getting millions of dollars.  As you mentioned, it is maybe $10,000 a year, and maybe because they didn’t get the benefits for the longest time because the process took a year or two to finish, they are getting $20,000.  But most of that is money that they probably have to use to pay back family and friends and others that they borrowed money from to provide for their assistance while waiting to see if the Social Security Administration would grant their disability claim. 

The reason I point that out is because I fear that we are going to start to treat this the way we treat the regular legal system, where we have attorneys going at it, and you figure you better get the higher priced attorney who does this all the time and you better be prepared to go after them really hard because you want to win your case.  This is the not the case where you are going to come down with a six figure judgment.  This is very basic benefits, and the folks we are talking about are the frailest of the frail. 

And I asked staff to get me some information on the whole process itself, and this is from the Social Security Administration, where they go through and give their ‑‑ this is 2011’s disability workloads.  They can’t give us 2012 because it is still ongoing.  So, at the initial level, how many people submit an application for disability benefits?  Excuse me, 3,295,806 disability decisions were issued by the Social Security Administration in 2011.  How many of those decisions were to allow benefits?  Thirty‑four percent.  Two‑thirds, 66 percent, were to disallow at that initial stage.  So, right away, two‑thirds of all those applicants were denied benefits.  Of those two‑thirds that are denied, some of them say, okay, you deny it, that is it.  Many will say, wait a minute, I that you made the wrong decision, I want you to reconsider.  So they go to the next level of appeal, which is in many cases reconsideration; not every jurisdiction has that interim level of reconsideration. 

Appeals to reconsideration ‑‑ how many of those appeals to reconsideration did the Social Security Administration receive ‑‑ 853,142.  They issued 819,710.  Of the 819,710 decisions on reconsideration, how many of those were to grant benefits at that stage now?  Twelve percent; 88 percent of those individuals who sought benefits after that initial rejection at the second level, how many at the second level of 819,000 decisions, how many were allowed?  Only 12 percent.  So now have you 88 percent that is denied.  They say, wait a minute, we still think you are wrong; what can I do to appeal that?  Now you can get to that ALJ.  This is now at the administrative appeal level.  So you are now at the third level where you are constantly narrowing down the universe of folks who are appealing, and by the way, you are now probably getting to the more complicated cases, where it is not a simple clear fact of whether you get the benefits or not.  At the administrative judge level, the hearing level, 662,775 cases were decided.  How many were allowed?  Fifty‑eight percent of those cases were allowed; 13 percent were dismissed; 29 percent were denied.  There are still two other levels of appeals, the so‑called appeals council, which is much smaller, only 103,000 in decisions.  Only 2 percent of the individuals got allowance of benefits, and then, of course, you go to the Federal court from there, where the allowance rate for 13,271 decisions was 3 percent. 

My point here is to say this:  There are different steps along the way and every time you narrow the number of folks who are appealing because the cases are probably more complicated, more severe, and so you have a lot of work, Judge Frye, to do because you are dealing with folks that after two stages of being told no, they still believe yes, and so you are making some very important decisions.  That is why some of us believe you should be able to be aggressive through an informal process, where you can do all the questioning, as Ms. Zelenske mentioned, of that individual, the personal questions.  Try to make it as easy as possible for SSA to come out with a decision.  But it is a tough process, and I hope we recognize that we are dealing with folks who are for the most part very poor and very frail.  We appreciate your testimony and anything you can do to help enlighten us on how to move forward would be appreciated. 

Mr. Chairman, it has been a great hearing, as have been the previous hearings on this matter.  With that, I yield back.

Chairman Johnson.  Thank you.  I would like to ask unanimous consent to enter into the record a report by the Congressional Research Service which provides an overview of Administrative Judges and how they differ from ALJs and some examples of how administrative judges are used by other agencies.  Everybody has received a copy of that. 

Without objection, so ordered. 

[The information follows: Transcript Insert #5]

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

[Whereupon, at 3:53 p.m., the subcommittee was adjourned.]

Questions For The Record

The Honorable Michael J. Astrue #1
The Honorable Michael J. Astrue #2
Ethel Zelenske #1
Ethel Zelenske #2
The Honorable D. Randall Frye
Richard J. Pierce, Jr.

Submissions For The Record

David McCaskey
Max Rae
Randy Frye