This week, the Senate Committee on Homeland Security and Governmental Affairs lead by Senator Tom Coburn (R-OK) released an investigative report on Social Security Disability Insurance (SSDI) entitled, “How Some Legal, Medical, and Judicial Professionals Abused Social Security Disability Programs for the Country’s Most Vulnerable: A Case Study of the Conn Law Firm.”  In the report’s Executive Summary, it says:

In 1993, Eric Christopher Conn opened a legal practice in a small trailer next door to his boyhood home in rural Eastern Kentucky. Located in Stanville, Kentucky, along Highway 23, his office was two hours from the closest major city and over an hour from the Social Security’s main regional office in Huntington, West Virginia. Despite operating in a sparsely populated town of 500, Mr. Conn would go on to build one of the largest and most lucrative disability practices in the nation.”

The report focuses on the improper and lucrative relationships between Mr. Conn of the Conn Law Firm, David B. Daugherty, a Social Security Administrative Law Judge (ALJ), and local physicians.  It is also an indictment of the SSDI program and the ineptness of Social Security oversight.  The report tells Congress to provide adequate funding to the Quality Division of the Office of Appellate Operations, the office that reviews ALJ decisions on SSDI claims.  It recommends the agency conduct more reviews, improve ways to measure the quality of disability decisions, and to provide that information to Congress.

Dr. Coburn, in a "60 Minutes" interview, was also critical of Congress in that it has not done enough oversight of SSDI.

But the bigger picture is that the report provides a window into government programs that are initially created to help a small number of people but end up growing into gigantic government giveaways. Their poor structure and lack of oversight invite and permit shysters and con artists to steal from taxpayers and ultimately harm people who truly need government assistance.

In May 2013, the Social Security Trustees said that the Social Security Disability Trust Fund would likely be exhausted by 2016 and would only be able to pay approximately 80 percent of scheduled benefits.  In 2011, SSDI paid out $132.3 billion but only collected $81.9 billion in dedicated pay-roll taxes.  To make up the difference, money was taken from the Trust Fund, which at the end of 2012 had asset reserves of about $123 billion.

This is the second report Dr. Coburn and his staff had undertaken on SSDI.  An earlier report released last year showed that more than 25 percent of three hundred SSDI claims reviewed contained errors or had poor quality analysis.

Here are some highlights of the key findings in the new report find:

-          The Administrative Law Judge Daugherty awarded billions in benefits in the last years of his career, moving an “unusually large number of disability cases through the agency and awarded an unusually high percentage of disability benefits.”  Between 2005 to mid-2011, Judge Daugherty awarded disability benefits to over 8,000 individuals with an estimated total award of benefits exceeding $2.5 billion.

-          From at least June 2006 to July 2010, Judge Daugherty telephoned the Conn law firm each month and identified a list of Mr. Conn’s disability claimants to whom the judge planned to award benefits.  For each claimant he told Conn whether he needed either a “physical” or “mental” opinion from a doctor.

-          After receiving the disability claimant list, Mr. Conn’s office scheduled appointments for certain doctors favored by the law firm.  The firm conveniently provided several “residual functional capacity” (RFC) forms with the medical information already filled out to their favored doctors.  The doctors signed the forms without making any changes.  In many cases, the only information that differed among the forms were the names and social security numbers of the claimants. The forms contained no unique medical or employment information, a statistically rare occurrence.

-          The preferred doctors often had suspect credentials such as having their medical license suspended or revoked in another state.

-          Mr. Conn was well paid by the Social Security Administration.  Between 2006 to 2010, the SSA paid Mr. Conn over $4.5 million in attorney fees from Judge Daugherty’s cases alone.  SSA records show that in 2010, Mr. Conn was the third highest paid disability law firm in the country with receipts amounting to over $3.9 million in attorney fees from the SSA.

-          The doctors favored by Mr. Conn that “evaluated” his claimants were also well paid: some $2 million to five doctors over six years.

I recently wrote about the need for SSDI reform in CAGW’s Blog Swineline just a few weeks ago.  Many policy analysts argue that SSDI has become a “de-facto” welfare program.  In The Atlantic, Jordan Weismann argues that SSDI is now “America’s $124 billion secret welfare program.” He says since the early 1990’s “the number of former workers receiving payments under it has more than doubled to about 8.5 million” with “more than five percent of all eligible adults are now on the rolls, up from around 3 percent twenty years ago. Add in children and spouses who also get checks, and the grand tally comes to 11.7 million.”

If scam artists and fraudsters continue to abuse the program, it is clear there will not be enough money for the truly disabled. This new report only confirms action needs to be taken immediately to reform SSDI.