Hundreds Lose SS Disability Benefits In Fraud Probe

Hundreds Lose SS Disability Benefits In Fraud Probe

A Kentucky lawyer has pleaded guilty in an unprecedented half-a-billion dollar Social Security disability fraud scheme. An attorney specializing in handling Social Security disability claims, Eric C. Conn, caused massive hardship for hundreds of former clients who were legitimately disabled when their benefits were suspended after Conn was accused of committing massive fraud.

Like retirement benefits, Social Security disability insurance benefits are based on an individual’s work and earnings history. People pay into the program through withholdings from jobs. But in recent years some attorneys have abused the system to pocket millions in legal fees for helping hundreds of applicants claim disability insurance benefits that they weren’t entitled to.

From 2004 to April of 2016, Eric Conn participated in a scheme with a former Social Security administrative law judge and several doctors, submitting thousands of falsified documents for Social Security disability claims in over 1,700 cases. Conn paid administrative judge David B. Daugherty kick-backs of $10,000 a month over a seven year period to approve fraudulent claims for his clients — reportedly, often without hearings. Conn paid doctors to sign off on falsified medical records.

In 2013 the fraud scheme became the focus of a high profile investigation covered in a widely-watched segment on CBS News 60 Minutes, “Disability USA.” Yet the Social Security Administration continued to pay Conn’s firm for two more years, through 2015, giving him a total of $23 million in legal fees for such work since 2005. That made him one of the top earning disability attorneys nationally.

In 2015, before Conn was formally charged with any crime, the Social Security Administration contacted his clients. The letters stated that their disability benefits were suspended because their lawyer was suspected of fraud. People were given 10 days to collect their medical records from years before to prove they were disabled. For some, doing so was impossible. Conn had destroyed hundreds of thousands of client records to protect himself.

Nearly 1,500 of Conn’s former clients, most of them in eastern Kentucky, went back through Social Security’s re-determination hearings. Some 46%, totaling 700 people won their cases. Eight hundred individuals got dropped from the rolls. Three committed suicide.

A new white paper on Social Security Disability Fraud released by TSCL contains a number of recommendations to prevent this sort of thing from ever happening again. First, the Social Security Administration needs to investigate suspicious claims early, before making any decision to award benefits. A pilot program that tested this approach in 2012 found that such investigations resulted in an estimated savings of $17 for each $1 spent. Second, the hearing process needs to be restructured to include an attorney to represent the Social Security Administration. Currently the SSA has no legal representation at all during the hearing process, leaving only the administrative judge and the claimant’s attorney during this phase of claim re-determination.

“With Social Security Disability facing insolvency in six years, the program needs to get determination decisions right to ensure they can pay benefits for those who legitimately meet Social Security disability’s eligibility criteria,” says TSCL Executive Director, Shannon Benton.

 

Sources: “Disability USA,” 60 Minutes, CBS News, October 10, 2013. http://www.cbsnews.com/news/disability-usa/

“Well-Known Disability Lawyer Eric Conn Pleads Guilty In Federal Fraud Case,” Bill Estep, Lexington Herald-Leader, March 24, 2017. “Curtailing Waste Fraud And Abuse In The Social Security Disability Insurance Program,” TSCL Policy Paper, January 20, 2017.

 

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