Fraudulent Disability Claims Threatening Social Security Program

$21 billion in false claims handed out annually

June 27, 2013

Social Security experts testified Thursday that a recent surge in falsely awarded disability benefits threatens the viability of a program whose trust fund will be exhausted by 2016.

Administrative law judges, who grant the benefits in some cases, told members of the House Oversight and Government Reform Committee that they are often pressured by the Social Security Administration (SSA) to quickly resolve the disability cases and reduce a massive backlog.

More than 63,000 people waited 1,000 days or more for a decision in 2007.

Judge J.E. Sullivan said administrators advised her to not spend more than 20 minutes reviewing medical evidence and no more than one hour on any case despite the hundreds of medical records that often accompany the case file.

The case has typically already been reviewed twice by state agencies before it reaches the judge, but attorneys will also submit hundreds of pages of documents hours before the hearing, she said.

"There’s tremendous pressure on judges to not spend time on adjudication in order to meet all the goals," she said.

The SSA distributed $175 billion in disability benefits to about 15 million recipients in 2011, according to a report for the Hofstra Law Review by Drew Swank, another administrative law judge.

He testified that about 15 percent, or $21 billion, of those benefits are improperly awarded each year to persons who are not disabled, placing a significant financial strain on a program whose coffers will be depleted in three years.

An 18-month investigation released last year by Sen. Tom Coburn (R., Okla.) found that more than a quarter of recipients in 300 randomly selected cases were awarded disability benefits by the SSA despite questionable evidence.

Those findings were similar to an internal SSA review in 2011, which determined that judges issued wrong or error-prone decisions 23 to 26 percent of the time.

Improperly paid benefits waste taxpayer money and deprive actual disabled persons of the assistance they need, Coburn said at the hearing. The average lifetime cost of a disability award is $300,000.

"For those that are truly disabled, their ability to survive on not a great amount of money is going to be severely limited if we don’t make some rather dramatic changes," he said.

The judges recommended requiring SSA representatives to attend the hearings, granting more access to case documents in advance and loosening the regulations for reporting noncompliant attorneys.

Thomas Sutton, a member of the board of directors for the National Organization of Social Security Claimants’ Representatives, disagreed with the need for wholesale changes.

He noted in his testimony that the average benefits approval rate has declined from 62 percent in 2007 to 52 percent in 2012. The disability program continues to be underfunded, he added.

However, Swank said the SSA has not always properly used its resources. The agency has received more than $1.2 billion since 2009 to conduct reviews of continuing disability payments for children, he said, but has completed almost eight times fewer reviews than 2003, when it did not receive additional funding.

Coburn called continuing disability review a "joke," adding that most SSA employees are diligent workers but are hampered by convoluted procedures.

"We need to reform the process," he said.