Disability claims soar; lawyers making millions

During the Great Depression, when Congress was first considering a federal insurance program for the disabled (the law didn’t pass until almost 20 years later), a Social Security Advisory Council actuary warned of costs beyond “anything that can be forecast.”

The fear was that well-intentioned assistance for any person with impairments of mind or body that would keep him from being gainfully employed for their rest of his life would devolve into a version of unemployment.

That warning has proven prophetic as this country’s Social Security Disability Insurance (SSDI) program has spun out of control and is now on course to run out of money by 2016.

Sunday night, CBS 60 Minutes aired a segment entitled “Disability USA,” which probed the abuse of SSDI.  Steve Kroft reported that SSDI rolls have risen 20 percent just in the last six years to 12 million people, with a budget of $135 billion.

West Virginia, despite a small population, is a big contributor to the SSDI rolls.  The AP reports that “West Virginia leads the nation in the percentage of adults receiving government assistance for disabilities.”

A big reason for the surge in SSDI is that people who have had their claims denied are hiring law firms that specialize in winning appeals.

According to 60 Minutes, “Last year, the Social Security Administration paid a billion dollars to claimants’ lawyers out of its cash-strapped disability trust fund.  The biggest chunk–$70 million—went to Binder & Binder, the largest disability firm in the country.”

Jenna Fliszar, a lawyer who used to work for Binder & Binder and represent clients from West Virginia and other states, told CBS, “I call it a legal factory because that’s all it is.  They have figured out the system and they’ve made it into a huge national firm that makes millions of dollars a year on Social Security Disability.”

In 2011, the Wall Street Journal’s Damian Paletta reported on one Huntington-based disability judge who nearly always sided with the claimant.  Judge David B. “D.B.” Daugherty awarded benefits in all but four of 1,284 cases during one fiscal year.  The national average is 60 percent approval.

A report by the Committee on Homeland Security and Government Affairs estimates that Daugherty awarded more than $2.5 billion in benefits in the last 7 years of his career.

The Journal reported that Daugherty worked closely with lawyer Eric Conn, who advertises heavily in southern West Virginia and eastern Kentucky, looking for potential clients. Daugherty resigned after the Journal’s reports. Conn, who continues a thriving practice in SSDI cases, was evasive in a brief interview with 60 Minutes about his relationship with the former judge.

The abuse of the SSDI system has caught the attention of the Senate Committee on Government Affairs. It held a hearing Monday and issued a report finding “a raft of improper practices by the Conn law firm to obtain disability benefits, inappropriate collusion between Mr. Conn and a Social Security Administrative Law Judge (Daugherty), and inept agency oversight which enabled the misconduct to continue for years.”

The Committee report says Daugherty’s bank records show $96,000 in cash deposits from 2003 to 2011, for which Daugherty refused to explain the origin or source of the funds.

As one of the SSDI administrative judges said, “If the American public knew what was going on in our system, half would be outraged and the other half would apply for benefits.”

Frankly, it’s predictable that Americans hit by hard economic times are tempted to latch on to any government help they can, especially when there is an alliance of lawyers, doctors and judges willing to shepherd them through the system.

In doing so, however, they are squandering taxpayer dollars and bankrupting a legitimate program.

 

 





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