Senate Investigation Alleges Fraud By ALJ and Attorney

The U.S. Senate Committee on Homeland Security & Governmental Affairs held a hearing on Monday, Oct. 7, to outline the findings of a two-year investigation of an administrative law judge (ALJ), attorney and other staff in the Office of Disability Adjudication and Review professionals in Kentucky and West Virginia.

The investigation, led by Senator Tom Coburn (R-OK) specifically outlines and alleges an illegal arrangement between attorney Eric Conn, ALJ David B. Daugherty, several physicians and other staff at the SSA’s Huntington ODAR office led to millions of dollars in fraudulent claims and related costs for Social Security disability insurance between 2007 and 2011.

This report was initiated by several events, primarily by a series of Wall Street Journal articles about the SSDI program in 2011. That series included a study of award rates of ALJs nationwide. At the time, Judge Daugherty was singled out for having an award rate of approximately 99 percent. He retired July 13, 2011.

Findings include:

• The Senator’s report details the ALJ environment at the time Judge Daugherty was working, including increased pressure for ALJs to decide more cases, more quickly in order to clear the backlog of SSDI appeals. The report states that the environment created by pressure on the federal agency enabled the alleged situation to develop.
• Attorney Eric Conn is singled out for allegedly engaging in a number of questionable practices that are said to have included: improper communications using disposable cell phones, coordinating batches of claims so that they would be reviewed almost exclusively by Judge Daugherty, receiving knowledge in advance as to which claims the ALJ planned to approve and the medical evidenced needed to make that determination, and arranging to provide physicians with pre-completed forms about claimants in order to document their disability claims.
• Staff in the SSA’s Huntington office are alleged to have participated in a range of inappropriate behavior and, as a result, failed to prevent the abuse of the SSDI program.
• The report also alleges a variety of misconduct by parties cited in the report as a result of the investigation, including destruction of records, harassment of SSA employees and other individuals.
• The report assigns a dollar value of costs allegedly resulting from these activities, stating that Mr. Conn earned more than $4.5 million in attorney fees during this time and that five doctors received almost $2 million to provide disability opinions for Mr. Conn’s claimants. They also state that Judge Daugherty received approximately $96,000 in cash deposits that were not explained, and that Huntington ODAR staff received bonuses for performance during this time period.

We will continue to monitor this story for any additional developments, including its potential impact on the SSDI program through policy or process changes at the Agency.