[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
                 SECOND IN A SERIES ON SOCIAL SECURITY 
                  DISABILITY PROGRAMS' CHALLENGES AND 
                             OPPORTUNITIES
=======================================================================

                                HEARINGS

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                          JUNE 11 AND 20, 2002

                               __________

                           Serial No. 107-86

                               __________

         Printed for the use of the Committee on Ways and Means








                           U.S. GOVERNMENT PRINTING OFFICE
84-169                         WASHINGTON : 2003
___________________________________________________________________________
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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa                     JOHN LEWIS, Georgia
SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington            MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia                 WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania           XAVIER BECERRA, California
WES WATKINS, Oklahoma                KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

                     Allison Giles, Chief of Staff
                  Janice Mays, Minority Chief Counsel

                                 ______

                    SUBCOMMITTEE ON SOCIAL SECURITY

                  E. CLAY SHAW, Jr., Florida, Chairman

SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               BENJAMIN L. CARDIN, Maryland
KENNY C. HULSHOF, Missouri           EARL POMEROY, North Dakota
RON LEWIS, Kentucky                  XAVIER BECERRA, California
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

















                            C O N T E N T S

                               __________
                                                                   Page
Advisories announcing the hearing................................
2, 3, 4..........................................................

                               WITNESSES

Social Security Administration, Martin Gerry, Deputy 
  Commissioner, Disability and Income Security Programs..........     6
U.S. General Accounting Office, Robert E. Robertson, Director, 
  Education Workforce, and Income Security Issues................    70
Social Security Advisory Board, Hon. Hal Daub, Chairman..........    79

                                 ______

American Bar Association, Commission on Legal Problems for the 
  Elderly, John H. Pickering.....................................   199
American Federation of Government Employees, Social Security 
  General Committee, AFL-CIO, and National Council of SSA Field 
  Operations Locals, Witold Skwierczynski........................    96
Association of Administrative Law Judges, and Social Security 
  Administration, Office of Hearings and Appeals, Milwaukee, WI, 
  Hon. Ronald G. Bernoski........................................   175
Consortium for Citizens with Disabilities, Social Security Task 
  Force, Marty Ford..............................................   154
Federal Bar Association, Social Security Section, and Social 
  Security Administration, Office of Hearings and Appeals, 
  Atlanta, GA, Hon. Kathleen McGraw..............................   191
National Association of Disability Examiners, Jeffrey H. Price...   112
National Council of Disability Determinations Directors, Linda 
  Dorn...........................................................   121
National Council of Social Security Associations, Inc., and 
  Social Security Administration District Office, Hackensack, NJ, 
  Anthony T. Pezza...............................................   107
National Organization of Social Security Claimants' 
  Representatives, Nancy G. Shor.................................   161
National Treasury Employees Union, Chapter 224, and Social 
  Security Administration, Office of Hearings and Appeals, 
  Cleveland Heights, OH, James A. Hill...........................   168
Stapleton, David C., Cornell Center for Policy Research..........   126
Verkuil, Paul, Benjamin N. Cardozo School of Law, Yeshiva 
  University, accompanied by Jeffrey Lubbers, Washington College 
  of Law, American University....................................   203

                       SUBMISSIONS FOR THE RECORD

Federal Managers Association, Alexandria, VA, statement..........   234
Public Employees Federation, New York, NY, Larry Jacks, statement   239
Robinson, Philip A., Framingham, MA, statement...................   240














 SECOND IN A SERIES ON SOCIAL SECURITY DISABILITY PROGRAMS' CHALLENGES 
                           AND OPPORTUNITIES

                              ----------                              


                         TUESDAY, JUNE 11, 2002

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 3:33 p.m., in 
room 1100 Longworth House Office Building, Hon. Mac Collins 
presiding.
    [The advisory, revised advisory, and revised advisory #2, 
announcing the hearing follow:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                Contact: (202) 225-9263
FOR IMMEDIATE RELEASE
June 4, 2002
No. SS-14

             Shaw Announces Second in a Series of Hearings

                on Social Security Disability Programs'

                      Challenges and Opportunities

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing examining the Social Security 
Administration's (SSA's) disability determination and appeals 
processes. The hearing will take place on Tuesday, June 11, 2002, at 
10:00 a.m., and will continue Tuesday, June 18, 2002, at 2:00 p.m., in 
room B-318 Rayburn House Office Building.

    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing.

BACKGROUND:

    Last year, the Subcommittee began a hearing series examining the 
challenges and opportunities facing Social Security's disability 
programs. In the first hearing of the series, the Subcommittee heard an 
overview of these challenges from key stakeholders. Recommendations 
generally focused on how to decrease processing times at all levels of 
disability claims adjudication.

    Consistently managing our Nation's largest disability determination 
and appeals process and delivering timely, high-quality, and fair 
service to disability applicants has become one of the SSA's greatest 
challenges. The process of applying for Social Security and 
Supplemental Security Income (SSI) disability benefits is complex and 
fragmented, involving multiple State and Federal officials, and 
consisting of an initial decision and up to three levels of 
administrative appeals within the agency. Upon exhausting these 
administrative remedies, the claimant may file an appeal in Federal 
court. In addition, each step within the agency involves detailed 
procedures for collecting and reviewing evidence and for decision-
making. Last year, it required an average of about 106 days to process 
and issue a final decision for an initial claim for disability benefits 
and about 308 days to process an appeal before an Administrative Law 
Judge.

    Moreover, due to the aging of the baby boomers, Social Security's 
actuaries project that between now and 2010, the number of Social 
Security Disability Insurance beneficiaries will increase by nearly 50 
percent and the number of SSI recipients who are disabled will increase 
by 15 percent. As a result, it is increasingly important for the agency 
to clearly identify the resources it needs to effectively serve the 
American people.

    Aware of the long-standing problems within the disability 
determination and appeals process, SSA has spent more than $39 million 
attempting to develop and implement new initiatives to improve the 
timeliness, accuracy, and consistency of its disability decisions and 
spent an additional $71 million to develop an automated disability 
claims process. Many of these initiatives, however, have been 
ineffectual or have met with mixed results. Many reports, including 
those issued by the Social Security Advisory Board and the U.S. General 
Accounting Office, have outlined problems and provided recommendations 
for improving SSA's disability determination and appeals process.

    In announcing the hearing, Chairman Shaw stated: ``Individuals with 
disabilities, already burdened by the challenges of their illness or 
injury, are often in desperate need of benefits to replace lost income. 
They deserve and should receive timely and accurate decisions through a 
fair and understandable process. Our challenge is to thoughtfully and 
carefully examine the disability determination and appeals process to 
ensure it meets the needs of individuals with disabilities and their 
families.''

FOCUS OF THE HEARING:

    The Subcommittee will examine the reasons for delays, complexities, 
and inconsistencies in the disability determination and appeals process 
and explore recommendations for change.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Tuesday, June 25, 2002. Those 
filing written statements who wish to have their statements distributed 
to the press and interested public at the hearing should deliver their 
200 copies to the Subcommittee on Social Security in room B-316 Rayburn 
House Office Building, in an open and searchable package 48 hours 
before the hearing. The U.S. Capitol Police will refuse sealed-packaged 
deliveries to all House Office Buildings.

FORMATTING REQUIREMENTS:

    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.

    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.

    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.

    3. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event 
(four business days notice is requested). Questions with regard to 
special accommodation needs in general (including availability of 
Committee materials in alternative formats) may be directed to the 
Committee as noted above.

                                 

               ***NOTICE--CHANGE IN TIME AND LOCATION***

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                Contact: (202) 225-9263
FOR IMMEDIATE RELEASE
June 6, 2002
No. SS-14-Revised

              Change in Time and Location for Second in a

            Series of Hearings on Social Security Disability

                 Programs' Challenges and Opportunities

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee hearing on the Social Security Disability 
Programs' Challenges scheduled for Tuesday, June 11, 2002, at 10:00 
a.m., in room B-318 Rayburn House Office Building, will now be held at 
3:30 p.m., in the main Committee hearing room, 1100 Longworth House 
Office Building.

    In addition, the continuation of the hearing scheduled for Tuesday, 
June 18, 2002, at 2:00 p.m., in room B-318 Rayburn House Office 
Building, will now be held at 3:30 p.m.

    All other details for the hearing remain the same. (See 
Subcommittee Advisory No. SS-14, dated June 4, 2002).

                                 

                 ***NOTICE--CHANGE IN DATE AND TIME***

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                Contact: (202) 225-9263
FOR IMMEDIATE RELEASE
June 14, 2002
No. SS-14-Revised #2

             Change in Date and Time for Second in a Series

               of Hearings on Social Security Disability

                 Programs' Challenges and Opportunities

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee hearing on the Social Security Disability 
Programs' Challenges and Opportunities, previously scheduled for 
Tuesday, June 18, 2002, will now take place on Thursday, June 20, at 
10:00 a.m., in room B-318 Rayburn House Office Building.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Friday, July 5, 2002. Those 
filing written statements who wish to have their statements distributed 
to the press and interested public at the hearing should deliver their 
200 copies to the Subcommittee on Social Security in room B-316 Rayburn 
House Office Building, in an open and searchable package 48 hours 
before the hearing. The U.S. Capitol Police will refuse sealed-packaged 
deliveries to all House Office Buildings.

    All other details for the hearing remain the same. (See 
Subcommittee Advisories No. SS-14, dated June 4, 2002, and No. SS-14-
Revised, dated June 6, 2002.)

FORMATTING REQUIREMENTS:

    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.

    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.

    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.

    3. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.

                                 

    Mr. COLLINS. The Subcommittee will come to order. Chairman 
Shaw is at the airport and is on his way into the Capitol now. 
So, he should be coming in most any time. We will enter his 
statement into the record, unless he just wants to go through 
it once he arrives.
    [The opening statement of Chairman Shaw follows:]
 Statement of the Hon. E. Clay Shaw, Jr., a Representative in Congress 
    from the State of Florida, and Chairman, Subcommittee on Social 
                                Security
    Today the Subcommittee will continue our in-depth examination of 
the challenges and opportunities faced by Social Security's two 
disability programs--Disability Insurance and Supplemental Security 
Income.
    Americans should have a reasonable expectation that Social Security 
will fairly and efficiently process the more than three million 
applications for disability benefits each year. The problem: They 
don't.
    In addition to hardships created by illness or injury, individuals 
with disabilities also face a long, complex, and confusing process in 
pursuing disability benefits for themselves and their families.
    Sadly, this is not new. The agency has been working to get it right 
since 1994, when they introduced plans to redesign the disability 
claims process. The situation is now approaching the breaking point: 
both disability and retirement claim workloads will grow dramatically 
as baby boomers age. At the same time the agency expects to lose about 
half of its experienced workforce to retirement.
    According to the bipartisan Social Security Advisory Board, ``the 
projected growth in the number of disability claimants threatens to 
overwhelm a policy and administrative infrastructure that is already 
inadequate to meet the needs of the public.''
    An accurate and thorough analysis of how the disability programs 
are working is urgently needed so that we can consider effective 
changes in policy, resources, and administrative structure.
    In our hearing series, we will focus in-depth on the disability 
determinations and appeals decisions made by State disability examiners 
and federal Administrative Law Judges. We welcome, for the first time, 
the new Deputy Commissioner for Disability and Income Security 
Programs, Martin Gerry. We will also hear from the Chairman of the 
Social Security Advisory Board, the GAO, a researcher, and several 
employee groups serving those with disabilities on the front lines 
every day.
    Social Security Commissioner Jo Anne Barnhardt recently testified 
that the length of time it takes to process disability claims is 
unacceptable. We couldn't agree more, and look forward to hearing more 
about measures she has initiated to reverse this time lag.
    If America's disabled workers must negotiate a morass of 
inefficient, complex and confusing bureaucratic processes to obtain 
benefits, then the essential safety net Social Security's disability 
programs offer has failed. Each of us has the opportunity and the 
responsibility to address existing problems within the disability 
determination and appeals processes so that individuals with 
disabilities and their families can receive the benefits so vital to 
their economic security.

                                 

    Mr. COLLINS. We will call on Mr. Matsui and see if he has 
any words of wisdom for us.
    Mr. MATSUI. I only have words of wisdom to thank you for 
holding this hearing.
    Mr. COLLINS. I like that. Short and sweet.
    Our first witness will be Mr. Martin Gerry, Deputy 
Commissioner for Disability and Income Security Programs. 
Welcome, Mr. Gerry, and we are glad you are here, appreciate 
your taking the time to come, and if you would like, your whole 
statement will be entered into the record, and if you would 
like to summarize your statement, we are ready.

STATEMENT OF MARTIN GERRY, DEPUTY COMMISSIONER, DISABILITY AND 
    INCOME SECURITY PROGRAMS, SOCIAL SECURITY ADMINISTRATION

    Mr. GERRY. Thank you very much, Mr. Chairman.
    Mr. Chairman and Members of the Subcommittee, thank you 
very much for inviting me to testify today before this 
Subcommittee regarding the Social Security Administration's 
(SSA) efforts to improve the process used to determine 
eligibility for benefits under the Social Security Disability 
Insurance and Supplemental Security Income (SSI) programs. As 
you know, the monthly disability benefits provided through 
these programs represent an economic safety net for situations 
that any of us might find ourselves in at some point during our 
lifetime.
    As Commissioner Barnhart testified before the Subcommittee 
last month, the length of time that the disability claims 
process can take is wholly unacceptable. The numbers of claims 
do not simply represent case counts. They represent people who 
need access to that safety net and are counting on the Social 
Security Administration for help.
    We are committed to and actively engaged in improving the 
current disability determination process. To this end, my 
written testimony addresses our initial efforts to improve 
various aspects of that process. I would be pleased to 
elaborate on any of the initiatives described in that testimony 
and to answer any other questions, which you or other Members 
of the Subcommittee might have.
    [The prepared statement of Mr. Gerry follows:]
 Statement of Martin Gerry, Deputy Commissioner, Disability and Income 
           Security Programs, Social Security Administration
    Mr. Chairman and Members of the Subcommittee:

    Thank you for inviting me today to discuss the Social Security 
Administration's (SSA) efforts to improve the Social Security and 
Supplemental Security Income (SSI) disability process. As you know, the 
monthly disability benefits provided through these programs represent 
an economic safety net for situations that any of us might find 
ourselves in at some point during our lifetime. Few individuals have 
private or employer-provided long-term disability insurance. But nearly 
all American workers have Social Security.
    As Commissioner Barnhart testified before you last month, the 
length of time the disability claim process can take is unacceptable. 
The numbers of claims do not simply represent case counts, they 
represent people who need access to that safety net and also are 
counting on us for help. Today I will focus my testimony on a 
description of the disability determination process and our efforts to 
improve it.
The Disability Determination Process
    Most disability claims are initially processed through a network of 
local Social Security field offices and State agencies (usually called 
disability determination services or DDSs). Favorable determinations 
(allowances) in most instances lead quickly to the payment of benefits. 
Appeals of unfavorable determinations may be decided in the DDSs or by 
administrative law judges or administrative appeals judges in SSA's 
Office of Hearings and Appeals.
Social Security Field Offices
    SSA representatives in the field offices usually obtain 
applications for disability benefits, either in person, by telephone, 
or by mail. The application and related forms ask for a description of 
the claimant's impairment(s), names, addresses, and telephone numbers 
of treatment sources, and other information that relates to the alleged 
disability. (The ``claimant'' is the person who is requesting 
disability benefits.)
    The field office is responsible for verifying necessary non-medical 
information requirements, which may include age, employment, marital 
status, or Social Security coverage information. The field office sends 
the case to a DDS for evaluation of disability.
State Disability Determination Services
    The DDSs, which are fully funded by the Federal Government, are 
State agencies responsible for developing medical and other evidence 
and rendering the initial determination on whether the claimant is or 
is not disabled or blind under the law.
    The DDSs follow SSA rules on how to develop and evaluate medical 
and vocational evidence. Usually, the DDS tries to obtain evidence from 
the claimant's own medical sources first. If that evidence is 
unavailable or insufficient to make a determination, the DDS will 
arrange for an independent medical examination, called a consultative 
examination (CE), at no cost to the claimant in order to obtain the 
additional information needed. The claimant's treating source is the 
preferred source for the CE; however, the DDS may also obtain the CE 
from an independent source.
    After completing its case development, the DDS makes the initial 
disability determination. Generally, the determination is made by a 
two-person adjudicative team consisting of a medical or psychological 
consultant (who is usually a physician or psychologist) and a 
disability examiner. If the adjudicative team finds that additional 
evidence is still needed the consultant or examiner may recontact a 
medical source(s) and ask for supplemental information.
    The DDS also makes a determination whether the claimant is a 
candidate for vocational rehabilitation (VR). If so, the DDS makes a 
referral to the State VR agency.
    After the DDS makes the disability determination, it returns the 
case to the field office for appropriate action depending on whether 
the claim is allowed or denied. If the DDS finds the claimant disabled, 
SSA will complete any outstanding non-disability development, compute 
the benefit amount, and begin paying benefits. If the claimant is found 
not disabled, the file is retained in the field office in case the 
claimant decides to appeal the determination.

Appeals Process

    A person who is dissatisfied with an initial determination may 
pursue an appeal through three administrative levels and the Federal 
courts. The Act requires the Commissioner to provide a claimant the 
opportunity for a hearing, and allows for filing of a civil action in 
Federal court after the Commissioner's final decision. SSA's 
regulations also provide a reconsideration review by the DDS prior to 
the hearing before the administrative law judge (ALJ) and an 
opportunity for final review by SSA's Appeals Council.
    Generally, SSA's first administrative review for claimants--the 
reconsideration--involves a de novo, or fresh review of the claim 
(including any new evidence) by individuals who did not participate in 
the original determination. The reviewers consider all of the evidence 
and issue a reconsideration determination. There is no reconsideration 
step in the 10 States in which SSA still has in place the prototype of 
a revised disability process.
    The second level of administrative appeal is a de novo hearing 
before an ALJ who can call on medical or vocational experts, if needed, 
to help evaluate the evidence. Usually the claimant obtains legal 
representation at this point. Frequently, new evidence is introduced by 
the claimant and his or her representative, often at the hearing 
itself. Claimants are allowed to appear before the ALJ and to call 
witnesses.
    The final administrative appeal level is the Appeals Council, which 
may grant, deny, or dismiss a request for review of the ALJ decision. 
It will grant review if the ALJ decision contains an error of law, is 
not supported by substantial evidence, involves a broad policy issue, 
or if there appears to be an abuse of discretion by the ALJ. After an 
Appeals Council action, if the claimant is still dissatisfied, the next 
step is filing a civil action in Federal court.
Uniform Application of Policy
    SSA strives to maintain and apply uniform standards at all levels 
of administrative adjudication and review. SSA takes every opportunity 
to emphasize to disability adjudicators in all locations and at all 
levels the importance of following SSA rules to ensure that similar 
cases are decided in a similar manner throughout the country. The 
result of this program-wide emphasis has been, and continues to be, 
more consistent application of Agency policy throughout the nation. 
Without reservation, SSA remains committed to providing a fair and 
consistent disability determination process throughout the United 
States.

Efforts to Improve the Process

    One of the first things that Commissioner Barnhart did after 
assuming office was to form a group to develop a service delivery 
budget to match up resource needs against the level of service we would 
like to deliver. The group mapped the disability determination process 
from the time a claimant first contacts SSA through the initial 
determination and all levels of appeal.
    Our preliminary analysis shows us that there is no one way to make 
the disability determination process faster and better. It's going to 
take many improvements--some large, some small--to take us where we 
need to be. As the Commissioner testified last month, we have already 
announced a number of steps to address the causes of delay in the 
disability process.

Initial Determination Initiatives

    As you are all well aware, SSA has engaged in a number of efforts 
to redesign and improve the disability determination process by testing 
a number of initiatives over the past several years. We carefully 
reviewed the results of these initiatives to identify the elements that 
show the most promise. Based on this review, we have decided to:

         Grant greater decision making authority to DDS 
        disability examiners by extending single decisionmaker 
        authority nationwide to all DDSs;
         Eliminate the formal claimant conference that was 
        tested as part of the disability Prototype; and
         Extend elimination of the reconsideration step in the 
        States that have been doing the Prototype, while SSA gathers 
        additional information and considers alternative approaches to 
        a second-level appeal step.

Appeals Initiatives

    The amount of time it takes for an individual to make his or her 
way through SSA's appeals process has been a perennial concern. In an 
effort to address this concern, the Office of Hearings and Appeals 
(OHA) implemented a new workload process commonly referred to as the 
Hearings Process Improvement initiative or HPI about two years ago. 
Implementation of this initiative involved significant changes to the 
way SSA processed the hearings workload, and the organizational 
structure of our hearing offices. The initiative was intended to reduce 
case processing times, improve productivity, and enhance the quality of 
service to claimants.
    However, while well intentioned, the initiative did not work. There 
have been concerns that the HPI project has created even more 
bottlenecks in the process that it was intended to fix. Simultaneously, 
SSA's past inability to hire ALJs to make decisions at the hearing 
level of the disability process compounded the unintended adverse 
impact that HPI had on our ability to provide timely service.
    Last year, former Acting Commissioner Larry Massanari formed a 
group to look at the hearing process. Thanks to this timely analysis, 
this spring the Commissioner announced decisions on short- and near-
term changes to the hearings process. We are required to bargain with 
employee unions before we can implement some of these changes. We 
certainly intend to meet that obligation in good faith and are working 
to implement these important changes as soon as possible.
    On a short-term basis, the Commissioner immediately set aside $6 
million in overtime and other costs to help expedite the processing of 
30,000 to 35,000 backlogged cases in OHA. In addition to expediting the 
processing of these cases, this action signaled the importance the 
Commissioner was placing on making program improvements.
    In the near term, the Commissioner announced decisions to make 
changes to the hearing process. The decisions include:

         Including ALJs in early screening for on-the-record 
        decisions;
         Developing a short form for fully favorable 
        decisions;
         Allowing ALJs to issue fully favorable decisions from 
        the bench immediately after a hearing;
         Creating a law clerk position; and
         Expanding the use of technology in the OHA, including 
        the use of video teleconferencing, speech recognition and 
        digital recording of hearings.

    Be assured, these are just the first steps that SSA will take to 
meet the challenge of providing a timely, efficient, and high quality 
hearing process.
Azdell Case
    In regard to the hearing process it is important to remember that 
since April 1999, due to litigation pending before the Merit Systems 
Protection Board, (MSPB) SSA, with one special exception, has been 
unable to hire new ALJs to replace those who have retired.
    The name of the case is Azdell v. OPM. It was brought by a class of 
individuals who have challenged the method that the Office of Personnel 
Management (OPM) used to compute the veterans' preference in the 
ranking of ALJ candidates. The MSPB has ruled in favor of the 
plaintiffs in the case and against OPM. The MSPB ordered OPM to revise 
the rankings.
    With the interest of this subcommittee, we were able to bring on 
board 126 new ALJs last October from a list of candidates that has been 
(and continues to be) the subject of litigation. While these additional 
ALJs will certainly help in addressing the backlogs, the continued 
inability to replace ALJs who retire or leave has the potential to 
seriously affect our ability to decide cases in the hearing offices.

e-DIB

    Before I close, I would like to note one final initiative that will 
improve the efficiency of both the initial determination and subsequent 
appeals process. Simply put, SSA must accelerate its transition to an 
electronic disability process (e-Dib), not just for the State 
Disability Determination Services but also for the appeals offices. As 
she stated here last month, Commissioner Barnhart is committed to the 
creation of an electronic system to support the disability 
determination and appeals process. I assure you that I share her 
commitment to bring the process into the 21st Century.
    Accelerated e-Dib is a major Agency initiative that will move all 
components involved in disability claims adjudication/review to an 
electronic business process through the use of an electronic disability 
folder. When the process is fully implemented, the Agency will no 
longer create, mail and store paper disability folders. Through 
interfaces with their existing case processing systems, components will 
be able to work claims by electronically accessing and retrieving 
information that is collected, produced and stored as part of the 
electronic disability folder. Accelerated e-Dib will significantly 
change the business process and the ways that components interact with 
disability claims and will ensure that SSA has a robust platform to 
manage and control increasing disability workloads.
Conclusion
    Finally, I thank you, Mr. Chairman, Mr. Matsui, and all the members 
of the Subcommittee, for your interest and offers to help as we move to 
meet the challenges facing the Social Security Administration. We are 
all aware that these go beyond our efforts to improve disability to 
providing the service that Americans deserve as the baby boomers age; 
ensuring the program's solvency; improving program integrity; and 
accomplishing all these goals with the quality staff we will need.
    I look forward to working with you all in the future.

                                 

    Mr. COLLINS. I like them short and sweet, but that was a 
little shorter and sweeter than I thought it was going to be.
    In your opening statement, your remarks, Mr. Gerry, you 
elaborate on the State Disability Determination Services (DDS). 
We noticed that there is quite a variation from State to State 
across the country in approvals for disability. Can you 
elaborate on that some? I know they go from 31 percent in some 
States, as high as 65 percent in others. There is quite a 
variance. Can you elaborate on that some for us?
    Mr. GERRY. Yes, Mr. Chairman. That is true. The current 
fluctuation actually runs from about 27 percent in the low 
State, which is Tennessee, to 61.3 percent, in the highest 
State, which is New Hampshire. The average is about 38.7 
percent. So, you are absolutely right. There is a significant 
variation. This has been true for a substantially long period 
of time. I served on the Disability Advisory Council 15 years 
ago, and this issue was around at that point. These variations 
have been with us for quite a few years in terms of the 
programs.
    Part of the answer--and I want to stress part--has to do 
with the way in which we calculate these rates. Obviously the 
total number of people who apply has something to do with the 
total number of people who are allowed or disallowed. In some 
States, the percentage of people in the State that apply for 
benefits is quite a bit higher than it is in other States. That 
accounts for some of the difference in rates.
    In other words, if you start with the assumption that for 
the most part disability is distributed evenly throughout the 
American population, you would assume the rates would be 
similar in every State. If, for example, twice as many people 
per thousand in a State apply for benefits, then it wouldn't be 
surprising that the rate of allowances might be lower in a 
State where more people apply.
    Now, that accounts for some of the difference, but we are 
actively engaged. As the Commissioner testified last month, we 
are still engaged in analyzing these variations. I think she 
expressed some concern that the application rate won't explain 
all of the variations. Working with our quality analysis 
process and looking at the statistics we have--we are trying to 
isolate other factors, if there are other factors that account 
for these variations.
    I can tell you from my own personal experience that some 
States have actually gotten into the habit of sending people to 
our offices for eligibility determinations as part of another 
eligibility process. That tends to, of course, artificially 
increase or decrease the rate of allowances by running people 
through our process just in case they might be eligible for 
benefits.
    Again, I don't think that accounts for all the differences, 
but the numbers are not quite as obvious. They don't tell the 
whole story.
    The other thing that is important, I think, is that 
accuracy affects allowance rates. The real issue is how 
accurate are the allowances made in different States? So 
really, in terms of what we would be looking at, it is the 
accurate allowance rate that we would want to explain any 
differences in. Sometimes if you have significant numbers of 
people who are being allowed or denied, and our review suggests 
that these are not proper decisions, then that would tend to 
influence data.
    Mr. COLLINS. The States themselves are responsible for 
developing the medical and other evidence dealing with 
disability.
    Mr. GERRY. Well, the States----
    Mr. COLLINS. They draft their own guidelines, the States?
    Mr. GERRY. No. We set forth the basic requirements for 
making the disability determinations through a series of 
documents, called the medical listings. There are other 
documents that provide instructions to the States on how to go 
about that. We do review the work of the States through our 
quality assurance (QA) process.
    So, it is true that the day-to-day routine in State 
Disability Determination Services may vary somewhat, but it is 
a Federal process. The basic rules are set by the Social 
Security Administration. So, we should expect the process to be 
applied generally uniformly throughout the country. If it 
isn't, it is not because the States have separate rules for 
making disability determinations.
    Mr. COLLINS. Okay. Well, that was the next point. There 
should be uniform standards.
    Mr. GERRY. There should be and there are. Now, one of the 
things that Commissioner Barnhart has done--and I think it has 
been an important move in the right direction--is to change 
organizationally how we develop our disability policy.
    Historically, we have collocated in the Office of 
Disability the rulemaking capability to develop the listings 
and the various rules that apply to the program. While that has 
had some direct linkage to the Disability Determination 
Services, it has been quite removed from the Office of Hearings 
and Appeals (OHA).
    Over the last few years, under a title that I found 
particularly mysterious called ``Process Unification,'' the 
Agency has been trying to make much more compatible and 
consistent the rules that are applied in the hearing and 
appeals process with the rules that are applied in the 
Disability Determination Service. They should be applying the 
same rules. It is the same law.
    We are setting up a new unit. This unit will be part of the 
Agency component that I head, and that will set disability 
policy across the Agency. So, it would apply equally to the 
Office of Hearings and Appeals and to the DDSs. That is an 
effort to try to be sure that the rules are consistent. We 
shouldn't have to create a label, process unification, to 
describe implementing the law fairly and consistently. That is 
all it really means.
    Mr. COLLINS. Moving on to another area, which I have had a 
lot of correspondence and input from people involved in this 
area in my district, or in Georgia, in particular. That is the 
administrative law judges (ALJ). How are we coming with giving 
them some assistance and helping with their processing of these 
cases?
    Mr. GERRY. Well, we have a substantial amount of work for 
the administrative law judges, Mr. Chairman. We are providing 
training for the new administrative law judges, the 126 that we 
have hired. For the most part, we have an enormous amount of 
work to do, and we are under a lot of strain. The backlogs have 
grown, and productivity has not kept pace. I am not sure that 
it could fully have kept pace, although we have been making 
efforts to try to improve it. All in all, we are committed to 
making the system work and doing whatever we need to do to 
provide the resources that we can to support the process. The 
workload of the Office of Hearings and Appeals is growing, and 
because of the Azdell decision, we have had historically some 
significant constraints on hiring new administrative law 
judges.
    We did have an initiative underway, covered in my 
testimony, called the Hearings Process Improvement (HPI) 
initiative. This initiative was an effort to try to speed up 
and improve the outcomes of the process. The Commissioner went 
through and reviewed a very careful analysis that was done by a 
group appointed by Acting Commissioner Massanari. We have made 
some major decisions to continue some portions of that 
initiative, to discontinue others, and to introduce some new 
elements to try to improve the hearing process.
    We are now going through the process of meeting with the 
unions to discuss these changes, and we are hoping to implement 
these initiatives this summer. I would be happy to discuss any 
of them, but they are pretty much outlined in my written 
testimony.
    Mr. COLLINS. Well, I was going to get to and ask the 
question about the unions and how you are progressing with 
that--so we appreciate that volunteer comment and testimony. I 
think that shows some of the problems that the administrative 
law judges have had in the past and some of their concerns. 
Last year they moved toward organization. So, they need help. 
We are glad that the Commissioner and you are looking at 
helping those law judges. Mr. Matsui?
    Mr. MATSUI. Thank you, Mr. Chairman.
    Mr. Gerry, I want to thank you for taking this very 
difficult job that you have. I know your background is one in 
which you have been very involved with disability issues, 
almost your entire professional career. So, we appreciate the 
fact that you are there, and Commissioner Barnhart is where she 
is as well. I think both of you working as a team will 
hopefully solve this backlog of disability claims, and second, 
streamline the process.
    Last month the Commissioner came before us, as you 
mentioned. She pretty much outlined her proposal. She wants to 
make this a major priority in her tenure as the Commissioner. 
You have outlined some of the recommendations that she intends 
to deal with in your written testimony. So, can you give me an 
idea of the timeline we are talking about--when she might be 
ready or you might both be ready to submit to us some 
legislative changes that you might think would be required in 
order to implement your proposals?
    Secondly, in reference to the timeline, if it is within the 
next fiscal year, from October 1 on, would you be able to give 
us an idea what we are looking at in terms of additional 
dollars for both the transition and implementation? Then, 
lastly, in terms of the overall cost of this? If you are not 
prepared to do this, that is fine. Then obviously when you are, 
we would want to get that information from you. I don't want to 
have you make any recommendations or comments that are 
premature because obviously this is a subject that we are all 
concerned about. We are all interested in on the basis of doing 
this right.
    Mr. GERRY. Well, thank you, and thank you for your kind 
comments, Mr. Matsui.
    At this point, we don't have any specific legislative 
proposals. The Commissioner set a timeframe and has asked me to 
recommend changes that wouldn't necessarily involve 
legislation, but it might. The timeline is late fall, so I 
would expect that we will have something by December.
    If at that point in time the Commissioner believes that we 
should go ahead with legislative proposals, then we would 
communicate those first, of course, to the Office of Management 
and Budget as part of our usual process. We then would try to 
move toward the Committee.
    Of course, we don't have the details or any estimate of 
cost, but the Commissioner wants recommendations by late fall.
    Mr. MATSUI. Okay. I would imagine if it requires additional 
sums of money, you probably would have to seek it in a 
supplemental. It could be very difficult as we are experiencing 
now, even with the current supplemental bill.
    If you have any idea prior to that time before, obviously, 
we are completed with the appropriations process, it would 
help. Again, this is not to put you on the spot or anything of 
that nature. It is really in order to make sure everybody's job 
is easier, and we deal with these disability issues in the way 
that I think all of us want to. So, if you could look at that, 
and if it does make some sense that you can give us a better 
idea before the fiscal year begins and before the 
appropriations process is completed, it would be helpful.
    Mr. GERRY. I would be happy to do that, Mr. Matsui. Again, 
we would very much like to work with the Committee and the 
staff on any proposals that we come up with. At this point, the 
fairly major task we have is to come up with the 
recommendations themselves.
    Mr. MATSUI. Right. Thank you very much.
    Mr. COLLINS. Thank you, Mr. Matsui.
    You know, it is pleasing to hear that you are trying to 
come up with ways to better the process without doing it 
through legislation. I have often said that when you have to go 
through the legislative process, Congress has a tendency to 
mess up a two-car funeral. So, I know that it could probably 
make a real mess out of some legislative action. A little piece 
of advice: Do it within the budget that you already have funded 
and appropriated for you. We have no more money for additional 
funding. If you can't do it that way, do some rescissions and 
make your numbers work. Mr. Ryan?
    Ms. RYAN. Well, thank you.
    Mr. Gerry, I just have two quick questions. One, in the 
March 2002 Advisory Board Report, they stated that appealing 
decisions is very costly to claimants, the Agency, and 
ultimately to the taxpayer. In fact, their report states that 
in 2001 a decision made at the ALJ level costs $2,157, but the 
cost of an initial decision at a State Agency is about $583.
    Many stakeholders have suggested closing the record at 
various stages, so that the case does not change at every level 
of appeal to save some dollars. I would just like your reaction 
to that proposal? What are your thoughts on that?
    Mr. GERRY. Well, thank you, Mr. Ryan. For me it is not a 
new proposal. It has probably been around as long as the 
discussion of this program. It is one that I think has pluses 
and minuses, and that is what makes it difficult to answer.
    There are a lot of advantages to closing the record, as you 
point out, in terms of getting a common set of facts where you 
could then get a more rapid decision about eligibility without 
the facts changing.
    On the other hand, the question is to what extent would 
closing the record unfairly disadvantage an individual whose 
condition is changing, and in some cases changing fairly 
rapidly. That is the tradeoff.
    In one sense, the record is closed probably now at the U.S. 
district court level in many cases. Even though in theory it 
might be closed at the administrative level, the district 
courts tend to reopen a lot of these cases. That is an awfully 
long time for the situation to continue without the record 
being closed, so I think it is logical to try to close the 
record earlier. We are certainly looking at this issue as a 
major part of whatever we are going to recommend.
    I just want to respond that if it were easy, I suppose 
other people--there have been many other people who have tried 
to solve these problems in the last 25 years--would have come 
up with an easy solution. It is a tradeoff. People can file 
separate claims. The other side of the closing-the-record issue 
is that if you go ahead and close the record, it doesn't 
preclude someone whose situation then changes fairly abruptly 
from filing a separate claim. I think the question is really 
how to do that? It is part of the larger question, I think, 
rather than a separate question.
    Once you figure out how you want to streamline the process 
of reaching a decision, then maybe it is easier to discuss 
where and how you would close the record. We are very much 
aware that it has been studied not only by the Advisory 
Committee I was on, but by many others. It will have to be part 
of whatever we ultimately recommend to the Commissioner.
    Ms. RYAN. Will you be recommending some changes to the 
Commissioner soon?
    Mr. GERRY. I think, as I responded to Mr. Matsui, our plan 
is to have recommendations by late fall, so I would say by the 
end of November, early December.
    Ms. RYAN. One other issue that I hope that you respond to 
is processing times. Claims to process, disability insurance 
(DI) claims, I believe, in 2000 took over 100 days to process, 
about 120 days for SSI claims. They have been going up since 
1996. Those are the last data we have.
    What are the processing times right now? How many 
applications are pending at this time? Do you think you are 
going to get these processing times down? Where are we right 
now vis-a-vis where we just were in 2000?
    Mr. GERRY. Well, I am happy to say the processing time 
right now is 102.5 days, or lower than----
    Ms. RYAN. On DI claims?
    Mr. GERRY. That is right. The pending cases, 582,334. At 
least it was--it can't be quite 34 right now. It must be 35 or 
33, depending on something in the last 15 minutes. But that is 
pretty close.
    Ms. RYAN. Okay.
    Mr. GERRY. I think we are doing better on processing times. 
As the Commissioner pointed out--and I know she presented the 
Subcommittee with that long chart showing all of the steps in 
the process. Without making any structural changes, there is 
only so much we can do on the processing times. I think we are 
getting closer to what we can do without changing the process 
itself. As she pointed out in her testimony, there are the 
larger changes. There are also a series of small changes that 
we are proceeding on that we think can get some of those days 
reduced. We are going to reach a natural limit that is imposed 
by the separate number of activities that are currently 
described in that chart.
    Ms. RYAN. One-hundred days to 102 days is about the same. 
Clearly, the statute underlying requires you have so many 
stages to go through. Will you be bringing forward more of a 
comprehensive set of recommendations to get to both of these 
issues, which are obviously related, so we can streamline these 
things and save a little money in the process? Do you think 
that within the existing statute you can come to us with some 
recommendations on how to accomplish those things?
    Mr. GERRY. I think the Commissioner has made it clear that 
a major part of her mission and a major reason that she took 
the job was to do that. My job, of course, is to recommend some 
things to her, and what she ultimately goes forward with may be 
different than what I recommend. I am committed, as she is, to 
that process. That is why I took my job, the opportunity to 
work with her on this effort. So, I am hoping that by late fall 
we will have a set of recommendations for her. I am convinced 
that she will act on them as quickly as she feels is 
appropriate. I know it is a high priority for her.
    Ms. RYAN. That is the point I am trying to make. We are 
eager to see what you have to recommend. We want to see 
progress made on these issues, and we are very much paying 
attention to these. I yield.
    Chairman SHAW. [Presiding.] Thank you. Mr. Doggett?
    Mr. DOGGETT. Thank you, Mr. Chairman, and I would just kind 
of continue the same line of questioning trying to understand 
the timetable. We appreciated the testimony of the Commissioner 
when she was here before previously. Of course, we are 
impressed by the very long delays that are occurring, 
recognizing that she has only been on that job for a relatively 
short period of time, and yourself also, but trying to get an 
idea of the timetable.
    You are saying your recommendations on the short-term 
changes to address these lengthy delays will go from you to her 
by the fall?
    Mr. GERRY. No. It wouldn't be the short-term changes. It 
would be the major changes. Those recommendations would be 
completed by the end of the fall. When she first took office, 
she mentioned short-term initiatives.
    Mr. DOGGETT. I see.
    Mr. GERRY. Those are the ones that are outlined in my 
testimony, so we are talking about the more significant, larger 
changes in the process.
    Mr. DOGGETT. By what point do you think you will have 
determined whether significant additional moneys are necessary 
to reduce the delay?
    Mr. GERRY. It would have to be after she reviews the 
options that are presented to her, and I know she will do that 
as expeditiously as possible. What is a little hard for me to 
at this point predict is how complex those will be.
    Mr. DOGGETT. All right. Are you saying that you won't have 
any request for additional resources on your short-term 
solutions until she has reviewed all of your long-term 
solutions?
    Mr. GERRY. No. Our plan is to implement the short-term 
initiatives that are outlined in the testimony as quickly as 
possible. We are meeting with union representatives right now 
to discuss implementation this summer. We are in the process--
and I would be happy to provide sort of a status on each of 
them--of implementing each one of these changes. We have 
incorporated the resources that we need to implement all of 
those changes. They are part of the 2004 budget process, which 
is underway in the Agency, or we have already accounted for the 
resources for 2003.
    So, we are not delaying any of the short-term changes. The 
only thing we are not in a position to do at this point, of 
course, is to look at the budgetary implications of 
recommendations for the larger changes, which the Commissioner 
hasn't seen yet.
    Mr. DOGGETT. Do you believe any additional moneys will be 
necessary to meet your short-term concerns in this 
appropriation cycle?
    Mr. GERRY. I don't believe so. I think we have certainly 
included in the budget documents that have gone forward, to my 
best knowledge, the resources that we need. I don't know of any 
unmet needs for the changes outlined in the testimony.
    Mr. DOGGETT. So, you are not seeking any appropriations to 
address the delays that are occurring? You propose to deal with 
those in other long-range proposals that you will have?
    Mr. GERRY. Well, of course, we are going through the 
process of submitting documents for the President's 2004 
budget. In that budget we will reflect the resources that we 
need for that fiscal year. I mentioned in my testimony resource 
decisions and commitments that the Commissioner has already 
made. Those decisions are coming out of funds that are already 
available to us or that are part of the President's 2003 
budget.
    Mr. DOGGETT. Your best estimate at this point is that no 
further dollars will be requested for the next fiscal year, the 
one we are working on in the appropriations process?
    Mr. GERRY. That is my best testimony at this point in time.
    Mr. DOGGETT. Okay. With reference to other witnesses that 
will be testifying at this hearing and next week, is the 
Commissioner considering any of the proposals that they are 
advancing?
    Mr. GERRY. Well, yes. The Commissioner is considering 
proposals from all sources. We are looking at recommendations 
that are being made from a variety of sources.
    She hasn't ruled out any source of recommendations. I think 
she has laid out the general goals that she wants to accomplish 
in terms of expediting the process. The mission of the Agency 
historically has been characterized as getting the right amount 
of money to the right people as early as possible in the 
process. Obviously, we are not doing a very good job of getting 
that money to those people very quickly in the process that we 
currently have. So, the time delays are certainly a very high 
priority. The accuracy and quality of the decisions is an equal 
priority, and the Commissioner has various activities underway 
to be sure that we improve that as well.
    Mr. DOGGETT. I would just ask, as you go through that 
process--that you continue in the coming months to consult with 
and keep advised some of those organizations that represent 
individuals with disabilities, as well as both majority and 
minority staff on this Subcommittee.
    Mr. GERRY. I would be happy to do so.
    Mr. DOGGETT. Thank you very much.
    Chairman SHAW. I would point out, in furtherance of Mr. 
Doggett's questioning, that this appropriation process that we 
are about to go through is going to be long and painful. So, 
there may be some opportunities during the conference that, if 
there are some immediate needs, there may be some tweaking that 
we are able to do for you. Mr. Brady?
    Mr. BRADY. Thank you, Mr. Chairman, and thank you for 
holding the hearing on this very important issue.
    The more I study disability, the more I am convinced that 
for us to have a fair and timely process, and to work off this 
growing backlog, it is going to take new reforms and new 
resources with a healthy dose of new technology in the middle 
of all that to bring this process into the 21st century. It is 
going to take a lot of work in a number of different areas to 
make this right.
    One of those areas, just in the brief time we have, let's 
go back for a minute to the Azdell case. We all worked together 
to bring a special exemption that would allow us to hire 126 
new administrative law judges. Hiring new ones alone won't 
solve this whole problem, but working off the backlog is 
critical.
    The questions I have for you are: What is the status of 
this case? Are we making progress in resolving it? If not, at 
what point do you see Congress taking some legislative action 
to try to ensure this backlog and freeze on judges doesn't 
continue? It has really hurt the process terribly and needs to 
be resolved. If we can't resolve it through the courts, we may 
need to resolve it legislatively. What are your thoughts?
    Mr. GERRY. First, I agree with your point about the 
importance of the case and the impact on the Agency. It has a 
substantial adverse impact on our ability to respond as we 
would like to.
    My best understanding is that the case is on appeal to the 
Federal circuit. There is a stay currently in place from the 
Merit Systems Protection Board, which, of course, affects us 
directly. That hasn't changed as a result of the appellate 
status.
    I don't have a very reliable estimate of how quickly the 
court will act on the case, unfortunately. I do agree with you 
that we need to get to a point where this case doesn't hinder 
us. We are very appreciative, by the way, of the assistance the 
Subcommittee has provided in the past in trying to help relieve 
the stresses that this has created.
    I know that is probably not a very satisfactory answer, but 
it is the best one I have at this point. It is one of the 
factors contributing to the growing backlog of cases.
    I wish I could say that even if we solved the staffing 
problem, which would be of great help, that the problem 
wouldn't continue to grow. As you pointed out, we have an 
increased rate of claims; we have an increased rate of appeals. 
Unless we make some more significant changes in the overall 
process, even if we were to solve the immediate problem, that 
isn't necessarily going to guarantee that we are not going to 
need to hire yet more administrative law judges. I think we 
have to do both, and we have to do them at the same time. We 
have to try to respond to the backlog and eliminate it, and 
solve the current problem. We also have to make some longer 
term systems changes that we can't just keep postponing that.
    Mr. BRADY. It seems like even with the exemption to hire 
the new judges, if we were to double that and hire 120 more, we 
would still just be back up to where we were back in 1997 or 
1998. Yet the growing number of cases, it just seems to me 
pretty obvious that we just don't have enough trained up and 
running along with the other changes in the process that need 
to be made for us to be able to both work off that backlog and 
to handle the new cases that are being. A funnel is being 
created that is nearly impossible to avoid, although reforms 
earlier in the process could help that, no doubt. We still have 
a funnel that at some point just can't continue as it is today.
    Mr. GERRY. I think you are right.
    Mr. BRADY. I didn't expect that answer. I will take that 
while I have it. Thank you, Mr. Chairman.
    Chairman SHAW. I have just one question. You state in your 
testimony that the SSA is striving for uniform policy and 
consistent application of policy throughout the Nation. Since 
1994, the Agency has been talking about revamping its quality 
system, which is so critical in ensuring national consistency 
within and across disability decision makers both within and 
across States. It simply isn't fair when a decision can depend 
upon who makes the decision or which office processes the 
application.
    What precisely is being done? Do you have a timetable that 
you might be able to share with us for taking action in this 
particular area?
    Mr. GERRY. Well, the Commissioner has taken some pretty 
bold action on that by designating the former Regional 
Commissioner in Atlanta to head up the new quality work group. 
She is currently putting that work group together and will be 
preparing a report for the Commissioner. This is very high on 
the Commissioner's set of priorities, and it is on mine, too, 
Mr. Chairman. I have had a major concern. For one thing, we 
have had a process that has relied on appeals to protect people 
from erroneous decisions. Many people who I have worked with 
over the years--and I have been a pro bono lawyer for many 
people with disabilities--and others who have been around the 
program--agree that often the people who ought to appeal, don't 
appeal. We very much need the quality process to protect the 
entire program from becoming too much of a litigation-driven 
model. I think the Commissioner is very concerned about not 
losing that focus on quality.
    I can tell you that the person she has appointed to this 
work group is a high-energy person who is very focused on 
producing a report. As I am sure you know, we had a study done 
by an outside contractor that made some fairly sweeping 
recommendations in changing the whole quality environment of 
the Agency. I know the Commissioner has read that report 
carefully and has paid a lot of attention to it. So, now we are 
into the process of trying to figure out what those changes 
should actually mean.
    One of the recommendations of the report is that we 
institutionalize a quality environment at all stages of the 
process. That is a fine concept, but what this work group needs 
to do is to talk about how would we really do that. How would 
we go about providing the kind of management oversight that 
will be necessary to identify problems and solve them before 
they end up becoming backlogs or workloads? That is what the 
Commissioner wants to do.
    So, that is going on right now. Along with the other Deputy 
Commissioners, I will be supporting that process. It is being 
spearheaded by Myrtle Haberham, who was the Regional 
Commissioner in Atlanta. She understands our process from the 
field level and is probably the best person to lead that effort 
right now.
    Chairman SHAW. Okay. Well, we thank you for your 
testimony--oh, Mr. Matsui has a question.
    Mr. MATSUI. Thank you, Mr. Chairman. I appreciate your 
giving me one more opportunity.
    Mr. Gerry, you were saying the recommendations would be 
made in the fall of this year. If at all possible--you know, I 
don't know when we are going to recess, probably around the 
second week of October, the first or second week of October, I 
would imagine. It would really be helpful if your 
recommendations and the Commissioner's recommendations came to 
us so that we would at least have a chance to review it before 
we adjourn for the year. Otherwise, it won't be until February 
or so that we would have that opportunity. I think given the 
backlog and given the number of people we are talking about, it 
would really be helpful if we had an opportunity to comment on 
it, work with you on it, during the regular calendar year. That 
is, in September, early October at the latest, assuming we are 
still in session. If, in fact, there is a short-term CR, 
continuing resolution, there may be an opportunity to help then 
with some of the funding requirements that may be necessary 
that Mr. Shaw had referred to. That to me would be at least a 
recommendation so that we would have a chance to vet it with 
you, obviously, before we adjourn.
    Mr. GERRY. Well, thank you, Mr. Matsui. I will convey those 
sentiments to the Commissioner. What I know is that there will 
be a two-step process. What you would really want to see is 
what her recommendations would be. What we are doing is an 
internal process. I will certainly make her aware of that 
timetable and convey to her the important point you made about 
the involvement of the staff and the Committee.
    Chairman SHAW. Well, I think an interim report would be 
welcomed if the Commissioner and you are comfortable in sharing 
them at any particular point.
    Well, we thank you. I was reading your background. It is 
very impressive. We are delighted to have you, and thank you 
for appearing before our Committee.
    Mr. GERRY. Thank you, Mr. Chairman.
    [Questions submitted by Chairman Shaw to Mr. Gerry, and his 
responses follow:]
                                     Social Security Administration
                                          Baltimore, Maryland 21235
                                                  November 15, 2002
The Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
House of Representatives
Washington, D.C. 20515

    Dear Mr. Chairman:

    This is in response to your letter of July 24, 2002, which 
transmitted questions for the record from the June 11, 2002, hearing on 
the Social Security Disability Program's Challenges and Opportunities. 
Enclosed you will find the answer to your specific questions. I hope 
this information is helpful. If I may be of further assistance, please 
do not hesitate to contact me.
    Enclosures

    1. Judge Kathleen McGraw stated in her testimony that there are no 
performance standards for employees at the Office of Hearings and 
Appeals (OHA), except for the judges. Is this true? If so, why? How 
exactly is the performance of OHA employees assessed? Are there no 
performance standards beyond a ``pass/fail'' rating? Do you have plans 
to change this system? Why or why not?

    Answer:

    SSA employees, including those at OHA and those at the Office of 
Appellate Operations (OAO) with the exception of ALJs, have performance 
standards which are negotiated with SSA management and the unions which 
represent SSA employees. Each standard requires the successful 
performance of critical elements of the job. Employees are rated as 
performing at a ``successful level'' or as performing at an 
``unacceptable level.'' However, the standards do not include numerical 
requirements for critical or other elements and the appraisal system is 
based on a ``pass/fail'' rating.
    Commissioner Barnhart has expanded the performance standards for 
members of the Senior Executive Service and is considering this change 
for other non-bargaining unit employees. The issue of returning to 
numerical requirements in the performance standards is under 
consideration for possible inclusion in SSA contract negotiations in 
2004 for bargaining unit employees.
    With respect to ALJs as independent decisionmakers, they are not 
rated in the same manner as other SSA employees. However, their 
decisions are still subject to the review of other ALJs (the peer 
review) and, if SSA becomes aware of a potential problem with a 
particular judge, it may refer the matter to the Merit Systems 
Protection Board to be investigated.

    2. Several witnesses suggested improving the appeals process by 
allowing judges to manage their own offices, and to hold them 
accountable. What has been your experience with this management 
approach in OHA? Would you consider allowing judges to manage the 
personnel in their offices and hold them accountable? Why or why not?

    Answer:

    We have not tried this approach in the past because, with the 
exception of the Hearing Office Chief administrative law judge 
(HOCALJ), ALJs do not manage employees. They are part of a collective 
bargaining unit and, according to OPM's regulations, may not manage 
personnel in their offices. However, SSA may explore this concept as 
part of an overall initiative to improve the hearing process.

    3. Much has been reported in the media and by the Advisory Board 
about the varying allowances rates across and within the States at the 
disability determination services (DDSs) and OHA offices. Can you 
provide more detail as to why these allowance rates vary? What is being 
done to address variances of allowance rates, including action taken, 
action planned, and the timeframe for completion of these actions?

    Answer:

Variations in Initial Allowance Rates Among States
    The variation in allowance rates among states and regions has been 
viewed by some as an indication that there may be a lack of uniformity 
in disability decisionmaking, but that greatly oversimplifies the 
issue. Enclosed is a study released in August \1\ that helps to explain 
some of the variation in initial level allowance rates across states 
for adult disability applicants.
---------------------------------------------------------------------------
    \1\ Strand, Alexander, 2002, ``Social Security Disability Programs: 
Assessing the Variation in Allowance Rates,'' ORES Working Paper No. 
98, Social Security Administration, Office of Policy.
---------------------------------------------------------------------------
    This study, like prior studies, will show that much of the 
variation in allowance rates can be explained by a number of 
socioeconomic and demographic differences among states. Using a 
regression analysis that predicts allowance rates based on the 
economic, demographic and health characteristics of states, the study 
estimates the portion of variation that can be explained by these 
differences. For example, states have different economic conditions, 
and economic conditions are correlated with the tendency to apply for 
benefits. When there are larger numbers of applications in a state, the 
rate at which those applications are allowed may be lower than the rate 
of allowance in a state that receive proportionately fewer 
applications. States also differ in their age and gender composition, 
and these groups have different tendencies to apply for benefits. For 
these reasons and others that are addressed in the study report, the 
composition and characteristics of the applicant pool differ across 
states so that, even with no inconsistency in disability adjudication, 
allowance rates would properly be expected to vary among states and 
regions.
    In view of the study results and our extensive experience with 
Federal consistency and quality assurance reviews of initial level 
determinations, we believe that most of the differences in initial 
allowance rates are not due to inconsistency in applying policy. The 
initial accuracy rate for the Nation through July 2002 is 94.6 percent. 
However, the study does show some differences among states that cannot 
be explained by the regression analysis (although these differences are 
much smaller than the simple allowance rates themselves suggest) and we 
will need to keep working to minimize them.

Variations in Administrative Law Judge Allowance Rates Among States:

    We are not aware of any statistical studies that specifically 
address possible variations in state allowance rates based on decisions 
made at the administrative law judge (ALJ) level. Our Office of Quality 
Assurance monitors the quality of ALJ decisions and provides reports 
about quality at the regional and national levels, not for particular 
states or hearing offices. Hearing offices are not organized along 
state lines (e.g., the Evansville, Indiana hearing office handles 
claims from parts of Kentucky, Illinois and Indiana) and ALJs have 
decisional independence.

    4. You stated in your testimony that implementation of the Hearings 
Process Improvement (HPI) initiative created bottlenecks in processing 
cases at OHA and in light of the initiative's failure, would not be 
continued in its current form. Commissioner Barnhart has announced 
short and near-term changes to the hearing process, but that SSA will 
need to bargain with employee groups before any changes are 
implemented. Please provide a status of the union negotiations relative 
to these changes.

    Answer:

    In March 2002, SSA Commissioner Barnhart announced a number of 
changes to the hearings process to remedy weaknesses in the HPI design 
in the short term and to promote greater efficiency in hearing office 
operations and better use of time and talents to reduce pending 
workloads.
    OHA has begun to award folder assembly contracts to assist in 
eliminating the pending inventory of cases awaiting folder preparation. 
The contractors will perform the routine clerical tasks of numbering 
exhibits and pages, removing duplicate reports, and preparing exhibit 
lists. In May 2002, OHA and two employee unions, AFGE and NTEU, entered 
into memoranda of understanding regarding the impact and implementation 
of this initiative on bargaining unit employees. Despite assurances to 
the International Federation of Professional and Technical Engineers 
(IFPTE)/Association of administrative law judges (AALJ) that OHA would 
implement the folder assembly contracts in a way as to not directly or 
materially affect the conditions of employment of any judge, OHA's 
negotiations with IFPTE/AALJ did not culminate in a signed agreement. 
IFPTE/AALJ filed an unfair labor practice complaint on this issue.
    In June 2002, OHA notified AFGE, IFPTE/AALJ, and NTEU of its intent 
to implement additional proposed initiatives for changes in the HPI 
design and afforded the employee unions the opportunity to discuss the 
impact and implementation of the initiatives on workers' conditions of 
employment. The initiatives were to:

         End the requirement that cases be certified as ready 
        to hear;
         End rotational assignments for case technicians and 
        senior case technicians;
         Extend early case screening and analysis to 
        administrative law judges;
         Introduce a short form favorable decision format; and
         Promote the issuance of bench decisions by 
        administrative law judges.

    OHA and NTEU entered into a memorandum of agreement on these 
initiatives. Talks with AFGE and IFPTE/AALJ terminated without reaching 
agreement. AFGE negotiations stalled chiefly due to AFGE insistence on 
issues that are either non-negotiable or beyond the scope of the 
national collective bargaining agreement. AFGE required incorporation 
of previous ``partnership'' agreements and partnering rights in any new 
memorandum of understanding with OHA, contrary to the rescission of the 
Executive Order on partnering that was executed early in the current 
Administration. OHA adhered to the provisions of Articles 26 and 27 of 
the national agreement in effectuating the initiatives; however, AFGE 
insisted upon an expansion of the terms of the contract. AFGE grieved 
OHA implementation of the initiatives prior to reaching agreement. 
Discussions between OHA and IFPTE/AALJ also terminated without 
agreement. IFPTE/AALJ failed to recognize management's statutory right 
to assign work to employees.
    Because of the importance of the initiatives to improve OHA's 
service for the American public, the initiatives were implemented in 
July 2002 despite the lack of agreement with AFGE and IFPTE/AALJ. 
Mindful of its labor management obligations, as well as the importance 
of the support of the employee groups in the success of any initiative, 
OHA invited both employee groups to return to negotiations in August 
2002. Despite preliminary indications from the groups that they were 
amenable to continuing the discussion, neither AFGE nor IFPTE/AALJ 
returned to the bargaining table.
    OHA has notified the unions of its proposal for video-
teleconferencing of hearings. OHA will soon notify the unions of its 
proposals for expansion of speech recognition technology. The unions 
will be afforded the opportunity to discuss the impact and 
implementation of these initiatives. OHA will continue to bargain in 
good faith with the employee groups to ensure that the initiatives to 
improve the hearings process do not adversely affect the conditions of 
employment of any worker.

    5. A number of changes to the disability appeals process were 
suggested at the hearing. Please provide your views as to the merits of 
each of the following and related issues the Subcommittee should 
consider as we examine each of these proposals:

         Limiting the review of the Appeals Council to clear 
        error of law or lack of substantial evidence, as recommended by 
        the American Bar Association.
         Following the current system of administrative 
        hearings by review by an Article I Social Security Court, with 
        a right of appeal on questions of law in the regular courts of 
        appeals (as with the current Tax Court).
         Agency representation at ALJ hearings.
         Closing the record either after reconsideration or 
        after an ALJ hearing.


    Answer:

    We believe it would be premature to advance an Agency view 
regarding any of these proposed changes. Commissioner Barnhart is 
committed to improving the disability process but the work is just 
beginning. In her testimony of May 2 before the Subcommittee on Social 
Security, Commissioner Barnhart announced decisions on a number of 
short or near-term improvements in the disability claims process but 
also indicated that mid- and longer-term improvements would be 
developed to improve the process. In her testimony Commissioner 
Barnhart emphasized that she ``did not assume [her] duties as 
Commissioner to manage the status quo.''
    In his testimony of June 11 before that subcommittee, Martin H. 
Gerry, Deputy Commissioner, Office of Disability and Income Security 
Programs, reported that the Agency had determined that no single change 
would suffice to improve the process as needed and that many 
improvements (some large and some small) would be needed. The already 
announced steps were ``just the first steps'' that SSA would take to 
meet the challenge of providing an improved process.
    Similarly, in his August 1 response letter to Ron Bernoski, IFPTE/
AALJ President, Deputy Commissioner Gerry noted that the Commissioner 
had announced several improvements that were already being implemented, 
expressed no judgment regarding particular process changes that Judge 
Bernoski mentioned, and stated ``our work on additional program 
improvements, however, is just beginning.''
    The above remarks of Commissioner Barnhart and Deputy Commissioner 
Gerry reflect a commitment to improving the process through mid- and 
longer-term changes, but this work on developing such changes is just 
beginning.
    We agree with the comment in the Social Security Advisory Board's 
Report ``SSA's Obligation to Ensure that the Public's Funds are 
Responsibly Collected and Expended'', that there is no simple fix to 
the challenges facing the disability program.

    6. You mentioned in your testimony that SSA has been hampered in 
hiring much-needed additional ALJs because of the Azdell v. OPM case 
challenging the method used to compute veterans' preferences in the 
ranking of ALJ candidates. What is the status of this case? Are there 
legislative changes the Subcommittee should be considering to provide 
the agency needed relief?

    Answer:

    The Azdell case is currently pending before the Federal Circuit. 
Oral argument was heard by a three-member panel on October 10, 2002. It 
is not clear at this time that legislative intervention is necessary.

    7. You stated in your testimony that Commissioner Barnhart 
appointed a former Regional Commissioner to head up a work group to 
review SSA's quality assurance program and to prepare a report of their 
recommendations. Can you provide more detail about this group, 
including: who serves, the workgroup's mission, goals and objectives, 
and the timeframe for the completion of its report. We would also 
appreciate a staff briefing as to the group's findings and 
recommendations, when ready.

    Answer:

    Commissioner Barnhart appointed the former Regional Commissioner 
for the Atlanta and Chicago Regions, Myrtle S. Habersham, as the Senior 
Advisor for Quality Management. A workgroup was established with 8 
Members representing years of operational and administrative 
experience. The Members came from the following major components: the 
Office of Disability and Income Security Programs, the Office of 
Finance, Assessment and Management, the Office of Operations, and the 
Office for Human Resources. Permanent staffing plans are being 
finalized. Additionally the group has utilized a senior level Steering 
Committee composed of representatives from every component and members 
from SSA management and Disability Determination Services (DDS) 
administrators' organizations.
    The group was tasked with developing a proposal on what quality 
should look like for each of the Agency's business processes (claims, 
post-entitlement actions, informing the public, enumeration, earnings) 
and all supporting activities. The proposal was presented to the 
Commissioner with initial implementation beginning in August 2002.
    Initially, the workgroup was tasked with completing extensive 
research and fact finding for the necessary background on their 
assignment. They looked at five key areas: definition of quality, who 
is responsible for ensuring its presence, the identification of quality 
models, challenges that impede progress and solutions for those 
impediments. The following recurring themes emerged from this fact-
finding and research process.
    For SSA to improve its performance in this area, our Agency needs:

         leadership to drive the change;
         quantifiable measures where appropriate and 
        sufficient resources for employees to provide services to the 
        American public;
         identification of initiatives that are currently 
        underway to improve processes;
         incentives to encourage ongoing identification of 
        quality solutions;
         an evaluative tool for use at the start of every 
        major initiative ensuring full consideration of quality; and
         more investment in leadership training that enhances 
        the skills necessary to reinforce this quality environment.

    To address the Agency's needs, the workgroup's proposal contains 
four phases that are running concurrently. The focus of the first phase 
was to re-emphasize the Agency's commitment to quality and increase 
visibility of quality issues. Many of the activities in Phase I such as 
a new Commissioner-level quality award and a Quality Matters website 
have already been completed. The website currently features initiatives 
that provide solutions to quality issues, i.e., changes in systems, 
policies, and processes. Phase II of the proposal involves defining 
quality for the disability claims process. The workgroup is continuing 
the research and fact finding needed to identify a quantifiable 
definition of quality. Beginning with Phase III, the workgroup has 
started to identify process changes that will streamline processes and 
procedures in order to free resources to focus on other priority 
workloads. Phase IV looks at how to build quality into new processes, 
i.e., the accelerated electronic disability process, online medical 
report for disability claims, online policy/procedures, etc. As new 
processes are developed, the workgroup will work with other components 
to identify up front needed policies, systems, and management 
information to ensure quality.
    The above outlines the steps the Agency is taking to reinforce the 
expectation of quality in everything it does. However, fully 
integrating quality into each of the business processes that serve the 
needs of more than 40 million beneficiaries is both a lengthy and 
complex challenge. The Agency will continue to research, coordinate, 
and develop a quality process to meet that challenge.

    8. GAO states in their testimony that SSA hired a contractor to 
evaluate their electronic disability strategy and make recommendations 
for options to ensure that all the business and technical issues are 
addressed to meet SSA's mission of moving the agency toward a totally 
paperless disability claims process. Has the contractor submitted their 
recommendations? If so, please provide a summary of the contractor's 
report and a copy of the report to the Subcommittee staff. If not, what 
is the timeframe for completion? What is the timeframe for 
implementation of e-dib? Once the contractor review is completed, we 
would appreciate a staff briefing as to the contractor's findings.
    Answer:

    SSA has contracted with Booz-Allen and Hamilton to support the 
overall eDib project. Rather than simply reviewing and reacting to SSA 
proposals, the contractor is helping us to formulate a strategy, define 
an architecture and refine implementation options.
    Since that time, Commissioner Barnhart challenged the Agency to 
accelerate the eDib project. She directed SSA to be ready to start 
implementation of a ``folderless'' disability business process by 
January 2004. We have revised the eDib Project Management Plan to 
reflect the Accelerated eDib (AeDib) project.

    9. GAO commented that, in the past, SSA has had mixed results 
implementing their information technology initiatives and that SSA must 
review the pros and cons of past efforts before they undertake new 
efforts. GAO also stated that SSA must identify, track, and manage the 
costs, benefits, schedule, and risks associated with the system's full 
development and implementation. In addition, they stated SSA must 
ensure that it has the appropriate ratio of skills and capabilities to 
achieve the desired results. Has the agency addressed these 
recommendations? How can the Subcommittee be assured that e-dib will 
succeed where other technology initiatives have not?

    Answer:

    SSA recognizes the inherent risks of any large-scale technology 
initiative such as eDib, whether at SSA or any other public or private 
organization. The success of the implementation of eDib is being 
managed on a twofold front at SSA: via the SSA institutional 
information technology (IT) management processes, and via process and 
architectural approaches unique to the eDib application.
    SSA has already addressed recommendations made by GAO concerning 
reviews of past IT initiatives; including identifying the tracking and 
managing costs, benefits, schedules and risks associated with full 
system implementation and ensuring the availability of the appropriate 
human capital IT skills and capabilities. Some of the means addressing 
these various GAO recommendations are:
IT Capital Planning and Investment Control (CPIC)
    SSA has had a documented and successful IT CPIC process in place 
for many years. The SSA Acting Chief Information Officer (CIO) is 
currently testing and evaluating promising changes to the already 
successful process. The process change recommendations being tested and 
evaluated address areas such as IT planning, value measurement for e-
services, as well as IT cost allocation methodologies for IT security 
and other IT infrastructure costs. New guidance from the Office of 
Management and Budget, along with ongoing evaluations of new tools and 
recommendations for other process improvements from higher monitoring 
authorities and consultants, will be included in the final model of a 
new CPIC process guide. The anticipated process plus use of the 
Information Technology Investment Portfolio System (I-TIPS) as a 
repository for selection criteria as well as SSA's IT portfolios will 
facilitate objective analysis, comparison, prioritizations and 
selection of IT investments. SSA is also developing procedures to guide 
future post-implementation reviews (PIR) that include criteria for 
designated projects for PIR. Standardized input to SSA's review process 
will probably be through I-TIPS.
Information Technology Advisory Board (ITAB)
    SSA is adopting an IT planning and portfolio selection process that 
includes predefined selection criteria. This new process includes the 
development of a documented prioritized IT plan based on predefined 
selection criteria. These plans will be provided to the CIO-chaired 
Executive-level Information Technology Advisory Board (ITAB). That 
board will perform enterprise-wide IT planning and prioritization using 
the established evaluation criteria to produce and regularly evaluate a 
single, integrated Agency IT project portfolio. The criteria will 
include qualitative and quantitative factors including strategic 
alignment, mission effectiveness, organization impact, risk and return 
on investment. ITAB and senior Systems managers will provide oversight 
of IT projects, comparing actual cost, schedule, and risk data with 
original estimates.
Information Technology Architecture Plan (ITAP)
    The ITAP continues to be a core management tool within SSA to 
document and manage the existent IT portfolio and to ensure that IT 
assets will be well positioned to support the evolving future service 
delivery requirements of the agency, of which one example is eDib. The 
ITAP is used to manage the current and target physical and application 
architectures; link IT investments to essential operational 
requirements; ensure that the IT architecture will support the SSA 
vision of the future; ensure continually refined process management of 
application development and operational IT management; ensure that 
security requirements are an integral part of all IT planning; and 
ensure the integration of IT capacity planning as part of the ongoing 
and future IT asset portfolio management.
Software Process Improvement (SPI) Program
    SSA Systems has heavily invested in the IT SPI program. SSA has 
selected the Carnegie Mellon's Software Engineering Institute (SEI) 
Capability Maturity Model (CMM) as the methodology for conducting the 
SPI program. CMM is in wide use throughout the software industry and is 
well respected as a standard benchmark. In 2001, SSA was certified by 
the SEI as being at CMM level 2. Level 2 specifies that the management 
processes are in place and in use to track cost, schedule and 
functionality on a repeatable basis. In the history of evaluations of 
non-military public sector organizations conducted by the SEI, 33 have 
been evaluated. Of the 33, 29 are at level 1 and 4 are at level 2, 
including SSA. The SEI has not evaluated any organizations in either 
the state or Federal sector that have achieved level 3 or above. In 
June of this year, Bill Gray, Deputy Commissioner for Systems, set a 
goal for Systems to be level 3 compliant by the end of calendar year 
2003.
Information Technology Human Capital Plan
    SSA is currently in the process of developing a human capital plan 
for the agency, including the human capital requirements to support 
current and foreseeable IT requirements. Initial work has already been 
completed to identify current IT skills using the Skills Inventory 
Planning System (SIPS). SIPS information is being analyzed to assess 
the usability of the data collected to support a gap analysis. SIPS 
will be repeated once the Systems reorganization has fully stabilized. 
SIPS will ensure the data is available to link current competencies and 
requirements and future staff needs. Additional work is being 
undertaken to develop a human capital plan based upon the difference 
between foreseeable IT requirements, and the current and projected IT 
workforce structure. In the meantime in recognition of the substantial 
retirement wave over the next five to ten years, priority is being 
given to future needs by setting aside a percentage of all full-time 
equivalents for entry-level hiring.
eDib Specific Success Enablers
    eDib is defined as a flexible IT framework to serve the complex SSA 
disability business process. A key tenant of eDib is that eDib is not 
viewed as just a successful demonstration of technology implementation, 
but rather as technology implemented in such as way as to clearly 
provide ongoing and increasing support for both the current and future 
disability business processes. eDib planning and implementation 
revolves around determining where automation might best make a 
contribution to significant operational needs in a cost effective 
manner. eDib IT development adheres to all of the SSA institutional IT 
management processes (some of which are described above) in order to 
ensure this rigorous connection between IT investment, IT development, 
and desired business outcomes. Business case documentation under 
development within SSA and with Booz-Allen & Hamilton is providing a 
foundation for ensuring linkage between the business case for 
disability processing improvements and the eDib IT structure to support 
the business case.
    eDib has ongoing and regular review at the highest levels of the 
agency. A Deputy Commissioner workgroup has already been formed to 
review and guide project performance on a regular basis. The 
participants are the Deputy Commissioners from Systems, Disability and 
Income Security Programs, and Operations. Management decisions 
requiring prompt reconciliation and resolution are escalated to the 
Deputy Commissioner workgroup. The Deputy Commissioner for Systems 
meets weekly with senior Systems staff to review the progress of eDib 
on all fronts, be they organizational, resource, business process, or 
technical design and implementation.
    Users and DCS are jointly framing requirements and implementation 
plans so that the functionality to be delivered is commensurate with 
available resources and timeframes. Extensive business process 
analysis, adherence to the systems development life-cycle, and use of 
CMM principles help ensure that the IT assets being developed in 
support of eDib clearly support the business process, and that system 
users and developers agree on clearly defined IT goals to support 
specific business process requirements.
    eDib is not a monolithic single application. Rather, eDib is being 
architected to consist of a number of discrete components, many of 
which can be implemented independently of one another. With the 
individual eDib building blocks being for the most part loosely tied to 
one another, success can be achieved incrementally within and between 
separate eDib projects and without being hostage to a tightly 
integrated ``grand design.'' Where eDib does introduce new IT 
components and architectures to SSA, these items are being positioned 
as core architectural components which will be used as part of the 
ongoing common IT architecture development.
    eDib is being designed to make the best use of projects, analyses, 
and architectural components already in use or under development, to 
maximize the use of commercial products, and to use external 
consultative expertise where appropriate. For example, eDib is being 
built to leverage and enhance the capabilities of existing disability 
case development and management systems, such as those in the state 
Disability Determination Services and the SSA Office of Quality 
Assurance. eDib will not replace any of these systems, but will instead 
provide additional services working in conjunction with these systems 
to enhance the capabilities of these systems and improve the business 
process already in place, while simultaneously setting the stage for 
future business process enhancements.
    As part of eDib planning SSA is making use of premier external 
consults such as Booz-Allen and Hamilton, Gartner, the Giga Information 
Group, Lockheed-Martin, and other select IT consultant and services 
groups. External professional services will also play an important part 
in eDib implementation in all areas, including design, development and 
implementation activities where necessary to provide expertise and to 
supplement the SSA IT workforce. Particular attention is being paid at 
both the design and systems operational levels to developing monitoring 
and modeling methodologies to proactively avoid potential performance 
issues both during design and upon implementation. A separate capacity 
planning and modeling activity is being undertaken to ensure that an 
appropriate physical architecture is procured and implemented which can 
support the operational business process and service level 
requirements. SSA will be making extensive use of prototyping, 
piloting, training, and phased and iterative deployment in order to 
introduce the various eDib IT components into the production 
environment in a carefully controlled fashion. This introduction will 
be quite granular permitting introduction by eDib component, SSA 
organizational entity type, and geographic location.

    10. The Advisory Board has recommended strengthening the current 
Federal-State relationship. Their suggestions for doing that include 
requiring States to adhere to specific guidelines for educational, 
salaries for staff, training, carryout procedures for quality 
assurance, and other areas having a direct impact on the quality of 
States' employees and their ability to make quality and timely 
decisions. Do you agree with these recommendations? Are you pursuing 
any of these suggested changes?

    Answer:

    SSA considered the establishment of a standard for adjudicators 
along with a standardized test to establish a certain level of 
proficiency. However, some States did not want SSA involved in what 
they viewed as State personnel matters. Some States were also concerned 
such educational requirements would result in higher salary levels that 
would have a ripple effect on other positions in the State that were 
not fully federally funded.
    In addition we have taken action to:

        1. LIncrease the disability policy component's staff 
        responsible for managing disability training to strengthen 
        SSA's ability to deliver high quality and consistent program 
        training to all adjudicators.
        2. LFocus user input regarding training needs and delivery 
        through the Disability Training Steering Committee (DTSC), 
        which has been operating for the last several years. The DTSC 
        includes representatives from the DDSs, OHA, the Office of 
        Quality Assurance, and Operations. Its primary role is to 
        ensure that appropriate training is made available for all 
        disability adjudicators.
        3. LEmbark on mandatory national training on selected topics in 
        which it is essential that every adjudicator, regardless of 
        component, have the same understanding to promote consistency 
        in decisionmaking. Training will be directed toward experienced 
        adjudicators. As we start the process, we envision providing 3 
        to 4 mandatory training programs in the 1st year, 
        with the first program in early mid FY 2003.

    11. The Advisory Board also recommends establishing a system of 
certification for claimant representatives and establishing uniform 
procedures for them to follow. Do you agree with this recommendation? 
If so, what action has been taken or is planned? If not, why?

    Answer:

    We view the issue of establishing a system of certification and 
uniform procedures for claimant representatives as another possible 
structural change to the claims process. As we consider options and 
develop proposals for changes in the disability process, we will keep 
the Advisory Board's recommendation in mind.

    12. Our hearings have reinforced the need for disability research 
in general, but specifically for comprehensive research in the area of 
return to work. Please provide a summary of related research that has 
been conducted in recent years, research underway, and research 
planned, including expected completion dates.

    Answer:

Overview
    SSA has conducted research in effective and efficient approaches to 
returning disability beneficiaries to work since the mid-eighties. 
Starting with the grants under the Research Demonstration Program and 
the Transitional Employment Training Demonstration, through Project 
NetWork, and continuing today with the State Partnership Initiatives 
(SPI), SSA has tested a wide range of work incentives, service 
provision techniques, and systems changes, designed to promote the 
employment of Supplemental Security Income (SSI) and Social Security 
Disability Insurance (SSDI) beneficiaries. In addition, over the next 
few years, SSA plans to conduct several new demonstrations, including 
an early intervention demonstration and several projects under a Youth 
Employment Strategy.
Previously Completed Research
    Research completed since the mid-eighties includes:

         Transitional Employment Training Demonstration: A 
        randomized field experiment providing skills training and work 
        experience to adolescents with mental retardation in the SSI 
        Program. Participants in 8 sites nationwide were given up to 2 
        years of services. Program waivers were used to encourage 
        participation.
         Research Demonstration Program: Three rounds of 
        research grants and cooperative agreements to State agencies 
        and private providers of vocational rehabilitation (VR) 
        services to SSDI and SSI beneficiaries. Some projects included 
        the use of program waivers to provide additional encouragement 
        to disability beneficiaries who wanted to work.
         Project NetWork: A randomized field test of four 
        models of case management for providing return-to-work (RTW) 
        services to SSI and SSDI disability beneficiaries. This project 
        included 2-3 years of services in 9 States and pre- and post-
        service interviews with participants to measure differences in 
        outcomes between treatment and control groups.
Current Return to Work (RTW) Research
    RTW research currently in progress includes:

         State Partnership Initiatives: A set of 12 projects 
        (cooperative agreements), sponsored by SSA, and 6 projects, 
        sponsored by the Department of Education. For the SSA-sponsored 
        projects, awards were made for 5 years to State agencies, which 
        proposed the most innovative consortia of State programs, 
        designed to encourage SSDI and SSI disability adult 
        beneficiaries and youth to attempt to work. Four of the 
        projects are also testing waivers of SSI Program features, such 
        as $1-for-$4 benefit offsets for earnings and suspensions of 
        Continuing Disability Reviews during participation in the 
        projects.

    LExpected completion date: September 2003 for the eight non-waiver 
projects; September 2005 for the four waiver projects.

         Adolescents with Special Health Care Needs Project: 
        This cooperative agreement with Children's Research Institute 
        is located in Washington, DC. It is a collaborative partnership 
        between the Adolescent Employment Readiness Center, a model 
        transition program; Health Services for Children with Special 
        Needs, Inc., a managed care organization for SSI recipients; 
        and the American Academy of Pediatrics, the nation's largest 
        organization for pediatricians. The purpose of the project is 
        to prepare transition age SSI youth with severe, chronic 
        disabilities for post-high school employment by establishing, 
        in an urban setting, an uninterrupted, coordinated, 
        developmentally appropriate, psychologically sound and 
        comprehensive model of transition services for SSI youth. This 
        project is part of SSA's Youth Employment Strategy.

    Expected Completion Date: September 2004.
Planned RTW Research
    LSSA has several RTW research projects planned to begin in FY 2003, 
spanning a broad range of topics.

         Youth Employment Strategy: Designed to assist 
        individuals with disabilities between 11 and 30 years of age 
        transition to the work force, this initiative will consist of 
        several projects related to the delivery of services needed to 
        assist these individuals in achieving independence. States and 
        local communities will be awarded contracts, grants, and 
        cooperative agreements for testing and delivering needed 
        transition services to young SSDI and SSI beneficiaries with 
        disabilities. Cooperative agreements will test integrated 
        school-family community-agency models of transition planning, 
        aided by assessments of employment potential and Vocational 
        Rehabilitation services. SSA will be pursuing interagency youth 
        transition projects with the Department of Education, the 
        Department of Labor (DOL), and other interested Federal 
        partners. Waivers of SSI and/or SSDI program features to 
        support youth beneficiaries' transition to adult life will also 
        be considered.

    Expected Completion Date: September 2008.

         Mental Illness Treatment Demonstration: SSA will test 
        models of services and treatment for SSDI and SSI beneficiaries 
        with diagnoses of mental illness, such as, mood disorders or 
        anxiety disorders and related co-morbid conditions. The 
        objective of the tests will be to return these beneficiaries to 
        productive activity and reduce program costs. Sites will be 
        chosen scientifically in several States where the State and 
        local mental health service system is interested in 
        participating and wins a competitive cooperative agreement 
        award. Participants will be randomly assigned to treatment or 
        control groups. Program waivers will be considered if they are 
        felt to be essential to supporting the work attempts of 
        demonstration participants. Funding is initially scheduled for 
        5 years with the first year for setup and testing of 
        procedures, followed by 4 years of enrollment of cases and 
        service delivery.

    Expected Completion Date: September 2008.

         Early Intervention Demonstration: The objective of 
        the Early Intervention Demonstration is to assist title II (and 
        concurrent title XVI disability) applicants, who have 
        impairments reasonably presumed to be disabling, to secure the 
        necessary support services that will help them to return to 
        work. Applicants for disability benefits will be given the 
        opportunity to put their applications ``on hold'' and 
        participate in the demonstration. Providing the necessary 
        support services before a benefit award is made may improve the 
        applicant's chances of a successful return to work and possibly 
        eliminate the need for disability benefits. Alternate models of 
        service delivery will be tested to determine the interventions 
        that will most likely encourage employers to hire and retain 
        participants. Participants will be given a stipend to support 
        them during the intervention as well as health care benefits. 
        The demonstration will be conducted as a randomized experiment 
        in several States nationwide.

    Expected Completion Date: Sept. 2009.

         Comprehensive Employment Opportunities Demonstration: 
        The Centers for Medicare & Medicaid Services (CMS) and SSA will 
        solicit interested States for a demonstration entitled the 
        ``Comprehensive Employment Opportunities (chief executive 
        officer)'' demonstration that would combine resources and 
        incentives from both Federal agencies and the States to promote 
        the employment of people with disabilities. States will 
        participate in this demonstration through cooperative 
        agreements that would include pre-approved Federal waivers. 
        Through this project, the Center for Medicare and Medicaid 
        Services and SSA are promoting the ability of States to offer a 
        coherent, comprehensive employment initiative. States will 
        extend health coverage via the Medicaid Buy-In and related 
        programs, and will bring State programs together to address all 
        major barriers to employment-- including health care, income 
        support, housing, employer access, and transportation. As part 
        of this demonstration, SSA will provide pre-approved waivers 
        under the SSI and SSDI programs to successful applicants. These 
        pre-approved waivers include additional disregards of income 
        and assets/resources, as well as ``hold harmless'' provisions 
        to ensure that an individual in the demonstration will not be 
        worse off as a result of participation. The pre-approved 
        waivers will be subject to State conformance with all 
        applicable terms and conditions, operational protocols, and the 
        cooperative agreement itself.

    Expected Completion Date: September 2008.

         Benefit Offset Demonstration: SSA will test the 
        impact on SSDI beneficiary employment through implementation of 
        a $1-for-$2 benefit offset. This demonstration was mandated by 
        section 302 of the Ticket to Work and Work Incentives 
        Improvement Act 1999. SSA will solicit the interest of States 
        that wish to participate in this test. Sites will be selected 
        to provide a diversity of settings nationwide. Participants in 
        the demonstrations who work will have disability benefits 
        reduced $1 for every $2 of earnings above a certain threshold, 
        instead of having benefits eliminated completely, as in the 
        current SSDI program. The extent of greater rates of employment 
        and higher earnings of participants will be assessed relative 
        to a control group.

    Expected Completion Date: September 2008.

         Evaluation of the Ticket to Work Program: As mandated 
        by section 1148 of the Social Security Act, SSA must evaluate 
        the size and nature of the impact of the Ticket to Work and 
        Self-Sufficiency Program on the employment and earnings of SSI 
        and SSDI beneficiaries and on the payment of Employment 
        Networks which provide services to those beneficiaries. SSA has 
        awarded a contract to design the evaluation. SSA will award a 
        competitive contract to a research firm to implement the 
        research design during FY 2003.

    LExpected Completion Date: September 2007 with interim reports in 
FY 2003 and 2005.

         Benefits Navigator Demonstration: SSA is partnering 
        with DOL on a test of a Disability Benefits Navigator in the 
        nationwide network of One-Stop Centers. The Navigator will be 
        an expert in SSA's disability program work incentives, the 
        Ticket to Work program, and all SSA and non-SSA programs and 
        benefits that could assist a beneficiary or non-beneficiary to 
        start or return to work. SSA and DOL will test the efficacy of 
        this new position in One-Stops in 6-8 States for 2 years and, 
        based on the evaluation results, decide if this position should 
        be made a permanent part of the One-Stop system nationwide.

    Expected Completion Date: September 2004.

    13. SSA created the Employment Support Representative (ESR) 
position to provide a specialist for work incentives. ERSs served as a 
single point of contact with beneficiaries, monitored beneficiaries' 
work progress, and processed work reports and work-issue continuing 
disability reviews. A final evaluation report on the ESR position was 
completed in November 2001 and recommended that SSA make the position 
permanent. SSA decided not to make the position permanent due to staff 
shortages and resources issues. Can you tell us what are SSA's plans 
for proceeding? Please provide a copy of the evaluation report to my 
Subcommittee staff. Additionally, we would appreciate SSA briefing 
Subcommittee Staff on this issue.

Answer:

    SSA piloted the temporary Employment Support Representative (ESR) 
position in SSA's field operations structure consistent with the 
requirement of section 121 of the Ticket to Work legislation that SSA 
establish a corps of work incentives specialists within SSA. The ESR 
pilot began in late July 2000 and ended in September 2001. In late 
November 2001, the SSA ESR Pilot Evaluation Team presented its final 
report recommending adoption of the ESR position. SSA is concerned that 
all our beneficiaries receive the very best service that we can 
provide, and we are currently deliberating on how best to provide 
employment support programs-related information and services to our 
beneficiaries with disabilities nationally with our present resources. 
We provided Subcommittee staff with a briefing on this subject.

    14. The National Council of SS Management Associations recommends 
that a Technical Expert for Disability (TED) position be created in 
field offices to focus on processing disability claims. Please comment 
as to your views regarding this proposal.

Answer:

    The Technical Expert (TE) position was established to handle a 
broad range of complicated work in field offices. Managers in local 
offices have the flexibility to assign technical disability work to 
their TEs, and many do so. We feel that requiring all offices to have a 
TE dedicated to disability claims would limit our flexibility to keep 
all workloads in balance.

    15. The National Association of Disability Examiners has proposed 
placing greater emphasis on claimant responsibility, expanding the 
single decisionmaker in DDS, providing for a due process hearing for 
the claimant in the reconsideration, closing the record after the 
reconsideration decision, eliminating the Appeals Council, and 
establishing a Social Security Court to hear appeals of the ALJ 
decisions. Please comment as to your views regarding this proposal.

Answer:

    We believe it would be premature to advance an Agency view 
regarding any of these changes.

    16. The National Council of Disability Determination Directors 
provided recommendations for change in their testimony, including; 
providing adequate resources to handle the current and pending 
caseloads at the DDSs, improving policy and training to produce more 
consistent and accurate decisionmaking, making revisions of SSA's 
quality assurance system a high priority to unify the application of 
policy among all components, enhancing performance of electronic 
systems, strengthening the reconsideration phase to provide for a face-
to-face de novo hearing between claimant and DDS reviewer, and 
establishing uniform quality assurance and case review systems to bring 
the DDS and OHA closer together in the determination process. Please 
comment as to your views regarding this proposal.

Answer:

    SSA is actively considering broad changes to the disability claim 
process to improve service and efficiency, and we are moving forward 
with some process changes. Commissioner Barnhart has announced her 
intention to move aggressively to implement electronic disability 
processing (eDib) by January 2004. We have received suggestions 
regarding other changes from the public, Federal and State employees, 
and employee groups, such as the National Association of Disability 
Examiners and the National Council of Disability Determination 
Directors. It would be premature to react to specific aspects of these 
recommendations at this time. As we consider options and develop 
proposals for change, we will continue to work with interested groups 
and the Congress as we all strive to provide the best possible service 
in an efficient manner.

    17. What is the average number of cases an ALJ hears per day?

Answer:

    According to the FY 2002 Caseload Analysis Report, the national 
average number of hearings scheduled per ALJ per day was 2.32 through 
July 2002 and the national average of hearings held per day per 
available ALJ through July 2002 was 1.66. This latter statistic 
reflects postponements, continuances and no-shows.

    18. To help us better understand how the process of disability 
determinations works at the OHA level, can you provide us with a step-
by-step process of what happens to a case beginning when it is received 
in an OHA office until a decision is made? For each step, please 
include when evidence is requested and by whom, and how evidence is 
presented.

Answer:

    The following is an outline of the step-by-step case processing at 
the Hearings level of administrative appeal:

         Case intake begins at the Master Docket level. The 
        folder is stamped-in to acknowledge the receipt of the file.
         The case is screened to determine whether the 
        claimant has had a prior claim(s) at the OHA level.
         The case is also screened through the Hearing Office 
        Tracking System (HOTS) to determine whether or not the folder 
        should be associated with a claim already pending at the 
        hearing level or if it is a new claim.
         The case is the screened to determine if it is 
        properly at the hearing level and whether the Request for 
        Hearing is timely filed. Master Docket then enters the case 
        into the HOTS tracking system, identifying the parties to the 
        claim, the hearing type and the claim type. Master Docket also 
        verifies the service area and the correct spellings of names 
        and addresses.
         Following established guidelines, Master Docket 
        screens cases for possible early dispositions. If the Request 
        for Hearing is not timely filed or the claim is not properly at 
        the hearing level, the case is referred to an administrative 
        law judge (ALJ) for possible dismissal. Possible on-the-record 
        decisions are referred to Senior Attorney Advisors for further 
        review.
         If the case is properly at the hearing level, Master 
        Docket then prepares an acknowledgement letter to the claimant 
        and representative. Along with the acknowledgement letter, 
        Master Docket sends the claimant hearing office worksheets 
        requesting information regarding any recent treatment since the 
        Reconsideration determination, medications and any updated work 
        background information. Often the claimant will have submitted 
        additional evidence in connection with the request for a 
        hearing. The case is then assigned to a Group within the 
        hearing office. Within the Group, the case is first assigned to 
        a Senior Case Technician (SCT).
         The SCT does a pre-hearing screening, including 
        verification of claim type, hearing type, names, SSN and 
        addresses.
         Proposed exhibits are selected in the case work-up 
        process and the documents are stamped and numbered.
         The SCT reviews the file to determine the need to 
        request updated medical information and information regarding 
        work and earnings. If additional information is needed, the SCT 
        requests this information from treating sources and employers 
        or requests the claimant's representative obtain this 
        information and submit it to the hearing office within a 
        specified timeframe. At this point, the SCT may also suggest 
        the need for medical or vocational expert testimony.
         The case is then assigned to an ALJ for his/her pre-
        hearing review. The ALJ will determine if further development 
        is needed or whether the case is ready to schedule for hearing. 
        The ALJ will also determine whether medical and/or vocational 
        expert testimony will be required at the hearing.
         When a claim is scheduled for hearing, a notice of 
        hearing is sent which requests the claimant/representative to 
        send any and all additional evidence to the hearing office 
        prior to the hearing. The acknowledgement letter to the 
        claimant/representative explains that any additional evidence 
        they wish to submit must be sent as soon as possible. Also, if 
        they need help in obtaining evidence they should contact the 
        hearing office for assistance.
         New evidence received prior to the hearing date is 
        added to the case file by the SCT or Case Technician (CT) and 
        the case is given back to the ALJ for review. The ALJ may 
        decide that a hearing is not necessary because a fully 
        favorable decision can be issued based on this additional 
        evidence.
         The claimant/representative may submit written 
        evidence on the day of the hearing. If this occurs, the ALJ may 
        decide to reschedule the hearing for a later date if he/she 
        needs additional time to re-review the file with the new 
        evidence received at the hearing.
         There are times when the ALJ will need to request 
        medical/vocational evidence subsequent to the hearing. This may 
        include additional development from the treating source, a 
        request for a consultative examination (CE), and/or a 
        supplemental hearing.
         After the additional development/testimony is 
        received, the ALJ will make a decision and complete the 
        instruction sheet for the Attorney Advisor (AA) or Paralegal 
        Analyst (PA) assigned to write the decision.
         The AA/PA prepares the draft decision.
         The ALJ is given the draft decision for review and 
        edit.
         A Notice of Decision with appeal rights and a copy of 
        the ALJ's decision are mailed to the claimant and 
        representative.
         The claim file, containing the exhibits, audiotape of 
        the hearing, Notice of Decision, and the ALJ Decision are 
        mailed to the appropriate processing component of SSA.

    The following is an outline of the step-by-step case processing at 
the Office of Appellate Operations (OAO) level of administrative 
appeal:

         When an unfavorable decision or dismissal is issued 
        by an ALJ, the hearing office sends the claim file to the OAO 
        Mega Site processing center for holding in the event the 
        claimant or representative files a Request for Review of the 
        ALJ decision or dismissal.
         When either a claimant or representative files a 
        Request for Review it goes directly to an OAO Branch where 
        receipt is documented by input into the case tracking systems. 
        Branch staff requests the file from the Mega Site in order to 
        process the claim. Often a claimant/representative will submit 
        additional evidence in connection with the Request for Review 
        or will request an extension of time in which to submit 
        additional evidence or present statements or arguments in 
        support of the claim.
         OAO does not routinely request evidence. However, in 
        situations where a claimant/representative references 
        additional evidence in connection with the Request for Review, 
        the Council will routinely grant an extension of time to submit 
        the evidence. Evidence of this nature is generally medical 
        reports from treating sources, hospitals, examining sources, 
        etc.
         Other pre-development activities may include 
        obtaining all pertinent files; obtaining the audiotape hearing 
        cassette, if missing; providing the claimant/representative 
        with copies of exhibits and/or audiotapes; and time to submit 
        evidence and/or statements or arguments, and so forth. Once all 
        pre-development activities are completed, an Analyst reviews 
        the case and makes a recommendation to the Administrative 
        Appeals Judge or Appeals Officer (signatory authority for 
        denials only) for his/her action, i.e., deny the Request for 
        Review; grant the Request for Review, vacate the ALJ decision 
        and Remand to ALJ for further processing; grant the Request for 
        Review, vacate the ALJ decision and issue an Appeals Council 
        decision; or Dismiss the Request for Review.
         The Administrative Appeals Judge or Appeals Officer 
        (denials only) review the Analyst's recommendation and sign the 
        action documents, if he/she is in agreement with the 
        recommendation. If there is no such agreement, the case is 
        returned to the Analyst for further review, revision, etc.

    19. Witold Skwierczynski's testimony focused on issues related to 
the Title II special disability workload. Please provide your comments 
regarding this testimony.

Answer:

    We agree that the Special Disability Workload is complex and 
difficult. For that reason, SSA established cadres of specially trained 
employees to process the cases. The specially trained cadres will 
screen and ``map'' each case. (``Map'' means that they identify the key 
issues to be covered during the interview and development of the 
claim.) They began processing cases in June 2002.
    The cadres will send case-specific instructions, i.e., the 
``mapping'' material, to the local field office that will obtain the 
application and develop the entitlement factors. Cases requiring 
medical determinations will then be sent to the disability 
determination services (DDSs). After all these steps have been 
finished, the field office will send the cases back to the cadres for 
quality review. Upon completion of the quality review, cases will be 
sent to the processing centers for payment.
    In addition, SSA's Office of Quality Assurance will conduct 
independent quality reviews. They will conduct ``early information'' 
reviews at various steps in the process to ensure accuracy.
    Due to much longer retroactive benefit periods than normal title II 
cases, the DDSs will need to develop much older medical evidence and it 
is estimated the special disability workload will take approximately 
1\1/2\ times longer to adjudicate than regular cases. The disability 
determination services (DDSs) are not funded to do all initial receipts 
in FY 2003. Absent additional funding, the special disability workload 
will be worked along with other disability claims and add to the 
backlog.
    20. In what percent of ALJ hearings is a medical or vocational 
expert present? Please provide this data totaled by year for the past 3 
years.

Answer:

    National data for Participants per Hearing Held is as follows:

------------------------------------------------------------------------
          Fiscal  Year            Vocational  Expert    Medical  Expert
------------------------------------------------------------------------
1999                              47.4%.............  16.3%
2000                              49.6%.............  17.8%
2001                              51.2%.............  17.5%
------------------------------------------------------------------------

    21. Dr. Stapleton stated in his testimony that he arrived at a 
different conclusion regarding the findings of the Disability Claims 
Manager (DCM)--``SSA's evaluation of the DCM test concluded that it 
substantially reduced processing time, increased claimant satisfaction, 
and improved employee satisfaction, but at a somewhat greater cost than 
the current process. My interpretation of the evidence from that 
evaluation is more positive than SSA's; it appears to me that the DCM 
is cost neutral, and that it reduced processing time by more than the 
report indicates.'' Please provide your comments relative to Dr. 
Stapleton's conclusions.

Answer:

    As Dr. Stapleton testified, SSA contracted the company he worked 
for (The Lewin Group) as consultants for the DCM evaluation. Based on 
the Lewin Group's recommendation, median processing-time was used as 
the assessment tool for the final report. The report recognized that 
the DCM cases had significantly faster median processing times for both 
Title II and Title XVI claims than the control group (on average 10 
days faster for Title II and 6 days faster for Title XVI).
    The DCM cost assessment considered the volume of cases processed, 
staff salaries including support staff and supervisors, medical 
development/evidence costs and overhead. This analysis indicated that 
the DCM model cost at least 7% more to process an initial claim than 
the current process. The assessment did not factor in costs associated 
with creating an infrastructure to support the DCM process, extensive 
training and mentoring or productivity losses over the long learning 
curve.
    Although there were some positive outcomes in the DCM test, the 
agency concluded that there was not a compelling business case for 
making resource commitments necessary to implement the process. The 
agency issued a decision not to pursue further testing or 
implementation of the Disability Claim Manager position, but to 
consider the valuable insights and experiences learned from this test 
in its longer-term planning efforts.

    22. Please summarize the procedures requiring field office and DDS 
employees to instruct claimants and/or their representatives about how 
the process works and what information they need to provide to 
substantiate the claim. What quality review procedures are in place to 
ensure these procedures are followed? Do such quality reviews 
illustrate that these procedures are being followed?

    Answer:

LField Office (FO) Responsibilities
         When a disability claim is taken, field offices 
        explain to claimants and/or their representatives:
         That SSA will need to obtain medical evidence to 
        support the claim;
         That timely and accurate identification of medical 
        sources will assist the DDS in processing the case;
         That SSA will pay for the medical evidence of record;
         That the claimant will need to fully cooperate if a 
        special examination is necessary;
         The estimated time it takes to get a determination;
         Available work incentive provisions;
         Available Vocational Rehabilitation Services; and
         Mandatory continuing disability review requirements.

    Claimants are given the booklet ``Disability Benefits''. This 
booklet provides information on the definition of disability, how to 
apply for benefits and the role of the DDS. This pamphlet is available 
online at http://mwww.ba.ssa.gov/pubs/10029.html
    Field office cases are reviewed for accuracy after they are worked. 
This is done by a quality review component located in the Regional 
Offices. Feedback is provided to the field offices on all cases found 
to be inaccurate, and these cases are sent back to the claims 
representative for correction.
Teleservice Center (TSC) Responsibilities
    When a claimant calls one of our teleservice centers (TSCs) via our 
800 number about applying for disability benefits, the TSC interviewer 
screens the caller for self-help and, if screened in, sends the caller 
a Disability Report form (SSA-3368-BK) and advises the caller that the:

         FO interviewer will provide any needed assistance to 
        finish completing the form at the time of the interview, and
         Claimant should return the form along with any 
        medical evidence (including prescription information) already 
        in his/her possession:

        1. Lwhen requested by the FO, or
        2. Lin person at the time of the in-office appointment, or
        3. Lby mail after the FO telephone interview.

    The TSC interviewer also informs the claimant of the location of 
the SSA website, which explains each item on the Disability Report 
form.
    The TSC interviewers receive quality review two ways. Their calls 
are monitored by management and/or technical staff onsite. Calls are 
also remotely observed by a quality component in the Office of Quality 
Assessment (OQA). Both service observation reviews look at the quality 
of service provided by the interviewer as well as the interviewer's 
accuracy of information provided to the caller. When needed, feedback 
is provided to the interviewer from their supervisors and/or 
technicians to ensure that correct information is given to the callers. 
The OQA provides feedback of their evaluations on a monthly and 
quarterly basis.
Disability Determination Services (DDS)
    Many DDSs, as part of their initial development of every new claim, 
also mail the claimant an explanation of the disability process. This 
is in addition to the information provided by the FO and TSC. In 
addition, letters sent to the claimant by the DDS for additional 
information, such as work history, consultative examinations, and 
activities of daily living, contain general information about why the 
DDS needs this information and how it relates to the disability 
process.
    DDS Quality Specialists and frontline supervisors on an ongoing 
basis conduct quality reviews. Cases are reviewed at various stages of 
development to ensure that appropriate developmental practices and 
procedures are abided by. Worksheets are maintained on each case to 
verify that correct actions are being taken in a timely fashion. 
Recommendations are made to Disability Examiners if the reviewer feels 
that a more appropriate course of development should be pursued. A 
record is maintained of all case reviews for training purposes.
    All quality review information for the FO/DDS/TSC is evaluated and, 
if it illustrates that procedures are not being followed, the necessary 
training is provided. All components provide ongoing training of new 
ad/or problematic procedures to insure that a high level of quality is 
maintained.

    23. Judge Bernoski testified on June 20 that improving the quality 
of disability determination services (DDS) decisionmaking would improve 
the overall determination process. He stated (page 4 of his testimony), 
``rather than carefully develop and examine the claimants' case once, 
DDS often is making its initial determinations based on incomplete 
records and, upon reconsideration, rarely obtains significant 
additional medical evidence or changes the outcome of the case.'' What 
are your comments on this statement? [What] are the procedures for 
developing a case? Would you explain the process for reviewing a case 
for reconsideration, including under what circumstances a disability 
examiner obtains additional information? Are such processes checked and 
documented via DDS or Federal quality review?

Answer:

    We believe that DDSs do carefully develop and examine cases.
    A DDS is required by regulations to make every reasonable effort to 
develop an individual's complete medical history for the 12-month 
period preceding the month of filing before making any adverse 
determination (20 CFR 404.1512(d) and 416.912(d)). ``Every reasonable 
effort,'' means an initial request for the evidence and, if not 
received one follow-up. (20 CFR 404.1512(d)(1) and 416.912(d)(1)). As 
part of the initial development of every new case, the DDS routinely 
requests evidence from medical sources identified by the applicant or 
discovered during development. The DDS may also develop medical 
evidence outside of the required 12-month period, if necessary.
    If the DDS knows from past experience that a particular source 
either cannot or will not provide the necessary evidence, they will not 
request evidence from that source but will instead note this on the 
case development worksheet, which is part of the case file. Otherwise, 
the DDS develops evidence from all known sources.
    However, that does not mean that the DDS receives responses from 
every source. It is common for some medical sources not to respond to 
the DDS's requests and follow-ups. Consequently, a case file can appear 
to be incomplete because of ``missing'' evidence, even though the DDS 
carefully developed the case by making every reasonable effort to 
obtain available evidence.
    If a DDS is not successful in obtaining needed evidence from the 
individual's medical sources, then the DDS will ask the individual to 
go to one or more special examinations, called consultative 
examinations.
    During the reconsideration process, the claimant has the 
opportunity to present additional evidence. The DDS makes a new 
determination considering all available evidence, including evidence 
considered at the initial determination and any new evidence. An 
adjudicator other than the one who made the initial determination makes 
this new determination.
    Development and documentation requirements for reconsiderations are 
the same as for initial cases. At reconsideration, the DDS will request 
any new evidence since the initial determination, as well as any 
earlier evidence that is necessary.
    Because reconsideration determinations are generally made soon 
after the initial determination, there is often no significant 
additional evidence available, and no reason to develop additional new 
evidence. This can contribute to a misperception that the DDS is not 
undertaking needed development at reconsideration. It also contributes 
to the comparatively low (but still significant) allowance rates at 
reconsideration of about 15%.
    We continue to monitor DDS adherence to our development policies at 
both the initial and reconsideration steps through our quality 
assurance process.

    24. Kathleen McGraw, the Chair of the Social Security section of 
the Federal Bar Association, testified on June 20 that State Disability 
Examiners do not assess claimants' subjective complaints. She stated 
(page 2 of her testimony), ``They were confounded by the task of 
assessing a claimant's credibility and subjective allegations and 
articulating a reasoned basis for their conclusion. Notwithstanding the 
clear message from the Process Unification Training that State Agency 
Examiners were expected to perform individualized assessments and 
rationalize their determinations, they have failed to do so. State 
agencies have balked at this requirement, and examiners' determinations 
continue to be devoid of rationale and are driven almost exclusively by 
objective medical findings.'' What are your comments on these 
statements? Would you explain what factors and criteria State 
disability examiner use to assess an individual's claim? Are such 
processes checked and documented via DDS or Federal quality review?

Answer:

    Assessing subjective allegations and credibility is one of the most 
complicated and difficult parts of disability claims adjudication. This 
is true at all levels of adjudication--not just at the State agency 
(i.e., DDS) level. And dealing with these complex issues can confound 
not only DDS disability examiners, but also medical consultants, 
administrative law judges, and others involved in disability claim 
evaluation.
    These issues present several particular difficulties for DDSs, even 
though DDSs consider the same factors and criteria as administrative 
law judges and other adjudicators. First, the volume of cases DDSs must 
deal with makes individualized assessment a significant challenge. 
However, our experience shows that the DDSs universally strive for, and 
for the most part, achieve, a very respectable level of performance. 
They provide individualized assessments and correctly apply our rules 
for evaluating subjective complaints and credibility, as shown in our 
quality review findings. However, their workloads make it increasingly 
difficult for them to document, through comprehensive and detailed 
rationales, how they have done so.
    Despite these demands, however, we do not believe that DDSs have 
``balked'' at the requirement to make proper assessments of disability 
claims. Indeed, DDSs have done the best job we could expect of them, 
while balancing enormous workloads with the need for comprehensive 
documentation.
    We have been testing a different process in ten States, which 
includes the elimination of the reconsideration step from the appeals 
process, and DDS examiners making some disability determinations 
independent of medical and psychological consultants. Also included in 
this process is an enhanced rationale process that requires clear 
documentation of development actions as well as a clear explanation of 
the examiner's thought processes. Without the savings from the 
elimination of the reconsideration, however, the remaining States do 
not have the necessary resources to provide these more detailed 
explanations. This different approach among the States will be 
addressed as we consider longer term, broader changes to the claims 
process.
    This new process was intended, in part, to help DDSs better meet 
workload demands, while providing the comprehensive decision rationales 
that we would prefer. Consequently, the rationales we have seen in 
these States are more extensive than those in other States in which the 
process was not tested. But, the same workload pressures exist in every 
State across the country.
    Although DDS rationales are often less detailed than what we would 
like, it doesn't mean that DDSs aren't correctly applying our policies, 
including those we refer to as ``Process Unification,'' such as 
policies related to medical source opinions, symptoms and credibility, 
and residual functional capacity. We believe that DDSs are doing so 
within the constraints imposed by budgets and workloads. Because their 
decisions are not always rationalized to the same extent as an 
administrative law judge's decision, it is a common misconception that 
that they consider only the ``objective'' medical evidence. That is 
because the evaluation forms and medical consultant analyses tend to 
reference readily available clinical information, and to give less 
emphasis to any complex discussion of the individual's complaints and 
credibility. But that doesn't mean the adjudicator did not consider 
those factors. It only means he or she didn't spend a great deal of 
time explaining them.
    We continue to monitor and document DDS adherence to our disability 
adjudication policies through our quality assurance process. All DDSs 
are held to the same, strict quality standards, regardless of the level 
of explanation provided in their determinations.

    25. James Hill made the following recommendations in his testimony. 
``1. All qualified OHA Attorney Advisers should be converted to Senior 
Attorney decisionmakers and given the authority to issue fully 
favorable on-the-record decisions. These Senior Attorney decisionmakers 
would review all cases coming into the hearing office. 2. SSA should 
establish a workgroup to examine the implementation of additional 
attorney decisionmakers, such as Hearing Officers, in the OHA hearing 
offices to work in conjunction with the ALJs in processing the ever-
growing workload that faces SSA. 3. SSA should establish a workgroup to 
examine the issue of introducing an Agency representative into the 
adjudication process.'' Please provide your comments as to these 
recommendations.

Answer:

    See the response to question 5. Additionally, there is a proposal 
under development to establish an attorney decisionmaker position in 
OHA to help address the growing backlog of cases.

    26. The Commissioner has stated she will implement reforms to the 
disability process this fall. Judge Bernoski indicated that SSA has not 
asked either he or his association, the Association of administrative 
law judges, to participate in identifying solutions to the problems 
associated with the disability determination process. Is this true? If 
so, why?

Answer:

    Commissioner Barnhart has asked Martin H. Gerry, Deputy 
Commissioner, Office of Disability and Income Security Programs, to 
present suggestions for improvements in the disability process to her 
this fall. As Deputy Commissioner Gerry stated in his August 1, 2002 
message to all hearing office employees, he plans to meet with Judge 
Bernoski as well as with representatives of OHA's other unions to 
solicit ideas for improvement. Deputy Commissioner Gerry is also 
looking into the possibility of obtaining input and feedback from other 
interested parties such as the Hearing Office Chief administrative law 
judge (HOCALJ) Association and the Federal Managers Association, and 
outside organizations such as NADE, NOSSCR, NCDDD and NCSSMA.

    27. Judge McGraw believes a major failing of HPI was the promotion 
of clerical employees to the ranks of paralegals, who she states were 
promoted without having any legal training or demonstrating ability to 
write and communicate effectively. Their promotion reduced the number 
of employees trained in ``pulling cases'' in preparation for 
adjudication by ALJs, thus creating fewer cases ready for judges to 
hear. Compounding the problem is that the promoted employees are paid 
at the same grade and pay level as attorneys. Will you please comment 
as to Judge McGraw's concerns?

Answer:

    The Memorandum of Understanding signed by management and AFGE on 
the implementation of HPI required the Agency to fill a large number of 
paralegal analyst positions, primarily through internal promotion of 
current OHA employees. The AFGE Partnership Agreement for HPI Phases II 
and III specified 350 paralegal analyst positions would be announced in 
July 2000 and filled before November 20, 2000. No one in a clerical 
position was promoted to the paralegal analyst position; however, the 
majority of the promotions were from the ranks of our technical 
positions, in particular the Senior Case Technician position.
    All of the employees who were promoted met the basic qualifications 
of the position. However, as a result of the requirement to promote 
such a large number of employees in a relatively short time, there was 
a higher than usual incidence of employees requiring new skills 
training. Moreover, this occurred during a period when many of the 
employees supervising the new paralegal analysts were, themselves, also 
new to their positions, and all office staff was learning a new 
process.
            Sincerely,
                                                    Martin H. Gerry
                                            Deputy Commissioner for
                            Disability and Income Security Programs

    Attachment:
                                 ______
                                 
                       ORES Working Paper Series
                               Number 98
                  Social Security Disability Programs:
               Assessing the Variation in Allowance Rates

                           Alexander Strand *
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    * Social Security Administration, Office of Policy
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                     Division of Policy Evaluation

                              August 2002

                     Social Security Administration

                            Office of Policy

             Office of Research, Evaluation, and Statistics

8th Floor, ITC Building, 500 E Street SW, Washington, DC 20254-0001

    Working Papers in this series are preliminary materials circulated 
for review and comment. The views expressed are the author's and do not 
necessarily represent the position of the Social Security 
Administration.
Summary
    The Social Security Administration (SSA) operates two programs that 
provide disability benefits: Social Security Disability Insurance (DI) 
and Supplemental Security Income (SSI). The Social Security Act and the 
regulations that implement it establish uniform national criteria for 
determining whether someone who applies for disability benefits under 
either of these programs is disabled. However, an agency of the state 
in which the claimant lives makes the initial determination under 
contract to SSA and using SSA guidelines.
    Historically, states have allowed initial disability claims at 
rates that vary from one state to another, in some cases widely. On the 
surface, this variation seems to indicate that states apply the 
national disability criteria differently from one another. Over the 
years, this concern has prompted several congressional hearings and 
numerous analyses and reports. For example, the Senate Finance 
Committee report on the Disability amendments 1979 commented: ``The 
assumption is that it is easier (or more difficult) to meet the 
disability definition depending on where you live'' (Senate Committee 
on Finance 1979). Most recently, a report by the Social Security 
Advisory Board (2001a and b) showed geographic patterns of variation in 
allowance rates and expressed concern about SSA's ability to assess 
whether there is inconsistency and unfairness in disability 
decisionmaking.
    Equity demands that claimants receive the same consideration 
regardless of their state of residence, but it does not require that 
states have the same or even similar allowance rates. Allowance rates 
depend in part on the economic and demographic characteristics of those 
who apply, which vary among states. For example, a state with an older 
population is likely to have a higher allowance rate because older 
claimants are more likely to meet disability criteria, on average.
    This study estimates the amount of variation in allowance rates 
that is related to certain economic and demographic differences among 
states. The major findings include the following:
    In 1997-1999, states with the highest and lowest allowance rates 
for DI, SSI, and concurrent applicationsdiffered by about 30 percentage 
points.

         States that have the highest and lowest allowance 
        rates for DI or SSI tend to retain that status over time, 
        although some changes in ranking do occur.
         States with high filing rates tend to have low 
        allowance rates, and vice versa.
         Adjusting for economic, demographic, and health 
        factors cuts the variation in allowance rates among states in 
        half.
         The variation in the prevalence of disability 
        beneficiaries in the population has only a minimal ability to 
        explain allowance rates.
         The allowance rates in most states are relatively 
        close to the rates predicted by demographic and socioeconomic 
        factors.
         States that deviate from their predicted rates tend 
        not to do so consistently.



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Concern about Variation in Allowance Rates

    The variation in DI and SSI allowance rates across states has been 
substantial and persistent. Recently, the range between the states with 
the highest allowance rates and the ones with the lowest was around 30 
percentage points.\1\ In addition, the states with the lowest allowance 
rates tend to remain in this category in adjacent years. Over longer 
periods of time, the ranking of allowance rates remains fairly stable. 
For example, Chart 1 plots DI allowance rates that are 8 years apart. 
States tend to keep their position relative to the other states, as 
shown by the proximity of the data points to the diagonal line.\2\
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    \1\ These allowance rates reflect initial decisions only (including 
pre-effectuation review) and exclude SSI applicants who are minors. The 
states with the five highest and lowest allowance rates for 1997 to 
1999 are listed in Appendix A.
    \2\ The correlation of the rankings of allowance rates is around 
0.7 for both DI and SSI between 1991 and 1999. It is somewhat lower for 
concurrent applicants.

        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



    Even though the differences between allowance rates are large and 
persistent, an internal Social Security Administration study (1988) 
showed that much of the variation is associated with economic and 
demographic differences in state populations. The analysis also 
concluded that more variation could have been accounted for had data on 
additional factors (such as health) been available. Numerous other 
studies have analyzed the relationship between allowance rates and 
economic and demographic factors.\3\
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    \3\ For a review of these studies, see Rupp and Stapleton (1995, 
1998).
---------------------------------------------------------------------------
    This study expands on the 1988 analysis by considering a wider 
range of possible explanatory variables. It differs from previous 
studies by analyzing 3 years of data and by conducting separate 
analyses for the DI and SSI Programs and for concurrent claims under 
both programs. It responds to concerns about differing allowance rates 
by reexamining the portion that is associated with external factors 
and, by extension, the portion that could be attributable to 
inconsistency. The analysis addresses the issue of whether a claimant 
in one state is less likely to be allowed than a claimant in another 
state, all other things being equal. By adjusting the allowance rates 
to account for demographic and economic conditions, this analysis moves 
toward making at least some important ``other things'' equal.
    This study pertains to the average initial allowance rate for each 
state across all cases. Therefore, it does not reach any conclusions 
about the extent of variation across particular categories of 
disability or particular steps in the process. It also does not cover 
the important issue of possible inconsistency among decisionmakers 
within a state.
Factors Influencing Allowance Rates

    This study aims to account for state-to-state differences in 
allowance rates using variables that are clearly external to the 
administration of the disability program. Variables that measure 
aspects of the economy or the population are in this category. An 
example is the age of the population; it is logical to expect higher 
allowance rates with an older population. The only variable used in the 
analysis that could be considered partially internal to the program is 
the percentage of applications based on physical (as opposed to mental) 
impairments. It is internal in the sense that it refers to a 
characteristic of the claimant rather than of the population. Although 
this variable is largely independent of the claims process, an element 
of subjective judgment exists in the classifying of disability cases. 
The analysis nevertheless uses this variable because there is no 
corresponding characteristic that can be measured in the state 
population.
    One of the goals of this analysis is to separate the variation that 
can be influenced by administrative factors or policy from that which 
is attributable to external differences between states. Through 
controlling for the external factors for which data are available, the 
analysis can focus on the remaining differences in allowance rates.\4\
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    \4\ It is important to note that while the degree of variation 
between states is less than it appears, that finding does not imply 
that inconsistency across adjudicators is not a concern. An earlier SSA 
study (Gallicchio and Bye 1980) found inconsistency in adjudicating 
sample cases.
---------------------------------------------------------------------------
    This study uses data for calendar years 1997, 1998, and 1999 to 
explain differences in allowance rates. It combines 3 years of data 
into a single analysis. In addition to allowing for greater statistical 
precision, combining the data permits an examination of whether 
anomalies recur in different years. Separate analysis is conducted for 
three different groups: DI claims, SSI claims, and concurrent claims 
under both programs.\5\ DI and SSI allowance rates can differ greatly 
in a particular state. The states with the lowest DI allowance rates do 
not necessarily have the lowest SSI allowance rates. Furthermore, DI 
and SSI filing rates are correlated with different external variables. 
Concurrent applicants represent a unique population with labor force 
experience but little financial success. This group has enough work 
experience to be insured for DI but has meager enough assets and income 
to qualify for SSI. Because of these differences, we separated the 
programs for the purpose of this analysis.
---------------------------------------------------------------------------
    \5\ Concurrent applications are excluded from the DI and SSI 
equations.
---------------------------------------------------------------------------
Candidate Explanatory Variables

    This section discusses the variables that were considered for 
inclusion in the analysis based on prior expectations about what 
variables might be important. Some variables that would be expected to 
be important are, nevertheless, not included in the analysis for 
reasons discussed below.
    Filing Rates. Filing rates are the number of initial applications 
expressed as a percentage of the working-age population. Filing rates 
are negatively correlated with allowance rates; that is, the states 
with higher filing rates tend to have lower allowance rates, although 
not in all cases. Charts 2 and 3 plot data points for filing rates and 
allowance rates. The lines show the general relationship between the 
two.
    It is not essential to include filing rates in equations explaining 
allowance rates because filing rates themselves are heavily influenced 
by economic and demographic factors. The influences on filing rates are 
shown by regression equations in Appendix B. Although these equations 
employ additional variables, they also use the same or similar economic 
and demographic variables as are used to predict allowance rates. Thus, 
the influence of filing rates on allowance rates is also captured by 
these other variables. Consequently, when predicting allowance rates, 
filing rates have only a marginal effect. Filing rates are rates on 
allowance rates is also captured by these other variables. 
Consequently, when predicting allowance rates, filing rates have only a 
marginal effect. Filing rates are, nevertheless, included in the 
equations explaining allowance rates because readers may be curious 
about their impact.


        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



    Economic Indicators. Although filing rates are influenced by 
economic factors, the economic indicators have an independent effect on 
allowance rates even when controlling for filing rates. According to 
economic theory, deteriorating economic conditions influence some 
people to switch from the labor market to disability insurance for 
their primary means of support as their probability of success in the 
labor market declines. Thus, poorer economic conditions are associated 
both with higher filing rates on an aggregate level and with an 
applicant pool containing people with less severe impairments. If the 
medical judgments are consistent, one would expect that more people in 
this group would be denied benefits, resulting in lower allowance 
rates. Thus, economic conditions affect both allowance rates and filing 
rates.
    Different aspects of economic conditions can be captured by 
different variables. The available candidate variables are the 
unemployment rate, the labor force participation rate, the poverty 
rate, per capita income, and the proportion employed in retail or 
wholesale trade.\6\
---------------------------------------------------------------------------
    \6\ Retail or wholesale trade is used as a cyclical indicator by 
Stapleton and others (1999).
---------------------------------------------------------------------------
    Prevalence Rates. The proportions of DI and SSI beneficiaries in 
the population, known as prevalence rates, are related to the allowance 
rates for DI and SSI, as shown in Charts 4 and 5.


        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Despite the apparent relationship, prevalence rates are not good 
explanatory variables for allowance rates when the other economic and 
demographic variables have been included. This is because both 
prevalence rates and allowance rates are influenced by economic and 
demographic factors. Also, the prevalence rate and the allowance rate 
are conceptually related measures. In an accounting sense, a prevalence 
rate is the sum of many years' allowances and rates of leaving the 
programs.
    Demographic Indicators. Different demographic groups have different 
risks of disability. Demographic indicators include the median age, the 
proportion of the work force in ages most vulnerable to disability, the 
percentage of the work force that is male, and the percentage of the 
work force that has a high school education.
    Health Indicators. Previous reports, including one by the Social 
Security Administration (1988), referred to average health status by 
state as a crucial but, at the time, unavailable piece of data. Such 
data are now available through surveys measuring self-reported health 
and disability levels. Indeed, these indicators are important variables 
in predicting filing rates but are not essential for predicting 
allowance rates. Other health-related variables that are useful for 
explaining allowance rates include the proportion of workers with 
health insurance and the rate of nonfatal work-related injuries and 
illness.
    Predictive Equations. The sets of variables described above are 
used in a regression analysis to examine the variation in allowance 
rates. Regression analysis is a statistical tool that divides the 
variation in a variable into explained and unexplained portions based 
on a set of predictor variables. A subset of the candidate variables 
described above was used in each equation. A combination of variables 
was selected based on the proportion of variation that was explained 
and the relevance of the variables to economic theory. The equations 
that were selected are not uniquely superior by any one criterion but 
are among a number of equations showing similar results. More 
information about the equations is given in Appendix B and Table B-3.
    The equation for allowance rates among DI applicants contains the 
following variables:

         the filing rate,
         the percentage of applicants claiming physical 
        disabilities,
         the percentage of the work force with a high school 
        education,
         the percentage of the work force that is male,
         the occupational illness and injury rate,
         the median age of the population,
         per capita disposable income,
         the poverty rate,
         variables capturing the percentage of employment in 
        industries with high injury and illness rates, and
         a variable capturing differences between years in the 
        data.

    The equation for allowance rates among SSI applicants contains the 
following variables:

         the filing rate,
         the percentage of applicants claiming physical 
        disabilities,
         the percentage of the work force with a high school 
        education,
         the percentage of the work force that is male,
         the median age of the population,
         the unemployment rate,
         the percentage of employment in retail trade,
         per capita disposable income,
         the percentage of workers with health insurance,
         variables capturing the percentage of employment in 
        industries with high injury and illness rates, and
         two variables capturing differences between years in 
        the data.

    The equations for SSI and DI are similar. Both equations include 
the filing rate, the percentage of applicants claiming physical 
disabilities, the demographic variables, and the variables representing 
the composition of employment by industry. The equation for concurrent 
applicants is similar to the ones for DI and SSI and resembles a 
combination of the two. It contains the following variables:

         the filing rate,
         the percentage of applicants claiming physical 
        disabilities,
         the percentage of the work force with a high school 
        education,
         the percentage of the work force that is male,
         the median age of the population,
         the percentage of workers with health insurance,
         the unemployment rate,
         the poverty rate,
         the percentage of employment in retail trade,
         variables capturing the percentage of employment in 
        industries with high injury and illness rates, and
         a variable capturing differences between years in the 
        data.

    In assessing studies such as this one, there is frequently concern 
that some of the explanatory variables are internal to the claims 
evaluation process. For example, although filing rates may be expected 
to influence allowance rates, the inverse may also be true. Allowance 
rates may influence filing rates if the population in particularly 
lenient or stringent states changes their filing behavior. Thus, it is 
uncertain whether a variable measuring the filing rate captures 
differences in a state's population or differences in the application 
of the disability standards. Appendix B illustrates the impact of the 
variables to which this critique would most apply, presenting empirical 
analysis both including and excluding these variables. The primary 
result is that including variables such as the filing rate makes little 
difference in the explanatory power of the model equations and the 
overall conclusions of the report. However, the results for an 
individual state and the identification of an individual state as a 
statistical outlier are affected by changing the variables of analysis.
    The argument that certain variables measuring an aspect of the 
population may also capture variation in the claims evaluation process 
can potentially be extended to any of the explanatory variables. It is 
sometimes argued, for example, that adjudicators are more lenient 
during recessions. Following this logic, such variables as the 
unemployment rate or the poverty rate may capture an element of 
adjudicator judgment and may thus be internal to the claims evaluation 
process.\7\ It is beyond the scope of this paper to address the issue 
of whether adjudicators are more lenient during recessions. Variables 
such as the unemployment rate and the poverty rate remain in the 
analysis. Retaining these variables would create a problem in the 
analysis only if adjudicator leniency varies with economic conditions 
in a way that creates differences across states. There is no problem if 
leniency varies only with national economic trends rather than with 
state-level economic conditions.
---------------------------------------------------------------------------
    \7\ Some studies have tried to quantify the feedback of disability 
policy on some economic measures. For an example of how disability 
policy can influence the unemployment rate, see Autor and Duggan 
(2001).
---------------------------------------------------------------------------
    In summary, regression equations are used to divide the variation 
in allowance rates into the portion associated with external variables 
and a remaining portion. This remaining portion is the difference 
between the predicted allowance rates calculated from the equations and 
actual allowance rates. The remaining portion is examined in the next 
section. This remaining portion is of particular interest, since it 
represents the portion of variation that could contain the effects of 
inconsistency in evaluating claims.
Actual and Predicted Allowance Rates

    A predicted allowance rate was calculated for each year of analysis 
for SSI, DI, and concurrent applicants and is presented in Appendix C. 
This allowance rate reflects the rate that is expected given the 
demographic characteristics, economic indicators, and other variables 
used in each equation. The difference between the predicted allowance 
rate and the actual allowance rate represents the unexplained portion 
of the variation in allowance rates.
    States with the highest DI allowance rates in 1998 and their 
deviations are shown in the following tabulation:



        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Although these states all have high actual allowance rates, only 
some of them differ substantially from the predicted rate. These 
differences from predicted allowance rates were examined from the 
perspective of their likely occurrence due solely to random variability 
and analyzed in terms of the standard deviation of the predictive 
model.\8\ In Nevada, for example, there is a difference of 9.8 
percentage points between the actual and predicted allowance rates for 
1998. This difference exceeds two standard deviations (8.26 percentage 
points), so the Nevada allowance rate can be considered an outlier in 
1998. The allowance rate for Iowa is also an outlier in 1998 whereas 
the other states listed here are not.\9\
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    \8\ The standard deviation is a measure of random variability of 
actual observations from the value predicted by the regression model. 
In general, due solely to random variability, an actual observation 
will be 1.96 standard deviations from the predicted value 5 percent of 
the time and will be one standard deviation away about 32 percent of 
the time. Actual observations that are far from the predicted value 
have a low probability of occurrence due solely to random variability. 
Observations that are more than 1.96 (roughly two) standard deviations 
away from the predicted value are considered to be outliers at the 5 
percent level of statistical significance.
    For the predictive allowance rate models for SSI, DI, and 
concurrent applicants, the standard deviations are respectively 3.90, 
4.13, and 3.40 percentage points. Thus, for the SSI model, a state 
allowance rate that was more than 7.6 percentage points different from 
the predicted value would occur only about 5 percent of the time, due 
to random variability.
    \9\ These outliers are specific to a particular set of regression 
equations. Another set is shown in Appendix B, which produces a 
somewhat different set of outliers. Other variables that are not used 
here could explain a portion of the remaining variation.

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Outlier Patterns

    Three equations with 3 years of data for 50 states plus the 
District of Columbia provide 459 comparisons of actual and predicted 
allowance rates. Of these, 20 have differences from the predicted value 
in excess of two standard deviations, which is about 4.4 percent of 
observations; that is to be expected and is no cause for concern, in 
itself.
    We now look for patterns of outliers in individual states. About 
half the outliers are a single occurrence for that state. In other 
words, the state is an outlier in 1 year of analysis but not in the 
other 2. A few states have more than one outlier. Out of a possible 
total of nine (three equations times 3 years), no state has more than 
four. The following tabulation shows states with more than one outlier:

        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



Other Patterns of Differences

    No individual state is an outlier for all 3 years of analysis for 
any one set of applicants (SSI, DI, or concurrent applicants). In some 
states, however, there appears to be a pattern in the differences 
between actual and predicted allowance rates, even though the 
differences are less than two standard deviations. These patterns 
emerge when examining states that differ from their predicted value by 
at least one standard deviation.
    The states that have differences that are greater than one standard 
deviation in all 3 years of analysis for one or more sets of applicants 
are listed in the tabulation below. A positive sign means the actual 
rate is higher than the predicted rate and vice versa. For example, the 
actual SSI allowance rate for Colorado is consistently lower than the 
predicted rate. The difference is 5.5, 6.5, and 11.0 percentage points 
for 1997, 1998, and 1999, respectively. Only the last figure is greater 
than two standard deviations, yet the available data consistently 
overpredict the SSI allowance rate for Colorado. States that differ 
from the predicted value by more than one standard deviation for one 
set of applicants for all 3 years of analysis are as follows:




        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


Discussion

    If all states were the same in terms of their population and 
economy, it might be appropriate to expect them to have allowance rates 
near the national allowance rate. In that case, a measure of the extent 
of inconsistency in the application of the national disability criteria 
would be the difference between state allowance rates and the national 
mean.
    Given economic and demographic differences among states, however, 
it is not appropriate to expect allowance rates to be the same. The 
difference between a state's actual and predicted allowance rates is a 
more appropriate measure of the extent to which the state might be 
applying national disability criteria differently than other states. Of 
course, this measure is dependent upon the quality of the available 
data as well as the choices made when constructing the regression 
equations. The measures are likely to capture the maximum difference 
that could be attributable to inconsistency since there are other 
aspects of the differences in caseloads that are not captured by the 
variables that were used.
    Comparisons between actual and predicted allowance rates are given 
for each state and year in Appendix C. The differences are presented 
visually in Charts 6, 7, 8, and 9. The states are divided into 
categories, with darker shades representing categories with greater 
differences. Chart 6 shows the differences between allowance rates and 
the mean for DI. It shows a concentration of large differences in the 
South. By contrast, Chart 7 shows the differences between allowance 
rates and predicted allowance rates. When accounting for economic and 
demographic differences by using predicted allowance rates, the South 
no longer exhibits a concentration of large differences. Similarly, 
Charts 8 and 9 show the same information for SSI. For both SSI and DI, 
there are fewer states with the darkest shade representing differences 
greater than 10 percentage points when comparing allowance rates with 
predicted allowance rates. For example, 15 states fall into this 
category in Chart 6, while only 2 remain in Chart 7. The remaining 
states correspond in large part to the states that were described as 
statistical outliers in the previous section. Nevada, Wyoming, and 
Hawaii also appear in the category representing the largest differences 
for either DI or SSI.


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    Because only a few states have large differences, a more 
representative picture of the magnitude of state variation emerges by 
examining differences for a typical state. The best way to show such 
differences is with the mean of the absolute differences. A typical 
state's DI allowance rate differs from the mean in either direction by 
6.7 percentage points on average. It differs from the predicted rate by 
less than half that amount, however, only 3.1 percentage points. The 
reductions in allowance rate differences are not as notable for SSI or 
for concurrent applicants. These differences, in percentage points, are 
shown in the tabulation below, and more information is given in 
Appendix B.

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Conclusion

    A major concern regarding the quality of disability adjudication 
has been the consistency of decisions. While no two cases are 
identical, SSA seeks to ensure that criteria are applied consistently 
and that like cases will have the same outcome. This study has focused 
on a subset of that issue--the variation in allowance rates across 
states. The difference between a typical state's allowance rate and its 
predicted allowance rate (for example, adjusted for economic, 
demographic, and health factors) is estimated to be about half the 
difference between a typical state's allowance rate and the national 
mean. Nonetheless, differences still exist, and a few states have DI or 
SSI allowance rates that are consistently above or below their 
predicted rates. By focusing on areas of real rather than apparent 
inconsistency, SSA can more effectively focus future examination of the 
issue of inconsistency.



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Appendix B: Technical Notes

    This appendix presents the results of the regression analysis and 
discusses topics relevant to their interpretation. Interpretation of 
the influences on allowance rates is aided by discussion of the 
influences on filing rates; thus a discussion of filing behavior and an 
empirical analysis of filing rates is presented first. The analysis of 
allowance rates follows.

Filing Rates

    Interpretation of the equations in this paper is aided by two 
assumptions about individual choice and the nature of disability. 
First, according to standard economic theory, people choose rationally 
between alternatives. In this case, the relevant alternatives are 
seeking work and filing for disability. It follows that the decision of 
those at the margin is affected by the return to each choice, in this 
case the size of the disability payment and the attainable wage from 
employment. Economic indicators serve as a proxy for the attainable 
wage, in aggregate.\10\ Second, the analysis assumes that disability 
status itself is not affected by economic conditions, at least in the 
short run. Poverty and unemployment may affect the onset of disability 
through nutrition, safety, and other influences; however, this 
presumably happens gradually. Taken together, these two points portray 
filing behavior as more responsive to economic conditions and 
disability itself as less responsive. Therefore, when analyzing 
allowance rates, the effect of changing economic conditions is largely 
through changes in filing behavior and, it follows, in the composition 
of the applicant pool. The composition of the applicant pool is 
hypothesized to be one of the determining factors for aggregate 
allowance rates.
---------------------------------------------------------------------------
    \10\ Muller (1982) asserts that there is no additional relationship 
between aggregate economic indicators and individual outcomes beyond 
the incentives and constraints faced by the individual. The analysis 
uses economic indicators not to capture such an additional relationship 
but rather to proxy the composite of individual incentives in state-
level equations.
---------------------------------------------------------------------------
    It follows that the interpretation of allowance rates rests in part 
on the interpretation of filing behavior. There is substantial 
empirical evidence that filing behavior changes in response to changing 
conditions. Leonard (1986) reviews the studies that examine whether 
changes in the DI benefit amounts affect the tendency to work. The 
consensus is that they do, although the magnitudes of the estimated 
effects vary widely. Conversely, various chapters in Rupp and Stapleton 
(1998) review and contribute to the literature on whether changes in 
the reward to work affect filing behavior. Again, the results point to 
substantial effects.
    The results of this paper agree with most previous studies. Table 
B-1 shows some simple evidence about the influences on filing rates. 
The regressions describe filing rates for DI and SSI and include 
concurrent applicants. All the independent variables described in the 
text were made available for these regressions. Around 80 percent of 
the variation can be described with just a few variables, although 
different variables appear in the DI and SSI equations. Not 
surprisingly, the poverty rate appears only in the SSI equation since 
only that program has a means test. The DI equation uses the labor 
force participation rate. The negative sign is consistent with a 
discouraged worker effect; as labor force participation declines, DI 
filings increase. Demographic variables that capture some behavioral 
differences across age and educational attainment categories are also 
used, as are the self-reported health and disability averages from the 
Current Population Survey. Self-reported disability is strongly 
correlated with filing for DI. The industry variables that are included 
are also intended to measure an aspect of health. They capture the 
percentage of employment in various industries that have relatively 
high occupational injury and illness rates.


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Allowance Rates

    Given these effects on filing rates, the pool of DI and SSI 
applicants changes with the economy and with demographic and health 
trends. The regression coefficients in the allowance rate equations are 
interpreted in this light. A procyclical economic indicator, for 
example, would be expected to have a positive sign. If per capita 
income falls during a recession, one would expect more marginal 
applicants to file for benefits. With the applicant pool diluted by 
these marginal filers, one would expect the allowance rate to be lower. 
Similarly, employment in retail trade is sometimes a good procyclical 
indicator of the low-wage labor market, but that is not borne out in 
these data. Countercyclical indicators such as the unemployment rate 
and the poverty rate are expected to have a negative sign.
    The demographic variables have more straightforward 
interpretations. Disability is more prevalent at older ages and is 
associated with low educational achievement. The expected sign is thus 
positive for median age and negative for the percentage of the 
workforce that has completed high school. By contrast, there are no a 
priori expectations for the signs on the coefficients for percentage of 
the workforce that is male and percentage of applicants claiming a 
physical disability.
    The remaining variables are related to health or occupational 
illness and injury. In general, one would expect health to be 
negatively associated with allowance rates. The variables representing 
employment in various industries capture employment in industries with 
high risk; agriculture, construction, manufacturing, and transportation 
are the one-digit Standard Industrial Classification codes with the 
highest rates of occupational illness and injury. These variables and 
the rate of occupational illness and injury itself are expected to have 
positive signs.
    Tables B-2 and B-3 show two sets of regressions for the allowance 
rate equations. They differ primarily in terms of conceptual approach. 
The preliminary results shown in Table B-2 represent specifications 
reflecting a priori ideas about what variables should be included. By 
contrast, the final specifications in Table B-3 were chosen because 
they are among those that produce a good fit with just a few 
explanatory variables, within some limits. The fact that these two 
approaches produce quite similar results shows that the distinction 
between the two is not a crucial one. The regressions that are 
compatible with a priori ideas are close to the ones with a near-
optimal fit. Similarly, the regressions with a near-optimal fit do not 
conflict with the a priori ideas. The results of the equations in Table 
B-3 were used for the analysis in the main text.
    There were several priori considerations in the variable selection 
for Table B-2. Variables were selected corresponding to the nature of 
the SSI and DI programs. The poverty rate was employed as a predictor 
for the SSI equation corresponding to the SSI means test, whereas the 
unemployment rate has a rough relation to the work history requirement 
for DI eligibility.
    Another consideration for Table B-2 was to exclude variables that 
contained possible endogeneity. As demonstrated above, most of the 
variation in filing rates corresponds to economic and demographic 
differences among states. However, it is possible that filing rates 
also respond to state differences in program administration. For 
example, states with more allowances could inspire additional people to 
file for benefits. It is also possible that some predictor variables 
are coincidentally correlated with adjudicative, administrative, or 
policy differences. Industry employment indicators, for example, could 
capture variations that correspond to such differences.\11\ Because of 
this, the filing rate was excluded, and industry variables were 
included only in aggregated form in Table B-2.
---------------------------------------------------------------------------
    \11\ Variables indicating differences in state SSI supplements also 
fall into this category because state supplements are geographically 
concentrated.




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    The variables in Table B-3, by contrast, were selected with less 
regard for these issues. These equations were selected on the basis 
that they explain a large amount of the variation with relatively few 
variables. Variables were generally excluded if they did not contribute 
to the overall fit. The selection does not represent a complete 
disregard for endogeneity issues, however. The variables that are most 
likely to be endogenous have been excluded. For example, the average 
levels of self-reported health and disability were categorically 
excluded from these equations. The evidence indicates that the 
remaining variables are primarily exogenous but could be contaminated 
by some endogeneity.
    The relevance of this issue is limited by the size of the 
differences between the two sets of equations. Given that the results 
are similar, including a few potentially marginally endogenous 
variables cannot undermine the results significantly. The results are 
similar in several ways. The signs and magnitudes of the coefficients 
that are included in both sets of equations are similar, with only one 
exception for both the sign (percentage completing high school) and the 
magnitude (percentage of employment in retail trade) in three 
equations. Also, the explained portion of the variation is similar, and 
the two sets of equations produce similar sets of outliers. The rank 
order correlations of the regression residuals are 0.83, 0.91, and 0.94 
for DI, SSI, and concurrent applicants, respectively.
    The outliers from the regressions in Table B-2 are shown in Charts 
11 and 13. (To facilitate comparison, Charts 6 and 8 are repeated here 
as Charts 10 and 12.) In some cases, the two sets of equations produce 
different outliers. Thus, the results for any one particular state 
depend on the choice of specification; however, the overall results are 
independent of the choice of specification.


        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



    The signs in Tables B-2 and B-3 are generally as expected. The 
coefficient on the percentage of filings that are physical is negative, 
indicating that physical claims have a lower allowance rate than mental 
claims. States with more males in the workforce and a higher median age 
have higher allowance rates. The coefficients for cyclical and health 
indicators have the signs discussed above. The coefficients for filing 
rates are negative but generally not statistically significant. It is 
not essential to include filing rates in the equation when the economic 
and health variables that are highly correlated with filing rates are 
included. Filing rates are included in Table B-3 because many readers 
may expect to see this effect.
    Some other potential weaknesses of these equations should also be 
mentioned. The inclusion of filing rates illustrates that 
multicollinearity is present in these equations. Multicollinearity is a 
general problem not isolated to this variable. All the variables are 
related to deprivation of either health or income, and health and 
income are also correlated. Thus, the accuracy of the standard errors 
and tests of significance is affected. The worst cases of 
multicollinearity have been removed. For example, self-reported 
disability has a correlation with the DI filing rate of around 0.8 and 
is thus excluded from the DI allowance rate equations.
    The predictive value of the equations is not affected, however. The 
predictions are the product of the data and the regression coefficients 
summed for each observation. Table B-4 shows the quantile distributions 
of the difference between actual allowance rates and the predictions 
(based on Table B-3), as well as the distribution of the differences 
from the mean. It shows that the variation in allowance rates by states 
is lower when accounting for the variation due to economic and 
demographic factors.

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    The figures give a sense of how much lower the variation is than 
when using the mean as a basis for comparison. The differences from the 
predicted rates have a smaller range and a more compressed 
distribution. At any point in the distribution (the 5th 
percentile, for example), the differences between allowance rates and 
predicted rates are smaller than the differences between allowance 
rates and the mean. This is a measure of the composite predictive power 
of the independent variables. Smaller average differences and a smaller 
variability of differences result from taking the independent variables 
into account. This result is robust with respect to choice of 
specification and the potential problems mentioned above.
    It is also possible that using aggregate state-level data rather 
than individual-level data will introduce a bias in the estimates 
presented in this paper (see Robinson 1950 and Heckman 2001). 
Individuals within a state make the decision to apply for disability 
benefits, and individual adjudicators make a decision to award 
disability benefits. There is considerable within-state heterogeneity 
in economic and demographic factors. Aggregate-level data ignore this 
heterogeneity; thus the estimates presented in this paper may over--or 
underestimate the degree to which the variation is attributable to 
differences in environmental factors as opposed to the application of 
the SSA disability standard. Individual-level data may be examined in 
future work on this topic.


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References

Autor, David H., and Mark G. Dugan. 2001. The Rise in Disability 
Recipiency and the Decline in Unemployment. NBER Working Paper No. 
8336. Cambridge, Mass.: National Bureau of Economic Research.

Gallicchio, Sal, and Barry Bye. 1980. Consistency of Initial Disability 
Decisions Among and Within States. Staff Paper No. 39. U.S. Department 
of Health and Human Services, Social Security Administration, Office of 
Policy.

Heckman, James J. 2001. ``Micro Data, Heterogeneity, and the Evaluation 
of Public Policy: Nobel Lecture.'' Journal of Political Economy 109(4): 
673-748.

Leonard, Jonathan. 1986. ``Labor Supply Incentive and Disincentives for 
Disabled Persons.'' In Disability and the Labor Market: Economic 
Problems, Policies and Programs, edited by Monroe Berkowitz and M. Anne 
Hill. Ithaca, N.Y.: ILR Press, Cornell University.

Muller, Scott L. 1982. The Impact of Local Labor Market Characteristics 
on the Disability Process. ORS Working Paper No. 27. U.S. Department of 
Health and Human Services, Social Security Administration.

Robinson, W.S. 1950. ``Ecological Correlations and the Behavior of 
Individuals.'' American Sociological Review 15 (June): 351-357.

Rupp, Kalman, and David Stapleton. 1995. ``Determinants of the Growth 
in the Social Security Administration's Disability Programs--An 
Overview.'' Social Security Bulletin 58(4): 43-70.

Rupp, Kalman, and David C. Stapleton, eds. 1998. Growth in Disability 
Benefits: Explanations and Policy Implications. Kalamazoo, Mich.: W.E. 
Upjohn Institute for Employment Research.

Senate Committee on Finance. 1979. Social Security Disability 
Amendments of 1979: Report of the Committee on Finance, U.S. Senate, on 
H.R. 3236. Report No. 96-408.

Social Security Administration, Chief Financial Office, Office of 
Program and Integrity Reviews. 1988. Factors Influencing Disability 
Determination Services: Initial Allowance Rates. Washington, D.C.: 
Social Security Administration. July.

Social Security Advisory Board. 2001a. Charting the Future of Social 
Security's Disability Programs: The Need for Fundamental Change. 
Washington, D.C.: Social Security Advisory Board. January.

________________. 2001b. Disability Decision Making: Data and 
Materials. Washington, D.C.: Social Security Advisory Board. January.

Stapleton, David C.; Michael E. Fishman; Gina A. Livermore; David 
Wittenburg; Adam Tucker; and Scott Scrivner. 1999. Policy Evaluation of 
the Overall Effects of Welfare Reform on SSA Programs. Social Security 
Administration Task Order No. 0440-98-33244, The Lewin Group, Inc.
    Acknowledgments: The author wishes to thank Aditya Bamzai and 
Joanna Greenberg for valuable assistance. Steve Fear, Bob Weathers, 
Brian Greenberg, Charlie Scott, Susan Grad, Paul Van de Water, Howard 
Iams, Kalman Rupp, the staff of the Office of Disability, and the staff 
of the Office of Quality Assurance and Performance Assessment provided 
helpful comments. Mark Nadel initiated the project and provided 
guidance.
    [Attachment is being retained in the Committee files.]

                                 

    [Questions submitted by Mr. Matsui to Mr. Gerry, and his 
responses follow:]
                                     Social Security Administration
                                          Baltimore, Maryland 21235
                                                      July 24, 2002
The Honorable Robert Matsui
Ranking Member
Subcommittee on Social Security
Committee on Ways and Means
House of Representatives
Washington, D.C. 20515

    Dear Mr. Matsui:

    This is in response to your letter of June 27, 2002, which 
transmitted questions for the record from the June 11, 2002, hearing on 
the Social Security Disability Program's Challenges and Opportunities. 
Enclosed you will find the answer to your specific questions.
    I hope this information is helpful. If I may be of further 
assistance, please do not hesitate to contact me.

    1. What precisely are the consequences of filing a new application 
for benefits rather than appealing a denial--in terms of eligibility 
for past due benefits, maintaining insured status for Disability 
Insurance Benefits, and avoiding a denial on the second claim as a 
result of res judicata?

Answer:

    The immediate consequence of filing a new application rather than 
appealing an unfavorable decision is the possible loss of past due 
benefits. A successful appeal would permit payment of retroactive 
benefits up to 12 months from the initial date of filing (starting with 
the date all eligibility factors are met). Conversely, a favorable 
determination on a subsequent application would have a maximum 
retroactivity to 12 months from the date the new claim is filed. 
Therefore, filing a new application instead of filing an appeal could 
reduce the amount of retroactive benefits payable. It is also possible 
for a person's insured status to expire between the retroactive period 
for the initial claim and the retroactive period for the new subsequent 
claim. Such cases could result in the person's new claim being denied 
for lack of insured status, while benefits would be payable upon a 
successful appeal of a medical denial.
    There is no retroactivity for title XVI claims. Benefits are 
limited to the month after the date the claim is filed. A successful 
appeal would allow for benefits to be paid beginning the month after 
the month in which the initial claim was filed while filing a new 
subsequent application would limit benefits to the month after the 
month the new claim is filed. Thus, filing a new claim in lieu of 
filing an appeal could result in loss of benefits for the period 
between the month after the initial claim was filed to the month after 
the new subsequent claim was filed.
    Administrative res judicata is a rule in civil law and an 
administrative policy. It means that SSA will not consider a claim 
again if it has already issued a determination based on the same facts, 
same issues, same parties, and same adjudicative period. In other words 
if a new application is filed with the same issue by the same party and 
no new facts or evidence is presented, the application may be denied on 
the basis of res judicata. (There are no appeal rights given in a 
notice determining res judicata.) However, if anything has changed, 
e.g., new evidence is presented, res judicata cannot be applied and a 
determination on the merits of the claim is made.
    SSA's field office personnel explain the implications of res 
judicata to claimants who wish to file a new application rather than 
appealing a denied claim. However, if an individual insists on filing a 
new application, a new application must be taken. SSA has also revised 
its notices to inform claimants that filing a new application is not 
the same as requesting an appeal and that it could result in a loss of 
benefits.

    2. What fraction of DI and SSI claimants have no treating 
physician, or no regular medical provider who can provide evidence of 
the claimant's impairment on thorough knowledge of the claimant's 
medical condition? Please provide separate estimates for DI and SSI 
claims.

Answer:

    SSA has no records or data available on whether a claimant has a 
treating physician or regular medical provider.

    3. Is the record ever closed during the agency's adjudicative 
process? Can the Federal courts consider new evidence? If so, under 
what circumstances?

Answer:

    The record is never completely closed during the agency's entire 
adjudicative process. Claimants may submit additional evidence 
throughout the administrative review process including after the 
issuance of a decision by an administrative law judge (ALJ). However, 
the Appeals council considers new evidence submitted after the ALJ 
decision only if it is material and relates to the period on or before 
the date of the ALJ decision.
    A district court may at any time order SSA to take or obtain 
additional evidence if the claimant shows that there is new and 
material evidence and there is good cause for failure to have the 
evidence entered into the record during the administrative reviews.

    4. Does SSA have standards for the conduct of claimant 
representatives? What tools does it have available to sanction 
misconduct?

Answer:

    SSA has standards for the conduct of claimant representatives that 
are published in our regulations at 20 CFR 404.1740. These standards 
include that:
    The Representatives shall:

         Act with reasonable promptness to obtain the 
        information and evidence that the claimant wants to submit in 
        support of his or her claim, and forward it to SSA as soon as 
        practicable;
         Assist the claimant in complying, as soon as 
        practicable, with SSA's requests for information or evidence; 
        and
         Conduct their dealings in a manner that furthers the 
        efficient, fair and orderly conduct of the administrative 
        decisionmaking process.

    The Representatives shall not:

         With intent to defraud, willfully and knowingly 
        deceive, mislead or threaten any claimant or beneficiary with 
        respect to his or her rights under the Social Security Act;
         Knowingly charge or collect any fee not authorized by 
        law;
         Knowingly make or present any false statement, 
        representation, or claim about a material fact or law 
        concerning a matter within SSA's jurisdiction;
         Unlawfully disclose any information SSA has furnished 
        relating to the claim of another person.
         Through actions or omissions, unreasonably delay the 
        processing of a claim.
         Attempt to influence the outcome of a decision by 
        offering a loan, gift, entertainment or anything of value to a 
        presiding official, SSA employee or witness; or
         Engage in actions or behavior prejudicial to the fair 
        and orderly conduct of the administrative proceedings, 
        including repeated absences or tardiness; willfully disrupting 
        or obstructing hearings; and threatening or intimidating 
        language, gestures or actions directed at a presiding official, 
        SSA employee or witness.

    If SSA finds that a representative has failed to comply with these 
standards, SSA may suspend the representative for a period of from one 
to 5 years, or disqualify the representative from further practice 
before the Agency. SSA will also notify an attorney's State bar 
disciplinary authority of any final decision finding that the attorney 
has violated SSA's law or regulations. Our rules for making decisions 
about violations of these standards are in our regulations at 20 CFR 
404.1745-404.1795.
    Other sanctions include:

         If convicted of actions such as threatening a 
        claimant or beneficiary with an intent to defraud or knowingly 
        charging or collecting any fee in excess of the maximum fee 
        prescribed by the Commissioner, a representative can be 
        punished by a fine not to exceed $500 or imprisonment not to 
        exceed 1 year or both.
         Civil and monetary penalties can be assessed against 
        any representative who makes or causes to be made false 
        statements or representations, or omissions of material fact, 
        for use in determining the right to or amount of social 
        security or supplemental security income benefits. The 
        penalties may not be more than $5000 for each false statement 
        or representation. The representative could also be subject to 
        an assessment of not more than twice the amount of benefits or 
        payments paid as a result of the statement or representation 
        that was the basis for the penalty.
         A person can be excluded from representing claimants 
        if they have been criminally convicted or determined to be 
        civilly liable for committing fraud involving an SSA program. 
        The minimum exclusion is for 5 years if the representative has 
        no prior convictions, 10 years if the representative has one 
        prior conviction, or permanently if the representative has two 
        prior convictions.

    The above listed sanctions are not mutually exclusive. 
Representatives may be subject to a misdemeanor prosecution, suspension 
or disqualification from practice before SSA and a civil monetary 
penalty. The components within SSA that have responsibility for each of 
the various types of sanctions coordinate their actions to ensure that 
all appropriate sanctions are imposed.

    5. What fraction of cases are allowed at each level of the 
adjudicative process (at each level of agency decisionmaking and in the 
Federal court system)? What fraction of denied claimants appeal their 
denial at each level of the adjudicative process?

Answer:

    The chart below, which is on SSA's website, represents aggregate 
data showing the number of claims, per 100, that are allowed at each 
step of the adjudicative process through the Appeals Council, and the 
number of appeals at each step. Most allowances are made at the initial 
level (40 out of 57 that are allowed overall for every 100 cases). Only 
about 5 cases out of 100 go beyond the administrative hearings level. 
At the Appeals Council level, 1 case in 5 is either allowed or remanded 
for further action. Less than 1 per 100 enter Federal court. The 
available data on Federal court decisions combines initial claims and 
continuing disability reviews, and shows that about 6% of the cases 
that reach Federal court are allowed, and 58% are remanded for further 
action.


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    6. What is the responsibility of personnel at SSA field offices, 
state Disability Determination Services and SSA Offices of Hearings and 
Appeals to develop the evidentiary record? What policies does SSA have 
in place to assure that each claimant's case if fully developed?

Answer:

    Our policy for ensuring that each individual's case is fully 
developed is contained in our regulations (20 CFR 404.1512 and 
416.912). Before we make a determination that the individual is not 
disabled, we are responsible for developing the individual's complete 
medical history for at least the 12-month period before the month in 
which application is filed, unless there is reason to believe that 
development of an earlier period is necessary or unless the individual 
says that his or her disability began less than 12 months earlier.
    We make every reasonable effort to help the individual get medical 
reports from his or her own medical source(s). We request evidence from 
this medical source(s) and follow up with the medical source(s) if the 
evidence is not received.
    When the evidence we receive from the individual's medical 
source(s) is inadequate for us to make a determination, we re-contact 
the medical source(s) for the evidence. If the information we need is 
not readily available, or we are unable to seek clarification from the 
medical source, we ask the individual to attend one or more 
consultative examinations at our expense (20 CFR 404.1517-404.1519n and 
416.917-416.919n).
    These policies are reflected in our operating instructions to field 
offices, disability determination services (DDSs), and hearings 
offices.

FIELD OFFICE (FO)

    The FO is responsible for conducting the disability interview and 
completing the appropriate disability report forms for adults and 
children. The information that is provided by the individual to the FO 
during the disability interview is critical to the DDS's medical and 
vocational development.
    Although the DDS is primarily responsible for developing the 
medical evidence, the FO will assist the individual in requesting 
medical evidence in special arrangement situations, or when asked to do 
so by the DDS or other Social Security Administration component. In 
addition, FOs are authorized to request medical evidence from medical 
sources in certain Supplemental Security Income cases involving human 
immunodeficiency virus infection for which there is a strong likelihood 
that the individual will be found disabled. After initiating a request 
for medical evidence, the FO sends the file to the DDS. The DDS follows 
up on the request if necessary.

DDS

    DDS examiners are responsible for making every reasonable effort to 
help the individual get medical reports from his or her medical 
sources. The examiners develop evidence, including diagnostic tests, 
from all sources identified by the individual or discovered during 
development who have treated or evaluated the individual for the 
alleged or documented impairment(s) during the applicable 12-month 
period. Examiners must also determine whether developing medical 
evidence outside of the 12-month period is necessary, based on the 
facts in each case.
    The DDS is also responsible for obtaining additional vocational 
evidence not contained in the disability report form when it is 
necessary to determine the individual's ability do past relevant work 
or other work. The individual is the best source of information about 
past work. If this information is not sufficient, however, other 
possible sources of vocational information who the DDS may contact 
include family members, previous employers, authorized representatives, 
or anyone else with knowledge of the individual's work history.

HEARING OFFICE (HO)

    The administrative law judge (ALJ) or HO staff under the ALJ's 
direction is responsible for reviewing the evidence before the hearing 
to determine whether it is sufficient for a full and fair inquiry in to 
the matters at issue. Development may be needed to:

         obtain additional medical evidence (for example, 
        current evidence from a treating source);
         obtain technical or specialized medical opinion; or
         resolve conflicts or differences in the evidence.
    If the ALJ or the HO staff decides that additional evidence is 
needed, the ALJ or the HO staff will undertake appropriate development 
before the hearing and arrange for any necessary witnesses to be 
present at the hearing.
    If the ALJ obtains evidence after the hearing from a source other 
than the individual, the ALJ must provide the individual an opportunity 
to examine the evidence before entering it into the record as an 
exhibit.

APPEALS COUNCIL

    The Appeals Council has responsibility for assessing whether the 
ALJ committed an error of law or abused his or her discretion with 
respect to the development of evidence or if the ALJ's decision is not 
supported by substantial evidence. If the Appeals Council determines 
that additional development of evidence is required, it typically 
remands the case to the ALJ to obtain the additional evidence.

                                 

    Chairman SHAW. The next panel is made up of Robert E. 
Robertson, who is the Director of Education, Work force, and 
Income Security Issues, U.S. General Accounting Office (GAO); 
and Mr. Hal Daub, who is the Chairman of the Social Security 
Advisory Board (SSAB), a former Member of Congress, and former 
Member of this Subcommittee.
    Welcome, gentlemen. We have your full testimony, which will 
be made a part of the record, and we invite both of you to 
proceed as you may see fit.

    STATEMENT OF ROBERT E. ROBERTSON, DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING 
                             OFFICE

    Mr. ROBERTSON. Mr. Chairman, Members of the Subcommittee, 
thanks for the opportunity to discuss the challenges that the 
Social Security Administration faces in improving its 
disability claims process. These challenges are among the more 
daunting that it faces. Before I go too much further, Mr. 
Chairman, I had better, as a concession to age, put on these 
glasses or who knows what words may come out of this mouth.
    The written statement that I have submitted for the record 
basically addresses three areas: one being the results and the 
status of the five initiatives included in SSA's most recent 
plans to improve the disability process; another being SSA's 
current plans for developing an electronic disability system; 
and the last being the implications of SSA's past efforts for 
future success. What I would like to do this afternoon is 
concentrate pretty much on that last area because that gives a 
little bit more of a flavor of where do we go from here.
    Mr. Chairman, here is the bottom line. In spite of the 
significant resources that SSA has dedicated to improving the 
disability process, the overall results have been 
disappointing. Now, before I go any further, I just want to 
emphasize something that I think is extremely important, which 
is simply that implementing the types of sweeping changes that 
were envisioned with the five initiatives I am going to be 
talking about is no easy task. This is because there are a 
number of factors that tend to make this very, very difficult, 
which include: the complexity of the disability decisionmaking 
process, the Agency's fragmented service delivery structure, 
and the challenge of overcoming an organization's natural 
resistance to change, inertia. However, the situation that led 
SSA to attempt these redesign initiatives--increasing 
disability workloads in the face of resource constraints--
continue to exist today and will likely worsen as more baby 
boomers reach their disability-prone years.
    This situation makes SSA's decisions on where to go with 
its disability initiatives crucial. In that regard, we agree 
with SSA that, because of its high cost and other practical 
barriers to implementation, the Agency should not continue to 
implement the disability claims manager initiative. If you will 
recall, that initiative basically combined the responsibilities 
normally divided between SSA's field representatives and the 
State DDS disability examiners under a newly created position 
of disability claims manager.
    We also agree with SSA that the appeals council process 
improvement initiative which resulted in modest reductions in 
the processing times for certain types of appealed claims 
should continue, but with increased commitment to achieving the 
initiative's performance goals.
    Deciding the future course of action on each of the 
remaining three initiatives, however, presents a challenge to 
SSA. For example, SSA continues to face decisions on how to 
proceed with the prototype initiative, which, as you know, 
experimented with significant changes to the initial claim 
process at State DDSs. Interim results were mixed, making 
decisions on the continuation of the initiative problematic. 
The SSA has recently decided to revise some features of the 
prototype in the near term and has also been considering some 
longer term improvements.
    Of all the initiatives, we are most concerned about the 
failure of the hearing process improvement initiative to 
achieve its goals. Hearing office backlogs are fast approaching 
the crisis level of the mid-1990's. We have recommended that 
the new Commissioner act quickly to implement short-term 
strategies to reduce the backlog and develop a longer term 
strategy for a more permanent solution to the problems. The new 
Commissioner has agreed with our recommendations and has 
announced her decisions on short-term actions. The challenge 
remains, however, to identify the longer term strategies to fix 
the longer term problems.
    Similarly, we are concerned about SSA's lack of progress on 
its initiative for revamping its quality assurance system. 
Without such a system, it is difficult for SSA to ensure the 
integrity of its disability claims process. We are encouraged 
to see that the Commissioner has signaled the high priority she 
attaches to this effort by appointing a senior manager for 
quality who reports directly to her.
    I would like to conclude my remarks by noting that, in 
addition to the changes that the Agency is currently 
considering to improve its claims processing, now may be the 
time for the Agency to step back and reassess the nature and 
scope of its basic approach. To date, SSA has focused, with 
limited success, on changing the steps and procedures of the 
process and on adjusting the duties of its decisionmakers. A 
new analysis of the fundamental issues impeding progress may 
help SSA identify areas for future action. This could include 
examining the fragmentation and structural problems associated 
with SSA's overall service delivery system.
    Mr. Chairman, that concludes my statement, and I will be 
happy to answer questions at the appropriate time.
    [The prepared statement of Mr. Robertson follows:]
 Statement of Robert E. Robertson, Director, Education, Workforce, and 
         Income Security Issues, U.S. General Accounting Office
    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me here to discuss the challenges the Social 
Security Administration (SSA) faces in improving the claims process for 
its two disability programs, Disability Insurance (DI) and Supplemental 
Security Income (SSI). Managing its disability caseloads and delivering 
high-quality service to the public in the form of fair, consistent, and 
timely eligibility decisions in the face of resource constraints has 
become one of SSA's most pressing management challenges.\1\ In the last 
7 years, SSA has spent more than $39 million in efforts to test and 
implement initiatives designed to improve the timeliness, accuracy, and 
consistency of its disability decisions and to make the process more 
efficient and easier for claimants to understand.\2\ These efforts have 
included initiatives to improve the initial claims process as well as 
the process for handling appeals of denied claims. In addition, the 
agency has spent at least $71 million in an attempt to develop an 
automated disability claims process intended to provide support for its 
redesign efforts.
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    \1\ U.S. General Accounting Office, Social Security Administration: 
Agency Must Position Itself Now to Meet Profound Challenges, GAO-02-
289T (Washington, D.C.: May 2, 2002).
    \2\ The $39 million includes expenditures for contractor support, 
travel, transportation, equipment, supplies, services, and rent. It 
excludes personnel costs, most of which would have been incurred 
processing workloads regardless of redesign projects. it also excludes 
the costs incurred for all but one initiative tested or implemented 
after March 1999, when the commissioner ended disability process 
redesign as a separate agency project.
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    Today, I will discuss the results and status of five initiatives 
included in SSA's most recent plans to improve the process, SSA's 
current plans to develop an electronic disability system, and the 
implications of SSA's efforts to date for future success. The 
information I am providing is based primarily on recent work we did for 
this subcommittee.\3\ (Also see Related GAO Products at the end of this 
statement.)
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    \3\ U.S. General Accounting Office, Social Security Disability: 
Disappointing Results From SSA's Efforts to Improve the Disability 
Claims Process Warrant Immediate Attention, GAO-02-322, (Washington, 
D.C.: Feb. 27, 2002) and GAO-02-289T.
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    In summary, the results to date from SSA's redesign initiatives 
have been disappointing. The agency's two tests of initiatives to 
improve the initial claims process produced some benefits; however, 
both initiatives as tested would have significantly raised costs, and 
one would have lengthened the wait for final decisions for many 
claimants. As a result, SSA is considering additional changes to one of 
these initiatives and has shelved the other. The situation is less 
favorable at the appeals level. One initiative to change the process 
for handling appealed claims in SSA's hearing offices has resulted in 
even slower case processing and larger backlogs of pending claims. A 
second initiative has reduced the processing times for a separate group 
of appealed claims, though far less than expected. Moreover, a cross-
cutting initiative to update the agency's quality assurance program--a 
goal the agency has held since 1994--is still in the planning stage. 
Finally, SSA's plans to improve its disability claims process relied in 
part upon hoped for technological improvements; however, SSA failed to 
design and develop a new computer software application to automate the 
disability claims process after a 7-year effort.
    On the basis of our recent work, we have recommended that SSA take 
immediate steps to reduce the backlog of appealed cases, develop a 
long-range strategy for a more permanent solution to the problems at 
its hearings offices, and develop an action plan for implementing a 
more comprehensive quality assurance program. SSA agreed with our 
recommendations and is beginning to make some short-term changes. In 
addition, SSA has recently announced plans to accelerate implementation 
of needed technological improvements. However, much work remains. The 
commissioner faces difficult decisions about long-term strategies for 
problems at the hearings offices and in the disability claims process 
as a whole. It will be important to both learn from the past and look 
to the future.
Background
    DI and SSI provide cash benefits to people with long-term 
disabilities. While the definition of disability and the process for 
determining disability are the same for both programs, the programs 
were initially designed to serve different populations.\4\ The DI 
program, enacted in 1954, provides monthly cash benefits to disabled 
workers--and their dependents or survivors--whose employment history 
qualifies them for disability insurance. These benefits are financed 
through payroll taxes paid by workers and their employers and by the 
self-employed. In fiscal year 2001, more than 6 million individuals 
received more than $59 billion in DI benefits. SSI, on the other hand, 
was enacted in 1972 as an income assistance program for aged, blind, or 
disabled individuals whose income and resources fall below a certain 
threshold. SSI payments are financed from general tax revenues, and SSI 
beneficiaries are usually poorer than DI beneficiaries. In 2001, more 
than 6 million individuals received almost $28 billion in SSI 
benefits.\5\
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    \4\ The Social Security Act defines disability for adults as an 
inability to engage in any substantial gainful activity because of any 
medically determinable physical or mental impairment which can be 
expected to result in death or which has lasted or can be expected to 
last for a continuous period of not less than 12 months.
    \5\ Some DI beneficiaries have incomes low enough to qualify them 
for SSI; therefore, they receive benefits from both programs.
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    The process to obtain SSA disability benefits is complex and 
fragmented; multiple organizations are involved in determining whether 
a claimant is eligible for benefits. As shown in figure 1, the current 
process consists of an initial decision and up to three levels of 
administrative appeals if the claimant is dissatisfied with SSA's 
decision. Each level of appeal involves multistep procedures for 
evidence collection, review, and decision-making.
Figure 1: SSA's Disability Claims Process


        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



    Source: SSA Documents
    Generally, a claimant applies for disability benefits at one of 
SSA's 1,300 field offices across the country, where a claims 
representative determines whether the claimant meets financial and 
other program eligibility criteria. If the claimant meets these 
eligibility criteria, the claims representative forwards the claim to 
the state disability determination service (DDS).\6\ DDS staff then 
obtain and review evidence about the claimant's impairment to determine 
whether the claimant is disabled. Once the claimant is notified of the 
medical decision, the claim is returned to the field office for payment 
processing or file retention. This completes the initial claims 
process.
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    \6\ DDSs are state agencies that contract with SSA to determine 
claimants' medical eligibility for DI and SSI disability benefits. 
Although federally funded and guided by SSA in their decision making, 
the DDSs hire their own staff and retain a degree of independence in 
how they manage their offices and conduct disability determinations.
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    Claimants who are initially denied benefits can ask to have the DDS 
reconsider its initial denial. If the decision at this reconsideration 
level remains unfavorable, the claimant can request a hearing before a 
federal administrative law judge (ALJ) at an SSA hearings office, and, 
if still dissatisfied, the claimant can request a review by SSA's 
Appeals Council. Upon exhausting these administrative remedies, the 
individual may file a complaint in federal district court.
    Given its complexity, the disability claims process can be 
confusing, frustrating, and lengthy for claimants. Many individuals who 
appeal SSA's initial decision will wait a year or longer for a final 
decision on their benefit claims. In fact, the commissioner recently 
testified that claimants can wait as long as 1,153 days from initial 
claim through a decision from the Appeals Council. Moreover, the claims 
process can also result in inconsistent assessments of whether 
claimants are disabled; specifically, the DDS may deny a claim that is 
later allowed upon appeal. For example, in fiscal year 2000, about 40 
percent of claimants denied at the initial level filed an appeal and 
about two-thirds were awarded benefits. This inconsistency calls into 
question the fairness, integrity and cost of SSA's disability 
decisions. Program rules, such as claimants' ability to submit 
additional evidence and to allege new impairments upon appeal, as well 
as the worsening of some claimants' conditions over time can explain 
only some but not all of the overturned cases. Other overturned cases 
may be due to inaccurate decisions by the DDSs or ALJs or to other 
unexplained factors.
    In response to these problems, SSA first announced an ambitious 
plan to redesign the disability claims process in 1994, after a period 
of rapid growth in the number of people applying for disability 
benefits. This plan represented the agency's first effort to 
significantly revise its procedures for deciding disability claims 
since the DI program began in the 1950's. The overall purpose of the 
redesign was to

         ensure that decisions are made quickly,
         ensure that the disability claims process is 
        efficient,
         award legitimate claims as early in the process as 
        possible,
         ensure that the process is user friendly for 
        claimants and those who assist them, and
         provide employees with a satisfying work environment.

    The agency's initial plan entailed a massive effort to redesign the 
way it made disability decisions. SSA had high expectations for its 
redesign effort. Among other things, SSA planned to develop a 
streamlined decision-making and appeals process, more consistent 
guidance and training for decision makers at all levels of the process, 
and an improved process for reviewing the quality of eligibility 
decisions. In our reviews of SSA's efforts after 2 and 4 years, we 
found that the agency had accomplished little.\7\ In some cases, the 
plans were too large and too complex to keep on track. In addition, the 
results of many of the initiatives that were tested fell far short of 
expectations. Moreover, the agency was not able to garner consistent 
stakeholder support and cooperation for its proposed changes.
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    \7\ U.S. General Accounting Office, SSA Disability Redesign: Focus 
Needed on Initiatives Most Crucial to Reducing Costs and Time, GAO/
HEHS-97-20, (Washington, D.C.: Dec. 20, 1996); and SSA Disability 
Redesign: Actions Needed to Enhance Future Progress, GAO/HEHS-99-25, 
(Washington, D.C.: Mar. 12, 1999).
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    In 1999, we recommended that SSA focus attention and resources on 
those initiatives that offer the greatest potential for achieving the 
most critical redesign objectives, such as quality assurance, computer 
support systems, and initiatives that improve consistency in decision-
making. In addition, because implementing process changes can be even 
more difficult than testing them, we recommended that SSA develop a 
comprehensive and meaningful set of performance measures that help the 
agency assess and monitor the results of changes in the claims process 
on a timely basis. We have also pointed out the need for effective 
leadership and sustained management attention to maintain the momentum 
needed to effect change in such a large and complex system.
SSA's Recent Redesign Initiatives Have Had Limited Success
    SSA's five most recent initiatives were designed to improve claims 
processing at all levels of the service delivery system. These redesign 
initiatives continue to experience only limited success. A brief 
summary of the status, results and problems experienced in implementing 
each of the five initiatives follows.

         The Disability Claim Manager initiative, which began 
        in November 1997 and ended in June 2001, was designed to make 
        the claims process more user friendly and efficient by 
        eliminating steps resulting from numerous employees handling 
        discrete parts of the claim. It did so by having one person--
        the disability claim manager--serve as the primary point of 
        contact for claimants until initial decisions were made on 
        their claims.\8\ The managers assumed responsibilities normally 
        divided between SSA's field office claims representatives and 
        state DDS disability examiners. After an initial training 
        phase, SSA tested the concept in 36 locations in 15 states from 
        November 1999 through November 2000. While the test resulted in 
        several benefits, such as improved customer and employee 
        satisfaction and quicker claims processing, the increased costs 
        of the initiative and other concerns convinced SSA not to 
        implement the initiative.
---------------------------------------------------------------------------
    \8\ The Disability Claim Manager initiative excluded claims for SSI 
children's benefits.

         The Prototype changed the way state DDSs process 
        initial claims, with the goal of ensuring that legitimate 
        claims are awarded as early in the process as possible. This 
        initiative makes substantial changes to the way the DDS 
        processes initial claims. The Prototype requires disability 
        examiners to more thoroughly document and explain the basis for 
        their decisions and it gives them greater decisional authority 
        for certain claims. The Prototype also eliminates the DDS 
        reconsideration step. It has been operating in 10 states since 
        October 1999 with mixed results. Interim results show that the 
        DDSs operating under the Prototype are awarding a higher 
        percentage of claims at the initial decision level without 
        compromising accuracy, and that claims are reaching hearing 
        offices faster because the Prototype eliminates DDS 
        reconsideration as the first level of appeal. However, interim 
        results also indicate that more denied claimants would appeal 
        to administrative law judges (ALJ) at hearings offices, which 
        would increase both administrative and program costs (benefit 
        payments) and lengthen the wait for final agency decisions for 
        many claimants. As a result, SSA decided that the Prototype 
        would not continue in its current form. In April, the 
        commissioner announced her ``short-term'' decisions to revise 
        certain features of the Prototype in order to reduce processing 
        time while it continues to develop longer-term improvements. It 
        remains to be seen whether these revisions will retain the 
        positive results from the Prototype while also controlling 
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        administrative and program costs.

         The Hearings Process Improvement initiative is an 
        effort to overhaul operations at hearings offices in order to 
        reduce the time it takes to issue decisions on appealed claims. 
        This was to be accomplished by increasing the level of analysis 
        and screening done on a case before it is scheduled for a 
        hearing with an ALJ; by reorganizing hearing office staff into 
        small ``processing groups'' intended to enhance accountability 
        and control in handling each claim; and by launching automated 
        functions that would facilitate case monitoring. The initiative 
        was implemented in phases without a test beginning in January 
        2000 and has been operating in all 138 hearings offices since 
        November 2000.
          LThe initiative has not achieved its goals. In fact, 
        decisions on appealed claims are taking longer to make, fewer 
        decisions are being made, and the backlog of pending claims is 
        growing and approaching crisis levels. The initiative's failure 
        can be attributed primarily to SSA's decision to implement 
        large-scale changes too quickly without resolving known 
        problems. For example, problems with process delays, poorly 
        timed and insufficient staff training, and the absence of the 
        planned automated functions all surfaced during the first phase 
        of implementation and were not resolved before the last two 
        phases were implemented. Instead, the pace of implementation 
        was accelerated when the decision was made to implement the 
        second and third phases at the same time. Additional factors, 
        such as a freeze on hiring ALJs and the ALJs' mixed support for 
        the initiative, may also have contributed to the initiative's 
        failure to achieve its intended results.
          LSSA has recently made some decisions to implement changes 
        that can be made relatively quickly in order to help reduce 
        backlogs and to streamline the hearings process, and they are 
        preparing to negotiate some of these changes with union 
        officials before they can be implemented. These changes include 
        creating a law clerk position and allowing ALJs to issue 
        decisions from the bench immediately after a hearing and 
        including them in the early screening of cases for on-the-
        record decisions. They also include decisions to enhance the 
        use of technology in the hearings process, as well as other 
        refinements.

         The Appeals Council Process Improvement initiative 
        combined temporary staff support with permanent case processing 
        changes in an effort to process cases faster and to reduce the 
        backlog of pending cases. The initiative was implemented in 
        fiscal year 2000 with somewhat positive results. The initiative 
        has slightly reduced both case processing time and the backlog 
        of pending cases, but the results fall significantly short of 
        the initiative's goals. The temporary addition of outside staff 
        to help process cases did not fulfill expectations, and 
        automation problems and changes in policy which made cases with 
        certain characteristics more difficult to resolve hindered the 
        initiative's success. However, SSA officials believe that 
        recent management actions to resolve these problems should 
        enhance future progress. Improving or revamping its quality 
        assurance system has been an agency goal since 1994, yet it has 
        made very little progress in this area, in part because of 
        disagreement among stakeholders on how to accomplish this 
        difficult objective. In March 2001, a contractor issued a 
        report assessing SSA's existing quality assurance practices and 
        recommended a significant overhaul to encompass a more 
        comprehensive view of quality management. We agreed with this 
        assessment and in our recent report to this subcommittee 
        recommended that SSA develop an action plan for implementing a 
        more comprehensive and sophisticated quality assurance 
        program.\9\ Since then, the commissioner has signaled the high 
        priority she attaches to this effort by appointing to her staff 
        a senior manager for quality who reports directly to her. The 
        senior manager, in place since mid-April, is responsible for 
        developing a proposal to establish a quality-oriented approach 
        to all SSA business processes. The manager is currently 
        assembling a team to carry out this challenging undertaking.
---------------------------------------------------------------------------
    \9\ GAO-02-322.
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LProblems Implementing Technological Improvements Have Long Undermined 
        SSA's Redesign Efforts
    SSA's slow progress in achieving technological improvements has 
contributed, at least in part, to SSA's lack of progress in achieving 
results from its redesign initiatives. As originally envisioned, SSA's 
plan to redesign its disability determination process was heavily 
dependent upon these improvements. The agency spent a number of years 
designing and developing a new computer software application to 
automate the disability claims process. However, SSA decided to 
discontinue the initiative in July 1999, after about 7 years, citing 
software performance problems and delays in developing the 
software.\10\
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    \10\ U.S. General Accounting Office, Social Security 
Administration: Update on Year 2000 and Other Key Information 
Technology Initiatives, GAO/T-AIMD-99-259, (Washington, D.C.: July 29, 
1999).
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    In August 2000, SSA issued a new management plan for the 
development of the agency's electronic disability system. SSA expects 
this effort to move the agency toward a totally paperless disability 
claims process. The strategy consists of several key components, 
including (1) an electronic claims intake process for the field 
offices, (2) enhanced state DDS claims processing systems, and (3) 
technology to support the Office of Hearing and Appeals' business 
processes. The components are to be linked to one another through the 
use of an electronic folder that is being designed to transmit data 
from one processing location to another and to serve as a data 
repository, storing documents that are keyed in, scanned, or faxed. SSA 
began piloting certain components of its electronic disability system 
in one state in May 2000 and has expanded this pilot test to one more 
state since then. According to agency officials, SSA has taken various 
steps to increase the functionality of the system; however, the agency 
still has a number of remaining issues to address. For example, SSA's 
system must comply with privacy and data protection standards required 
under the Health Information Portability and Accountability Act, and 
the agency will need to effectively integrate its existing legacy 
information systems with new technologies, including interactive Web-
based applications.
    SSA is optimistic that it will achieve a paperless disability 
claims process. The agency has taken several actions to ensure that its 
efforts support the agency's mission. For example, to better ensure 
that its business processes drive its information technology strategy, 
SSA has transferred management of the electronic disability strategy 
from the Office of Systems to the Office of Disability and Income 
Security Programs. In addition, SSA hired a contractor to independently 
evaluate the electronic disability strategy and recommend options for 
ensuring that the effort addresses all of the business and technical 
issues required to meet the agency's mission. More recently, the 
commissioner announced plans to accelerate implementation of the 
electronic folder.
Implications for Future Progress
    In spite of the significant resources SSA has dedicated to 
improving the disability claims process since 1994, the overall results 
have been disappointing. We recognize that implementing sweeping 
changes such as those envisioned by these initiatives can be difficult 
to accomplish successfully, given the complexity of the decision-making 
process, the agency's fragmented service delivery structure, and the 
challenge of overcoming an organization's natural resistance to change. 
But the factors that led SSA to attempt the redesign--increasing 
disability workloads in the face of resource constraints--continue to 
exist today and will likely worsen when SSA experiences a surge in 
applications as more baby boomers reach their disability-prone years.
    Today, SSA management continues to face crucial decisions on its 
initiatives. We agree that SSA should not implement the Disability 
Claim Manager at this time, given its high costs and the other 
practical barriers to implementation at this time. We also agree that 
the Appeals Council Process Improvement initiative should continue, but 
with increased management focus and commitment to achieve the 
initiative's performance goals. Deciding the future course of action on 
each of the remaining three initiatives presents a challenge to SSA. 
For example, SSA continues to face decisions on how to proceed with the 
Prototype initiative. Although SSA has recently decided to revise some 
features of the Prototype in the near term, it also is considering 
long-term improvements. As such, SSA continues to face the challenge of 
ensuring that the revisions it makes retain the Prototype's most 
positive elements while also reducing its impact on costs.
    We are most concerned about the failure of the Hearings Process 
Improvement initiative to achieve its goals. Hearing office backlogs 
are fast approaching the crisis levels of the mid-1990's. We have 
recommended that the new commissioner act quickly to implement short-
term strategies to reduce the backlog and develop a long-term strategy 
for a more permanent solution to the backlog and efficiency problems at 
the Office of Hearings and Appeals. The new commissioner responded by 
announcing her decisions on short-term actions intended to reduce the 
backlogs, and the agency is preparing to negotiate with union officials 
on some of these planned changes. It is too early to tell if these 
decisions will have their intended effect, and the challenge to 
identify and implement a long-term strategy for a more permanent 
solution remains. It is especially crucial that the Office of Hearings 
and Appeals make significant headway in reducing its backlog quickly, 
as it faces in the next several months a potentially significant 
increase in Medicare appeals due to recent legislative changes in that 
program.
    In addition to the changes the agency is currently considering, it 
may be time for the agency to step back and reassess the nature and 
scope of its basic approach. SSA has focused significant energy and 
resources over the past 7 years on changing the steps and procedures of 
the process and adjusting the duties of its decision makers, yet this 
approach has not been effective to date. A new analysis of the 
fundamental issues impeding progress may help SSA identify areas for 
future action. Experts, such as members of the Social Security Advisory 
Board, have raised concerns about certain systemic problems that can 
undermine the overall effectiveness of SSA's claims process, which in 
turn can also undermine the effectiveness of SSA's redesign 
efforts.\11\ The Board found that SSA's fragmented disability 
administrative structure, created nearly 50 years ago, is ill-equipped 
to handle today's workload. Among other problems, it identified the 
lack of clarity in SSA's relationship with the states and an outdated 
hearing process fraught with tension and poor communication. As the new 
commissioner charts the agency's future course, she may need to 
consider measures to address these systemic problems as well.
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    \11\ See Social Security Advisory Board, How SSA's Disability 
Programs Can Be Improved (Washington, D.C.: SSAB, Aug. 1998); Selected 
Aspects of Disability Decision Making (Washington, D.C.: SSAB, Sept. 
2001); and Charting the Future of Social Security's Disability 
Programs: The Need for Fundamental Change (Washington, D.C.: SSAB, Jan. 
2001). The Board is an independent, bipartisan Board created by the 
Congress and approved by the President and the Congress. Its purpose is 
to advise the President, the Congress, and the Commissioner of Social 
Security on matters related to SSA's programs.
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    Regardless of the choices the agency makes about which particular 
reform initiatives to pursue, SSA's experience over the past 7 years 
offers some important lessons. For example, sustained management 
oversight is critical, particularly in such a large agency and with 
such a complex process. We have found that perhaps the single most 
important element of successful management improvement initiatives is 
the demonstrated commitment of top leaders to change. In addition, some 
initiatives have not enjoyed stakeholder support or have contributed to 
poor morale in certain offices, both of which may undermine the chances 
for success. While it is probably not possible for the agency to fully 
please all of its stakeholders, it will be important for the agency to 
involve stakeholders in planning for change, where appropriate, and to 
communicate openly and often the need for change and the rationale for 
agency decisions. Moreover, because SSA has experienced problems 
implementing its process changes, the agency will need to continue to 
closely monitor the results of its decisions and watch for early signs 
of problems. An improved quality assurance process and a more 
comprehensive set of performance goals and measures can help the agency 
monitor its progress and hold different entities accountable for their 
part in implementing change and meeting agency goals. Thus, we are 
concerned about SSA's lack of progress in revamping its quality 
assurance system. Without such as system, it is difficult for SSA to 
ensure the integrity of its disability claims process.
    Finally, because SSA has had mixed success in implementing 
information technology initiatives in the past, it is vital that the 
agency look back at its past problems and take the necessary steps to 
make sure its electronic disability system provides the needed supports 
to the disability claims process. It is imperative that the agency 
effectively identify, track, and manage the costs, benefits, schedule, 
and risks associated with the system's full development and 
implementation. Moreover, SSA must ensure that it has the right mix of 
skills and capabilities to support this initiative and that desired end 
results are achieved.
    Mr. Chairman, this concludes my statement. I would be pleased to 
respond to any questions that you or other members of the subcommittee 
may have.
Contacts and Acknowledgements
    For further information regarding this testimony, please contact 
Robert E. Robertson, Director, or Kay E. Brown, Assistant Director, 
Education, Workforce, and Income Security at (202) 512-7215. Ellen 
Habenicht and Angela Miles made key contributions to this testimony on 
the status of the five initiatives, and Valerie Melvin was the key 
contributor to the section on information technology.
Related GAO Products
Social Security Administration: Agency Must Position Itself Now to Meet 
Profound Challenges. GAO-02-289T. Washington, D.C.: May 2, 2002.

Social Security Disability: Disappointing Results From SSA's Efforts to 
Improve the Disability Claims Process Warrant Immediate Attention. GAO-
02-322. Washington, D.C.: February 27, 2002.

Information Technology Management: Social Security Administration 
Practices Can Be Improved. GAO-01-961. Washington, D.C.: August 21, 
2001.

Social Security Disability: SSA Has Had Mixed Success in Efforts to 
Improve Caseload Management. GAO/T-HEHS-00-22. Washington, D.C.: 
October 21, 1999.

Social Security Administration: Update on Year 2000 and Other Key 
Information Technology Initiatives. GAO/T-AIMD-99-259. Washington, 
D.C.: July 29, 1999.

SSA Disability Redesign: Actions Needed to Enhance Future Progress. 
GAO/HEHS/99-25. Washington, D.C.: March 12, 1999.

Social Security Disability: SSA Must Hold Itself Accountable for 
Continued Improvement in Decision-making. GAO/HEHS-97-102 Washington, 
D.C.: August 12, 1997.

SSA Disability Redesign: Focus Needed on Initiatives Most Crucial to 
Reducing Costs and Time. GAO/HEHS-97-20. Washington, D.C.: December 20, 
1996.

                                 

    Chairman SHAW. Thank you. Mr. Daub?

   STATEMENT OF THE HON. HAL DAUB, CHAIRMAN, SOCIAL SECURITY 
         ADVISORY BOARD, AND FORMER MEMBER OF CONGRESS

    Mr. DAUB. Mr. Chairman, nice to see you this afternoon. Mr. 
Matsui, thanks on behalf of the Social Security Advisory Board 
for continuing this very vital series of hearings on Social 
Security's disability programs. They have serious problems 
today calling for fundamental changes. The hearings that you 
are holding are an important step toward the reform that needs 
to be in a timely and appropriate way.
    Over the past 5 years, the Board has spent a great deal of 
time studying the Social Security Administration's disability 
programs on a nonpartisan basis. The Board has consulted with 
Agency leaders and with hundreds of managers and employees in 
the field. The Board has examined data and listened to the 
views of many individuals and organizations in the disability 
community. I have a longstanding personal interest in this 
subject as well, both as a former Member of this Committee and 
Subcommittee as well as before that, well before that, an 
attorney representing claimants.
    In my oral testimony today, I would like to focus on the 
issue of the quality of the decisions that are being made in 
the initial disability determination process. In my written 
statement, which I ask to be included in the record, I take a 
broader look at the process.
    There are two items in the written statement which I would 
like to draw to your attention, and they allude a bit to what 
Mr. Ryan was saying in his questions a moment ago. They deal 
with the hearing level, but they have a definite impact on the 
initial process. The first is having the Agency represented at 
the hearing. Doing so would help clarify issues, provide useful 
feedback, which is sorely missing from the process, at the 
initial decision level. The second point is that it is time for 
serious consideration to be given to closing the record. 
Leaving the record open means that the case can change at each 
level of appeal, making it difficult for decisions at higher 
levels to improve the quality of the process at lower levels.
    Organizations get what they measure, and the emphasis in 
the Social Security Administration disability programs has been 
on quantity and processing times. Last January, the Board 
issued a document entitled ``Disability Decision Making: Data 
and Materials.'' The document presents extensive data 
indicating striking differences in outcomes over time from 
State to State and between levels of adjudication. I want to 
make it clear that these problems in the disability program are 
systemic. They are not the result of deficiencies in employee 
performance. In its visits to field offices, State agencies, 
and Offices of Hearings and Appeals around the country, the 
Board has met people on the front lines of the disability 
process. We have found that they work hard and care deeply. All 
parts of the process are under stress, severe stress.
    The quality of the decisionmaking is a longstanding issue, 
but several things have happened since the mid-eighties to make 
the disability determination process even more subjective and 
more complex than previously. Over the same period of time, 
workloads have grown substantially, and resources have been 
constrained. The result is that disability policy and 
administrative capacity are now seriously out of alignment. 
There are also wide variances among States in areas that can 
have a major impact on the quality of work that is performed, 
such as staff salaries, hiring requirements, training, and 
quality assurance procedures. Turnover rates are high in some 
States. The result of lack of experience is especially 
troubling as SSA moves toward increased use of a single 
decisionmaker, examiners who can handle cases without much 
input from a physician.
    So, I have three recommendations that I would like to make 
in my brief time remaining. They are crucial to improving the 
quality of decision making. I want to stress them.
    The Social Security Administration's current quality 
assurance system relies on end-of-line reviews to check and 
report on the quality of the completed case. The Board believes 
that quality is something that should be built into the 
disability determination process, not something that should be 
graded at the end of the process. So, to make quality a central 
objective of the disability programs, the Administration needs 
to develop and implement a new quality management system that 
would apply to all levels of adjudication. Quality management 
is a process of ensuring that the right things are done well 
the first time at every level of the process.
    Second, SSA should develop a single presentation of policy 
to guide all adjudicators. It should also enhance the medical 
and vocational expertise of its staff.
    Last, there is a gap between what is required by policy and 
the administrative capacity to carry it out. The gap is large 
now and will grow as baby boomers age and become more likely to 
become disabled. The Administration's actuaries estimate that 
by 2012 the number of cases to be decided will grow by 9 
percent, to 2.6 million per year. This growth threatens to 
overwhelm a policy and an administrative infrastructure that is 
already inadequate to meet the needs of the public. Bridging 
the gap between policy and administrative feasibility will 
require introducing changes in policy, institutional 
arrangements, funding, or most probably in all three facets of 
this interwoven process.
    I have listed at the end of my statement, Mr. Chairman, the 
five publications that our Board has presented about SSA's 
disability program: an August 1998 on how SSA's disability 
programs can be improved; a September 2000 report on selected 
aspects of disability decisionmaking; a January 2001 report on 
disability decisionmaking; and the most recent one that was the 
subject of the hearings a couple of weeks ago, Mr. Chairman--a 
January 2000 report on charting the future of Social Security's 
disability programs and the need for fundamental change.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Daub follows:]
  Statement of the Hon. Hal Daub, Chairman, Social Security Advisory 
                  Board, and former Member of Congress
  Reforming the Disability Insurance and Supplemental Security Income 
                         Disability Program\1\
    The Nation's two primary disability programs--Social Security 
Disability Insurance (DI) and Supplemental Security Income (SSI) 
disability--are a vital but complex part of our social insurance and 
welfare systems, requiring vigilant attention in order to keep their 
policy and administrative structures sound and up to date.
---------------------------------------------------------------------------
    \1\ For more information on this subject, see the Advisory Board's 
January 2001 reports, Charting the Future of Social Security's 
Disability Programs: The Need for Fundamental Change and Disability 
Decision Making: Data and Materials, as well as How SSA's Disability 
Programs Can Be Improved, issued in August 1998. The reports are 
available at the Board's website, www.ssab.gov.
---------------------------------------------------------------------------
    These programs have grown steadily over the years to the point 
where in fiscal year 2002 they are expected to account for nearly $100 
billion in Federal spending, or nearly five percent of the Federal 
budget. They require a growing portion of the time and attention of 
Social Security Administration employees at all levels. In 2002, about 
two-thirds of the agency's $7.7 billion administrative budget, $5.2 
billion, is expected to be spent on disability work.
    As the baby boomers reach the age of increased likelihood of 
disability the growth in these programs will accelerate. The Social 
Security Administration's actuaries project that between now and 2012 
the number of DI beneficiaries will increase by 37 percent. SSI 
beneficiaries are projected to increase by 15 percent. The projected 
growth in the number of disability claimants threatens to overwhelm a 
policy and administrative infrastructure that is already inadequate to 
meet the needs of the public.
    In recent decades, disability policy has come to resemble a mosaic, 
pieced together in response to court decisions and other external 
pressures, rather than the result of a well thought out concept of how 
the programs should be operating. Compounding the problem, the 
disability administrative structure, now nearly a half century old, has 
been unable to keep pace with the increasing demands that have been 
imposed upon it. Policy and administrative capacity are dramatically 
out of alignment in the sense that new and binding rules of 
adjudication frequently cannot be implemented in a reasonable manner, 
particularly in view of the resources that are currently available.
    It has been more than two decades since either the Congress or the 
Administration has reviewed in a comprehensive manner the question of 
whether the administrative structure established nearly five decades 
ago should be strengthened or changed. Numerous regulations and rulings 
affecting how disability decisions are made have been implemented 
without review by policy makers. The question of whether the definition 
of disability for adults should be changed has not undergone close 
examination for more than 30 years.
                   Major Issues Need to Be Addressed
Are disability decisions consistent and fair?
    There are substantial data that show striking differences in 
decisional outcomes over time, among State agencies, and between levels 
of adjudication, raising the question of whether disability 
determinations are being made in a uniform and consistent manner.
    For example, in 2001 the percentage of disability applicants whose 
claims were allowed by a State agency ranged from a high of 66 percent 
in New Hampshire to a low of 27 percent in Tennessee. As another 
example, a strikingly large percentage of cases denied by State 
agencies are reversed upon appeal to an administrative law judge 
hearing, and, at least at the State level, there appears to be no 
correlation between high State agency allowance rates and low ALJ 
reversals of these decisions. Both State agency and hearing level 
allowance rates have varied substantially over the years. The hearing 
level allowance rates (allowances as a percent of all decisions) for 
both DI and SSI disability stood at 58 percent in 1985, grew to nearly 
72 percent in 1995, fell to 63 percent in 1998, and grew again to 66 
percent in 2000 and 68 percent in 2001.
    For many years both Members of Congress and others who have studied 
the disability programs have expressed concern about variations such as 
these. Analysts have identified many factors which they believe 
contribute to inconsistencies in outcomes, such as economic and 
demographic differences among regions of the country, court decisions, 
the fact that the claimant has no opportunity to meet with the decision 
maker until the face-to-face hearing at the ALJ level, and that the 
record remains open throughout the appeals process.
    But many who are knowledgeable about the programs--including 
disability examiners in the State agencies as well as administrative 
law judges--have long believed that there are also reasons relating to 
program policy, procedures, and structure that are responsible for some 
if not many of these inconsistencies. In a recent study of SSA's 
quality assurance processes, the Lewin Group found that although the 
information on current consistency of the disability programs is 
somewhat mixed and not as definitive as one would like, ``The evidence 
of inconsistencies is compelling * * *.'' \2\
---------------------------------------------------------------------------
    \2\ The Lewin Group, Inc. and Pugh Ettinger McCarthy Associates, 
L.L.C., Evaluation of SSA's Disability Quality Assurance (QA) Processes 
and Development of QA Options That Will Support The Long-Term 
Management of The Disability Program, June 21, 2000, p. C-24.
---------------------------------------------------------------------------
    Despite the long-standing concern about consistency, the agency has 
no effective mechanism to provide the information needed to understand 
the degree to which the programs' own policies and procedures--
including their uneven implementation--are causing inconsistent 
outcomes in different regions of the country and different parts of the 
disability system. As long as variations in decision making remain 
unexplained, the integrity and the fairness of the disability programs 
are open to question. These programs are too valuable and important to 
the American public for this issue not to be addressed.
           DI and SSI Disability Determinations and Appeals*


        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]



                        Percentage of Allowances


                   Initial Decisions                      72.5
                    Reconsiderations                       7.5
                            Hearing Level                 19.8
                     Appeals Council                        .2

Note: Due to rounding, data may not always total 100%

        * Data relate to workloads processed (but not necessarily 
        received) in fiscal year 2001, i.e., the cases processed at 
        each adjudicative level may include cases received at 1 or more 
        of the lower adjudicative levels prior to fiscal year 2001. Not 
        all denials are appealed to the next level of review.
         ** Includes ALJ decisions not appealed further by the claimant 
        but reviewed by the Appeals Council on ``own motion'' 
        authority.
         *** Remands to ALJs by the Appeals Council and courts result 
        in allowances in about 60 percent of the cases. Court decisions 
        include decisions on continuing disability reviews. Figures for 
        other levels are for claims only.
LIs disability policy being developed coherently and in accord with the 
        intent of the Congress?
    Although Congress has not changed the law defining disability for 
adults for more than 30 years, the determination of what constitutes 
disability has changed in fundamental ways. For example, there has been 
a gradual but persistent trend away from decisions based on the medical 
listings to decisions that increasingly involve assessment of function. 
Today, many more decisions involve mental impairments than was the case 
in the past. In addition, changes in agency rules mean that now all 
adjudicators must adhere to more complex and intricate requirements 
regarding such matters as determining the weight that should be given 
to the opinion of a treating source and making a finding as to the 
credibility of claimants' statements about the effect of pain and other 
symptoms on their ability to function. All of these changes have made 
decision making more subjective and difficult.
    These policy changes have been made through changes in regulations 
and rulings. A number of the most significant changes have grown out of 
court decisions, many of which have not been appealed. None of them 
have been reviewed by the Congress as to their effect on decision 
making or whether they are operationally sustainable for a program that 
must process massive numbers of cases.
Can today's administrative structure support future program needs?
    When the DI program was enacted in 1956, the expectation was that 
the program would be relatively small. But over the last half century, 
the original Federal-State administrative structure has had to 
accommodate a growth in program size and complexity that it has been 
ill equipped to handle. In addition to working within a fragmented 
administrative structure, employees at all levels have been buffeted by 
periodic surges in workloads and funding shortfalls.
    At the present time, all parts of the applications and appeals 
structure are experiencing great stress with every indication that the 
difficulties each is facing will continue to grow unless changes are 
made. There are about 15,000 disability adjudicators throughout the 
disability system. Their qualifications and the rules and procedures 
they follow differ, sometimes dramatically. For example, adjudicators 
at the State agency and ALJ levels may receive vastly different 
training and draw upon very different resources. Factors such as these 
raise questions about how well the administrative structure will be 
able to handle the growing workload.
LIs Social Security's definition of disability appropriately aligned 
        with national disability policy?
    There are many who believe that the Social Security Act definition 
of disability, which requires claimants to prove they cannot work in 
order to qualify for benefits, is inconsistent with the Americans with 
Disabilities Act and is at odds with the desire of many disabled 
individuals who want to work but who still need some financial or 
medical assistance. Recent Ticket to Work legislation is aimed at 
helping people who are already on the disability rolls to return to 
work by providing increased services and new incentives, but does not 
fully address these basic inconsistencies.
    In recent testimony the Consortium of Citizens with Disabilities 
questioned whether the Social Security definition of disability 
adequately captures ``the spectrum and continuum of disability today. 
Does it reflect the interaction of vocational, environmental, medical 
and other factors that can affect the ability of someone on SSI or SSDI 
to attain a level of independence?''
             Reform Should Have Clear Goals and Objectives
    Reform of the disability programs must be evaluated within the 
context of clear goals and objectives:
         All who are truly disabled and cannot work should 
        receive benefits.
         Those who can work but need assistance to do so 
        should receive it.
         Vocational rehabilitation and employment services 
        should be readily available and claimants and beneficiaries 
        should be helped to take advantage of them.
         Claimants should be helped to understand the 
        disability rules and the determination process.
         The disability system should provide fair and 
        consistent treatment for all.
         The disability system should ensure high quality 
        decisions by well-qualified and trained adjudicators.
         The disability system should provide expeditious 
        processing of claims. When cases are complex and require more 
        time, claimants should be informed so that they will understand 
        why there is delay.
The Elements of Reform
    To build a disability system that can meet the challenges of the 
future will require changes in policy, procedure, and structure. The 
Board has proposed a number of changes that we urge policy makers in 
the Congress and the Administration to consider. These changes would 
represent fundamental reform. In summary, they include the following 
elements.
Strengthen SSA's capacity to manage
    SSA's ability to manage the disability programs is undermined by 
three major shortcomings--
    There is a lack of management accountability. Nearly every staff 
component of the agency has a role in administering the disability 
programs.
    The policy infrastructure is weak. There are too many voices 
articulating disability policy. Adjudicators in different parts of the 
system are bound by different sets of rules.
    Important policy elements are out of date. As the result of 
downsizing and lack of new staff to replace those who have left the 
agency through retirement or otherwise, the level of expertise in areas 
such as medical and vocational factors has declined.

The agency lacks a quality management system that can provide the 
comprehensive information that is needed for accurate and consistent 
decision making.

    The Board recommends that SSA address these shortcomings by----

         organizing the agency so as to ensure greater 
        accountability and
         unified direction for the disability programs, 
        developing a single presentation of policy to guide all 
        adjudicators and enhancing the medical and vocational expertise 
        of its staff, and
         developing and implementing a new quality management 
        system that will (1) provide the information that policy makers 
        and administrators need to guide disability policy and 
        procedures and (2) ensure accuracy and consistency in decision 
        making.
Change the disability adjudication process
    Strengthen the Federal-State arrangement.--Although the law gives 
SSA the basic responsibility for administering the disability programs, 
it requires that disability decisions be made by State agencies rather 
than by SSA itself. The Federal Government pays 100 percent of the 
cost.
    Whether the disability decision making authority should belong to 
the States or to SSA has been a subject of debate since Congress 
established the Federal-State arrangement nearly five decades ago. 
Proponents of federalizing the process argue that the present structure 
is inherently difficult to manage and that federal administration is 
necessary to ensure high quality, uniform administration throughout the 
country.
    The issue of federalizing the disability determination process 
needs to be examined in the light of anticipated future needs of the 
disability programs. In the short term we believe it is necessary to 
strengthen the present Federal-State arrangement. Underpinning this 
view is the fact that SSA currently lacks the administrative and 
staffing capacity to take on the significant additional responsibility 
that federalization would entail. Nevertheless, the present arrangement 
is inadequate to meet the needs of the disability programs today, and 
problems need to be addressed as quickly as possible.
    SSA's regulations should be revised to improve the agency's ability 
to manage State agency operations and to provide greater national 
uniformity. States should be required to follow specific guidelines 
relating to educational requirements and salaries for staff, training, 
carrying out quality assurance procedures, and other areas that have a 
direct impact on the quality of their employees and their ability to 
make decisions that are both of high quality and timely.
    Reform the hearing process.--The formal right of claimants to a 
hearing was adopted in 1940 with only 12 ``referees'' to hear appeals. 
But with the enactment of the disability programs, the hearing process 
has become massive, with about 1,000 administrative law judges and 
nearly 7,000 other employees.
 DI and SSI Claims Process: Steps and Average Processing Time* FY 2001



        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]







*Processing times shown must be added at each step to find the total
 time

**Field office processing time includes all components of the field
 office work, including taking the claim and processing it after the
 State agency makes a determination

***SSA reports DDS initial processing time by programs; average total
 processing time (DI and SSI) is not available



    Along with becoming a much larger operation than originally 
envisaged, SSA's hearing process has also changed as the result of the 
fact that most claimants are now represented by attorneys or other 
representatives. Because the agency is not represented as well, many 
believe the hearing process has become too one-sided. We think that 
having an individual present at the hearing to defend the agency's 
position would help to clarify the issues and introduce greater 
consistency and accountability into the adjudicative system and, as in 
a more traditional court setting, would help to carry out an effective 
cross-examination. Consideration should also be given to allowing the 
individual who represents the agency at the hearing to file an appeal 
of the ALJ decision.
    We also recommend that the Congress and SSA review again the issue 
of whether the record should be closed after the ALJ hearing. Leaving 
the record open means that the case can change at each level of appeal, 
requiring a de novo decision based on a different record. Many ALJs 
have told the Board that leaving the record open gives attorneys an 
incentive to withhold evidence in order to strengthen an appeal at a 
later stage, and provides an inherent incentive to withhold evidence in 
order to prolong the case and increase fees. Other ALJs do not believe 
that representatives hold back evidence for these reasons. If evidence 
is held back, they maintain, it is because the rules for presenting 
evidence are lax and representatives do not take the time or spend the 
money to obtain additional evidence unless required to do so as a 
result of an unfavorable hearing decision. Closing the record would 
heighten the need to develop the record as fully as possible before the 
decision is made in order to ensure that claimants are not unfairly 
penalized. Closing the record would not preclude filing a new 
application.
    Third, we recommend that consideration be given to establishing a 
system of certification for claimant representatives and to 
establishing uniform procedures for claimant representatives to follow. 
The objective would be to provide for a more orderly and expeditious 
hearing procedure than currently exists.
    Consider changes in the current provisions for judicial review.--
Concerns about national uniformity in policy and procedure have led 
many to consider whether there is a need for change in the current 
provisions for judicial review. Under the current system, Federal 
courts frequently issue decisions that vary from district to district 
and circuit to circuit. Over the years a number of bills have been 
introduced in the Congress that would create either a Social Security 
Court or a Social Security Court of Appeals that would specialize in 
Social Security cases, thus establishing a framework that could produce 
greater uniformity in decision making. The statutorily-established 
Commission on Structural Alternatives for the Federal Courts of 
Appeals, chaired by Justice Byron White, stated in its final report in 
December 1998 that Congress should seriously consider proposals that 
would place judicial review of Social Security cases in an Article I 
court. We believe that the question of whether existing arrangements 
for judicial review should be retained or replaced by a new court 
structure deserves careful study by the Congress and the Social 
Security Administration.
Align policy and administrative capacity
    Nearly every part of the Social Security Administration has been 
affected by the downsizing and restraint on government hiring that has 
occurred over the last two decades. But for various reasons, the 
disability programs in particular have tended to suffer. As resources 
have been constrained, SSA has issued numerous regulations and rulings 
that require more time and expertise on the part of all adjudicators 
than was the case in the past and workloads have grown substantially. 
The result is that disability policy and administrative capacity are 
now seriously out of alignment and threaten to become more so as the 
agency moves toward national implementation of several new initiatives.
    Of particular importance are the ``process unification'' rulings 
issued by SSA in 1996, which were aimed at bringing State agency and 
ALJ decisions closer together. Many State agency administrators claim 
that some of them are so complex that State agency employees cannot 
adhere to them without spending substantially increased time on a large 
percentage of the cases they are adjudicating. In addition, these new 
rules for adjudicating cases require analytical and writing skills that 
many employees do not have.
    Both the Administration and the Congress will share the 
responsibility for making the changes that are needed to ensure that 
disability policy and administrative capabilities are properly aligned. 
This will likely involve a combination of changes in policy, processes, 
institutional arrangements, and funding. In addition, the Board has 
urged the agency to develop a comprehensive workforce plan and base its 
appropriations requests on this plan, as directed by the 1994 
independent agency legislation. We also urge the Administration and the 
Congress to exclude SSA's administrative budget for Social Security 
from any statutory cap that imposes a limit on the amount of 
discretionary government spending.
LExamine ways to improve incentives for early rehabilitation and 
        employment
    The issue of whether the present structure of assistance to the 
disabled provides sufficient help and incentive for employment needs 
careful review. Many experts believe that the most effective 
intervention is to help disabled individuals return to work as quickly 
as possible. More comprehensive research on ways to improve incentives 
for rehabilitation and employment early in a period of disability is 
needed. This may include new or different arrangements for cash or 
medical benefits or for rehabilitation and employment services. The 
experience of other countries and of both private and public employers 
in the United States should be taken into account.
    Included as part of this comprehensive research effort should be a 
study of whether providing some type of short-term disability 
assistance, combined with rehabilitation services, would improve 
assistance for those who have disabilities while also relieving 
pressure on the permanent disability programs. The studies that are 
conducted should include cost-benefit analyses. Where needed, specific 
legislative authority and funding for these studies should be provided.

    [Attachments are being retained in the Committee files.]

                                 

    Chairman SHAW. Mr. Daub, what was your second 
recommendation?
    Mr. DAUB. The second recommendation is on page 5 at the top 
of our oral presentation, which is to develop a single 
presentation of policy to guide all adjudicators.
    Chairman SHAW. Is that adopting rules of procedure?
    Mr. DAUB. So to speak. It would be. The Agency's 
regulations should be revised to require States to follow 
specific Federal guidelines relating to educational 
requirements and to salaries for: staff, initial and ongoing 
training, quality assurance procedures, and other areas that 
have a direct impact on the quality of their employees and 
their ability to make decisions. Regulations should also ensure 
that State hiring freezes will not apply to State Agency 
disability operations. These programs are national programs, 
and SSA has an obligation to ensure equal treatment for all 
claimants wherever they reside.
    Chairman SHAW. Mr. Robertson, you expressed disappointment 
at the pace at which things are going. Could you frame that 
better for us and a position in time? The Commissioner was late 
coming online, and anyone who comes into a position like that, 
you don't want them to start making wholesale changes until 
they can get their sea legs, so to speak. Could you comment 
further or expand further as to exactly what you have seen 
since the new Commissioner has come online?
    Mr. ROBERTSON. Well, let me just start by saying that we 
like a lot of what the Commissioner has done so far. She has 
taken actions that are very consistent with some of the things 
that we have been recommending for a long time. For example, 
she has elevated a senior manager to the position of a QA 
adviser. We have been emphasizing, as you know, the need to get 
a QA program underway and in place for quite a long time.
    Likewise, we like the emphasis that she has placed on 
recognizing the importance of Information Technology solving 
some of the problems that the system is currently experiencing. 
Frankly, we like some of the short-term solutions that she has 
suggested for addressing the hearings office problems that we 
have seen.
    Right now, it is just a little bit too early to get a good 
handle on how effective these actions will be. If I could just 
make an observation--I was sitting back earlier in the hearing 
listening to the discussion. Being relatively new to the area, 
it struck me that one of the fundamental differences that I see 
in discussions so far today is that there is agreement on what 
the problem is. There is inconsistency in the decisionmaking. 
There is a lengthy process. It is a costly process. There is 
also, it seems to me, some agreement on some of the actions 
that should be taken. Trust me, having looked at other areas, 
that agreement is not always there. So, I think this is a good 
thing. Again, being new to the area, it was a personal 
observation and it was kind of a nice thing to see.
    Chairman SHAW. Mr. Robertson, are you saying that Mr. 
Matsui and I disagree on some things pertaining to Social 
Security?
    Mr. ROBERTSON. Never, never.
    [Laughter.]
    Chairman SHAW. Mr. Matsui?
    Mr. MATSUI. I won't respond to that, Mr. Chairman.
    Mr. Robertson, your analysis actually goes back years and 
years in terms of the problems that we have had. I recall Mr. 
Daub does as well--in the early eighties we were having 
problems with both administrative law judges. Obviously the 
whole issue of disability claims and the backlog was 
significant then. It has obviously grown much larger now.
    You have said that the short-term solutions by the SSA 
Commissioner and Mr. Gerry being implemented now are good 
short-term solutions. Then you are basically saying where do we 
go from here? I think that is really the crux of the issue. 
Obviously time will have to be given to them to put together 
the long-term plan.
    In your analysis--and perhaps I am asking a question that 
you won't want to answer, but is it a management problem in 
terms of how these things are being done? Is it a structural 
problem? Is it a lack of money? Or is it all three of those? If 
it is all three of those, or any one of those, could you kind 
of elaborate on that in terms of your analysis of the long-term 
problems? How we can really address these issues? Obviously, we 
are going to wait for the Administration to come up with their 
package, and we are all going to work with them because we all 
want to solve this problem. As you have said, we are all 
working in agreement here in terms of our goals. What is your 
analysis of the long-term approach that we need to be taking, 
in those three areas or any other areas that you might want to 
raise?
    Mr. ROBERTSON. You have hit three areas that are all 
contributors to the problem. The one that maybe you didn't hit 
directly that I would like to re-emphasize--and I mentioned it 
in my short statement--is that, I think everybody should 
realize that we are dealing with an extremely complex process 
that involves complex judgments, multiple appeals levels, and 
lots of adjudicators. So, inherently, it is a difficult process 
to get your hands around, simplify and say here is the silver 
bullet that is going to fix everything. So, I would add that--
the inherent complexity of the process--to your list of factors 
that have made the progress slow.
    I would also add that the solutions--and I am going to say 
this carefully--the solutions, in my view, to the problems 
should not be narrowly focused. We should be looking very 
broad. We should be looking at some of the systemic problems, 
the fragmentation problems that are part of this overall 
problem that we are talking about this morning.
    So, my only suggestion as we are looking for causes and for 
potential solutions to the problem, is that: we not look 
narrowly, that we look broadly, that at least everything gets 
on the table for discussion to begin with before we eliminate 
things, and that we look at things system-wide as opposed to 
one segment or another of the system.
    Mr. MATSUI. Okay. I think I understood you. I am not sure 
if I did. I think I understand your initial part of your 
comments in terms of the length it takes. As somebody who 
practiced law before coming here, a normal case that goes 
through a superior court in California would take through the 
appeal process 4 or 5 years, perhaps. We are talking about 
something a lot simpler in terms of adjudicating a disability 
claim. We do have statistics that show that a claim actually is 
only seen for approximately 7 days or so. The rest is appeal 
time, or 500 days, 500-plus days, due to the fact that we have 
a backlog.
    What do you think is an ideal time? Let's say that the 
backlog was cleared, and we had an efficient system going 
through the entire process. Could you make that estimate? Maybe 
you can't.
    Mr. ROBERTSON. I can't make that estimate. I know that 
obviously we can do better than we are doing now, but I don't 
have an ideal time in mind. I think we are going to be 
talking--or you are going to be speaking with some QA people 
later on this afternoon that have looked at benchmarking other 
organizations. They may be able to provide some insights into 
that question.
    Mr. MATSUI. Could I ask you this question--and maybe, 
again, you think it would make some sense to try to figure out 
what should be the average time that a claim is adjudicated? 
The reason I ask that, how do we have a benchmark or how do we 
have some goals?
    Mr. ROBERTSON. I think that is a very difficult question 
that you raise. I think that you can look to other 
organizations for benchmarking. Ultimately, you have got to 
look back at your process and say what is it that I want? What 
do I want to accomplish with this process? That is going to----
    Mr. MATSUI. Process requirements, yes. Okay. Thank you.
    Chairman SHAW. Mr. Brady?
    Mr. BRADY. Thank you, Mr. Chairman.
    Both the testimonies were excellent in different ways. Two 
of the statements that struck me were in Mr. Daub's testimony, 
but you addressed them a minute ago, Mr. Robertson. One of them 
was that it has been 30 years since Congress has changed the 
law defining disability. In that timetable, the intervening 
years, the disabled community itself sort of passed the process 
by with new technology and new approaches is able to do more in 
occupational areas than ever before. The decisionmaking is more 
complex with the determiners as a result of that. Also, as you 
would imagine, in 30 years a lot of complex and conflicting 
legal rulings--that have made it more difficult to consistently 
apply the decisionmaking across the way.
    The second point you make is that it has also been about 
two decades since either Congress or the administration has 
really taken a fresh look at how the whole structure and 
process ought to work. I guess that is my question for both of 
you. Are you in different ways saying it is time for the 
administration to think outside the box in defining, in 
developing a system that really works? Is it time for Congress 
to step up to try to help remove some of the complexity or the 
conflicting legal decisions over the years that make it tough 
for the system to work? I would open it up to both of you.
    Mr. DAUB. I would answer in this way: First, I think the 
Commissioner is very dedicated to summoning the resources of 
the administrative leadership of the Social Security program to 
try to make as many efficient decisions inside the system 
without legislative action, if that is possible. I think that 
the short-term goals she has established are starting to make 
sense and should produce some early results. I think that is an 
important point to emphasize.
    In our testimony, you will recall, I talk on behalf of the 
Board about three things that we believe can be done by the 
leadership of the Social Security Administration, 
administratively. They deal with the quality of the decision 
making, not the quantity or processing. Focusing on the quality 
should lead to less confusion in the early period of the 
determination process, which can take 100, 106, 102, 115 days, 
according to various studies. If it just took 3 calendar 
months, to make a decision that wouldn't be bad for a very 
subjective judgment that is being made about assessing 
somebody's degree of pain, their inability to take occupational 
therapy and to do alternative work to make a living. The 
Disability Determination Services are short of people who are 
well trained--it takes about 2 years to train these folks to be 
able to make those sound early judgments. We have high turnover 
coming, a very aging work force, and a crazy quilt of rules and 
regulations from the courts that have impacted the decision 
process. Many of them never appealed, so we don't have any 
consistency from region to region.
    I think another important thing is that the administrative 
law judge system is just a paradise for extending matters as 
long as you can--especially if you hire a lawyer who is not 
forthcoming with the evidence or holds back or has something 
that may be a little damaging to your case. The administrative 
law judge wears two hats: the decisionmaking hat of having to 
decide the fairness of the Disability Determination Services 
decision, to adjudicate whether the appeal should be approved 
or not; and the interrogator representing the taxpayer and the 
system, sort of attacking the credibility of the witnesses and 
the claimant. So, the claimant and lawyer perceive the judge as 
almost being adversarial in a way.
    So, part of the problem is attorneys take cases all the way 
through the court appeals process as long as they can because 
the record is not closed. Then the case gets up to the Federal 
district judge, where it gets remanded with an automatic $2,000 
attorney's fee being paid for 30 seconds' worth of work. So, 
the longer the case is strung out, the more the lawyer makes. 
What is suffering is the process, the backlogs, and the 
claimants behind them.
    So, I think that a fundamental reform can be accomplished 
by internally getting some of these things done that we are 
talking about today with the encouragement of this Committee. 
Second, I think Congress should legislate. I think it is time 
in the next year or so that this Committee take a strong look 
at things like: the record being closed, whether there should 
be an Article I court specialized in disability case matters, 
and whether there should be a process where there is a State's 
lawyer, a Federal Social Security lawyer, that represents the 
taxpayer side of the issue. Then after that hearing, close the 
record.
    Those are things that I think need to be looked at by this 
Committee.
    Mr. BRADY. Thank you. Mr. Robertson?
    Mr. ROBERTSON. The short answer to your question, from my 
perspective, is that in looking for potential solutions to the 
problems that we are talking about today, yes, indeed, people 
should be thinking outside the box. Of course, that means, 
however, that those outside-the-box solutions are going to have 
to be discussed in terms of here are the pluses, here are the 
minuses, and there is going to have to be a lot of 
communication with you about the pluses and minuses of these 
types of solutions.
    Mr. BRADY. Mr. Chairman, you need to know, in the 
questioning I am not suggesting that we have legislative 
solutions for all this, but neither do you want to abdicate 
responsibility. It seems that at some point this has gotten to 
such a critical situation. We all ought to be looking at ways 
that--roles we can play in helping solve this. Thank you, Mr. 
Chairman.
    Chairman SHAW. Mr. Becerra?
    Mr. BECERRA. Thank you, Mr. Chairman. Thank you very much 
for empaneling the witnesses and holding this hearing. Thank 
you for having come.
    Let me go back to a question that Mr. Matsui raised. In 
preparation for this hearing, I asked my district staff to give 
me a sense of what we are encountering when it comes to these 
cases, these disability claims. I was told by the senior 
caseworker in my office that typically it takes someone in my 
congressional district 4 to 5 months to get an initial 
determination, about another 3 or 4 months to get a 
reconsideration, about a year to get a decision from the judge, 
an ALJ, and about 2 to 3 years to get a decision from the 
Appeals Council. Of course, there are a few who do go on to 
Federal court. I suspect that is pretty consistent throughout 
with other folks as well.
    Given everything you have said, and having looked over some 
of the written testimony, is there some way that we can reduce 
that latter portion of time? It seems that when you have to 
appeal your case--and oftentimes, many of the claimants are--
you are going to be waiting a lot longer the last steps, when 
you probably are most in need. Now you are starting to pay an 
attorney to help you take your case forward. So, is there any 
thought being given to how you reduce the wait between the 
decision by the ALJ and any decision that might be rendered by 
the Appeals Council, which at least in Los Angeles has resulted 
in, in some cases, 2 to 3 year waits?
    Mr. ROBERTSON. Is that a question for me?
    Mr. BECERRA. Mr. Robertson, Congressman Daub, either one.
    Mr. DAUB. The Social Security Advisory Board has addressed 
it since 1998, and I think there are things that can be done. I 
think to Mr. Brady's question, I said that it is time for 
Congress to look at the process. Although I believe much can be 
done administratively, the administrative law judge appeals 
process, where you are focusing, is going to require 
congressional action in order to create a new process.
    Mr. BECERRA. Yes, but I am not sure I would like to see the 
record closed.
    Mr. DAUB. Let's talk about that for a minute, if I may. 
Closing the record is what proves the American system of 
jurisprudence. If you have any other type of court case of any 
complexity, for mental stress, pain, emotion, shock, whatever 
it is, at some point the record close. I am not saying when, 
now. The concept is that of closing the record so that the 
judge isn't at each next level considering new evidence, almost 
taking the case through a de novo new process as if you start 
all over. The fact is that the system currently is not cutting 
off one set of factual considerations, forcing the claimant to 
put his best evidence in at that point based on the disability 
claim to get a determination, knowing that they can come back 
and refile if there is further degeneration in the spine or 
other illnesses, or if they get dismissed at some level they 
can come back and refile, which you can do without prejudice in 
any other type of court case.
    Mr. BECERRA. See, I would look at it differently. I would 
say that one of the difficulties we are having is that you are 
having claimants who, for the most part, are not versed in the 
law. They don't know how to best marshal the facts forward, and 
it is not until they get to the ALJ stage that when they do 
finally hire an attorney because now it is getting pretty late 
in the process. If they do hire someone who can say, by the 
way, you should have raised these facts. To me that is two 
things. It spells out two solutions. One is we do a much better 
job--and principally that means putting more resources at the 
early stage so that these claimants do put forward all of their 
evidence----
    Mr. DAUB. Well, that is what we should do. I agree with 
that.
    Mr. BECERRA. If we do that, then I think you will have a 
fairly complete--without having to close the record, and 
ultimately I think what we have to try to do is figure out a 
way to get from the ALJ through the Appeals Council in a much 
faster way. To me that means if you put more resources in at 
the initial stage or you make that initial determination by 
someone at the Agency, that what you are going to do is you are 
going to prevent the difficulties that I think you raise 
rightfully, that a judge is having to consider new evidence for 
the first time, which should have been developed way at the 
beginning, at the first stage, and not depend so much on the 
claimant to try to marshal together his or her best case. I 
think we are wasting a lot of time in not allowing them to put 
their best foot forward. We shouldn't be adversarial in any way 
with them because if they have a legitimate claim, we owe them 
those benefits, and we should develop their case as much as 
possible.
    Mr. DAUB. We should. We should make sure that it is a 
proper claim, that it is not fraudulent, that it is being paid 
properly. We have a system that also has a substantial 
insolvency issue. The oversight over claims paid and the 
redetermination process also lags dramatically.
    So, it is complex, but to be sensitive to the disability 
claimant, that is truly, compassionately what we should have as 
our focus. On page 5 of the formal testimony that our Board has 
presented to you today, we list the objectives that reform of 
the system should have, that all who truly are disabled and 
cannot work should receive their benefits.
    My testimony on behalf of the Board today emphasized 
administratively what we do to improve the quality of the 
determination to begin with. I couldn't agree with you more 
that that is where the emphasis on reform should be.
    In the end, there will be those cases that will go into the 
system of appeal. That system, too, if it is reformed, will put 
pressure on more quality work up front early on. If you leave 
that system open-ended so you are not happy with the way things 
are going through the administrative process, knowing you are 
going to get a better deal from the court system, which is what 
is basically the result now, you will wait because you will get 
a better deal if you take it to court.
    Mr. BECERRA. Mr. Chairman, I know you have been gracious 
with the time----
    Mr. DAUB. So, I think that is the dilemma that you face.
    Mr. BECERRA. Congressman Daub, I think the difficulty is 
the courts which have to finally dispense the justice are 
saying we see from the record, which should have been better 
developed at the beginning--that this claimant had a cause. The 
process didn't allow the claimant to fully develop at the 
initial stages, so the ALJ or the Advisory Council could come 
up with a good decision. It is now left up to the courts. 
Instead of expending so much money and time and causing the 
claimant so much grief and loss of money, let's get our 
determiners to get out there and virtually tell these folks you 
are missing this piece of evidence. Get it out here, because 
the earlier we do it, the quicker we can dispense with those 
cases that are truly frivolous and deal with those that are 
really legitimate and come up with a solution. If there is an 
appeal, then you are going to have a good record because the 
ALJ will have all the evidence he or she needs. So will the 
Advisory Council, and you will never have to go to court to do 
that.
    Mr. Chairman, you have been gracious with the time. Thank 
you to the two of you for your testimony.
    Chairman SHAW. Thank you. I think this is insightful, and I 
think we need to do a little more work. It is difficult sitting 
here, never having tried such a case, and trying to figure out 
how we can solve the problems involved in the process.
    Years and years ago, I was a municipal judge. What we would 
do is if the defendant was represented by counsel, we would 
always bring in the city prosecutor. If he were not, then it 
would just go forth almost as an administrative type of 
proceeding.
    Maybe what we have here is a system that is a hybrid which 
really doesn't focus correctly in either instance. It is one 
size fits all, so it is like you are either a size 9\1/2\ or 
10\1/2\. So, we will give you a 10. I think we need to maybe 
take a look at the process for people that have attorneys and 
people that do not to try to expedite the process.
    Mr. DAUB. Mr. Chairman, Federal judges tell me--if I might 
just briefly comment, I have talked to a number of Federal 
judges in the last couple of months since I have been 
privileged to have this assignment. They commiserate with the 
administrative law judge. I say this kiddingly because I know 
that they are here today, they are listening, they are 
watching, and they are my friends. They ought to wear robes, 
but they don't. They have a tough job to wear both hats, 
almost, in that process.
    So, if there is a way to force quality into that record on 
the way up, we all feel that is the better approach. There is a 
way--and you said it, when you were a municipal judge. There is 
a way that you get some balance in the system. You force it to 
come to the court better prepared so that the playingfield is 
level. The end result is that we want fair and uniform 
efficient determination. I think you are on to something.
    Chairman SHAW. Who presents the case to the judge 
initially? Is it----
    Mr. DAUB. The lawyer for claimant normally, on appeal in 
the ALJ system.
    Chairman SHAW. Is there representation from the Social 
Security Administration who made the first determination?
    Mr. DAUB. Just the file that has been submitted.
    Chairman SHAW. So, you are counting on the judge having 
thoroughly read the file before the case.
    Mr. DAUB. That is what you are counting on.
    Chairman SHAW. I would assume that that is----
    Mr. DAUB. I think most--I certainly think those judges make 
an effort to read every file, but there is also a backlog 
there. They are overwhelmed. They've got a huge load on them in 
many jurisdictions. As that Federal judge commented to me, 
these cases get to the Federal court just almost like they have 
been thrown into a shoe box. The Federal judge then has to feel 
compelled to go sort that case out from the beginning.
    Chairman SHAW. How many cases a day would a typical judge 
hear?
    Mr. DAUB. I am sorry?
    Chairman SHAW. How many cases a day would the judge hear? A 
whole slew of them or----
    Mr. DAUB. I don't know. It could be two or three. It could 
be 10. It depends on the----
    Chairman SHAW. How long does the process usually take, the 
whole hearing process, typically?
    Mr. DAUB. A typical case? I am going to ask a staffer 
because I haven't been in the courtroom in a long time. Forty-
five minutes to an hour and a half?
    Just the actual court experience itself, 45 minutes to an 
hour and a half. That would probably be the average.
    Chairman SHAW. Okay. Well, thank you very much. I thank 
both of you. Perhaps this Subcommittee should go to court 1 day 
and watch one of these. It might not be a bad idea
    Mr. DAUB. We are going to hold field hearings in Denver on 
Thursday and Friday.
    Chairman SHAW. Well, I don't know that we have to go to 
Denver. Perhaps downtown would do. I don't know. Anyway, we 
thank you both.
    Mr. DAUB. Thank you.
    Mr. ROBERTSON. Mr. Chairman, thank you.
    Chairman SHAW. We thank you both for your testimony.
    Next we have Witold Skwierczynski. Boy, I am always 
challenged on difficult names, but I believe this one is the 
best one I have seen. He is the President of the National 
Council of the SSA Field Operations Locals, Chicago, Illinois, 
and a Representative in the American Federation of Government 
Employees, Social Security General Committee, AFL-CIO, 
Baltimore, Maryland. I apologize for crucifying the 
pronunciation of your name. If it was any longer it wouldn't 
fit on there. In fact, it barely fit on the placard there.
    Anthony T. Pezza, who is the President of the National 
Coalition of Social Security Management Association; Jeffrey H. 
Price, who is the President of the National Association of 
Disability Examiners (NADE) from Raleigh, North Carolina; Linda 
Dorn, who is the Vice President of the National Association of 
Disability Determinations Directors, Lansing, Michigan; and 
David Stapleton, who is the Director of Cornell Center for 
Policy Research.
    Welcome to all of you. We have your written testimony that 
will be made a part of the record, and you may proceed as you 
see fit. Thank you. Thank you all for being here. Mr. 
Skwierczynski, would you pronounce that for me, please?
    Mr. SKWIERCZYNSKI. Witold Skwierczynski. Thank you.

STATEMENT OF WITOLD SKWIERCZYNSKI, PRESIDENT, NATIONAL COUNCIL 
    OF SSA FIELD OPERATIONS LOCALS, CHICAGO, ILLINOIS, AND 
 REPRESENTATIVE, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, 
SOCIAL SECURITY GENERAL COMMITTEE, AFL-CIO, BALTIMORE, MARYLAND

    Mr. SKWIERCZYNSKI. I am with the union. We represent 50,000 
bargaining unit Social Security workers.
    The Social Security Disability Program is in trouble, and 
it is in deep trouble. Unfortunately, the Administration has 
not provided sufficient appropriations to allow Social Security 
to dig out of its hole. The Bush budget has cuts in our full-
time equivalent staffing for fiscal year 2003. I do not see how 
we can absorb a cut when the Commissioner has already said that 
we are about 150,000 case backlog on our disability program. 
She has indicated to the Senate Finance Committee that in order 
to work off that backlog, the Agency is going to need 400 to 
500 million additional dollars just to work off the backlog. I 
was shocked to hear Deputy Commissioner Gerry say that they are 
not going to ask for any more money when it is clear that the 
only way that the Agency is going to be able to cut down the 
backlog is to have additional employees do cases.
    I am also disappointed that nobody is mentioning this 
terrible crisis that we are having on the special Title II 
Disability Workload. Unfortunately, what has happened is 
literally half a million of Title XVI Social Security 
beneficiaries, the Agency has finally determined, are due back 
Title II Social Security benefits. The Agency is going to have 
to take a half a million Social Security claims. Most of these 
claims are going to require additional disability decisions 
which is going to totally backlog the State agencies as well as 
the field offices that have to take those cases. These half a 
million Title XVI beneficiaries, who are due back pay benefits, 
have children and spouses who also may be due benefits on their 
record, which will mean additional claims that have to be 
taken. The union estimates that it will take a minimum of 22 to 
25 hours per case to do these, which means that you're going to 
need about 6,000 work years in order to work off these cases. I 
think Congress needs to look very closely at funding the 
situation. This is a group of beneficiaries, by the way, that 
is the poorest of the poor. These are SSI recipients, who we 
have not paid properly and are due benefits, some of these 
cases date back to 1974. This is also an indication of 
mismanagement of the disability program. The Agency has known 
about this situation since the mid '90s and has not taken any 
action until recently to deal with it.
    Another thing that the Agency hasn't done that nobody is 
mentioning today is work continuing disability reviews (CDR). 
People who are getting disability benefits, some of them to go 
back to work. If you are a Title II beneficiary, you get a 
trial work period. We get information that these people go back 
to work, but our employees in Social Security field offices 
don't have any time to take these work CDRs. The Agency doesn't 
track them. They don't track their processing time. They don't 
track their volume. They stack up in our offices and are 
overpayments that are not addressed. These overpayments 
continue to mount. We need additional staff to do address these 
CDRs. Now, the Congress did initiate a program called Ticket to 
Work. The Agency hired 32 employment support representatives 
(ESR) for a pilot program. One of their functions was to do 
work CDRs, and they have done many of them and saved hundreds 
of thousands of dollars of trust fund dollars. We need to 
expand that program throughout the country. The ESRs pay for 
themselves and save taxpayer dollars.
    Although Commissioner Barnhart has testified about some of 
the problems, it is funny that one of the big problems is the 
initial claim. Most people don't file appeals. About 47 percent 
of Title II beneficiaries are approved. A large percentage file 
appeals, but the average person that files a claim only makes 
it through the initial claims phase.
    The Disability Claims Manager (DCM), which is a pilot that 
the Agency experimented with, cut the processing time of 
disability claims to 62 days. Right now you have heard 
testimony that the average case takes 102 days. The Agency goal 
is 120 days. The DCM did it in 62 days. Why did the Agency 
terminate that program? Why aren't we implementing the DCM 
across the board to save hundreds of thousands of disability 
applicants time in terms of the processing of these cases.
    Not only that, but with regards to the ALJ, the Agency 
piloted the Adjudicate of Officer Program, which was a 
professional employee who was able to make favorable decisions 
upon reviews. They screened out about 17 percent of all cases 
that were sent to hearing, and in screening out those 17 
percent cases, reversing them and approving them, the ALJs has 
less work. They had 20 percent less work. The Agency killed 
that program, too.
    The Commissioner says let's have more litigation. By 
cutting out reconsiderations, what you do is you have more 
litigation. The claimants are forced to get a lawyer to deal 
with the hearings process. Even though reconsideration is only 
cut 17 percent, have a 17-percent reversal rate, that is a 
large group of people, along with 20 percent who don't pursue 
their claims, 37 percent of the people that don't have to get 
an attorney, don't have to deal with the hearings process and 
with the lengthy delays. So, I don't think it is the greatest 
idea to cut out the reconsideration process. I think what we 
need to do is, one, improve--I agree we need to improve the 
quality. I think the DCM does that. I think the wildly varing 
approval rates from State to State would indicate that there is 
something wrong with the system that we have now.
    We ought to seriously look at Federalizing the Social 
Security Disability Program to ensure more uniformity and more 
consistency in decisionmaking. We should look at having a 
caseworker approach, like the DCM, which claimants love. The 
DCMs provided a quicker decisionmaking and quality product that 
produced high satisfaction rates. We need to have consistency. 
The problem today is that in the DDSs they are using one set of 
rules and the judges are using another set of rules. So, we 
need to unify the process to rectify the problems. It should be 
shocking to us that 60 percent of cases that are appealed to 
the ALJs are reversed, 60 percent. That means there is 
something wrong with the initial claims process, and that is 
the first thing that needs to be addressed.
    Another problem is that we have 50 States with 50 different 
supervisors making the decisions using different rules. My 
suggestion is that this Committee addresses the initial claims 
process and the lack of uniformity. The DCM and ESR have proven 
effective. Thank you Mr. Chairman and Ranking Member Matsui for 
holding this hearing.
    [The prepared statement of Mr. Skwierczynski follows:]
 Statement of Witold Skwierczynski, President, National Council of SSA 
    Field Operations Locals, Chicago, Illinois, and Representative, 
 American Federation of Government Employees, Social Security General 
                Committee, AFL-CIO, Baltimore, Maryland
    Chairman Shaw, Ranking Member Matsui, and members of the Social 
Security Subcommittees, I thank you for the opportunity to present this 
statement regarding Social Security's disability programs and the 
challenges that face SSA and Congress. As a representative of the AFGE 
Social Security General Committee and President of the National Council 
of SSA Field Operations Locals, I speak on behalf of approximately 
50,000 Social Security Administration (SSA) employees in over 1400 
facilities. These employees work in Field Offices, Offices of Hearings 
& Appeals, Program Service Centers, Teleservice Centers, Regional 
Offices of Quality Assurance, and other facilities throughout the 
country where retirement and disability benefit applications and appeal 
requests are received, processed, and reviewed.
    In previous testimony before the Social Security Subcommittee, we 
have commended the Social Security Advisory Board (SSAB) for its 
continual perseverance addressing improvements necessary to strengthen 
SSA's capability to answer the demands of the public it serves. Prior 
to becoming SSA Commissioner, Jo Anne Barnhart was a member of the 
SSAB. The Social Security Advisory Board has confronted a number of 
important issues, including changes in the disability programs, the 
Agency's quality of service to the public, the need to safeguard the 
public's funds as well as the administration of the Supplemental 
Security Income (SSI) program. AFGE is committed to working with 
Commissioner Barnhart and Congress regarding these complex issues, as 
well as other issues continuing to present challenges to SSA and its 
employees.
Commitment to Staffing and Resources

    The disability program is growing rapidly. Approximately 10 million 
Americans and their families depend upon SSA's disability programs. As 
baby boomers grow older, there is an increased likelihood of their 
filing for disability benefits. This causes the amount of resources 
dedicated to SSA disability programs to significantly increase. Last 
year, almost 70 percent of SSA's administrative budget was spent 
accomplishing disability work. Unfortunately, without serious changes 
in the current administrative process, along with additional staffing 
and resources needed to adequately receive and process this work, 
disability service to the taxpayer will deteriorate.
    SSA will be unable to continue to timely and efficiently process 
disability claims unless the Administration and Congress provide 
additional resources. Absent appropriate financing for additional 
staff, SSA cannot guarantee providing timely payment of benefits, 
correct administration of complex regulations as well as training and 
mentoring both current employees and new workers. President Bush's FY 
2003 budget request not only falls short of providing the resources 
necessary to begin addressing this crisis, but calls for a reduction in 
workyears. AFGE believes a shortage of over 5500 positions currently 
exists in field offices and TSCs across the country. This shortage has 
already proven to be a recipe for disaster in providing adequate 
service. Backlogs of disability claims have created lengthier 
processing times. Callers are unable to get through on the toll free 
number and phones in field offices are frequently unanswered. The most 
recent example of last week's 800 number accessibility will demonstrate 
my point. Because of the tremendous backlogs in SSA's Processing 
Service Centers (PSCs), employees who assist our understaffed 
Teleservice Centers were unable to provide assistance during the 
busiest week of the month. This resulted in unacceptable levels of 
service. In fact, SSA has indicated that no PSC employees will be 
answering the 800 number for the rest of the fiscal year. This will 
cause 800 number performance levels to further deteriorate. The 
Government Performance Results Act goal for SSA's 800 number service is 
an overall 5-minute access rate of 92%. Last week, the 800 number 5 
minute access rate slipped to an average of 82%. Occasionally last week 
the 5 minute access rate was as low as 68%. As I have previously 
testified, the public can expect to wait up to several hours in many 
SSA reception areas across the country before being interviewed. 
Employees are forced to rush through the interviews, and stress levels 
have escalated to an unacceptable degree according to employee surveys.
    Senior SSA officials have testified at various times to this 
Committee and other committees, that without process improvements, the 
Agency will need 20,000 additional Full Time Equivalent Employees 
(FTEs) to maintain previous service levels. Eighteen years of staffing 
cuts has been the primary cause for SSA's deteriorating service. During 
this time FTE levels plummeted from 86,000 to 62,000. Most of the cut 
was in direct service workers in the field. Recently the Social 
Security Advisory Board (SSAB) has issued multiple reports, which 
criticize SSAs inadequate staffing and resources. The Board has 
concluded that such resource deficiencies have adversely affected the 
Agency's ability to provide adequate service. In January 2001, the SSAB 
urged the President to provide sufficient funding for SSA to enable it 
to improve its service to the public. In September 2001, the SSAB 
contacted the House and Senate Appropriation Committees reiterating its 
concerns previously addressed to President Bush. It is unfortunate that 
those cries for help seem to have fallen on deaf ears.
    Unless Congress acts to increase SSA's administrative budget, the 
Agency's service levels will continue to decline.
SSA's Disability Programs

    AFGE believes that immediate attention needs to be given to three 
specific issues regarding the SSA disability benefit program: providing 
proper staffing and resource allocations, ensuring consistent 
disability decisions in a more expeditious manner and maintaining 
quality in person service and assistance at the field office level.
    SSA's disability programs are at the heart of the Agency's many 
challenges. AFGE is just one of many voices that has insisted upon 
reform of SSA's seriously flawed disability structure.
    However, institutional problems continue to be overlooked. SSA's 
ethos of discouraging open discussion of problems continues to exist. 
Communication between headquarters and operations in the field remains 
poor. Workgroups designed to address problem areas or workloads no 
longer include either the union or the employees who actually do the 
work. These employees in field offices and teleservice centers who have 
been working at SSA's frontlines serving the public, know what is wrong 
and what is needed. The open door policy between the Commissioner and 
the Union has does not exist. These actions have caused SSA employees 
to doubt Commissioner Barnhart's sincerity and will ultimately cause 
employees to mistrust any changes implemented without their 
participation and input. AFGE understands that long-lasting progress 
will only be achieved with the assistance of those who not only 
understand the problems, but also have the institutional experience and 
knowledge to repair SSA's disability programs. Certainly much more can 
be accomplished in a constructive manner with open two-way 
communications. The union remains committed to such a process.
    SSA must develop and implement a new quality management system that 
will routinely produce information the Agency needs to properly guide 
disability policy. Equity and consistency in disability decision-making 
does not exist today. Claimant's chances of being approved for 
disability benefits depend on where they live and the amount of their 
resources.
    For example, SSA records appear to suggest that those who have the 
resources to obtain medical attention early and often have a better 
chance of being approved for benefits than those who have a limited 
income or resources. (See Chart Below) Nationwide, those applying for 
Social Security disability have a much greater chance of being approved 
than those who may only apply for the Supplement Security Income (SSI) 
program. SSA records clearly expose the inconsistencies of the State 
DDS decisions. More than 70 percent of Social Security disability 
claims for benefits are approved in New Hampshire, while only less than 
38 percent of those who file for benefit in Oklahoma are approved. Of 
those who applied for SSI benefits, New Hampshire soars with an 
allowance rate of over 63%. However, less fortunate are those from 
Kansas, Missouri, Louisiana and Georgia. Less than 35 percent of the 
SSI applications in these states are approved by the respective State 
Disability Determination service (DDS). The reconsideration process is 
fraught with inconsistencies. Reconsideration claims in Missouri and 
Pennsylvania result in a 40% reversal rate. Conversely, 
reconsiderations in East Los Angeles, Kentucky, New York and Oklahoma 
result in less than 15% approval rate. Reconsideration of an SSI 
application is less likely to be approved than TII cases.
    As an illustration, following is a compilation of different states 
and the variance from state to state in allowance and denial rates:


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 T2  Initial          T16  Initial       Concurrent  Initial        T2  Recon            T16  Recon
                                           -------------------------------------------------------------------------------------------------------------
                                              Allow       Deny      Allow       Deny      Allow       Deny      Allow       Deny      Allow       Deny
--------------------------------------------------------------------------------------------------------------------------------------------------------
NATIONAL AVERAGE                                 47.4       52.6       39.5       60.5       30.4       69.6       19.0       81.0       16.0       84.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
BOSTON Region                                    56.8       43.2       43.6       56.4       34.5       65.5       30.0       70.0       25.6       74.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
New Hampshire *                                  70.3       29.7       63.6       36.4       56.2       43.8       33.3       66.7       33.3       66.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Connecticut                                      55.7       44.3       39.2       60.8       32.3       67.7       30.4       69.6       21.6       78.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
New York Region                                  48.5       51.5       40.8       59.2       34.5       59.2       15.1       84.9       13.5       86.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
New York *                                       51.5       48.5       39.9       60.1       33.4       66.6       12.2       81.3       12.6       87.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Albany                                           55.0       45.0       36.2       63.8       32.6       67.4       22.0       78.0       19.4       80.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico                                      34.6       65.4          -          -          -          -       16.3       83.7          -          -
--------------------------------------------------------------------------------------------------------------------------------------------------------
Philadelphia Region                              53.1       46.9       43.7       56.3       34.6       65.4       20.3       79.7       16.7       83.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maryland                                         49.8       50.2       38.6       61.4       30.4       69.6       25.3       74.7       18.0       82.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
PA *                                             60.2       39.8       48.6       51.4       40.7       59.3       40.6       59.4       29.2       70.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Atlanta Region                                   40.3       59.7       35.8       64.2       27.0       73.0       16.3       83.7       14.0       86.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama *                                        48.8       51.2       37.7       62.3       33.3       66.4       34.7       65.3       33.5       66.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Georgia                                          38.2       61.8       34.0       66.0       25.7       74.3       17.9       82.1       14.5       85.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kentucky                                         37.3       62.7       35.0       65.0       23.8       76.2       10.9       90.1        9.8       90.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Birmingham                                       50.8       49.2       40.3       59.7       35.1       64.9       35.1       64.9       34.0       66.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Florida                                          41.7       58.3       41.6       58.4       30.7       59.3       20.5       79.5       19.6       80.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Miami                                            42.3       57.7       49.3       50.7       35.4       64.6       21.7       79.3       26.4       73.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chicago Region                                   47.3       52.7       36.4       63.6       30.1       69.9       19.8       80.2       15.0       85.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Illinois                                         49.3       50.7       38.1       61.9       31.8       68.2       18.7       81.3       15.9       84.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Michigan *                                       49.8       50.2       35.3       64.7       31.9       68.1       32.3       67.7       24.7       75.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wisconsin                                        52.0       48.0       37.2       62.8       30.3       69.7       31.7       68.2       16.8       83.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dallas Region                                    41.3       58.7       36.7       63.3       29.6       70.4       18.7       81.3       17.3       82.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Louisiana *                                      43.3       56.7       30.9       69.1       30.7       69.3       39.9       61.0       27.6       72.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Texas                                            40.0       60.0       40.0       60.0       30.5       69.5       18.7       81.3       18.5       81.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
New Mexico                                       49.1       50.9       41.3       58.7       32.2       67.8       23.2       76.8       20.9       79.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oklahoma                                         39.3       60.7       36.7       63.3       27.7       72.3       14.3       85.7       12.6       87.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Shreveport                                       42.8       57.2       31.6       68.4       28.7       71.3       21.4       78.6       29.5       70.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kansas City Region                               54.3       45.7       34.4       65.6       27.0       72.0       23.8       76.2       15.5       84.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Missouri *                                       56.8       43.2       33.0       66.0       28.6       71.4       44.8       55.2       35.3       65.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kansas                                           47.2       52.8       34.7       65.3       22.1       77.9       23.5       76.5       14.6       85.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Denver Region                                    43.6       56.4       41.1       58.9       25.2       74.8       14.2       85.8        9.7       90.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Colorado *                                       46.6       53.4       42.2       57.8       27.6       72.4       27.6       72.4        5.7       84.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
N. Dakota                                        45.4       54.6       37.3       62.7       22.0       77.0       17.2       82.8        8.5       91.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
S. Dakota                                        48.2       51.8       36.5       63.5       23.0       76.0       18.8       81.2       12.8       87.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
San Francisco Region                             52.8       47.2       46.2       53.8       37.1       62.9       25.2       74.8       22.5       77.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona                                          59.3       40.7       51.8       48.2       43.3       56.7       38.7       61.3       33.8       66.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
California                                       50.9       49.1       45.7       54.3       34.4       65.6       22.1       77.9       18.6       81.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bay Area                                         56.0       44.0       52.6       47.4       43.2       56.8       28.5       71.5       20.8       79.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
L.A. East                                        42.7       57.3       44.0       55.0       32.1       67.9       12.4       87.6       12.2       87.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
L.A. West *                                      59.8       40.2       49.9       50.1       42.0       57.0       31.2       68.8       22.5       77.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
L.A. North *                                     58.7       41.3       49.3       50.7       40.0       60.0       31.8       68.2       42.2       57.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
L.A. South                                       42.0       57.0       49.2       60.8       31.4       68.6       19.7       80.3       19.9       80.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sacramento                                       48.6       51.4       42.2       57.8       30.2       69.8       23.6       76.4       31.6       78.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seattle Region                                   50.0       50.0       43.6       56.4       21.2       68.8       22.2       77.8       16.1       83.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alaska *                                         57.4       42.6       52.3       47.7       38.1       61.9       50.0       50.0       0.00      100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oregon                                           49.7       50.3       40.7       59.3       28.3       71.7       24.1       75.9       16.2       83.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Washington                                       49.9       50.1       44.3       55.7       32.5       67.5       22.0       78.0       15.8       84.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seattle                                          50.1       49.9       49.8       50.2       36.6       63.4       24.3       75.7       16.1       83.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* ``Prototype'' sites.

    In a system where contributions are made equitably, such wildly 
divergent allowance rates raise significant questions regarding the 
accuracy and fairness of the decision making process. The American 
taxpayers are entitled to quality consistent decisions whether they 
live in California or New Jersey. The significant differences between 
SSA and SSI disability approval rates leads one to conclude that wealth 
is a factor in the decision making process. We strongly encourage 
Congress to hold hearings in the near future to address these very 
important issues.
    As long as inconsistent medical decisions continue to be made by 
the State DDSs, the backlogs at the hearing levels may never be 
completely resolved. In some areas, the rate of hearing reversals is as 
high as 60%.
    SSA has spent millions of dollars testing new disability 
initiatives in an effort to address some of the serious problems with 
the disability process. One of those initiatives is the ``Prototype'' 
pilot. Approximately 25% of SSA's national initial disability claims 
workload was included in the Prototype, which was conducted in State 
DDS facilities for Alabama,
    Alaska, California (Los Angeles North DDS & Los Angeles West DDS 
branches only), Colorado, Louisiana, Michigan, Missouri, New Hampshire, 
New York, and Pennsylvania. The Prototype features were designed to:

         Provide greater decisional authority to the 
        disability examiner and more effective use of the expertise of 
        the medical consultant in the disability determination process;
         Provide more complete development and improved 
        explanations of how the disability determination was made in 
        order to enhance the quality of decisions;
         Afford an opportunity for claimants to talk with the 
        decision-maker if the evidence in the file does not support a 
        fully favorable determination, and/or to submit further 
        evidence before an initial determination is made.
         Simplify the appeals process by eliminating the 
        reconsideration step.

    Recently, Commissioner Barnhart announced her decision to expand 
the Single Decision Maker aspect of the Prototype pilot and to 
eliminate the Claimant Conference portion of the initial disability 
claims in the 10 Prototype states. These decisions were made prior to 
the completion of the pilot and before an analysis of final data 
regarding the pilot. The decision to eliminate the Claimant Conference 
appears to have been made solely due to the additional time that 
conducting such a conference adds to the processing time for initial 
disability claims. No data has been provided to the union which 
measures the impact of the claimant conference on the decision making 
process. Claimant conferences were intended to partially replace the 
loss of the Reconsideration appellate opportunity. Eliminating such 
conferences will, undoubtedly, result in additional hearings requests 
by denied claimants. Since there is a severe backlog of hearings cases, 
this is an undesirable result. The 2001 Interim Report on the Prototype 
indicated that claimant satisfaction was much lower than claimant 
satisfaction for the Disability Claims Manager (DCM) pilot. The interim 
report also indicated that Prototype productivity was less than the 
current process, employee satisfaction was not especially high and 
that, although final results were not available, the total program 
costs of the Prototype appeared higher than the current process and the 
elimination of the Reconsideration leads to more hearing requests than 
the current process. In addition, the Prototype did nothing to resolve 
the state to state disparity in the disability claims allowance rates.
    The elimination of the reconsideration and the elimination of the 
Claimant Conference in Prototype states does not appear to be the 
solution to the disability problem in SSA. It is particularly puzzling 
that SSA leadership appears enamored with the Disability Prototype and 
its lukewarm results while it scuttled the DCM, which exceeded the 
current process in numerous respects, especially processing time.
    As I emphasized in previous testimony before the Social Security 
Subcommittee in June 2001, the Disability Claims Manager (DCM) pilot 
(another SSA initiative) proved to be highly successful in addressing 
these problems in the disability program. Processing time was 
significantly better. In fact, the DCM processing time of 62 days was 
almost \1/2\ of SSA's initial disability claim processing time goal of 
120 days. Customer service dramatically improved. Claimants expressed 
record high satisfaction rates for the DCM. The public likes the DCM 
caseworker approach and wants it retained in the current process. 
Although SSA contended that the DCM would cost more than the current 
process, no valid data exists showing this conclusion. Also, the pilot 
was prematurely terminated before valid statistical data could be 
compiled regarding full program costs. It is unfortunate that, since 
the last time I testified before the SSA Subcommittee, then Acting 
Commissioner, Larry Massanari, decided not to implement the most 
successful new disability initiative, the DCM. The DCM was a positive 
step to ensuring the public that consistent and equitable disability 
decisions are made. Tragically, no actions were taken to implement any 
of these successes, and the pilot was terminated. Congress should 
demand that SSA justify the elimination of this successful and 
innovative experiment. It is part of the answer to the disability 
problem.
    It is apparent that the primary reason that SSA terminated the DCM 
pilot was due to State resistance. Such resistance certainly was not 
based on a poor pilot result. Instead the decision appears to be based 
on political considerations and the fear of losing work. Congress 
should be very concerned when SSA spends $ millions for a process that 
demonstrably improves the disability processing time yet is rejected 
for political reasons. The concerns of the states are understandable in 
view of their unacceptably poor performance regarding decision 
consistency from state to state and their poor processing time in 
comparison to the DCM. However, the only real criteria should be the 
level of service that is provided to the claimant. Using customer 
service as a measure, the DCM exceeds State DDS performance in 
virtually every category.
    AFGE has recommended to Commissioner Barnhart that she reconsider 
former Acting Commissioner Massanari's decision and implement the 
position of the DCM at SSA as soon as possible. AFGE is willing to work 
with the Commissioner in an incremental approach to achieving this 
goal. AFGE understands that there will need to be changes in policy, 
processes and institutional arrangements, as well as funding to 
implement this very valuable and successful position at SSA. 
Legislative amendments to the Social Security Act would be necessary to 
allow SSA workers to make disability decisions; however the crisis in 
disability processing requires immediate, as well as long-term changes. 
When trained to make medical decisions, SSA employees can provide 
immediate relief to backlogged Disability Determination Agencies, and 
provide faster and better service to the public by serving as a single 
point of contact. The pilot demonstrates that the public loves the DCM, 
employees enthusiastically support it and that it provides 
substantially better service than the current disability product. It is 
the responsibility of Congress to take the necessary action to assure 
the DCM is part of the solution to the disability problem.
    As a short term approach not requiring legislative change, AFGE is 
supportive of the ``Technical Expert for Disability'' position. This 
position would provide high quality, trained field office employees the 
tools to assist disability claimants in both programmatic and medical 
issues, provide professional personalized service to applicants, focus 
the disability interview, make or recommend disability decisions, and 
assist the DDS's in their development and backlogs.
    Another tested initiative that would save considerable disability 
processing time is the Adjudicative Officer (AO). This position was 
intended to assist Administrative Law Judges to reduce the number of 
hearings and to prepare cases for efficient and expeditious hearings. 
AO's were empowered to gather additional evidence and to make favorable 
decisions without hearings when the evidence submitted indicated that 
such a decision was appropriate. The pilot indicated that many hearings 
requests were quickly adjudicated by AO's. These workers reduced the 
processing time for hearing requests. The AO's met the same fate as the 
DCM's. SSA cancelled the initiative. When processing time can be 
legitimately reduced, why is SSA terminating a methodology that 
achieves that objective? SSA should reexamine this position.
Ticket to Work

    Another prominent challenge for SSA, as well as a legislative 
mandate, is complying with the provisions of the Ticket to Work and 
Work Incentives Improvement Act of 1999 (TWWIIA). SSA has, in fact, 
redefined its mission to include promoting the employment of Social 
Security beneficiaries with disabilities. By the year 2005, SSA's goal 
is to increase the number of beneficiaries who can attain steady 
employment and leave the disability rolls by 100%. Currently, less than 
one-half of one percent of Social Security Disability and SSI 
recipients return to work and whose benefits are terminated. If only an 
additional one-half of one percent of recipients were to cease 
receiving benefits due to employment, savings to the Trust Funds and 
Treasury would total $3.5 billion over the worklife of these 
beneficiaries.
    Section 121 of this legislation directs SSA to establish ``a corps 
of trained, accessible and responsive work incentives specialists 
within the Social Security Administration.'' As members of this 
subcommittee are well aware, this legislation mandating specialists 
within SSA is the result of many years of poor service on the part of 
SSA in providing accurate information on employment supports and 
failing to process cases timely or accurately. SSA created the 
Employment Support Representative (ESR) position as this work 
incentives specialist. The pilot of 32 ESRs testing models of how best 
to service the disabled community concluded in August 2001.
    The final Evaluation Report of the ESR position was completed in 
November 2001. Findings of the report were clear that the ESR was most 
effective in serving organizations and beneficiaries when situated in 
field offices serving the communities. Beneficiaries and community 
organizations were overwhelmingly appreciative of the services the ESR 
performed, finding them to be compassionate, responsive, accessible, 
and highly knowledgeable. The investments of the ESRs in outreach 
programs have led to increased trust of SSA by the communities, and 
increased program knowledge on the part of professionals and consumers. 
There is a great deal of interest on the part of organizations for a 
further rollout to service every locality. The pilot proved that 
Congress was correct when it insisted that SSA improve its service to 
disabled beneficiaries seeking to return to work.
    Furthermore, the ESRs were able to develop a single point of 
contact with beneficiaries, monitor their work progress in a timely and 
supportive manner, and process work reports and work-issue Continuing 
Disability Reviews (CDRs) timely, greatly reducing large benefit 
overpayments and anxiety on the part of the beneficiary. ESRs gave many 
examples of customers who, with ESR guidance, were able to reliably 
predict the outcome of their work activity and viewed benefit cessation 
as a mark of achievement.
    Both SSA and AFGE agree that hundreds of millions of dollars in 
benefit overpayments would be saved nationally if work issues are 
reported and worked promptly. SSA projects a large increase in work CDR 
activity, especially in the early stages of the Ticket to Work 
implementation. Even discounting the potential effect of Ticket related 
workloads, work issue CDRs processed in field offices have been 
increasing at an average annual rate of over 35% for the past three 
years. Anecdotal evidence from employees throughout the country 
indicates that work issue CDRs are backlogged for up to several years 
in field offices. Overpayments on these cases can reach $250,000 for an 
office, and employees have encountered overpayments on individual 
records reaching $100,000. Unfortunately, the Union is unaware of any 
statistical data regarding the numbers of work CDRs processed, the 
number pending and the cessation rate due to work activity. SSA should 
be required to maintain and produce such data. In processing medical 
issue CDRs, SSA contends that for every dollar spent, seven to twelve 
dollars in benefits are saved. The cost savings are greater for 
``work'' CDRs since the cost of medical decision making is eliminated. 
Investing in the ESR position is a perfect example of applying 
stewardship responsibilities effectively and investing resources in a 
cost effective manner.
    The Evaluation Report recommends that the ESR job should be made a 
permanent position within SSA. The report also recommended that the ESR 
position be expanded to as many SSA offices as possible. The Report 
cautions: ``Failure to institutionalize a position to perform the 
duties that the ESR has piloted could in effect deny the public and 
community the opportunity to interact with an accessible and responsive 
SSA specialist. This could eliminate an important element in SSA's plan 
to improve its employment support service delivery to the public. It 
could also negatively affect our ability to effectively train and 
advise other SSA staff in the provisions of the law, with implications 
for increased incorrect payments and the denial of benefits to 
beneficiaries.''
    Unfortunately, SSA is reluctant to implement the ESR position due 
to the shortages of staff and resources in field offices. These 
intolerable resource deficits leave SSA in the position of 
ineffectively implementing the Ticket to Work and continuing to provide 
the current level of service. This is an impossible situation.
    AFGE believes an Agency decision not to implement the ESR would be 
a tragic mistake when the ESR has proven to be a winner for all 
parties. For SSA, it shows superb service to the public, provides 
stewardship in reducing benefits and overpayments, and results in SSA 
compliance with the legislative mandate for work incentive specialists 
within SSA. For the public, it provides stellar service, a single point 
of contact, and assists beneficiaries in leaving the disability rolls. 
For the taxpayer, it saves money and extends Trust Fund solvency.
    Section 121 of PL 106-170 authorized $23,000,000 to be appropriated 
to establish a community based work incentives planning and assistance 
program for disabled beneficiaries, and to develop a corps of work 
incentives specialists with SSA, for each of the fiscal years 2000 
through 2004. SSA allocated all of the appropriated resources to grants 
outside the Agency. AFGE requests that Congress direct SSA to 
appropriate additional funding to meet the requirements of the Ticket 
to Work and Work Incentives Improvement Act. This provision of the 
legislation also requires continuous adequate funding beyond FY 2004. 
Otherwise, the most effective method of providing consistent, accurate 
information and assistance on work incentive programs will not be 
accessible to disabled beneficiaries. It is outrageous that budget 
constraints for SSA's Administration Expenses will inhibit the success 
of the ESR, a Ticket to Work initiative, which is designed to generate 
Trust Fund Savings. It would cost approximately 120 million to staff 
SSA's 1300 field offices with 1500 ESRs. The potential return of $3.5 
billion indicates that this would be a prudent expenditure.
Special T2 Disability Workload

    Inadequate staffing and resources influences SSA work priorities. 
While ignoring or putting off the inevitable can provide a temporary 
solution to a staffing and resource problem, the consequences can be 
severe and compromise the Agency's integrity. In addition to this being 
self-evident with the 800 number service, inadequate staff is also the 
cause for the ``Special T2 Disability Workload.'' This resource 
shortage will be a great challenge for the new Commissioner, this 
Congress, and the employees of SSA as it begins to tackle the ``Special 
T2 Disability Workload.''
    A study done by an SSA employee in the early 1990s revealed that a 
serious computer processing error existed in the Agency's software. At 
that time, SSA became aware that the Social Security and SSI programs 
were not properly interfacing, resulting in a failure to properly 
identify SSI recipients who may be eligible for Social Security and 
Medicare benefits retroactively to 1974. From 1974 until the early 
1990's, the SSI application did not solicit information that would 
identify individuals who would be eligible for Social Security 
benefits. SSA officials neglected to take the necessary action to 
correct this problem until recently. As a result of this systems 
failure, hundreds of thousands of SSI recipients and their families 
were not paid the proper Social Security benefits. This placed the 
burden of benefits solely on SSI, Medicaid, and State and County 
welfare programs instead of the Social Security trust fund.
    Under Title XVI of the Social Security Act, SSI recipients are 
required to apply for all benefits for which they are eligible. SSA is 
responsible for identifying and paying the recipient once they achieve 
insured status for Social Security benefits. Eligibility for Social 
Security benefits reduces the State's obligation to supplement the SSI 
and Medicaid programs. For example, in the cases SSA has identified, 
the average retroactivity is 8 years. This means that the states will 
be reimbursed an average of 8 years of past payments that States have 
made on SSI. In addition, using Social Security data, these individuals 
would have been eligible for Medicare retroactively for 6 years and 
Medicare would have been the primary insurance provider rather than 
Medicaid. Thus, the burden for paying for medical services would shift 
from State budgets to Medicare. Therefore, SSA owes millions of dollars 
in back payments to the States and the U.S. Treasury General Fund.
    In March of this year, the AFGE National Council of Social Security 
Field Operations Locals made Congress aware of this very serious 
situation. This issue impacts not only the Social Security and 
Supplemental Income (SSI) beneficiaries in every state and/or 
Congressional district, but affects SSA reimbursements of revenue due 
states for erroneous SSI and Medicaid payments.
    SSA has identified approximately 505,000 impoverished individuals 
to date who appear to be entitled to Social Security and Medicare 
benefits. Of those cases identified, some may have a retroactivity 
period that can date as far back as 1974; however, the average 
retroactivity involved is estimated to be about eight years. Because of 
the limited number of cases reviewed, we believe that a complete and 
thorough audit of all SSI cases should be evaluated for possible 
entitlement to Social Security benefits. It is important to notify you 
that these numbers do not reflect the countless thousands of spouses, 
widows and/or children that may be eligible for Social Security 
benefits due to the Agency's failure to correctly enforce the 
eligibility requirements for SSI beneficiaries.
    The cases identified in the Special T2 Disability Workload are 
complex and require careful screening and diligent review by FO 
personnel. Development of trial work periods, substantial gainful 
activity, and workers compensation will be very time consuming. Most of 
these cases will require new medical determinations. If SSA's original 
medical file no longer exists, medical records will have to be 
redeveloped. Once approved for T2 benefits, the majority of these cases 
will require extensive manual computations. The complexity of these 
cases will be overwhelming. For example, all historic legislative 
changes that have occurred since 1973 will have to be considered to 
determine proper payment due to the disabled individual, spouse, widow, 
children, survivors and/or estates. Initial attempts to process these 
cases indicate that each case takes an average of 12 hours to properly 
screen. This time estimate does not include the time needed to make a 
disability decision and the time necessary to process and adjudicate 
auxiliary claims (e.g., mothers/father's and children).
    Based on SSA's current work measurement system, the minimum amount 
of time to review and adjudicate the simplest of these cases will take 
22-25 work hours. This would result in a minimum of 2,400 work years to 
fully develop and adjudicate the first 210,000 cases. However, most 
cases will not be simple.
    SSA's mission requires that the Agency pay each eligible 
beneficiary timely and accurately. Depriving poor SSI recipients 
accurate benefits adversely affects their struggle for survival.
    Without additional resources, addressing this workload will have an 
enormously detrimental impact on service to current applicants and 
beneficiaries. AFGE recommends that SSA, with Congressional oversight, 
take immediate action to:

         Determine trust fund expenditures related to this 
        workload;
         Identify state supplements and Medicaid 
        reimbursements;
         Provide an analysis of when complete resolution can 
        be expected, including reimbursement to federal and state 
        treasuries;
         Verify that the processes are corrected, in an effort 
        to rebuild the confidence of the public, Congress and the 
        states;
         Identify the additional staffing and resources 
        necessary to successfully process this overwhelming and complex 
        workload;
         Earmark sufficient funds to process this work. This 
        was done in the 1980's in order for SSA to process the 
        ``Zebley'' litigation cases, which reversed case decisions on 
        hundreds of thousands of cases involving children with 
        disabilities. It is necessary to earmark such funds again, as 
        in Zebley, to process this enormous complex workload.
         Utilize the former Disability Claims Manager (DCM) in 
        processing this workload. DCM's are highly trained in SSA 
        programmatic issues and experienced in making medical 
        determinations. They would be able to process the entire 
        complex case from start to finish and provide needed relief to 
        the overburdened State DDS's regarding this workload.
         Utilize the skills of the Employment Support 
        Representatives in developing and analyzing the many years of 
        work activity present on these records, taking into account all 
        work incentives and provisions, to insure accurate case 
        development.
Summary

    There will always be budget priorities, whether it's reducing the 
deficit or increasing our military opposition to terrorists. However, 
both workers and employers contribute to the self-financed Social 
Security system and are entitled to receive high quality service. It is 
entirely appropriate that spending for the administration of SSA 
programs be set at a level that fits the needs of Social Security's 
contributors and beneficiaries, rather than an arbitrary level that 
fits within the current political process.
    Mr. Chairman, you and Human Resources Subcommittee Ranking Member 
Benjamin Cardin reintroduced the Social Security Preparedness Act of 
2000 (formerly H.R. 5447), a bipartisan bill to prepare Social Security 
for the retiring baby boomers. AFGE strongly encourages each of your 
committees to reconsider introducing legislation that will provide SSA 
with the appropriate funding level to process claims and post-
entitlement workloads timely and accurately. AFGE believes that by 
taking these costs OFF-BUDGET with the rest of the Social Security 
program, Social Security funds will be protected for the future. This 
will permit new legislation, such as Ticket To Work, to be fully 
implemented without comprising public service integrity. We believe 
this can be accomplished with strict congressional oversight to ensure 
that the administrative resources are being spent efficiently.
    AFGE is committed to serve, as we always have in the past, as not 
only the employees' advocate, but also as a watchdog for clients, 
taxpayers, and their elected representatives.

                                 

    Chairman SHAW. Thank you. Mr. Pezza.

    STATEMENT OF ANTHONY T. PEZZA, MANAGER, SOCIAL SECURITY 
  ADMINISTRATION DISTRICT OFFICE, HACKENSACK, NEW JERSEY, AND 
   PRESIDENT, NATIONAL COUNCIL OF SOCIAL SECURITY MANAGEMENT 
                       ASSOCIATIONS, INC.

    Mr. PEZZA. Chairman Shaw, Members of the Subcommittee, my 
name is Anthony Pezza. I am here as President of the National 
Council of Social Security Management Associations, which is an 
organization of more than 3,000 managers and supervisors who 
work at SSA's field officers and teleservice centers in more 
than 1,300 locations throughout the United States.
    I thank you for giving me the opportunity to come before 
you today to speak about the problems the Social Security 
Disability process is having from the perspective of SSA's 
frontline managers and supervisors, and make recommendations 
for change.
    The managers and supervisors I represent deal directly 
every day with the folks applying for Social Security 
Disability and Supplemental Security Disability Payments. It is 
most often our Members with whom your local staff deal to 
resolve Social Security problems for your constituents. I must 
tell you, that more often than not those problems involve the 
disability program.
    Since our organization was founded almost 34 years ago, we 
have been a strong advocate for locally delivered Social 
Security services nationwide. We work directly with those we 
serve, because they are our friends and neighbors, folks we 
know in our hometowns and local communities. We represent the 
very essence of citizen-centered government. Those of us who 
work in SSA's field offices spend a great deal of our time and 
effort on the disability program. We deal directly with 
disability applicants and recipients. We take their claims, 
initiate their continuing disability reviews and provide them 
and their representatives with information. We hear their 
stories and see firsthand the impact of their impairments and 
our procedures on their lives.
    As we are all painfully aware, SSA's Disability program has 
been under severe stress for a number of years. I believe we 
all know about the processing delays. It takes too long to get 
an initial decision. The time it takes to get a decision on 
appeal is inexcusable. I think we all know that there are 
troubling variances in the allowance rates between State DDSs 
and between initial and appeals decisions.
    Some 9 years ago, SSA embarked on an effort to re-engineer 
its disability process. After almost a decade of spending 
literally tens of millions of dollars on that effort, the sad 
fact is we are still talking about the same problems and 
discussing the same potential solutions today as we were then. 
It appears the more we discuss and study the problem, the less 
gets done. The bottom line is that after all of this effort, 
from the claimants' point of view nothing is changed.
    In our written submission to the Subcommittee, we made a 
number of recommendations. I would like to tell you very 
briefly about one of them. In February 2001 and again in 
January of this year, the National Council of Social Security 
Management Associations made a recommendation to SSA that a new 
position be established in our local field offices. The 
position which we have called the Technical Expert for 
Disability, capitalizes on the success of the 3-year-long 
Disability Claims Manager program. That pilot demonstrated that 
field office personnel, given the same medical determination 
training as DDS medical examiners, can have a positive impact 
on the initial disability claims process. The new position 
would expand and strengthen the role and performance of the 
field office in the front end of the disability process.
    Technical Experts for Disability would be responsible for 
the intake of applications for disability benefits under both 
titles. They would be responsible for developing both the 
medical and non-medical aspects of certain claims. They would 
be responsible for making the non-medical and making or 
recommending the medical decisions in predetermined types of 
cases in agreement with individual DDSs, for example, terminal 
cases and presumptive disability cases. They would be 
responsible for reviewing and taking where indicated the first 
action on disability claims being forwarded to the DDS for 
development and medical decision. This would ensure that the 
product sent to DDS for medical determination is of high 
quality and would often include supporting medical evidence. 
And finally, they would be responsible for training and 
mentoring other field office employees involved in the 
disability process.
    The incumbents of this new position would be drawn mainly 
from SSA's current field office staff of claims representatives 
and technical experts, and within current FTE ceilings. We 
don't envision massive numbers. We are convinced that a 1,000 
to 1,500 Technical Experts for Disability in field offices 
across the country could have a dramatic and positive impact on 
the timeliness and quality of the initial disability 
determination process. We urge the Subcommittee to join us in 
asking SSA to seriously consider this proposal.
    Mr. Chairman, Members of the Subcommittee, I am ready to 
answer any questions you may have. Thank you.
    [The prepared statement of Mr. Pezza follows:]
Statement of Anthony T. Pezza, Manager, Social Security Administration 
   District Office, Hackensack, New Jersey, and President, National 
        Council of Social Security Management Associations, Inc.
    Chairman Shaw and Members of the Subcommittee, my name is Anthony 
Pezza, and I am here today representing the National Council of Social 
Security Management Associations (NCSSMA). I am also the manager of the 
Social Security District Office in Hackensack, New Jersey and have 
worked for the Social Security Administration (SSA) for 40 years. On 
behalf of our membership, I am both pleased and honored that the NCSSMA 
was selected to testify at this hearing on the problems and 
opportunities facing SSA in its administration of the disability 
program.
    As you know, Mr. Chairman, the NCSSMA is a membership organization 
of more than 3000 Social Security Administration managers and 
supervisors who work in SSA's more than 1300 field offices and 
teleservice centers in local communities throughout the nation. It is 
most often our members with whom your staffs work to resolve issues for 
your constituents relative to Social Security retirement benefits, 
disability benefits, or Supplemental Security Income. Since our 
organization was founded almost 34 years ago, the NCSSMA has been a 
strong advocate of locally delivered services nationwide to meet the 
variety of needs of beneficiaries, claimants, and the general public. 
We represent the essence of ``citizen centered'' government. We 
consider our top priority to be a strong and stable Social Security 
Administration that delivers quality service to our clients--your 
constituents.
    It is significant to note, that the number of people receiving 
Social Security or Supplemental Security Income (SSI) disability 
benefits is less than 20% of all those receiving Social Security or SSI 
payments. On the other hand, about two-thirds of SSA's administrative 
budget, around $5 billion this year, will be spent on the work 
generated by the disability program.
    SSA's field offices must expend a great deal of their efforts on 
the disability program. Field offices deal directly with disability 
applicants and recipients. Field offices take disability claims, 
provide information to claimants and their representatives, initiate 
continuing disability reviews, and provide the public and third parties 
with information about the disability program. In dealing directly with 
disability claimants and recipients, we hear their stories and see 
firsthand the impact of their impairments and our procedures on their 
lives. We are in a prime position to assess the challenges and 
opportunities presented by the current situation.
Challenges Facing the Disability Program:

    SSA's disability programs have been under severe stress for a 
number of years. As reported by the Social Security Advisory Board in 
its January 2001 report entitled ``Charting the Future of Social 
Security's Disability Programs: The Need for Fundamental Change'', 
SSA's actuaries project that between now and 2010 the number of Title 
II disability beneficiaries will increase by 50% and the number of SSI 
disability recipients by 15%. This tremendous increase in disability 
claims workloads will further strain a system that is already at the 
breaking point. Disability claims workloads are rising around the 
country. During one recent week some 60,000 initial disability cases 
were waiting to be assigned to Disability Examiners in the various 
Disability Determination Services. There were in all probability a like 
number of Continuing Disability Review cases awaiting assignment. This 
is just the ``tip of the iceberg''.
    The most prevalent criticism field offices hear concerns the amount 
of time it takes to get a decision. Applicants wait an average of 
almost 4 months from filing to receipt of an initial decision. The 
almost half a million claimants who request a hearing before an 
Administrative Law Judge (ALJ) each year can expect to wait, on 
average, more than a year from the date of the initial filing for a 
decision.
    Delay in the process may be the most pervasive problem, but it is 
by no means the only problem. Many claimants have no idea of how the 
process works or how decisions are made. They have little understanding 
of what is required to meet the definition of disability under the 
Social Security program, much less what is needed to document their 
claim. Unfortunately, limited resources have forced a reliance on self-
help completion of forms and on telephone interviews. Claims 
Representatives rarely have the time to fully review all forms 
completed by applicants or to fully explain how the process works. 
Additionally, failure to see a claimant face to face increases the 
opportunity for fraudulent activity. It is also extremely important to 
note and understand that many claimants are suffering from mental 
impairments. This makes self-help and electronic service delivery 
extremely problematic for such individuals.
    Other problems facing the disability program have been abundantly 
documented by reports of the Social Security Advisory Board, GAO, and 
others. There are, for example, wide variances in allowance rates and 
processing times from state to state. Court decisions have greatly 
complicated the disability determinations process and have resulted in 
a disparity between the criteria used to make initial and 
reconsideration decisions and criteria used at the hearing level. In 
addition, recent attempts to focus efforts on helping disability 
recipients return to work have not resulted in a promising response. 
The problem is probably rooted in the ``all or nothing'' statutory 
definition of disability and the application process that focuses on 
inabilities rather than abilities. These factors tend to discourage a 
return to work.
    One of the most significant and sad points about the disability 
problems faced by SSA is that we've been discussing the same problems 
and talking about the same potential solutions for many years now. This 
is not a situation that materialized overnight. It's been a long time 
coming. But it appears that the more it gets discussed and studied, the 
less gets done to deal with the problem.
    Unfortunately, from the claimant's perspective, after years of 
SSA's efforts to deal with its problems in the disability area, nothing 
has changed.

         There are reasons for this, among which are:
         The structure of the disability determinations and 
        appeals process
         The competing interests of the various 
        ``stakeholders''
         The institutional bias toward the paralysis of 
        analysis
         The limitations on resources

    It is probable that we have now reached the point where all of the 
dire predictions about a ``melt down'' in the disability process will 
occur if action is not taken quickly and decisively to avert it. The 
final straw may be the recent emergence of an unanticipated workload in 
the form of literally hundreds of thousands of cases that have come to 
be termed Special Title II Disability cases. These cases involve 
situations wherein there was a failure to identify SSI recipients who, 
after becoming eligible for Title XVI (SSI) payments, subsequently 
became insured for Title II benefits. At that point an application for 
Title II benefits should have been solicited and processed. Having 
identified these cases, SSA is now obligated to secure and process 
applications. This will involve a very significant and unanticipated 
expenditure of SSA's frontline field office resources. But 
additionally, with specific reference to the disability issue, it is 
anticipated that more than half of these cases will require medical 
determinations. This will further strain the already strained 
Disability Determinations Services (DDSs) with what could involve 
hundreds of thousands of additional medical determinations.
    Potential solutions to the disability crisis can be divided into 
two broad categories: long-term and short-term. The long-term solutions 
generally require legislation. The short-term solutions require 
executive decision.
Long-Term Solutions:

    The root causes of the disability dilemma were accurately described 
by the Social Security Advisory Board when it reported: ``. . . the 
structural problems with the agency's disability determinations and 
appeals process . . . are at the heart of many of the agency's service 
delivery problems.'' We believe that it is essential to reexamine the 
nature of the federal-state relationship in the disability process. 
What we have today is a system that produces wide variances in 
allowance rates, staff salaries, hiring and training practices, and 
quality assurance practices among the 54 different agencies making 
medical decisions. Because SSA's disability programs are national 
programs, there is an obligation to ensure that all applicants receive 
equal treatment. This does not appear to be the case today. Examination 
of the federal-state relationship may lead to recommended changes, 
which in all likelihood will require legislation.
    Another long-term solution would be to change the nature of the 
disability program by changing the current definition of disability and 
modifying the program to provide for short-term as well as long-term 
disability payments.
    Such a modified program could provide a smoother and faster initial 
disability determination process. It could also build into the 
provision for short-term disability the work incentive provisions 
currently available through ``Ticket to Work''.
Short-Term Solutions:

    While it may be prudent and desirable to pursue the relatively 
long-term solutions described above, which would generally require 
legislation, there are actions that can be taken now to improve the 
current process.
    Nine years ago, SSA embarked on an ambitious effort to improve the 
disability process by attempting to redesign the process. A number of 
pilots and other efforts were undertaken. While we haven't found a 
``silver bullet'' much has been learned, and NCSSMA recommends that 
some of the positive findings from the efforts undertaken over the past 
nine years can and should be put to work now to help mitigate the 
problems with the current process. Our specific recommendations are as 
follows:

         Technical Expert for Disability: The three-year-long 
        Disability Claims Manager (DCM) pilot undertaken by SSA was 
        successful in proving the concept that one individual could 
        handle both the program and disability determinations aspects 
        of disability claims. Under this initiative, one individual in 
        either an SSA field office or a DDS was given the 
        responsibility for the complete processing, from initial 
        application and interview to a final decision of an initial 
        claim for disability benefits. The DCM served as the claimant's 
        point of contact throughout the process. This pilot 
        demonstrated reduced processing times, greater claimant and 
        employee satisfaction, a level of accuracy at or above that of 
        the traditional process, and at the peak of the pilot produced 
        more work for the total number of staff hours involved than the 
        traditional process. It is especially significant that 
        claimants expressed high levels of satisfaction with the level 
        of service provided under the pilot vis-a-vis the traditional 
        process, especially claimants whose claims were denied. While 
        the nature of the federal-state relationship presented 
        difficulties preventing a general adoption of the DCM process, 
        there were valuable lessons learned that can be put to 
        immediate use to improve current service. The pilot established 
        that, within the confines of the current federal-state 
        relationship, the role of the field office could be 
        strengthened and enhanced in the front-end disability process. 
        Specifically, the NCSSMA has recommended to SSA that a new 
        position be created in field offices whose focus would be on 
        the processing of disability claims. This position, which we 
        have termed ``Technical Expert for Disability'' (TED), would be 
        fully trained in the same basic medical determination training 
        received by new DDS Disability Examiners (DEs). Their 
        responsibilities would include:

         Intake of initial applications for disability 
        benefits under both the Title II and Title XVI programs

         Developing both the medical and non-medical aspects 
        of certain claims

         Making the non-medical and making or recommending the 
        medical decisions in predetermined types of cases, with 
        individual state agreement

         Reviewing and taking, where indicated, the first 
        action on disability claims being forwarded to the DDS for 
        development and medical decision

         Training and mentoring other field office employees 
        in the disability process


    The TED position could help resolve one of the most pervasive 
problems in the disability process by improving the quality of the 
initial medical transmittals to DEs in the DDSs. Both the timeliness 
and accuracy of initial disability decisions should be improved. The 
TED could become the pivotal position in the disability process, 
providing the claimant with a single point of contact that can only be 
effectively accomplished by someone knowledgeable in both the medical 
and non-medical aspects of the disability claims process. Once again, 
we urge SSA to implement this position.

         E-DIB: SSA has recently embarked on a project to 
        accelerate the conversion of the disability process to an 
        electronic environment, eliminating paper files and mailings 
        and permitting easier review and transfer of information in the 
        disability claims process. We applaud the Commissioner's 
        decision to move this project quickly.

         ``Intelligent'' front-end system: Field offices need 
        to be provided with an intelligent front-end interview system 
        that will allow the interviewer to obtain all relevant medical 
        information. This would include ``drop down'' menus and an 
        interview path with questions based on the specific impairment. 
        This will result in a better front-end product and avoid 
        unnecessary information by making the questions impairment-
        specific.

         Improving the appeals process: There are a number of 
        changes to the hearings process that would make the process 
        more efficient and reduce the length of time it takes to get 
        hearing and appeals council decisions.

                L--Close the record after the ALJ decision

                L--Allow Agency representation at ALJ hearings

                L--Combine OHA and SSA field offices
The Need for Resources

    Quality and service ultimately takes staff. SSA continues to 
struggle to keep up with its burgeoning disability workload. This 
situation will continue and probably worsen as the ``Baby Boomers'' age 
and file for disability in growing numbers if something is not done. 
Because of the nature of the disability process and program, it is not 
amenable to an Internet service delivery solution. Many people who file 
for disability are suffering from mental disorders. The complexity of 
the process makes it unlikely that this service population will be able 
to apply via the Internet. These individuals need the option of face-
to-face, personalized service. The NCSSMA, in a survey released in 
March 2001, documented the finding that field managers felt the need 
for an additional 5000 employees simply to keep up with current service 
demands. The Special Title II Disability workload has added to this 
need. We cannot overemphasize the point that disability claimants need 
face-to-face, person-to-person service. This is the most effective way 
to ensure that these most vulnerable of our citizens, facing crisis 
situations in their lives, receive the timely and quality service they 
deserve.
    Again, Mr. Chairman, I thank you for this opportunity to appear 
before this Subcommittee. I would welcome any questions that you and 
your colleagues may have.

                                 

    Chairman SHAW. Thank you. Mr. Price?

STATEMENT OF JEFFREY H. PRICE, PRESIDENT, NATIONAL ASSOCIATION 
        OF DISABILITY EXAMINERS, RALEIGH, NORTH CAROLINA

    Mr. PRICE. Mr. Chairman, Members of the Subcommittee, the 
Social Security Administration faces critical choices regarding 
the direction the disability claims process should take, and 
the National Association of Disability Examiners appreciates 
this opportunity to present our perspective.
    Our written testimony provides greater detail. Our oral 
testimony concentrates on our proposal for a new claims process 
that we believe will improve service to the claimant at an 
affordable cost.
    Because of the extent of the increase in the number of 
disability claims over the next decade, improving the 
disability process in a way that is practical and affordable is 
critical. The SSA launched its most recent effort to redesign 
the disability process in October 1999. Spiraling 
administrative costs made it clear this design did not 
represent the future of the disability process. It was also 
clear that the attempt to reduce the four-tiered appeals step 
to two was not a viable solution. The ALJs were overwhelmed by 
the number of cases appealed. The need for an intermediate 
appeals step was clearly established. After more than a decade 
of redesigning efforts, SSA still does not have an acceptable 
new disability process to handle the significant increase and 
the number of claims. It does not have a new claims process 
that will reinforce the need for fair and timely decisions 
while awarding benefits only to the truly disabled.
    The NADE accepted the challenge to develop a concept for a 
new process that would achieve these goals. What we hoped to 
achieve was to direct attention to a process based on what was 
fair for the claimant, and what could SSA afford. The 
highlights of our proposal include placing greater emphasis on: 
claimant responsibility, expansion of the single-decision maker 
in the DDS, enhancing the current reconsideration to provide a 
due process hearing, closing the record after the 
reconsideration decision, allowing administrative law judges to 
make the legal decisions they are trained to do, eliminating 
the appeals council, and establishing a Social Security Court.
    Our proposal affords the claimant a right to the hearing 
regarding their eligibility for benefits, and a review to 
ensure that the medical decision correctly followed the law. 
Hearings conducted at the DDS level would follow the 
Administrative Procedures Act (APA) in the same way that 
appeals at State workers compensation agencies do at the 
present. Those hearings preserve claimant appeal rights, and 
have been tested in courts so that we know this process is 
viable. Under the APA claimants are entitled to a hearing to 
ensure that the government's decision follow the law. Our 
proposal does not alter this fact, but it does seek to reduce 
the 1,153 days that claimants now wait for a decision if they 
appeal their case all the way through the appeals council.
    Our proposal recommends that the record be closed after the 
DDS hearing. Closing the record is critical to establishing 
consistency and affordability since appeals beyond the DDS are 
extremely expensive. It will also encourage cooperation with 
claim development efforts. The NADE's proposal required 
claimants and their representatives to cooperate with all 
components of the disability claims process. This Subcommittee 
was advised in March 1999 by the U.S. General Accounting Office 
that, ``Frequent delays in disability proceedings are a 
significant problem and often attributable to the actions of 
some representatives. Decision makers are frustrated by 
disability program laws that provide numerous opportunities for 
claimant representatives to submit new evidence in support of 
their clients' claims throughout the entire process, but 
holding SSA primarily responsible for adequately developing the 
evidentiary record even when a claimant has representation.''
    The NADE believes this Subcommittee and SSA should consider 
holding claimants and their representatives accountable. Other 
aspects of our proposal call for the elimination of the appeals 
council and the creation of a Social Security Court. Eighty 
percent of the claims now heard before administrative law 
judges involve representation for the claimant. This process 
places an unfair burden on the administrative law judge who 
must remain fair and impartial while considering SSA's defense 
as if they had presented one.
    In conclusion, NADE believes truly disabled citizens should 
be awarded benefits as early in the process as possible, and 
those who are not disabled should not receive benefits 
regardless of the process used. Our proposal has the potential 
for making this happen. We believe that it is time to establish 
a new process that reflects pragmatic reality and offers the 
best service to the claimant at the best price to the American 
taxpayer. Hon. Clay Shaw, Chairman of this Subcommittee, in 
announcing today's hearing, commented, ``Individuals with 
disabilities, already burdened by the challenge of their 
illness or injury, are often in desperate need of benefits to 
replace lost income. They deserve and should receive timely and 
accurate decisions through a fair and understandable process. 
Our challenge is to examine the disability process, to ensure 
that it meets the needs of individuals with disabilities and 
their families.''
    The NADE believes our proposal for a new disability process 
answer the Chairman's challenge. Thank you.
    [The prepared statement of Mr. Price follows:]
   Statement of Jeffrey H. Price, President, National Association of 
             Disability Examiners, Raleigh, North Carolina
    The National Association of Disability Examiners (NADE) commends 
the Subcommittee on Social Security for holding today's hearing. It is 
entirely appropriate and urgently needed that public and congressional 
attention be directed to `` SSA's Disability Determination and Appeals 
Process.'' The Social Security Administration is bringing to a close 
this month the last of many experiments aimed at creating a new 
disability claims process. SSA now faces critical choices regarding the 
direction it must choose to go. NADE considers itself to be an expert 
on the disability claims process and we appreciate the opportunity to 
present our perspective on this topic.
Who We Are
    NADE is a professional association whose mission is to advance the 
art and science of disability evaluation and to promote ongoing 
professional development for our members. The majority of our members 
work in the State Disability Determination Service (DDS) agencies and 
are responsible for the adjudication of claims for Social Security and 
Supplemental Security Income disability benefits. Our membership also 
includes personnel from Social Security's Central Office and its Field 
Offices, claimant advocates, physicians, attorneys, and many others. 
Our diversity, our immense program knowledge, and our ``hands on'' 
experience, enables NADE to offer a perspective on disability related 
issues that is unique and, more importantly, reflective of a pragmatic 
realism.
Current Process
    The current disability claims process presents a four tiered 
approach that is challenging to the majority of claimants seeking help. 
An initial application is adjudicated by the DDS. If denied, the 
claimant may request a reconsideration of their claim. This is also 
adjudicated by the state DDS. Subsequent appeals would ask for a 
hearing before an Administrative Law Judge and review by the Appeals 
Council. Further appeals are made in federal court. Initial and 
reconsideration decisions are subject to quality review in the DDS and 
in SSA's regional offices. Counting waiting times, hand-offs, etc., 
claimants currently will wait an average of 1153 days, more than three 
years, for a final decision if their claim is appealed through the 
Appeals Council.
    Is this the kind of service we should expect from our government? 
Do we really want to tell people, who believe they are disabled and 
unable to work, that if they can find a way to feed, clothe and house 
themselves, and their families, without an income, for more than three 
years, we will then give them a decision? I doubt anyone believes this 
is the level of service we should be providing. Anyone who does should 
be made to wait three years for their next paycheck.
What's Wrong with the Current Process?
    The current disability claims process presents many problems. These 
are the same problems that have been studied by the Social Security 
Administration and this Subcommittee for more than a decade. To date, 
affordable solutions have remained elusive. The complexity of the 
regulations and rules that govern the disability program and the multi-
layer appeal process tends to discourage many claimants from utilizing 
all of their appeal rights. Consequently, SSA has been trying to 
redesign the disability claims process. For the most part, these 
efforts have been unsuccessful. The problems that persist are numerous:

         Timeliness of decisions
         Increasing administrative costs
         Solvency of Social Security disability trust funds
         Disparity in DDS and ALJ allowance rates
         Concerns regarding public confidence
         Poor customer service throughout the claims process
         Inadequate training of staff

    Clearly, there is a need for the agency to move forward with 
implementing a new disability process that is practical and affordable. 
Because of the expected increase in the number of Social Security and 
Supplemental Security Income disability claims over the next decade, 
improving the disability process is critical to the agency's mission. 
SSA will also have to discover a way to incorporate into its assessment 
of eligibility for disability benefits a determination of what is 
actually needed to return the claimant to work. SSA will need to 
develop more aggressive and more comprehensive return-to-work 
strategies that focus on identifying and enhancing the work capacities 
of claimants and beneficiaries.
Redesign
    SSA's most ambitious efforts to redesign the disability claims 
process were introduced in 1994. In the ensuing years, SSA tested many 
ideas, including the Full Process Model (FPM), the Disability Claims 
Manager (DCM), and others that, after lengthy testing, proved to be 
inadequate to meet the demands for service and affordability. NADE 
raised practical concerns about the feasibility of many of these 
proposals but we supported testing to establish whether or not the 
ideas would work. Our emphatic condemnation of the Full Process Model 
and concerns over the administrative costs of Prototype did cause SSA 
to step back from its plans to roll these designs out nationally.
    SSA launched its most recent effort to redesign the disability 
claims process in October, 1999. In so doing, the Agency ignored 
warnings from NADE, from the General Accounting Office, and from 
others, that this test was too large and committed too much of the 
Agency's resources.
    As the Prototype experiment was gradually refined in recognition of 
its spiraling administrative costs, it became clear that SSA had 
misjudged its data and that prototype did not represent the future of 
the disability process. It was clear that the attempt to reduce the 
four tiered appeal step to two was not a viable approach. 
Administrative Law Judges were not prepared for the tremendously heavy 
caseload that resulted from so many claimants choosing to appeal 
initial denials. Without an intermediate appeal step, Administrative 
Law Judges, already faced with a backlog of cases, were quickly 
overwhelmed. The Prototype experiment clearly established the need for 
an intermediate appeal step between the initial decision and the 
hearing before the Administrative Law Judge.
    Prototype also produced one idea that did show promise for the 
future--the concept of a Single Decision-Maker (SDM). By eliminating 
the need for medical consultants to ``sign off'' on every case and 
allowing qualified disability examiners to make decisions on cases they 
felt comfortable deciding, the SDM became the one positive result of 
Prototype. It was successful in increasing employee satisfaction for 
the disability examiner and the medical consultant and, more 
importantly, there was no decline in the quality of the decision.
NADE Proposal For A New Disability Claims Process
    After more than a decade of redesign efforts, SSA still does not 
have an acceptable new disability claims process that will enable the 
Agency to handle the expected significant increase in the number of 
claims it will receive in the next decade. It does not have in place a 
new process that will enforce the need for fair and timely decisions, 
coupled with the need to maintain public confidence that only the truly 
disabled are awarded benefits. NADE accepted the challenge to develop a 
concept for a new disability process that would achieve these goals. A 
copy of our proposal, published over three months ago, is attached to 
our statement today. What we desired to achieve with this proposal was 
to direct attention on a concept for a claims process based on two 
ideas:

         What is fair for the claimant?
         What can SSA afford?

    Our experience and expertise, as the only professional association 
with the membership base that enables it to view the entire disability 
process, was critical to our ability to develop this concept for a 
process that, not only would improve the service provided to the 
claimant, but would also be affordable. The major highlights of our 
proposal include:

         Placing greater emphasis on claimant responsibility
         Expansion of the Single Decision-Maker in the DDS
         Enhancing the current reconsideration to provide a 
        due process hearing for the claimant
         Closing the record after the reconsideration decision
         Allowing Administrative Law Judges to make the legal 
        decisions that they are trained to do
         Eliminating the Appeals Council
         Establishing a Social Security Court to hear appeals 
        of ALJ decisions.

    We firmly believe that the decision as to whether a claimant is 
disabled is a medical decision and should be made by those who are 
especially trained to make such decisions. Judging the impact that a 
heart attack or stroke has on a person's ability to function in a work 
setting is a medical decision and is best made by those who have been 
trained to do so.
    Reviewing disability determinations to determine if the law was 
correctly applied is a legal decision and is best left to those who are 
especially trained to make those decisions. American jurisprudence 
would not accept a legal decision made by a lay person untrained in the 
law. Likewise, America's disability programs should not have to accept 
medical decisions made by individuals who are not trained to do so.
    NADE's proposal affords the claimant the right to a medical hearing 
regarding their eligibility for disability benefits and a legal review 
to ensure that the medical decision correctly followed the law. We can 
hardly see where the argument that the claimant would lose appeal 
rights has any merit.
    There have been arguments presented that hearings conducted at the 
DDS level would violate the Administrative Procedures Act and would 
restrict the claimant's right of appeal. This is clearly not true. The 
APA guarantees the claimant is entitled to a hearing to ensure that the 
Federal Government agency's decision was made in accordance with the 
law. This concept is reinforced in the NADE proposal. We fail see how 
it can be advocated that the right to a medical hearing much earlier in 
the process would restrict the claimant's appeal rights.
    NADE's proposal asserts that the record should be closed after the 
DDS hearing. The Association of Administrative Law Judges has also 
supported closing the record after the claimant has received a hearing. 
Because each appeal beyond the DDS is extremely expensive and each new 
appeal level is looking at a new case, the decisions made on appeal 
cannot be used to reflect on the decision rendered by DDS adjudicators. 
There may be an incentive to not cooperate with the DDS. This is why we 
have proposed closing the record after the reconsideration level. It 
will add consistency and affordability to the program.
    The proposal to close the record simply seeks to incorporate within 
the disability program a practice common to the American judicial 
system and most state workers compensation systems. Appeals are made on 
issues of law and not on a new case. In NADE's proposal, if claimants 
believe that new and material evidence does arise after the DDS 
hearing, this evidence can be reviewed in the DDS and, if necessary, 
the claim folder can be recalled and the file reopened. If the claim is 
not reopened, the claimant has the option of submitting a new 
application for disability and including this evidence. This process 
still provides claimants with faster processing times than currently.
    NADE believes that a new disability process should place greater 
emphasis on the expectation that claimants, and their authorized 
representatives, must assume greater responsibility for cooperating 
with all components of the disability claims process. This Subcommittee 
was advised in March, 1999 by the U.S. General Accounting Office that, 
``frequent delays in disability proceedings are a significant problem 
and often attributable to the actions of some disability 
representatives.'' The GAO also reported it had found that disability 
decision-makers were frustrated by, ``* * * disability program laws 
that provide numerous opportunities for representatives to submit new 
evidence in support of their client's claim throughout the entire 
process and hold SSA primarily responsible for adequately developing 
the evidentiary record, even when a claimant has representation.''
    There is a growing problem in Continuing Disability Reviews where 
claimants refuse to cooperate with requests for information and to 
attend consultative examinations. This lack of cooperation is often 
encouraged by representatives and we are beginning to see the same lack 
of cooperation in initial and reconsideration claims, particularly when 
there is legal representation involved.
    Claimants and their representatives should be required to cooperate 
fully with the decision-makers at each level in the disability process. 
Consideration should be given by SSA and the Subcommittee to holding 
claimants and their representatives accountable for their actions in 
failing to cooperate.
    Other aspects of NADE's proposal call for the elimination of the 
Appeals Council and the creation of a Social Security Court. The 
Appeals Council is an unnecessary appeal step. The complexity of 
disability claims should require that a specialized court, similar to 
federal bankruptcy and military courts, be created to hear these 
appeals.
    The DDS hearing decision should be defended in subsequent appeals 
by an individual who can present the merits of the decision. Many will, 
of course, advocate that this scenario will create an adversarial 
relationship between the claimant and the Social Security 
Administration at subsequent appeals. We do not believe this will be 
the case. Eighty percent (80%) of claims now heard before 
Administrative Law Judges involve legal representation for the 
claimant. There is no representation of the government's decision. 
Administrative Law Judges can be charged with bias if they are 
perceived as defending the decision while questioning the claimant. 
This process is unfair. The Social Security Advisory Board suggested in 
their September, 2001 report that the government should be represented 
at the hearing level. We concur with this opinion.
The Electronic Disability Claims Folder
    The Commissioner of Social Security recently announced her intent 
to have an electronic disability claims folder fully operational in the 
field offices and DDSs by January 1, 2004. We believe this is an 
ambitious goal for an Agency that has struggled for the past ten years 
to develop an electronic folder. However, NADE is encouraged by the 
Commissioner's commitment to advancing this goal and we support this 
effort. We caution the Subcommittee, however, that the expected costs 
will be significant and funding must either be taken from other 
components within the disability program that are already experiencing 
financial strain, or be provided as new money. It would be unfair to 
expect the level of service that has been provided to be maintained if 
needed funds are diverted to other projects. We should also not forget 
that performance and training issues that would arise from this new way 
of doing business have not been addressed. This will require learning 
and using new tools and this usually has a negative impact on 
production, as it has for the past several years in Wisconsin where the 
DDS in that state has been working on a paperless folder pilot for five 
years.
Training and Resources
    The NADE proposal should be tested to determine whether it can work 
and provide better service delivery to the claimant than the current 
process. Its success, however, will be contingent on the proper funding 
and training being made available to each component in the process.
    The need for adequate training has never been more critical. 
Advances in technology make it likely that knowledge in the world will 
double every two months by the year 2010. Seventy-five percent (75%) of 
the technology we will use in 2010 has yet to be invented. It is 
critical that all components within the disability program be provided 
with the training that will enable them to discharge their 
responsibilities in the best interests of the claimants who come to us 
for help and the taxpayers who pay for the service delivery.
Conclusion
    NADE believes that truly disabled citizens should be awarded 
benefits and that those who are not disabled should not receive 
benefits, regardless of the claims process used. NADE supports the goal 
of allowing disability claimants who should be allowed as early in the 
process as possible. Our proposal has the potential of making this 
happen in an affordable and expeditious manner.
    In its September, 2000 report, the Social Security Advisory Board 
reported that, ``. . . in recent decades, disability policy has come to 
resemble a mosaic, pieced together in response to court decisions and 
other external pressures, rather than the result of a well-thought out 
concept of how the programs should be operating . . . Policy and 
administrative capacity are dramatically out of alignment in the sense 
that new and binding rules of adjudication frequently cannot be 
implemented in a reasonable manner, particularly in view of the 
resources that are currently available.'' NADE concurs with this 
observation. We believe our proposal for a new disability claims 
process achieves the goal of providing a well thought out concept that 
describes how the disability program should operate. It is time to move 
forward with a new disability claims process that reflects pragmatic 
reality and offers the best service to the claimant at the best price 
to the American taxpayer. It is equally important that the Commissioner 
be given the support necessary to make the appropriate changes that 
will recommit the Agency to its primary purposes of stewardship and 
service.
    The disability program presently requires about two-thirds of SSA's 
operating budget ($8 billion in FY 2002-2003). To continue to allow the 
disability program to operate as described in the report from the 
Social Security Advisory Board would be a violation of the public's 
trust and the mission of SSA--``To promote the economic security of the 
nation's people through compassionate and vigilant leadership in 
shaping and managing America's social security programs.''
    At her confirmation hearing last year, the new Commissioner of 
Social Security asserted, ``I do not seek to manage the status quo.'' 
NADE agrees that managing the status quo is no longer a viable option. 
While we do not support change for the sake of change, we recognize 
that the status quo has ceased to provide the level of service those 
who seek our help have a right to expect. The question we must all seek 
to answer is, ``How will we respond to the need to improve service 
delivery while recognizing that financial resources have constraints?''
    No other agency has a greater impact on the quality of life in this 
nation and the American public will judge the ability of their 
government to meet their needs by the quality of service provided by 
SSA. In announcing today's hearing, the Honorable Clay Shaw, Chairman 
of this Subcommittee, commented: ``Individuals with disabilities, 
already burdened by the challenges of their illness or injury, are 
often in desperate need of benefits to replace lost income. They 
deserve, and should receive, timely and accurate decisions through a 
fair and understandable process. Our challenge is to thoughtfully and 
carefully examine the disability determination and appeals process to 
ensure it meets the needs of individuals with disabilities and their 
families.'' NADE believes the proposal we have submitted for a new 
disability claims process addresses the Chairman's challenge.
                                 ______
                                 
            NADE Proposal for New Disability Claims Process

                           February 26, 2002
    1. LIntake of new disability claims at the Social Security Field 
Office would not be significantly altered from the current practice 
with the following exceptions:

        a. LGreater emphasis would be placed on the inclusion of 
        detailed observations from the claims representative.
        b. LThe claimant would be provided with a clear explanation of 
        the definition of disability by the claims representative. The 
        definition would also appear on the signed application.
        c. LSSA's web site should clearly indicate that this is a 
        complex process that would be better served if the claimant 
        filed the application in person at the Field Office.
        d. L Quality review of the Field Office product would be added 
        to demonstrate SSA's commitment to build quality into the 
        finished product from the very beginning of the claims process.
        e. LSSA's outreach activities would combine education with 
        public relations. The Agency's PR campaign would remind 
        potential claimants of the definition of disability with the 
        same degree of enthusiasm as the Agency's efforts to encourage 
        the filing of claims.
        f. LGreater emphasis would be placed on claimant 
        responsibility.

    2. LDDS receipts the new claim and assigns the claim to a 
disability examiner. The Disability Examiners initiates contact with 
the claimant to:

        a. LThe Disability Examiner will verify alleged impairments, 
        medical sources and other information contained on the SSA-
        3368.
        b. LThe Disability Examiner will provide a clear explanation of 
        the process and determine if additional information will be 
        needed.
        c. LThe Disability Examiner will inform the claimant of any 
        need to complete additional forms, such as Activities of Daily 
        Living questionnaires.

    3. LExpand the Single Decision Maker (SDM) concept to:

        a. LInclude more claim types
        b. LAllow more disability examiners to become SDMs
        c. LStandardize national training program for all components of 
        the disability process
        d. LEstablish uniform criteria for becoming SDMs
        e. LStandardize performance expectations for all components of 
        the disability process

    4. LIf the initial claim is denied by the DDS, the denial decision 
will include an appeal request with the denial notice that the claimant 
may complete and return to the DDS.

        a. LThe requirement for a clear written explanation of the 
        initial denial will remain a major part of the adjudicative 
        process.
        b. LProcess Unification rulings should be reexamined and, if 
        necessary, modified to clarify how the initial disability 
        examiners should address credibility and other issues.
        c. LClaimant responsibility will be increased in the new 
        process

    5. LThe denied claim will be housed in the DDS for the duration of 
the period of time the claimant has to file an appeal. During this 
period of time, claims could be electronically imaged (with adequate 
resources--this would further the electronic file concept).

    6. LThe appeal of the initial denial will be presented to the DDS. 
Upon receipt of the request for an appeal, the claim will be assigned 
to a new disability examiner. Under this proposal:

        a. LThis appeal step would include sufficient personal contact 
        to satisfy the need for due process.
        b. LThe appeal decision, if denied, would include a Medical 
        Consultant's signature.
        c. LThe decision would include findings of fact.
        d. LThere would be a provision to include an automatic remand 
        to DDS on appeals for denials based on failure to cooperate.

    7. LThe record should be closed at the conclusion of this appeal 
(including allowing sufficient time for explanatory process before the 
record closes).

    8. LAppeal to the Administrative Law Judge must be restricted to 
questions of law rather than de novo review of the claim.

        a. LThe DDS decision needs to have a representative included in 
        the hearing to defend the decision.
        b. LThere must be an opportunity to remand to DDS but such 
        remand procedures must be carefully monitored to prevent abuse 
        and remands should only occur for the purpose of correcting 
        obvious errors.

    8. LThere needs to be a Social Security Court to serve as the 
appeal from OHA decisions.

        a. LThe Social Security Court will serve as the final level of 
        appeal.
        b. LThe Social Security Court will provide quality review of 
        ALJ decision.
        c. LThe Appeals Council would be eliminated, limiting the total 
        number of appeal steps within SSA to three. Appeals beyond the 
        ALJ level would be presented to the Social Security Court.
        d. LThe Social Security Court would be restricted to rendering 
        only a legal decision based on the application of the law.

Explanation of New Disability Claims Process Proposed by NADE

    NADE considered various alternatives to the current disability 
claims process before deciding on this process as representing the hope 
for a claims process that truly provided good customer service while 
protecting the trust funds against abuse. It was our intent to develop 
a vision for what the total program should look like and not just the 
DDS piece of the puzzle. We believe in the concept of ``One SSA'' and 
our proposal is submitted based on the belief that all components 
within the disability program should be united in the commitment to 
providing good customer service at an affordable price. Quality 
claimant service and lowered administrative costs should dictate the 
structure of the new disability program.
    The critical elements identified in the NADE proposal are:

         The expansion of the Single Decision Maker concept to 
        all DDSs and expanding the class of claims for which the SDM is 
        able to provide the decision without medical or psychological 
        consultant input. Continuing Disability Review cases (CDR's) 
        and some childhood and mental cases can easily be processed by 
        SDMs.
         More early contact with the claimant by the DDS to 
        explain the process and to make the process more customer 
        friendly. The Disability Examiner is able to obtain all 
        necessary information while clarifying allegations, work 
        history, and treatment sources. The claimant is educated about 
        the process so they know what to expect.
         Housing the initial claim folder on denied claims in 
        the DDS pending receipt of an appeal of that denial. This will 
        effectively eliminate significant shipping costs incurred in 
        transporting claims from the DDS to the Field Office and then 
        back to the DDS. Costs of storage in the DDSs would be 
        significantly less than the postal fees incurred by SSA in the 
        current process. Housing the claims at the DDS instead of the 
        Field Offices could save as much as $20 per claim in shipping 
        costs. It will also reduce processing time by eliminating a 
        hand-off.
         Closing the record after the appeal decision is 
        rendered. NADE believes that closing the record prior to any 
        subsequent ALJ hearing is critical to generating consistency, 
        providing good customer service, restoring public confidence 
        and reducing the costs of the disability program. Without it, 
        there will continue to be two programs, one primarily medical 
        and one primarily legal, with two completely different 
        outcomes. We are unclear as to the degree of personal contact 
        that would be required to satisfy the due process requirement 
        at this appeal level and would defer to SSA the decision as to 
        how much contact is needed and how the requirement could be 
        met. Is a face-to-face hearing necessary or can a phone 
        interview suffice? Even the former, conducted in the DDS, would 
        be substantially less costly than the current hearing before 
        the ALJ. The DDS hearing would allow the claimant to receive a 
        much more timely hearing than the current process allows. NADE 
        also believes that the role of attorneys and other claimant 
        representatives would be significantly diminished as the 
        opportunity for reversal of the DDS decision would be lowered 
        substantially. The DDS hearing would be an informal hearing, 
        lessening the impact attorneys have at this level.
         NADE believes that the current 60 day period granted 
        to claimants to file an appeal should be reexamined in light of 
        modern communication and greater ability of claimants to file 
        appeals more quickly. Reducing the time allowed to file an 
        appeal would produce cost savings to the program and aid the 
        claimant in obtaining a final decision much more quickly.

    The additional costs incurred by the DDSs in this new process would 
be paid for from monies reallocated from OHA and from the cost savings 
created by less folder movement between the DDSs and the Field Offices. 
Political decisions will have to be made to reallocate these funds and 
these decisions will not be popular. Because of turf guarding by the 
various components within SSA and a general unwillingness to accept 
change, NADE believes that the victim in past efforts to develop a 
comprehensive disability claims process has been the claimant. The 
question must be asked, ``Who do we serve, ourselves or the claimant?''
    NADE envisions a claims process that would reinforce the medical 
decision made by the DDS and limit the OHA legal decision to addressing 
only points of law. NADE believes this proposal would produce a high 
level of consistency for the disability decisions rendered by the DDSs 
while significantly reducing the opportunities for OHA to reverse DDS 
decisions. This would help restore public confidence in the system, 
provide good service to the claimant and reflect good stewardship since 
the entire process should prove to be less costly than prototype or the 
traditional process. The decision as to whether a claimant is disabled 
would rightfully remain primarily a medically based decision. Claimants 
who appeal the DDS decision to an ALJ would be entitled to hire legal 
counsel if they wish. Likewise, SSA would employ a legal representative 
to define the legal merits of the DDS decision. Each side would present 
legal briefs in support of their position, rather than appearing in 
person, and the ALJ would make the decision based on review of the 
claim file and the legal briefs. If necessary, the ALJ could be 
permitted to request that both sides appear in person but this should 
be only for rare circumstances. Unless the law was incorrectly applied, 
the DDS decision would be affirmed. Any appeal of the ALJ decision 
would be made to the Social Security Court and either side could 
appeal.
    The proposal is predicated on the assumption that sufficient 
staffing and resources would be made available to the DDSs. It is also 
predicated on the need for SSA to clearly define the elements that will 
satisfy the process unification initiatives. It is critical that SSA 
should provide clarification of what steps must be followed and provide 
the funds necessary. To minimize the need for additional resources, we 
believe the process unification rulings should be modified in 
accordance with the recommendations that have been proposed by various 
workgroups. Failure to adhere to this recommendation could result in 
the likelihood of additional lawsuits throughout the country that will 
make it mandatory for DDSs to adhere to regulations for which they are 
not funded. Such a situation would have serious consequences for the 
ability of the DDSs to provide good customer service and also meet the 
requirements established by the courts.

                                 

    Chairman SHAW. Thank you. Ms. Dorn?

 STATEMENT OF LINDA DORN, VICE PRESIDENT, NATIONAL COUNCIL OF 
     DISABILITY DETERMINATIONS DIRECTORS, LANSING, MICHIGAN

    Ms. DORN. Mr. Chairman, thank you for your invitation to 
participate in this hearing on the challenges and opportunities 
facing the Social Security Disability process. Our organization 
agrees with your statement that improvement in the disability 
determination function is among the primary challenges facing 
the Commissioner. The National Council of Disability 
Determination Directors (NCDDD) reaffirms all its previous 
commitments to participate in finding and implementing 
responsible solutions with accountability by all stakeholders.
    The NCDDD is a professional association of directors and 
managers of agencies of the State government, performing the 
disability determination function on behalf of the Social 
Security Administration. The NCDDD's goals focus on finding 
ways to establish, maintain and improve fair, accurate, timely 
and economical decisions to persons applying for disability 
benefits.
    Congress created the Federal/State relationship in response 
to the need for professional experts working effectively and 
efficiently with other community based services. It is through 
the State initiatives, work with the medical community, cost 
effectiveness in personnel usage, and working with individual 
State infrastructures to provide referrals to State agencies 
that serve the disability program and the American public well. 
This relationship should continue to be nurtured and supported 
to allow for alignment with other community-based services. The 
Federal/State relationship, while not perfect, is at its best 
when integrated with the administration's mandate of empowering 
States to act on behalf of and empowering our most vulnerable 
citizens.
    We appreciate the recommendations of the bipartisan Social 
Security Advisory Board as stated in their January 2001 report 
in regard to strengthening the Federal/State relationship. Our 
recommendations today focus on six key issues in need of 
attention: adequate resources, clear concise policy, a quality 
culture promoting consistency, integrated technology systems, 
support for the interim decisions are post prototype, and 
consistency between the DDSs and OHA.
    First in regard to resources. The complex task of applying 
the statutory definition of disability requires extensive 
development of medical evidence, expert analysis of evidence, 
and careful explanation of conclusions. The process is 
therefore costly. Determining eligibility for disability 
benefits requires staff trained in making complex medical, 
psychological, vocational judgements. It is not done in any lab 
situation or a vacuum, but rather in the real world of mounting 
pressures. The DDS has continued to be the component performing 
the mission of Social Security disability programs 
productively, responsively, timely, consistently and cost 
effectively. Federal components have referred to the State 
agencies in the DDS as the best deal in government services. A 
clear relationship exists between the level of service we are 
able to provide and the resources available to provide that 
service. The recent history of downsizing, the attempts to 
implement multiple costly projects, pilots, prototypes, and the 
creation of new policies that are expensive to administer and 
other unfunded mandates have contributed to the current 
situation in which the program and the resources available to 
carry it out are seriously out of alignment. The task to 
resource deficit has resulted in an alarming situation about 
which we want to be very clear.
    Presently our program has well over 125,000 disability 
cases nationally pending than we are able to process. These 
claims and disability application are awaiting assignment to 
caseworkers because the caseloads are at maximum capacity for 
the resources available. Worse, SSA has predicted that the 
current resource allocation, that this number will continue to 
grow. The NCDDD feels that this quality of service delivery is 
unacceptable and amounts to a failure to provide the level of 
service that the public deserves.
    Second, improving policy and training as recommended in the 
Advisory Board report, the most important step SSA can take is 
to improve the process to develop ongoing joint training for 
all adjudicators in all components. The Board also noted that 
such training presumes the existence of a clear policy base, 
which is clear, concise and applicable in the real world 
setting. The NCDDD indicates much more remains to be done in 
the policy arena. Quality assurance, along with clear, concise 
policy, NCDDD recommends that SSA assign a high priority to 
revising the quality assurance system so as to achieve the goal 
of unifying the application of policy. The NCDDD endorses many 
aspects of the Lewin Report. We commend SSA and the 
Commissioner for their recent steps to appoint an executive 
lead to this important focus on quality. The NCDDD has a group 
ready, identified, to step forward and work with the 
Commissioner on this effort.
    System support, the development and enhancement of 
effective performing electronic systems is critical to 
delivering a high level of service. Historically, the DDSs have 
an excellent track record of having worked together to develop 
system capabilities to support their business processes. The 
NCDDD wants to express our support for accelerated electronic 
technology initiatives. We recommend further and future 
development be accomplished with a greater reliance on DDS 
systems experts and personnel. By working together, the DDS 
systems experts and private sector and SSA will achieve the 
bold timeline announced by the Commissioner.
    Our support for Post-Prototype and strengthening 
reconsiderations, we applaud the Commissioner's expeditious 
actions on prototype, ending years of testing and pilots. We 
want to acknowledge the decisions are the beginning steps of 
the process improvements. We want the second level of a 
possible review at the DDS level need not be an extra step, but 
could be such that would provide a better product than those 
that do go on to the next step in the appeals. We see as the 
most important task consistency and bringing together 
reasonable, consistent decision making to the process and the 
outcomes between the DDS and the Office of Hearings and 
Appeals.
    The DDS process initial and reconsideration level, in an 
average of about 70 days at a cost about $300 per case, 
according to data. According to SSA quality reviews we have a 
decisional accuracy of about 97 percent. Eighty percent of all 
allowances of those who receive disability benefits are allowed 
through decision made at the DDS. The NCDDD agrees that 
disability claims meeting the definition of disability should 
be allowed at the earliest step in the process.
    In conclusion, there is not one single fix. There are 
challenges to the disabled citizens, the program, the policy, 
the quality assurance, the employees that make an effort to 
implement the policy, our Agency, as well as the taxpayer 
challenges, are in need of our collective attention. The NCDDD 
restates its desire to continue to work together with you 
during the continued evolution and improvement of the 
disability program. Thank you.
    [The prepared statement of Ms. Dorn follows:]
Statement of Linda Dorn, Vice President National Council of Disability 
              Determinations Directors, Lansing, Michigan
    Mr. Chairman, thank you for your invitation to participate in this 
hearing on the challenges and opportunities facing the Social Security 
Disability process at the initial, reconsideration and continuing 
disability levels at the State Divisions of Disability Determination 
Services (DDS). Our organization agrees with your statement that 
improvement in the disability determination function is among the 
primary challenges facing the new Commissioner. The National Council of 
Disability Determination Directors (NCDDD) reaffirms all its previous 
commitments to participate in finding and implementing responsible 
solutions with accountability by all stakeholders.
    Before commenting on specific issues on the topic of today's 
hearing, we would like to restate the purpose of our organization, 
explain the reasons for the federal state partnership, and describe our 
commitment to the identification of barriers to service improvements 
and to the search for solutions to the challenges facing the disability 
programs at the DDS adjudication levels.
    The NCDDD is a professional association of directors and managers 
of the agencies of state government performing the disability 
determination function on behalf of Social Security. NCDDD's goals 
focus on finding ways to establish, maintain, and improve fair, 
accurate, timely, and economical decisions to persons applying for 
disability benefits.
    Congress created the federal state relationship in response to the 
need for experts at the grass roots level working effectively and 
efficiently with other community-based services. The intention was that 
the DDS be the human face in government services to our disabled 
population. This still proves to be the case in most instances. State 
initiatives; cost effectiveness in personnel usage, and working within 
the individual state infrastructures to provide referrals to related 
state agencies have served the disability program and the American 
public well. This relationship should continue to be nurtured and 
supported to allow for alignment with other community-based one-stop 
services. In reality, the federal state partnership, while not perfect, 
is at its best when integrated with the Administration's mandate of 
empowering the states to act on behalf of and empowering our most 
vulnerable citizens.
    The SSA/DDS partnership is held to a high standard by close contact 
with individual state governors, U.S. Congressional delegations and the 
American public. Serving the public requires close, collaborative 
teamwork. We appreciate the recommendations of the bipartisan Social 
Security Advisory Board (SSAB) as stated in their report of January 
2001 and generally concur with their findings, particularly in regard 
to strengthening the federal state relationship in the short run.
    The definition of disability has remained essentially unchanged in 
the past 30 years. It was always meant to be a more stringent standard 
compared to many other programs. Recent attention has been focused on 
allowance rates and other issues when, in fact, the program was never 
designed to allow every individual with any disability. Contrary to 
some statements contending the disability programs have not changed 
over the past years, the program has indeed experienced multiple 
changes in leadership, focus and direction. For example, mental, 
childhood, pain, treating source opinion, and credibility issues have 
engendered many changes which in turn impacted our ability to provide 
thoughtful, consistent, timely adjudication of Social Security 
disability cases.
    Our recommendations today focus on key issues on which the 
Commissioner must take prompt and decisive action in order to improve 
public service for the programs that we jointly administer with SSA.

        1. LAdequate resources
        2. LClear, concise policy
        3. LA quality culture promoting consistency and integrity
        4. LUp to date, integrated systems support
        5. LSupport for the interim suggestions ``Post-Prototype 
        strengthened reconsideration''
        6. LConsistency between DDSs and OHA
1. Resources
    The complex task of applying the statutory definition of disability 
requires extensive development of medical evidence, expert analysis of 
the evidence, and careful explanation of the conclusions. The process 
is therefore costly. Because determining eligibility for disability 
benefits are far more than a medical clerical function, the process 
requires staff trained in making complicated medical, psychological and 
vocational judgments. This is not done in a ``lab'' situation or vacuum 
but rather in the real world of mounting pressures. The DDSs continue 
to be the component performing the mission of the Social Security 
disability programs productively, responsibly, timely, consistently, 
and cost effectively. In fact, various SSA components have referred to 
the state agencies as being the ``best deal'' in government service.
    A clear relationship exists between the level of service we are 
able to provide and the resources available to provide that service. 
The recent history of downsizing, the attempts to implement multiple 
costly projects, pilots and prototypes, the creation of new policies 
that are expensive to administer, and other unfunded mandates have 
contributed to the current situation in which the program and the 
resources available to carry it out are seriously out of alignment.
    The task-to-resource deficit has resulted in an alarming situation 
about which we want to be very clear. Presently our program has well 
over 125,000 cases pending than we are unable to process. These 
disability applications are awaiting assignment to caseworkers because 
all the caseloads are at maximum capacity for the resources available. 
Worse, SSA has predicted that, with the current resource allocation, 
this number will continue to grow.
    NCDDD feels that this quality of service delivery is unacceptable 
and amounts to a failure to provide the level of service that the 
public deserves.
2. LImproving Policy and Training to Produce More Consistent and 
        Accurate Decision Making.
    As recommended by the Advisory Board in its report of August of 
1998, ``the most important step SSA can take to improve the process is 
to develop on-going joint training for all adjudicators in all the 
components that make and review disability determinations''. The Board 
also noted that such a training program presumes the existence of a 
policy base, which is clear, concise, and applicable in a real world 
setting.
    Presently, SSA policy for evaluating disability claims is 
fragmented, complex, conflicting, confusing, and sometimes obsolete. 
This compromises the ability of the DDSs to adjudicate cases 
consistently and accurately and is part of the reason that more than 
60% of the applicants who appeal denial of benefits at the initial 
level receive those benefits after appeal.
    While SSA should be commended for its recent efforts to introduce a 
greater degree of consistency into the process, much more remains to be 
done.
3. Quality Assurance
    Along with clear, concise policy and guidelines, NCDDD recommends 
that SSA assign a high priority to revising its quality assurance 
system so as to achieve the goal of unifying the application of policy 
among all components. The present QA system is out of date, applies 
differently to the various components, and induces inconsistency of 
decision-making.
    SSA presently is in possession of an independent consultant's 
report concerning changes in the QA system. NCDDD endorses many aspects 
of the Lewin report and recommends that it receive expedited attention 
by top management at SSA. We commend SSA for their recent steps to 
appoint an executive lead to this important focus on quality.
    NCDDD is committed to work with SSA to help create a new quality 
culture and a new quality process.
4. Systems Support
    The development and enhancement of effectively performing 
electronic systems is critical to delivering high quality service at a 
reasonable cost. Historically, DDSs have an excellent track record of 
having worked together to develop systems capabilities to support their 
business processes. In the last several years, SSA has embarked on 
various initiatives to develop, at the centralized level, alternative 
systems that would replace the equipment and software used in the DDSs. 
These initiatives have been extremely costly and have not produced 
advantages commensurate with their costs. While the available resources 
were diverted to the unsuccessful development of SSA systems, 
enhancement of the DDS systems has been curtailed due to lack of 
funding.
    NCDDD wants to express our support for accelerated electronic 
disability technology initiatives.
    NCDDD recommends that future development and enhancement of 
electronic systems be accomplished with greater reliance on the DDS 
systems experts and personnel.
    We believe it is reasonable to consider system software development 
be a task for which the knowledge, skills and ability of the private 
sector should be better utilized. Only by working together with the DDS 
systems experts and private sector will SSA achieve the bold timeline 
announced by the Commissioner.
5. LSupport for the interim suggestions ``Post-Prototype'' and 
        strengthened Reconsideration.
    We applaud the Commissioner's expeditious actions on prototype 
issues ending years of testing and pilots. We want to acknowledge the 
decisions are the beginning steps of process improvements. Further the 
Social Security Advisory Board (SSAB) reported in January 2001 any 
plans to eliminate the reconsideration should be reviewed carefully. 
The rationale was that recon had become a meaningless step that only 
delayed the correct decision. But a second level of review at the DDS 
level need not be meaningless. Claimants could be provided the 
opportunity for a face-to-face de novo hearing conducted by highly 
trained and experienced DDS reviewers. This should enhance the 
reliability and accuracy of DDS decisions and reduce the need for 
claimants to go through the complex and lengthy ALJ hearing process.
    NCDDD's position is an alignment of the SSAB's recommendation.
6. Consistency
    We are concerned that by attempting to move on so many fronts 
simultaneously, SSA will sacrifice progress toward solving what we see 
as its most important task--bringing reasonable consistency to the 
decision making processes and outcomes between the state DDSs and the 
SSA Office of Hearings and Appeals (OHA).
    We believe that variance in decision making between the two levels 
is a serious problem in the disability program. Without asserting which 
component is ``right'', the facts are as follows: DDSs process initial 
and reconsideration level decisions on average in about 70 days at a 
cost of about $300 per case. According to SSA quality reviews, DDS 
claims have a decisional accuracy of about 97%. Additionally, we 
believe that it is critically important to remember that eighty percent 
(80%) of all the individuals who receive disability benefits are 
allowed through a decision made by the DDS.
    NCDDD agree that cases meeting the definition of disability should 
be allowed at the earliest step in the process.
    There has historically been an absence of uniformity and stated 
clear policy instructions for adjudicators at the two levels. There has 
been no established ongoing common training for personnel.
    Separate and opposite quality assurance and case review systems 
tend to drive the two components apart rather than to bring them 
together.
    Mr. Chairman and members of the committee, thank you again for the 
opportunity to provide these comments on the challenges and 
opportunities facing the disability program. NCDDD restates its desire 
to continue to work together with SSA during the continued evolution 
and improvement of the program. We appreciate this committee's 
initiative in addressing and resolving barriers to improved service 
delivery.

                                 

    Chairman SHAW. Thank you. Dr. Stapleton?

   STATEMENT OF DAVID C. STAPLETON, PH.D., DIRECTOR, CORNELL 
                   CENTER FOR POLICY RESEARCH

    Dr. STAPLETON. Mr. Chairman, Members of the Subcommittee, 
thank you for inviting me today.
    Since 1993 the bulk of my professional career has been 
devoted to work on projects concerning SSA's Disability 
programs. My knowledge of the disability determination process 
comes from assistance that I provided to SSA in three 
evaluations of its efforts to improve the determination 
process, plus work on another project to review the quality 
assurance process. Martin Gerry referred to the report we 
produced today, which I have here in my hand, in his testimony. 
I am pleased that the Commissioner has followed our first 
recommendation in that report to appoint a quality work group 
at a very high level to study some of the options we developed 
and try to implement them.
    My briefing paper presents my conclusions on the 
performance of the disability determination process and the key 
challenges that the Agency faces in trying to improve it. My 
oral remarks are confined to five recommendations that I see as 
key to making significant improvements
    My first recommendation is to create a disability czar. 
This recommendation follows from the maxim that if it is 
everybody's responsibility, it is nobody's responsibility. 
Currently responsibility for the disability programs is divided 
among the deputy commissioners. Each deputy commissioner has 
responsibilities to go beyond the disability programs, and all 
of them interact with each other as equals. The Agency needs a 
single person whose sole responsibility is the disability 
programs, who has the authority needed to improve cooperation 
and coordination among the offices, and who is accountable to 
the Commissioner for all aspects of disability program 
performance. The senior advisor who has recently been appointed 
is not the disability czar I have in mind. It is possible that 
that position could evolve into a disability czar.
    My second recommendation is to develop a modern performance 
management system for the disability programs. This is the 
thrust of our quality assurance report. Such a system will 
require improved information technology, improved performance 
measurement, consistent use of performance score cards in every 
day decisions, introduction of significance performance 
incentives, and use of management techniques that build a 
quality culture and support continuous improvement.
    My third recommendation is to assign responsibility for 
each initial determination to a single office. This 
recommendation also follows from the maxim that if it is 
everybody's responsibility, it is nobody's responsibility. 
Currently no office, let alone individual, takes ownership of 
an application. Each office involved blames the other for poor 
performance, and inter-office communications delay the process, 
use significant resources and result in duplication of effort. 
The substantial success of the Disability Claims Manager test 
demonstrates the gains to be made from single office 
responsibility. I think the DCM went too far, personally, by 
giving a single individual responsibility for adjudicating all 
aspects of all adult applications. In so doing, it also 
consolidated responsibility into a single office and gave a 
single individual ownership of each application. The SSA has 
concluded that the DCM, as tested, substantially reduced 
processing time, increased claimant satisfaction and improved 
employee satisfaction with no effect on measured accuracy, but 
at an increased cost.
    My interpretation of the evidence--and let me tell you, I 
was intimately familiar with that evidence--is that it is 
actually more favorable than SSA's. It appears to me that the 
DCM is roughly cost neutral relative to the current process, as 
it was implemented in the test, and also that it reduced 
processing time by more than SSA's report indicates.
    The most vexing question about assignment of responsibility 
to a single office is: whose office? There are really three 
options, SSA field offices, State run offices, and offices that 
are established by private contractors. All of these ideas have 
strengths and weaknesses, which I discuss in my briefing paper. 
I'm not ready to endorse any one of these approaches over the 
others, but I do think that one of them will have to be tried 
if significant progress is to be made.
    The fourth recommendation is that the Agency should abandon 
the one-adjudicator-fits-all model. Currently each medical 
determination is the responsibility of just one disability 
examiner with some assistance from experts. This approach is 
probably efficient for a large majority of cases, but the 
complexity of the medical, vocational and legal issues involved 
in a significant number of cases requires a team approach. Such 
an approach is used for complex determinations conducted by 
private disability insurers, as well as for many other complex 
medical and non-medical determinations.
    My final recommendation for improving the initial 
determination process is to address the problems with the 
appeals process, and in so doing I'm echoing the recommendation 
of Hal Daub. Current problems with the appeals process 
undermine the initial process because it is nearly impossible 
for SSA to obtain useful information from the appeals process 
and use it to improve the initial process. Defenders of the 
initial process allege that ALJs are out of control and they're 
undermining the initial process. Others allege that applicants 
help their representatives game the system by withholding 
evidence at the initial level so they can present it to an ALJ. 
If the ALJ denies their application, they shop for a new ALJ by 
filing a new application.
    Given the lack of information about decisions at the 
appeals level, it is hard to know how much truth there is in 
these allegations, but it is clear to me that the initial 
process is being undermined by the lack of trust in the appeals 
process.
    Those are my five recommendations. Thank you again for 
inviting me to testify. I would be pleased to answer your 
questions.
    [The prepared statement of Dr. Stapleton follows:]
 Statement of David C. Stapleton, Ph.D., Director, Cornell Center for 
                            Policy Research
    This briefing paper is largely based on the knowledge I gained 
through work that was performed under contracts from the Social 
Security Administration to The Lewin Group and its subcontractors, 
Cornell University and Pugh Ettinger McCarthy Associates, LLC. I 
gratefully acknowledge the contributions of individuals in those 
organizations to the information contained herein and to my thinking on 
this subject. The views expressed in this briefing paper and my oral 
remarks to the Subcommittee are, however, my own, and do not represent 
the views of the Social Security Administration, Cornell University, or 
Pugh Ettinger McCarthy Associates.
    Directions for Improvements to the Social Security Administration's 
Disability Determination Process
I. Introduction
    I am an economist, with strong training and experience in the 
conduct of quantitative evaluations of social service programs. The 
bulk of my professional career since 1993 has been devoted to work on 
projects concerning the Social Security Administration's (SSA's) 
disability programs, Social Security Disability Insurance (DI) and 
Supplemental Security Income (SSI), and other disability programs and 
policies. My knowledge of the disability determination process comes 
from assistance that I provided to the SSA in evaluation of three of 
its efforts to improve the determination process--the Full Process 
Model (FPM), the Disability Claims Manager model (DCM), and the 
Prototype--and from a project to review and develop options for 
improvements to the Quality Assurance process for disability 
determinations. The product of the latter was a voluminous report, 
which included extensive background material, findings from our 
analysis, and numerous options for improvement.\1\ My Cornell colleague 
Gina Livermore co-led the first three of these efforts, and Michael 
Pugh of Pugh Ettinger McCarthy Associates, LLC co-led the last.
---------------------------------------------------------------------------
    \1\ See D.C. Stapleton and M.D. Pugh, Evaluation of SSA's 
Disability Quality Assurance (QA) Processes and Development of QA 
Options that will Support the Long-term Management of the Disability 
Programs, to the Social Security Administration, 2001. http://
www.quintiles.com / products and services / specialty consulting / the 
lewin group / lewin publications / detail / 1,1278,213,00.html.
---------------------------------------------------------------------------
    This paper focuses on the initial determination process for all 
types of applications and continuing disability reviews (CDRs) (i.e., 
everything up to appeals to the Office of Hearings and Appeals), 
reflecting the Subcommittee's interest for this hearing. Some material 
concerning potential changes to appeals above this level is introduced 
because of its relevance to the initial determination process.
    I begin by briefly summarizing my own conclusions about the 
performance of the disability determination process. I then describe 
challenges to improving the process that are posed by the nature of the 
determinations being made. It is critical to keep these challenges in 
mind as improvements are developed and implemented. I then describe 
five changes to the initial process that I believe are key to 
achievement of significant process improvements.
II. Performance of the Disability Determination Process is Poor
    Performance of the process is poor. Mean processing times at the 
initial level are very long. Approximately one-third of all allowances 
are made to applicants whose applications are initially denied, 
including many applications that are allowed on the basis of the 
supporting evidence collected at the initial level. As a result, the 
administrative cost of appeals is very high. The cost to applicants 
whose awards are delayed, and who are often very vulnerable, is perhaps 
greater, although it is not a line item in the federal budget. Worse 
yet is the cost to an unknown number of applicants who should be found 
eligible, but whose claims are initially denied and who fail to appeal.
    There is also substantial evidence that eligibility criteria are 
applied inconsistently across state Disability Determination Services 
(DDSs), and even across disability examiners within DDSs, although SSA 
does not currently have a good system to document it. We found one 
convincing indicator by looking at the spread of initial allowance 
rates across examiners within four DDSs. In each DDS, the examiners 
included were experienced, made several hundred decisions per year, and 
were drawing applications randomly from the same queue. We used 
statistical methods to calculate that the luck of the draw would lead 
to a spread in allowance rates across examiners of about 10 percentage 
points within each of the DDSs, but we found that the actual spread in 
allowance rates was 10 to 19 percentage points greater. Thus, it 
appears that the examiner in a DDS that happens to get assigned to a 
claim could affect the chance of that claim's allowance by 10 to 19 
percentage points. It is not hard to imagine that differences across 
DDSs are much greater, because of differences in management, training, 
examiner qualifications, expert consultants, the health care system in 
the state, and other factors.
    Other evidence indicates that decisions are significantly 
influenced by incentives. Dramatic evidence of this occurred in the 
early 1980s. At that time, SSA, at the direction of Congress, started 
conducting pre-effectuation reviews of a large share of initial awards 
in response to low allowance accuracy identified through the quality 
assurance process; denial accuracy was much better. Over three years, 
allowance accuracy increased substantially, but denial accuracy fell by 
essentially the same amount. The most obvious explanation for this 
reversal in the two accuracy rates is that the pre-effectuation review 
process made it more costly for examiners to allow error-prone cases 
than to the deny them, tipping the balance in favor of denials. 
Although cause and effect cannot be proved, I have not heard a more 
convincing explanation.
    People involved in the process are disgruntled about it. 
Applicants, adjudicators, managers, union leadership and others all 
have complaints that are difficult to dismiss. DDSs complain about the 
SSA field offices, and vice versa. Morale is low, leading to high 
turnover in many offices.
    Some would say that the process is also very costly, but what is 
the benchmark against which we can say costs are high or low? In 1999, 
as near as I can tell, SSA spent about $1,400 per application 
adjudicated--including appeal costs, quality assurance costs, and any 
other costs that SSA associates with applications. The actuaries 
estimate that the present value of the average SSDI award, including 
Medicare benefits, is on the order of $100,000. Is $1,400 too much to 
be spending when this much money is at stake? One private disability 
insurer told us they were spending $2,400 per application when the 
amount at stake for the average claim was much lower. Putting more 
resources into the current process in a reasonably judicious manner, 
without any other changes, would clearly improve other aspects of 
performance, but it also appears that substantial improvements in 
performance could be achieved more efficiently by other means.
III. The Nature of Disability Determination Poses Significant 
        Challenges to Performance Imporvements
    Several features of disability determinations are significant 
challenges to improving process performance. The first is the highly 
complex and diverse nature of the medical, vocational, legal, and 
financial issues involved in making determinations. An impressive array 
of knowledge is required to make appropriate decisions in all cases.
    The second is the high level of subjectivity involved in many 
decisions--assessments of severity of functional limitations, the 
credibility of evidence about pain and other symptoms, the weight to be 
given to source evidence versus a medical examiner's evidence, and the 
value of seeking medical evidence of record from certain providers, are 
all examples. It appears that there is room for well-trained, well-
intended examiners to disagree on the ``correct'' decision in a 
substantial number of cases.
    The third challenge is that the applicant has a substantial 
incentive--the potential benefit award--to mislead the adjudicator. The 
applicant's supporter, including the applicant's provider, might share 
that incentive.
    The fourth challenge is that the program exists within an agency 
that, despite its fairly recent independence, is subject to the 
vicissitudes of the political process. Congressmen and governors 
attempt to influence the program in the interests of their 
constituents. While this can be a positive force for performance 
improvement in some circumstances, it can undermine improvement in 
others. Unions, professional organizations, and other groups can be 
expected to resist changes that are not in the interest of their 
members.
    The fifth challenge is that major change takes time. The number of 
years needed is likely longer than a Commissioner's six-year term. 
Major change also takes extra resources during the transition period, 
and is likely to crowd out other agency priorities.
    Perhaps the most significant challenge is that the concept of 
disability in the programs is out-of-step with current thinking. 
Advocates, researchers, policymakers, and others have embraced the idea 
that the inability to work results from the interaction of impairment, 
or functional limitations, with a person's environment, yet the program 
is required to make determinations on the basis of the old notion that 
disability is ``medically determinable.'' Policy is changing in ways 
that reflect the new thinking, albeit very slowly, and the 
determination process, as well as the broader operations of the 
disability programs, will need to change with it.
IV. Five Key Changes to Achieve Significant Process Improvements
    There is much that can be done to produce small improvements to the 
initial determination process, but significant improvements require 
major change. I have developed a list of five changes that I think are 
key to making significant process improvements.
    1. Appoint a disability czar: A single person who reports to the 
Commissioner must be given lead responsibility for all aspects of the 
disability programs. The recommended change follows from the maxim that 
``If it's everybody's responsibility, it's nobody's responsibility.'' 
Currently, responsibility for the program is divided among the Deputy 
Commissioners, each Deputy Commissioner has responsibilities that go 
beyond the disability programs, and all interact with each other as 
equals. The Agency needs a single person whose sole responsibility is 
the disability programs, who has the authority needed to improve 
cooperation and coordination among the offices, and who is accountable 
to the Commissioner for all aspects of disability program performance.
    2. Develop a modern performance management system. The thrust of 
our quality assurance report is that SSA needs to develop a modern 
performance management system for the disability programs, including 
the determination process. Such a system will require improved 
information technology, improved performance measurement, consistent 
use of performance score cards in everyday decisions, introduction of 
significant performance incentives, and use of management techniques 
that build a ``quality culture'' and support continuous improvement. 
The job of the disability czar would be to develop and lead this 
system.
    3. Assign responsibility for each initial determination to a single 
office: This recommendation change also follows from the maxim that 
``If it's everybody's responsibility, it's nobody's responsibility.'' 
Currently, SSA Field Offices and state DDSs share responsibility for 
disability determinations. The result is a system in which no office, 
let alone individual, takes ownership of an application, each blames 
the other for process problems, and inter-office communications delay 
the process, use significant resources, and result in duplication of 
effort.
    The substantial success of the Disability Claims Manager model 
demonstrates the gains to be made from single-office responsibility. I 
think the DCM went too far, by giving a single individual 
responsibility for adjudicating all aspects of all adult applications, 
but in so doing, it consolidated responsibility into a single office 
and gave a single individual ownership of each application. SSA's 
evaluation of the DCM test concluded that it substantially reduced 
processing time, increased claimant satisfaction, and improved employee 
satisfaction, but at a somewhat greater cost than the current process. 
My interpretation of the evidence from that evaluation is more positive 
than SSA's; it appears to me that the DCM is cost neutral, and that it 
reduced processing time by more than the report indicates.
    That SSA has decided not to pursue the DCM, despite the 
considerable success of the test, reflects the most vexing question 
about assignment of responsibility into a single office: Whose office? 
There are three options, and all have strengths and weakness. The first 
is to federalize the entire process, so that all decisions are made in 
field offices. This approach is favored by American Federation of 
Government Employees (AFGE), and likely has substantial support among 
SSA managers, but it is probably the most costly and it is also 
difficult to imagine a federal bureaucracy managing such a large 
internal process well. The determination process for Veterans' benefits 
provides a useful model.
    The second approach is to give the responsibility to the states. 
This might be the least expensive approach, would provide a process 
that is more tailored to the needs of the state, and make state 
governments accountable to their voters for process performance. SSA's 
past management of the state DDSs has, however, been hampered by lack 
of political will; SSA does not have sufficient power to hold states 
accountable. Perhaps a deal that gives the entire process to the states 
in exchange for provisions that will make it possible for SSA to hold 
states accountable could be developed. Such a system already exists in 
the Food Stamp program, although it is imperfect.
    The final approach is to contract the work to the private sector. 
Many would oppose such a change because of a fundamental distrust of 
entities that are driven by the profit motive. SSA might, however, be 
in a stronger position to ensure performance of local entities that are 
outside the political process than local entities that are either owned 
by states or internal to SSA. This approach also has the advantage that 
a successful firm could make determinations in multiple states. Every 
participating firm would be continuously threatened by competition from 
firms that are operating in other states. The Center for Medicare and 
Medicaid Services uses this approach in its effort to improve health 
care quality, with some success.
    I'm not ready to endorse any one of these approaches over the 
others, but I think one of these approaches will have to be tried if 
significant progress is to be made.
    4. Abandon the ``one-adjudicator-fits-all'' model. Currently, each 
medical determination is the responsibility of just one disability 
examiner. While expert consultation is available, and required in some 
cases, the decision rests on the shoulders of an individual. This 
approach is probably efficient for a large majority of cases, but the 
complexity of the medical, vocational, and legal issues involved in a 
significant number of cases requires a team approach. Such an approach 
is used for complex determinations conducted by private disability 
insurers, as well as for many other complex determinations, including 
medical ones.
    5. Address the problems with the appeals process. Currently, the 
appeals process has significant performance problems of its own. Those 
problems undermine the initial process. The fact that the program is 
represented only by conflicted Administrative Law Judges (ALJs), and 
that performance management is limited, make it nearly impossible for 
SSA to obtain useful information from the appeals process and use it to 
improve the initial process. Instead, defenders of the initial process 
allege that ALJs are ``out of control'' and are undermining the initial 
process. Others allege that applicants, with the help of their 
representatives, game the system by withholding evidence at the initial 
level so they can present it to an ALJ, and by continuing to file whole 
new applications until they find an ALJ who will give them an award. 
Given the lack of information about the decisions at the appeals level, 
it is hard to know where the truth lies, but it is clear that the 
initial process is being undermined by the lack of trust in the appeals 
process.

                                 

    Chairman SHAW. Mr. Brady?
    Mr. BRADY. Thank you, Mr. Chairman. This was excellent 
testimony. While I have questions for each, I will limit it to 
three very brief questions.
    Mr. Pezza, in your testimony you talk about the need for an 
intelligent front-end interviewing process. I would like to 
hear a little more about that.
    Mr. Price, I was wondering about the relationship between 
the State groups and the Federal Agency, SSA, and how that 
helps or hinders the process?
    Then to Dr. Stapleton, I would like to hear a little more 
about the revenue-neutral approach on the Disability Claims 
Manager because that seems like if we improve the information 
gathering and the intelligence up front, if we have good work 
relationships, consistent standards, and if we can process 
these claims more accurately and quicker, the whole process 
benefits in a big way. So, I would like to hear those real 
quickly.
    Mr. PEZZA. Well, one of the things that we do in the 
initial disability application process taking in the field 
office, is we take what we call a background report which 
basically gives the nature of the impairment in the perspective 
of the claimant. In doing this background report, it would be 
very helpful if we had a system which would provide drop-down 
menus for our interviewers. So, that based upon the nature of 
the impairment, the individual interviewer would be able to 
tailor the questions and guide the claimant in giving us the 
information necessary to do a good background report and supply 
the folks in the DDS with complete medical information. This is 
something that I think the Agency's been looking into because 
each----
    Mr. BRADY. By its nature, each impairment's going to have a 
unique set of--or some unique features that you ought to have 
laid out and gathered.
    Mr. PEZZA. Absolutely, right. So, for example, if a person 
was talking about a heart condition there would be certain 
specific guidance that this system would provide in a series of 
drop-down menus which I think would be very beneficial. It 
makes good sense.
    Mr. BRADY. Thank you. Mr. Price, relationship?
    Mr. PRICE. Yes. The relationship, we would concur with the 
testimony of Mr. Daub and the previous reports by the Advisory 
Board. Strengthening the Federal/State relationship would 
greatly enhance the opportunity to reduce processing times, to 
give better service to the claimant. The current set up is such 
that NADE has encouraged the establishment of more uniform 
national training standards, for example, at the front end and 
strengthening the quality assurance process throughout.
    Mr. BRADY. If you had to rank what could best be done to 
improve that relationship, would that increased training be the 
most important thing?
    Mr. PRICE. I think it would be--yes, the training is 
absolutely essential, and having that availability, I think SSA 
needs to revamp, if you will, the way it does training, the way 
it mandates training. Right now in the DDS's initial disability 
examiners who are hired, receive training basically in 
compliance with whatever the State feels is their set up. The 
SSA has introduced a basic examiner training package which 
forms the basis of this new examiner training, but NADE has 
asked that there should be more than this because many States 
simply do what is minimum.
    Mr. BRADY. Sure.
    Mr. PRICE. Minimum doesn't give you good service.
    Mr. BRADY. Good answer. Thanks, Mr. Price.
    Dr. Stapleton, I like the idea of having accountability in 
one person. I like the idea of having teams evaluating these. I 
would imagine both between the sophisticated medical decisions 
and then ever-changing occupational standards and 
opportunities, that the would really help. Tell me about 
disability claims.
    Dr. STAPLETON. Sure. Measuring costs in SSA's system is 
very difficult. They were doing a test where both the current 
process and the model they are testing. The DCM model were 
embedded in lots of other things that were going on in various 
offices.
    I would say that--well, my recollection is that the result 
that SSA reported is that the DCM costs from 6 to 12 percent 
more than the current process. I would say that the margin of 
error in just trying to make that estimate is probably 5 to 10 
percent. So, it is close to the margin of error.
    The other thing, a couple other points though, when they 
did this they got the upper value by one method and the lower 
value by another method. It seemed to me that the upper value 
had some serious problems with it, and the other method was 
much more sound. So, I think 6 percent is a reasonable estimate 
given the whole period of the test which was 18 months. But if 
you look at the test results from month-to-month, you will see 
that productivity of the claims managers increases quite a lot 
over the first 12 months. By the time it gets to the peak, if 
you recalculated cost at that point, it would be lower or at 
least about the same as the current process costs using SSA's 
methodology. The costs reported are reported for the entire 18-
month period, and at the beginning there was startup time and 
at the end there was wind-down time. These people knew they 
were losing their positions and tried to wrap things up.
    Mr. BRADY. Sure.
    Dr. STAPLETON. So, that is the basis of my conclusions.
    Mr. BRADY. Are your conclusions in detail on that in your 
report or can we get some information along those lines?
    Dr. STAPLETON. It is not in this report, and in fact, it is 
not written in any report. I have detailed my thoughts in e-
mails to people at SSA. I could provide those to you, I think.
    Mr. BRADY. If you don't mind because I would like to learn 
about it. A final thought is that were the increased costs on 
that due to accelerated benefits, that we make decisions sooner 
and more accurately. Therefore, benefits occurred faster?
    Dr. STAPLETON. Not really because the cost had to do with 
administrative cost, not programmatic cost, and my recollection 
is the allowance, the initial allowance rates were just about 
the same.
    Mr. BRADY. Thank you, Mr. Chairman, very much.
    Chairman SHAW. Mr. Pomeroy.
    Mr. POMEROY. Mr. Chairman. this is one of the more 
challenging assignments we have given SSA. I appreciate you 
having this hearing to explore what they are doing to execute 
these duties as best as they can do, and I appreciate very much 
you holding this important hearing. I regret my own schedule 
prevented me from attending the bulk of it, and look forward to 
reviewing and having staff put a review of your written 
materials. It is obviously an area where Members of Congress on 
the Social Security program perhaps the most active interaction 
with their constituents. That is very important to us all. 
Thanks again, Mr. Chairman.
    Chairman SHAW. Dr. Stapleton, you said something in your 
testimony regarding forum shopping to get the best 
administrative judge that you can get. If somebody's turned 
down at one, they can go ahead and refile, come up with another 
judge, and there is no way of bringing it back to the same 
judge?
    Dr. STAPLETON. My understanding now is when somebody files 
a new application it just enters a process like any other 
application, and it can end up----
    Chairman SHAW. Even though it may be from the same claimed 
injury?
    Dr. STAPLETON. Yes, yes.
    Chairman SHAW. Interesting.
    Dr. STAPLETON. Actually, if I may go on, there has been 
some discussion earlier about closing the record. I know there 
is a lot of concern about if you close the record and somebody 
has got a new condition. Then that means filing a whole new 
application and a much longer wait for them, and that is a 
problem. It seems to me there is a fairly straightforward 
solution to that if new evidence is being introduced at the 
appeals level, at the ALJ level--to send the case back to the 
initial level basically and do another reconsideration by 
taking into account the new evidence.
    Chairman SHAW. Can the court appoint its own doctor to 
examine the claimant? Does it ever do that?
    Dr. STAPLETON. It can do that, yes.
    Chairman SHAW. Is that done very often?
    Dr. STAPLETON. I wouldn't be the best person to ask.
    Chairman SHAW. I would guess, from the way I understand 
these things, that if you get the right doctor, the right 
lawyer and the right judge, and----
    Dr. STAPLETON. Well, I would certainly expect that the 
advocates for the claimant get them to get medical examinations 
independently which are brought into evidence.
    Chairman SHAW. I know going from tort law that different 
doctors are sought after depending on whether you are the 
plaintiff or the defendant. We remember one doctor that we 
didn't think he really believed in pain. He was one of the 
favorite of the defendants, but that was before he had a disc 
problem in is back. He now believes in pain.
    All right. I want to thank all of you for being with us. It 
has been a very, very good hearing. I think the thing that 
comes out of this most is that I think this Subcommittee has to 
know more about this process. This is really our first venture 
into the details of this. We have looked at the process before 
as to the lack of electronics and the slowness of the movement, 
but now we are getting in a little bit into the actual process 
of the hearing process itself. It is something I don't think we 
have any expertise on this Committee--who really did any 
litigation in this area, even though a number of us are 
lawyers. Still, it is a very specialized area that most lawyers 
haven't even ventured into.
    Thank you. Thank you all for being here. This hearing is 
adjourned.
    [Questions submitted from Chairman Shaw to the panel, and 
their responses follow:]

                       National Association of Disability Examiners
                                      Raleigh, North Carolina 27602
                                                    August 14, 2002
The Honorable E. Clay Shaw, Jr., Chairman
Social Security Subcommittee
Committee on Ways & Means
United States House of Representatives
2408 Rayburn House Office Building
Washington, DC 20515-0922

    Dear Mr. Shaw:

    The National Association of Disability Examiners (NADE) is pleased 
to provide the following response to your inquiry of August 1, 2002. 
NADE was asked to respond to several questions regarding our testimony, 
and the testimony of others, that was presented on June 11, 2002.
1a. Explain the process of developing a case.
    Case development typically begins with a review of the disability 
application that has been forwarded to the DDS from the Social Security 
Field Office. In the vast majority of claims, the disability examiner 
must initiate contact with the claimant (either by phone or by mail) to 
develop or clarify issues regarding medical treatment, education, past 
relevant work and the impact the claimant feels that the alleged 
impairment has on their activities of daily living (ADLs). Frequently, 
the disability examiner must also contact an interested third party who 
is also asked to provide information about the impact the claimant's 
impairment has on these activities. If these reports include 
conflicting information then the disability examiner must resolve the 
conflicts by re-contacting the claimant, and third party source, or 
contact another source to resolve the conflicts.
    All relevant medical sources listed by the claimant are then 
contacted by mail or fax and asked to either send copies of records or 
respond to questions specifically tailored to the alleged impairment. 
Information received from treating sources is reviewed as it is 
received to determine if a favorable decision is possible based on 
those records. If so, additional evidence is not pursued. If not, 
unless the treating source is a known uncooperative source, appropriate 
follow up is made, either by telephone, fax, or by mail, to obtain any 
records or completed forms which have not been received.
    SSA regulations (POMS DI 22505.001ff) mandate that treating sources 
be allowed thirty (30) days to respond and the DDS must initiate at 
least one follow up if there is no response.
    If treating source information is incomplete, unavailable, or does 
not provide the specific documentation needed to determine eligibility 
under Social Security regulations, the DDS will schedule a consultative 
examination. This examination is at the government's expense. Every 
effort is made to assist the claimant in keeping any consultative 
examination, including arranging for responsible parties when the 
claimant has a mental impairment and providing the cost of 
transportation to the appointment. Once all of the medical and non--
medical information, including ADL and work history forms, pain 
questionnaires, and so forth., has been received, the DDS will prepare 
a decision following the sequential evaluation process. This decision 
is based on an appraisal of the objective medical findings and 
consideration of the subjective non-medical findings such as pain 
allegations, claimant credibility, and treating source opinion.
b. LExplain the process for reviewing a case for reconsideration, 
        including under what circumstances a disability examiner 
        obtains additional information.
    Reconsideration claims are assigned to disability examiners who are 
more experienced than disability examiners who adjudicate only initial 
claims. Reconsideration claims are assigned to a disability examiner 
who had no part in the initial decision. If input from a DDS medical or 
psychological consultant becomes necessary at the reconsideration 
level, the consultant will also be one that had no part in the initial 
decision.
    The reconsideration examiner reviews the claim file to determine 
both the accuracy of the initial decision and whether additional 
development is needed in view of the claimant's statements and 
allegations. The reconsideration examiner must determine if all 
impairments alleged by the claimant or diagnosed in the file evidence 
were fully developed initially. The reconsideration examiner must also 
determine if there are any new impairments alleged or diagnosed and/or 
whether the claimant has listed any new treating sources or has 
reported receiving additional treatment from previously identified 
sources.
    If the prior decision was correct based on the information 
available at the time and the claimant has not alleged any worsening of 
the impairment(s) and has not reported receiving additional medical 
treatment, the initial decision can be affirmed ``on the record'' 
without the need to pursue additional development. However, such 
circumstances are unusual. If the claimant alleges worsening of the 
impairment(s) and/or reports receiving additional medical treatment, 
all relevant sources for more current records are contacted. The 
reconsideration examiner follows the same adjudicative requirements as 
the initial examiner in allowing an appropriate period of time to 
elapse for a medical source to respond and initiating appropriate 
follow up contact if the source does not respond. If the 
reconsideration examiner is unable to fully document all alleged or 
diagnosed impairments based on the medical evidence of record, a 
consultative examination will be scheduled. Once all requested 
information has been received, or it has been determined that the 
information is unavailable, the DDS will prepare a reconsideration 
decision, again following the sequential evaluation process.
c. LAre such processes checked and documented via DDS or Federal 
        quality review?
    Any DDS decision is subject to review by internal DDS quality 
assurance staff and/or review by the Federal Disability Quality Branch 
(DQB) in the respective SSA regional office.
2a. LAre determinations made by disability examiners in the DDSs, 
        ``devoid of rationale and--driven almost exclusively by 
        objective medical findings.''? What factors and criteria do 
        State disability examiners use to assess an individual's claim?
    NADE is very concerned with the erroneous statements contained in 
the testimony presented by Ms. Kathleen McGraw on June 11. We are 
equally concerned that such inflammatory statements are often left 
uncorrected, adding to the false perception the public already has of 
the decisionmaking process in the State Disability Determination 
Agencies. NADE is very appreciative of this opportunity to challenge 
Ms. McGraw's statements.

    DDS decisions, by law and by SSA regulation, are based on objective 
medical findings, coupled with consideration of the claimant's age, 
education and past work experience. DDS decisions do take into 
consideration the subjective findings such as pain and fatigue and the 
impact the alleged impairment is said to have on a claimant's daily 
activities. However, DDS decisions are influenced to a lesser extent 
than decisions made by administrative law judges by these subjective 
findings. Where the disability examiner in the DDS is unable to 
conclude that there is an objective medical basis to support the 
claimant's allegations of pain or fatigue, the subjective complaints 
are often disregarded, as required by law.
    The primary factor in adjudicating disability claims at the DDS 
level is that it must first be concluded that there is a medically 
determinable physical or mental impairment that can reasonably account 
for the subjective symptoms alleged by the claimant before any such 
symptoms can be factored into the decision.
    As an example, NADE would like to offer the case of an individual 
who alleged disability due to severe burning pain in his hands. A 
physical examination failed to detect a significant medical condition. 
The claimant retained normal range of motion of all joints in the hands 
and there was no impairment of neurological functioning. The claim was 
documented with x-rays, nerve conduction studies, and a MRI, all of 
which failed to reveal any evidence of a significant medical condition. 
Without any objective evidence that could establish the existence of a 
medically determinable impairment the DDS would conclude that the 
alleged impairment was non-severe. This would be the correct decision 
under the law and any attempt to render a different decision would have 
resulted in DDS or DQB quality assurance reviewers returning the claim 
to the disability examiner with instructions to deny the claim.
    The application of process unification rulings would not alter the 
DDS decision in such cases. By law, DDSs must first establish the 
existence of a medical impairment before determining that the claimant 
is functionally limited, even by pain alone.
    An administrative law judge, hearing the same case and using the 
same evidence available to the DDS, could conclude that the claimant 
was under a disability. The decision by the ALJ would be based solely 
on the claimant's alleged pain and no other factors.
    Herein lies the difference between DDS decisions and those made by 
ALJs--DDS decisions must have a medical basis that is defensible to 
subsequent quality reviewers. Such decisions are sometimes 
misinterpreted as if the DDS failed to consider the claimant's 
subjective symptoms. This perception is reinforced by subsequent ALJ 
decisions that do award benefits based only on such subjective 
complaints, even when the objective evidence clearly fails to document 
the existence of a significant impairment.
    Such decisions by administrative law judges impact negatively on 
program integrity since such decisions will, in effect, place an 
individual on the disability rolls for life. All future continuing 
disability reviews of such cases will obviously fail to establish that 
there has been any significant medical improvement in the claimant's 
condition. Individuals whose claims are allowed on the basis of 
subjective symptoms alone will continue to receive benefits as long as 
they continue to allege the presence of such symptoms. Since there was 
no objective basis for the original allowance decision, there can be no 
objective basis for determining that there has been medical 
improvement.
    NADE would contend that Ms. McGraw's testimony would have been more 
effective if she had devoted equal criticism to the administrative law 
judges who also have failed to adhere to the precepts of process 
unification.
b. LAre such processes checked and documented via DDS or Federal 
        quality review?
    As noted earlier, any DDS decision is subject to internal DDS 
quality assurance review and/or review by the Disability Quality Branch 
in the regional SSA office. Not only do such quality reviews check for 
decisional accuracy, but also ensure that the procedures that define 
the adjudicative process that are outlined in the regulations are 
followed.
3. LWhat is the status of implementation of Process Unification? What 
        specific Process Unification activities were held last fiscal 
        year? This fiscal year? What are the results?
    Process unification was stressed extensively in the ten Prototype 
states and in those states under various court orders to follow the 
process unification rulings without fail. It has been implemented to 
some extent in all DDSs, both in anticipation of the roll-out of the 
Prototype experiment and in an on-going effort to align DDS and ALJ 
decisions. However, there has been some inconsistent application of the 
process unification rulings in all DDSs because of a lack of necessary 
resources. DDSs have struggled to apply the process unification rulings 
in light of inadequate funding. For the most parts, the DDS application 
of process unification has been limited for cases in which the rulings 
would make a decisional difference. NADE strongly recommends that, in 
the future, adequate resources should be allocated to the DDSs whenever 
any changes are made in the adjudicative process that will require 
significant allocation of time and resources by the DDSs.

    NADE also contends that the continued absence of ongoing training 
for all adjudicators and reviewers, and the lack of a consistent 
Quality Assurance review of decisions made at all levels, have 
contributed to the sporadic and inconsistent application of process 
unification.
4. LIs the reconsideration, ``little more than a rubber stamp of the 
        original denial''? Should it be eliminated?
    Current SSA statistics show a 16% reversal rate at the 
reconsideration level. NADE would like to challenge the testimony 
presented by others that point to only a 3% reversal rate at the 
reconsideration level. Such a misrepresentation of the facts could be 
viewed as an attempt to misguide the Subcommittee. Obviously, a 
reversal rate of 16% at the reconsideration level is not a ``rubber 
stamp of the original denial.'' The reconsideration step in the appeal 
process has served to provide a needed intermediate appeal step between 
the initial decision by the DDS and the hearing decision made by the 
ALJ. This was effectively demonstrated in the Prototype experiment when 
the absence of a reconsideration step caused appeals to OHA to soar out 
of control. Even so, in recent years the reconsideration step has been 
weakened in the interest of increasing case processing efficiencies and 
reducing processing time. For that reason, NADE's proposal for a New 
Disability Claims Process, included as an attachment to our testimony 
of May 2, 2002 before the Subcommittee and the focal point of our 
testimony on June 11, 2002, proposes strengthening this vital step.
    Consideration of affordability, timeliness and fairness issues 
would indicate that there is a need to strengthen the reconsideration 
step, rather than eliminating it. The reconsideration, especially an 
enhanced reconsideration, would provide claimants an opportunity to 
have their cases reviewed again much earlier than the current 1-2 year 
wait for a hearing before an ALJ. For thousands of people, an enhanced 
reconsideration would prevent lengthy waits and would reduce 
administrative costs.
5. LDoes the agency, ``. . . consult the claimant's health care 
        providers, and compensate them adequately for providing 
        relevant medical information?'' If so, how?
    All relevant treating sources identified by the claimant on the 
initial and, if one is filed, reconsideration application, or who are 
subsequently identified in the course of DDS case development, are 
contacted. The majority of disability claims are adjudicated based on 
information obtained solely from the claimant's treating source(s). 
However, the reality is that, regardless of the level of compensation 
offered, some sources will to refuse to provide information, either 
because they don't feel the claimant is disabled or because they don't 
want to become involved with ``government bureaucracies''. Other 
sources provide little or no information as they have not seen the 
claimant for the alleged impairment or they do not have detailed 
records. Hospitals, clinics and other medical sources are frequently 
slow to respond due to the sheer volume of requests they receive for 
medical records.
    In every case in which the DDS seeks to obtain medical records, 
compensation is offered. It is a subject of national debate as to 
whether the amount offered by the DDS is ``fair and reasonable.'' DDSs 
continually face uphill struggles when attempting to obtain increases 
in the compensatory rates they offer for medical evidence of record.
6. LIn the case of continuing disability reviews, how common is it for 
        claimants to refuse to cooperate with requests for information? 
        Are claimant representatives a source for this lack of 
        cooperation? What is your solution?
    We are unaware of any factual data that would describe the 
incidence at which claimants and/or their representatives have refused 
to cooperate with requests for information from the DDS. To our 
knowledge, such data would be nearly impossible to collect because 
failure to cooperate or deliberate actions by the claimant or their 
representative to delay the DDS in making a decision are nearly always 
concealed under false pretenses. However, we do have anecdotal 
information that would indicate this problem is increasing as 
claimants, and their representatives, become increasingly aware that 
benefits will continue until a final decision is made and that, by 
failing to cooperate fully with the DDS, such a decision can be delayed 
for years. There are few penalties for such actions as there are no 
administrative procedures in place that require the claimants to pay 
back any overpayments if the Agency's final decision is to cease 
benefits.
    We further believe that anecdotal evidence suggests that the common 
perception that exists among the public that claimants have a better 
chance to ``win'' at the hearing level has caused some claimants and 
their representatives to elect not to ``bother'' with the DDS level, 
either at the initial or reconsideration steps. We believe that 
claimants erroneously believe that failing to cooperate with the DDS 
will force a quick denial of their claim and speed their case to the 
hearing level. This is rarely the case. Usually, the DDS spends weeks 
and months in an unsuccessful effort to document each case to show that 
the DDS has done everything in its power to document the claim for a 
medical decision before having to resort to denying the claim for 
failure to cooperate.
    As at least a partial solution, NADE has proposed that the 
Regulations be revised to allow for the immediate suspension of 
benefits in CDR claims where the DDS proposed a cessation of benefits 
because the claimant has failed to cooperate or cannot be found.
    NADE would also propose that administrative penalties should be 
enacted that would enable SSA to force the cooperation of claimants 
and/or their representatives when it can be clearly shown that there 
has been a failure to fully cooperate with the DDS or when the claimant 
and/or representative has engaged in actions designed to delay the 
development of the case.
7. LIs the Federal/State relationship working? How could this be 
        changed to improve this relationship?
    NADE believes that the Federal/State relationship is working. 
However, we believe that this relationship could be strengthened by 
encouraging more open discussion between the DDSs and SSA to resolve 
issues as they occur. SSA must adopt a significant change in its 
culture to allow for the possibility that they are not always the 
experts in the development of policy for the DDSs. State governments 
must be more willing to accept the oversight requirements of SSA with 
regards to DDS training expectations and salary issues. Too often, the 
DDSs are asked to compete with similar state agencies in the formation 
of salary structure and training.
8. LShould SSA's regulations be revised to require States to, ``follow 
        specific guidelines relating to educational requirements and 
        salaries for staff, training, carrying out quality assurance 
        procedures, and other areas that have a direct impact on the 
        quality of their employees and their ability to make decisions 
        that are both of high quality and timely.''? What are the pros 
        and cons, and the feasibility for making these changes?
    NADE believes that the Federal/State partnership could be revised 
to allow SSA to stipulate minimum educational and training requirements 
for DDS staff, but only if such a mandate were accompanied by a similar 
mandate specifying minimum salary levels for DDS staff. NADE believes 
that a national disability program should have national minimum 
standards with regard to educational and training requirements for all 
adjudicative staff. NADE is committed to the concept of ongoing 
training and professional development. However, the ability to set 
minimum educational standards would carry an expectation that SSA would 
also set minimum salaries, an issue that will create problems in many 
states. Heretofore, SSA has been unwilling to face this political 
obstacle.
    In recent years, we have witnessed frequent turnover in DDS staff. 
This is due both to an increase in the number of retirees as well as an 
increase in the number of employees who opt to leave the DDS for less 
complex work, often with an increase in pay. The salary levels in the 
DDSs have not kept pace with private industry and the ability of many 
DDSs to attract the most qualified job applicants has been compromised. 
At the same time, the DDSs have been forced to contend with the erosion 
of their experienced staff. These two factors will create a crisis of 
leadership and experience in the DDSs and contribute to an erosion of 
their ability to effectively administer the disability program. This 
will negatively impact on public confidence and the continued ability 
of the disability program to fulfill its mission.
    NADE does believe that educational requirements must not take 
precedence over ongoing training needs. While we recognize there may be 
a need to establish some degree of national uniformity in prescribing 
minimum educational requirements, we strongly suggest that it is the 
need for ongoing training for all adjudicative staff that will have a 
greater impact in achieving national uniformity in the disability 
program. Furthermore, while the ability to prescribe minimum 
educational standards for DDS staff would have to be coupled with the 
ability to prescribe minimum salaries, something that we do not 
envision as being possible in the near future, the ability to prescribe 
the need for ongoing training, and to be able to offer such training, 
either through its own resources or by utilizing the availability of 
training offered by such organizations as NADE, is certainly within 
SSA's ability. In this regard, we agree with the opinion expressed by 
the Social Security Advisory Board in its August, 1998 report, ``How 
SSA's Disability Programs Can Be Improved,'' page 19). ``The most 
important step SSA can take to improve consistency and fairness in the 
disability determination process is to develop and implement an on-
going joint training program for all . . . 15,000 disability 
adjudicators . . . and the quality assessment staff who judge the 
accuracy of decisions made by others in the decisionmaking process.'' 
The Advisory Board also asserted, ``We urge the Commissioner to make a 
strong ongoing training program a centerpiece of the agency's effort to 
improve the accuracy, consistency, and fairness of the disability 
determination process, and to see that the necessary resources are 
provided to carry it out.''
    Recently, SSA explored the idea that the Agency would offer 
national disability examiner certification. This idea was abandoned 
because little interest was expressed in a program that came with few 
tangible rewards. We believe that an effort to prescribe minimum 
educational requirements, without the ability to prescribe minimum 
salary, would have a similar impact.
9. LDo you have specific suggestions for changes in the law to better 
        enable you to do your job?
    NADE has long advocated review of an equal percentage of allowed 
and denied decisions by the regional DQBs. We are concerned with recent 
initiatives by SSA and the Congress that would require pre-effectuation 
reviews in 50% of State agency allowances of SSI adult cases. These 
initiatives are similar to existing legislatively mandated reviews of 
Title II allowances. Without additional resources, any increase in the 
percentage of allowance decisions reviewed will result in a 
corresponding decrease in the number of denial decisions reviewed. 
While we support the increased reviews as a means to improve decisional 
consistency, we also strongly suggest that reviews of decisions made at 
all levels should be increased. We are concerned that an increased 
focus on DDS allowances may reduce objectivity and compromise program 
integrity. The decision regarding an individual's eligibility for 
disability benefits should be objective and unbiased. Therefore, NADE 
supports requiring review of an equal percentage of DDS allowances and 
denials and an increased review of decisions at all levels.
    NADE recommends allowing for the immediate cessation of benefits in 
failure to cooperate cases as a means of ensuring full cooperation from 
claimants and their representatives and to also ensure program 
integrity.
    NADE believes that DDSs should be insulated from the particular 
circumstances that impact on state governmental agencies that tend to 
negatively effect the quality of service provided. For example, DDSs 
can be subjected to state hiring freezes, inadequate salary structures, 
and restrictions on out-of-state travel because of internal state 
budget problems. In many cases, DDSs are not exempted from such 
restrictions, even though their funding is provided in full from the 
Federal budget. Even when exemptions are granted, DDS Administrators 
are often required to exercise extraordinary measures to obtain such 
exemptions, wasting time and resources that would be better used in 
providing quality service to the people. The inability to hire new 
personnel, retain experienced staff, or offer employees opportunities 
to receive national training that may not be offered within their 
particular State, negatively impacts on the quality of service DDSs can 
offer. SSA needs to exert greater oversight in this regard.
    Thank you for the opportunity to provide this additional response. 
Should you or any Member of the Subcommittee have any additional 
questions, please do not hesitate to ask.
            Sincerely,
                                                   Jeffrey H. Price
                                                          President

                                 

             National Council of Disability Determination Directors
                                            Lansing, Michigan 48909
                                                    August 29, 2002
    1. Judge Bernoski, the President of the Association of 
Administrative Law Judges, testified on June 20 that improving the 
quality of disability determination services decisionmaking would 
improve the overall determination process. He stated (page 4 of his 
testimony), ``rather than carefully develop and examine the claimants' 
case once, DDS often is making its initial determination based on 
incomplete records, and upon reconsideration, rarely obtains 
significant additional medical evidence or changes the outcome of the 
case.'' What are your comments on this statement? Would you explain the 
process of developing a case? Would you explain the process for 
reviewing a case for reconsideration, including under what 
circumstances a disability examiner obtains additional information? Are 
such processes checked and documented via DDS or Federal quality 
review?

    The National Council of Disability Determination Directors (NCDDD) 
agrees that improving the quality of disability determinations would 
improve the process. We agree that quality improvements are necessary 
for all steps in the process, including the appeals process. However, 
quality is a relative term when the Disability Determination Service 
(DDS) is the only component with regular, targeted and substantive 
reviews of their work. No other component, including Office of Hearings 
and Appeals (OHA) is held to this type of quality review standard. The 
DDSs' record of accuracy is well known as documented by the Federal 
Disability Quality Branches (DQB) of the Social Security Administration 
(SSA).
    Additionally, we strongly disagree with the assumption that the DDS 
often makes initial determinations based on incomplete records and at 
reconsideration level rarely obtain significant medical evidence. We 
know of no study or report that factually documents these assertions 
and statements by the association of administrative law judges. The DDS 
follows the legal requirements for development of claimants' cases for 
the disability determination process.
    The current process begins at the local SSA Field Office. The SSA 
Claim Representative, in person or via teleclaim, obtains the pertinent 
information from the claimant as to allegations, medical sources, types 
of tests, medications, work history information and daily activities. 
The claim file then moves to the DDS. Each case is assigned to a 
Disability Examiner. The Examiner does, in fact, carefully develop and 
examine the information provided by the claimant and/or representative. 
This would include requesting all medical evidence relevant to the 
claim within twelve months of the claimant's alleged onset (the day he/
she indicates that disability precluded work at substantial gainful 
work activity). There are time constraints explained to each medical 
vendor and prescribed by law, including a series of follow up 
activities to providers slow in providing reports. Concurrently, 
Examiners send requests to collateral sources, including but not 
limited to relatives, friends, therapists, employers, teachers and 
special service providers. This is an attempt to supplement the 
objective medical evidence with additional evidence of functionality 
from a source that is more familiar with the claimant. Each DDS 
complies with state requirements for payment of medical reports. This 
entails, at the national level, literally millions of requests for 
medical evidence of record from various providers.
    Throughout the entirety of the case, when an Examiner receives 
enough documentation for an allowance, development is ceased and a 
medical determination is made at the earliest possible time. After the 
legal requirements for requests and follow-ups are met, the Examiner 
reviews the evidence that has been compiled. The Examiner is required 
to have supporting documentation for all alleged impairments. In 
addition, if an impairment is discovered in the course of the 
development, the Examiner is required to fully and carefully document 
the new impairment(s). If there is enough evidence to support the 
medical determination, the Examiner finalizes the decision. If there is 
not enough evidence for one or more impairment, the Examiner requests a 
Consultative Examination (CE) from one or more sources including the 
treating physician, if appropriate. For the first 8 months of fiscal 
year 2002, nationally, over 42% of the DDS cases required more medical/
psychological information. In these cases the DDS was required to 
purchase additional medical information. This is a significant 
administrative cost to the program. After the CE report(s) are 
received, the Examiner once again re-evaluates the case. In the 
statutory claims, both the DDS examiner and physician review the case 
for the thoroughness and completeness of the legally required 
documentation. In addition, all of the subjective information is 
synthesized into the decisionmaking process. This would also include 
credibility determinations and weighing treating source opinion.
    After the DDS makes the medical determination, the case is subject 
to random sample review by the Regional Federal Disability Quality 
Branch (DQB). This review includes both allowances and denials. If the 
DQB concurs with the documentation and/or decision, the case is 
returned to the SSA Field Office for final processing. In unfavorable 
decisions the claimant has 60 days to file for reconsideration. At this 
time, the claimant may allege new impairments, new medical information, 
and/or question why the DDS did not obtain pertinent medical records. 
An Examiner is once again required by law to attempt to obtain the 
medical evidence from appropriate providers as updated by the claimant. 
The case is again subject to the same process as described above. This 
may include documenting a newly alleged or worsening impairment with a 
CE.
    It is unfortunate that the reconsideration step may have been 
perceived as a ``rubber stamp'' of the initial decision. The DDSs have 
well known resource and time constraints in which to proceed with a 
case. When the medical provider does not provide reports in a timely 
manner (timely is considered in the range of 30 to 45 days), the case 
must be moved along in the process without the unavailable records. 
Many times these records do come in and are associated with the 
reconsideration claim. Again, if the lack of the medical information 
leaves an impairment ``undocumented'' a CE is purchased in most cases 
in order to meet SSA policy requirements.\1\
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    \1\ Redundant--stated in the 1st
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    The DDSs have internal management reviews and/or quality assurance 
teams who check all legally required processes. This includes 
appropriate requests, follow-ups on these requests to the sources if 
the information has not yet been received and waiting the legally 
prescribed time for the medical providers to respond.
    Since the appeal period on a denial is 60 days, many times the DDSs 
do not see a vastly different case at the reconsideration level. 
However reconsideration does validate that the claim was correctly 
adjudicated and, where conditions have worsened, results in an earlier 
allowance decision. Given the 12 month durational requirement for 
disability benefits, the DDS may agree that while the claimant is 
disabled at the time of the initial and reconsideration claim, their 
medical condition is not expected to remain severe for 12 continuous 
months. Because the DDSs have to make a medical/vocational projection 
of the claimant's recovery 12 months down the line, the DDS would be 
directed to deny the claim as a duration denial. This is a critical 
fact, but little known factor in the definition of disability under 
Social Security. Cases at the ALJ level are usually well beyond the 12-
month duration requirements. Many ALJs in our communities tell the DDSs 
that they see a vastly different case when the case is a year or two 
older. These ALJs tell us that there is much new evidence in the file 
that the DDS was never told about or which occurred in months after the 
case left the DDS the claimant's condition has changed. However, these 
same judges tell us, given the DDSs' medical expertise, the DDS has 
laid the foundation for the medical evaluation.
    The continuing challenge of the process in the DDS is to manage 
within the context of cost, resource, quality, and timeliness 
requirements. The historical under-funding of the program has a direct 
impact on our ability to balance the quality, timely adjudication of 
disability claims at the DDS level. Now is the opportunity for the 
Congress and Administration to find the supporting financial resources 
to move into the DDS environment. This would enhance the overall 
strength of the disability determination process.

    2. Kathleen McGraw, the Chair of the Social Security Section of the 
Federal Bar Association, testified on June 20 that State Disability 
Examiners do not assess claimants' subjective complaints. She stated 
(page 2 of her testimony), ``They were confounded by the task of 
assessing a claimant's credibility and subjective allegations and 
articulating a reasoned basis for their conclusions. Notwithstanding 
the clear message from the Process Unification Training that State 
Agency Examiners were expected to perform individualized assessments 
and rationalize their determinations, they have failed to do so. State 
agencies have balked at this requirement, and examiners' determinations 
continue to be devoid of rationale and are driven almost exclusively by 
objective medical findings.'' What are your comments on these 
statements? Would you explain what factors and criteria State 
disability examiners use to assess an individual's claim? Are such 
processes checked and documented via DDS or Federal quality review?

    NCDDD disagrees with the perceptions stated in the testimony of the 
Federal Bar Association. In response to the allegation, ``. . .  
examiner's determinations continue to be . . . driven almost 
exclusively by objective medical findings'' we believe this 
demonstrates a lack of understanding and medical expertise. We believe 
the DDSs are in compliance and alignment with the law for determining 
Social Security disability.
    The foundation of each case is an objective medical impairment. ``A 
medically determinable impairment (MDI) which must result from 
anatomical, physiological or psychological abnormalities which can be 
shown by a medically acceptable clinical and laboratory diagnostic 
techniques and be established by medical evidence consisting of signs, 
symptoms and laboratory findings . . .'' The DDS is the only 
adjudicative component with the medical expertise, training and in-
house medical staff to develop and evaluate the facts of the case. Our 
decisions are not based on bias, assumptions or unsupported 
allegations. Also, subjective complaints are just that---subjective 
and, by nature, individualized. It is not an easy process to evaluate 
this information in the context of a medical determination, but it is 
considered in the final determination by the DDSs. Severe resource 
constraints do in fact place limitations upon the whole process.
    We should be clear that most denial determinations have an 
individualized assessment and rationale. The DDS certainly admits that 
due to historical under-funding of the DDS process and workload volume, 
the assessment obviously is briefer than a detailed legal document. 
Most DDS cases that are appealed to an ALJ are rationalized on a 
Residual Functional Capacity form which addresses current functioning, 
subjective complaints, credibility and treating source opinion. As part 
of Process Unification, Social Security Ruling (SSR) 96-6p dictates 
that the DDS medical and psychological consultants' finding of fact may 
not be ignored and must be given weight. It appears the legal community 
might be reluctant to view this RFC as the individualized assessment 
and rationalization. However, this is the format prescribed by SSA, 
used consistently by the DDSs and should not be dismissed. The DDSs 
have participated in pilots and prototype initiatives, which provided 
for more detailed assessment, rationalization and explanation. It is 
our understanding that resource limitations are the basis for not 
including this detailed level of case explanation and documentation as 
part of the DDS determination.
    All of these processes, including the assessment and 
rationalization, are subject to both DDS internal and Federal DQB 
quality review. In fact, the Examiner's assessment is subject to very 
close review by both quality review teams because it is a source of 
potential inconsistencies and deficiencies. The DDSs' review process 
reinforces the application of these concepts. The current national 
quality rating has not identified insufficient Process Unification 
application in the DDSs across the nation.
    Given the DDS budgetary constraints, our organization believes that 
we are meeting the challenge, fulfilling the mandate and case 
compliance expectations set forth by SSA. We are in compliance with the 
training, and the feedback/monitoring by DQB.
    The DDS stands ready to make further refinements and adjustments as 
required by the appeals process and SSA. The DDSs have been leaders on 
various pilots and projects to improve the adjudicative process. 
Unfortunately, resources have not always been commensurate with the 
mission and goals of the pilots and process improvements. In the 
future, it is crucial that both staffing and time extensions be built 
into the process and additional resources dedicated to these concepts, 
principals and requirements. The NCDDD believes that we need to 
continue strengthening training, learning from case examples, 
conducting cross reviews, and receiving component feedback.

    3. What is the status of implementation of Process Unification? 
What specific Process Unification activities were held last fiscal 
year? This fiscal year? What have been the results?

    The status of the Process Unification (PU) implementation at the 
current time is commensurate with the level of funding provided by SSA 
to DDSs. Activities continue and further refinements, training 
programs; case staffing and the collective understanding of the 
concepts outlined in the Process Unification guidelines are being 
pursued. However SSA policy for evaluating disability claims is 
fragmented, complex, conflicting, confusing and sometimes obsolete. 
This compromises the ability of the DDSs to adjudicate cases 
consistently and accurately.
    NCDDD agrees with the recommendation by the Social Security 
Advisory Board in its report of August 1998, ``The most important step 
SSA can take to improve the process is to develop on-going joint 
training for all adjudicators in all the components that make and 
review disability determinations''. The Board also noted that such a 
training program presumes the existence of a policy base, which is 
clear, concise, and applicable in a real world setting.
    Specific to your question about training, PU was the initial step 
in the direction of providing a consistent level of training. When PU 
was instituted there was a massive and mandatory intercomponent 
training. PU is the framework upon which the DDS makes determinations 
on a daily basis. This is not an added-on process. PU training is 
initiated in the DDSs as the order of business from day one when 
training the new Disability Examiner. This is supported in the 
following ways: Basic Examiner Training, in-house mentoring, trainer/
supervisor/coach review, internal DDS Management Quality Assurance, 
SSA-provided Interactive Video Training, update training, and Federal 
DQB quality review.
    As far as the specific training this past year, much of the PU 
training has been integrated into other training. For example, in 
January 2002, the DDSs had mandatory national training on the SSA 
changes in the musculoskeletal listings. PU was included into the 
training because it is the way we currently evaluate cases.
    The DDSs continue to receive claims with ongoing feedback from the 
DQB for appropriate application of the PU concepts and principles. The 
DDS community does believe that there is a need for ongoing, 
intercomponent refresher training that should be provided by SSA for 
consistent presentation of policy similar to the original PU training.
    It should be reiterated that this type of training and application 
of these concepts is resource-intensive and very time consuming. The 
DDS is not the only component with PU responsibilities. All components 
should share in the consistent application of these principles. Limited 
funding has compromised, in part, a comprehensive approach to the PU 
principles. We are aware of various pilots, and certainly the Prototype 
process, which have had success with these concepts when supported by 
adequate funding. With sufficient training and funding support, this 
regulatory language can continue to be refined and strengthened in the 
DDSs and throughout the disability determination process. Further cross 
component training, feedback and monitoring of PU concepts across all 
components would serve as a cost-effective method in our delivery of 
services.

    4. Several witnesses testified at the Subcommittee's hearings 
recently that the reconsideration step should be eliminated. Ms. McGraw 
stated (page 8 of her testimony), ``Reconsideration is widely--and 
correctly--viewed as little more than a rubber stamp of the initial 
denial.'' What are your comments on this statement and the 
recommendation of eliminating the reconsideration step? What are the 
pros and cons in your view?

    NCDDD is in agreement with the Social Security Advisory Board that 
the reconsideration step should not be eliminated. We believe it should 
be strengthened and enhanced at the DDS. For the 86,000 individuals 
granted disability benefits at the reconsideration level last fiscal 
year (19% of those appealing), it should not be considered a rubber 
stamp for the initial decisions. This is particularly important when 
you consider how soon these decisions were made following the initial 
determination. The claimant does not have to wait for months for a 
hearing and it is exceptionally less expensive to process a case in the 
DDS. Per SSA Office of Disability, it costs on average $418.00 to 
process a claim at the DDS level. This is \1/3\ of the cost of any case 
appealed subsequent to the DDS determination. Therefore, we believe it 
to be the most cost efficient part of the disability process.
    In the debate over the value of the reconsideration we share the 
concern that the second step in the case process should be meaningful 
and value added. The rationale that the reconsideration has become a 
meaningless step, only delaying the correct decision, is not valid for 
the thousands of disabled citizens whose conditions continue to 
deteriorate. The DDS can and does step in to reverse an adverse 
decision to an allowance at the earliest possible time, including at 
the reconsideration. This is the right thing to do for the American 
public that the DDSs serve and is more cost-effective to the claimant 
and the taxpayer than sending the case to OHA.
    The challenge as we view this process is in strengthening the 
reconsideration step. A second level of review at the DDS level need 
not be meaningless or have the appearance of a ``rubber stamped'' 
decision. Claimants could be provided the opportunity for a face-to-
face de novo hearing, conducted by highly trained and experienced DDS 
staff. This ``new'' reconsideration would enhance the reliability and 
accuracy of the DDS decisions and reduce the need for claimants to go 
through the complex and lengthy ALJ hearing process. In addition, we 
recommend that the record be closed after this enhanced reconsideration 
in order to strengthen the consistency of the adjudicative process.
    The opportunity, as we see it, is to target resources that achieve 
results in the component with a proven track record . . . the DDS. We 
would again reiterate, as in much of our earlier testimony, that our 
DDS organizations are the most cost effective and efficient. With 
proper funding and resource support, we are prepared to help establish 
and implement the program improvements that strengthen both the initial 
claim and the reconsideration appeals step.

    5. Mr. John Pickering, Commissioner Emeritus of the American Bar 
Association Commission on Legal Problems of the Elderly, stated in 
testimony on June 11 (page 2) that to improve the initial quality of 
medical and vocational evidence and reduce the number of appeals, ``the 
agency consult the claimant's health care providers, and compensate 
them adequately for providing relevant medical information.'' Isn't 
this done today? Can you explain how? What are your comments on this 
recommendation?

    The NCDDD position is that the DDS organizations are under-funded 
in terms of appropriate financial support to pay medical providers. 
Medical evidence is the very foundation for our documentation in all 
disability claims. The states' ability to compensate health care 
providers has been compromised and weakened and has negatively affected 
their ability to deliver quality and timely service.
    Each year many states request, as a part of their budget planning 
requests, increases in the Medical Evidence of Record (MER) and 
Consultative Examination (CE) fees paid by their state. This is 
typically the first line item in the funding authority that is 
eliminated or reduced as funds are being allocated to the State 
agencies. Further, many states do not even pay the Medicaid rate for 
retrieval of medical records and purchase of CE medical evaluations, 
laboratory tests and x-rays. By law, as previously stated, the DDSs are 
required to request the appropriate MER from the claimant's health care 
providers. This is not a matter of ``picking and choosing'' which piece 
of evidence to obtain. However, there are known timeframes to which all 
providers are expected to adhere in order to improve overall claims 
processing time.
    Each state pays a predetermined amount for this MER. MER could be 
in the form of the physician's notes, diagnostic studies, and could 
include a narrative by the medical source in response to specific 
questions from the DDS. Nationally the DDSs send out millions of 
requests per year to document these cases. Mr. Pickering makes the case 
to ``. . .  compensate them [health care providers] adequately for 
providing relevant medical information''. However, that would not 
appear to take into consideration the millions of dollars spent to 
document these cases in the current process. It also does not take into 
consideration that despite perhaps not ``adequately compensating'' the 
health care providers, the DDSs still manage to get the much of the 
Medical Evidence of Record. Again, this could be in direct contrast to 
Mr. Pickering's assertion that if we paid more for the medical records, 
we would get more ``relevant medical information''. We reiterate, the 
DDSs' don't dictate the relevancy of the record, it IS what is on the 
record. The challenge continues to be one of ever increasing 
administrative costs to the program.
    We firmly believe that there are two options. These records could 
be made available to government agencies as belonging to the claimant. 
The other option would be to obtain available records and/or purchase 
evaluations with the ability to pay a fair market price, similar to 
what insurance companies and Medicare are paying, for existing medical 
records or examinations. This may also be an up front cost, saving 
overall dollars, resources, rework and costly appeals. The theory of 
``pay slightly more now or pay significantly more later'' would seem to 
apply.

    6. We have heard from the Advisory Board, as well as others, about 
the need for disability policy to be clear, concise, and applicable in 
real world settings. Can you give us an example of current policy that 
is not clear, concise, and applicable to real world settings? How can 
Social Security Administration (SSA) improve their policies to ensure 
they are applied consistently as they administer a national program?

    The NCDDD organization believes that disability policy that is 
clear, concise and can be applied in real world settings is ultimately 
the most cost effective use of the limited resources in today's 
environment. Historically, there has been inaccurate analysis and 
insufficient funding associated with the implementation of operational 
policy changes. Policy effectiveness and its implications are not 
reviewed post-implementation. It is critical that decisionmakers at 
both levels (DDS and OHA) apply the same statutory definition of 
disability and the same regulations. The language in the regulation is 
far less specific than that of the separate vehicles used to convey 
policy to DDSs and to OHA. For DDSs there is a manual called the 
Program Operations Manual System (POMS). Adherence to POMS directives 
is required at the DDS level. The OHA appeals process has its own 
separate manual, which differs substantially from the DDS manual.
    In addition to the different directives given to the DDSs and OHA, 
there are a number of unclear regulations and policies. A specific 
example is found in the newer ``Musculoskeletal'' listing regulation. 
One criterion for ``loss of function,'' as required by the listings, is 
``The inability to ambulate effectively.'' This is defined as, 
``Inability to ambulate effectively, means an extreme limitation of the 
ability to walk; i.e. an impairment(s) that interferes very seriously 
with the individuals' ability to independently initiate, sustain, or 
complete activities.'' Terms such as ``effectively'', ``extreme 
limitation'', ``very seriously'' ``independently initiate'', 
``sustain'' or ``complete activities'' are nebulous and could lead 
independent reviewers to different conclusions.
    Another example is found in the different approaches to the 
assessment of residual functional capacity by various decisionmakers. 
According to the law and regulations, decisionmakers must consider the 
effect of the medical impairments(s) on the applicant's ability to 
perform work-related tasks. The resulting conclusion is called the 
claimant's ``residual functional capacity''. This finding is based on 
the medical facts and any opinions that may have been provided by a 
claimant's treating physician. It is our understanding that OHA 
decisionmakers tend to place much greater weight on the conclusionary 
statements of treating physicians, often without supporting, objective 
findings. SSR 96-2p requires controlling weight to treating source 
opinions only when supported by objective findings. An extreme 
difference in decisional outcomes emerges from the conclusions reached 
about claimants' remaining ability to work.
    A third example can be found in the way that SSA determines 
disability due to a mental impairment. Policies dictate that the 
claimant with a medically determinable impairment have two of the 
following: ``Marked restriction of activities of daily living.'' 
``Marked difficulties in maintaining social functioning''; 
``Deficiencies of concentration, persistence or pace resulting in 
frequent failure to complete tasks in a timely manner (in work settings 
or elsewhere)''. Or ``Repeated episodes of deterioration or 
decompensation in work or work-like settings, which cause the 
individual to withdraw from that situation or to experience 
exacerbation of signs and symptoms (which may include deterioration of 
adaptive behaviors).'' We suggest that these four areas are fraught 
with potential for inconsistencies in the application of policy. In 
addition, in spite of the allegation that ``Disability Examiners do not 
assess claimants' subjective complaints'' one should clearly see by 
evaluating the listing for a mental impairment, the way to establish 
any limitation is by assessing subjective complaints. Although data are 
not available, it is our understanding that at least half of the cases 
in each DDS involve mental impairments.
    An additional example is the Speech and Language policy being 
applied in childhood disability claims. To some this is a very complex, 
comprehensive policy and appears to be heading beyond the real world 
operational boundaries.
    A final example is in the way the DDSs and ALJ's assess vocational 
information. The DDS is required to assess and evaluate the claimant's 
past relevant work history for the previous 15 years. Then, using the 
Dictionary of Occupational Titles (DOT) produced by the Department of 
Labor, the examiner is required to make a vocational determination 
including transferability of skills to other jobs in the national 
economy. As an aside, the DOT has not been updated in many years; is 
not being continued as a research publication; but it is the only 
reference material available to the DDS. A finding of transferability 
of skills in most cases dictates a finding of ``not disabled''. This 
determination is done in the DDS by the Examiner who has been trained 
to apply the DOT.
    The ALJ frequently contracts an independent a Vocational Expert 
(VE) to be present at hearings where a vocational determination is 
required. While the VE uses the same DOT he/she is frequently allowed 
to give testimony that the job as performed in the national economy (as 
the DDS is required to determine) is no longer available in the 
claimant's community. Therefore, there are no transferable skills used 
in the determination. This frequently results in an allowance decision 
at the ALJ level. This is inconsistent with the policy that the DDS 
Examiner would be ``allowed'' to use for determination purposes.
    The challenge continues to be improvements and methods to ensure 
consistent application of policy. NCDDD and others in the disability 
community have consistently advised that updates and changes in 
regulations/policies should be carefully reviewed. There has been an 
ever-increasing move for including more subjectivity and 
`functionality' in the medical listings, which has increased variation 
in the decisionmaking process. We acknowledge the current SSA 
Commissioner for essentially putting a hold on any medical listing 
updates that were being considered. It is our understanding that all of 
the proposed changes are being re-reviewed and reconsidered at least 
partly in response to NCDDD's expressed concerns.
    The opportunity now is to review the many workgroup recommendations 
in which our organization has participated. We encourage SSA to again 
review the 30-Day Workgroup proposals, the Philadelphia Workgroup 
suggestions, Tri-Regional recommendations, the One-Agency session ideas 
and various subgroup proposals. All of these initiatives generated 
comprehensive strategies that would advance improved cost efficient 
policy development and operational efficiency.
    In conclusion, a single presentation of clear policy for all 
components is required. In addition, the quality assurance system must 
be revised so as to achieve the goal of unifying the application of 
policy among all components.

    7. You state your organization supports many aspects of the Lewin 
report. Would you describe which recommendations you specifically 
support and why?

    NCDDD does support many of the key elements in the Lewin Report. 
First, NCDDD reiterates our commendation for SSA's recent steps in 
appointing an executive lead to focus attention on creation of a 
quality culture at all levels in the disability process. As one of the 
first recommendations of the Lewin report, we urged SSA to start a 
dialog. The SSA Executive Lead has already taken steps to include the 
NCDDD organization in early deliberations and movement forward on the 
findings of this report. We fully support this effort. The report 
recommends that the existing QA system be changed radically. It is very 
explicit that tinkering at the margins of the present system is not 
enough. The most fundamental precepts and processes must be changed.
    The structure of the disability program is too fragmented with too 
many components responsible for the various pieces of the program and 
too little coordination among those units. We particularly agree with 
Lewin's recommendation that SSA develop a new organizational structure 
that clearly establishes responsibility and authority for the 
disability program across all SSA functions. This would not only 
include operations and quality review; but also policy development, 
budgeting, training and electronic data and tele-video systems design.
    The current model is based on a decades-old industrial antiquated 
model for quality control in which end-of-process reviewers check a 
sample of the completed product and report and describe ``errors''. 
Quality reviews should assure a consistency across the nation. End-of-
line quality review does not educate the front line workers or develop 
their abilities, but simply makes them fearful of being identified as 
error-prone workers. The SSA quality assurance system should place much 
more emphasis on in-line process improvement and much less emphasis on 
finding and reporting on defects.
    The report recommends that SSA adopt a broader definition of what 
it means by quality outcomes in the disability program. At the present, 
quality, in the quality component, means only the extent of 
documentation, analysis, and explanation and the resulting 
``correctness'' of the eligibility decision. Other important factors 
correlate with the quality of an operation--most notably case costs, 
case processing time and claimant satisfaction with the process--are 
not considered. This broader definition of quality must be shared among 
all components. Everyone must buy into it. Progress toward the 
objective is unlikely and is compromised if different components have 
different views of what quality means. Lewin also observes that leaders 
and managers in all components must commit to achieving all aspects of 
the quality objectives.
    The frontline workers, the quality reviewers and OHA, should 
develop a shared definition of what ``quality'' means to replace the 
current process in which they view the concept much differently. 
Presently, frontline workers must always simultaneously balance 
concerns for the amount of documentation, the thoroughness of analysis 
and explanation, case processing time and case costs. The operations 
definition of ``quality'' includes all these elements. But at the case 
review level, ``thoroughness'' is the only consideration, cost and case 
processing time are entirely ignored. The result is that operations 
workers on the frontlines receive feedback from the quality reviewers, 
which is virtually impossible to apply in the real work environment. We 
recommended establishing a quality concept that all components can work 
toward rather than continue the present model, which places the 
components in adversarial positions to one another. The current process 
does not demonstrate reviews as a value-added step in the process, 
rather it is viewed as a costly, ineffective impediment.
    Lewin recommends that DDSs be responsible for first level reviews 
(which would incorporate emphasis on in-line improvements) and that 
Federal resources be used to coordinate and develop the DDS QA units 
rather than to perform direct reviews of the DDS work.
    NCDDD supports the following: creation of a strong link between the 
mission and goals of the disability programs. We support the refinement 
of the definition of goals and how they are measured. We also support 
the development and implementation of a communication plan that 
reinforces the understanding of the mission, vision, and quality 
definition for the disability programs at all levels of the 
organization. We especially agree with:

         Continuing the DDSs' internal quality management 
        systems that meet SSA's disability program specifications;
         Case review and accuracy sampling conducted by the 
        DDS quality management unit (whereby redundant [and costly] 
        Federal and DDS end-of-line reviews are eliminated);
         Validation audits conducted by SSA on self-reported 
        DDS accuracy and other performance metrics; and
         Using the findings to adjust state measures.

    DDS performance monitoring, through use of a balance scorecard of 
key performance indicators, would serve as the foundation of the new 
Federal state relationship.
    The opportunity and the reasons for our support of these key 
aspects are many. The DDSs have a proven track record of providing 
accurate, cost effective, and timely service to the disabled population 
that they serve. The DDSs have always been held accountable for a 
multitude of performance metrics. We support all the components being 
held to quality standards. A ``balanced scorecard'' approach would be 
an important step toward creating a quality environment for all 
components throughout the organization. This sets the stage for 
reducing variation in the decisionmaking process across the nation. Of 
critical importance in the quality process, are actions and steps 
throughout the process that would advance national quality consistency.
    In conclusion, developing the broader definition and applying the 
definition to all the components can reasonably be expected to change 
the current environment into one here teamwork and collaboration 
flourish and adversarial behavior diminishes. The emphasis on quality 
must begin much earlier in the business process than in end-of-line 
review. Dedicating valuable time and resources to in-line quality 
culture is ultimately cost effective and efficient to a business 
process. The current environment costs the agency work and rework and 
is an ineffective way to assure quality and national quality 
consistency.

    8. Much has been said by the Advisory Board and the media about 
decisional variance across states. Can you provide your opinion on why 
that is?

    The NCDDD has historically recognized the issue of decisional 
variance across states. Reasons for variance include, but are not 
limited to demographics, urban, rural, age of population, education, 
poverty, economy, health care programs, employment base, insurance and 
corporate insurance policies, workers' compensation requirements and 
workload mix.
    An SSA Office of Policy study last year determined allowance rate 
variance exists.
    State supported programs, local economies, policies of large 
business corporations that require application for SSDI benefits when 
employees are in medical leave status and unemployment can all 
contribute to the variation. Access to health care and availability of 
public health and community mental health programs also add to the 
variance.
    There have been no population-based studies to analyze the client 
population coming into the disability process. The questions of who is 
applying, what are the reasons, what are the disabilities, are there 
differences from state to state or among geographic areas, what are the 
influences of health care in select geographical areas have not been 
addressed.
    In addition, we believe that the variance in decisionmaking between 
the DDS and OHA is a serious problem in the disability program. 
Realizing that time has passed and the claimant's condition may have 
changed, and without asserting which component is `right', the facts 
are as follows: DDSs process initial claims with an average processing 
time of about 86 days, at a cost of about $418 per case. According to 
SSA quality reviews, DDS claims have a decisional accuracy of about 
97%. Additionally, we believe that is critically important to remember 
that eighty (80%) of all the individuals who receive disability 
benefits are allowed through a decision made by the DDS at \1/3\ of the 
administrative cost incurred at subsequent appeals steps. There has 
historically been an absence of uniformity and clearly stated policy 
instructions for adjudication at the two levels. There has been no 
established ongoing common training for personnel. Separate and 
opposite quality assurance and case review systems tend to drive the 
two components apart rather than bring them together. These challenges 
continue today.
    In addition, there is clear variance in the decisionmaking between 
the ten DQB offices, again leading to inconsistencies across the 
nation. Although SSA has recently undertaken `Consistency Reviews', SSA 
has reported that the review ``Did not measure what we needed to 
measure''.
    Another demonstration of variances in the decisionmaking between 
components is `Case Bank Studies'. This is an ongoing project to 
attempt to provide sample cases to each component to get feedback on 
consistency in adjudicative application. In theory, the results were to 
come back to SSA and the `correct' answer would be disseminated to all 
components. The results of this action did not provide clear case 
policy decisional direction.
    The variance can be attributed to the very beginning of policy 
development and operational aspects of policy. There is variance in 
interpretation at various levels including the DDS, the DQB, as well as 
the OHA. The training, or lack thereof, also contributes to the 
variation. There is little opportunity for dialog, cross component 
feedback, retraining, and learning about the subjective areas of policy 
complexities.
    The opportunity exists for further in-depth study to explain the 
variation. A national, not regional, review could minimize variance. 
Dedicating resources to assure the public confidence in the program and 
eliminate the concern of bias and unequal treatment of the disabled 
citizens of this country is absolutely necessary.

    9. Do you have specific suggestions for changes in the law to 
better enable you to do your job?

    NCDDD has recommended in several workgroups over the past few years 
many changes in policy and process to better deliver service and meet 
the mandated goals and objectives of the program. Adequate resources, 
administration and management support could better enable the DDSs to 
deliver improved service.
    One specific suggestion is a change in the relevancy of past 
relevant work from consideration of a 15-year work history to a 5-year 
period. This is essential given the previous statement regarding the 
currency of the Dictionary of Occupational Titles and ever-changing job 
duties.
    We have also recommended closing the record after an enhanced 
reconsideration decision performed by DDS personnel. We also suggest 
consideration be given to temporary and/or time-limited benefits. 
Temporary disability and short-term disability with new work incentive 
provisions and closing the record after the DDS final case review would 
be consistent with future goals and return to work initiatives for the 
future viability of the program. These kinds of changes in the 
disability laws, consistent with the Americans with Disability Act 
protections and provisions as a matter of general public policy, 
encourages successful efforts to have the disabled in the work force 
contributing to the national economy and productivity.
    Decisionmaking between the initial (DDS) and appeals (OHA) level 
must be more consistent. It is our understanding that SSA management 
has historically permitted the development of an inaccurate view of the 
immunity from management control of administrative law judges under the 
Administrative Procedures Act. ALJs have successfully asserted broad 
decisional independence and freedom from management control and 
oversight. Our organization believes that this not only accounts for 
much of the difference in decisionmaking between DDSs and OHA, but also 
for the extreme difference in allowance rates generally. SSA has 
recently obtained an opinion for its General Counsel that declares 
management authority for requiring ALJs to attend training, apply the 
agency policy, conform to administrative rules, and so forth. As the 
administration establishes their authority as provided by law, a change 
in the law may not be necessary
    Again our organization encourages changes and updates in laws that 
demonstrate cost effective public policy, protect vulnerable citizens, 
protect integrity of the trust fund and assure that resources and means 
to fund the program are consistent with these laws and initiatives.

    Note: NCDDD is recommending regulatory changes that may not require 
a change in law.

    10. Do you think the Federal/State relationship is working or not 
working? Please explain why, and what you would like to see changed?

    The Federal state relationship is working, however the NCDDD 
organization believes that this unique relationship should be enhanced, 
nurtured and supported. We believe that the mission of the DDSs is to 
make accurate determinations of eligibility, to do so quickly, and to 
be economical.
    In considering the effectiveness of the relationship, as well as 
some of the challenges, we encourage ongoing, open dialog on areas of 
concern. In reality, the federal/state partnership, while not perfect, 
is at its best when integrated with the Social Security 
Administration's mandate of empowering the states to act on behalf of 
and empowering our most vulnerable citizens. Our organization does 
recognize areas in need of attention and focus.
    The NCDDD organization recommends changes including regulatory 
language that provides sufficient resources and appropriate funding to 
meet the mandates of the Administration. In addition, education of the 
DDS's parent agency and state entities supporting the DDS structure, 
improving the quality of staffing to deliver the service of this 
complex process, training initiatives that support national 
consistency, and staff that are dedicated to systems support are vital.
    Working together is cost-effective when both national and local 
governments understand the mission, goals and values of meeting the 
needs of vulnerable citizens. The time and effort to strengthen the 
relationship will, in the long run, serve both the states and nation.

    11. The Social Security Advisory Board has recommended that SSA 
strengths the Federal/State relationship, including revising SSA's 
regulations to allow improving the agency's management of State 
operations. In his testimony of June 11 (page 6), Mr. Hal Daub, the 
chairman for the Advisory Board, suggested that these revised 
regulations require States to ``follow specific guidelines relating to 
educational requirements and salaries for staff, training, carrying out 
quality assurance procedures, and other areas that have direct impact 
on the quality of their employees and their ability to make decisions 
that are both of high quality and timely.'' What are your comments on 
this recommendation? What do you believe are the pros and cons, and the 
feasibility for making these changes?

    We agree with the Social Security Advisory Board (SSAB) in their 
report of January 2001 that ``The agency's regulations should be 
revised to require States to follow specific Federal guidelines 
relating to educational requirements and salaries for staff, training, 
carrying out quality assurance procedures, and other areas that have a 
direct impact on the quality of their employees and their ability to 
make decisions that are both of high quality and timely. Regulations 
should also ensure that State hiring freezes will not apply to State 
agency disability operations.'' While many states have recognized the 
valuable, skilled professional staff in the DDS agencies, others are 
seriously impairing DDS and SSA to achieve their service goals. DDS 
organizations throughout the country have been impacted--as state 
budgets continue to be compromised by current fiscal conditions and the 
impact of revenue shortfalls and other local/state challenges. Hire 
freezes and downsizing of state government programs have all had a 
corollary impact on the DDS's business process. There is an urgent need 
for SSA to address in regulatory terms the DDS's ability to direct and 
control their data systems support staff, hardware and software assets. 
Therefore, there are many issues regarding staffing, staffing 
retention, training, internal DDS process issues, with a dramatic 
impact on the agencies' ability to meet the SSA service delivery goals.
    We agree with Chairman Daub of the SSAB, that the regulations need 
strengthening. There are pros and cons to this challenge. The pros 
include language and strengthened abilities to minimize these 
mitigating effects on the DDS business and organizational process. The 
cons include the question of oversight and control issues. Carrying out 
the Federal mandate of the Social Security Administration should 
include flexibility in business processes, while protecting the 
integrity of the Federal funding.
    The opportunity is now. The times call for an updating of the 
regulations that will instill public confidence and deliver the most 
cost-effective process for disabled citizens at the state and national 
levels. Together we can create the future of effective human service 
and efficient public policy.

                                 

                                 Cornell Center for Policy Research
                                               Washington, DC 20036
Kim Hildred
Staff Director
Subcommittee on Social Security
U.S. House of Representatives
B-316 Rayburn House Building
Washington, DC 20515

    Dear Ms. Hildred:

    This letter is my response to a letter I received from 
Representative Clay Shaw, Jr., as follow-up to my testimony before the 
Subcommittee on June 11, 2002. He asked me to respond to the following 
question:
    The results of your evaluation of the Disability Claims Manager 
test were more positive than the Social Security Administration's 
(SSA's) results. Would you explain why you disagree with SSA's 
evaluation of this test, including why they found higher costs and 
lower processing times than you?
    First, I need to correct a misimpression that is reflected in the 
preamble to the question. I did not conduct a separate evaluation of 
Phase 2 of the Disability Claims Manager (DCM) test--the phase on which 
SSA's conclusions are based. Instead, I interpret SSA's findings from 
Phase 2 differently than SSA does. That interpretation is based on a 
detailed knowledge of those findings, as well as the methods used to 
produce them. My colleague, Gina Livermore, and I evaluated the Phase 1 
pilot, designed the evaluation of Phase 2, and provided technical 
assistance to SSA's Disability Process Redesign Team on their 
implementation of the Phase 2 evaluation.
Cost
    The most critical issue is the interpretation of the cost data. 
SSA's report draws the following conclusion:
    Dependent on the productivity and staffing models used, the DCM 
administrative cost to process an initial claim ranged from about 7 to 
21 percent higher than the current process.\1\
---------------------------------------------------------------------------
    \1\ SSA, Disability Process Redesign Team, Disability Claims 
Manager Final Evaluation Report, October 2001, p. 29.
---------------------------------------------------------------------------
    The major component of cost is labor cost, which mirrors labor 
productivity. SSA drew the following conclusion about productivity:
    DCM productivity ranged from about 14 percent less to 8 percent 
more than the current process.\2\
---------------------------------------------------------------------------
    \2\ Ibid., p. 29.
---------------------------------------------------------------------------
    Based on the evidence provided in the same report, I think a more 
reasonable conclusion is that, apart from training costs, DCM cost per 
claim was about the same as cost per claim under the current process. 
DCM productivity is probably higher, but offset by higher salaries and 
expenditures for medical evidence. I would further conclude that 
opportunities for reducing DCM costs are substantial. My reasons 
follow:

         SSA's cost per claim and productivity estimates are 
        based on the average performance of the DCMs over 13 months of 
        the Phase II test. It is clear from other evidence in the 
        report, however, that productivity increased substantially from 
        the first month of Phase II through the 10th and 11th months, 
        then declined somewhat in the last 2 months. In the peak month, 
        SSA's estimates show that DCM productivity is no lower than 
        current process productivity and possibly 20% higher. I think 
        that peak productivity is a better gauge of actual DCM 
        productivity than the mean over 13 months because the reasons 
        for the gradual increase, followed by a decline near the end, 
        have to do with the test situation. Although there was a 
        substantial Phase I, the DCMs were still learning their jobs as 
        Phase II started, and as Phase II ended their attention shifted 
        to what they would be doing after the test ended. In fact, it 
        is possible that productivity would have continued to increase 
        had the test not ended when it did.
         Measurement of DCM productivity relative to current 
        process productivity is very inexact, for two reasons. First, 
        the current process has two components (state Disability 
        Determination Service (DDS) and SSA field office (FO)), with 
        two different productivity measurement systems, and these must 
        be combined in some fashion for purposes of comparison to the 
        DCM. Second, many activities other than initial adult 
        disability claims processing occur in the DDSs and FOs, and it 
        is problematic to accurately apportion labor effort into 
        initial application processing and other activities. The 
        problems are so substantial that we cannot be confident that 
        the productivity (and cost) differences reported are real, 
        rather than the result of measurement problems. SSA developed 
        two approaches to measuring productivity, and the extremes of 
        the range of both productivity and cost estimates reflect these 
        two approaches. The range for measured DCM productivity 
        relative to measured current process productivity is 22 
        percentage points. If I had to choose, I would prefer the 
        approach that produces the relatively high productivity 
        measures for the DCM, because it relies less heavily on work 
        sampling. The more important point, however, is that the 
        estimates are not sufficiently precise to draw firm conclusions 
        about which process is less costly, given the differences 
        observed for these measures.
         DCM costs could likely be lowered relative to current 
        process costs through adjustments to the DCM process. Remember 
        that the DCM process is largely new, while the current process 
        has been in place for many years; SSA and the DDSs have had 
        much more time to tinker with the current process in order to 
        improve productivity. An important example is improvement in 
        management information systems (MIS). Each DCM had to use both 
        Federal and state MIS during the test. Combining the two 
        systems would likely reduce costs substantially.
         DCM salaries were an important determinant of DCM 
        costs during the test, and it is quite possible that lower 
        salaries would be sufficient to operate this process. The costs 
        SSA reports reflect the salaries of individuals who actually 
        participated in the test. With a few exceptions, the DCMs were 
        a mix of former disability examiners (state employees) and 
        claims representatives (federal employees). Almost all Federal 
        DCMs received a promotion, and many state DCMs also did. One 
        reason for the promotions was to encourage employees to accept 
        temporary assignments, in many cases away from home. In 
        general, state DCMs were paid substantially less than Federal 
        DCMs.
         The cost estimates from the evaluation do not include 
        training costs. Training costs under the DCM might be higher 
        than under the current process because every adjudicator must 
        receive training in both medical and non-medical adjudication. 
        Lower adjudicator turnover, resulting from greater job 
        satisfaction and higher pay, might substantially mitigate this 
        increase.
Processing Time
    SSA concludes that the median processing time for DCM Title II 
claims was 10 days shorter than under the current process; for Title 
XVI the median was 6 days shorter. These estimates understate the 
reduction because of the way the samples used to calculate the medians 
were selected. While it is not possible to determine exactly what the 
corrected values would be from data in the report, it is possible to 
make a good estimate. My calculations indicate that median DCM 
processing times were shorter than those for the current process by 
about 19 days for Title II (compared to SSA's 10), and by about 15 days 
for Title XVI (compared to SSA's 6).
    The report states: ``Any claim filed before Phase 2 began (11/1/
1999) or that was adjudicated after the evaluation phase ended (11/30/
2000)'' is excluded.\3\ Exclusion of claims filed before Phase 2 is 
fine. Exclusion of claims adjudicated after the evaluation phase ended 
is necessary, but by itself introduces a downward bias in processing 
time for both DCM and control (i.e., current process) claims, because 
claims filed late in the evaluation phase are included if they are 
adjudicated quickly, but omitted if they are not. The bias is greater 
for control claims, for two reasons. First, longer processing times for 
control claims means that for all claims filed during any month, the 
share of ``slow'' control claims excluded is larger than the share of 
slow DCM claims excluded. Second, due to an initial problem in the 
assignment of control claims, a larger share of the control claims is 
initiated in the last few months of the evaluation period.
---------------------------------------------------------------------------
    \3\ Ibid, p. 18.
---------------------------------------------------------------------------
    It is possible to produce unbiased estimates of the medians for 
claims in each group that were filed in the first 10 months of the 
evaluation period, because more than half of all claims filed in each 
of these months had been adjudicated by the end of the evaluation 
period, for both the DCM and control processes and for both Titles. SSA 
provides enough information in the report to approximate the median 
processing time for all claims filed in the first 10 months of the test 
by process and Title.\4\ My estimates of the reductions in median 
processing time are based on those claims only.
---------------------------------------------------------------------------
    \4\ Ibid, p. 23. The table on this page of the report shows the 
percentage of claims filed in each month that were processed as of each 
30 day interval after filing, from 30 to 180 days, plus the number of 
claims filed in each month, by Title and DCM versus control. From these 
data I calculated the percent of each type of claim completed at 60, 90 
and 120 days for those claims filed in the first 10 months. My 
estimates of the medians were obtained by interpolation between these 
percentages. For example, I found that 39.0 percent of DCM Title II 
claims were completed within 60 days and 62.7% were completed within 90 
days. The median must, therefore, be between 60 and 90 days. I used 
linear interpolation between these two points to estimate a median of 
74 days for DCM Title II claims. Note that this value is actually 
greater than the median reported by SSA, but this is because of the 
bias in SSA's estimate caused by; the fact that SSA included claims 
that were filed after the 10th month if they were adjudicated by the 
end of the 13th month.
---------------------------------------------------------------------------
Conclusion
    Based on the evaluation, I think that the DCM, if fully implemented 
in a reasonable way, would produce substantial improvements in 
processing time, applicant satisfaction, and employee satisfaction 
without an increase in cost, a decline in accuracy or a change in the 
initial allowance rate. However, as indicated in my testimony, I do not 
recommend implementation of the DCM as it was tested. Based on 
discussions with many people involved in the test, I think that much of 
the success of the DCM occurred because a single person in a single 
office took ownership of the claim and also served as the point of 
contact for the claimant. That feature of the DCM can be preserved 
without requiring the person to be qualified to adjudicate all aspects 
of the claim. The complexity of many claims makes it inefficient to 
have a single person have the expertise needed to fully adjudicate any 
claim. A system that preserves the most positive aspects of the DCM, 
but includes more specialization of expertise and functions, would be 
better.
    I hope this information is useful to the Subcommittee.
            Sincerely,
                                          David C. Stapleton, Ph.D.
                                                           Director

                              ----------                              


    [Whereupon, at 5:30 p.m., the hearing was adjourned, to 
reconvene on Thursday, June 20, 2002, at 10:00 a.m.]

                                 

                        THURSDAY, JUNE 20, 2002

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:21 p.m., in 
room B-318 Rayburn House Office Building, Hon. E. Clay Shaw, 
Jr. (Chairman of the Subcommittee) presiding.

                                 

    Chairman SHAW. We are going to go ahead and get started. I 
am advised that we should be left alone for an hour before they 
call us back across the street. I am told Mr. Matsui will be 
here in just a moment. So, I am going to go ahead and read my 
opening statement.
    Today the Subcommittee will continue our examination of the 
challenges and opportunities faced by Social Security's two 
disability programs, Disability Insurance and Supplemental 
Security Income.
    Last week we examined the disability and appeals process. 
Today, we will focus in depth on the disability appeals 
decisions made by Federal Administrative Law Judges, the 
Appeals Council and the Federal District Courts.
    We will hear from stakeholder groups who can provide their 
perspectives on the major issues their constituents face as 
well as their recommendations.
    Americans that apply for disability benefits and those who 
appeal the Agency's decision expect to receive accurate fair 
decisions within a reasonable period of time.
    This is not happening now. Individuals with disabilities 
who pursue disability benefits for themselves or their families 
by appealing an unfavorable decision face unconscionable 
delays. On average, according to the Commission of Social 
Security, wait time from initial applications to decisions from 
an Administrative Law Judge averages 495 days.
    Add appeals and the court's processing time, the average is 
nearly 3 years. Worse yet, this broken system has persisted for 
years with little improvement. Individuals with disabilities 
face tremendous obstacles every day and an enormously 
frustrating process of applying for and obtaining Social 
Security benefits shouldn't contribute to this challenge.
    Changes must be made to improve this process to ensure that 
Americans with disabilities and their families can depend on 
Social Security to provide the economic security that they 
deserve.
    This morning we have one panel, and it is a large panel. We 
have Marty Ford who is Co-Chair of the Social Security Task 
Force, Consortium for Citizens with Disabilities (CCD). We 
welcome you back.
    We have Nancy Shor who is Executive Director of the 
National Organization for Social Security Claimants' 
Representatives from Midland Park, New Jersey.
    We have James Hill, who is President of the National 
Treasury Employees Union (NTEU), Chapter 224.
    We have the Honorable Ronald G. Bernoski, who is President 
of the Association of Administrative Law Judges. He is from 
Milwaukee, Wisconsin.
    We have the Honorable Kathleen McGraw who chairs the Social 
Security Section of the Federal Bar Association (FBA).
    We have John Pickering who is the past Chair of the Senior 
Lawyers Division, Commissioner Emeritus, Commission on Legal 
Problems of the Elderly, American Bar Association (ABA).
    We have Paul Verkuil, who is Professor of Law, Benjamin N. 
Cardozo School of Law at Yeshiva University in New York. He is 
accompanied by Jeffrey Lubbers, who is a Fellow at the 
Washington College of Law, the American University.
    We welcome all of you. We have your full statements which 
will be made a part of the record and you may summarize as you 
see fit. Ms. Ford.
    [The opening statement of Chairman Shaw follows:]
 Opening Statement of the Hon. E. Clay Shaw, Jr., a Representative in 
   Congress from the State of Florida, and Chairman, Subcommittee on 
                            Social Security
    Good morning. Today the Subcommittee will continue our examination 
of the challenges and opportunities faced by Social Security's two 
disability programs--Disability Insurance and Supplemental Security 
Income.
    Last week we examined the disability determination and appeals 
process. Today, we will focus in-depth on the disability appeals 
decisions made by Federal Administrative Law Judges, the Appeals 
Council, and Federal District Courts. We will hear from stakeholder 
groups who can provide their perspectives on the major issues their 
constituents face, as well as their recommendations for change.
    Americans that apply for disability benefits, and those who appeal 
the agency's decision, expect to receive accurate, fair decisions 
within a reasonable amount of time. This isn't happening now.
    Individuals with disabilities who pursue disability benefits for 
themselves and their families by appealing an unfavorable decision face 
unconscionable delays. On average, according to the Commissioner of 
Social Security, wait time from initial application to decision from an 
Administrative Law Judge averages 495 days. Add appeals through the 
courts plus processing time and the average is nearly 3 years. Worse 
yet, this broken system has persisted for years, with little 
improvement.
    Individuals with disabilities face tremendous obstacles every day--
the enormously frustrating process of applying for and obtaining Social 
Security benefits shouldn't contribute to their challenges. Changes 
must be made to improve this process to ensure that Americans with 
disabilities and their families can depend on Social Security to 
provide the economic security that they deserve.

                                 

STATEMENT OF MARTY FORD, CO-CHAIR, SOCIAL SECURITY TASK FORCE, 
           CONSORTIUM FOR CITIZENS WITH DISABILITIES

    Ms. FORD. Chairman Shaw, thank you for this opportunity to 
testify.
    For people with disabilities it is critical that the Social 
Security Administration significantly improve the process for 
determining disability and the process for appeals. The CCD 
Social Security Task Force strongly supports efforts to reduce 
unnecessary delays and to make the process more efficient--so 
long as those efforts do not affect the fairness of the 
outcome.
    I will highlight three points from my written statement. 
First, regarding technological improvements: The current system 
requires a great deal of manual labor. Using electronic folders 
could allow much faster processing.
    However, it is critical to establish from the outset that 
electronic files must contain all of the claimant's evidence in 
an exact, unalterable electronic copy of the original.
    In addition, nothing should preclude the claimant from 
presenting available evidence in any format. Important details 
and nuances in handwritten and typed reports must not be lost. 
We do not consider summaries or partial documents acceptable 
substitutes for inclusion in a folder.
    Advances in technology will allow the Commissioner to 
ensure protection of this evidence by requiring that exact, 
unalterable, electronic copies of all originals be permanently 
maintained in the folder.
    Second, keeping the record open for new evidence: We 
strongly support the development and submission of evidence as 
early as possible in the process. However, there are often 
factors beyond the claimant's control which contribute to 
delay. Claimant's conditions may worsen over time and diagnoses 
may change. Claimants may undergo new treatment. They may be 
hospitalized or referred to different doctors. Some conditions 
take longer to diagnose. Some claimants misunderstand their own 
impairments.
    By their nature, these claims are not static and a finite 
set of medical evidence does not exist. At what point can a 
individual say that he now has all of the information about the 
condition and how it will affect his life?
    How sensible is it to refuse to receive new information, 
especially if the process itself creates such a delay that 
changes in condition are possible?
    If the record is closed earlier in the process, individuals 
will be forced to file new applications merely to have new 
evidence reviewed. However, filing a new application may 
severely jeopardize, if not permanently foreclose eligibility 
for benefits.
    Individuals applying for Title II Disability Insurance 
could lose their entitlement to benefits if they are unable to 
reapply before their recent connection to the workforce ends.
    Contrary to statements made in oral testimony during last 
week's hearing, great harm could be done to an individual who 
is forced to reapply and who, due to the Title II time limits, 
loses his or her eligibility.
    We believe that it is important to work on the front end of 
the process instead and figure out how to get the best possible 
evidence as soon as possible.
    Third, the Agency role in adjudication. An important issue 
underlying many of these discussions is the role of the Agency 
in determining disability and paying benefits. There seems to 
be a sentiment among some that SSA is not being fairly 
represented in the determination process.
    We believe that it is important, however, to note that SSA 
and the claimant are not parties on opposite sides of a legal 
dispute. The SSA already has a major say in what goes on. The 
SSA develops and publishes the regulations, including the 
medical listings. The SSA provides guidance to claims workers 
and DDS staff through its program operations manual system. The 
SSA contracts with the States for determinations based on its 
own regulations and Program Operating Manual System (POMS) and 
SSA hires the ALJs.
    The claimant's role is to show that she has an impairment 
with limitations that fit within the parameters constructed by 
Congress and implemented by SSA. Very few claimants would have 
the wherewithal to know and understand all of the things that 
could or should pertain to their cases.
    The SSA's role is not to oppose the individual's claim, but 
rather to ensure that people who are eligible, as contemplated 
by Congress, are enabled, as a result of the claims process, to 
receive the benefits to which they are entitled.
    Where an individual has representation, SSA is not placed 
in a weaker or unfair position. The SSA still controls the 
process. Rather, SSA should see the individual's representative 
as an ally in facilitating the collection of relevant evidence 
and highlighting the important questions to be addressed in 
making the disability determination.
    Again, I thank you for this opportunity to testify on these 
important issues. The CCD Social Security Task Force looks 
forward to working with the Subcommittee and the Commissioner 
in meeting the challenges to improve the disability 
determination and appeals processes.
    [The prepared statement of Ms. Ford follows:]
    Statement of Marty Ford, Co-Chair, Social Security Task Force, 
               Consortium for Citizens with Disabilities
    Chairman Shaw, Representative Matsui, and Members of the 
Subcommittee, thank you for this opportunity to testify regarding the 
disability determination and appeals process.
    I am Director of Legal Advocacy for The Arc of the United States. I 
am testifying here today in my role as co-chair of the Social Security 
Task Force of the Consortium for Citizens with Disabilities (CCD). CCD 
is a working coalition of national consumer, advocacy, provider and 
professional organizations working together with and on behalf of the 
54 million children and adults with disabilities and their families 
living in the United States. The CCD Social Security Task Force focuses 
on disability policy issues in the Title XVI Supplemental Security 
Income program and the Title II disability programs.
    For people with disabilities, it is critical that the Social 
Security Administration address and significantly improve the process 
for determining disability and the process for appeals. We are pleased 
to see Commissioner Barnhart take on this task as a major goal of her 
tenure as Commissioner. We support her view that this is a vitally 
necessary course of action for the agency and we look forward to 
working with the Commissioner and this Subcommittee in meeting the 
challenges
    The backlog of cases waiting for ALJ and Appeals Council decisions 
is clearly unacceptably long, as so vividly and visually illustrated by 
the Commissioner at this Subcommittee's hearing on May 2, 2002. People 
with severe disabilities who by definition have limited earnings from 
work are often forced to wait years for a final decision from the time 
of application through the final Appeals Council decision. This is 
damaging not only to the individual with a disability and his/her 
family, but also to the public perception of and integrity of the 
program.
    We strongly support efforts to reduce unnecessary delays for 
claimants and to make the process more efficient, so long as they do 
not affect the fairness of the process to determine a claimant's 
entitlement to benefits.
Technological Improvements
    We support the Commissioner's efforts to make technological 
improvements at SSA. Whatever funds are necessary should be 
appropriated to ensure that the process works as intended by the law.
    Much of the delay in the current process is caused by a system that 
still requires a great deal of manual labor. If the system is not 
upgraded, from a technological standpoint, some of the process reform 
changes discussed below will not improve the system. Several 
initiatives have been announced recently that, we believe, could reduce 
delays, provide better service to the public, and would not require 
fundamental changes to the current process. They include: electronic 
folders (eDIB); digital recording of hearings, and video teleconference 
hearings. We support such modernizations where they are used to ensure 
a full and fair evaluation of a claim and ensure the claimant's access 
to a full and fair hearing on appeal, where necessary.
    We believe that using electronic folders will allow much faster 
processing, eliminating delays while folders are moved from place to 
place, avoiding loss of valuable records, and allowing immediate 
recording of updates, new evidence, or other actions regarding the 
file. However, we believe that it is critical to establish that 
electronic files contain all of the claimants' evidence in an exact, 
unalterable electronic copy of the original, including complete copies 
of originals that are received electronically. In addition, nothing 
should preclude the claimant from presenting available evidence in any 
format.
    In the past, we were skeptical about the use of electronic folders 
due to concerns about how evidence, such as handwritten or typed 
doctors' reports, would be included in an electronic file. We do not 
consider summaries or partial documents acceptable substitutes for 
inclusion in a folder. Important details and nuances in the paper 
reports must not be lost. However, technology is now commonly available 
to allow such ``paper'' evidence to be fully included in the electronic 
folder without alteration. We urge the Commissioner to ensure 
protection of this valuable, sometimes irreplaceable, evidence by 
requiring that exact, unalterable electronic copies of all originals be 
permanently maintained in the electronic folder. Otherwise, we could 
not support this move toward a fully electronic record.
Gathering Evidence
    It is critical that SSA collect the correct information at the 
earliest possible time in the process to ensure that correct decisions 
are made the first time. SSA must improve the collection of medical and 
non-medical evidence by explaining what is needed and asking the 
correct questions, with appropriate variations for different treatment 
sources.
    Claimants should be encouraged to participate to the extent they 
are able. To that end, SSA should assess, as early in the process as 
possible, the claimant's need for special assistance and provide it. 
Such assistance could be triggered when applicants are unable to read, 
show evidence of cognitive or other mental impairments, or give other 
indications of being unable to maneuver the process alone.
    As noted below, it may be difficult for claimants to obtain 
evidence for various reasons, e.g., state laws limiting release, 
reluctance of providers to release information, inadequate payment for 
records. Providing DDSs with adequate funds to obtain evidence would 
assist greatly at an earlier part in the process.
Eliminating Reconsideration
    We support the concept of eliminating reconsideration and providing 
the opportunity for a pre-denial interview. The Commissioner recently 
announced in April 2002 that the elimination of the reconsideration 
step would be extended in the ten ``prototype'' states while SSA 
gathers additional information, but will not be extended nationwide at 
this time.
    However, the Commissioner also announced the end of the ``claimant 
conference'' in the prototype states, upon publication of a notice in 
the Federal Register. We believe that an in-person interview would be 
beneficial to many claimants. In addition to identifying further 
information, these interviews would also allow claimants to provide 
information and explain the limitations caused by their impairments.
LThe Right To A Full And Fair Hearing Before An Administrative Law 
        Judge
    The key aspect of the adjudication process for a claimant is the 
right to a full and fair hearing by an Administrative Law Judge (ALJ), 
who is an independent decision-maker, providing impartial fact-finding 
and adjudication. The ALJ asks questions of and takes testimony from 
the claimant, may develop evidence when necessary, and applies the law 
and agency policy to the facts of the case. Claimants have the right to 
present new evidence in person to the ALJ and to receive a decision 
from the ALJ that is based on all available evidence. This right should 
be preserved.
Keep the Record Open for New Evidence
    Many recent proposals to change the disability determination 
process recommend that the record be closed to new evidence either 
after the DDS or, at least, after the ALJ level. In the past, both 
Congress and SSA have recognized that such proposals are neither 
beneficial to claimants nor administratively efficient for the agency.
    We strongly support the submission of evidence as early as 
possible. Full development of the record at the beginning of the claim 
means that the correct decision can be made at the earliest point 
possible. The benefit is obvious: the earlier a claim is adequately 
developed, the sooner it can be approved and the sooner payment can 
begin.
    Despite the obvious benefit to claimants, the fact that early 
submission of evidence does not occur more frequently indicates that 
factors beyond the claimant's control contribute to this problem. In 
attempting to find a solution, Congress and SSA should be careful not 
to make the process less ``user-friendly'' or more problematic for SSA.
    There are several reasons why closing the record is not beneficial 
to claimants:

        L(1) Conditions change over time. Claimants' conditions may 
        worsen or improve over time and diagnoses may change. Claimants 
        may undergo new treatment, be hospitalized or referred to 
        different doctors. Some conditions, such as multiple sclerosis, 
        take longer to diagnose. Some claimants mischaracterize their 
        own impairments, either because they are in denial or lack 
        judgment or understanding about their illness.
        LBy their nature, these claims are not static and a finite set 
        of medical evidence does not exist. Think for a minute about 
        your own and your family's situation. How often has someone 
        received a diagnosis, only to have it change later as more 
        tests are conducted or as more symptoms begin to appear? How 
        often has the original assessment of a condition's severity 
        changed, for the better or the worse? At what point can the 
        individual affected say that he/she now has all of the 
        information about the condition and how it will affect his/her 
        life? And how sensible is it to refuse to receive new 
        information, especially if the disability determination process 
        itself creates such a time lag that changes in condition are 
        possible, if not likely?
        LIf the record is closed, individuals will be forced to file 
        new applications merely to have new evidence reviewed, such as 
        reports from a recent hospitalization or a report that finally 
        assesses and diagnoses a condition. Closing the record to such 
        evidence does not serve either the claimant or the agency well. 
        It would merely ensure that a decision will be made based on a 
        snapshot that may be significantly out of date.
        LFinally, the system already imposes restrictions on new 
        evidence submitted after the initial DDS decision. These 
        limitations prevent the process from being entirely open-ended 
        and serve to encourage claimants and their representatives to 
        gather as much relevant information as possible as early in the 
        process as possible.

        L(2) The ability to submit evidence is not always in the 
        claimant's control. Claimants always benefit by submitting 
        evidence as soon as possible. However, there are many reasons 
        why they are unable to do so and for which they are not at 
        fault. Closing the record punishes them for factors beyond 
        their control, including situations where:

                 DDS examiners fail to obtain necessary and 
                relevant evidence.
                 Neither SSA nor the DDS explains to the 
                claimant what evidence is important and necessary for 
                adjudication of the claim.
                 Claimants are unable to obtain medical 
                records either due to cost or because state laws 
                prevent them from directly obtaining their own medical 
                records.
                 Medical providers, especially treating 
                sources, receive no explanation from SSA or the DDS 
                about the disability standard and are not asked for 
                evidence relevant to the claim.
                 Medical providers delay or refuse to submit 
                evidence.

        LSo that claimants are not wrongly penalized for events beyond 
        their control, the current system provides a process to submit 
        new evidence if certain conditions are met. This exception 
        should not be eliminated in the name of streamlining the 
        system.

        L(3) The process should remain informal. For decades, Congress 
        and the United States Supreme Court have recognized that the 
        informality of SSA's process is a critical aspect of the 
        program. Imposing a time limit to submit evidence and then 
        closing the record is inconsistent with the legislative intent 
        to keep the process informal and inconsistent with the 
        philosophy of the program.
        LThe value of keeping the process informal should not be 
        underestimated: it encourages individuals to supply 
        information, often regarding the most private aspects of their 
        lives. The emphasis on informality also has kept the process 
        understandable to the layperson, and not strict in tone or 
        operation. SSA should be encouraged to work with claimants to 
        obtain necessary evidence and more fully develop the claim at 
        an earlier point.

    Further, filing a new application is not a viable option because it 
does not improve the process and may in fact severely jeopardize, if 
not permanently foreclose, eligibility for benefits. A claimant should 
not be required to file a new application merely to have new evidence 
considered where it is relevant to the prior claim. If such a rule were 
established, SSA would need to handle more applications, unnecessarily 
clogging the front end of the process.
    Worse yet, individuals applying for Title II Disability Insurance 
benefits could permanently lose their entitlement to benefits if they 
are unable to re-apply before their recent connection to the workforce 
ends (DI beneficiaries must have worked 20 out of the last 40 
quarters). Contrary to statements made in oral testimony during last 
week's hearing, great harm could be done to an individual who is forced 
to re-apply and who, due to the Title II time limits, loses his/her 
eligibility permanently.
    Many people will wait some time before applying for benefits as 
they try to see if their impairments can be overcome or if they can 
make it in their changed circumstances. Added to the delays in the 
process as described by the Commissioner, the individual could be 
beyond the 5-year ``recency of work'' test before facing the need to 
re-apply. Those who do not have problems with recency of work may still 
lose benefits for the time period between the first and second 
applications. Forcing re-application merely to consider new evidence is 
clearly unfair to the claimant.
The Agency Should Not Be Represented at the ALJ Level
    We do not support efforts to have SSA represented at the ALJ 
hearing because past experience shows that it does not result in better 
decision-making and reducing delays, but instead injects a level of 
adversity, formality and technicality in a system meant to be informal 
and non-adversarial. In the 1980's, SSA tested, and abandoned, a pilot 
project to have the agency represented. It was terminated following 
Congressional criticism and a judicial finding that it was 
unconstitutional and violated the Social Security Act. In the end, the 
pilot did not enhance the integrity of the administrative process.
Agency Role in Adjudication
    In the discussions above regarding maintaining an informal process 
and representation of SSA in the ALJ hearing, an important underlying 
issue is the role of the agency in determining disability and paying 
benefits. There seems to be a sentiment among some that SSA is not 
being fairly represented in the determination process.
    We believe that it is important, however, to note that SSA and the 
claimant are not parties on opposite sides of a legal dispute. SSA 
already has a very heavy say in what goes on: SSA implements the law 
through development and publication of regulations, including the 
medical listings; provides guidance to claims workers and Disability 
Determination Services staff through its Program Operations Manual 
System (POMS); contracts with the states for determinations made in 
accordance with its regulations and POMS; and hires the ALJs. The 
claimant's role is to show that he/she has an impairment with 
limitations that fit within the parameters constructed by Congress and 
implemented by SSA.
    Very few claimants would have the wherewithal to know and 
understand all of the things that could or should pertain to their 
cases. SSA has a vital role in helping the claimant through a very 
complex process. SSA's role is not to ``oppose'' the individual's 
claim; but rather to ensure that people who are eligible as 
contemplated by Congress are enabled, as a result of the claims 
process, to receive the benefits to which they are entitled. Where an 
individual has representation, whether legal or lay representation, SSA 
is not placed in a weaker or unfair position requiring its own 
representation. SSA has still written all the regulations and POMS and 
contracted with the DDSs and hired the ALJs. Rather, SSA should see the 
individual's representative as an ally in facilitating the collection 
of relevant evidence and highlighting the important questions to be 
addressed in making the disability determination.
    We believe that all the discussions about the formality/informality 
of the process and whether SSA should/should not be represented should 
be viewed from this perspective.
Retain Review by the Appeals Council
    We oppose the elimination of a claimant's right to request review 
by the Appeals Council. The Appeals Council currently provides relief 
to nearly one-fourth of the claimants who request review of ALJ 
denials, either through outright reversal or remand back to the ALJ. 
Review by the Appeals Council, when it is able to operate properly and 
in a timely manner, provides claimants, and SSA, with effective review 
of ALJ decisions. Given the low percentage appealed to federal court, 
it appears that claimants largely accept decisions by the Appeals 
Council as the final adjudication of their claims. As a result, the 
Appeals Council acts as the initial screen for ALJ denials, a position 
for which the district courts are ill equipped, given their other 
responsibilities.
Retain Access to Judicial Review in the Federal Court System
    Both individual claimants and the system benefit from the regular 
federal courts handling social security cases. Given the wide variety 
of cases they adjudicate, federal courts have a broad background 
against which to measure the reasonableness of SSA's practices.
    Reasons given for establishing a Social Security Court include 
creating a uniform body of case law and guaranteeing that the claims of 
similarly situated claimants are treated without regional disparity. 
Creation of a Social Security Court is not the most effective, 
efficient, or fair manner in which to accomplish these goals.
    Intervention by the federal courts has played a vital role in 
protecting the rights of claimants. The courts have halted illegal 
practices by SSA and have provided standards and guidance where SSA has 
failed to articulate clear policies. The current federal court system 
has contributed to national uniformity. The process of federal court 
review has not led to significant regional variation. In general, the 
courts have reached agreement on core issues concerning SSA programs. 
As a result, extensive circuit case law has provided guidance to SSA in 
developing uniform standards. Two examples in major areas include: (1) 
rules describing the weight to be given all medical evidence, including 
reports from treating sources; and (2) rules to evaluate subjective 
symptoms, including pain. Overall, there is substantial benefit to be 
derived from different courts thoughtfully considering different cases 
on the same issue to shed light on the many aspects of any particular 
position.
    The courts should be readily accessible to all claimants, and 
should allow everyone, including people who are poor, disabled or 
elderly, an equal opportunity to be heard by judges of the high caliber 
we expect. A Social Security Court located in Washington, DC, would 
severely limit access to the court for those who most need it--people 
with disabilities or who are elderly and who have limited financial 
means. Currently, claimants and their attorneys have relatively easy 
access to the federal courts and un-represented individuals are able to 
file appeals without the assistance of counsel. If Social Security 
Courts were not located in as many locations as the federal district 
courts, many people would be unable to file cases because of distance 
and the cost of travel. These individuals would likely feel that the 
system had utterly failed to provide a fair opportunity for review. In 
light of geographical distances and high caseloads, the court might be 
forced to forego oral argument altogether, as has been the case with 
the Appeals Council.
    There are high financial and administrative costs in creating the 
court. The court would involve expenditures for judges, staff, 
courthouse space, etc. The financial cost of creating the court must be 
weighed against the questionable effectiveness of the court to achieve 
its stated objective, especially given the limited resources available.
Remove Limitation on Administrative Expenses
    Reducing the backlog and processing time must be a high priority. 
We urge commitment of resources and personnel to resolve the exorbitant 
waiting times and make the process work better for people with 
disabilities. First, SSA must be provided with the resources to fully 
meet its administrative responsibilities. This can be accomplished by 
removing SSA's Limitation on Administrative Expenses budget authority 
from the domestic discretionary spending category.
    SSA workloads are projected to begin increasing rapidly within the 
next decade as the baby boom generation begins to reach its peak 
disability years just prior to reaching early retirement age beginning 
in 2008. In addition, the SSA workforce is also aging and will begin to 
lose significant numbers of staff, including senior and leadership 
staff. About 3,000 employees are expected to retire per year from 2007 
through 2009. SSA is also taking on new or more complex 
responsibilities such as providing increased rehabilitation and 
employment services for people with disabilities, completing and 
maintaining an appropriate schedule of continuing disability reviews 
and other eligibility reviews, and new approaches to prevent fraud and 
abuse. In FY 1985, SSA's staffing levels were 80,844 FTEs and 83,406 
workyears. The President's budget requests for FY 2003 include 63,464 
FTEs and 64,730 workyears, for a reduction of 17,380 FTEs and 18,676 
workyears over the last 18 years.
    The CCD Social Security Task Force has voiced concern for some time 
over the continued long-term downsizing of the SSA workforce. We 
believe that failure to conduct appropriate and timely CDRs and other 
eligibility reviews could lead to decreased trust in the integrity of 
the Social Security and SSI programs. In addition, the new efforts to 
assist people with disabilities to go to work, through the Ticket to 
Work and Work Incentives Improvement Act of 1999, require new and 
expanded approaches for SSA interaction with beneficiaries. Adequate 
staffing levels are critical for these and other efforts to be 
successful, especially given the coming disability and retirement years 
of baby boomers.
    For these reasons, we strongly support removing the Social Security 
Administration's Limitation on Administrative Expenses (LAE) budget 
authority from any domestic discretionary spending caps. Even if the 
LAE were removed from the domestic discretionary caps, SSA's LAE would 
still be subject to the annual appropriations process and Congressional 
oversight. Currently, SSA's administrative expenses total less than 2% 
of benefit payments paid annually. Congress would still maintain its 
role in ensuring continued administrative efficiency.
    Most importantly, removal of the LAE from the domestic 
discretionary spending caps would remove it from competition with other 
health, education, and human needs programs for limited funds. It would 
allow for growth that is necessary to meet the needs of the coming 
baby-boomer retirement years (including the retirement of SSA and state 
DDS personnel); continue the efforts to improve the processing time for 
initial applications and appeals, particularly through technological 
improvements; continue the efforts to ensure integrity in the program 
through CDRs and other redeterminations; and allow for replacement of 
staff in a timely manner and to provide for adequate training and 
mentoring.
    Again, thank you for this opportunity to testify on these important 
issues. The CCD Social Security Task Force looks forward to working 
with the Subcommittee and the Commissioner on improving the disability 
determination and appeals processes.
On Behalf Of:
American Association on Mental Retardation
American Congress of Community Supports and Employment Services
American Network of Community Options and Resources
American Occupational Therapy Association
Brain Injury Association of America
National Alliance for the Mentally Ill
National Association of Protection and Advocacy Systems
National Multiple Sclerosis Society
National Organization of Social Security Claimants' Representatives
Research Institute for Independent Living
The Arc of the United States
Title II Community AIDS National Network
United Cerebral Palsy Associations, Inc.

                                 

    Chairman SHAW. Ms. Shor?

   STATEMENT OF NANCY G. SHOR, EXECUTIVE DIRECTOR, NATIONAL 
  ORGANIZATION OF SOCIAL SECURITY CLAIMANTS' REPRESENTATIVES, 
                    MIDLAND PARK, NEW JERSEY

    Ms. SHOR. Chairman Shaw, thank you for inviting us to 
testify today about challenges and opportunities in the 
administration of the Social Security Disability Programs.
    Collectively, Members of the National Organization of 
Social Security Claimants' Representatives (NOSSCR) have many, 
many years of experience in representing claimants at every 
level of the disability determination process. We appreciate 
this opportunity to share some observations and recommendations 
with you.
    Today's hearing focuses on the challenges facing the 
disability programs, two extremely important criteria for such 
review are certainly efficiency and timeliness. They are not 
the sole criteria. Today's hearing should be directed to ensure 
the fairness of the process for determining whether or not a 
claimant is entitled to benefits.
    Without hesitation, NOSSCR strongly supports efforts to 
reduce unnecessary delays for claimants and to make the process 
much more efficient as long as these efforts do not impair the 
fairness of the process to determinate a claimant's entitlement 
to benefits.
    First, it is certainly necessary to State without 
elaboration. It is crucial to provide the Social Security 
Administration with adequate resources to meet current and 
future needs. To improve delays, better develop cases and 
implement technological advances, SSA requires adequate 
staffing and resources. The NOSSCR supports removing SSA's 
administrative budget from discretionary domestic spending 
caps.
    Secondly, very briefly, but it is certainly necessary to 
improve full development of the record earlier in the process. 
Unfortunately, very often the files that denied claimants bring 
to our Members show that inadequate development was done at the 
initial and reconsideration levels.
    Often claimants are denied at those levels, not because the 
evidence establishes that the person is not disabled, but 
because the limited evidence gathered there cannot establish 
that the person is disabled.
    Often, a properly developed file is before the ALJ because 
either the claimant's representative has obtained the necessary 
evidence or because the ALJ has. Not surprisingly, these 
different evidentiary records can easily produce different 
results on the issue of disability.
    To address this, the Agency needs to emphasize the full 
development of the record at the beginning of the claim. The 
benefit is obvious. The earlier a claim is adequately 
developed, the earlier it can be correctly decided.
    We have set out several recommendations to improve the 
development process in our written testimony.
    Third, I want to speak to processes to streamline the 
disability determination process without impairing the 
claimant's right to a full and fair hearing.
    First, we support elimination of the reconsideration level. 
It appears to be a step that requires a lot of time and 
produces very little.
    Secondly, with the focus on the Office of Hearings and 
Appeals, clearly current processing times at the ALJ and 
Appeals Council levels are unacceptably high. We strongly agree 
with the Commissioner that reducing the backlog and processing 
time is a high priority. We urge commitment of resources and 
personnel necessary to reduce delays and make the process work 
better for the public.
    We believe that features of a full and fair process include 
the following: retain the right to a de novo hearing before an 
Administrative Law Judge. This is the right to a full and fair 
administrative hearing by an independent decision maker who 
provides impartial fact finding and adjudication, free from any 
agency coercion or influence for claimants. This means the 
right to appear in person to provide testimony and new evidence 
to an ALJ.
    Keep the record open for new evidence and understand that 
there are currently regulatory and statutory limitations on 
what can come into a file once an ALJ has issued an opinion.
    The NOSSCR strongly supports the submission of evidence as 
early as possible, but we know there are often many legitimate 
reasons that evidence cannot be presented at the time of the 
ALJ hearing. I would certainly offer a cautionary observation 
that telling a claimant to file a new application in lieu of 
submitting new evidence on appeal can be significantly 
disadvantageous to that claimant.
    We believe that the Social Security Administration should 
not be represented at the ALJ level. In the eighties, SSA 
tested and abandoned a pilot project to have the Agency 
represented. The government representation project, which I 
guess works out to GRP.
    The GRP caused extensive delays in a system that was 
overburdened even then and injected an inappropriate level of 
adversity, formality and technicality into a system meant to be 
informal and non-adversarial.
    We support continued review by the Appeals Council. I will 
note very briefly, appropriately 25 percent of claimants who 
have requested review of an unfavorable ALJ decision find 
relief at the Appeals Council. We also note that the processing 
times are significantly improved at that level in the past 
year.
    Finally, we support continuation of the current system of 
access to the Federal courts for judicial review of Social 
Security claims. Thank you for the opportunity to testify.
    [The prepared statement of Ms. Shor follows:]
 Statement of Nancy G. Shor, Executive Director, National Organization 
of Social Security Claimants' Representatives, Midland Park, New Jersey
    Chairman Shaw, Representative Matsui, and Members of the 
Subcommittee:

    Thank you for inviting me to testify about challenges and 
opportunities in the Social Security disability programs. I commend you 
for holding this hearing since millions of people with disabilities 
depend on these programs.
    For the past twenty years, I have been the Executive Director of 
the National Organization of Social Security Claimants' Representatives 
(NOSSCR). NOSSCR's current membership is approximately 3,450 attorneys 
and others from across the country who represent claimants for Social 
Security and Supplemental Security Income (SSI) benefits. Collectively, 
we have many years of experience in representing claimants at every 
level of the disability determination process and welcome this 
opportunity to share some observations and recommendations with you.
    During my tenure as the NOSSCR Executive Director, SSA 
Commissioners and other officials at the Social Security Administration 
have been willing to meet with us and other groups to discuss issues 
important to our membership and to claimants. This has proven to be an 
effective way of addressing our concerns before they become serious 
problems requiring other types of intervention and we look forward to 
continuing this dialogue with Commissioner Barnhart and her staff 
regarding the disability programs.
    Today's hearing focuses on the challenges facing the Social 
Security and Supplemental Security Income disability programs. Two 
extremely important criteria for such a review are efficiency and 
timeliness. But these are not the only criteria. Today's hearing should 
be directed to ensure the fairness of the process for determining 
whether or not a claimant is entitled to benefits. We share SSA's goal 
of providing accurate decisions for claimants as early in the process 
as possible. Further, changes at the ``front end'' can have a 
significant beneficial impact on improving the backlogs and delays 
throughout the hearings and appeals process.
    The vast majority of cases handled by NOSSCR members are claims for 
Social Security and SSI disability benefits. NOSSCR strongly supports 
efforts to reduce unnecessary delays for claimants and to make the 
process more efficient, so long as these efforts do not impair the 
fairness of the process to determine a claimant's entitlement to 
benefits.
Provide SSA With Adequate Resources To Meet Current And Future Needs
    NOSSCR is concerned about SSA's readiness to deal with the 
impending increase in its workload as the ``baby boom'' generation 
approaches the peak age for onset of disability and, subsequently, 
retirement. At hearings held by this Subcommittee in 2000, testimony 
painted a bleak picture regarding SSA's ability to deal with the 
increased work, at the same time that its own workforce will reach peak 
retirement numbers. To exacerbate this problem, SSA's budget continues 
to be cut from levels that would allow it to adequately address current 
and future service delivery needs.
    Most cases handled by NOSSCR members are at the ALJ hearing and 
Appeals Council levels, where current processing times are unacceptably 
high. A claimant cannot proceed with an appeal in federal district 
court until the Appeals Council has acted. Thus, while their medical 
and financial situations are deteriorating, claimants are forced to 
wait for many months, if not years, before receiving a decision.
    To improve delays, better develop cases and implement technological 
advances, SSA requires adequate staffing and resources. NOSSCR supports 
removing SSA's administrative budget, like its program budget, from the 
discretionary domestic spending caps. Legislation such as H.R. 5447, a 
bipartisan bill introduced in 2000 by Chairman Shaw and Representative 
Cardin, would accomplish this by allowing Congress to approve funding 
for SSA to address current service delivery needs and planning for the 
future.
Improve Full Development Of The Record Earlier In The Process
    Developing the record so that relevant evidence from all sources 
can be considered is fundamental to full and fair adjudication of 
claims. The decisionmaker needs to review a wide variety of evidence in 
a typical case, including the medical records of treatment; opinions 
from medical sources and other treating sources, such as social workers 
and therapists; records of prescribed medications; statements from 
former employers; and vocational assessments. The decisionmaker needs 
these types of information to determine the claimant's residual 
functional capacity, ability to return to former work, and ability to 
engage in other work which exists in the national economy in 
significant numbers. Once an impairment is medically established, SSA's 
regulations envision that all types of relevant information, both 
medical and nonmedical, will be considered to determine the extent of 
the limitations imposed by the impairment(s).
    The key to a successful disability determination process is having 
an adequate documentation base and properly evaluating the 
documentation that is obtained. Unless claims are better developed at 
earlier levels, the procedural changes will not improve the disability 
determination process. Unfortunately, very often the files that denied 
claimants bring to our members show that inadequate development was 
done at the initial and reconsideration levels. Until this lack of 
evidentiary development is addressed, the correct decision on the claim 
cannot be made. Claimants are denied not because the evidence 
establishes that the person is not disabled, but because the limited 
evidence gathered cannot establish that the person is disabled.
    A properly developed file is usually before the ALJ because the 
claimant's representative has obtained evidence or because the ALJ has 
developed it. Not surprisingly, these different evidentiary records can 
easily produce different results on the issue of disability. To address 
this, the agency needs to emphasize the full development of the record 
at the beginning of the claim. The benefit is obvious: the earlier a 
claim is adequately developed, the earlier it can be correctly decided.
    NOSSCR supports full development of the record at the beginning of 
the claim so that the correct decision can be made at the earliest 
point possible. Claimants should be encouraged to submit evidence as 
early as possible. However, the fact that early submission of evidence 
does not occur more frequently is usually due to reasons beyond the 
claimant's control.
    Our recommendations to improve the development process include the 
following:

         SSA should explain to the claimant, at the beginning 
        of the process, what evidence is important and necessary.
         DDSs need to obtain necessary and relevant evidence. 
        Representatives often are able to obtain more relevant medical 
        information because they use letters and forms that ask 
        questions relevant to the disability determination process. DDS 
        forms usually ask for general medical information (diagnoses, 
        findings, etc.) without tailoring questions to the Social 
        Security disability standard. The same effort should be made 
        with nonphysician sources (therapists, social workers) who see 
        the claimant more frequently than the treating doctor and have 
        a more thorough knowledge of the limitations caused by the 
        claimant's impairments.
         Improve provider response rates to requests for 
        records, including more appropriate reimbursement rates for 
        medical records and reports.
         Provide better explanations to medical providers, in 
        particular treating sources, about the disability standard and 
        ask for evidence relevant to the standard.

    The Disability Determination Process: How to Streamline Without 
Impairing the Claimant's Right to a Full and Fair Hearing
I. Initial And Reconsideration Levels
    In ten ``prototype states'' [AL, AK, CA, CO, LA, MI, MO, NH, NY, 
PA], SSA currently is testing two significant changes at the pre-
hearing levels of the process: elimination of the reconsideration level 
and adding a predecision interview, also known as a ``claimant 
conference.'' Originally scheduled to be implemented in 2002, SSA 
published proposed regulations in January 2001. 66 Fed. Reg. 5494 (Jan. 
19, 2001). However, SSA announced in mid-2001 that the nationwide 
rollout would be deferred pending further analysis. In April 2002, the 
Commissioner announced that the claimant conference would be eliminated 
after notice is published in the Federal Register.
    NOSSCR has supported elimination of reconsideration and adding the 
predecision claimant conference. We have had concerns about the conduct 
of the claimant conference based on reports from NOSSCR members such 
as: brief and pro forma conferences held by telephone; variations in 
content of the conference, depending on the particular DDS adjudicator 
involved; claimants not being informed of their right to be represented 
at the claimant conference; and claimants possibly being discouraged 
from pursuing an appeal if the decision is denied.
    We have long advocated the value of providing claimants with a 
face-to-face meeting with the decisionmaker and hope that the 
Commissioner will find a way to incorporate the most beneficial 
features of the original objectives of the claimant conference. When 
she announced that the conference would be eliminated, the Commissioner 
stated that SSA would encourage early and ongoing contacts with 
claimants during the development process. As discussed above, these are 
goals that NOSSCR strongly endorses. Many NOSSCR members would like to 
participate earlier in the process since they are able to assist the 
disability examiners in obtaining medical evidence and focusing the 
issues.
II. The Hearings And Appeals Levels
    Current processing times at the ALJ and Appeals Council levels are 
unacceptably high. We agree with the Commissioner that reducing the 
backlog and processing time must be a high priority. We urge commitment 
of resources and personnel necessary to reduce delays and make the 
process work better for the public.
    Recently, a number of proposals to change the disability 
determination process have been put forward. However, these proposals 
contain some recommendations that we believe would undermine a 
claimant's right to a fair adjudication process. We believe that 
features of a full and fair process include the following:

         Retain the right to a de novo hearing before a 
        Administrative Law Judge.

    A claimant's right to a hearing before an Administrative Law Judge 
(ALJ) is central to the fairness of the adjudication process. This is 
the right to a full and fair administrative hearing by an independent 
decisionmaker who provides impartial fact-finding and adjudication, 
free from any agency coercion or influence. The ALJ asks questions of 
and takes testimony from the claimant, may develop evidence when 
necessary, and considers and weighs the evidence, all in accordance 
with relevant law and agency policy. For claimants, a fundamental 
principle of this right is the opportunity to present new evidence in 
person to the ALJ, and to receive a decision from the ALJ that is based 
on all available evidence.

         Keep the record open for new evidence.

    Many recent proposals to change the disability determination 
process recommend that the record be closed to new evidence either 
after the DDS or, at least, after the ALJ level. In the past, both 
Congress and SSA have recognized that such proposals are neither 
beneficial to claimants nor administratively efficient for the agency.
    Under current law, an ALJ hears a disability claim de novo. Thus, 
new evidence can be submitted and will be considered by the ALJ in 
reaching a decision. However, the ability to submit new evidence and 
have it considered becomes more limited at later levels of appeal. At 
the Appeals Council level, new evidence will be considered, but only if 
it relates to the period before the ALJ decision and is ``new and 
material.'' \1\ At the federal district court level, the record is 
closed and the court will not consider new evidence. However, the court 
may remand the case to allow SSA to consider new evidence, but only if 
it is ``new and material'' and there is ``good cause'' for the failure 
to submit it in the prior administrative proceedings.\2\
---------------------------------------------------------------------------
    \1\ 20 C.F.R. Sec. Sec.  404.970(b) and 416.1470(b).
    \2\ 42 U.S.C. Sec.  405(g).
---------------------------------------------------------------------------
    As noted earlier, NOSSCR strongly supports the submission of 
evidence as early as possible. Full development of the record at the 
beginning of the claim means that the correct decision can be made at 
the earliest point possible. The benefit is obvious: the earlier a 
claim is adequately developed, the sooner it can be approved and the 
sooner payment can begin. However, there are many legitimate reasons 
why evidence is not submitted earlier and thus why closing the record 
is not beneficial to claimants including: (1) worsening of the medical 
condition which forms the basis of the claim; (2) the fact that the 
ability to submit evidence is not always in the claimant's or 
representative's control, e.g., providers delay sending evidence; and 
(3) the need to keep the process informal.
    Proponents of closing the record note that claimants could file a 
new application. This does not improve the process and may in fact 
severely jeopardize, if not permanently foreclose, eligibility for 
benefits. By reapplying rather than appealing: (1) benefits could be 
lost from the effective date of the first application; (2) in SSDI 
cases, there is the risk that the person will lose insured status and 
not be eligible for benefits at all when a new application is filed; 
and (3) if the issue to be decided in the new claim is the same as in 
the first, SSA will find that the doctrine of res judicata bars 
consideration of the second application.
    In the past, SSA's notices misled claimants regarding the 
consequences of reapplying for benefits in lieu of appealing an adverse 
decision. Congress addressed this serious problem and, in legislation 
enacted in 1990, required SSA to include clear and specific language in 
its notices describing the adverse effect on possible eligibility to 
receive payments by choosing to reapply in lieu of requesting 
review.\3\
---------------------------------------------------------------------------
    \3\ 42 U.S.C. Sec. Sec.  405(b)(3) and 1383(c)(1).
---------------------------------------------------------------------------
    Apart from these harsh penalties, which have been recognized and 
addressed by Congress, a claimant should not be required to file a new 
application merely to have new evidence considered where it is relevant 
to the prior claim. If such a rule were established, SSA would need to 
handle more applications, unnecessarily clogging the front end of the 
process. Further, there would be more administrative costs for SSA by 
creating and then developing a new application.

         SSA should not be represented at the ALJ level.

    We do not support proposals to have SSA represented at the ALJ 
hearing. In the 1980's, SSA tested, and abandoned, a pilot project to 
have the agency represented, the Government Representation Project 
(GRP). First proposed by SSA in 1980, the plan encountered a hostile 
reception at public hearings and from Members of Congress and was 
withdrawn. The plan was revived in 1982 with no public hearings and was 
instituted as a one-year ``experiment'' at five hearing sites. The one-
year experiment was terminated more than four years later following 
congressional criticism and judicial intervention.\4\
---------------------------------------------------------------------------
    \4\ In Sallings v. Bowen, 641 F. Supp. 1046 (W.D.Va. 1986), the 
federal district court held that the Project was unconstitutional and 
violated the Social Security Act. In July 1986, it issued an injunction 
prohibiting SSA from holding further proceedings under the Project.
---------------------------------------------------------------------------
    Based on the stated goals of the experiment, i.e., assisting in 
better decisionmaking and reducing delays, it was an utter failure. The 
GRP caused extensive delays in a system that was overburdened, even 
then, and injected an inappropriate level of adversity, formality and 
technicality into a system meant to be informal and nonadversarial. In 
the end, the GRP experiment did nothing to enhance the integrity of the 
administrative process.

         Retain review by the Appeals Council.

    In the ten prototype states, SSA also is testing the elimination of 
a claimant's right to request review of a hearing decision by the 
Appeals Council. We oppose the elimination of a claimant's right to 
request review by the Appeals Council. The Appeals Council currently 
provides relief to nearly one-fourth of the claimants who request 
review of ALJ denials, either through outright reversal or remand back 
to the ALJ. As the Commissioner noted in her testimony at this 
Subcommittee's hearing on May 2, the Appeals Council has made 
significant improvements in reducing processing times and its backlog. 
Based on this progress, she stated that by the end of the year, the 
Appeals Council pending caseload could be at a workable level.
    The Appeals Council, when it is able to operate properly and in a 
timely manner, provides claimants with effective review of ALJ 
decisions and acts as a screen between the ALJ and federal court 
levels. In addition, elimination of Appeals Council review could have a 
serious negative impact on the federal courts. As long ago as 1994, the 
Judicial Conference of the United States opposed elimination of the 
claimant's request for review by the Appeals Council prior to seeking 
judicial review in the district courts, stating that such a proposal 
was ``likely to be inefficient and counter-productive.'' \5\ Since most 
ALJ denials did not then result in federal judicial review, as is 
currently the case, the Judicial Conference stated: ``Claimants largely 
accept the outcome of Appeals Council review.'' Further, the Conference 
expressed concern that allowing direct appeal from the ALJ denial to 
federal district court could result in a significant increase in the 
courts' caseloads. As a result, the Judicial Conference concluded:
---------------------------------------------------------------------------
    \5\ Comments dated May 26, 1994, of Chief Judge John F. Gerry, 
Chairman of the Judicial Conference of the United States, in response 
to SSA's April 1, 1994 ``Disability Reengineering Project Proposal.''

        From the perspective of both unsuccessful litigants and the 
        federal courts, the present system of Appeals Council review as 
        a precondition to judicial review is sound. The right of 
        judicial review by Article III courts for all claimants remains 
        intact under the present system. To the extent that the process 
        of Appeals Council review is thought to be too time-consuming, 
        despite the high degree of finality that results, it would be 
        wiser to seek to streamline and expedite the process of review 
        rather than to bypass it as a precondition to federal judicial 
        review.\6\
---------------------------------------------------------------------------
    \6\ Id.

    We agree with the conclusion of the Judicial Conference of the 
United States. Access to review in the federal courts is the last and 
very important component of the hearings and appeals structure. Court 
review is not de novo, but rather, is based on the substantial evidence 
test. We believe that both individual claimants and the system as a 
whole benefit from federal court review. The district courts are not 
equipped, given their many other responsibilities, to act as the 
---------------------------------------------------------------------------
initial screen for ALJ denials.

         Retain access to judicial review in the federal court 
        system.

    NOSSCR supports the current system of judicial review. Proposals to 
create either a Social Security Court to replace the federal district 
courts or a Social Security Court of Appeals to provide appeal of all 
Social Security cases from district courts have been considered, and 
rejected, by Congress and SSA over the past twenty years.
    We believe that both individual claimants and the system as a whole 
benefit from the federal courts deciding Social Security cases. Over 
the years, the federal courts have played a critical role in protecting 
the rights of claimants. The system is well-served by regular, and not 
specialized, federal judges who hear a wide variety of federal cases 
and have a broad background against which to measure the reasonableness 
of SSA's practices.
    Creation of either a single Social Security Court or Social 
Security Court of Appeals would limit the access of poor disabled and 
elderly persons to judicial review. Under the current system, the 
courts are more geographically accessible to all individuals and give 
them an equal opportunity to be heard by judges of high caliber.
    Rather than creating different policies, the courts, and in 
particular the circuit courts, have contributed to national uniformity, 
e.g., termination of disability benefits, denial of benefits to persons 
with mental impairments, rules for the weight to give medical evidence, 
evaluation of pain. The courts have played an important role in 
determining the final direction of important national standards, 
providing a more thorough and thoughtful consideration of the issues 
than if a single court had passed on each. As a result, both Congress 
and SSA have been able to rely upon the court precedent to produce a 
reasoned final product.
    Finally, the financial and administrative costs of creating these 
new courts must be weighed against their questionable effectiveness to 
achieve the stated objectives. The courts, if created, would involve 
new expenditures. We believe that limited resources should be committed 
to the front end of the process. Further, from an administrative 
perspective, the focus should not be on the end of the appeals process 
but, rather, on the front end. Requiring claimants to pursue an appeal 
to obtain the justice they are due from the beginning will only add to 
the cumulative delay they currently endure.
Other Hearing Level Improvements
    Recently, the Commissioner decided that the Hearings Process 
Improvement plan (HPI) would be discontinued as a nationwide initiative 
and that she would move forward, based on what was learned from that 
initiative. We support her decision.
    From the inception of HPI, NOSSCR members raised numerous, critical 
concerns about the current state of affairs in hearing offices around 
the country. These concerns were shared last year with the Executive 
Task Force established by former Acting Commissioner Massanari to 
evaluate HPI. The main problems included: processing times after the 
Request for Hearing is filed; development; lack of on-the-record 
decisions; conduct of hearings; and processing times after the hearing. 
Specific concerns included duplicate requests for medical evidence; 
inability to speak to a ``point'' person on the case; mail not being 
associated with the file prior to the hearing; organization of files; 
preparing cases for hearing; and confusion over when a case was ready 
for hearing.
    Some of the recommendations NOSSCR presented to the Task Force 
included: (1) creating the same claims folder earlier in the process; 
(2) reinstating senior attorney authority to issue decisions in certain 
cases; (3) identifying a ``point'' person who is available to ensure 
that the case is ready for hearing; (4) a better mechanism for review 
of requests for on-the-record decisions; (5) single requests for 
information; and (6) advance notice of hearings so that submission of 
evidence can be targeted. We hope that the Commissioner will consider 
these recommendations as she determines the future organization of the 
hearings process.
    In addition, the Commissioner and the Associate Commissioner for 
Hearings and Appeals recently announced an initial series of 
initiatives to improve the hearings and appeals process which include:

         Early screening and analysis of cases, including 
        possible on-the-record decisions
         Short form favorable decisions
         Bench decisions
         Expansion of videoconference hearings
         Digital recording of hearings

    We are generally supportive of these initiatives so long as they do 
not impair the claimant's right to a full and fair hearing. The 
technological improvements are discussed below.
Technological Improvements
    At the Subcommittee hearing on May 2, 2002, Commissioner Barnhart 
expressed her strong support for moving forward to improve the 
technology used in the disability determination process. NOSSCR fully 
supports the Commissioner in this effort, as we believe that much of 
the delay in the system could be rectified with improved technology.
    For example, the Commissioner has committed herself to development 
of the electronic disability folder, ``eDIB,'' as soon as practicable 
in light of available resources. This would reduce delay caused by 
moving and handing off folders, allowing for immediate access by 
whichever component of SSA or DDS is working on the claim. Further, 
this would allow adjudicators to organize files to suit their 
preference.
    In terms of preparing a record for the district court, it would 
allow for electronic filing of the administrative record, which is 
consistent with the Judicial Conference of the United States' policy 
and initiative to move towards electronic filing of documents and 
pleadings. The Appeals Council has had difficulty reproducing copies of 
the record, whether needed by the claimant or for federal court filing. 
Files are too often lost or difficult to locate, leading to delays at 
the Appeals Council and district court levels. Our members report 
increasing delays and government requests for extension while cases are 
pending in court, in order to locate files and prepare transcripts. In 
many cases, after more lengthy delays, the files cannot be found and 
the court must remand the case for a new hearing. The electronic folder 
would certainly ease the workload in this regard and consequently, 
reduce delays. However, we urge the Commissioner to ensure that the 
eDIB folder contains complete copies of the paper records, rather than 
summaries or otherwise reduced copies, and that claimants would be able 
to submit evidence in any format, including paper records.
    Another important component of technological improvement is digital 
recording of ALJ hearings. Currently, hearings are taped on obsolete 
tape recorders, which are no longer even manufactured. If copies are 
needed, they must be transferred to cassette tapes, which is time-
consuming. Tapes are frequently lost because they are stored separately 
from the paper folder. Given the age of the taping equipment, the 
quality of tapes is often quite poor, which also results in remands 
from the Appeals Council or the district court. A digitally recorded 
hearing would not only be of high audio quality but would be easy to 
copy or transfer to the district court as part of the administrative 
record.
    The Commissioner also has announced an initiative to expand the use 
of video teleconference ALJ hearings. This allows ALJs to conduct 
hearings without being at the same geographical site as the claimant 
and representative and has the potential to reduce processing times and 
increase productivity. NOSSCR members have participated in pilots 
conducted by SSA and have reported a mixed experience, depending on the 
travel benefit for claimants, the quality of the equipment used, and 
the hearing room set-up.
    In 2001, SSA published proposed rules on video teleconference 
hearings before ALJs. 66 Fed. Reg. 1059 (Jan. 5, 2001). In general, we 
support the proposed rules and the use of video teleconference hearings 
so long as the right to a full and fair hearing is adequately protected 
and the quality of video teleconference hearings is assured.
Conclusion
    We commend the Subcommittee for holding this hearing today to look 
at the challenges and opportunities for the Social Security disability 
programs. NOSSCR is committed to working with Commissioner Barnhart to 
improve these programs which are so vital to millions of people in this 
country. I would be glad to answer any questions that you have.

                                 

    STATEMENT OF JAMES A. HILL, ATTORNEY-ADVISOR, OFFICE OF 
HEARINGS AND APPEALS, SOCIAL SECURITY ADMINISTRATION, CLEVELAND 
   HEIGHTS, OHIO, AND PRESIDENT, NATIONAL TREASURY EMPLOYEES 
                       UNION, CHAPTER 224

    Mr. HILL. Good morning, Mr. Chairman. I thank the 
Subcommittee for inviting me to testify today.
    I have been employed as an attorney advisor in the 
Cleveland, Ohio hearing office for nearly 20 years. I am also 
the President of Chapter 224 of the National Treasury Employees 
Union, which represents attorney advisors and other staff 
Members in approximately 110 hearing offices and regional 
offices across the United States.
    The crisis in disability adjudication of the mid-1990s has 
returned. The OHA is once again failing to provide quality 
service to the American public. Commissioner Barnhart and her 
staff are currently in the process of planning long-term 
initiatives. Implementation of those initiatives is years into 
the future.
    To address the current problems, SSA has announced a series 
of short-term initiatives. I regret to inform you that these 
initiatives are utterly inadequate for the task. Some of the 
initiatives resulted from recommendations of the HPI Executive 
Steering Committee, which was tasked by Acting Commissioner 
Massanari with finding short-term initiatives to combat the 
growing case backlog at OHA. I was a Member of that Committee. 
Many Members of that Committee were bitterly disappointed that 
we failed to address the primary problem with OHA disability 
adjudications, that being the lack of a sufficient number of 
decision makers.
    We were well aware that the initiatives we advised would 
have only a minimal impact. I seriously doubt that feeling was 
conveyed to the Commissioner during the briefing she received 
regarding the Committee's recommendations.
    Despite the plethora of problems caused by the 
implementation of HPI, the most fundamental problem at OHA 
remains the lack of a sufficient number of decision makers. The 
SSA must quickly recognize that the current initiatives are 
inadequate and quickly augment them by reinstituting the Senior 
Attorney Program.
    The GAO recently issued a report which emphasized the 
success of that program. Its recommendations to SSA clearly 
contemplated a return to that program. However, SSA did not 
follow that advice. While recognizing the value of early 
screening of cases by a decision maker, SSA is instructing its 
ALJs to perform that role.
    Having ALJs perform the time-consuming task of reviewing 
``unpulled'' cases significantly reduces the time they can 
spend conducting hearings and deciding cases in which a hearing 
is required.
    While the Senior Attorney Program produced a substantial 
number of dispositions in addition to those produced by ALJs, 
the current program only redirects ALJ time. It does not 
increase the number of decision makers and will not 
significantly increase the number of dispositions.
    The lack of sufficient decision makers must be addressed on 
both a short term and a long-term basis. However, the answer is 
not hiring vast numbers of ALJs, as was acknowledged last week 
by Deputy Commissioner Gerry in his testimony before this 
Subcommittee. Hiring the number of ALJs needed to efficiently 
adjudicate the entire OHA workload is cost prohibitive and 
operationally unnecessary.
    Many of the cases that come to OHA do not require the 
participation of an Administrative Law Judge in the 
adjudicatory process. The ALJs must remain the backbone of the 
OHA process. The SSA should investigate the utility of 
introducing an Agency representative into the hearings process 
and the feasibility of using other attorney adjudicators, such 
as a magistrate or hearing officer, to assist the 
administrative law judges and Senior Attorneys in adjudicating 
the OHA caseload.
    The NTEU makes the following recommendations for actions 
necessary to ensure OHA delivers quality service as demanded by 
the American people now and in the future:
    One, all qualified OHA attorney advisors should be 
converted to Senior Attorney decision makers now and given the 
authority to issue fully favorable on-the-record decisions. 
These Senior Attorney decision makers would review all cases 
coming into the hearing office, as well as provide decision-
writing support for Administrative Law Judges.
    Two, SSA should establish a work group to examine the 
implementation of additional attorney decisionmakers such as a 
magistrate or hearing officer who would work in conjunction 
with ALJ's and Senior Attorneys in adjudicating the ever 
growing disability work load that faces SSA.
    Three, SSA should establish a work group to examine the 
issue of introducing Agency representatives into the 
adjudication process at the hearing level. Thank you very much.
    [The prepared statement of Mr. Hill follows:]
  Statement of James A. Hill, President, Attorney-Advisor, Office of 
    Hearings and Appeals, Social Security Administration, Cleveland 
   Heights, Ohio, and President, National Treasury Employees Union, 
                              Chapter 224
    Chairman Shaw and Members of the Subcommittee:

    My name is James A. Hill. I have been employed by the Office of 
Hearings and Appeals (OHA) of the Social Security Administration (SSA) 
for more than 19 years as an Attorney-Advisor. I am also the President 
of National Treasury Employees Union (NTEU) Chapter 224 that represents 
Attorney-Advisors and other staff members in approximately 110 Hearing 
Offices and OHA Regional Offices across the United States. I wish to 
thank the Subcommittee for inviting me to testify regarding the 
challenges and opportunities facing Social Security disability programs 
today.
    The crisis in disability adjudication at the hearing level of the 
mid-1990's has returned. Case backlogs and average processing time have 
increased at an alarming rate, severely diminishing the quality of 
service provided to the American public. SSA must immediately address 
the current backlog problem and devise a system that will adequately 
serve the needs of the future. At the request of the Social Security 
Subcommittee, the United States General Accounting Office (GAO) 
conducted a study of the initiatives that SSA developed and the results 
that have been obtained. GAO stated that:

        LSSA's current backlog is reminiscent of a crisis-level backlog 
        in the mid 1990's, which led to the introduction of 19 
        temporary initiatives designed to reduce OHA's backlog of 
        appealed cases . . . Among the most long-standing of these 
        initiatives was the Senior Attorney Program. Under this 
        program, selected attorneys reviewed claims to identify those 
        cases in which the evidence already in the case file supported 
        a fully favorable decision. Senior attorneys had the authority 
        to approve these claims without ALJ involvement. The Senior 
        Attorney Program took effect in fiscal year 1995 and was phased 
        out in 2000. During its existence, the program succeeded in 
        reducing the backlog of pending disability cases at the hearing 
        level by issuing some 200,000 hearing-level decisions. . . . 
        SSA management has expressed concern that the Senior Attorney 
        Program is a poor allocation of resources as it diverts 
        attorneys from processing more difficult cases in order to 
        process the easier cases. (GAO Report 02-322, February 2002, 
        Page 23-24, (hereinafter ``GAO''))

    GAO recommended implementing ``short-term strategies to immediately 
reduce the backlog of appealed cases in the Office of Hearing and 
Appeals. These strategies could be based on those that were 
successfully employed to address similar problems in the mid-1990's''. 
(GAO at Page 28) (Emphasis added.)
    Unfortunately, SSA has chosen to evade the clear advice of the GAO 
and has not implemented strategies based on those that worked in the 
1995 to 1999 time period. The misuse of ALJs to screen and analyze 
unassembled cases off the master docket is the only short term change 
proposed by the Commissioner that bears any resemblance to the changes 
that successfully brought down the backlog by more than 250,000 cases. 
It will not succeed because every minute an ALJ spends on screening and 
analyzing unassembled cases is a minute that that ALJ will not spend 
preparing for a Hearing, holding a Hearing or deciding a case after the 
Hearing, tasks that no other SSA employee can assume. It robs from 
Peter to pay Paul. It actually reduces the time ALJs will have to spend 
on the great majority of cases that go to Hearing, the ones where the 
claimant waits the longest. This initiative will have the unintended 
consequence of actually making most claimants wait longer for their 
Hearing. Additionally, if each ALJ does not produce a decision for each 
4 hours he or she spends on this program, ALJs will actually produce 
fewer decisions with this initiative than they would have without it. 
To be sure, some deserving (and lucky) claimants will get their 
decisions and benefits significantly earlier than they would under the 
present process, but it will come at the expense of other claimants who 
have been waiting much longer. Further, these claimants would receive 
the same benefits from a Senior Attorney program that has none of the 
adverse consequences of this initiative. The Senior Attorney program 
would not divert any ALJ time from the Hearing workload. No one would 
wait longer for a Hearing because of the Senior Attorney program. 
Rather than the possibility of fewer cases going out each month, the 
Senior Attorney program will result in as many as 5,000 to 8,000 more 
cases going out every month. Based upon previous experience the average 
processing time for these cases would be approximately 100 days. We 
asked the Agency how many cases they expected their initiatives to 
produce and we were told that they did not have that data.
    Deputy Commissioner Martin Gerry recently testified before this 
Subcommittee and stated that short term initiatives are being 
implemented that are intended to alleviate some of the current problems 
at the Office of Hearings and Appeals. Mr. Gerry testified that these 
initiatives were recommended by the HPI Executive Steering Committee 
impaneled by Acting Commissioner Massanari and charged with finding 
short term initiatives to solve many of the problems associated with 
HPI. I was a member of the Executive Steering Committee as was Judge 
Bernoski. I regret to inform you that many members of that Committee 
were bitterly disappointed that we failed to address the primary 
problems associated with HPI, and we left the final meeting with a 
pervasive feeling that we had failed. We were well aware that the 
initiatives we advised would have only a minimal impact. I seriously 
doubt that feeling was conveyed to the Commissioner during the briefing 
she received regarding these initiatives.
    In light of the GAO analysis and recommendations, NTEU makes the 
following recommendations for action necessary to ensure that the 
Office of Hearings and Appeals delivers the quality of service demanded 
by the American people currently and in the future:

        1. LAll qualified OHA Attorney Advisers should be converted to 
        Senior Attorney decision makers and given the authority to 
        issue fully favorable on-the-record decisions. These Senior 
        Attorney decision makers would review all cases coming into the 
        hearing office.
        2. LSSA should establish a workgroup to examine the 
        implementation of additional attorney decision makers, such as 
        Hearing Officers, in the OHA hearing offices to work in 
        conjunction with the ALJs in processing the ever-growing 
        workload that faces SSA.
        3. LSSA should establish a workgroup to examine the issue of 
        introducing an Agency representative into the adjudication 
        process.

    Since the mid-1990's SSA's disability program has been in crisis. 
In the mid-1990s the disability backlog rose to over 550,000 cases and 
processing time climbed to nearly 400 days at the hearing office level. 
In 1995 SSA introduced the Senior Attorney Program that was 
instrumental in reducing the disability backlog to approximately 
311,000 cases by September 1999 and reducing processing time to 
approximately 270 days at the end of fiscal year 2000. Since the 
termination of the Senior Attorney Program the pending case backlog has 
risen to approximately 491,350 and SSA projects by the end of FY 2002 
the backlog will rise to 546,000 cases.
    The Senior Attorney Program was replaced by HPI, a program which 
was implemented without testing. HPI includes a triage system in which 
Attorney Advisers screen profiled cases (the same profiles used by the 
Senior Attorney Program) and recommend cases to ALJs that could be paid 
on the record. This still requires a significant commitment of ALJ 
resources. However, this process has resulted in a considerable decline 
in on-the-record decisions emanating from this profiled workload 
leading to fewer overall dispositions. The average rate of ALJ 
dispositions has not increased; in fact, it has declined, leading to a 
substantial decrease in total dispositions. We are in the midst of an 
emerging disaster precipitated by the demise of the Senior Attorney 
decision maker and fueled by HPI. The situation continues to 
deteriorate. Any hope of significant improvement without bold and 
decisive action is unreasonable. OHA has traditionally maintained a 
roster of 1000-1100 ALJs. Hiring substantial numbers of additional ALJs 
to meet future needs is fiscally irresponsible. SSA recently hired 
approximately 130 new Administrative Law Judges (returning to the norm) 
but readily admits that this addition will not solve today's problems.
    The loss of efficiency caused by HPI, the elimination of the Senior 
Attorney Program, the precipitous decline in the number of on-the-
record decisions, the staggering increase in ``unpulled'' cases, the 
expected increase in disability receipts, and the imposition of a new 
and increased Medicare workload spell disaster. The Social Security 
Administration must act quickly to deal with the current disability 
backlog. It must also realistically assess its future workloads and 
devise processes sufficient to meet the decision-making needs of the 
future.
SSA Must Immediately Re-introduce the Senior Attorney Program
    The fundamental problem at OHA is that the number of decision 
makers is insufficient to meet the workload. There is widespread 
agreement that it is unreasonable to expect an Administrative Law Judge 
to produce more than 500 dispositions in a year if an acceptable level 
of quality is to be maintained. If ALJs are the only decision-makers, 
unless the Agency is prepared to accept a much greater number of ALJs 
than currently are employed, the simple arithmetic mandates an ever 
increasing backlog and skyrocketing processing times. The solution is 
more decision makers.
    In 1995 the Social Security Administration faced a disability 
caseload backlog and processing time crisis very similar to that 
existing today. In order to reduce the backlog and decrease processing 
time, SSA instituted the Short Term Disability Program. The primary 
element of that program, designed to reduce both the backlog and 
processing time, was the Senior Attorney Program.
    That program continued until the advent of the HPI Program. The 
authority to make and issue fully favorable decisions on the evidence 
of record, with minimal development, was delegated to the Agency's 
experienced Attorney Advisors. The Senior Attorney decisions combined 
with ALJ decisions resulted in a substantially higher level of total 
dispositions than would have occurred if ALJs had been the sole 
decision-makers. In addition to performing the ``Senior Attorney 
work'', the Senior Attorneys also continued to draft ALJ decisions. 
This arrangement utilized the knowledge, skills, and abilities of these 
attorneys to issue fully favorable decisions to those claimants whose 
case did not require a hearing, and to continue to draft the more 
difficult ALJ decisions. This afforded, on an individual hearing office 
basis, the flexibility to direct decision making and decision writing 
resources as necessary to achieve maximum productivity.
    Senior Attorneys issued approximately 220,000 decisions during the 
course of the Program. The average processing time for Senior Attorney 
decisions was approximately 105 days. During its pendency the OHA 
backlog fell from over 550,000 to as low as 311,000 at the end of FY 
1999. The correlation is obvious. During the same time period there was 
also an increase in ALJ productivity demonstrating that dual decision 
makers was a viable concept. It is readily apparent that processing a 
large number of cases in such an expeditious manner materially reduced 
the average processing time for all disability cases at the hearings 
level in OHA.
    While the Senior Attorney Program resulted in a substantial 
increase in on-the-record decisions, there was not a corresponding 
increase in the OHA payment rate. In fact the overall payment rate at 
OHA declined during the course of the Senior Attorney Program.
    In July 1998 the Senior Attorney Program was significantly 
downsized with approximately one-half of the senior attorneys returned 
to the GS-12 attorney adviser position. The remaining Senior Attorneys 
spent 100 percent of their time doing ``Senior Attorney work''. This 
lack of flexibility doomed this arrangement which lasted only four 
months before the remaining Senior Attorneys were also assigned ALJ 
decisions drafting duties. Unfortunately, the number of Senior 
Attorneys was not increased which led to a significant decline in the 
Program's productivity. This decrease in productivity led to the rise 
in unpulled cases and the beginning of the increase in the backlog and 
average processing time.
    The Senior Attorney Program benefited more than just those 
claimants who received their disability payments far earlier than would 
otherwise have been the case. Staff and ALJ time was not spent 
needlessly on cases that could be paid without a hearing and they could 
more timely attend to the other cases, thereby reducing processing time 
for those cases as well. Another benefit was that cases paid by a 
Senior Attorney were not ``pulled'' (prepared for hearing). Had the 
Senior Attorney Program not been downsized, and then eliminated, there 
would be about 90,000 fewer cases waiting to be ``pulled''.
    The processing of Senior Attorney cases involved a very limited 
amount of hearing office staff time. This resulted in the expenditure 
of far fewer work years devoted to processing Senior Attorney cases 
than would have been the case had ALJ adjudication been required. This 
resulted in a significant reduction of administrative costs for those 
cases. The former Chief Administrative Law Judge stated that OHA may 
receive as many as 100,000 cases a year that with minimal development 
could be paid without a hearing. The savings in administrative costs 
arising from the reinstitution of the Senior Attorney Program would be 
substantial.
    One of the criticisms of the Senior Attorney Program involved 
decisional accuracy. Of course that is also one of the chief complaints 
regarding ALJ decisions. The Appeals Council review of Senior Attorney 
and ALJ on-the-record decisions found no difference in quality. I am 
convinced that the formulation and implementation of an effective 
quality assurance program at the hearing level should be of the highest 
priority
    The success of the Senior Attorney Program ultimately rests on the 
competence of the legal professionals who can serve as adjudicators. 
These individuals are experienced OHA Attorney Advisors who have many 
years experience dealing with the intricacies of the legal-medical 
aspects of the Social Security disability program. They are attorneys 
well versed in the law, and they are experienced disability 
practitioners with a wealth of adjudicatory experience in the Social 
Security disability system.
    The conversion of OHA Attorney Advisers to Senior Attorney 
decisionmakers as described above will result in an immediate and 
substantial improvement in OHA service to the public at minimal 
additional cost. Based upon the Agency's experience with the original 
Senior Attorney Program, and with the full cooperation of hearing 
office management (lacking during the original Senior Attorney 
Program), this measure could produce as many as 75,000-100,000 
decisions a year without diminishing ALJ productivity.
    The original Senior Attorney Program was a resounding success. It 
materially improved the quality of service provided to the public, 
especially for those individuals who were disabled and entitled to 
receive their disability decision and benefits on a timely basis. In 
addition, it resulted in administrative and program cost savings. 
Senior Attorney decisionmakers have proven by their performance that 
pre-ALJ decisionmaking in the OHA hearing office significantly improves 
the quality of service provided to the public.
SSA's Proposed Changes
    Instead of following the advice of GAO, SSA has once again decided 
to implement additional permanent untested changes to the Appeals 
process. These include requiring ALJs to perform early screening and 
analysis of unassembled cases from Master Docket; implementing a short 
form favorable decision; and, authorizing ALJs to issue bench 
decisions. While current Senior Attorneys will continue to screen and 
analyze some cases, they will not have the decisionmaking authority 
that they had in the original, successful, Senior Attorney Program. 
Also contrary to the advice of GAO, SSA did not involve this 
Stakeholder, NTEU, in any predecisional planning for these changes.
    The agency has stated that both the ALJs and Senior Attorneys will 
generally be expected to complete their early screening and analysis of 
cases within five work days. This will not permit ALJs or Senior 
Attorneys to develop the record. The system will allow ALJs to do 
little more than cherry pick the easy cases and second guess the DDS 
decision. The review of a lesser profile of cases by Senior Attorneys 
who have neither the authority to decide the case, nor the time 
allocated by management that is necessary to develop the case, will 
largely be a waste of resources. These short-term strategies will not 
reduce the backlog, in fact, it is unlikely that they will 
significantly slow the rate of growth of the backlog. (Other changes, 
such as ending certification of cases as ready to hear, simply 
recognize the reality that many offices never implemented this change, 
and most of those that did have already stopped the practice. 
Similarly, many offices no longer rotate clerical employees. Neither of 
these changes will have a measurable affect on the backlog.)
    Without a doubt the biggest problem with the plan is the decision 
to have ALJs perform screening and analysis. This adds significantly to 
the workload of SSA's most expensive and most limited resource, ALJs. 
The time they spend on screening, analyzing, deciding and writing these 
unassembled cases is time that they cannot spend preparing for a 
Hearing, holding a Hearing, deciding a case after a Hearing or editing 
and signing the final decision, functions that no other SSA employee 
can perform. Even if the program worked, most claimants would have to 
wait longer for their decision. ALJs will have less time to review, 
hear and decide those cases already in the 500,000 case backlog while 
critically limited ALJ time is spent cherry picking payments as they 
come into the office. This is supremely unfair to those claimants 
already waiting almost a year at OHA for their decision. The critical 
difference between the Senior Attorney Program and this current SSA 
plan is that the Senior Attorney Program did not divert any ALJ time to 
produce 50,000 or more decisions a year. NTEU does not believe that a 
process that reduces the number of Hearings that an ALJ can hold and 
the number of Hearing decisions that an ALJ can issue is a fair or 
effective way to increase production or reduce processing time. SSA 
needs a program where decisionmakers can pay deserving claimants at the 
earliest possible time in the appeals process, but not at the expense 
of those longer suffering claimants whose cases require a Hearing. That 
program is the Senior Attorney Program.
    The Senior Attorney Program is a real life tested program that 
demonstrated it could produce 50,000 to 60,000 on the record decisions 
a year without the use of any ALJ time. It can be instituted quickly 
with minimal cost to the Agency using current Agency personnel. If it 
were implemented with the strong support of the Commissioner, OHA 
could, for the first time since the original Senior Attorney program 
was eliminated, actually decide more cases in a month then it received 
and begin to reduce the backlog.
    As indicated by Acting Commissioner Larry Massanari, in response to 
questions from the Chairman following your June 28, 2001, Hearing:

        L  The Senior Attorney Program was established in 1995 as an 
        initiative of the Agency's Short Term Disability Project to 
        rapidly reduce the number of pending disability cases at the 
        hearing level. Under this program, some 200,000 fully favorable 
        decisions were issued without the need for approval by an ALJ, 
        thus saving the ALJ's time for hearings and decisions on the 
        rest of the hearing workload. In general, the Senior Attorney 
        Program had a positive impact on hearing process efficiency and 
        productivity.

    I note that rather than saving the ALJ's time for hearings and 
decisions the current plan reduces the time that ALJs have for hearings 
and decisions on the rest of the hearing workload. Acting Commissioner 
Massanari continued:

        L  However, by the beginning of FY 2000, pending hearing 
        workloads had declined and fewer cases lent themselves to on-
        the-record fully favorable decisions primarily because of 
        process unification improvements at the initial claim level. 
        Thus, it was decided that an adjudicator in addition to the ALJ 
        would not be a useful element of the workflow and staffing 
        structure and that the signatory authority of the Senior 
        Attorney would be terminated in each office.

    Note that pending hearing workloads are now higher than they were 
during most of the existence of the Senior Attorney Program and they 
continue to increase. The anticipated improvements from ``process 
unification'' have not materialized and thus the conditions that now 
exist are remarkably similar to the conditions that led to the first 
Senior Attorney Program in 1995. Acting Commissioner Massanari further 
stated:

        L  At the time the decision was made to terminate the Senior 
        Attorney Program, the full implementation of prototype in the 
        DDSs was believed to be imminent. These process changes would 
        further reduce the pool of possible on-the-record decisions at 
        the hearing level by ensuring more allowance decisions made 
        correctly at the DDS level and by sending fully developed and 
        ``fresher'' cases to the hearing offices for adjudication.

    Clearly, this did not take place.

        L  The Senior Attorney Program was never a part of HPI. 
        However, the HPI plan institutionalized key positive aspects of 
        the Senior Attorney Program, like early screening and analysis 
        of cases and early identification and fast-tracking of 
        potential on-the-record decisions.

    Unfortunately, HPI was unsuccessful in its attempt to screen, 
analyze, identify and fast-track on-the-record decisions. HPI proved 
that taking a few, but not all, key aspects of a successful program 
like the Senior Attorney Program, does not guarantee success in a new 
untested program. HPI had too many handoffs and still required the ALJ 
to review the potential on-the-record decision, and make the decision. 
This cumbersome process is what remains in place for most of the cases 
that will be screened and analyzed in OHA. It did not work well when it 
was called HPI and it won't work any better with whatever new name they 
put on it.
    NTEU doubts that Bench decisions will add significantly to ALJ 
productivity or decrease processing time. We do believe, however, that 
they will increase the rate of cases remanded to ALJs as these 
decisions are likely to be less well reasoned and drafted than those 
decisions where an ALJ can review the entire record after the Hearing 
and make a thoughtful reasoned decision with the advice and counsel of 
Hearing Office attorneys and program experts. Even without the 
screening and analysis initiative, many ALJs (who generally have 
hundreds of cases on their docket at any one time) have insufficient 
time to fully evaluate and consider all of the nuances of each case 
prior to the Hearing. We are concerned that ALJs are being pressured 
into making premature decisions.
    NTEU also has serious concerns about the short form for favorable 
decisions format (FEDS) that the Agency proposes that ALJs and other 
employees use in drafting decisions. We are unimpressed that a number 
of Agency components have reviewed the format for legal sufficiency and 
quality as formats do not have to be legally defensible, disability 
decisions do. Decisions such as these, long on conclusions and short on 
facts, will fuel the complaint that the ALJ decisions are not supported 
by the evidence.
Long Term Changes
    NTEU believes that it is time for the Social Security 
Administration to seriously consider fundamentally altering the nature 
of ALJ hearings by introducing an Agency representative, the Social 
Security Counsel, who will be responsible for presenting the Agency's 
case to the Administrative Law Judge. The Counsel would be responsible 
for developing the record and presenting it at the hearing. It is the 
responsibility of the Counsel to present the adjudicator with a 
balanced and complete record upon which a fair and just decision can be 
based. The Counsel, in concert with the claimant's representative, will 
resolve issues and propose settlement agreements that would be 
presented to the adjudicator for approval.
    The role of the adjudicator would be reduced to oversight of the 
pre-hearing process, conducting hearings, and preparation of written 
decisions based on evidence presented at hearing. The ALJ would be 
relieved of the responsibility of representing the agency and the 
represented claimant, and would act as a trier of fact.
    In its report dated January 2001, Charting the Future of the Social 
Security's Disability Programs: The Need for Fundamental Change, the 
Social Security Advisory Board also noted that Administrative Law 
Judges have been required to balance three roles. They are obligated to 
protect the interests of both the claimant and the government, and to 
serve as an objective adjudicator. The Board further noted that 
approximately 80 percent of disability insurance claimants are now 
represented by an attorney. The Board also noted that because of the 
massive increase in the disability appellate workload, SSA has 
periodically made efforts to increase ALJ productivity which many in 
OHA believe has impacted adversely on the quality of decision-making. 
The Social Security Advisory Board recommended that the agency be 
represented at hearings. The Board stated that having a representative 
present at the hearing to defend the Agency's position would help 
clarify the issues and introduce greater consistency and accountability 
into the adjudicatory system.
    The extent of the quality assurance problems in the current system 
is underlined in the report of The Lewin Group, Inc, which stated that 
the adjudication process at OHA is almost unique. The Lewin Group 
reported, ``We have not encountered good examples of non-adversarial 
processes.'' The Lewin Group suggested that one way to improve the non-
adversarial system is to make it more adversarial. It suggested that 
the mechanism for such a change would be to introduce a representative 
from the Social Security Administration into the adjudication process. 
This would relieve the Administrative Law Judge of the responsibility 
of representing the agency, and if the claimant were represented by 
outside counsel, the responsibility for representing the claimant.
    In conclusion, NTEU makes the following recommendations:

    1. LAll qualified OHA Attorney Advisers should be converted to 
Senior Attorney decisionmakers and given the authority to issue fully 
favorable on-the-record decisions. These Senior Attorney decision 
makers would review all cases coming into the hearing office.
    2. LSSA should establish a workgroup to examine the implementation 
of additional attorney decision makers in the OHA hearing offices to 
work in conjunction with the ALJs in processing the ever-growing 
workload that faces SSA.
    3. LSSA should establish a workgroup to examine the issue of 
introducing an Agency representative into the adjudication process.

                                 

    Chairman SHAW. Thank you, Mr. Hill. Mr. Bernoski?

 STATEMENT OF THE HON. RONALD G. BERNOSKI, ADMINISTRATIVE LAW 
    JUDGE, OFFICE OF HEARINGS AND APPEALS, SOCIAL SECURITY 
     ADMINISTRATION, MILWAUKEE, WISCONSIN, AND PRESIDENT, 
 ASSOCIATION OF ADMINISTRATIVE LAW JUDGES, MILWAUKEE, WISCONSIN

    Mr. BERNOSKI. Thank you, Mr. Chairman for inviting us to 
testify here today.
    Based on the testimony of this hearing and other hearings 
that you have conducted so far this year, it is clear that the 
Social Security Disability System is under severe distress. It 
is also clear that the Agency-imposed process of HPI is at the 
center of the problem.
    Immediately before the start of HPI, both case backlogs and 
case processing times were being reduced. For fiscal year 1998 
and 1999, we averaged about 600,000 cases each year. After HPI, 
both case backlogs and case processing times have increased and 
for fiscal year 2001, we produced about 450,000 cases.
    As found by the Social Security Advisory Board, the Agency 
has not properly administered the hearing process. Therefore, 
we believe that active Congressional oversight is needed at 
this time.
    I will discuss three major issues this morning.
    First, if the entire case processing time is to be reduced, 
the steps in the process should also be reduced. This can be 
done by having one complete review at the DDS level, which is 
based upon the same legal standard that is used by the 
Administrative Law Judges.
    The issue of the variance between the DDS allowance rates 
should also be addressed.
    Second, the hearing process must be restored and the 
problems caused by HPI corrected. As stated in some detail in 
our written statement, we believe the corrections should 
include both short range and long-term objectives.
    Some of the reforms that we consider vital include 
restoring the Administrative Law Judges to the primary position 
in the hearing process; assigning staff and attorney writers to 
each judge; adopting a government representative to help 
develop the record and to represent the Agency at some hearings 
before the Administrative Law Judge; closing the record after 
the ALJ hearing and as of the date of the decision; defending 
decisions of the Administrative Law Judges before the Appeals 
Council and in the Federal courts; clarifying the disability 
law by either statute and/or case law; and adopting rules of 
practice and procedure for claimant representatives and for our 
hearings.
    The Commissioner has stated that she will announce reforms 
for the disability system this fall. We have not been asked to 
participate, despite our effort to do so.
    Thirdly, the hearing system and the hearing system should 
be strengthened. A bill has recently been introduced into 
Congress within the last week. It is H.R. 4932. This bill will 
place the Administrative Law Judge hearings of SSA under the 
operational control of a Chief Judge who reports directly to 
the Commissioner. This is an important first step for reform 
and this bill deserves the support of this Committee.
    We have also suggested a more comprehensive reform that 
would make the hearings function a separate component within 
the Agency. The hearings component will report directly to the 
Commissioner. The plan eliminates the Appeals Council and it 
creates local administrative law judge appellate panels that 
are based upon the Bankruptcy Court model.
    We testified in detail on this change before this 
Committee, and the plan is part of the record of a prior 
hearing of this Committee.
    Whichever reform the Congress adopts, we believe that it is 
now time for the Congress to act. We know the problems. We have 
been discussing them for many years. We have also identified 
several solutions. We think that the Congress should begin 
moving along these lines and begin some type of reform effort.
    We think that it is now time to bring together a work group 
consisting of legal scholars, judges, attorneys and claimant 
groups and start crafting a plan for reform. We believe that we 
should also give the recommendations of the Social Security 
Advisory Board considerable credit and use them as a guide.
    We believe that the American people must have a hearing 
system that is timely, accurate, fair and understandable, and 
is protected by the Administrative Procedure Act.
    Mr. Chairman, our request as judges is simple. We ask that 
we be given the responsibility and authority and we be held 
accountable for our work.
    Mr. Chairman, we look forward to working with you and the 
Committee on this important project of reforming the Social 
Security disability system. Thank you.
    [The prepared statement of Mr. Bernoski follows:]
  Statement of the Hon. Ronald G. Bernoski, Administrative Law Judge, 
    Office of Hearings and Appeals, Social Security Administration, 
Milwaukee, Wisconsin, and President, Association of Administrative Law 
                      Judges, Milwaukee, Wisconsin
    Mr. Chairman and Members of the Subcommittee:
I. INTRODUCTION
    Thank you for the opportunity to testify before you today. My name 
is Ronald G. Bernoski. I am an Administrative Law Judge (``ALJ'') who 
has been hearing Social Security disability cases at the Office of 
Hearings and Appeals (``OHA'') of the Social Security Administration 
(``SSA'') in Milwaukee, Wisconsin, for over 20 years.
    This statement is presented in my capacity as the President of the 
Association of Administrative Law Judges (``AALJ''), which represents 
the ALJs employed in the SSA OHA and the Department of Health and Human 
Services (``DHHS''). One of the stated purposes of the AALJ is to 
promote and preserve full due process hearings in compliance with the 
Administrative Procedure Act for those individuals who seek 
adjudication of program entitlement disputes within the SSA.
    I will address the challenges and opportunities for the Social 
Security Disability Programs in improving the disability determination 
appellate process at the ALJ hearing and Appeals Council administrative 
review levels. First, I will list the challenges at the DDS agencies 
that affect the appellate levels and at each of the appellate levels. 
Then I will offer short and long term solutions that may be implemented 
to resolve these challenges. The table of contents is an outline of the 
challenges and proposed solutions that I present for the Social 
Security Disability Programs. This discussion presumes familiarity with 
the structure of the SSA OHA and the initiatives by the SSA management 
to change or improve the functioning of OHA, including the Process 
Unification Training (``PUT''), the Hearing Process Improvement Plan 
(``HPI''), and the Appeals Council Improvement Plan (``ACPI'').
II. CHALLENGES FOR THE SOCIAL SECURITY DISABILITY PROGRAMS
A. Challenges at the DDS Level:

    1. The Need to Reduce the Number of Cases that Require an ALJ 
Hearing by Getting the Claimants a Correct Final Administrative Result 
Sooner: The reversal rate of the DDS decisionmakers' determinations by 
the ALJs remains high. In order to reduce the number of ALJ reversals 
of DDS determinations, in 1996, the SSA conducted the PUT training to 
have the DDS decisionmakers use the same rules to decide cases as the 
ALJs. This has not resulted in fewer cases requiring an ALJ hearing 
because DDS decisionmakers are required to apply a medical standard set 
forth in the SSA POMS manuals when determining disability, which is not 
the standard used by the ALJs. ALJs use a legal standard when 
determining disability that is based upon the Social Security Act, the 
SSA regulations and rulings, and the federal case law that interpret 
them.
    Although Congress has expressed concern about the different 
benefits allowance rates between the DDS agencies and OHA, there also 
is a concern about the wide discrepancy in the benefits allowance rates 
among the different states' DDS agencies. The latter discrepancy cannot 
be explained by the use of a different standard for decisionmaking, 
since all of the DDS agencies use the same medical standard.
    2. The Need to Reduce Processing Time for the Initial and 
Reconsidered Determinations Levels: Rather than carefully develop and 
examine the claimants' cases once, DDS often is making its initial 
determinations based on incomplete records, and, upon reconsideration, 
rarely obtains significant additional medical evidence or changes the 
outcome of the case. SSA recently reported that only about three 
percent of initial determinations are changed at the reconsideration 
level.
    There are steps that SSA can take that do not require legislation 
to (1) improve the quality of DDS decisionmaking, which will reduce the 
number of ALJ hearings, and (2) reduce the DDS case processing time. 
They are enumerated in Section III below.
    B. Challenges at the ALJ Hearing Level: In brief, the Social 
Security Disability Programs' challenges at this level is to have a 
large and growing volume of cases heard and decided by SSA's ALJs in a 
timely and high quality manner that preserves the claimant's due 
process rights under the Social Security Act and Administrative 
Procedure Act (``APA''). Several specific challenges that now confront 
the new Commissioner are as follows:
    1. The Need to Reduce the Number of Cases that Require an ALJ 
Hearing by Getting the Claimants a Correct Final Administrative Result 
Sooner: The burgeoning caseload at the ALJ hearing level has been 
growing unabated in recent years. Prior to HPI, the SSA OHA heard and 
decided over 500,000 cases annually, and surpassed 600,000 in one 
recent year. SSA is projecting that the annual caseload will climb to 
about 726,000 by 2005. This has strained the current structure of OHA 
to timely handle the volume with quality because nothing effective has 
been done to either reduce the number of cases that require an ALJ 
hearing or change the structure of OHA to better address the huge 
caseload:

        L(a) OHA's structure and process for hearing cases has not 
        changed significantly to adjust to the large scale of the 
        operation since the APA went into effect in 1947. There is no 
        mechanism for settling cases without a hearing, other than 
        granting a claim on the record, because SSA has no 
        representative to assert its interests at the hearing level.

        L(b) Cases endlessly are remanded back to the ALJ level for 
        rehearing because the record remains open without limits, new 
        issues may be raised at all levels of appeal, and the quality 
        of the Appeals Council review is poor.

    There are several steps that SSA can take that do not require 
legislation to reduce the number of ALJ hearings. They are enumerated 
in Section III below.
    2. Challenges from the ALJ Level HPI Reorganization of OHA: There 
is a consensus that HPI, which SSA implemented in 2000, has both 
exacerbated the case disposition time problems that it was intended to 
solve and created new problems that have caused work flow bottlenecks, 
reduced the quality of decision drafts by some decision writers, and 
increased the case backlog. The several HPI challenges are as follows:

        L(a) One purpose of HPI was to reduce the amount of processing 
        time it takes to obtain the evidence for the record by doing it 
        more completely before the ALJ hearing, so that fewer cases 
        would need post-hearing development. The practice of HPI did 
        not result in a reduction of cases that require post-hearing 
        development.

        L(b) HPI also was expected to reduce overall case processing 
        time, ostensibly by reducing the need for post-hearing 
        development. Instead, case processing time steadily has 
        lengthened under HPI beyond what was considered to be 
        unacceptable at the time that HPI was implemented. The creation 
        of teams to handle cases was intended to decrease the number of 
        people who have to work on each case and increase individual 
        responsibility for the quality of work within the group, which 
        were expected to reduce case processing time and increase work 
        quality. Instead, HPI process has resulted in an increase of 
        the ``hand offs'' of the files and the sense of individual 
        responsibility for work quality has vanished. The cases are 
        assigned to judges later in the process and the responsibility 
        for early pre-hearing case development has been transferred to 
        the staff.

        L(c) The quality of decision drafts has declined because, as 
        part of the HPI plan, SSA has promoted to Paralegal Specialist 
        positions as ALJ decision writers clerical staff members, many 
        who do not have the skills to perform the job adequately. HPI 
        created promotion opportunities for the clerical staff, which 
        boosted the morale of those receiving the promotions. However, 
        the implementation of HPI resulted in the promotion of clerical 
        staff to approximately 350 writer positions without the need to 
        show that they have the skills to do the job. This promotion 
        process resulted in positions being filled by clerical staff, 
        some of whom who have not been successful in performing the 
        job.

        L(d) A huge backlog of case files that need to be prepared for 
        hearing has accumulated as a result of the SSA promoting about 
        350 clerks to writer positions and about 300 clerks to case 
        technician positions as part of the HPI plan without replacing 
        the vacated clerical positions. (The process of organizing and 
        marking exhibits to prepare a case for hearing is called 
        ``pulling,'' which is a clerical task.) As a result, the 
        backlog of unpulled cases has ballooned from about 34,000 to 
        216,000 since HPI has been implemented. The shortfall in 
        ``pulled'' cases has resulted in an insufficient number of 
        cases being scheduled for ALJs to hear in many offices and adds 
        to the case processing time.

        L(e) The lack of acceptance of the failure of HPI by the SSA 
        administrators is a challenge that the new Commissioner 
        confronts. At a hearing before the House Subcommittee on Social 
        Security in June 2001, Mr. Stanford Ross, Chair of the SSAB, 
        testified that the HPI did not improve the hearing process and 
        in some circumstances it had made the situation worse. Without 
        acknowledgment of the failure of HPI, new strategies will not 
        be considered seriously and implemented by SSA administrators.

    3. The Challenge of Preserving Due Process While Achieving Greater 
Efficiency:
    I have a strong concern with recent information that AALJ has 
received relating to three proposals to transfer the SSA administrative 
law judge hearing and final adjudication of Social Security Act claims 
to non-ALJ claims personnel within the District Offices, non-ALJ claims 
personnel within the District Offices the Departments of Disability 
Services, and/or non-ALJ hearing officers within OHA. A brief summary 
of the facts about these proposals that are known to AALJ are as 
follows:

        Transfer of SSA Hearings to non-ALJ Technical Personnel in the 
        District Offices: Recently, AALJ learned that the SSA is 
        creating a ``Special Title II Disability Workload cadre'' 
        (``ST2DW'') to make final determinations of Title II Social 
        Security Act claims. The jobs are for a detail of one year that 
        may be extended in upstate New York (Buffalo, Schenectady, 
        Albany) that will consist exclusively of GS-12 level claims 
        personnel employed in the District Offices in that local area, 
        whose title is ``Technical Expert (``TE'').'' No OHA personnel 
        reportedly will be considered for this position. The SSA New 
        York Region Personnel Operations already has issued 
        solicitations for Technical Experts to apply for the position 
        that was to close on May 1. There reportedly will be a two 
        month training period for this one year detail. The training 
        was to begin in New York City on May 13. The solicitation 
        provided as follows:

          LTEs will perform a pre-interview assessment of each ST2DW 
        case and complete a development sheet. This sheet will be used 
        to conduct interviews with the claimant and to obtain complete 
        development of the case. TEs will be responsible for final 
        adjudication of developed cases, and/or pre-effectuation 
        reviews of cases developed by others. TEs will use all 
        available tools and controls associated with the ST2DW.
        The position reportedly will be at the GS-12 level and no 
        position description has been prepared. This is a proposal that 
        already is being translated into action. The use of the words 
        ``final adjudication'' of cases in this job announcement is 
        telling, since only ALJ and Appeals Council decisions may 
        become final decisions of the SSA Commissioner pursuant to the 
        Social Security Act and APA.
        Transfer of SSA Hearings To DDS: Since February, information 
        has surfaced that report that the Agency may attempt to change 
        the Social Security hearing process and move the administrative 
        law judge hearing to the reconsideration level at the DDS. The 
        National Association of Disability Examiners (``NADE'') has 
        published its detailed proposal for such a change and the fact 
        that its executive officers met with the SSA Commissioner in 
        February 2002 to discuss the proposal. NADE also has submitted 
        its proposal in a written statement that is part of the record 
        of this Subcommittee's May 2, 2002, hearing on the Challenges 
        Facing the New Commissioner of Social Security. The DDS 
        proposal would restrict appeals to the administrative law judge 
        to questions of law, rather than the de novo review of the 
        claim that is mandated by the Social Security Act and the APA.
        In mid-January, the New York DDS director sent a letter to the 
        Commissioner that includes suggested reforms of the Social 
        Security disability system that is like the NADE proposal. The 
        letter contains the recommendations that the administrative law 
        judge hearing be abandoned and that the hearing be changed to a 
        ``fair hearing'' conducted at the state level by the DDS. At 
        the end of January, the Commissioner attended a meeting of DDS 
        personnel at which the attendees agreed to continue to 
        investigate this change.
        AALJ has learned that a small committee had been appointed by 
        the SSA Commissioner to look at alternative hearing methods. 
        There also is an existing SSA Commissioner's Committee on 
        Disability that is looking at various aspects of the disability 
        program. AALJ learned that the Committee soon will send a 
        report to the Commissioner that contains a recommendation to 
        conduct the de novo Social Security hearing at the 
        Reconsideration level of the DDS. Under this proposal, 
        administrative law judges would have jurisdiction only to 
        review cases for errors of law. If error is found, the case 
        would be remanded to the DDS for hearing. The Commissioner 
        apparently has not made a policy decision on the transfer of 
        the due process hearing to a lesser DDS hearing, but this issue 
        clearly is on the table for consideration.
        Any such change would have a profound effect on the rights of 
        the American people and would deny them a constitutional due 
        process hearing and decision of their claims as now is 
        protected by the APA. The DDS proposal also would markedly 
        restrict the claimants' access to judicial review, since few 
        cases would reach ALJs and thus be subject to the Appeals 
        Council review that is a necessary predicate to judicial 
        review.
        Transfer of SSA Hearings to Non-ALJ Hearing Officers: AALJ has 
        learned from a reliable, well-placed source that SSA is 
        planning to budget for hiring of hearing officers at the GS-14 
        and GS-15 level. However, AALJ does not have information on the 
        timing or implementation of the plan. This information is 
        consistent with a proposed hearing officer job description for 
        a position to handle ``small claims'' that the National 
        Executive Board became aware of at the time of its October 2002 
        meeting. This news is of considerable concern because it is a 
        natural ``spin off'' from the discussions to transfer the 
        hearings to the DDS. This type assault on the hearings system 
        goes to the very heart of the purpose and function of 
        administrative law judges.

    Any plan to deny Social Security claimants the right to a full due 
process hearing under the APA before an administrative law judge will 
result in a denial of basic constitutional rights to the American 
people. The preservation of APA due process for the claimants, 
including the hearing and decision of their claims by ALJs who are 
appointed pursuant to the APA, is essential as the new Commissioner 
devises ways to more efficiently address the agency's large and growing 
caseload.
    The APA was adopted by Congress in 1946 to ensure that the American 
people were provided hearings that are not prejudiced by undue agency 
influence. The securing of fair and competent hearing adjudicators was 
viewed as the heart of the Administrative Procedure Act.
    The APA was enacted primarily to achieve reasonable uniformity and 
fairness of the administrative process in the Federal Government for 
members of the American public with claims pending before Federal 
agencies. The APA sets forth a due process administrative procedure for 
the hearing and decision by administrative law judges of cases brought 
before the Federal agencies to which the APA applies. The APA provides 
the minimum standards for federal administrative due process in the 
Executive Branch, and delineates procedures for adjudicative 
administrative proceedings, namely individual case decisions about 
rights or liabilities as an agency's judicial function. This includes 
uniform standards for the conduct of adjudicatory proceedings, 
including the merit appointment of administrative law judges. U.S. 
Justice Dept., Attorney General's Manual on the Administrative 
Procedure Act 9 (1947) (the ``Manual''). The APA, Pub. L. No. 79-404, 
60 Stat. 237 (1946), as amended, is codified at 5 U.S.C. Sec. Sec.  
551-559, 701-706, 1305, 3105, 3344, 4301(2)(E), 5335(a)(B), 5372, and 
7521.
    By APA mandate, the administrative law judge is an independent, 
impartial adjudicator in the administrative process and there is a 
separation of the adjudicative and prosecutorial functions of an 
agency. The administrative law judge is the only impartial, independent 
adjudicator available to the claimant in the administrative process, 
and the only person who stands between the claimant and the whim of 
agency bias and policy. If SSA returns to using subordinated employees 
who would be an instrument and mouthpiece for the SSA, we will have 
returned to the days when the agency was both prosecutor and judge.
    There is a close relationship between the APA and the Social 
Security Act. In the case of Richardson v. Perales, 420 U.S. 389 
(1971), the U.S. Supreme stated that the APA was modeled upon the 
Social Security Act.
    It is clear that Congress intended the APA to apply to hearings 
conducted under the Social Security Act. The Attorney General's Manual 
on the Administrative Procedure Act, which is recognized by the U.S. 
Supreme Court to be part of the legislative history of the APA, states 
that ``the residual definition of ``adjudication'' in section 2(d) was 
intended to include. . . . [t]he determination of . . . claims under 
Title II (Old Age and Survivor's Insurance) of the Social Security Act. 
. . . '' Manual at 14-15 (emphasis added), citing, Senate Judiciary 
Committee Hearings on the APA (1941) at 657, 1298, 1451 and S. Rep. No. 
752 at 39; 92 Cong. Rec. 5648. (The other programs did not then exist.)
    The U.S. Supreme Court defined the role of a federal Administrative 
Law Judge in Butz v. Economou, 438 U.S. 478, 513-514 (1978), as 
follows:

        There can be little doubt that the role of the modern hearing 
        examiner or administrative law judge within this framework is 
        ``functionally comparable'' to that of a judge. His powers are 
        often, if not generally, comparable to those of a trial judge. 
        He may issue subpoenas, rule on proffers of evidence, regulate 
        the course of the hearing, and make or recommend decisions. . . 
        . More importantly, the process of agency adjudications is 
        currently structured so as to assure that the hearing examiner 
        exercises his independent judgment on the evidence before him, 
        free from pressures by the parties or other officials within 
        the agency. Prior to the Administrative Procedure Act, there 
        was considerable concern that persons hearing administrative 
        cases at the trial level could not exercise independent 
        judgment because they were required to perform prosecutorial 
        and investigative functions as well as their judicial work . . 
        . and because they were often subordinate to executive 
        officials within the agency. . . . Since the securing of fair 
        and competent hearing personnel was viewed as ``the heart of 
        formal administrative adjudication,'' . . . the Administrative 
        Procedure Act contains a number of provisions designed to 
        guarantee the independence of hearing examiners. They may not 
        perform duties inconsistent with their duties as hearing 
        examiners. When conducting a hearing under the APA, a hearing 
        examiner is not responsible to or subject to the supervision or 
        direction of employees or agents engaged in the performance of 
        investigative or prosecution functions for the agency. Nor may 
        a hearing examiner consult any person or party, including other 
        agency officials, concerning a fact at issue in the hearing, 
        unless on notice and opportunity for all parties to 
        participate. . . . Hearing examiners must be assigned to cases 
        in rotation so far as practicable. . . . They may be removed 
        only for good cause established and determined by the Civil 
        Service Commission after a hearing on the record. . . . Their 
        pay is also controlled by the Civil Service Commission.

    The Supreme Court recently reaffirmed its holdings in Butz that a 
federal ALJ's role is similar to that of a trial judge and that 
administrative adjudications are similar to judicial proceedings when 
it held that state sovereign immunity bars the Federal Maritime 
Commission from adjudicating a private party's complaint against a non-
consenting state. Federal Maritime Commission v. South Carolina State 
Ports Authority, ______ U.S. ______, slip op. 1, 10-14 (2002).
    The Congress has reviewed the function of the administrative law 
judge in the Social Security Administration. In 1983, a Senate 
Subcommittee on Oversight of Government Management of the Committee on 
Governmental Affairs conducted a hearing that inquired into the role of 
the administrative law judge in the Title II Social Security Disability 
Insurance Program. S. PRT. 98-111. The Committee issued its findings on 
September 16, 1983, which provided in part as follows:

        The APA mandates that the ALJ be an independent impartial 
        adjudicator in the administrative process and in so doing 
        separates the adjudicative and prosecutorial functions of an 
        agency. The ALJ is the only impartial, independent adjudicator 
        available to the claimant in the administrative process, and 
        the only person who stands between the claimant and the whim of 
        agency bias and policy. If the ALJ is subordinated to the role 
        of a mere employee, and instrument and mouthpiece for the SSA, 
        then we will have returned to the days when the agency was both 
        prosecutor and judge.

    The decisionmaking independence provided by the APA is not for the 
benefit of the judge, but instead is provided for the protection of the 
American people. The protections are intended to ensure that the 
American people receive a full and fair due process hearing with a 
decision based on the evidence in the hearing record. This is a right 
protected by the constitution. ``The APA creates a comprehensive 
bulwark to protect ALJs from agency interference. The independence 
granted to ALJs is designed to maintain public confidence in the 
essential fairness of the process through which Social Security 
benefits are allocated by ensuring impartial decisionmaking.'' Nash v. 
Califano, 613 F.2d 10, 20 (2nd Cir. 1980). Despite these protections, 
the Social Security Administration has a history of attempting to 
assert undue influence on the decisionmaking of its administrative law 
judges. This abuse occurred in the 1980's after the agency had 
implemented the Bellmon Review Program. The Senate Subcommittee on 
Oversight of Government Management (referred to above) issued findings 
on September 16, 1983, on this improper agency conduct that provided in 
part as follows:

        The principal findings of the subcommittee is that the SSA is 
        pressuring its ALJs to reduce the rate at which they allow 
        disabled persons to participate in or continue to participate 
        in the Social Security Disability Program.

    The Bellmon Review Program also was challenged in the courts in 
Association of Administrative Law Judges v. Heckler, 594 F.Supp. 1132 
(1984). In that case, a Federal district court judge found in part as 
follows:

        In sum, the Court concludes, that defendant's unremitting focus 
        on allowance rates in the individual ALJ portion of the Bellmon 
        Review Program created an untenable atmosphere of tension and 
        unfairness which violated the spirit of the APA, if no specific 
        provision thereof. Defendants' insensitivity to that degree of 
        decisional independence the APA affords to administrative law 
        judges and the injudicious use of phrases such as 
        ``targeting'', goals and ``behavior modification'' could have 
        tended to corrupt the ability of administrative law judges to 
        exercise that independence in the vital cases that they decide.

    The efforts of the administrative law judges of the Social Security 
Administration to protect the Social Security hearing process and the 
rights of Social Security claimants was recognized in an award 
presented to the judges of the agency by the President of the American 
Bar Association in August 1986. The award acknowledged the efforts of 
the Social Security administrative law judges in protecting the 
integrity of the hearing system. The award specifically stated:

        That the American Bar Association hereby commends the Social 
        Security Administrative Law Judge Corps for its outstanding 
        efforts during the period from 1982-1984 to protect the 
        integrity of administrative adjudication within their agency, 
        to preserve the public confidence in the fairness of 
        governmental institutions and uphold the rule of law.

    On January 9, 2001 Commissioner Kenneth S. Apfel affirmed the 
relationship between the Administrative Procedure Act and the Social 
Security Act for Social Security hearings. He stated as follows:

        The Social Security Administration (SSA) has a long tradition, 
        since the beginning of the Social Security programs during the 
        1930s, of providing the full measure of due process for people 
        who apply for or who receive Social Security benefits. An 
        individual who is dissatisfied with the determination that SSA 
        has made with respect to his or her claim for benefits has a 
        right to request a hearing before an Administrative Law Judge, 
        an independent decisionmaker who makes a de novo decision with 
        respect to the individual's claim for benefits. As the Supreme 
        Court has recognized, SSA's procedures for handling claims in 
        which a hearing has been requested served as a model for the 
        Administrative Procedure Act (APA). Congress passed the APA in 
        1946 in part to establish uniform standards for certain 
        adjudicatory proceedings in Federal agencies, in order to 
        ensure that individuals receive a fair hearing on their claims 
        before an independent decisionmaker. SSA always has supported 
        the APA and is proud that the SSA hearing process has become 
        the model under which all Federal agencies that hold hearings 
        subject to the APA operate. SSA's hearing process provides the 
        protections set forth in the APA, and SSA's Administrative Law 
        Judges are appointed in compliance with the provisions of the 
        APA.

    In a recent study prepared for the Social Security Advisory Board 
by Professors Paul Verkuil and Jeffrey Lubbers, entitled Alternative 
Approaches to Judicial Review of Social Security Disability Cases, the 
authors recommended the establishment of an Article I court for Social 
Security cases. The report favorably refers to the over 1000 
administrative law judges in the Social Security Administration as an 
objective source of decisionmaking that can be effectively integrated 
into an article I court review structure. This recommendation seeks to 
improve and strengthen the Social Security disability process, not to 
diminish the system as would result from abandoning the administrative 
law judge hearing. In fact, articles recently have been published that 
recommend that the Veterans disability appeals system be improved by 
modeling it after the Social Security administrative law judge hearing 
process. James T. O'Reilly, Burying Caesar: Replacement of the Veterans 
Appeals Process Is Needed to Provide Fairness to Claimants, 53 Admin. 
L. R. 223 (2001); William F. Fox, Jr., A Proposal to Reform the VA 
Claims Adjudication Bureaucracy: One Law Professor's View, FBA Veterans 
Law Sec., Tommy: A Lawyer's Guide to Veterans Affairs, 1 (Issue 3, 
2001).
    Any retreat from this long and proud tradition of the Social 
Security Administration with regard to the manner in which it conducts 
hearings will have a substantial adverse effect on Social Security 
claimants and will deny them basic constitutional rights. American 
citizens will have less rights than they had prior to the enactment of 
the APA.
    We urge Congress to protect the constitutional rights of the 
American people and to continue to provide the Social Security 
claimants the full range of due process rights for a Social Security 
hearing under both the APA and the Social Security Act.
    C. Challenges at the Appeals Council Level: Several specific 
challenges that now confront the new Commissioner are as follows:
    1. Long Case Processing Time: The long case processing time at the 
Appeals Council often is measured in years, rather than months.
    2. Poor Decision Quality: The chronically poor quality of the 
Appeals Council decisions has declined further in recent years. The 
decisions rarely have legal citations of authority or rationales for 
the positions taken, and often are factually inaccurate regarding what 
the record shows. The informality of the decisions does not give the 
impression of the careful deliberation to which the claimants are 
entitled.
    3. Excessive Number of Lost Hearing Record Tapes and Files: The 
chronic loss of hearing record tapes and files by the Appeals Council 
requires a lengthy rehearing process for the claimants. Anecdotal 
evidence suggests that thousands of hearing tapes and files have been 
lost. SSA recently reported that there are about 5,000 remands per year 
for lost or inaudible hearing tapes, most of which are for lost tapes. 
The loss of tapes and files reportedly is caused by three problems: (a) 
the repeated crashing of the Appeals Council's antiquated computer case 
tracking system and loss of case names from the database that are not 
recoverable, (b) a large backlog of cases that have not been entered 
into the case tracking system but instead are stored on shelves without 
being alphabetized, numbered or coded, and (c) separating hearing tapes 
from the hearing file to save storage space and prevent jamming paper 
shredder machines when the files ultimately are destroyed.
    4. Achieving Acceptance of the Failure of the Appeals Council Level 
ACPI Reorganization of OHA: Acceptance by SSA administrators of the 
failure of the ACPI that was implemented in 2000 to correct these three 
chronic challenges of the Appeals Council operation also is a challenge 
that the new Commissioner confronts. Without acceptance of the failure 
of ACPI, new strategies will not be considered seriously and 
implemented by SSA administrators.
III. PROPOSED ACTIONS TO MEET THE CHALLENGES FOR THE SOCIAL SECURITY 
        DISABILITY PROGRAMS
    A. Overview of Needed Reforms for the SSA Hearing Process
    1. Reorganize the Hearing Office Process: Because of the failure of 
HPI, SSA should reorganize the hearing office process. The 
reorganization should correct the defects in HPI. We propose that the 
recommendations of the Commissioner's HPI Steering Committee be used as 
a guide for the reorganization. The reorganization should consist of 
both short term and long term changes. The short term changes should be 
structured in a manner that permits easy transition to the long term 
reforms. The objective should be to immediately return to the 
efficiency and level of case production that existed in the hearing 
offices immediately before the introduction of HPI (over 500,000 cases 
a year). The long term reform should then build on that base. There is 
no single change that will accomplish this objective. It instead must 
be accomplished by a series of coordinated changes in several different 
areas. The changes will allow the agency to improve the service 
provided to the American public.
    We recommend that the short term changes should include the 
following elements:

        (a) LThe process must be simple, and administrative law judges 
        should be assigned to cases from master docket according to 
        law.
        (b) LEach administrative law judge should have adequate and 
        properly trained support staff. The support staff should 
        include a clerical worker, paralegal and attorney/writer.
        (c) LThe support staff should be assigned to perform the work 
        product of a particular administrative law judge according to 
        the instructions and guidance of the judge.
        (d) LThe administrative law judge should have control of all 
        case development.
        (e) LThe administrative law judge should have the 
        responsibility to determine when a case decision is legally 
        sufficient and the judge should have the authority to return 
        the decision for rewrite to achieve the same.
        (f) LCase files of each administrative law judge should be 
        maintained separately.
        (g) LThe assigned support staff of each administrative law 
        judge should be under the supervision of the hearing office 
        management staff for personnel actions.
        (h) LStaff members should be accountable for their work 
        product. Case work should be assigned on an individual basis to 
        support staff to provide for accountability and enhance the 
        employees' sense of ownership.

        We recommend that the long term changes should include the 
        following elements:

        (a) LClose the hearing record after the administrative law 
        judge hearing as of the date of the ALJ's decision.
        (b) LAssignment of Social Security Administration 
        representatives to represent the agency at administrative 
        hearings. Such representatives would be responsible to defend 
        the position of the agency at the hearing, recommend favorable 
        cases, exercise settlement authority, and assist unrepresented 
        claimants. When most claimants were unrepresented, having a 
        non-adversarial process made sense to keep the benefits process 
        simple and not intimidating. However, now, approximately 82% of 
        the claimants who have an ALJ hearing are represented, 
        according to recent statistics assembled by the SSA OHA Office 
        of the Chief ALJ.
        (c) LCreate a case manager and law clerk position for the 
        support staff of each administrative law judge (as recommended 
        by the Commissioner's HPI Steering Committee).
        (d) LAllow administrative law judges to issue bench decisions 
        and short form decisions.
        (e) LAdopt regulations for issue exhaustion as suggested by the 
        United States Supreme Court in the case of Sims v. Apfel, 530 
        U.S. 103 (2000), if SSA representatives are available to assist 
        the unrepresented claimants.
        (f) LReform the Appeals Council to issue decisions in some 
        cases, limit the scope of appeal for claimants who have 
        received the requested relief from the administrative law 
        judge, and support the administrative law judge in ``no-show'' 
        dismissals.
        (g) LImplement a sustainable agency policy on the issue of pain 
        and the treating physician rule and defend the same if 
        challenged.
        (h) LRequire the DDS to follow the same legal standard as the 
        ALJs when determining disability, which is based upon the 
        Social Security Act, the SSA regulations and rulings, and the 
        federal case law that interpret them.
        (i) LImprove the use of technology in the hearing process (i.e. 
        an improved case processing and management system, and 
        electronic file, voice to print software, improved equipment 
        for recording hearings, etc., most of which already is in the 
        planning and pilot stages).
        (j) LAdopt rules of procedure for the hearing process.

        (k) LReorganize the Office of Hearings and Appeals.

    B. Strategies to Reduce the Number of Cases Heard at the ALJ 
Hearing Level that May Be Effected in the Short Term by Regulation 
Changes and Preserve Due Process
    1. Require DDS Decisionmakers to Follow the Same Legal Standard as 
the ALJs, not a Medical Standard: SSA should issue regulations that 
require DDS decisionmakers to adjudicate cases pursuant to the Social 
Security Act, the SSA regulations and rulings, and the federal case law 
that interpret them. This can be implemented on a short term basis and 
immediately would serve to reduce the number of cases appealed to the 
ALJs.
    2. Have the DDS Do One Thorough Case Development and Determination 
to Increase the Accuracy and Quality of the DDS Determinations: If the 
DDS were enabled to do one thorough development of the medical record 
and carefully considered determination, rather than two incomplete 
reviews of incomplete files, the accuracy and quality of the 
determinations would rise and result in fewer appeals to the ALJ level. 
Either eliminate the reconsideration level to save processing time at 
the DDS level or make it into a meaningful decision level in which 
evidence is further developed and a meaningful second look is taken at 
the claimants' files that has a realistic chance of a more accurate 
outcome for the claimants than at the initial level.
    3. Close Record as of the Administrative Law Judge decision date: 
The amendment of SSA's regulations to close the record after the ALJ 
hearing and as of the date of the ALJ decision would reduce the number 
of cases that ALJs must hear upon remand from the Appeals Council and 
courts based upon new evidence. New evidence is one of the most common 
reasons for remand of cases. This adds to the ALJ caseload and greatly 
delays a final administrative decision for the claimants. This change 
will place the responsibility upon the claimants' representatives for 
producing all relevant and material evidence at the hearing.
    By SSA regulation, the hearing record in the Social Security 
disability system is not closed at any stage in the appeals process. 
This system precludes administrative finality and allows the claimant 
to introduce new evidence at each step of the process, including the 
Appeals Council level. 20 C.F.R. Sec. Sec. 404.900(b), 404.976(b). This 
is true even when the evidence was in existence and available during 
the prior stage of the appeal. The reason the SSA keeps the record open 
at the administrative levels is that the Social Security Act authorizes 
the courts to remand a case to SSA when a claimant shows that there is 
material new evidence and there is good cause for not including it in 
the record earlier. 42 U.S.C. Sec. 405(g).
    In a recent report, the Social Security Advisory Board (``SSAB'') 
stated that ``Congress and SSA should review again the issue of whether 
the record should be fully closed after the ALJ decision.'' Charting 
the Future of Social Security's Disability Programs: The Need for 
Fundamental Change, January 2001, p. 20. This change will bring 
administrative finality to the Social Security disability case and will 
encourage all known relevant and material evidence to be produced at 
the hearing.
    New documentary medical evidence of disability based upon treatment 
that occurred before the date on which the ALJ hearing closed should be 
admitted into evidence by the Appeals Council only upon a showing that 
the new evidence is material and that there is good cause for the 
failure to incorporate such evidence into the record in a prior 
proceeding. This standard is in keeping with the standard that the 
Social Security Act allows for the courts. Unrepresented claimants 
should be excepted from the requirement to show good cause.
    4. The SSA Should Have a Representative at the ALJ Hearings: After 
conducting a pilot program to work out the details in practice, the SSA 
should amend its regulations to provide for a government representative 
at the ALJ hearing. This change would permit SSA to complete the 
documentary record faster, enter into settlements without the need for 
a hearing in some cases, and present the government's position on each 
case. SSA representation will allow the SSA to present its evidence, 
present the type of expert witnesses it deems necessary, and advance 
its legal theories in the case. The government representative also 
should provide assistance and advice to claimants in unrepresented 
cases.
    In order to meet the requirements of due process, the APA provides 
that ``[a] party is entitled to appear in person or by or with counsel 
or other duly qualified representative in an agency proceeding.'' 5 
U.S.C. Sec. 555(b). Therefore, the SSA, as a party, has the right to 
appear on its own behalf at the proceedings before the OHA. However, 
the Social Security Administration is not represented at the disability 
hearing before an administrative law judge. SSA regulations long have 
stated that it ``conducts the administrative review process in an 
informal, nonadversary manner,'' 20 C.F.R. Sec. 404.900(b), so SSA thus 
has waived its right to appear at the ALJ hearings. The present system 
worked well when most claimants in Social Security cases were not 
represented at the hearing. However, there has been a dramatic rise in 
the number of claimants who are represented at the hearing. Presently, 
well over 80% of the claimants are represented at the hearing. The 
Social Security Advisory Board has noted that ``[t]he percentage . . . 
of claimants represented by attorneys at ALJ hearings has nearly 
doubled [between] 1997 [and 2000].'' SSAB, Disability Decision Making: 
Data and Materials, Chart 56 Attorney and Non-attorney Representatives 
at ALJ Hearings Fiscal Years 1997-2000, p. 73 (January 2001).
    In its recent report, the SSAB recommended that the SSA have 
representation at the Social Security disability hearing: ``We think 
that having an individual present at the hearing to defend the agency's 
position would help to clarify the issues and introduce greater 
consistency and accountability into the adjudicative system.'' Charting 
the Future of Social Security's Disability Programs: The need for 
Fundamental Change, January 2001, p. 19.
    The SSA had a pilot program for its representation at the hearing 
in 1982. This pilot program was discontinued after an unfavorable court 
decision on the project. Salling v. Bowen, 641 F. Supp. 1046 (W.D.Va. 
1986). The past pilot program on the government representative project 
was not an adequate test of this system. The SSA should implement a new 
test program for agency representation at the hearing. This pilot 
project should be implemented in coordination with the claimants' bar, 
SSA employee organizations, our Association, and other interested 
groups. The pilot program should address the issues raised by the court 
in Salling. The objective is to establish a hearing process that 
provides a full and fair hearing for all parties who have an interest 
in the case.
    In addition, in the current non-adversarial setting, the SSA ALJ 
has the legal responsibility to ``wear three hats'' in each case. The 
ALJ legally is bound to ensure that all of the claimant's relevant and 
material evidence is made part of the record and the claimant's 
interests are protected, to protect the interests of the government in 
the hearing, and to make a fair decision which is based on the evidence 
in the record. Additionally, the judge must take care to not become 
overly protective of the interests of the government for fear that the 
case will be reversed on appeal on a claim of bias against the 
claimant. The inherent conflict in all of these roles is patent and 
would be resolved by having the government represented at the hearing.
    5. If the SSA Provides for a Government Representative at the 
Hearing, Require Issue Exhaustion at the Appeals Council Level for 
Represented Claimants: As the Supreme Court stated in Sims v. Apfel, 
530 U.S. 103, 120 S.Ct. 2080, 147 L. Ed. 2d 80 (2000), there is no 
statute or regulation that requires that a claimant must list the 
specific issues to be considered on appeal on the request for review by 
the Appeals Council of an ALJ's decision, in order to preserve those 
issues for judicial review. Although agencies often issue ``regulations 
to require issue exhaustion in administrative appeals,'' which are 
enforced by the courts by not considering unexhausted issues, ``. . . 
SSA regulations do not require issue exhaustion.'' Id. at 2084. The 
Supreme Court refused to impose a judicially inferred issue exhaustion 
requirement in order to preserve judicial review of the issues upon a 
claimant for Title II and Title XVI Social Security Act benefits 
because the issues in SSA hearings are not developed in an adversarial 
administrative proceeding and the ``[Appeals] Council, not the 
claimant, has primary responsibility for identifying and developing the 
issues.'' Id. at 2086. However, the Court, deferring to the agency, 
noted that ``. . . we think it likely that the Commissioner could adopt 
a regulation that did require issue exhaustion.'' Id. at 2084. The 
Supreme Court thus explicitly invited SSA to draft new regulations.
    Unrepresented claimants should be excepted from the requirement to 
show good cause. Expecting unrepresented claimants to bear the burden 
of preserving specific legal issues for judicial review does not 
comport with a sense of fair play and keeping the claims process 
claimant-friendly.
    Issue exhaustion would bring finality to the administrative process 
and it is consistent with the general principles of administrative law 
and the procedure of other agencies in the Federal Government.
    C. Strategies to Reduce Case Processing Time and Increase Quality 
of Service at OHA While Preserving Due Process
    1. Administratively Reform the HPI Process: SSA should change the 
HPI process by assigning cases to ALJs at an earlier point in the 
process, such as when the cases are entered into the computerized 
master docket. This would return the control of pre-hearing case 
development to the ALJs, leave the ALJ in control of the hearing, and 
support the ALJ's responsibility for determining when a draft decision 
is legally sufficient. SSA also should return individual accountability 
for work product to the employees by assigning staff employees to work 
with each ALJ, which should consist of a clerical person, paralegal, 
and staff attorney. This will enhance morale through a sense of 
ownership by employees working on particular cases for an individual 
judge. These changes are needed to permit the ALJs to provide full and 
fair hearings for the American public in an efficient and timely 
manner. SSA may effect these changes administratively on a short term 
basis.
    2. Redefine Paralegal Specialist Job To Include Clerical Duties: 
SSA OHA may redefine the GS-0950 Paralegal Specialist ALJ decision 
writer job across a broad band of General Schedule levels to permit the 
assignment of appropriate clerical duties to the people promoted to 
this position who have not performed the ALJ decision writing function 
well. The clerical work could include the case pulling and other 
clerical work that has been accumulating. This permits the necessary 
clerical work of the agency to get done while permitting the promoted 
staff to stay at their new grade levels and experience satisfaction 
from a job well done.
    3. Enhance the Appeals Council Case Tracking System by Including it 
in the First Phase of the Accelerated e-DIB Project: SSA should install 
a modern computerized case tracking system with bar coding for the 
Appeals Council as expeditiously as possible to prevent loss of files 
and tapes by the Appeals Council. SSA is in the process of developing a 
new Case Processing and Management System (``CPMS'') for OHA that is 
part of the Accelerated e-DIB project, the first phase of which will be 
implemented in January 2004. Although both the ALJ-level offices and 
the Appeals Council are expected to have the capacity to read an 
electronic file by January 2004, senior SSA management reportedly is 
including only the ALJ-level offices in the implementation of the CPMS 
by January 2004. Implementation of the CPMS for the Appeals Council 
reportedly is being deferred to a later phase of the Accelerated e-DIB 
project, despite the chaos in its case tracking system. If 140 OHA 
offices can be brought into the CPMS by January 2004, the Appeals 
Council, with its one location, also can be included in the first phase 
of implementation.
    4. Reorganize the Office of Hearings and Appeals
    (a) Proposed Legislation to Reform the Office of the Chief ALJ and 
Create an Office of Administrative Law Judges within SSA:
Current Status:
    The adjudication of administrative claims by the SSA currently is 
done by administrative law judges who are part of the OHA. The function 
for both administrative law judge hearings and the appellate process 
for the review of administrative law judge decisions by the Appeals 
Council are located in the OHA. The OHA is under the dual leadership of 
a Chief Administrative Law Judge and an Associate Commissioner. The 
position description of the Chief Administrative Law Judge places the 
Chief Judge in charge of the hearings function and hearings field 
operation of the agency. The Associate Commissioner is placed in charge 
of the Appeals Council and major policy-making and policy-
implementation responsibilities of the OHAs. The Chief Judge reports to 
the Associate Commissioner, who in turn reports to the Deputy 
Commissioner for Disability and Income Security Programs (``ODISP''), 
who in turn reports to the Commissioner.
Problems with Current System:
    In the current organization of SSA, the Office of Hearings and 
Appeals is buried in the bureaucracy and is far removed from the 
Commissioner. This structure prevents the Commissioner from having 
effective oversight of the agency hearing process. The administrative 
law judge adjudication function should not be treated as a staff 
responsibility in the agency. The administrative law judge adjudication 
function is a major program of the agency with every individual in this 
nation being a potential claimant within the system. The SSA 
Administrative Law Judge hearing system protects a constitutional right 
of our citizens and provides a constitutionally protected due process 
hearing to the American public. This vital process should have direct 
oversight from the Commissioner and the Chief Judge should have direct 
interaction with the Commissioner.
    Another major defect in OHA is created by the dual leadership 
responsibilities of the Chief Judge and the Associate Commissioner. 
Frequently these two leaders are competing for power to control the 
administrative and/or policy decisions for this component of SSA that 
has deprived OHA of strong effective leadership. The lack of effective 
leadership and direction of the Office of Hearings and Appeals has 
resulted in an organization that has been deteriorating. During the 
past 10 plus years several reforms have been imposed on the SSA hearing 
process. Each attempt has resulted in failure. Subsequent to a recent 
change in the hearing office process that was implemented in January 
2000 (HPI), the number of case depositions have dropped while the case 
processing time and the case backlog have increased. The result has 
been poorer service for the American public. Within the past several 
years, the Associate Commissioner attempted to reorganize the 
responsibilities of the Chief Judge and divest the Chief Judge of most 
of the powers of that office leaving the Chief Judge with some minor 
duties relating to judicial education and staff support for the 
Associate Commissioner. This scheme was thwarted by the efforts of 
interested individuals and organizations together with the oversight 
action of the Congress.
    The problem has now returned with the present Associate 
Commissioner of the Office of Hearings and Appeals. He has striped most 
of the power from the Office of the Chief Judge. He treats the Chief 
Judge as a staff person instead of a vital policy maker who is in 
charge of the field operations for the hearings function of the agency 
as provided for in the Chief Judge's position description. This action 
of the Associate Commissioner has led to a crisis within the Office of 
Hearings and Appeals with the last Acting Chief Judge leaving the 
position last March after having served for only a few weeks in office. 
The Chief Judge position was vacant until June 3, when a new Acting 
Chief Judge was appointed. This position has not been filled 
permanently since the last Chief Judge left over a year ago.
Proposed Reform:
    This system requires basic reform that places an established Chief 
Judge in charge of the agency hearing process with reporting 
responsibility directly to the Commissioner. We propose legislation 
that separates the agency hearings function from the Appeals Council 
and places the hearing component in an Office of Administrative Law 
Judges under the control of a Chief Judge who reports directly to the 
Commissioner. Our bill to effect this reform imminently will be 
introduced in the House.
    The following improvements in service to the American public will 
result from the proposed legislation:

    a. LThe Commissioner will have direct oversight of the hearing 
component of the agency that is necessary to effectively administer 
this important program which provides constitutional due process 
hearings for the American public.
    b. LImproved leadership and efficiency in the hearings component 
will permit the SSA to provide better service for the American public 
by increasing case dispositions, reducing processing times and reducing 
case backlogs.
    c. LThe change will improve the SSA hearing process and will 
continue to ensure that the American public receives a fair 
constitutional due process hearing.
    d. LThe proposed legislation creates an Office of Administrative 
Law Judges (``Office'') in the SSA. The national ALJ hearings function 
and hearings field operation that presently is within the OHA would be 
transferred to the Office by the proposed legislation.
    e. LThe Chief Judge would be in charge of the Office, would report 
directly to the Commissioner, be appointed by the Commissioner for a 
term of six years that is renewable once, and be subject to removal 
only upon a showing of an enumerated cause.
    f. LThe administrative law judge hearing component of SSA is 
regarded as an organization that is responsible for administering a 
major agency program which reports directly to the Commissioner. It 
will be no longer organized as a staff function within the agency.
    g. LThe Office of Administrative Law Judges will have one 
individual, the Chief Judge, responsible for administrative operations 
and policy making. This will result in effective leadership of the 
administrative law judge function.
    h. LThe Associate Commissioner of OHA will continue to head the 
Appeals Council.
    i. LThe change is a reorganization within the agency and will not 
result in any additional costs to the agency.

    This change is endorsed by the SSAB. The SSAB recently prepared a 
report on the Social Security disability system that states that 
``[m]any believe that the Office of Hearings and Appeals is buried too 
low in the agency and should be elevated so that the head of the office 
would report directly to the agency leadership. Others believe that 
there should be independent status for an administrative law judge 
organization.'' Charting the Future of Social Security's Disability 
Programs: The need for Fundamental Change, January 2001, p. 19.
    (b) In the Alternative, Reorganize OHA to Have the Chief ALJ Report 
Directly to the Commissioner and Replace the Appeals Council with a 
Right of Appeal to Appellate Panels Staffed by ALJs that Would Be 
Administered by the Chief ALJ: This proposal is identical to AALJ's 
proposal for an independent adjudication agency that would provide a 
hearing before an ALJ with a right of appeal from the individual ALJ's 
decision to an appellate panel staffed by ALJs, which is explained in 
suggestion 6(b) below, except that the Chief ALJ would report to the 
Commissioner rather than be the head of an independent agency. Such a 
reorganization may be effected by the SSA without legislation.
    (c) As an Alternative to Reorganizing OHA, Create A New Independent 
Agency within SSA to Issue the Final Administrative Decisions of Social 
Security Act Claims, Including Medicare Claims: A consensus has formed 
that the SSA's administration of OHA and its efforts to bring DDS 
decisionmaking into accord with ALJ decisionmaking have failed and that 
fundamental change is needed. Management initiatives such as process 
redesign, process unification, prototype, and, most recently, the 
Hearing Process Improvement Plan (``HPI'') and Appeals Council Process 
Improvement Plan (``ACPI''), have not achieved their goals. The Appeals 
Council, which originally was intended as a policy making body, is 
universally recognized as a failure in its function as the final step 
in the administrative review of Social Security claims.
    OHA performs an adjudicatory function in an executive agency that 
was created by Congress, and handles the largest appellate 
administrative caseload of any agency in the world. SSA's many 
misguided efforts to implement policy through OHA's adjudication 
function, some of which are described in this statement and AALJ's 
Statement that is published in the Report for the June 28, 2001, First 
Hearing in the Series on Social Security Disability Programs' 
Challenges and Opportunities, House Subcommittee on Social Security, 
No. 107-35, 107th Cong., 1st Sess., pp. 80-93, reveal the nature of the 
change in the Social Security claims process the American public needs: 
Separation of OHA's appellate administrative adjudication function into 
an entity that is independent of the political policy making and 
implementation portions of SSA. An independent adjudication agency 
would provide members of the American public who file claims for Social 
Security Act entitlement program benefits that have been denied by the 
SSA timely adjudications that give due process, including a timely and 
fair hearing free of policy implementation and political pressure.
    The rationales that have justified Congressional separation of the 
appellate administrative adjudication function from Executive Branch 
agencies include an efficient and low cost process for the claimants, 
high case volumes, expertise, and decisional independence of 
adjudicators. The maintenance of a reasonably efficient, orderly and 
low cost adjudication system in the traditional domain of public rights 
is in the public's interest, especially for programs that distribute 
benefits on a large scale. Specialized tribunals are more likely to 
make correct decisions in subject areas that are legally complex or 
have technical facts. The large increase in the administrative case 
volume also supports the use of specialized adjudication agencies. The 
most important rationale is the experience that effective protection of 
individual rights before agencies through independent decisionmaking 
cannot take place unless adjudications are separated from the agency's 
rulemaking/policy, prosecutorial/enforcement and investigatory 
functions.
    These rationales, particularly the need to separate the 
adjudicatory function from other conflicting agency functions, led 
Congress to create the Occupational Safety and Health Review Commission 
(``OSHRC'') in 1970, 29 U.S.C. Sec. 661, and the Federal Mine Safety 
and Health Review Commission (``FMSHRC'') in 1977, 30 U.S.C. Sec. 823, 
as independent Executive Branch agencies outside the Department of 
Labor with only adjudicative authority. The OSHRC determines whether 
regulations promulgated and enforced by the Occupational Safety and 
Health Administration have been violated. The FMSHRC adjudicates 
violations of standards promulgated and enforced by the Mine Safety and 
Health Administration.
    Therefore, when an agency, such as SSA, exclusively uses rulemaking 
proceedings to set policy, rather than also using adjudications to set 
policy, there no longer is any rationale for keeping the adjudicatory 
function within the agency. The Congressional interest in providing a 
check on SSA's enforcement powers, i.e., to withhold disability and 
other program benefits, is best served by having entitlement 
determinations decided by an independent adjudicatory agency based on 
the benefits entitlement standards set by SSA. Hence our proposal that 
the independent agency be an adjudicatory body that is self-
administered by the ALJs with a right of appeal from an individual 
ALJ's decision to an appellate panel staffed by ALJs.
    There are additional reasons why an independent adjudication agency 
administered by ALJs would provide a more efficient and higher quality 
of due process for Social Security benefits claimants than the current 
SSA Appeals Council or an independent but politically appointed 
Commission or Board structure. First, a small body, such as the current 
Appeals Council, or a Commission or Board, cannot be of sufficient size 
to do meaningful administrative review of appeals from the ALJ 
decisions, which now number near 100,000 per year. The SSA ALJs are a 
large group of highly qualified judicial professionals who are capable 
of administering themselves and the appellate administrative process in 
a competent and effective manner. Second, creating an independent 
agency would eliminate political oversight by appointees (ie., 
Commissioners or Board members) who do not have due process and 
adjudicative independence as their foremost goal in agency 
administration. Finally, if the SSA ALJs administer themselves, they 
will draft and issue the procedural regulations and rules of the new 
agency based upon their experience and needs of the process, rather 
than expediency and other policy concerns as they are now. There now is 
no coherent set of procedural regulations and rules for the SSA 
appellate administrative process.
    For all of these reasons, the Social Security Act hearing process 
should be reformed by the transfer of the authority to make final 
administrative adjudications of Social Security Act claims, which 
currently are made at the ALJ and SSA Appeals Council levels, from the 
Social Security Administration to a new ALJ-administered independent 
adjudication agency within SSA. This agency may be called the United 
States Office of Hearings and Appeals (``USOHA'').
    The USOHA would have the exclusive jurisdiction to make the final 
administrative decisions of Social Security Act Title II and XVI 
claims. The USOHA would have permissive jurisdiction over other classes 
of cases, including Medicare cases under Social Security Act Title 
XVIII. [On December 4, 2001, the House passed the Medicare Regulatory 
and Contracting Reform Act of 2001, H.R. 3391, section 401 of which 
authorizes the transfer of the ALJ function from SSA to the Department 
of Health and Human Services by October 1, 2003, to hear and decide 
Medicare cases pursuant to Title XVIII of the Social Security Act. 
AALJ's proposal advocates placing all of the ALJs hearing Social 
Security Act cases into one independent agency, including Medicare 
cases.]
    AALJ recommends the creation of a new ALJ-administered independent 
adjudication agency for Social Security Act claims that would provide a 
hearing before an ALJ with a right of appeal from the individual ALJ's 
decision to an appellate panel staffed by ALJs. The panels would 
consist of three ALJs who would review the cases locally. This Social 
Security Appellate Panel Service within the USOHA would replace the 
Appeals Council, a failed appellate review step that already exists and 
is funded.
    The ALJ appellate panels would be akin to the Bankruptcy Court 
appellate panels and is one of the key features that makes the ALJ 
self-administration model superior to the current SSA Appeals Council 
model, which is a small body that cannot timely and effectively handle 
a heavy caseload. Based upon the Bankruptcy Court experience, the 
appellate panel model (1) is an appellate system that can handle a 
large caseload, (2) results in a shorter disposition time because the 
large pool of about 1,000 ALJs throughout the United States permits the 
timely determination of appeals that cannot take place with a small 
body such as the Appeals Council or a Commission or Board, (3) results 
in higher quality decisions because of expertise, (4) results in 
substantially fewer appeals to the courts and a substantially lower 
reversal rate by the courts because of the confidence in the high 
quality of the decisions, which reflects a higher degree of decision 
accuracy, (5) results in a substantially reduced federal court 
caseload, and (6) affords the claimants access to a local 
administrative appellate process.
    This proposal would provide the claimants with timely, high 
quality, impartial and fair decisions of their claims pursuant to the 
Social Security Act and APA by adjudicators who are in an agency 
independent of, but within, the SSA.
    The USOHA would be located within the SSA for logistical reasons, 
but its officers and employees will not be supervised by any other part 
of SSA. The USOHA will be accountable only to Congress and the 
President. Placing the USOHA within SSA results in no new costs for 
office space and information systems and is a practical necessity, 
given the USOHA's substantial space needs that currently are in place 
at SSA, the need to share the SSA's information services and data 
bases, and the need to use the same case files.
    A Chief ALJ appointed by the President for a term of years would 
administer the agency.
    The final decisions of the USOHA that are made by its appellate 
panels would be appealed only to the federal courts, with the District 
Courts as the first step in the judicial review. A District Court 
appeal step is essential for several reasons: (1) The huge size of the 
Social Security appellate caseload would overwhelm the Circuit Courts 
if the District Court step is removed. An Article I court as a 
substitute for the District Courts would suffer from the same problems 
of being too small to effectively handle the case load that the Appeals 
Council does. (2) Retaining District Court judicial review keeps local 
decisional generalists in the appeals chain who are sensitive to due 
process concerns, including adherence to the Administrative Procedure 
Act. (3) Social Security claimants have come to rely on the 
availability of the District Courts as a part of the judicial review 
due process. (4) Congress has a demonstrated preference for local 
control and decisionmaking with Social Security programs. (5) It is 
desirable to retain local access to the judicial review process for the 
often indigent Social Security claimants.
    The appeals from the District Courts will remain with the regional 
Circuit Courts of Appeal, as they do now, rather than go only to the 
D.C. Circuit or the Federal Circuit. Even with District Court review, 
placing all of the Social Security Circuit-level appeals in either of 
these courts would increase their workload by over 50%. The SSAB's 
recent suggestion of a specialized Social Security Court of Appeals 
superficially may sound attractive as a device to have one national 
interpretation of the Social Security Act. However, the SSAB does not 
demonstrate a strong need for such a specialized court. First, as SSAB 
points out, the Supreme Court already serves the function of providing 
a national interpretation of the Social Security Act, and having the 
regional circuits address the issues allows for legal debate that would 
otherwise not occur. Second, continuing to have the appeals go to the 
regional Circuits allows somewhat local access to the claimants. This 
is the same procedure as for appeals from both Bankruptcy Court 
decisions after District Court review and Tax Court decisions, which 
are appealed to the regional Circuits, which makes sense since they 
also serve individual claimants throughout the country who often have 
limited means. (Although the Tax Court is based in Washington, D.C., it 
sits throughout the country.) Regional circuit review has worked for 
tax and bankruptcy cases, despite the obviously strong argument that a 
single standard for construing the tax and bankruptcy laws is desirable 
so that they are applied the same to everyone. Finally, the regional 
circuits are not being overrun with Social Security cases. During the 
years that ended on September 30, 1999, and September 30, 2000, only 
891 and 845 Social Security cases respectively were filed with the 
regional Circuit Courts of Appeals. Judicial Business, 1999 and 2000 
Reports, Table B-1A. This is less than two percent of the 54,693 cases 
that were filed in 1999 and 54,697 cases filed in 2000 in the regional 
Circuit Courts. Judicial Business, 1999 and 2000 Reports, Table B.
    Thus, no substantive changes in the process of judicial review 
after the final administrative decision are recommended by AALJ, other 
than to amend the Social Security Act to reflect that judicial review 
will be from the final decisions of the new agency, not the SSA. Our 
recommendations pertain only to the appellate administrative 
adjudication process that results in a final administrative decision of 
the claimants' entitlement to Social Security benefits, since that is 
where the problems lie.
    This proposal requires legislation that would amend the Social 
Security Act.
    A detailed version of the features of the proposed new agency and 
the rationales for such a new agency is presented in the AALJ's 
Statement that is published in the Report for the June 28, 2001, First 
Hearing in the Series on Social Security Disability Programs' 
Challenges and Opportunities, House Subcommittee on Social Security, 
No. 107-35, 107th Cong., 1st Sess., pp. 80-93. A very detailed version 
of the features of the proposed new agency and the rationales for such 
a new agency, including legislative language, is presented in the 
AALJ's ``Report and Recommendations for the Transfer of the Authority 
to Make Final Administrative Adjudications of the Social Security Act 
Claims from the Social Security Administration to a New Independent 
Regulatory Agency,'' which is available upon request or on the AALJ 
website, www.aalj.org.
    The AALJ proposal for a new adjudication agency is a detailed and 
practical blueprint to improve the Social Security disability process. 
The AALJ proposal would improve the timeliness and quality of ALJ and 
final administrative review decisions that, at the same time, likely 
will reduce the claimant's need to resort to federal court review and 
thus reduce the federal court Social Security caseload. The process 
AALJ is proposing is realistic in terms of handling the large caseload, 
which I respectfully submit is not the case for the other proposals in 
this area. All of the agencies and academicians who comment on the 
disability process correctly recognize the need for change, but rely on 
the creation of small bodies, such as a Review Board or Social Security 
Court, that would suffer from the same problems of low decision quality 
and untimely action as the SSA Appeals Council, another small body, has 
had for years.
    (d) As an Alternative to Reorganizing OHA, Create A New Independent 
Agency outside SSA to Issue the Final Administrative Decisions of 
Social Security Act Claims, Including Medicare Claims: Another 
alternative is to create a separate adjudication agency to hear Social 
Security Act claims, including Medicare claims. This agency would have 
the same organization structure as is described in section 4(c) 
immediately above, but it would be a separate agency outside the SSA.
    (e) As an Alternative to Reorganizing OHA at the ALJ Level, Create 
a Unified Corps of ALJs outside SSA: A more comprehensive reform of the 
ALJ hearing process may be achieved through the House Judiciary 
Committee by creating a unified corps of ALJs outside SSA and other 
agencies that includes SSA ALJs and ALJs from other agencies in any one 
of the following three configurations:

        1. La unified corps of all ALJs from the agencies that hear 
        benefits cases, including SSA,
        2. La unified corps of all ALJs from SSA and the Cabinet-level 
        Executive Branch agencies, and
        3. La unified corps of all ALJs in the Executive Branch, 
        including all of the independent agencies.

                                 

    Chairman SHAW. Thank you, Judge. Ms. McGraw?

   STATEMENT OF THE HON. KATHLEEN MCGRAW, ADMINISTRATIVE LAW 
    JUDGE, OFFICE OF HEARINGS AND APPEALS, SOCIAL SECURITY 
 ADMINISTRATION, ATLANTA, GEORGIA, AND CHAIR, SOCIAL SECURITY 
                SECTION, FEDERAL BAR ASSOCIATION

    Ms. MCGRAW. Chairman Shaw, thank you for convening this 
hearing on an issue of vital importance to millions of 
Americans.
    I am pleased to be here on behalf of the Social Security 
section of the Federal Bar Association. Although I am an ALJ 
with Social Security, I am not here in my official capacity and 
my remarks are solely those of the Social Security section of 
the Federal Bar.
    As you know, the FBA represents a broad array of 
stakeholders working at all levels of the disability 
adjudication process. The primary concern of the FBA is the 
integrity, independence, fairness and effectiveness of the 
disability hearing process. Clearly, the effectiveness of the 
process is front and center in this hearing today.
    Two years ago, I testified before this Committee and not 
much has changed. We are faced with the same problems, only 
they have gotten worse. In my limited time I want to address 
two of those problems. First, the fundamentally different 
approaches to disability of DDS and OHA, and second, the 
unacceptable delays at OHA.
    The SSA's process unification initiative was intended to 
have everyone using the same legal standards to decide the 
issue of disability. That still is not happening. At the DDS, 
decisions are driven solely by the objective medical findings 
with mere lip service being paid to the requirements of the law 
that a claimant's subjective complaints such as pain and 
fatigue be assessed. No two people with the same objective 
findings have identical functional limitations. The law 
requires an individualized assessment.
    While there has been some good faith effort in prototype 
States to apply the law and assess subjective complaints, the 
testimony before this Committee 1 year ago of Sue Heflin, then 
President of NADE, is illuminating. She made the point that it 
is expensive and time consuming to gather the evidence 
necessary to make an individualized assessment. Moreover, doing 
individualized assessments leads to inconsistencies in 
decisionmaking. Consequently, DDS prefers to base decisions 
purely on objective medical findings. That, however, is not 
what the law requires.
    The NADE has proposed to move the claimant's hearing to the 
DDS level. Based on the DDS response to process unification, it 
is clear the DDSs are not capable of providing claimants the 
due process hearing they are entitled to consistent with the 
requirements of the law.
    At a minimum now, DDSs need to do a better job of 
collecting relevant evidence; they need to contract for higher 
quality consultative examinations; and, they need to provide 
claimants with rationalized decisions that explain the 
standards for disability and the reasons claimants don't meet 
those standards.
    The Commissioner recently announced an initiative to have 
ALJs screen cases as they come in the door from DDS. The 
purpose is to pay those that should be paid on the record and 
to identify those that need more development. If this 
initiative can be productive, then clearly claimants are not 
being allowed as early in the process as they should be and 
cases are not being properly developed at the DDS.
    That said, the delays at OHA are unacceptable. You no doubt 
want to know why and what can be done about the situation. As 
for the ``why,'' the culprit is poor management practices at 
OHA. Mr. Bernoski referenced the number of cases ALJs used to 
produce. We are dealing in large part here with a management-
induced crisis.
    Two years ago we raised with this Committee a warning about 
management problems within OHA. The HPI was conceived and 
implemented without meaningful input from judges. It was not 
designed for the needs of an organization that delivers 
judicial services.
    Under HPI, employees were organized into groups servicing 
groups of judges. Instead of more accountability, there was 
none. Claimants and representatives found themselves unable to 
identify any one employee who had responsibility for or 
knowledge of their cases. Judges didn't even know which 
employees were handling the cases on their own dockets. There 
was chaos in the office.
    In addition, there was wholesale promotion of employees 
into jobs they weren't prepared for or qualified to perform. 
The OHA was without a support staff that could effectively 
process cases. Judges who routinely issued 40 to 60 decisions a 
month no longer had enough cases pulled and scheduled to enable 
them to maintain that level of production. Added to this 
organizational debacle is the inscrutable decision of SSA not 
to impose performance standards on its employees. The only 
people in OHA who have production expectations are judges. The 
employees that both claimants and judges rely upon for case 
preparation, scheduling and decision drafting have no 
quantifiable standards. They operate on a pass-fail basis. In 
my experience, no one, no matter how little they do or how 
poorly they do it, has ever failed or suffered any adverse 
consequences.
    The simple act of imposing quantifiable performance 
standards would produce immediate improvement in OHA's 
productivity and timeliness.
    Finally, in the view of the FBA, OHA is a judicial entity. 
It needs to be led by a Chief Judge and it needs the support 
and services of attorneys. While there is a legitimate place 
for paralegals, the massive promotion under HPI of 350 clerical 
staff to the paralegal position with no legal training and no 
demonstrated qualifications for the job of drafting decisions 
is inexplicable. These so-called paralegals are at the same pay 
and grade as attorneys. This decision flies in the face of 
effective judicial administration.
    With this, I am afraid time deserts me. So, I thank you for 
this opportunity to testify on behalf of the Social Security 
section of the FBA.
    Chairman SHAW. Thank you.
    [The prepared statement of Ms. McGraw follows:]
Statement of the Hon. Kathleen McGraw, Administrative Law Judge, Office 
   of Hearings and Appeals, Social Security Administration, Atlanta, 
  Georgia, and Chair, Social Security Section, Federal Bar Association
INTRODUCTION
    Chairman Shaw and Members of the Subcommittee:

    I am Kathleen McGraw, Chair of the Social Security Section of the 
Federal Bar Association. I am an administrative law judge in the Office 
of Hearings and Appeals of the Social Security Administration in its 
Atlanta North office. As an Administrative Judge for the U.S. Merit 
Systems Protection Board for 13 years and as an Administrative Law 
Judge for Social Security for the past seven years, I have heard and 
decided well over 2,500 appeals. I am very pleased to be here today 
representing the Social Security Section of the Federal Bar Association 
(FBA). My remarks today are exclusively those of the Social Security 
Section of the Federal Bar Association, not the FBA as a whole. 
Moreover, they in no way reflect the official views of the Social 
Security Administration.
    Thank you for convening this hearing this afternoon on a matter of 
critical importance to the Federal Government's delivery of effective 
services to the American people. As you know, the Federal Bar 
Association is the foremost professional association for attorneys 
engaged in the practice of law before federal administrative agencies 
and the federal courts. Fifteen thousand members of the legal 
profession belong to the Federal Bar Association. They are affiliated 
with over 100 FBA chapters in many of your districts. There are also 
over a dozen sections organized by substantive areas of practice, such 
as the Social Security Section, of which I am the Chair.
    Unlike other organizations associated with Social Security 
disability practice that tend to represent the narrow interests of one 
specific group, the Federal Bar Association's Social Security Section 
encompasses all attorneys involved in Social Security disability 
adjudication. Our members include:

         Attorney Representatives of claimants
         Administrative Law Judges (ALJs)
         Administrative Judges at the Appeals Council
         Staff Attorneys at the Office of Hearings and Appeals
         Attorneys at the Social Security Administration's 
        Office of General Counsel
         U.S. Attorneys
         U.S. Magistrate Judges, District Court Judges and 
        Circuit Court Judges

    The greatest interest of the FBA's Social Security Section is in 
the effectiveness of the adjudicatory process associated with hearings 
in the Office of Hearings and Appeals (OHA), the appeal process at the 
Appeals Council and judicial review in the federal courts. Our highest 
priority is to assure the integrity, independence, fairness, and 
effectiveness of the Social Security disability hearing process for 
those it serves--both Social Security claimants themselves and all 
American taxpayers who have an interest in assuring that only those who 
are truly disabled receive benefits.
    It is the Section's collective view that the Social Security 
disability program is under considerable strain. Current delays in the 
processing of claims are unacceptable and the quality of decisions at 
all levels is less than ideal. The Commissioner is faced with a 
daunting task. It is with that in mind that we offer the following 
comments.
Full Implementation of Process Unification at All Levels of 
        Adjudication
    Process unification is essential to an efficient, timely and 
accurate disability adjudication system that ensures disabled claimants 
will be paid as early in the process as possible.
    In the mid-1990's the Social Security Administration (SSA) 
acknowledged the inconsistency created by the Disability Determination 
Services (DDS) applying one set of rules for determining eligibility 
through the Program Operations Manual (POMS), and its Administrative 
Law Judges, Appeals Council, and the federal courts applying another 
through statute, regulations, rulings and case law. Consequently, in 
1996 SSA initiated Process Unification Training for all DDSs, ALJs, and 
the Appeals Council. The training was based on a set of rulings--the 
``Process Unification Rulings''--that were designed to guide all 
adjudicators at every level. It was anticipated that the DDSs would no 
longer rely exclusively on POMs, and that they would begin to write an 
analysis of their decision-making. This rationalized determination, in 
turn, would be granted some deference by reviewing ALJs and Appeals 
Council.
    As a facilitator for this training, I traveled across the country 
and interacted with all components being trained. It became clear to me 
during this training that State Agency examiners, although hardworking 
and well-trained in the medical area, were not assessing a claimant's 
subjective allegations. Moreover, they were overwhelmed by the prospect 
of having to do so. They were confounded by the task of assessing a 
claimant's credibility and subjective allegations and articulating a 
reasoned basis for their conclusion. Notwithstanding the clear message 
from the Process Unification Training that State Agency Examiners were 
expected to perform individualized assessments and rationalize their 
determinations, they have failed to do so. State agencies have balked 
at this requirement, and examiners' determinations continue to be 
devoid of rationale and are driven almost exclusively by objective 
medical findings. It is the only way they can maintain the production 
expected of them.
    These observations were confirmed by Sue Heflin, President of the 
National Association of Disability Examiners, who testified before this 
Subcommittee on June 28, 2001. In her answer to the Subcommittee's 
question on the prototype initiative, she confirmed that it is only in 
the 10 prototype states that Process Unification initiatives have been 
really implemented. In those states, while the implementation of 
Process Unification enabled examiners working as Single Decision-Makers 
to allow claims they might have otherwise denied--something they found 
to be a positive and fulfilling professional experience--examiners also 
learned that it takes longer to process a claim and costs more to do 
the additional development required to comply with Process Unification 
requirements. Ms. Heflin astutely observed that evaluating subjective 
factors such as pain, fatigue, credibility and treating source opinions 
is more time consuming for examiners and therefore more costly.
    The evaluation of the claimant's subjective complaints is an 
everyday occurrence for ALJs deciding Social Security disability cases. 
Under Process Unification, it should have been an everyday occurrence 
at the DDS level as well. The failure to fully implement Process 
Unification at the DDS level implicates the due process rights of the 
claimant because the evaluation of subjective complaints is an integral 
part of the process that is due the claimant. The evaluation of 
subjective complaints should not be postponed until the case reaches 
OHA. Postponement in the review of subjective complaints represents one 
of the core problems that Process Unification was intended to address.
    Social Security regulations and rulings mandate an individual 
assessment of each and every claimant's subjective complaints and their 
impact upon that claimant's ability to function. Yet, as candidly 
acknowledged by Ms. Heflin, the DDS examiners do not consider 
subjective complaints. We have all heard the stories about people 
walking around with herniated discs, documented by MRI, who suffer few 
or no symptoms, while others with the same MRI findings suffer from 
debilitating pain. At the DDS, both would receive the same decision 
based on the objective findings the individual level of pain alleged 
would not matter. That certainly makes for consistency, but 
unfortunately does not make for accuracy in decision-making. One can 
only imagine how the claimant who suffers with a subjective condition 
such as fibromyalgia or chronic fatigue syndrome will fair at the DDS 
level. Only at OHA, will the claimant's subjective complaints be fully 
evaluated.
    The failure to implement Process Unification has led to a new 
agency initiative to identify cases shortly after arriving at OHA 
offices from the DDS. The new initiative would have been wholly 
unnecessary had Process Unification been implemented at the DDS. The 
Commissioner recently announced that, in an effort to deal with the 
backlog and delays at OHA, ALJs will begin to review raw, unpulled 
files as they arrive from DDS. The purpose of the review is twofold: to 
grant those claims that can be allowed on the record without a hearing; 
and to undertake immediate development of cases requiring additional 
expansion of the record. While this initiative is commendable from the 
viewpoint of claimants who should have been paid earlier in the 
process, it attests to the failure of process unification. If such an 
initiative yields significant results and productivity, then the cases 
were either: (1) not decided correctly under the law at the DDS; or (2) 
not adequately developed at the DDS.
    We submit that SSA had it right the first time when it recognized 
the need for process unification. Fairness requires that all 
adjudicators assess a disability claim using the same legal standards 
and requirements. A fundamental premise of the SSA process unification 
effort was that disability benefits should be awarded to claimants as 
soon as their disability has been determined under the law. The burden 
of long delays to claimants before the statute, regulations, rulings, 
and case law are applied is unacceptable and does not serve the 
interests of justice. Quite simply, it can wreak havoc in the lives of 
deserving claimants.
LPreservation of the Due Process Hearing Before an Administrative Law 
        Judge
    It is our understanding that various proposals are being made that 
would eliminate a hearing before an Administrative Law Judge. The 
Social Security Section of the FBA strongly opposes any such effort.
    In 1983, the Senate Governmental Affairs Subcommittee on Oversight 
of Government Management conducted a hearing on the role of the ALJ in 
disability hearings. The report provided in part:

        The principal finding of the Subcommittee is that the SSA is 
        pressuring its ALJs to reduce the rate at which they allow 
        disabled persons to participate in the Social Security 
        Disability Program. . . . [The Subcommittee found that the SSA 
        was limiting the decisional independence of ALJs through its 
        Rulings, its non-acquiescence to federal court decisions, and 
        its increasing of case quotas that reduced the time an ALJ 
        could spend on each case to develop additional evidence that 
        may support an allowance decision, among other things.] The APA 
        mandates that the ALJ be an independent, impartial adjudicator 
        in the administrative process and in so doing separates the 
        adjudicative and prosecutorial functions of an agency. The ALJ 
        is the only impartial, independent adjudicator available to the 
        claimant in the administrative process, and the only person who 
        stands between the claimant and the whim of agency bias and 
        policy. If the ALJ is subordinated to the role of a mere 
        employee, an instrument and mouthpiece for the SSA, then we 
        will have returned to the days when the agency was both 
        prosecutor and judge.

Sen. Rep. No. 98-111 (September 16, 1983).
    The Administrative Procedure Act requires that independent 
administrative law judges be selected on a merit basis and insulated 
from agency bias and pressure in performing the adjudicative function. 
See Butz v. Economu, 458 U.S. 478, 513 (1978). Regretfully, as noted in 
the Senate Report, SSA in the past has attempted to subvert the 
statutory independence of its administrative law judges. It has sought 
overtly, and at other times more subtly, to influence the decisions of 
its ALJs to achieve some predetermined acceptable allowance rate or 
altogether cease payment of benefits to a particular class of disabled 
beneficiaries. In one well-publicized episode in 1982, SSA attempted to 
terminate benefits to thousands of Americans with mental disabilities, 
triggering the reversal in many cases of that policy decision by SSA 
ALJs who applied the law and restored the benefits. The American Bar 
Association in fact honored the SSA ALJ corps for their outstanding 
efforts during the period from 1982-84 to protect the administrative 
adjudication within their agency, to preserve the public confidence in 
the fairness of governmental institutions and to uphold the rule of 
law.
    A due process hearing conducted by an ALJ is a protection against 
potential agency bias and policy that may at times run contrary to the 
law as mandated by Congress. Disability claimants should not be 
deprived of this step in the disability process. Moreover, as noted 
earlier, given the constraints on DDS's, it is the first opportunity 
for claimants to have their subjective complaints meaningfully 
considered as mandated by the law. That being said, there remains the 
critical issue of unacceptably long delays at OHA. The causes of these 
delays are many, but most obvious is the abject failure of the Hearing 
Process Improvement (HPI) initiative. Prior to HPI, in FY 1998, ALJs 
issued 618,578 decisions. In FY 2001, with full implementation of HPI, 
that figure plummeted to 465,228.
    The defects in HPI, both in design and implementation, are legion 
and need not be enumerated here. Suffice it to say, a fundamental 
problem was the de-legalization of the adjudicative process, which 
included the removal of judges from the case development function. Over 
350 employees, primarily from the clerical ranks, were promoted to the 
position of ``paralegal''. Their promotion left OHA bereft of employees 
trained in ``pulling cases'' in preparation for adjudication by 
administrative law judges. This created fewer cases ready for judges to 
hear and fewer cases for judges to decide--a crisis induced by an ill-
advised management decision. To make matters worse, the employees who 
have been promoted to the ``paralegal'' position, in almost all cases, 
have had no legal training whatsoever and in their promotion were not 
even required to demonstrate an ability to write; yet, they were and 
remain tasked with writing draft decisions for the judges--decisions 
that are subject to judicial review in U. S. District Court. Attorneys 
could have filled the positions encumbered by these ``paralegals'' as 
the two positions are at the same grade and pay level. Instead, SSA 
made the conscious choice to fill these slots with clerical workers 
rather than trained lawyers. It goes without saying that under this new 
arrangement the review time required for judges to edit and revise 
their decisions has increased exponentially further delaying 
disposition of claimants' cases.
    OHA performs an adjudicative function and its procedures and 
support systems need to be designed and implemented to facilitate that 
function. Clearly, with proper and adequate support, ALJs are capable 
of timely adjudicating the cases before them while providing claimants 
with due process.
OHA Adjudicative Support Functions Should be Reorganized

    OHA fundamentally is a judicial operation. Therefore, it should be 
under the direction of a Chief Administrative Law Judge, who is 
provided appropriate administrative assistance in carrying out the 
adjudicative function. Contrary to the current situation, the 
administrative and support system should not dictate to OHA's judges 
how the adjudicative function should be accomplished.
    The foremost problem within the Office of Hearings and Appeals is 
that the judges have no managerial authority over the staff who work 
for them. It may come as a surprise to members of this Subcommittee, 
particularly those who may have practiced in federal or state courts, 
how different the delivery of judicial ``services'' is in Social 
Security cases. In federal district courts, as well as in most state 
courts, judges have secretaries and law clerks whose work they direct 
on a day-to-day basis. Theses employees are ultimately responsible to 
the judge and practitioners can readily identify them as the employees 
who support the work of the judge.
    This is decidedly not how the Social Security Administration has 
chosen to deliver its judicial services. A pooled staff is available to 
assist judges, but without direction or supervision by the judges 
themselves. Judges, as well as claimants' representatives, are often at 
a loss to know what staff member to talk to about specific case 
problems. Miscommunication abounds, leading to processing and 
scheduling problems that impede the timely adjudication of cases. The 
situation is further compounded by staff working at home--a 
complicating factor that in some cases further diminishes the 
effectiveness of the office. On a daily basis, evidence that needs to 
be associated in a timely manner is not. In fact, the evidence may even 
be lost. Messages do not reach the right person to avert scheduling 
problems. Ultimately claimants' cases are delayed as a result of this 
administrative chaos.
    Added to these problems, and probably chief among them, is the fact 
that within OHA there are no quantifiable standards by which employee 
performance is measured. Appraisals are done on a pass/fail basis, and 
no one ever fails. Employees can nominate themselves for awards and too 
often the worst of employees reap the same rewards as their hardworking 
coworkers who are picking up the slack for their shoddy performance. 
Morale is understandably low. Other components of SSA have employee 
performance standards and it is difficult to see why a component such 
as OHA would not utilize a system of individual employee 
accountability.
    Like it or not, OHA is drawn into a numbers game. Yet, the only 
persons in OHA for whom there is a stated numerical expectation are the 
judges who are supposed to produce a certain number of cases per day. 
There is no comparable expectation for the employees upon whom the 
judges must rely for support, such as the case technicians who ``pull'' 
cases or the attorneys and paralegals who draft decisions. Competitive 
and excepted service employees in other federal agencies are subject to 
objective performance standards both for quality and quantity of work. 
For some unexplained reason, that is not the case at OHA. As a result, 
substandard performance is routinely tolerated and claimants suffer as 
a result. There could be no more single effective improvement at OHA 
than the imposition of quantifiable performance standards and the 
willingness on the part of management to enforce those standards.
LEstablishment of a Comprehensive Quality Assurance Program Throughout 
        the Disability Program
    The General Accounting Office has repeatedly reported that SSA 
needs to implement a comprehensive and meaningful quality assurance 
system. SSA announced a plan to revamp its existing quality assurance 
system in 1994. Yet, in 2001 SSA acknowledged that its quality 
assurance system needed to more effectively promote uniform and 
consistent disability decisions across all geographic and adjudicative 
levels. GAO has made specific recommendations as to the content of such 
a plan.
    The Commissioner has appointed a Regional Commissioner to lead an 
effort to establish a quality assurance program. We commend the 
Commission for undertaking this action, and we encourage the 
development of a comprehensive quality assurance program that 
establishes quality standards at all levels of the claims process. The 
disability program is a nationwide program, and it is not acceptable to 
have disparate allowance rates at the initial DDS level on disability 
claims in FY 2001 ranging from a low of 27% in one state to a high of 
65% in another state.
    A quality assurance plan should, for example, set the standard for 
the collection of evidence at all levels of review, including DDS. Much 
of the delay in the life of a disability claim is due to the time 
needed to collect relevant evidence. For example, if a claimant alleges 
disability due to severe injuries in an automobile accident and DDS 
obtains the primary care physician records of general care, but fails 
to obtain the records of the trauma surgeon and hospital, DDS will not 
have the relevant evidence needed to make an accurate determination. 
While a denial based on the primary care physician records may be 
technically correct, given the record as developed, that record is 
wholly inadequate. The claimant is then forced to appeal the denial 
until someone develops the complete and relevant record. If the correct 
record were obtained at the DDS level, the accuracy of the DDS decision 
could be realistically measured. It is a meaningless statistic to say 
the DDS made the right decision, when it was rendered on an inadequate 
record.
    Similarly, delays at the ALJ level occur while the relevant 
evidence is obtained and the file is assembled. One of SSA's redesign 
initiatives, the Adjudication Officer (AO), sought to accomplish the 
generation of evidence and file assembly at the DDS level. The AO 
developed the record and granted eligible claims, forwarding the 
ineligible claims to an ALJ for further review. In those cases that 
were denied, the AO prepared a summary of the evidence, and certified 
that the record was complete. The case was then heard by an ALJ 
generally within 60 to 90 days of its receipt and little or no further 
development of the record was required. Concerns were raised about the 
AO project because a higher percentage of claims was paid at the DDS 
level, and administrative costs for assembling a complete record and 
providing a summary were high. The project, however, resulted in 
correct decisions earlier in the process and savings of administrative 
costs and time at OHA.
    A Quality Assurance Program should measure the adequacy of the 
file, the quality of the analysis, and the correctness of decisions at 
all levels. It should also undertake to measure the accuracy of both 
allowances and denials of claims. At the DDS level, quality review work 
currently performed by SSA's Disability Quality Branch focuses on 
allowances of claims rather than denials. This creates systemic 
pressure on the DDS examiner to avoid erroneous allowances, but not 
necessarily erroneous denials. Since an erroneous denial is much less 
likely to be scrutinized by quality control, a denial represents a far 
more attractive and safer decision option for the DDS examiner. At the 
ALJ level, the opposite is true. To be effective, without subtly 
influencing the outcome of decision-making, a quality assurance program 
should be neutral and refrain from pushing the process toward allowing 
or disallowing claims. The QA program must measure the accuracy of both 
allowances and denials.
LThe Electronic Folders Initiative (E-DIB) must be adequately funded, 
        closely monitored, and not viewed as the complete answer to 
        disability adjudication problems
    The Commissioner has announced that the entire record at all levels 
will be contained in an electronic folder (E-DIB) by January, 2004. The 
E-DIB initiative has the potential to provide significant improvement 
in the speed of claims adjudication. However, given SSA's track record 
in the conceptualization and implementation of HPI and other redesign 
initiatives, we strongly encourage the application of significant care 
and attention to the testing and introduction of E-DIB.
    Very few details concerning the plan have been announced, and there 
are innumerable questions relating to the implementation of this 
initiative. We urge extensive testing at the pilot stage and vigilant 
monitoring of its rollout. Given the shortage of personnel within DDS 
and OHA to handle the current caseload, careful attention also should 
be devoted to staffing plans for those who will maintain the systems 
and scan the documents included in the electronic folder. Attention 
should also be devoted to whether E-DIB coverage will extend to claims 
pending at the time of conversion or whether this will include only 
claims filed after January, 2004. The Social Security Administration 
needs to work with the representative community to insure the 
confidentiality of the claimant's record, while also assuring safety 
and security of the internet system itself. Access to the claimant's 
record by those on the other side of the digital divide, who lack 
compatible equipment, also should be considered.
Elimination of Reconsideration and Reorganization of the Appeals 
        Council
    The Social Security Section of the FBA seriously questions whether 
the current processes of DDS level reconsideration and Appeals Council 
review are serving their intended purposes. Thoughtful scrutiny should 
be devoted to whether the time spent on these two review processes 
contributes to the effective adjudication of disability claims and the 
interests of justice.
    A claimant who is initially denied benefits may request DDS 
reconsideration of the denial decision. Reconsideration is widely--and 
correctly--viewed as little more than a rubber stamp of the initial 
denial. During FY 2001, of an average 100 claims processed by DDS, 40 
were approved at the initial level and 4 at the reconsideration level. 
Time spent at the reconsideration level was 69 days. Given the few 
requests for reconsideration that ultimately are successful, concerns 
can be deservedly raised whether reconsideration represents a 
meaningful step in the disability process. The Social Security Section 
of the FBA supports the elimination of reconsideration and redirection 
of that portion of DDS budgets into the initial level of decision-
making.
    Attention should also be devoted to the role and effectiveness of 
Appeals Council review. Upon receipt of an adverse claims decision by 
an ALJ, a claimant may appeal to the Appeals Council, which then 
undertakes a review on the record. While the Appeals Council serves a 
valuable purpose in screening out many cases that should not reach 
federal court due to deficiencies in the ALJ decisions, the Appeals 
Council is overwhelmed by its staggering workload. It has taken steps 
to shorten its appeal time, and according to the General Accounting 
Office, reduced the amount of time to process an appeal from 458 days 
in FY 1999 to 447 days in FY 2000. This is still an unduly long period 
of time. There can also be no excuse for the number of cases in which a 
remand occurs for no reason other than a lost or defective hearing 
tape. Technology needs to be improved to eliminate this needless delay 
for claimants.
    The substantive legal correctness of the decisions of the Appeals 
Council has also been frequently challenged. In a mounting number of 
cases appealed to U.S. District Court after denial of review by the 
Appeals Council, the Office of General Counsel and U.S. Attorneys have 
asked the Appeals Council to agree to a ``voluntary remand.'' These 
requests are prompted by concerns over the ability to defend the 
underlying ALJ decision--the decision that had already been affirmed by 
the Appeals Council. The frequency of such ``voluntary remands'' 
indicates that in its rush to process appeals, the Appeals Council may 
not be getting it right the first time. The record the Appeals Council 
agrees to take back in a voluntary remand is usually identical to the 
record it initially reviewed. If the ALJ decision is indefensible, it 
should have been caught before the case proceeded to federal court. 
That, after all, is the role of the Appeals Council in the request for 
review process.
    Therefore, we believe that the Commissioner should review and study 
the role and responsibility of the Appeals Council, with special 
attention devoted to: the usefulness and necessity for the request for 
review function; the merits of redesign of the Appeals Council mission 
to focus on quality review; and the establishment of a time-limit for 
the processing of requests for review, permitting cases not reached 
within the allowable time to go directly to court.
Conclusion
    This concludes my prepared remarks. Thank you once again for the 
opportunity to appear before you today. The Social Security Section of 
the Federal Bar Association looks forward to working with you and the 
Social Security Administration in improving disability process. I would 
be happy to answer any questions you may have.

                                 

  STATEMENT OF JOHN H. PICKERING, PAST CHAIR, SENIOR LAWYERS 
   DIVISION, AND COMMISSIONER EMERITUS, COMMISSION ON LEGAL 
       PROBLEMS OF THE ELDERLY, AMERICAN BAR ASSOCIATION

    Mr. PICKERING. Mr. Chairman and Members of the 
Subcommittee, it is a privilege to appear before you this 
morning to present the views of the American Bar Association to 
discuss the important issue of improving the Social Security 
disability appeals system.
    The American Bar Association as a representative of our 
legal profession, is particularly concerned with making access 
to justice available to those persons who are most in need and 
are least able to protect their rights: the poor, the elderly 
and persons with disabilities.
    Accordingly, we have had a longstanding interest in the 
Social Security disability review process and we have worked 
actively to promote increased efficiency and fairness. Over the 
years we have developed numerous recommendations for 
improvement, which are appended to my written statement. We 
have filed an amicus brief in the landmark Bowen case in the 
Supreme Court for the disability claimants who had been 
unlawfully deprived of their rights.
    Our first recommendation for improvement builds on what you 
have previously heard. To reduce the number of appeals, we need 
to improve the initial stage of the process by providing 
applicants with a clear statement of eligibility requirements, 
a list of claimant responsibilities, and a description of the 
administrative steps in the process, and explanation of 
relevant medical and vocational evidence and a notice of the 
availability of legal representation.
    The SSA should take affirmative steps to make a better 
record at the initial stage by compiling accurate documentation 
and by supplementing medical reports that are not sufficient.
    Next we recommend that before denying a claim, SSA should 
notify claimants of the pending adverse action, inform them of 
the reasons for the finding, ensure that they have access to 
all the evidence in their file, and provide them with an 
opportunity to submit further evidence.
    We recommend that the SSA advise claimants' health care 
providers of deficiencies in the medical evaluation and give 
them an opportunity to cure those deficiencies.
    If the claim is denied after full development of the file, 
we recommend additional steps to ensure the integrity and 
efficiency of the appeals process and to guarantee due process. 
To do that, claimants should be provided with a clear and 
detailed statement of the reasons for denial, their opportunity 
to appeal, the availability of legal representation, and the 
consequences of failing to appeal.
    We support the elimination of the reconsideration level. In 
the present scheme it serves no purpose. Instead, you should go 
right to a due process hearing on the record before an 
Administrative Law Judges whose authority as an independent 
fact finder is assured.
    That ALJ should have the opportunity to take testimony from 
the client, develop evidence when necessary, consider and weigh 
the evidence and evaluate vocational factors in order to reach 
an impartial decision free from Agency coercion. I emphasize 
the need for independence because we must never forget past 
history when SSA tried to eliminate the backlog of disability 
cases by threatening the ability of the ALJs to ensure due 
process. That sorry experience must not be repeated.
    We also urge that the proposals to close the record be 
carefully considered. We think the record should not be closed 
until the conclusion of the hearing at the very earliest and 
that it could be reopened upon a showing of good cause. Denying 
the opportunity to reopen and requiring the applicant/claimant 
to submit a new application is simply a waste of time and 
resources.
    Recent proposals have again raised questions about the role 
of the Appeals Council. We have recommended that this issue be 
studied in the past. We caution that any changes should not 
compromise the independence and the impartiality of the ALJs. 
We therefore urge that the scope of the Appeals Council review 
be limited to clear errors or law or lack of substantial 
evaluated.
    The ALJ findings of fact should not be reversed without 
specific documentation and review of the hearing tapes.
    We recommend that if the Appeals Council fails to act upon 
a request for a review within a specified period of time, 
claimants should be deemed to have exhausted their 
administrative remedies and be permitted to seek Federal court 
review if the decision is adverse.
    Finally, there is the issue of creating Article I courts to 
hear Social Security appeals. The ABA has consistently opposed 
legislation to create such Article I review courts. It may be 
timely to revisit this issue, but the important factor is that 
it is not court review that has resulted in delay. It has been 
defects in the administrative process itself.
    Accordingly, we think that the improvements have to be made 
at the front end, not at the back end of the review. Simply 
shifting appeals to another court system is not a practical 
solution.
    We are confident that our recommendations will improve the 
disability system and alleviate the backlog by reducing the 
number of appeals and the number of reversals when cases are 
appealed.
    We commend the Subcommittee for holding these hearings on 
these important issues. We appreciate the opportunity to 
testify. We look forward to working with the Subcommittee and 
with SSA on these issues in the future. Thank you very much.
    [The prepared statement of Mr. Pickering follows:]
 Statement of John H. Pickering, Past Chair, Senior Lawyers Division, 
and Commissioner Emeritus, Commission on Legal Problems of the Elderly, 
                        American Bar Association
    Mr. Chairman and Members of the Subcommittee:

    My name is John H. Pickering. I serve as Commissioner Emeritus of 
the American Bar Association Commission on Legal Problems of the 
Elderly, which I chaired for a number of years. I am also a past chair 
of the ABA Senior Lawyers Division. I appreciate the opportunity to 
appear before you today on behalf of the Association, to discuss our 
views on the Social Security disability appeals system.
    As representative of the legal profession in the United States, the 
American Bar Association is particularly concerned with equal access to 
justice for those members of our society who are generally least able 
to protect their own rights--low-income persons, individuals with 
disabilities and older people. We have a long-standing interest in the 
Social Security Administration's disability benefits review process, 
and have worked actively for many years to promote increased efficiency 
and fairness in this system. We have followed the agency's efforts over 
the past decade to improve the timeliness, accuracy, and consistency of 
its disability decisions, and we commend those attempts, although we 
recognize that they have met with mixed results. It is clear that they 
have not alleviated backlogs in the system. It still takes the agency 
as long as one year to reach a determination on an initial appeal; some 
claimants must wait years for a final Appeals Council decision. These 
delays have a profound effect on public confidence in the agency, on 
agency staff, and most significantly, on claimants who desperately need 
the benefits.
    Almost seventeen years ago, the ABA joined with the Administrative 
Conference of the United States (ACUS) to sponsor a national symposium 
to examine Social Security's administrative appeals process. In 1986, 
the Association filed an amicus curiae brief in the landmark U.S. 
Supreme Court case, Bowen v. City of New York, in which we argued 
successfully that the Social Security Administration should reopen the 
cases of thousands of mentally disabled claimants who were denied 
disability benefits because they failed to meet sub rosa requirements 
and appeal deadlines. Brief for the American Bar Association, Amicus 
Curiae, in Support of the Respondents, Bowen v. City of New York, 476 
U.S. 467 (1986). More recently, the Association adopted a set of 
recommendations for strengthening safeguards and protections in the 
representative payee program. Over the years, we have drawn upon the 
considerable expertise of a membership with backgrounds as claimant 
representatives, administrative law judges, academicians and agency 
staff to develop a wide ranging body of recommendations on the 
disability adjudication process that encourage clarity in 
communications with claimants, due process protections, and application 
of appropriate, consistent legal standards at all stages of that 
process.
    It is with this background that we offer some recommendations to 
the Subcommittee for consideration. We believe that implementation of 
these recommendations will help to alleviate the backlogs and delays 
that are overwhelming the current system, and will lead to the 
development of a disability determination and appeals process that is 
timely, efficient and fair, and that meets the needs of individuals 
with disabilities and their families.
    The first step toward increasing the speed and efficiency of the 
appeals process is to reduce the number of appeals. According to the 
General Accounting Office, of the 40% of claimants who appealed initial 
denials in fiscal year 2000, approximately two-thirds were awarded 
benefits upon appeal. In all too many cases in the system today, claims 
that could have been decided at the initial stages are awarded at the 
hearing level simply because the evidence of disability is more 
complete by the time it is presented to the administrative law judge. 
We recommend that the Social Security Administration improve the front 
end of the process by providing applicants with a clear statement of 
eligibility requirements, a list of claimant responsibilities, a 
description of the administrative steps in the process, an explanation 
of relevant medical and vocational evidence, and notice of the 
availability of legal representation.
    To improve the quality of medical and vocational evidence at the 
initial stages of the process and to reduce the need for appeal, we 
suggest that the agency consult the claimant's health care providers, 
and compensate them adequately for providing relevant medical 
information. We encourage SSA to take affirmative steps to compile 
accurate documentation and to supplement medical reports (particularly 
those from treating physicians) that are not sufficiently detailed or 
comprehensive. We are pleased to note that the SSA website includes 
information for the medical community about eligibility criteria used 
in the disability program. We encourage the agency to go further by 
assisting claimants in compiling necessary documentation and in 
supplementing incomplete reports. We also urge the agency to establish 
a single standard for the determination of disability at all levels of 
decision-making making.
    We recommend that, prior to denying claims, the Social Security 
Administration notify claimants of the pending adverse action; inform 
them of the reasons why the finding of disability cannot be made; 
ensure that they have access to all the evidence in their file, 
including medical reports; and provide them the opportunity to submit 
further evidence. We also recommend that SSA advise claimants' health 
care providers of deficiencies in the medical evidence and give them 
the opportunity to supply additional information. Disability claims 
managers should be encouraged to consult with legal as well as medical 
resources in their evaluation of a claim. We encourage the vesting of 
initial decision-making authority in two-member teams composed of a 
disability examiner and a medical or psychological professional, and we 
support face-to-face interviews between claimants and agency decision-
makers before a final decision is made.
    In the event that the claim is denied after this full and complete 
development of the file, we suggest certain additional steps to enhance 
the integrity and efficiency of the appeals process while guaranteeing 
the claimant due process.
    Claimants whose applications are denied should be provided a clear 
and detailed statement of the reasons for denial, the opportunity to 
appeal, the availability of representation, and the consequences of 
failing to appeal. The ABA supports elimination of the reconsideration 
level. If the quality of intake and development of evidence at the 
early stages is improved, there is little reason for reconsideration, 
particularly given the historically low reversal rate and substantial 
delays involved at this level. Instead, claimants whose applications 
are denied should have the right to a due process hearing on the record 
before an administrative law judge whose authority as an independent 
fact-finder is assured. The administrative law judges should be 
appointed pursuant to the Administrative Procedures Act. This hearing 
is essential to a full and fair review of the claim, and administrative 
law judges should have the opportunity to take testimony from the 
claimant, develop evidence when necessary, consider and weigh the 
medical evidence, and evaluate vocational factors in order to reach an 
impartial decision free from agency coercion.
    In 1995, in response to the Social Security Administration's 
efforts to eliminate the backlog of cases that threatened the ability 
of administrative law judges to assure due process at the hearing 
level, the ABA House of Delegates endorsed additional reforms at the 
hearing and pre-hearing stages. We recommended the designation of 
adjudication officers with supporting staff who, immediately following 
the initial denial of a claim, would work with the disability claims 
manager to develop the evidence, assemble a file and, where 
appropriate, allow the claim. The adjudication officer could obtain 
additional evidence necessary to establish a change in medical 
condition, or evidence that the claimant was unable to procure due to 
cost or other circumstances beyond the claimant's control. Should the 
case proceed to a hearing, the adjudication officer could be a 
``presenter'' responsible for drawing attention to salient facts in the 
record and calling witnesses where appropriate. However, concerned 
about the disadvantage such a system might pose to unrepresented 
claimants, we also recommended that administrative law judges have 
access to investigative sources and be permitted to assert direct 
control over the development of the record. Those recommendations still 
have value today.
    Several proposals over the past few years have suggested closing 
the record at some point during the administrative appeal process to 
provide a measure of finality. While we hope that evidence would be 
submitted as early in the process as possible, we urge that proposals 
to close the record be carefully considered. Certainly, the record 
should not be closed until the conclusion of the hearing at the 
earliest. Even then, claimants who show good cause, such as newly 
discovered evidence or a material change in condition, must be 
permitted to reopen the record within one year of an adverse decision. 
To close the record without allowing reopening under those 
circumstances would penalize claimants who may have been unable through 
no fault of their own to gather the evidence necessary for a full and 
fair hearing. It would also create additional costs for the agency, 
because claimants would file new applications simply to submit new 
evidence.
    Recent proposals have raised anew questions about the role of the 
Appeals Council. In 1986, the ABA advocated for a complete study of 
Appeals Council procedures and functions to determine whether Appeals 
Council review is necessary and to explore possible changes in the 
Council's role. We are cognizant of past agency attempts to control the 
rates at which administrative law judges allowed claims, so we caution 
that any changes to the role of the Appeals Council not compromise the 
independence and impartiality of administrative law judge decision-
making making. We therefore urge that the scope of Appeals Council 
review be limited to clear errors of law or lack of substantial 
evidence. Administrative law judges' findings of fact should not be 
reversed without specific documentation and review of the hearing 
tapes. Finally, we recommend that if the Appeals Council fails to act 
upon a request for review within a specified period of time, claimants 
should be deemed to have exhausted their administrative remedies and 
permitted to seek federal court review.
    Finally, we consider the issue of Article I courts to hear Social 
Security appeals. The ABA has consistently opposed legislation to 
create Article 1 courts to hear appeals from final decisions of the 
SSA. When we testified before this Subcommittee in 1991, we observed 
that efforts to establish a separate court appeared to have been 
motivated by three concerns: increasing numbers of appeals, issues too 
technical for courts of general jurisdiction; and the need for 
uniformity of decision-making making. More recent arguments have 
included the potential for more cases in the system as a result of baby 
boomer claim filings, and the parallels to be drawn with the Veterans 
Court of Appeals and other specialized courts. We have posited in the 
past that Social Security appeals are not drains on federal court 
resources since they are considered by magistrates in many if not all 
jurisdictions, and are on the record reviews using a substantial 
evidence test. While it may be time to revisit this issue in light of 
the more recent arguments, the more significant problem remains the 
failure of the Social Security Administration to make accurate 
determinations on claims in the earlier stages of the process. Simply 
shifting appeals to another court system is not a practical solution, 
and indeed could overwhelm a single court.
    We attach copies of relevant ABA policies for your reference.
    The Social Security Administration has made great strides in 
improving access to information, particularly on the Internet, but 
there continues to be room for improvement in the appeals process 
itself. We are confident that our recommendations would improve the 
disability system and alleviate the backlog by reducing the number of 
appeals and the reversals upon appeal. We commend the Subcommittee for 
holding hearings on these important issues, and appreciate the 
opportunity to submit this testimony. We look forward to working with 
the Subcommittee and with the Social Security Administration on these 
issues in the future.

                                 

    Chairman SHAW. Thank you.

   STATEMENT OF PAUL VERKUIL, PROFESSOR OF LAW, BENJAMIN N. 
CARDOZO SCHOOL OF LAW, YESHIVA UNIVERSITY, NEW YORK, NEW YORK, 
 ACCOMPANIED BY JEFFREY LUBBERS, FELLOW, WASHINGTON COLLEGE OF 
                    LAW, AMERICAN UNIVERSITY

    Mr. VERKUIL. Thank you. Mr. Chairman and Members of the 
Committee, I am pleased to be here this morning to discuss the 
findings and conclusions of a recent study for the Social 
Security Advisory Board that evaluates various proposals for 
changes in the judicial review structure relating to disability 
determinations.
    The study was conducted for the SSAB by Jeffrey Lubbers and 
myself. Mr. Lubbers is here. It was submitted on March 1, 2002.
    Of course, in our testimony we do not speak for the SSAB, 
but I believe that the Committee has copies of the study. It 
should be made generally available. It was submitted both to 
Members of Congress and also to Members of the Judiciary.
    In the last few decades there have been several legislative 
proposals to modify the current system of judicial review, 
including one model that would change the review structure 
after the ALJ stage by creating a new Article I court, a so-
called Social Security court, and give it limited Article III 
review power to legal and constitutional issues.
    There is another proposal that would maintain the current 
district court review structure, but centralize court of 
appeals review in a special Article III court, the Social 
Security Court of Appeals.
    While these and other alternatives are not themselves new, 
they have become increasingly relevant in light of recent 
events. The number of disability claims is expected to rise in 
the future for several reasons. One is the impending retirement 
of baby boomers; two, the downturn of the economy in the last 2 
years; three, the resumption of CDRs by the SSA; and four, the 
increasing tendency of private insurance companies to require 
as a condition of payment that claimants pursue their 
offsetting SSA benefits.
    These caseload realities create pressure on the SSA to 
achieve more uniform, fair and efficient decision-making and 
will likely increase the present time-consuming nature of that 
review, which varies between 12 to 18 months.
    In addition, during the last decade, a possible model for 
Article I and Article III shared review of disability cases has 
become a reality with the emergence of a program for the review 
of the U.S. Department of Veterans Affairs disability claims.
    Finally, in 1994 Congress also made a significant 
structural change in the Social Security program by separating 
SSA from the U.S. Department of Health and Human Services to 
``ensure that policy errors resulting from inappropriate 
influence from outside the Agency such as those that occurred 
in the early 1980s do not occur in the future.'' I believe Mr. 
Pickering referred to those incidents in his testimony.
    As a result, the Agency is now independent and better able 
to assist in a restructuring of the decision process. After the 
SSA signs off on a disability case, either as a result of an 
ALJ decision or after Appeals Council review, the losing 
claimant has an opportunity to appeal to the District Court. 
While traditionally known as a trial court, the District Court 
serves an appellate function in connection with disability 
review. In this role it is called upon not to hear matters in a 
trial de novo, as it usually does, but to apply the substantial 
evidence test to the record before it.
    Over the years, substantial evidence review of disability 
cases by District Courts and even subsequent review by Courts 
of Appeals has been a heavily contested matter.
    Modification in the role of a District Court was made 
necessary because of the size of the disability caseload, which 
makes the usual practice of direct review in the Court of 
Appeals to create administrative adjudication impractical.
    For example, during the decade 1990 to 2000, the number of 
new disability cases in the Federal District Courts nearly 
tripled from 5,000 to 15,000. In terms of impact upon the court 
system, during the 1-year period ending September 30, 2000, 
Social Security cases represented 5.86 percent of all civil 
District Court cases.
    It seems clear that the substantial judicial resources 
allocated to disability determinations are not used in the most 
cost effective manner.
    I do not wish to minimize the significant, symbolic role, 
as well as a corrective one that the District Courts play in 
our judicial system. Over the years the theoretical advantage 
of Article III oversight in SSA cases has become more limited 
in practice. District judges increasingly review disability 
cases not by themselves directly, but through surrogates. 
Article I, magistrate judges take evidence, decide on summary 
judgment or remand to the Agency. In fiscal year 1999 
magistrates decided over 40 percent of disability cases 
throughout the Federal courts and, in some jurisdictions over 
50 percent.
    In addition to caseload concerns within the District 
Courts, there are genuine concerns as to uniformity of 
decisions around the country, not only because of widely 
varying reversal rates, but also in terms of the need for 
better development of the law. A Social Security court would be 
a remedy for both of these problems.
    Opponents of such a court counter these arguments on a 
variety of fronts: the new court would be inconvenient to 
claimants; it would produce a windfall of appointments to the 
current President; or it might become captured by the SSA or 
those that tend to favor a higher rate of denial of claims.
    I respect these concerns, but believe that the caseload and 
uniformity problems are acute enough to warrant serious 
consideration of the changes to the current system.
    The current system of administrative hearings with a 
somewhat revised system of administrative review, followed by 
review in an Article I Social Security court with a right of 
appeal on questions of law to the regular courts of appeals, as 
with the current Tax Court, is, in our judgment, the best 
approach.
    This doesn't mean that class actions and facial 
constitutional challenges would be heard in this Article I 
court. They could still be reserved to the District Courts, as 
well as, challenges to SSA rule making which could be heard 
directly in the Courts of Appeals.
    Concerns about the convenient problem can be addressed by 
having regional offices for the SSA disability court. Concern 
about politicized appointments to the court would, of course, 
be ameliorated by the Senate confirmation process, but could be 
addressed more directly by requiring judges to be appointed 
like commissioners of independent agencies, with one political 
party limited to a bare majority.
    Down the road one could foresee the combination of such a 
court with the current Court of Veterans Appeals to produce a 
Federal disability court with a broader experience and 
expertise.
    Well, next steps to consider: Whatever happens with the 
Judicial Review Proposal, we believe that several steps can and 
should be taken at the SSA level. First, the use of attorneys 
for the government requires further consideration, as has been 
mentioned.
    Second, consideration should be given to a long pending 
suggestion to closing the file after the ALJ stage.
    Third, amending the good cause remand provision in the 
current law, section 205(g), should also be considered to 
reduce the ease with which District Courts simply remand cases 
back to the SSA. These remands fail to produce an effective 
feedback loop.
    Finally, we believe that much can be done to better utilize 
and improve the performance of ALJs in the current process, 
separate and apart from the Article I idea. An ALJ appeals 
process, which has been mentioned, is something worth looking 
at. We have made some initial analyses of that idea and if it 
works it could assume the correction and quantity review 
functions now performed by the Appeals Council.
    By the side of my statement was written ``explain.'' In 
connection with the ALJ appeals process idea, I gather that 
note is from the staff. I will reserve further explanation for 
the comment period.
    I would like to thank you and praise the Committee for 
their efforts in this hearing.
    [The prepared statement of Mr. Verkuil follows:]
Statement of Paul Verkuil, Professor of Law, Benjamin N. Cardozo School 
             of Law, Yeshiva University, New York, New York
    I am pleased to be here this morning to discuss the findings and 
conclusions of a recent study for the Social Security Advisory Board 
(SSAB) that evaluates various proposals for changes in the judicial 
review structure relating to Social Security disability determinations. 
The study was conducted for the SSAB by Professor Jeffrey Lubbers of 
American University, Washington College of Law and myself, and was 
submitted on March 1, 2002. Professor Lubbers is with me today. I 
believe the Committee has copies of the complete study.
Background

    In the last few decades, there have been several legislative 
proposals to modify the current system of judicial review of Social 
Security Administration (SSA) disability cases, including one model 
that would change the review structure after the administrative law 
judge (ALJ) stage by creating a new Article I court structure (a 
``Social Security Court'') with Article III review limited to legal and 
constitutional issues; and another that would maintain the current 
district court review structure but centralize court of appeals review 
in a special Article III court (a ``Social Security Court of 
Appeals'').
    While these and other alternatives are not themselves new, they 
have become increasingly relevant in light of recent events. The number 
of disability claims is expected to rise in the future for several 
reasons: (1) the impending retirement of Baby Boomers, (2) the downturn 
of the economy in the last two years, (3) the resumption of continuing 
disability reviews (``CDRs'') by the SSA, and (4) the increasing 
tendency of private insurance companies to require as a condition of 
payments that claimants pursue their offsetting SSA disability 
benefits.
    These caseload realities create pressure on the SSA to achieve more 
uniform, fair, and efficient decisionmaking and will eventually add to 
the caseload of the federal courts on judicial review. In addition, 
during the last decade, a possible model for Article I/Article III 
shared review of disability cases has become a reality with the 
emergence of a program for review of the Department of Veterans Affairs 
disability claims.
    Finally, in 1994, Congress also made a significant structural 
change in the social security program, by separating SSA from the 
Department of Health and Human Services to ``ensure that `policy errors 
resulting from inappropriate influence from outside the agency such as 
those occurring in the early 1980s do not recur in the future.''' As a 
result, the agency is now independent and better able to assist in a 
restructuring of the process.
The Current System of Judicial Review

    After the Social Security Administration signs off on a disability 
case, either as a result of an ALJ decision or Appeals Council 
consideration, the losing claimant has an opportunity to appeal to the 
federal district court. While traditionally known as a trial court, the 
federal district court serves an appellate function in SSA disability 
review. In this role, it is called upon not to hear matters in a trial 
de novo as it traditionally does, but to apply the substantial evidence 
standard to the record before it. Over the years, substantial evidence 
reviews of disability cases by district courts (and even subsequent 
review of such decisions by courts of appeals) have remained a heavily 
contested matter.
    This modification of the role of district courts is made necessary 
because of the size of the disability caseload, which makes the usual 
practice of direct review of formal administrative adjudication in the 
courts of appeals impractical. For example, during the decade 1990 to 
2000, the number of new disability cases in the federal district courts 
nearly tripled from 5,000 to 15,000. In terms of impact upon the court 
system, during the one-year period ending September 30, 2000, Social 
Security cases represented 5.86 percent of all civil district court. It 
seems clear that the substantial judicial resources allocated to 
disability determinations are not used in a cost-effective manner
    I do not wish to minimize the significant symbolic role (as well as 
a corrective one) that federal district courts play in our judicial 
system. But over the years, the theoretical advantage of Article III 
court oversight in SSA cases has become more limited in practice. 
District judges increasingly review disability cases not by themselves, 
but through surrogates: Article I magistrate judges take evidence, 
decide on summary judgment, or remand to the agency. In FY 1999, 
magistrates decided over 40 percent of disability cases.
    In addition to caseload concerns within the district courts, there 
are genuine concerns as to uniformity of decisions around the country 
not only in terms of widely varying reversal rates, but in terms of 
development of the law. A Social Security Court would be a remedy for 
both of these problems.
Possible Concerns

    Opponents to such a court counter these arguments by saying that 
the concerns are overstated and that a new court would be inconvenient 
to claimants, would produce a windfall of appointments for the current 
President, and might become ``captured'' by the SSA or those that tend 
to favor a higher rate of denials of claims.
    I understand those concerns, but believe that caseload and 
uniformity problems are acute enough to warrant serious consideration 
of changes in the current system. I believe that the current system of 
administrative hearings (with a somewhat revised system of 
administrative review), followed by review by an Article I Social 
Security Court, with a right of appeal on questions of law in the 
regular courts of appeals (as with the current Tax Court) is the best 
approach.\1\ Concerns about convenience can be addressed by having 
regional offices for the SSA Court. Concern about politicized 
appointments to the court would, of course, be ameliorated by the 
Senate confirmation process, but could be addressed more directly by 
requiring the judges to be appointed like commissioners of independent 
agencies, with one political party limited to a bare majority.
---------------------------------------------------------------------------
    \1\ Class actions and facial constitutional challenges could be 
preserved in district courts, with challenges to SSA rulemakings going 
directly to the courts of appeals.
---------------------------------------------------------------------------
    Down the road, I could also foresee the combination of such a court 
with the current Court of Veterans Appeals to produce a Federal 
Disability Court.
Next steps

    Whatever happens with the judicial review proposal, we believe 
several steps can and should be taken at the SSA level. First, the use 
of attorneys for the government requires further consideration, and we 
are currently looking at this issue for the SSAB. Second, consideration 
should be given to the long pending suggestion of closing the file at 
the ALJ stage. Third, amending the ``good cause'' remand provision in 
the current law (section 205(g)) should also be considered, to reduce 
the ease with which district courts simply remand cases back to SSA.
    Finally, we believe much can be done to better utilize and improve 
the performance of ALJs in the disability decision process, separate 
from the Article I court idea. An ALJ appeals process (using two or 
three ALJs to review their colleagues' decisions in precedential or 
other selected cases) could aid uniformity and correctness, and, if it 
works well, could take over the error correction and quality review 
functions now performed by the Appeals Council.\2\ The resources 
currently spent on the Appeals Council (reportedly over $64 million in 
FY 2000) could be used to cover the additional ALJs needed for the two 
tier review. Additionally, some Appeals Council members might be 
considered for positions as ALJs or as members of the Social Security 
Court. Moreover, the SSA should use some of these resources to improve 
its policymaking through rulemaking.
---------------------------------------------------------------------------
    \2\ If the ALJ stage were to be made the final stage, then SSA 
should also be entitled to appeal such decisions to the Social Security 
Court.
---------------------------------------------------------------------------
    I compliment the Committee for giving its consideration to these 
ideas and others for improving our vital but overly stratified SSA 
disability appeals process and would be happy to try to answer any 
questions about our proposals.

                                 

    Chairman SHAW. Thank you, Professor. Ms. Ford, you made 
reference in your testimony and I believe Mr. Pickering also 
made reference that when someone is going through the appeals 
process and their condition changes, that this is sort of an 
unamendable process.
    An example: Starting out the process, the claimant is 
partially blind. He is denied. During the appellate process in 
the days that are going by the claimant becomes totally blind. 
I would gather from your testimony that the process would 
require that claimant to start the process all over again and 
claim total blindness. Is that what you are saying?
    Ms. FORD. Well, as I understand the process, after the ALJ 
hearing new evidence would be allowed only if it related to the 
period before the ALJ hearing. So, depending on when that total 
blindness occurred, it might require him to start over, if I 
get that correctly.
    Chairman SHAW. I see. So, it would be like regular court 
process. Once a judgment is made, if you are appealing an ALJ 
process, that the record would stay intact. Is that correct?
    Ms. FORD. It is closed somewhat. The period of disability 
before the hearing is what is being looked at. If you have new 
evidence that relates to that period, as I understand, you can 
bring that evidence in at that point. We think that is 
important because people keep on seeing doctors.
    Chairman SHAW. I think it is important to that point. I 
would like to get the judges to comment on that because I want 
to be sure this Committee fully understands the process here. 
Would either one of you judges comment on that?
    Mr. BERNOSKI. The current process is that the record is not 
closed after the Administrative Law Judges hearing. In theory, 
the Appeals Council is not to receive new evidence, but in fact 
it is done routinely.
    The record isn't ever really closed. Even before the 
Federal court evidence is submitted to the Federal court. It is 
usually attached to the brief. The judge considers the new 
evidence as part of the brief.
    I understood Marty Ford's comment to be addressed to 
closing the record, the proposal to close the record after the 
Administrative Law Judges hearing. Now the record is not 
closed.
    Chairman SHAW. When the appeal is made to the Federal 
District Court from the Administrative Law Court, does it go up 
as a record or does the Appeal Court take testimony?
    Mr. BERNOSKI. No. It is certiorari. It is on the record.
    Chairman SHAW. So, it is simply, it is as any other court 
process?
    Mr. BERNOSKI. Yes, Mr. Chairman.
    Chairman SHAW. I'm glad you cleared that up. Another point 
that I would like to explore here for just a moment is how long 
do these cases usually take in the courtroom?
    Mr. BERNOSKI. Before the Administrative Law Judges?
    Chairman SHAW. Yes, sir.
    Mr. BERNOSKI. I would say a case before an Administrative 
Law Judge ranges from 45 minutes to an hour and a half, maybe 2 
hours on the outside.
    Ms. MCGRAW. Yes. In my experience, on average it is about 1 
hour. That brings me to that other question. In 2000, last 
year, there were two cases that were disposed of per day as an 
average. This would go from a high of about four and a half 
cases that were heard down to slightly less than one per day.
    What is the variance and how do you spend the rest of your 
day and how many cases do you all hear per day on the average?
    Ms. MCGRAW. I would say that on average I hear about two 
cases a day. I think it is important to realize Social Security 
is looking for numbers here, but I think it is important to 
realize that each claimant is entitled to a full and fair 
hearing.
    I think when you get up over two to three cases a day, 
because you have to prepare for these hearings. I do not go 
into a hearing without reading all the evidence concerning that 
claimant. I then hold the hearing and have to write directions 
and actually review the decision.
    So, I think there is an outside limit on what a judge can 
do effectively and in my view two to three cases a day is that 
limit.
    Chairman SHAW. How thick are those files when you receive 
them?
    Ms. MCGRAW. They range from a half an inch to a foot high, 
depending on how much treatment the claimants have. That is a 
very good point. Across the country you have different sized 
files based on the medical treatment that is available to 
citizens in particular parts of the country.
    Chairman SHAW. Do you have clerks working for you?
    Ms. MCGRAW. I have no one directly working for me. We are 
in a pooled system. I believe that if I had someone that I was 
working with it would be more efficient.
    Chairman SHAW. You have, as you say, a pool system. Are 
they reviewed by staff for you, are the files reviewed for you 
and summarized when they come to you or are you just given the 
raw file?
    Ms. MCGRAW. When the file is given to me it is what we call 
``pulled.'' The exhibits have been put in chronological order. 
That is all that has been done to the file. I personally go 
through and read every piece of evidence in the file. I don't 
think it is fair to a claimant not to have done that.
    Chairman SHAW. Are there depositions in the file or is that 
part of the process?
    Ms. MCGRAW. No. By and large, depositions do not occur in 
these cases. We are dealing with medical evidence, physical 
therapy, statements of activities of daily living. There is 
rarely a deposition unless there has been a workers comp case 
or something like that that the claimant has been involved in.
    Chairman SHAW. We have heard about incomplete medical 
records that sometimes show up. Do you order the claimant to go 
back and do you bring the doctors in? How do you handle that?
    Ms. MCGRAW. If the claimant is unrepresented, the claimant 
has filled out a form that States his medical sources. If a 
claimant is unrepresented, I ask someone on the staff to write 
to the sources that the claimant has identified.
    If a claimant is represented, then I expect the 
representative to go out and get that evidence.
    Chairman SHAW. Is there any sworn evidence that comes 
before you?
    Ms. MCGRAW. At the hearing the testimony is sworn.
    Chairman SHAW. It is all sworn in at the hearing. These 
medical records can come into consideration without sworn 
testimony. Is that correct?
    Ms. MCGRAW. Absolutely. They are almost never sworn.
    Chairman SHAW. Do you find in your experience that--and 
this is getting in the area of represented and non represented 
claimants--I would assume that if someone has a serious claim 
and represented by a lawyer, that perhaps the lawyers screen 
their cases somewhat. So, if somebody is just unhappy with the 
decision but without legal grounds, I would assume that 
probably if a lawyer is representing the claimant--the claimant 
probably has some grounds or the lawyer probably wouldn't have 
taken the case.
    Do you generally find that when the lawyers are involved 
that there are stronger grounds on the average?
    Ms. MCGRAW. I don't think that is necessarily so because I 
think there a lot of claimants out there who simply don't know 
how to go about getting an attorney. They may have a very good 
case. Some lawyers screen. There are other lawyers who are 
willing to take the cases of almost any claimant.
    On average I would say that cases where the claimant is 
represented, there has probably been more preparation of that 
case and a greater understanding of what is necessary to meet 
the disability standards.
    Chairman SHAW. I would assume that most of the State bar 
associations would represent this as a specialty, representing 
claimants for Social Security, and they could actually list 
that as qualified.
    Ms. MCGRAW. Yes, and when a claimant files we send out a 
form that gives them information about sources of legal 
representation.
    Chairman SHAW. A list of lawyers?
    Ms. MCGRAW. Not specific lawyers, but places to go to look 
for lawyers.
    Chairman SHAW. That is interesting. What is the general 
quality of the lawyers who practice before you? That is not a 
fair question, but I am going to ask it anyway.
    Ms. MCGRAW. By and large, it is good, although in any forum 
like this there are those that don't do such a good job. I 
think that Social Security takes the view that the job of 
developing the record is the Judge's. There are some lawyers 
out there who do take the view, ``Judge, it is your job. We 
will let you do it. Ultimately, it is your responsibility.''
    Unfortunately, that happens sometimes, but it is not the 
normal course of events.
    Mr. MATSUI. Thank you very much, Mr. Chairman. I want to 
thank all of you for your testimony.
    Let me follow up with Ms. McGRAW. on the questions that Mr. 
Shaw was asking. My understanding is that there are groups of 
lawyers in various communities, Sacramento, for example, where 
I represent, in which they kind of specialize in Social 
Security claim issues or workmen's comp claim issues.
    We have a law school in Sacramento. It is McGeorge School 
of Law. Oftentimes the lawyers will recruit some of the law 
students to participate in this. I would imagine that law 
students can come before you as well. I have gone through the 
process with some of the professors and some of the lawyers and 
some of the students over the years.
    I find, as you suggest and I think that Mr. Shaw was 
suggesting, some are really good and some are not so good. You 
get all kinds of variations here. Do the Administrative Law 
Judges? They come to know this over time, they are more careful 
in some cases than they need to be in others, I would imagine.
    How does that affect the issue of closing the record, which 
obviously is the big issue in terms of the point of view of the 
ALJ judges in terms of why the case never closes? That is why 
you have somewhat a backlog here.
    Can you discuss that with us a little bit? Go ahead, and 
then I will follow up.
    Ms. MCGRAW. Generally, when someone is represented, I leave 
it up the representative to develop the record. I will often 
identify pieces of evaluated that I feel are missing and need 
to be obtained. I leave it to the representative to do that.
    So, the closing of the record, if a representative is not 
doing their job, it might disadvantage a claimant. I agree with 
you. Representatives are being paid a lot of money, and I think 
they have an obligation. I think it is part of the process that 
they should be held to that obligation to properly develop the 
record.
    Mr. MATSUI. It is so difficult to know when that happens 
and when that doesn't happen. Obviously Mr. Pickering----
    Ms. MCGRAW. I can honestly say, there is discussion that 
there are some attorneys who hold back evidence and then they 
spring it on the Appeals Council. I don't see that happen very 
often. I don't believe attorneys are doing that and 
representatives are doing that. I think what sometimes happens 
is a claimant loses and then a representative will say, ``Well, 
I am going to send this claimant to another doctor and have 
another opinion.''
    Then that opinion gets offered at the Appeals Council level 
and as a result the case gets remanded because it raises a 
question about the decision. That is a somewhat frustrating 
situation for ALJs.
    Mr. MATSUI. I can appreciate that.
    Chairman SHAW. If you would yield to me just for a moment, 
I want to develop this line of questioning a little bit because 
I am confused. I am hearing an inconsistency which probably 
isn't there.
    Do you mean after you rule in a case that the claimant can 
go get another opinion from another doctor and that would be 
admitted at the appeal level at the District Federal Court?
    Ms. MCGRAW. I have had that happen on multiple occasions. 
That is not unusual.
    Chairman SHAW. Well, then the record is kept open as it 
goes up the appellate process.
    Ms. MCGRAW. We do not close the record. We have no 
authority right now to close the record.
    Chairman SHAW. So, you can get reversed on evidence you 
never saw?
    Ms. MCGRAW. I won't get reversed. I will probably have the 
case sent back to me, and that happens a lot.
    Chairman SHAW. Okay. Thank you.
    Mr. MATSUI. On the contrary side of that, and I have a 
totally open slate on this because this is kind of like 
Groundhog Day to me. This has been like a lot of times we have 
had discussions on this and the caseload. The backlog just 
keeps growing more and more and we really need to solve it.
    I really appreciate the Chairman holding these hearings and 
really trying to come to grips with it. In your opinion, and of 
course I am asking you to speculate and I am somewhat reluctant 
to do this kind of--in a formal hearing, because I don't want 
to create a bias for you. Is it in your opinion that the 
lawyers or representatives of the claimants--do you think they 
are gaming the system when they do this?
    I mean I know that there are a lot of doctors in various 
communities that specialize in these areas. You know, you can 
cherry pick, I guess, and pick and choose. You see, probably, 
the same doctors in the reports over and over again.
    Tell me, is that a gaming of the system? Do you think there 
is some of that going on? Again, if you don't want to answer 
it, that is fine, because you do have to maintain your 
independence here.
    Ms. MCGRAW. I think our representatives are putting their 
best foot forward for the claimants, trying to get the case 
allowed. I do see doctors who are used repeatedly by particular 
representatives. The system allows that. I am not sure how to 
correct that, to tell you the truth.
    Chairman SHAW. Mr. Lewis.
    Mr. LEWIS. What is your opinion, the panel, of continuing 
to keep the record open or closing the record? Are you in favor 
of closing the record?
    Mr. BERNOSKI. The Association of Administrative Law Judges, 
and I believe most administrative law judges in the field, are 
of the opinion that the record should be closed because this 
provides administrative finality to the adjudication process.
    In my opinion at some time the record has to be closed and 
the case has to come to an end. We believe that the best point 
for that is at the conclusion of the ALJ hearing when the 
decision is actually signed and issued. At that point the case 
record should be closed.
    There should be at that point a process for an appeal on 
the record, a certiorari appeal on the record that has been 
compiled.
    Mr. LEWIS. On the question of employment representatives, 
should there be a system of certification for these claimant 
representatives or some standard procedures that are set forth 
for these representatives?
    Mr. BERNOSKI. Well, our association hasn't taken a position 
on that issue, but I will offer my opinion. I would say yes. It 
is not uncommon in the government system of administrative 
hearings to have some type of a certification process by the 
government Agency. I think it would be appropriate for the 
Social Security Administration to do that.
    We have a system in place, but it is not very well 
developed. I think there could be work done in this area. It 
would provide protection to the claimant to have the 
government, the Social Security Administration, certify the 
claimant representatives.
    Hopefully we would have better quantity representation. You 
must understand that not all of the representatives are 
required to be attorneys. We have people representing claimants 
before Administrative Law Judges who are not attorneys and do 
not have the skill and training of an attorney.
    In my personal opinion, that is probably where most of the 
trouble is, in that area as opposed to attorney 
representatives.
    Mr. LUBBERS. If I could add a quick point on that. With 
respect to attorneys, under the Agency Practice Act, all 
attorneys are deemed to be qualified to participate in Agency 
proceedings. So, a special law would be needed to allow 
certification of attorneys in SSA cases. With respect to the 
non-attorney representatives, however, it is a different 
matter.
    Mr. PICKERING. On the closing of the record, the American 
Bar Association takes the position that if you do close the 
record, it should not be until after the ALJ hearing, but there 
should be a good cause exception for claimants who have been 
unable through no fault of their own to gather necessary 
evidence.
    The alternative, if there is no additional evidence, is for 
the claimant to start a new proceeding. There is no res 
judicata here and I would like to emphasize, even though 
representation is desirable, we are not dealing with an 
adversary process.
    The Social Security Program is a social insurance for the 
benefit of the people of this Nation. Consequently, they are 
entitled to some help. That is one of the reasons why we 
suggested that the ALJs be able to take a more active role in 
questioning and in trying to assist people to get a full record 
so that rights are not arbitrarily or without reason denied.
    Mr. LEWIS. Just following up on the adversarial role, you 
know, there has been some that believe that the Social Security 
Administration should be represented at the hearing. What is 
your feeling on that?
    Mr. VERKUIL. Maybe I can offer something on that score. In 
the study that Jeff Lubbers and I are doing for the SSAB, we 
will explore this more fully. The following case serves as a 
basis for government representation.
    The first assumption is that when this process started out 
there were no representatives for either side. The ALJ in the 
Richardson v. Perales case in 1971 was approved by the Supreme 
Court as having a three-hat role: represent the claimant, 
represent the United States, Foreign Sales Corpration, and be 
an objective decider.
    Now, over the years one of those hats has dropped off, 
since the claimant is now represented in 80 to 90 percent of 
the cases. That is the reality. So, now the judge has got two 
hats, is that right? This puts the judge in an awkward position 
vis-a-vis the claimant because by trying to question the 
claimant the judge often feels, he or she may be showing a kind 
of bias against the claimant.
    Now, the process looks imbalanced. So, the notion would be 
to give the judge the independent role, keep the one most 
important hat, but give the other one over to a government 
representative. This representative could also serve in 
preparing the case. Importantly, if there are two lawyers, or 
even if there are two non-lawyers, before a hearing, cases can 
get decided without having to go to a hearing. That happens 
frequently in other settings. Certainly in our criminal justice 
system it happens all the time. So, there is that opportunity 
and that is the case for it, I think.
    Mr. LEWIS. So, obviously, you feel like this would speed 
the process up.
    Mr. VERKUIL. It could have that effect. I don't want to be 
committed to a precise definition because we really haven't 
finished the study. But, of course, that is one of the issues 
that would be explored, i.e., whether it would have a positive 
effect.
    Mr. LEWIS. Thank you.
    Chairman SHAW. Mr. Becerra.
    Mr. BECERRA. Thank you, Mr. Chairman. Thank you again for 
this second of two hearings on this matter.
    Thank you all for your testimony.
    Let me ask a series of questions, and I will try to go 
through them quickly. Do disability examiners follow precedent 
in reaching their decisions on whether or not a claimant 
deserves or does not deserve benefits?
    Ms. MCGRAW. Well, they have objective medical standards 
that they use. Court precedent is not really a part of their 
world. They follow the POMS. In my experience from reviewing 
these cases, I would say that they are driven by the objective 
medical evidence in the record.
    Mr. BECERRA. So, it is principally a fact-finding mission 
that these examiners undertake.
    Ms. MCGRAW. What is critical is developing the record 
properly, getting the medical evidence that relates to the 
claimant's impairments.
    Mr. BECERRA. Now, do the examiners have any interaction 
with the claimants?
    Ms. MCGRAW. By and large they do not. They may call them on 
the phone. I see phone contacts asking questions of the 
claimants. If you are familiar with the prototype, with the 10 
States where there has been some change at the DDS. The idea 
was to have a face-to-face contact at the DDS level. The 
Commissioner has now eliminated that face-to-face contact with 
the claimant, even in prototype States.
    Mr. BECERRA. Is that working well?
    Ms. MCGRAW. It has just started. I can't tell you. I think 
that most people believe that face-to-face contact assists in 
deciding a case.
    Mr. BECERRA. That would be my gut reaction as well, that 
you are trying to make a judgment on someone's disabilities 
which in many cases is emotion. To not have a face to face, to 
have a paperwork administrative act occur which could be life 
or death for an individual probably doesn't help that 
individual feel comfortable with the final decision if it is 
adverse.
    It just seems to me that you add to the mounting number of 
days and delay that occurs. It is kind of horrific to see that 
at the very final stage of this process at the Federal court 
level, there is a 64 percent, nearly a two-thirds result of 
either remand or granting of the claimant's case. Two-thirds, 
if we had that in our judicial process, we would be swamped 
from here until eternity. It just doesn't make any sense that 
64 percent of all the cases by the Federal court have to be in 
some way returned to the system to be reviewed.
    It seems to me we don't do enough at the initiative stage 
and if it is accurate that most of these claims that have some 
difficulty take up to 3 years to complete----
    Chairman SHAW. At what level is that? Is that from the 
District Court?
    Mr. BECERRA. You are correct, Mr. Chairman. The numbers 
that I am showing from the Social Security Administration show 
that 6 percent of the cases presented to the Federal court are 
allowed and 58 percent of the cases are remanded, which could 
mean at the end of the day the ALJ still dismisses the case or 
finds adversely to the claimant.
    The fact remains, it has to go through the process again. 
So, you are adding additional time, delays, grief for the 
claimant. Even in our court system, which most people complain 
about to begin with, I guarantee you, two-thirds of the cases 
that go to the court on the appellate level do not have some 
type of positive or recurring activity.
    So, we have got to deal with that. If it takes that long, 
it just seems to me that we have to do a lot more up front and 
that principally means, not just at the examiner level, I would 
hope, and I know there have been some recommendations, that we 
talk about the collection of evidence.
    I would think that we could do a much better job at the 
administrative level of telling claimants, who are not 
claimants at that point, they are just hoping to be 
beneficiaries, what they need to do to get the process running. 
That means give them a better sense of what kind of evidence 
you all look at so they understand what they need to provide in 
terms of medical records; they understand that certain evidence 
that may be provided by non-medical individuals could be 
helpful in their case.
    It just seems that as you try to prepare a better record 
that we can do a lot more through the administration, on the 
government side, of helping prepare the case and giving 
claimants the information they need. Perhaps it is a brochure 
that tells them, ``Get ready if you think you are qualified. 
This is also what you will have to go through if you have to 
appeal.''
    So, they know what they need to keep so they can remember 
the name of that one physician who said this or that, who never 
really did a document at a particular visit to an office or 
something along those lines.
    Time and complexity of cases. I wouldn't go into because I 
think I just did. It seems to me that if you can't get it 
resolved well at the examiner stage, you are in real trouble. 
It just seems that for most of these folks, many of whom are on 
fixed incomes, it is a travesty to expect them to now try to 
find an attorney and in many cases go without an attorney and 
make it through the process.
    Mr. Chairman, I see my light is on. Let me just have one 
last question.
    Should the government be a party in these ALJ proceedings? 
I know that has always been a question that is out there. I 
guess if you have a process in the sense that the government 
prosecuting its case and being seen as an opposing party to the 
claimant, it creates an adversity and it makes it difficult.
    At the same time, perhaps if we help rid ourselves of the 
frivolous cases because now you have the government prosecuting 
this matter to try to engage the claimant in a more robust 
collection of evidence.
    Perhaps what we do is also make the claimant better develop 
the case. Of course, if you have a claimant who is not prepared 
or doesn't have good representation, you are now facing Goliath 
in the government.
    Is there any thought on what we should do in terms of that?
    Mr. HILL. Yes, I think at OHA one of the problems and one 
of the things that takes a lot of time is developing the case. 
The simple fact of the matter is cases are not as well 
developed as they should be coming up.
    Now, a lot of that may be due to the extreme time 
constraints the DDSs, the State agencies are under. The fact of 
the matter is, we get a lot of cases in OHA office that are not 
well developed. We also have a lot of cases that come in that 
when you have worked in the business long enough you look at it 
answer say, ``This is probably a pay.''
    The evidence isn't there. You have to go get it. There are 
a couple of ways to get it. One of the things that was done in 
the past, when we had the Senior Attorney Program, we reviewed 
these files. If it looked like a pay and the people were 
reported, we could make a call to the representative. When the 
representative at that point recognizes that these cases that 
we were looking at as probably pays, you would be surprised how 
fast evidence can come in under those circumstances.
    Mr. BECERRA. I agree.
    Mr. HILL. That is one way to handle it. One of the 
advantages to having somebody represent the government is they 
will be responsible for developing the case. Very quickly, I 
think what is really wrong with OHA is that cases sit and sit 
and sit. They are either in line, we are waiting for evidence 
or there are some time periods that have to run.
    The basic problem is they are sitting there waiting for 
somebody to do them. The quicker we get through them, the 
quicker we have somebody who can make a recommendation, ``We 
should go after this real quick because it looks like pay,'' 
the better off we are.
    Mr. BECERRA. In that regard, don't we have funding that is 
going in the opposite direction of caseload? The SSA has less 
money today to administer these cases than it did before and 
its caseload is ballooning.
    Mr. HILL. It is going up and we need a better way of 
triaging those cases that don't need to go to the judges 
because that is time consuming. Necessarily, it involves all 
kinds of assets. There are a lot of cases that they really 
shouldn't be involved in.
    Ms. MCGRAW. I would suggest, if that case can be paid when 
it comes in the door, DDS didn't do its job. It never should 
have gotten in the door. It should have been allowed earlier in 
the process.
    Mr. BECERRA. Thank you, Mr. Chairman.
    Mr. BERNOSKI. On the government representative, as Mr. 
Verkuil indicated, there is a definite probability that this 
could speed up the process.
    During last week's hearings, it was demonstrated quite 
conclusively that the case doesn't get active until the 
attorney from the claimant gets involved in the case. That 
unfortunately happens most generally at the Administrative Law 
Judge level. If the government also had an attorney involved in 
the case at that level, these two attorneys could more 
completely develop the case at an earlier time. There could be 
a resolution of the case, as Mr. Verkuil said, on a compromise 
basis or on a settlement basis as is normally done in the court 
system.
    I think that would be a beneficial aspect that would help 
the claimant in the process.
    Chairman SHAW. I think Ms. Ford wants to jump in here.
    Ms. FORD. Yes. We are opposed to having SSA represented. I 
think that changes the entire dynamic and the relationship 
between SSA and the claimant.
    Chairman SHAW. Yes.
    Ms. FORD. The SSA is supposed to be helping the claimant 
get that evidence. To put SSA in a position of being in an 
adversarial role against the claimant totally changes things. I 
think it would have to change the nature of an ALJ hearing. You 
couldn't have SSA in two roles in that hearing.
    I think the perception of unfairness of the process would 
be tremendous. This Subcommittee actually has testimony, 
significant amounts of testimony from the government 
representation project in the early 1080s that was submitted on 
behalf of claimants.
    I would be happy to dig that out and resubmit it as it 
stands, but it is in the record, documenting the problems that 
claimants encountered in these types of very adversarial 
hearings.
    Mr. BERNOSKI. Mr. Chairman, I think a point has to be made 
that having the government represent itself helps expedite the 
case, but if it becomes a prosecutor, then Ms. Ford is correct. 
It becomes not only an adversarial process, but a process where 
most claimants won't be able to hold their own. It would cost 
them additional money for the new attorneys that they would 
have to hire.
    We are trying to figure out a way to promote the full and 
expeditious development of the record without turning it into a 
strong prosecutor process.
    Mr. VERKUIL. Excuse me. Maybe the word ``prosecutor'' crept 
in when I drew an analogy to the criminal process. If so, Mr. 
Becerra, I withdraw the word. That is an inappropriate 
reference. Social Security attorneys do not do a prosecutorial 
function. There is a claimant helping function. It would still 
be that.
    We should focus on the fact that Social Security is the 
only ALJ setup where there is no government representation, or 
one of the few I can think of.
    In most cases, an ALJ presides over a formal hearing. So, 
that to bring an attorney in would not be an extraordinary act 
in terms of the ALJ's experience. But surely, even if that 
happens, the nature of the process still would be different 
from formal ALJ proceedings. It wouldn't be as adversarial. It 
might be more so in some contexts, but it would still be a 
claimant helping process and the statute wouldn't change in 
that regard.
    Chairman SHAW. I want to refine a point. Mr. Becerra 
brought out a statistic which, on its face, appears to be 
startling, but it may not be as startling as it appears to be. 
That is that 58 percent of the cases appealed to the District 
Court are remanded back. That, by the way, is up from 48 
percent in the year 2000.
    What percentage of the cases are appealed? We have to know 
that figure first before we know how startling that 58 percent 
is.
    Mr. VERKUIL. I think I can help you with that. There are 
approximately 120,000 decisions at the Appeals Council level 
and about 75 percent are denied, so that leaves you about 
90,000 cases that come to the Appeals Council and have not been 
paid. Of that 90,000, the Federal court only gets, say, 15,000. 
So, the percentage would be--we can do the math. It is 15 or 16 
percent.
    Chairman SHAW. About 15 percent.
    Mr. VERKUIL. There is a lot of drop out.
    Chairman SHAW. Mr. Brady.
    Mr. BRADY. I agree with Mr. Becerra's observations about 
improving the initial decision-making in this whole process. As 
to the panel, I really appreciate your testimony today because 
it seems like this process is just ripe for a major overhaul. 
Not only because between this and SSI we are talking about 5 
percent of the Federal budget, not just because there are very 
tragic individual consequences for not doing this right, for 
cases.
    There are so many areas of improvement open in this whole 
process, it just cries out for a major change in how we handle 
all this. The more homework I do, the more I am becoming 
convinced that the process is legally top heavy in the sense 
that we have an emergency room full of non-emergency cases. All 
important, but many which could have been treated accurately, 
faster, better and sooner in the process.
    By its nature, the legal process in the courtroom is 
deliberate. It is complicated and it is expensive. My thought 
is that it ought to be reserved for, not only as part of our 
due process, but reserved for the cases that are the most 
complex, where the decisions of fact and prospective really are 
difficult. They require the expertise of a legal mind in going 
through that.
    The only way that works is if we dramatically strengthen 
the initial process.
    Many of you offered good ideas on how to do that. As to the 
issue of how do we create an appellate model that works well, 
that really applies those legal resources to those truly legal 
cases. What appellate models would you suggest we look at that 
this Committee or the Social Security Administration look at if 
we are to undertake a major overhaul in the appeals process?
    Mr. VERKUIL. Well, we have several alternatives. One, as an 
appellate model in the court system, Mr. Brady.
    Mr. BRADY. Well, within the whole process.
    Mr. VERKUIL. Oh, within the whole process.
    Mr. BRADY. Whether it is equivalent to the U.S. Department 
of Veterans Affairs (VA) or Workman's Compensation.
    Mr. VERKUIL. We have a VA system which now has become much 
more formalized where there is a Court of Veterans Appeals and 
it reviews decisions. Then there is appeal on legal questions 
to the Federal circuit.
    We also have a Tax Court which as an Article I court, 
resolves most cases involving taxpayers even though there is a 
District Court option. That is, the taxpayer has a choice 
between an Article I or an Article III determination. The 
Article I is vastly preferred. About 90 percent of the cases go 
through an Article I court and then on to an appellate review 
in the Federal court system. So, that is another model.
    Mr. BRADY. Well, which one, in your opinion, works better 
in the whole process of fair, timely, accurate decisions as 
early in the process as possible, and then the legal system 
really gets to the heart of the more complicated matters?
    Mr. LUBBERS. It is a very hard question because there are 
so many levels in the process. I think that most of the 
comments from the panel today were that you want to try to 
resolve as many cases as you can at the beginning, when the 
stream of cases is at its widest. So, there are a lot of 
recommendations that have been made to improve the initial 
disability determination service review of cases.
    Then the stream narrows a little bit at the reconsideration 
level. Some people have suggested getting rid of that. You have 
the ALJ process, Appeals Council and court. So, you have a 
multi-stage process and when you change one process, it affects 
all the other processes.
    Mr. BRADY. Back to the question of which, in your opinion, 
which model ought we look at for significant improvement.
    Mr. LUBBERS. I think the basic structure of having an 
initial determination process at the State level is sound. I 
will consider perhaps not having a reconsideration level before 
going to the Administrative Law Judge system for the full 
hearing. Then the question is, do you need further review at 
the Social Security Administration Appeals Council?
    The panel has differed on that. I think the basic structure 
of maintaining an Administrative Law Judge hearing is something 
we can all agree on.
    So, I don't have a major structural change of the process, 
but I think you have to look at each step and make changes. We 
think a Social Security Court could help.
    Mr. VERKUIL. The reason why, and I would say in response 
that we came out favoring an Article I, Social Security Court, 
precisely because in the current system, in the Article III 
system, there is no feedback loop.
    These Federal District judges get 15,000 to 20,000 cases a 
year. They remand more than half, as was pointed out. That 
remand is a total disconnect. It doesn't even go back 
necessarily to the same decider. Nothing is learned and there 
is no education and uniformity gained from that kind of a 
process.
    An Article I process, however, with a Social Security Court 
who are experts in the field, could be more closely tied to 
educating what was wrong. If you have to remand a case, you 
want the decider to learn why the case was remanded and to get 
it correct the next time.
    An Article I system has a feedback loop that doesn't exist 
in Article III because it is just two different worlds. If you 
create an Article I court with rule making and other powers 
that would be provided through the Agency, you could define 
issues more clearly. You could have more accountability at the 
administrative system, and there would be connections.
    So, that is the argument in favor of it. That is why we 
would say we think the case for Article I is worth 
reconsidering.
    Mr. PICKERING. The view of the ABA on this is that it may 
be time to revisit whether we change the system or judicial 
review between Article I and Article II courts.
    The real problem here, as you have identified, is getting 
the system right at the beginning. Everything else will fall 
into place if we have a much better intake system, much better 
development of the record and help given to these people, many 
of whom are not represented by attorneys and need the help of 
the tryers of fact as to what are the deficiencies in the 
record. The better the product is from the beginning, the more 
likely it is that everything else will fall in place.
    Mr. BRADY. Thank you.
    Mr. BERNOSKI. It is our opinion, as we indicated in our 
written statement and during the testimony, and I agree with 
the other panelists, that the first thing that must be improved 
is the initial intake, review and decision. It should be based 
upon the legal standard that the ALJs use.
    The case is then appealed to the next level, and that is 
where the government representative is important. The 
government representative would develop the case as needed and 
would compromise or settle the cases that could be settled at 
that point.
    After the Administrative Law Judges hearing, we are of the 
opinion that the next level of appeal, if there is going to be 
one in the Agency, should be, to a three judge Administrative 
Law Judge panel. That panel is based on the Bankruptcy Court 
model, which is working well. That would give a higher and more 
careful level of review.
    After that, we believe the case should go into the Federal 
District Court because that seems to be the preference of the 
bar. Congress also seems to be very comfortable with the 
Federal District Court review of Social Security cases. 
Although there seems to be an interest in exploring a change at 
that level.
    Mr. BRADY. Okay. Thank you, Mr. Chairman.
    Chairman SHAW. Ms. Ford, go ahead and then Mr. Matsui has 
some questions.
    Ms. FORD. First of all, I am in an agreement with the other 
witnesses who have said that the front end is the important 
place to be putting our time and effort--in case development 
and evaluation. From our perspective, the process needs to 
remain informal for the claimant because this is a very 
difficult process.
    Not all medical evidence may be available at all points 
along the process. We have to help that claimant put as much 
forward as possible.
    I think one point that keeps getting missed is the fact 
that submitting a new application is not a valid choice for 
many people. If you are applying for Title II benefits, you 
must apply for benefits for a certain period of time to keep 
your connection to the recency of work--you must have worked 20 
out of the last 40 quarters before the period applied for.
    So, if your case has been denied, and then you are forced 
later to reapply, you may in fact lose eligibility permanently 
(res judicata) for benefits that you in fact should have been 
found eligible for.
    I am not sure that the question at higher levels of appeal 
should be, ``What was wrong in the earlier decision so much as 
the question might be, what more do we know about the claimant 
now at this later stage of the process?'' Thank you.
    Chairman SHAW. Well, Ms. Ford, just to expand on that 1 
second, though, let's assume none of these guys get into the 
case and the claimant is settled very, very quickly to 
everybody's satisfaction and then several years later, perhaps 
someone who was 50 percent disabled becomes 100 percent 
disabled. They can go back, can't they, at any time on that?
    Ms. FORD. The date of application is going to be important 
for the back benefits for a lot of folks. Also, in Title II 
their claim of when disability began has to be within that time 
period of having worked 20 out of the last 40 quarters.
    In Title II, there is the potential for waiting too long 
and losing benefits or losing eligibility.
    Mr. LUBBERS. I want to make a quick point, Mr. Chairman.
    Chairman SHAW. I am confused by that.
    Mr. LUBBERS. You mentioned a 50 percent disability. My 
understanding is that in the VA system you can be partially 
disabled, but in Social Security, you are either disabled or 
you are not.
    Chairman SHAW. That's correct.
    Mr. HILL. There is another real misunderstanding, when you 
file an application for disability insurance benefits, you 
allege an onset date. That onset date is not the date you file 
the application. I could file an application today alleging I 
was disabled December 1, 1988. If I have the evidence to show 
that I was disabled December 1, 1988, I will be awarded 
benefits, provided my case is approved.
    Chairman SHAW. One of the disadvantages that we have, and 
it probably is obvious from some of the questions that we are 
asking. We are trying to help reform a system that we have 
never seen before, even though you are a lawyer, aren't you?
    Mr. BRADY. No.
    Chairman SHAW. No? You plead not guilty?
    Mr. BRADY. Not guilty.
    Chairman SHAW. Bob and I are reformed lawyers, but neither 
one of us have been through this process. Most lawyers haven't. 
Mr. Matsui?
    Mr. MATSUI. May I ask, Ms. Ford, because I did ask the 
Administrative Law Judges about the closing of the record, I 
would like your thoughts? Perhaps, Ms. Shor, if you want to add 
to it, if you have any new thoughts on this.
    Ms. FORD. Well, we think the record should remain open as 
it is allowed to be now. There are some limitations. I 
understand what has been said earlier, but as I understand it, 
there are some limitations on what new evidence could come in 
after the ALJ level or the appeals level. It depends on whether 
the new evidence relates to the period of time before the ALJ 
hearing.
    There are some limits on new evidence. There is, therefore, 
some pressure on the claimant and the representative to get 
evidence in early.
    This is so important for the claimant, I don't think that 
we should be closing the record before it is absolutely 
necessary.
    If it can be handled by remanding--as it is now--or 
otherwise taking a look at the evidence, whatever is available 
that tells us more about that claimant and whether or not they 
have an impairment that is disabling ought to be looked at.
    Chairman SHAW. Did you want to add to that?
    Ms. SHOR. I think with the discussion earlier about Federal 
court, the statute provides that there has to be good cause and 
evidence has to be not cumulative and has to be new and 
material. The evidence that is going into Federal court cases 
is already quite tightly restricted.
    I don't think you would want a situation where someone with 
perhaps diverse symptoms and an undiagnosed case at the time 
they appeared before an ALJ, and was subsequently given a 
diagnosis of Multiple Sclerosis, for example. This happens 
quite frequently because it is a condition that is so difficult 
to diagnose. It seems more administratively efficient to deal 
with that case on remand when in fact the policy of the Social 
Security Administration is to send Federal court case remands 
back to the ALJ who heard the case in the first place; rather 
than to tell that person to file a new application and go back 
to the front of the line.
    That is the important reality. People with new evidence are 
not going to disappear. If the door were slammed in their face 
immediately and they were told, ``Under no circumstances and 
for any reason new evidence will not be accepted'' the Social 
Security Administration is not free from dealing with that 
person. They will go back to the front of the process, file a 
new application and frequently will find themselves 
disadvantaged by that choice.
    Mr. MATSUI. Thank you.
    Chairman SHAW. Well, we have learned about a lot of 
problems. I think it is going to take, a lot of independent 
study. Professor, perhaps you will come in with some answers 
that we will have a hearing on at a later date with your study. 
Perhaps the American Bar Association might come in with some 
study and suggest recommendations.
    The problem really is going to have to be looked at by the 
people who are in the system and know the system well as to how 
to streamline it.
    One further question I do have, though, and I would like to 
ask this of both the judges. What is your current case backlog? 
I am concerned exactly as to where the delays are.
    Ms. MCGRAW. It varies widely from office to office. Within 
my office I am now processing cases, requests for hearing that 
have come in our office in February of this year. We are pretty 
caught up. Then there are other offices around the country that 
are woefully backlogged.
    Chairman SHAW. Is that because of the--I will try to put it 
delicately, but I am not sure I can--about the work ethic of 
the judge involved?
    Ms. MCGRAW. No, I can't really tell you why that is. Mr. 
Bernoski, you may have a better understanding of it. I don't 
know the reason. I know that that is the situation in our 
office.
    Chairman SHAW. In Federal courts the work ethic of the 
judge has a lot to do with it.
    Ms. MCGRAW. It does, there is no doubt about that.
    Mr. VERKUIL. It varies greatly at all levels, 
administrative law judges and District judges.
    Chairman SHAW. Some judges have a huge backlog just because 
they are not working enough.
    Mr. BERNOSKI. The overall backlog in the Agency, as we 
indicated, has grown. I believe it is around 490,000 cases or 
in that neighborhood at this point.
    As Ms. MCGRAW. indicated, that backlog does vary between 
individual offices for various reasons. Some offices just have 
more cases coming in. Some have more Administrative Law Judges. 
Some have more staff. So, to some extent, it is particularized 
in the offices.
    But the overall backlog for the Agency is growing. The HPI 
has hurt us to the extent that, as Ms. MCGRAW. testified, the 
confusion that has been caused by the API process has allowed 
fewer cases to be set up for hearings. That has caused backlogs 
to grow, together with the filings of more cases.
    Chairman SHAW. What is the average backlog in your area?
    Mr. BERNOSKI. In our office, we were relatively current, 
but it is growing now. There seems to be more cases coming in.
    Chairman SHAW. What is current--February?
    Mr. BERNOSKI. For us current is about 6 months.
    Chairman SHAW. I see. Thank you all very much. We very much 
appreciate it. It has been very enlightening. We are trying to 
build some knowledge in this area, which I think is 
tremendously important to the people we serve.
    Thank you very much.
    [Questions submitted by Chairman Shaw to the panel, and 
their responses follow:]
                          Consortium for Citizens with Disabilities
                                               Washington, DC 20006
                                                     August 9, 2002
The Honorable E. Clay Shaw, Chairman
Subcommittee on Social Security
U.S. House of Representatives
Washington, DC 20515

    Dear Chairman Shaw:

    This is in response to your letter of August 1 requesting 
additional information regarding the Social Security disability 
programs' challenges and opportunities. Specifically, you asked:

    1. There have been suggestions that to improve the entire 
disability determination process, the claimant's record needs to be 
better developed at the disability determination services (DDS). This 
would involve obtaining more complete medical evidence earlier in the 
case. SSA's procedures include field office and DDS personnel advising 
claimants of the information needed to determine their eligibility for 
disability benefits. Are these procedures not being followed? Is the 
information that is now provided not adequate? If not, what else can be 
done to better gather and develop the evidence?
    I suspect that the ability of claims representatives and DDS staff 
to properly collect evidence would depend on a number of factors, 
including the workload of the individual and the tools available to 
assist in the process. Collection of better evidence earlier requires 
that SSA look carefully at all of the factors that currently hinder the 
effort. Applicants come to SSA with varied backgrounds. Some will not 
understand the process or the importance of the evidence; some may not 
have consistent treating medical sources in their history; and still 
others may not fully grasp their own impairments. SSA should look at 
all of the relevant factors, such as: whether the claimant needs 
assistance in understanding the process and the nature and importance 
of the material to be collected; whether the field offices and DDSs 
have adequate staffing and resources to thoroughly carry out evidence 
collection functions, including necessary follow-up with treating 
sources; whether physicians and others from whom evidence is sought are 
given enough guidance about what documentation is needed and the 
importance of a speedy response; whether consultative exams should be 
purchased earlier in the process for those without adequate medical 
treatment histories; and whether payment rates for consultative exams 
are adequate.
    It would be valuable for SSA to work with claimants' 
representatives, including attorneys, who have proven their ability to 
collect otherwise unavailable evidence. SSA should identify the key 
differences in the approach to evidence collection between these 
claimants' representatives and the SSA and DDS staff who have the 
statutory responsibility for evidence collection. It may be that the 
overall elements are the same (letters of request, follow-up phone 
calls, and etc.), but that the details or implementation differ 
(initial interview with claimant, content of the letter to physicians, 
number of follow-up calls, and etc.). I believe that such an effort 
could only result in useful, valuable information for SSA to use in 
assessing its own procedures.
    2. In your testimony of June 20 (page 4), you state that you 
believe a claimant's record should remain open so they are not wrongly 
punished for events that may be beyond their control. Could your 
concerns regarding closing the record be mitigated if claimants were 
provided sufficient protections? If so, what protections would be 
needed for you to support closing the record?
    Some of my concerns regarding closing the record could be mitigated 
if claimants were provided sufficient protections. These protections 
would have to include a hold-harmless provision for claimants whose 
late evidence is not accepted for purposes of reaching a decision. The 
claimant would have to be protected against application of the doctrine 
of res judicata--the period of time covered by a decision would need to 
be open for further decisionmaking in the future should late evidence 
become available. This must protect the claimant in at least two ways. 
The claimant should be able to apply again for the same time period and 
be able to receive any back benefits for that period without being 
negated by res judicata. Further, those claimants whose coverage has 
expired due to application of the recency of work test (insured status 
requires 20 quarters of coverage out of the last 40 quarters) must be 
able to apply again for that same time period, should late evidence be 
available, without being negated by res judicata. It is interesting to 
note that, in 1990, when Congress addressed the notices which SSA sends 
to beneficiaries and claimants, there was a clear recognition that re-
application, under current policy and accepted legal doctrine, does not 
equate to an appeal.
    Another way to address this issue might be to allow a case to be 
reopened. However, the current regulations on reopening a case place 
time limitations on the reopening, leave the decision to reopen to the 
discretion of the Commissioner, and do not allow appeals on the 
decision regarding reopening.
    Even if the above concerns were addressed, I would be concerned 
about the potential delay in the process. Claimants with late evidence 
would be forced to begin again and go through the entire process. I 
would expect this to increase, rather than decrease, administrative 
burden. In addition, from the claimant's perspective, the refusal to 
accept late evidence and the insistence on making a decision on a less-
than-complete record would create the appearance of arbitrary 
decisionmaking and government waste.
    As the process currently stands, late evidence is accepted under 
certain conditions, avoiding the appearance of arbitrary decisions and 
allowing a common-sense result of a decision made on the basis of all 
available evidence. Existing statutory and regulatory provisions 
recognize the need for the system to be flexible enough to admit such 
evidence on a limited basis. I believe that if the acceptance of late 
evidence were viewed in a common-sense way, there would be no problem 
with ensuring that all available evidence is brought into a decision. I 
believe part of the problem with late evidence is the perception that a 
remand to the ALJ from the Appeals Council or the district court is 
indicative of a bad or wrong decision. In many cases, it is merely 
indicative of late-arriving, but relevant, evidence. Quality assurance 
mechanisms should take this into account.
    3. The Social Security Advisory Board, in their testimony of June 
11 (page 8) recommended that the Social Security Administration (SSA) 
consider establishing a system to provide certification for claimant 
representatives and establishing a system to provide certification for 
claimant representatives and establishing uniform procedures for them 
to follow. What are your comments on this? What are the pros and cons 
of implementing these suggestions?
    I do not believe that certification is necessary, given the tools 
already available to SSA for ensuring proper behavior by 
representatives and the bureaucracy it would be necessary to establish 
for a certification process. The limited administrative funds available 
to SSA can be put to far better use in improving the disability 
determination process.
    In 1998, SSA issued final rules governing the conduct of all 
claimants' representatives, ``Rules Of Conduct And Standards of 
Responsibility for Representatives''. 20 C.F.R. 404.1740. These rules 
include both affirmative duties and prohibited actions, addressing, 
among other things, the duties to obtain and submit evidence and to 
comply with requests to submit evidence. The rules establish a 
procedure for filing complaints against representatives which are 
handled by SSA's Office of Special Counsel. In addition, SSA has the 
capacity to reduce attorneys fees in any case.
    Thank you for this opportunity to provide comment on these issues. 
I would be happy to respond to any further questions.
            Sincerely,
                                                         Marty Ford
                                                           Co-Chair
                                        Social Security Task Force.

                                 

National Organization of Social Security Claimants' Representatives
                                     Midland Park, New Jersey 07432
                                                    August 21, 2002
Hon. E. Clay Shaw, Jr., Chairman
House Ways and Means Subcommittee on Social Security
U.S. House of Representatives
Washington, DC 20515

    Dear Chairman Shaw:

    I am responding to your letter dated August 1, 2002, requesting 
additional information for the June 20, 2002 hearing on the Social 
Security disability programs' challenges and opportunities. 
Specifically, you asked for a response to the following question:
    1. The Social Security Advisory Board, in their testimony of June 
11 (page 8) recommended that the Social Security Administration 
consider establishing a system to provide certification for claimant 
representatives and establishing uniform procedures for them to follow. 
What are your comments on this? What are the implications of 
implementing these suggestions?
    For the following reasons, I do not believe there is a need for 
certification of claimants' representatives.
    First, the bureaucracy involved in establishing and maintaining a 
certification system would be a significant expenditure of limited 
agency resources. In any meaningful certification program, required 
tasks include:

         defining the area of practice
         devising the applicable standards
         writing the examination
         administering the examination
         grading the examination
         providing an appeal mechanism for aggrieved 
        certification candidates
         maintaining the certification roster, and
         providing for future re-certification.

    Second, SSA already has adequate procedures to govern the conduct 
of representatives. All claimants' representatives are subject to the 
agency's Rules of Conduct and Standards of Responsibility for 
Representatives, which have been in effect since 1998. 20 C.F.R. 
Sec. Sec. 404.1740, et seq., and 416.1540, et seq. These rules include 
both affirmative duties and prohibited actions. They were designed to 
clarify the obligations of representatives by promoting competence, 
diligence, and timeliness. The rules establish a procedure for filing 
complaints against representatives with the Office of Special Counsel 
(OSC) at the Office of Hearings and Appeals. OSC has the responsibility 
to investigate complaints and to administer discipline (suspension or 
outright disqualification) where warranted. Should, for example, an 
Administrative Law Judge (ALJ) wish to file a complaint about the 
conduct of a representative, the procedures set forth in the 
regulations on the Rules of Conduct would address the ALJ's concerns.
    Third, certification is not necessary because most representatives 
are attorneys and their conduct is already governed by state bar 
organizations. Each state bar promulgates rules of conduct and codes of 
professional responsibility. To the extent that a problem of misconduct 
by a claimant's attorney exists, SSA has the discretion to address each 
instance by referring it to the state bar which holds the license of 
the attorney involved.
    Thank you for the opportunity to provide this information.
            Very truly yours,
                                                      Nancy G. Shor
                                                 Executive Director

                                 

                                            Federal Bar Association
                                               Washington, DC 20037
                                                   January 10, 2003
Hon. E. Clay Shaw, Jr., Chairman
House Ways and Means Subcommittee on Social Security
U.S. House of Representatives
Washington, DC 20515

    Dear Chairman Shaw:

    1. The Social Security Advisory Board has stated that the Federal-
State relationship should be strengthened. Do you agree? If so, why do 
you agree? How can that relationship be strengthened?
    Out of concern for the variations in State Agencies in areas such 
as staff salaries, hiring, qualifications, training and quality 
assurance procedures--all of which have a major impact on quality of 
work product--the Advisory Board has asserted that the Federal-State 
relationship needs strengthening. While the Advisory Board has not 
advocated Federalization of the State programs, it has recommended 
implementation of guidelines for disability examiners vis-a-vis 
experience, training, background and salary.
    The Social Security Section of the Federal Bar Association (FBA) 
appreciates the point being made by the Advisory Board. The Social 
Security disability program is a national program and a person living 
in New Hampshire should expect his claim to be adjudicated in a 
comparable manner to the person living in Texas. While Federal 
guidelines in the areas mentioned above are a good idea, it is more 
important that the Social Security Administration (SSA) strengthen its 
oversight of the quality of State Agency decisionmaking. It can do so 
by implementing a strong and consistent quality assurance (QA) program 
within SSA that monitors State Agency work. The component that 
currently does this job is known as the Disability Quality Branch 
(DQB). It wields significant power over the States' work but it does 
not appear to have effectively fulfilled its mission. As GAO indicated 
in its report ``Social Security Disability: Disappointing Results from 
SSA's Efforts to Improve the Disability Claims Process Warrant 
Immediate Attention'' (GAO-02-322), SSA needs to develop a quality 
focused culture and it needs to implement a comprehensive quality 
assurance program. Such a program at the State Agency level needs to 
focus not only on favorable decisions but also on unfavorable decisions 
and adequate development of the record. To date, there is no evidence 
that this has been done.
    As just one example, SSA has a treating physician rule set forth at 
20 C.F.R 404.1527 and further explained in Process Unification Ruling 
SSR 96-2p. This rule is applicable at all levels of adjudication. Yet, 
State agencies repeatedly fail to apply this rule and the perception is 
that DQB condones and sometimes even encourages this practice. The 
actions of DQB have a profound impact on the work of the State 
Agencies, and we suggest that SSA focus on the function and performance 
of its quality assurance component as a means of strengthening the 
Federal-State relationship.
    2. You state that claimants' subjective complaints are not 
evaluated at the DDS level, but are when the cases reach OHA. Why is 
this? What could be done to improve the evaluation of subjective 
complaints at the DDS?
    Evaluation of subjective complaints, i.e., symptoms, such as pain 
and fatigue is a very difficult task because it requires an assessment 
of a claimant's credibility. Subjective complaints are not measurable 
by means of clinical tests or lab findings. Under SSA law, if a person 
has a medically determinable impairment that could cause subjective 
complaints of the type alleged, then the extent of those complaints 
must be evaluated. Reports from both claimant representatives and ALJs 
indicate that it is fairly standard that State Agency reviewing doctors 
will inevitably conclude that a person with a bulging lumbar disk that 
impinges on a nerve is capable of light exertional work. Yet, because 
this medically determinable impairment has the potential to cause 
debilitating pain in any given individual, SSA law requires that a 
number of factors beyond the objective clinical findings be considered 
in evaluating the person's ability to function. At 20 C.F.R. 404.1529, 
seven factors are set forth and they include: activities of daily 
living; location, duration and intensity of pain or other symptoms; 
precipitating and aggravating factors; type, dosage, effectiveness and 
side effects of medications; treatment other than medication for 
alleviation of the pain or other symptoms; measures used to alleviate 
pain or the other symptoms such as lying flat on one's back, sleeping 
on a board, changing positions; and other factors concerning one's 
functional limitations due to pain or other symptoms. These factors are 
elaborated upon in SSR 96-7p.
    Given the time and resources available to State Agency examiners, 
evaluating subjective complaints is a daunting task. Moreover, 
consideration of subjective complaints can lead to what appear to be 
inconsistent results in cases involving identical or similar objective 
findings. Yet, SSA regulations and rulings require that subjective 
complaints be assessed at all levels of adjudication.
    We submit that examiners who attempt to perform this kind of 
individual assessment may be taken to task by State Agency medical 
consultants, as well as SSA's quality component, as they tend to focus 
almost exclusively on objective clinical findings. It is much easier, 
more predictable, and less time-consuming to make decisions based 
solely on objective findings. As prototype States are discovering, if 
the State Agencies are going to evaluate subjective complaints they 
need more resources--more time per case, more employees, more training 
and better retention of trained employees. This means one thing--more 
money.
    3. During the hearing, you seemed to indicate that the DDSs needed 
to better evaluate claims. What suggestions do you have for improving 
case evaluation by the DDSs?
    The answer to this question is inextricably entwined with the 
response to the previous question. In addition to my previous response, 
however, there are steps that can be taken at the DDS level to better 
evaluate claims. First, there needs to be better development of the 
record. All sources of relevant medical evidence need to be identified 
and contacted. Where medical evidence is scant, appropriate 
consultative examinations must be obtained. Too often, a claimant with 
an orthopedic problem is sent to an internist or family practitioner 
rather than to an orthopedist or physiatrist and the examination is not 
particularly enlightening. Yet, it is relied upon to decide the 
claimant's eligibility for benefits. In addition, the old saw, ``you 
get what you pay for'' certainly applies to CEs, and DDSs do not pay a 
competitive fee to the doctors performing these examinations.
    Obtaining medical evidence is not always easy to do. Sources can be 
dilatory and uncooperative. If SSA could facilitate cooperation from 
hospitals and doctors, it would go a long way to improve the process. 
In addition, involvement early on at the DDS level by claimant 
representatives could facilitate the gathering of evidence. 
Unfortunately, such involvement at the State Agency level tends to be 
viewed as interference rather than assistance and thus may be 
discouraged.
    Claimants need to be provided a rational explanation for why they 
have been denied benefits. The determinations issued by the DDSs can 
best be described as uninformative. They are crammed full of standard 
language but they are very short on explanation as to why the claimant 
is being denied. A typical explanation reads something like this:
    You said that you are disabled because of chronic obstructive 
pulmonary disease, bursitis and depression. The available medical 
evidence shows that your condition or combination of conditions is not 
severe enough to be disabling. The evidence does not show an impairment 
that would prevent you from performing some work-related activities. It 
has been decided, therefore, that you are not disabled according to the 
Social Security Act. We have concluded that you are able to return to 
your past work as it is usually done in similar jobs.
    This sheds little light on how this decision was reached. A real 
explanation for the denial could result in fewer appeals if claimants 
understood why they don't meet the standard for disability.
    In 1996, SSA embarked upon a process unification initiative to 
assure that the same standards are used at all levels of adjudication. 
State Agencies were expected to assess subjective complaints and 
provide a reasoned rationale in their determinations. At the OHA level, 
ALJs would then be expected to give deference to those rationales. 
Other than in prototype states, this has not happened and it appears 
that SSA has quietly abandoned this initiative.
    4. In your testimony, you question the need for an Appeals Council. 
You give as an example that the substantive legal correctness of the 
decisions of the Appeals Council has been frequently challenged. Do you 
suggest an alternative to the Appeals Council? If so, what?
    In theory, the role of the Appeals Council is a good one--a final 
review in the administrative process before a claimant reaches Federal 
Court. Where an ALJ has erred or failed to provide a full and fair 
hearing, the Appeals Council can remand the case for a new hearing and 
decision. In this way, the Appeals Council acts as a filter for the 
Federal Court system weeding out many cases that might otherwise be 
filed in court.
    Unfortunately, however, of late the theory has been far better than 
the reality. In recent years, the Appeals Council has been overwhelmed 
and unable to provide timely, effective review. Yet, to its credit, 
when faced with the overwhelming workload, the Appeals Council has 
implemented strategies that have reduced average processing time by 
over 200 days since early 2000. Moreover, the pending request for 
review workload has been decreased from nearly 156,000 to below 58,000 
as of December 2002.
    Nonetheless, as at all levels within the disability process, there 
is need for improvement within the Appeals Council. I offer a few 
suggestions. First, there must be a better way to maintain the 
recording of the hearings. Far too many cases are remanded solely 
because the hearing tape has been lost at the Appeals Council. Second, 
SSA should consider the suggestion set forth by the Supreme Court in 
Sims v. Apfel, 530 U.S. 103, 120 S.Ct. 2080 (2000), that SSA impose an 
exhaustion requirement, i.e., that the Appeals Council will limit 
review to those exceptions raised in the request for review whenever 
the claimant is represented. Third, consideration should be given to 
setting a time limit by which review must be accomplished or the 
claimant is afforded the right to proceed to Federal Court. Fourth, as 
noted earlier, SSA needs a quality assurance program at all levels. At 
the Appeals Council, this should result in a reduction in the large 
number of cases where the Appeals Council has affirmed an ALJ decision 
and, after a complaint has been filed in district court, the Appeals 
Council agrees to seek a voluntary remand finding the same record it 
had earlier reviewed to be now legally insufficient. It should also 
result in more meaningful feedback and direction to ALJs in the remand 
orders.
            Sincerely,
                                               Hon. Kathleen McGraw
                                                              Chair
                                            Social Security Section

                                 

                 Benjamin N. Cardozo Law School, Yeshiva University
                                           New York, New York 10005

                     Washington College of Law, American University
                                               Washington, DC 20016
                                                    August 15, 2002
Hon. E. Clay Shaw, Jr., Chairman
Chairman
Subcommittee on Social Security
House Committee on Ways and Means
Washington, DC 20515

    Dear Chairman Shaw:

    This is in response to your follow-up question from the June 20, 
2002 hearing. Your question, and our response, follows:

    1. You stated that the SSA's ALJ hearings are the only hearings 
processes that you know of where the agency is not represented. Would 
you explain what makes the ALJ hearings in SSA unique from other 
agencies' administrative hearings?
    Although we haven't completely researched the issue, we believe 
that SSA ALJ hearings are the only ones where the agency is, as a rule, 
unrepresented. This has been the case since the beginning of the 
disability program, (except for the short-lived government 
representation experiment in the 1980s). In such cases the 
Administrative Law Judge (ALJ) has been relied upon to ``wear three 
hats''--(1) neutral adjudicator; (2) protector of the claimants' 
rights; and (3) trustee of the Social Security Trust Fund.
    This makes the SSA adjudication process unique from other 
adjudications presided over by ALJs. Of course there are many different 
types of ALJ adjudications--benefit claims denials, benefit 
revocations, initial license denials, license revocations, civil money 
penalties, etc. In agency enforcement cases, the agency is, of course, 
represented since it is, in effect, the ``prosecutor'' in the case. In 
initial benefit or initial license denial cases, there might appear to 
be less reason for an adversary proceeding since nothing is being 
``taken away'' from an applicant. Nevertheless, someone from the agency 
normally is charged with defending the agency's decision to deny the 
benefit or license if the case is contested before an ALJ.
    SSA disability cases are the exception to this rule. This obviously 
places a great responsibility on the ALJ. It may have been more 
understandable for the government to not be represented in the early 
days of the program when most claimants were also unrepresented. As 
late as 1977, less than half of all claimants were unrepresented (by 
either a lawyer or non-lawyer) at the ALJ hearing. Now, however, the 
figure is about 87% (70% by lawyers and 17% by non-lawyers).
            Sincerely,
                                                       Paul Verkuil
                                                   Professor of Law
                                                 Yeshiva University

                                                    Jeffrey Lubbers
                                                             Fellow
                                                American University

                                 

    [Questions submitted by Mr. Matsui to Ms. Ford and Ms. 
Shor, and their responses follow:]

                          Consortium for Citizens with Disabilities
                                               Washington, DC 20005
                                                      July 12, 2002
The Honorable. Robert Matsui, Ranking Member
Subcommittee on Social Security
Ways and Means Committee
U.S. House of Representatives
Washington, DC 20515

    Dear Representative Matsui:

    This is in response to questions in your letter of June 27 
requesting additional information following the June 20 hearing in the 
Subcommittee on Social Security regarding challenges in the Social 
Security disability programs.
    1. How would closing the record force workers at SSA field offices, 
DDSs, and OHA to do a more complete job of developing all evidence 
necessary to make a well-considered disability decision, since this 
does not always happen under current procedures?
    I do not believe that closing the record earlier than is required 
under current law would improve the performance of workers at SSA field 
offices, DDSs, or OHA in collecting evidence. The penalty, closing the 
record to evidence that comes in late, falls only on the claimant.
    It does seem clear that ensuring better development of evidence 
earlier in the process would help at all later stages of the process. 
Collection of better evidence earlier requires that SSA look carefully 
at all of the factors that currently hinder the effort now. Applicants 
come to SSA with varied backgrounds. Some will not understand the 
process or the importance of the evidence; some may not have consistent 
treating medical sources in their history; and still others may not 
fully grasp their own impairments. To fill these gaps will require 
addressing such things as: whether the claimant needs assistance in 
understanding the process and the nature and importance of the material 
to be collected; whether the field offices and DDSs have adequate 
staffing and resources to thoroughly carry out evidence collection 
functions, including necessary follow-up with treating sources; whether 
physicians and others from whom evidence is sought are given enough 
guidance about what documentation is needed and the importance of a 
speedy response; whether consultative exams should be purchased earlier 
in the process for those without adequate medical treatment histories; 
and whether payment rates for consultative exams are adequate. 
Improving the whole range of factors that result in slow development of 
evidence will be necessary to ensure any significant improvement.
    2. How would SSA obtain the resources necessary to provide agency 
representation, given the severe constraints on its budget and the 
rising backlog of claims awaiting decisions at the DDS, ALJ, and 
Appeals Council levels? In your opinion, would this be the best use of 
additional resources, should they be provided to the agency?
    Providing agency representation at the ALJ hearings would be very 
costly. As reported by Nancy Shor of the National Organization of 
Social Security Claimants' Representatives, the SSA government 
representation project of the `80s was very costly. I do not believe 
that the cost can be justified, especially since agency representation 
has proven to change the nature of the hearings to an adversarial 
process. In addition, agency representation is likely to add processing 
time (based on experience with the project in the `80s) and, certainly, 
does nothing to ensure that overall processing times are reduced or 
better evidence is developed earlier.
    Any additional resources available to SSA should be targeted to the 
better development of evidence earlier in the process, as discussed 
above.
    Thank you for this opportunity to provide comment on these issues. 
I would be happy to respond to any further questions.
            Sincerely,
                                                         Marty Ford
                                                           Co-Chair
                                         Social Security Task Force

                                 

National Organization of Social Security Claimants' Representatives
                                     Midland Park, New Jersey 07432
                                                      July 12, 2002
Honorable Robert T. Matsui, Ranking Member
Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Washington, DC 20515

    Dear Representative Matsui:

    I am responding to the questions in your June 27, 2002, letter to 
provide additional information for the record of the June 20, 2002, 
hearing before the House Ways and Means Subcommittee on Social 
Security.
    1. Proponents of having a ``government representative'' represent 
the agency claim that this change would result in better development of 
evidence. Why would a ``government representative'' do a better job of 
developing a claimant's case and the evidentiary record than the 
existing cadre of field office personnel, Disability Determination 
Service workers, attorneys at the hearing offices and Administrative 
Law Judges?
    SSA's duty to develop the evidence is well established in its own 
regulations and the case law, a duty that exists even it the claimant 
is represented at the ALJ hearing level. In the past, OHA staff 
developed cases at the hearing level. However, in most cases where 
claimants are represented, the ALJ will rely on the representative to 
obtain updated evidence, as ALJ Kathleen MCGRAW. testified before the 
Subcommittee on June 20, 2002. If the claimant is unrepresented, OHA 
staff develops the evidence. Even if there is a representative, the ALJ 
may nevertheless decide to obtain evidence, for example, a consultative 
examination.
    Existing DDS and OHA staff can do an adequate job of developing the 
record, if provided with sufficient resources and staffing. As 
discussed below in response to question 4, the government 
representatives did not adequately assist in development of the 
evidence during SSA's mid-1980's ``Government Representation Project 
(GRP). Based on testimony before this Subcommittee in March 1986, the 
cost of the GRP was nearly $1 million per year for the 5 OHAs 
participating in the Project. Given the enormous cost of providing 
government representation at the more than 100 OHAs that currently 
exist, we believe that the limited dollars available to the agency 
could be put to better use by assuring adequate staffing at the DDS and 
OHAs and developing better procedures to obtain evidence, including 
reasonable payment for medical records and examinations.
    2. If the agency is represented at a hearing only when the claimant 
has his or her own representative, wouldn't the agency representative 
unavoidably be placed in the position of opposing the claim and 
defending the agency's prior decision?
    In Salling v. Bowen, 641 F. Supp. 1046 (W.D.Va. 1986), the court 
held that SSA's previous effort to have the agency represented at the 
ALJ hearing in the 1980's was unconstitutional and permanently enjoined 
SSA from holding further proceedings under the GRP. The court found 
that ``[t]he mere presence of a government advocate at the hearing 
renders it adversarial--The government advocate is under no obligation 
to try to ascertain the truth but, rather, he is there to state the 
SSA's position in the case.'' 641 F. Supp. at 1070. The court noted 
that while the 1982 GRP regulations baldly stated that the project 
would not be adversarial, all the evidence presented in the case 
established otherwise.
    It is difficult to see how a representative for the agency would be 
anything other than adversarial. Otherwise, there would not appear to 
be any reason to have a government representative. As the Salling court 
noted, the ``mere presence'' of the government representative makes the 
proceedings adversarial.
    Another matter to consider, which could add to the cost of 
establishing government representatives, is that the agency would be 
liable to pay attorneys' fees in some cases under the Equal Access to 
Justice Act (EAJA). EAJA provides that the federal agency must pay fees 
where its position was not substantially justified in adversarial 
administrative and judicial proceedings. These fees are paid by the 
agency, not the claimant. Under current law, EAJA fees are paid in 
appropriate court cases involving Social Security and SSI claims, but 
not for ALJ hearings since they are not adversarial.
    3. Some have argued that a ``government representative'' would be 
able to facilitate the claims process by offering to ``settle'' a 
claim. What does ``settle'' a claim mean in the context of disability 
decisionmaking, and in what fraction of cases would ``settlement'' be 
an option? Do existing staff have any ability to offer to ``settle'' a 
claim?
    Although it is unclear what the other witnesses mean by 
``settling'' a case, for NOSSCR members, settling a case could include 
the following:

         Requesting an on-the-record decision without the need 
        for a hearing
         Amending the onset date to a later point in time
         Agreeing to a period of disability, rather than 
        ongoing benefits, if the claimant has returned to work or 
        otherwise is no longer eligible for benefits at the time of the 
        hearing
         Agreeing to accept SSI benefits and withdrawing a 
        Title II disability claim if there is a remote date last 
        insured

    I do not have statistics, however, this is a procedure our Members 
frequently use under the current process by dealing directly with the 
ALJs, either through pre-or post-hearing letters or at the time of the 
hearing. SSA has recognized the value of screening cases for on-the-
record decisions by recently including it in recently announced OHA 
initiatives. ALJs also may issue fully favorable on-the-record 
decisions or offer to settle the case on their own initiative.
    We have serious concerns whether a government representative would 
facilitate settlements beyond the current number. Based on NOSSCR 
members' experiences, the procedure currently works smoothly in most 
situations, without the need for a government representative. Based on 
past experience, the government representative may actually impede the 
settlement process. This was the case with the GRP, described in more 
detail in the answer to question 4, where settlements were often 
impossible. The GRP statistics showed that government representatives 
did not request on-the-record decisions in appropriate cases and 
further, challenged eligibility in cases where the evidence was 
overwhelming.
    4. What was SSA's experience with the previous effort at having the 
agency represented at the ALJ hearing? Did it improve benefit 
decisions? Did it speed up or slow down processing times? Were cases 
better prepared? Was the representative perceived as someone who 
assisted the claimant, or rather as someone who was there to oppose the 
claim?
    Shortly after the 1986 decision in Salling v. Bowen, SSA abandoned 
the GRP. Information obtained by the plaintiffs during the course of 
that case provides objective evidence that the project did not achieve 
its stated goals. In addition, testimony at Congressional hearings in 
March 1985 and March 1986, the latter before this Subcommittee, 
corroborated the findings of the court, providing first-hand 
experiences from claimants' representatives involved with the GRP.
    Processing times were lengthened. The Salling court found, based on 
the evidence presented in the case, that: (1) the time for hearing 
dispositions greatly increased; (2) there was a longer delay between 
requesting a hearing and holding a hearing; (3) the number of ALJ 
dispositions decreased; and (4) more cases were referred to the Appeals 
Council for its own-motion review by the government representatives, 
``many of which should not have been sent,'' causing further 
unwarranted delay in receipt of benefits by duly entitled claimants. 
641 F. Supp. at 1060-1062.
    One of the attorneys in Salling, Martin Wegbreit, Esq., submitted 
testimony to this Subcommittee for the March 1986 hearing. His written 
statement (a copy is attached) provided specific statistics, based on 
SSA's own information, about the lengthened processing times.
    A witness at that hearing, Dennis W. Carroll, Esq., offered first-
hand testimony about dealing with the government representatives. His 
testimony and written statement (a copy is attached) describe extensive 
delays in individual cases.
    The quality of decisionmaking did not improve. The Salling court 
found, based on evidence in the case, that ``there has been a 
remarkable decline in decisions.'' 641 F. Supp. at 1062.
    SSA's own statistics indicate that government representatives did 
not assist in making recommendations to the ALJ that a favorable 
decision be issued without the need for a hearing. Mr. Wegbreit's March 
1986 statement to this Subcommittee states that although 56.7% of all 
claimants in the project won at the hearing level, the government 
representatives opposed 92.2% of the claimants. Mr. Carroll's testimony 
describes individual cases with strong evidence of disability where the 
government representative argued against an award of benefits.
    Cases were not better prepared by the government representatives. 
Current proponents of having the agency represented maintain that the 
duty to develop cases would be taken away from the ALJs so that they 
could devote time toward making decisions. This also was put forward as 
a reason for the project in the 1980's. However, the Salling court 
concluded that the goal of the program to assist the ALJ in the 
development of the evidence has not been achieved. When the ALJ was in 
control of development, ``[t]here was better development of the record 
than has been shown under the current procedures.'' 641 F. Supp. at 
1069.
    According to affidavits from the plaintiffs' attorneys in Salling, 
the court noted that the government representatives ``had done very 
little in developing the files. If the [government representatives] 
found that the claimant's case was weak, they left it alone; but if the 
claimant's case was strong, consultative examinations were sought.'' 
641 F. Supp. at 1063. Martin Wegbreit's March 1986 written statement 
for this Subcommittee's hearing noted two key conclusions based on 
statistics provided by SSA:

         In 45.54% of the cases, government representatives 
        offered no pre-hearing development at all.
         In 59.8% of the cases, government representatives did 
        not contact treating sources.

    Government representatives generally acted in adversarial roles. In 
Salling, the court found that ``[t]he mere presence of a government 
advocate at the hearing renders it adversarial and indeed, he proceeds 
so to act on through the appellate process . . . [T]he government 
advocate is under no obligation to try to ascertain the truth, but, 
rather, he is there to state the SSA's position in the case. . . . 
[A]ll of the evidence in this case shows that the [Government 
Representation Project] is an adversarial process.'' 641 F. Supp. at 
1070-71.
    Mr. Carroll's March 1986 testimony to this Subcommittee provides 
examples from actual cases supporting the view that the government 
representatives were adversarial:

         They sought to have cases dismissed for technical 
        reasons unrelated to the merits, even after the ALJs indicated 
        they would not dismiss and would hear the merits;
         They cross-examined claimants, often attempting to 
        establish they were lying and asking personal information 
        unrelated to their claims;
         They would not agree to settle a case, despite 
        overwhelming evidence of disability. In one case, the 
        government representative refused to settle a case, even though 
        the ALJ stated during the hearing that the case should not have 
        required a hearing. The government representative called 
        witnesses and the hearing lasted 3 hours. The ALJ found the 
        claimant disabled.

    5. Why did Congress establish a non-adversarial hearing process? 
What have courts found on the matter of Congressional intent regarding 
whether hearings should be adversarial?
    Only 1 month ago, SSA published proposed regulations where it 
reaffirmed the nonadversarial, informal nature of its proceedings:

        Our administrative process was designed to be nonadversarial. 
        See [20 C.F.R.] Sec. Sec. 404.900(b) and 416.1400(b) of our 
        regulations; Richardson v. Perales, 402 U.S.389, 403 (1971); 
        Sims v. Apfel, 120 S. Ct. 2080, 2083-85, 2086 (2000).

    67 Fed. Reg. 39904, 39905 (June 11, 2002). This interpretation is 
consistent with Supreme Court decisions over the last thirty years that 
discuss Congressional intent regarding the SSA hearings process, with 
the most recent just 2 years ago:

        The differences between courts and agencies are nowhere more 
        pronounced than in Social Security proceedings. Although many 
        agency systems of adjudication are based to a significant 
        extent on the judicial model of decisionmaking, the SSA is 
        perhaps the best example of an agency that is not. . . . Social 
        Security proceedings are inquisitorial rather than adversarial. 
        It is the ALJ's duty to investigate the facts and develop the 
        arguments both for and against granting benefits . . . .

    Sims v. Apfel, 530 U.S. 103, 110 (2000) (citations omitted). The 
Court relied on another decision that was then nearly 30 years old, 
Richardson v. Perales, 402 U.S. 389 (1971). In Perales, the Supreme 
Court rejected a challenge that would have imposed a formal evidentiary 
rule into Social Security hearings. In Perales, SSA argued against 
adopting such a rule, stressing the need to keep the system informal, 
rather than becoming a ``full blown adversary procedure.'' Adopting the 
SSA's arguments and emphasizing Congress' intent to keep the process 
informal and nonadversarial, the Court stated:

        [I]t is apparent that (a) the Congress granted the Secretary 
        the power by regulation to establish hearing procedures; (b) 
        strict rules of evidence, applicable in the courtroom are not 
        to operate at Social Security hearings so as to bar the 
        admission of evidence otherwise pertinent; and (c) the conduct 
        of the hearing rests generally in the examiner's discretion. 
        There emerges an emphasis upon the informal rather than the 
        formal. This, we think, is as it should be, for this 
        administrative procedure and these hearings, should be 
        understandable to the layman claimant, should not necessarily 
        be stiff and comfortable only for the trained attorney, and 
        should be liberal and not strict in tone and operation. This is 
        the obvious intent of Congress so long as the procedures are 
        fundamentally fair.

    Some have argued that it would be appropriate for SSA to adopt an 
adversarial system because other Federal agencies have one. However, 
countering such arguments, a number of noted law school professors, who 
have studied the Social Security process, have concluded that an 
informal and nonadversarial process is the only effective way that the 
Social Security hearing system can function, thus agreeing with the 
position taken by SSA in the Perales case:

        While Federal regulatory agencies have largely chosen 
        adversarial adjudicative systems, federal benefactory agencies 
        typically employ inquisitorial models. Professor Jerry Mashaw 
        has observed that ``[v]irtually all mass justice systems have 
        decided that they are unable to function effectively without 
        the active-adjudicator investigation, informal rules of 
        evidence and procedure, and presiding officer control of issue 
        definition and development that characterize an inquisitorial 
        or examinational approach.'' The SSA, the largest ``mass 
        justice'' Federal benefactory agency, while employing most APA 
        adjudication requirements, fits this pattern.

    Jon C. Dubin, Torquemada Meets Kafka: The Misapplication of the 
Issue Exhaustion Doctrine to Inquisitorial Administrative Proceedings, 
97 Columbia L. Rev. 1289, 1301-1302 (1997) (footnotes omitted), quoting 
Jerry L. Mashaw, Unemployment Compensation: Continuity, Change, and the 
Prospects for Reform, 29 U. Mich. J. L. Reform 1, 16 (1996). Professor 
Dubin's article was cited with approval by the Supreme Court in the 
Sims case.
    Finally, the Court's reasoning in Perales formed a basis for the 
court's decision in Salling v. Bowen, 641 F. Supp. 1046 (W.D.Va. 1986), 
that SSA's effort in the 1980's to implement government representation 
violated due process:

        The greatest lack of fundamental fairness as required in the 
        Perales test is that the proceedings which have heretofore been 
        deemed to have been informal and nonadversarial are now formal, 
        stiff, strict and adversarial. . . . Congress did not intend it 
        to be an adversary proceeding. . . .

    641 F. Supp. at 1070.
    Thank you for the opportunity to provide this additional 
information for the hearing record.
            Sincerely,
                                                      Nancy G. Shor
                                                 Executive Director

    [The Subcommittee on Social Security Hearing Print # 99-63 is being 
retained in the Committee files.]

                                 

    [Whereupon, at 12:03 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
  Statement of the Federal Managers Association, Alexandria, Virginia
    Mr. Chairman, thank you for the opportunity for the Federal 
Managers Association--Social Security Conference to submit written 
testimony on the challenges and opportunities facing the Social 
Security Disability Program.
    The Federal Managers Association (FMA) represents the interests of 
over 200,000 executives, managers and supervisors in the Federal 
Government. The FMA-SSA Council represents executives, managers and 
supervisors in all Social Security Program Service Centers, the Office 
of Central Operations and the Office of Hearings and Appeals (OHA).
    We have read, with significant interest, the testimony of all of 
the Social Security Disability Program stakeholders who have testified 
to date. FMA supports a number of positions expressed on June 11th and 
again on June 20th. Briefly, FMA supports testimony on:

         The Due Process Hearing
         The recommendation to closing the record following 
        the decision by the Administrative Law Judge (ALJ)
         Accelerating the use of electronic disability folder 
        (eDib), video teleconferencing, digitally recorded hearings, 
        and a strong management information system
         The need to aggressively address the staffing issue 
        in the Social Security Administration (SSA)
         Agency efforts to correct problems with the OHA 
        process
         The need for Agency representation at the hearings

    FMA does not support:

         Moving the hearing process to Disability 
        Determination Services (DDS)
         Assigning clerical duties to paralegal specialists
         Combining OHA and SSA field offices

    Testimony submitted to date has covered issues ranging from 
providing greater autonomy to the ALJs, to turning the ALJ process over 
to DDS, having skilled paralegal specialists performing clerical 
duties, and ALJs performing routine screening. In addition to the many 
divergent views, testimony further differed on what led to the 
purported failure of the Hearing Process Improvement (HPI) initiative. 
The vast majority of views laid the blame on the process rather than 
the initiative's implementation. With HPI, the devil was truly in the 
initiative's implementation.
    There are several barriers that prevented successful implementation 
of the HPI initiative. At the top of the list was not giving management 
the ability to replace the hundreds of clerical workers who were 
promoted from clerical positions they performed very well, to positions 
with steep learning curves. Much of the failure in the early stages of 
HPI can be attributed to our inability to prepare cases for ALJs 
because of severe staffing imbalances. From implementation until the 
present, this inability to backfill for lost clerical support has had a 
far more serious impact on OHA than senior attorneys losing signatory 
authority. The ability to backfill clerical positions, coupled with a 
balanced MOU and time to mature could have dramatically changed the 
results of the Hearing Processing Improvement initiative.
    For SSA to meet the challenges and opportunities facing our 
disability programs, it will require staffing levels that will permit 
us to handle the anticipated retirement wave. In addition, we will need 
the technology necessary to accomplish the work in today's digital age, 
and tools to hold individuals accountable for the work they perform. We 
would like to focus on these three critical issues that are essential 
to meeting the challenges, and comment on three that would help, but to 
a lesser degree.
Top Three Issues
        1. Meaningful Performance Management system
        2. E-Dib and other automation enhancements
        3. Addressing the staffing imbalances in OHA 
Additional Areas Requiring Attention
        4. LElevating the Federal manager's ability to hire on equal 
        footing with private sector
        5. Short term initiatives
        6. Consistency between DDS and OHA

    We feel that it is important to note that action on the top three 
will have short and long term positive impact on the disability process 
regardless if any other issues are addressed. Action on the additional 
areas will have marginal impact without action on the top three.
Meaningful Performance Management System
    The success or failure of any of these initiatives will be directly 
related to management's ability to hold all employees accountable for 
their work. Without meaningful performance measurements, we can realize 
only limited success at best.
    The deterioration of the disability process has run parallel to the 
deterioration of our performance management system. Our performance 
management system began to decay in the late 1980s and has steadily 
gotten worse. Group-based accountability, under HPI, only moved us 
further from individual accountability. The current Pass/Fail appraisal 
system does not provide incentives for high performance and we are 
seeing the consequences of that.
    Each year the Social Security Administration presents its 
Government Performance and Results Act Annual Performance Plan. This 
plan describes specific levels of performance and outlines the means 
and strategies for achieving those objectives. The objectives are 
supported by indicators, which are used to measure the agency's success 
in achieving the objectives. The performance indicators are translated 
into goals that are shared with SSA executives. These goals are then 
clearly presented to managers and supervisors as expectations for 
performance. At OHA for example, the indicators are expressed in terms 
of dispositions per day per ALJ, processing time, percent of aged 
cases, etc. As noted above, SSA holds managers and supervisors 
responsible for communicating performance goals to agency employees. 
However, when the goals are communicated to the employees, managers are 
required to communicate in very generic terms due to the absence of 
numeric standards.
    Our current Performance Management system in SSA addresses these 
elements, but at an organizational rather than an individual level. We 
certainly have set performance expectations (Planning), but these are 
agency goals, not individual goals. As directed by the system, progress 
reviews are held (Monitoring), but since there is no individual 
measurement, the discussions are generic. Ideally, we would spend time 
training (Developing) our employees, but in reality, most of our 
offices suffer from significant staffing imbalances and struggle just 
to accomplish our most basic missions. We rate (Rating) our employees 
on a Pass/Fail appraisal system, which fails to distinguish individual 
performance. And finally our reward (Rewarding) system is essentially a 
``do it yourself'' process.
    According to a White Paper published by the U.S. Office of 
Personnel Management in April 2002, ``(I)n the current Federal white-
collar pay system, performance does not matter very much . . . In any 
given year, Federal employees receive more pay increases for remaining 
on the rolls than for meeting or exceeding performance expectations. 
The dominance of these performance-insensitive pay increases can make 
performance-oriented tools appear trivial.'' While this paper, in 
addressing the issue of pay for performance, goes beyond the scope of 
our immediate concerns, many of the principles addressed apply readily 
to performance management at SSA.
    Our current performance management system sends the message that 
performance does not matter. Because the standards are so generic, 
performance cannot be measured on an individual level. The labor-
management contract requires that data focus on the process, not the 
individual. For all intents and purposes, the system is one of non-
accountability. In spite of an employee's best effort, the employee 
will simply ``pass''. Award money is distributed on a formula based on 
the number of employees on the payroll. This distribution is completely 
devoid of any recognition for performance, even at an office level. 
Since we have no individually measurable standards (numerics) that can 
be taken into consideration, overtime/credit hours/flexiplace must be 
given to anyone interested.
    It is our belief that it is imperative that our employees are 
provided with clear goals. These goals must be measurable, 
understandable, verifiable, equitable, and achievable. According to an 
Associated Press article on 5/27/02, The Department of Veteran's 
Affairs slashed their backlog of pending claims. Secretary Anthony 
Principi was quoted, ``We decided to really declare war on that backlog 
and took some rather bold steps to address it. We're really getting 
this backlog under control, and we did it through sheer focus and 
discipline, performance measurements, and production goals.'' When 
employees know what is expected of them, they are better able to focus 
their efforts.
    The National Council of Social Security Management Association 
(NCSSMA), who previously testified, clearly stated the difficulties in 
addressing this issue earlier this year. They cite `a dysfunctional 
merit promotion process, overly restrictive performance improvement 
procedures, lack of objective performance criteria, and an impractical 
awards process . . . ' We agree with this assessment and believe in 
fact that these problems all relate back to the weaknesses of our 
current performance management system.
    There is an old adage that states, ``What gets measured, gets 
done.'' Implementing an effective performance plan within SSA given the 
current culture will be difficult. But if the Agency expects to meet 
its objectives it must be done. OPM has prepared A Handbook for 
Measuring Employee Performance. This Handbook outlines the guiding 
principles for performance measurement as follows: 1) performance 
management must be viewed as a valuable tool, not as an evil; 2) 
acceptance of the process is essential to its success; 3) we must 
measure what is important, not what is easy; 4) the plan must be 
flexible enough to allow for changes in goals to keep the process 
credible; 5) we must rely on multiple measures; 6) employees must 
perceive that performance measurement is important; and 7) management 
must demonstrate that performance is critical to organizational and 
individual success. These are the principles, which must guide efforts 
to reform the current system.
    A strong performance management system will go a long way in 
restoring the Social Security Disability Program to the status of a 
premier program. Our current leadership is committed to reforming our 
performance management system, but it will take several years to have a 
system in place. Any initiative implemented prior to having a 
meaningful performance management system will have minimal impact.
E-DIB and Other Automation Initiatives--
    Potentially, this will have the greatest impact on productivity and 
would significantly alter the way we do business. All necessary 
resources need to be devoted to E-DIB, as we will virtually eliminate 
case preparation (not to mention savings on mail and storage).
    As we move closer to this reality, we need to look at the entire 
structure of the field office and the positions within. We cannot start 
too early on this project considering the impact on the senior case 
technicians (SCTs) and the potential to easily distribute work to where 
the resources are.
    That said, there are a number of automation initiatives that are 
currently available, and FMA feels that the Agency should fast-tract 
rollout for:
    Voice Recognition software--When the initial learning curve period 
is over, this will save time both with writing decisions and eliminate 
the need to type decisions. Many offices have a limited number of 
typists and must ship cases to other offices to type. The time involved 
could be eliminated. The software is very inexpensive ($200.00 per 
office) and would not tax the budget.
    Video Teleconferencing--This technology can also have very positive 
impact on both production and the budget. The Agency has made a 
decision to fast track the rollout and this is commendable. However, 
FMA feels the rollout should be further accelerated.
    Reminder Pro Software--This is currently being piloted as a way to 
reduce ``no shows'' for our hearings. Offices using it find it very 
useful. Again, all OHA offices need this technology. Although Reminder 
Pro comes at a greater cost than Voice Recognition ($2500.00), FMA 
feels that the overall savings realized from not rescheduling so many 
``no show'' hearings will significantly offset the initial expense.
Local Systems Support
    As we move to new technology it will be extremely important to 
ensure that OHA has qualified, competitively graded employees in 
systems positions in each field office and in Central and Regional 
offices. The need for enhanced position descriptions (PD) has been 
apparent for some time, but any forward momentum to enhance our 
computer specialists has stalled. The Hearing Office Systems 
Administrator position description no longer meets our needs, and the 
Agency needs to address this critical need as soon as possible.
Addressing Staffing Imbalances in OHA
    As previously noted, the hundreds of promotions from the clerical 
ranks during the transition to HPI have left OHA with severe staffing 
imbalances. OHA does not have the clerical support necessary to 
adequately support our Administrative Law Judges. The Agency is 
currently looking at ways to ease the problem without additional 
staffing, but these types of fixes will not hold up as more and more 
Baby Boomers begin to retire. We need the ability to replace the 
personnel that we lost to promotion if we are to be in a position to 
handle the claims anticipated over the next decade. Social Security has 
worked hard to try to ease its staffing losses by at least replacing 
the people who retired in recent years. The problem stems from not 
replacing highly trained technical staff until after they have left! 
Many positions within our Agency require three or more years of 
training/experience before a person reaches journeyman status. We must 
have the ability to hire additional staff before we are faced with the 
retirement wave so we do not slip as new, inexperienced employees are 
trained. As with performance management, we can expect only marginal 
improvement with any initiative implemented without the staff to 
perform the tasks.
LElevating the Federal Manager's Ability To Hire on Equal Footing With 
        the Private Sector
    The Federal Government still hires following OPM rules established 
in 1948. We still use the outdated ``Rule of Three'' which has been in 
existence much longer. Some Federal Agencies have the ability to hire 
locally, but at SSA we ask potential applicants to inquire at OPM and 
we then must go through the labor-intensive process of OPM certificate 
of listings. Often, it takes months to complete this process and 
usually means that the most qualified of our potential candidates have 
usually accepted positions with Federal departments or private 
companies with greater hiring flexibility.
    We stand to lose a considerable degree of our accumulated knowledge 
over the next 7 years, and we must have the ability to fill this void 
with the best and brightest if we are to effectively serve the American 
public and ensure an experienced workforce. As with our earlier 
discussion on performance management and staffing imbalances, we need 
to address all of these issues if any new initiative is to be met with 
success. A change or an initiative implemented without the staff to 
carry it out and/or a performance management system that does not give 
managers the tools to effectively lead and manage is doomed from the 
beginning.
The New OHA Process Initiatives Recently Announced
    FMA fully supports the Agency as we work to correct problems 
discovered following our transition to HPI. Our concern is that the 
first series of initiatives will have only marginal impact without 
addressing issues within the Agency and government such as performance 
management and hiring roadblocks that that would have a far greater 
long term impact than surface issues such as new process initiatives.
Ending the Certification Process--
    Any impact on eliminating certification will, in large part, be 
determined by the number of offices still actually doing them. It is 
our understanding that many offices ended certification when the 
``flexibilities'' were introduced last year. Some offices never began 
certification to begin with. The idea of an initial review by a higher 
graded employee is still a good idea and is worth considering, in some 
format, as long as we have sufficient writing resources to absorb the 
additional duties without appreciable reductions in our writing 
production. Accelerated distribution of voice recognition software may 
allow some review with current staffing levels. It was just not viable 
in the formal way HPI designed it, and certainly not without some 
additional resources or relief for our writing staff. FMA does not 
support prior testimony asking that clerical duties be added to a 
paralegal's position description. This would only serve to further 
impact productivity and would devalue the position.
Ending Rotational Assignments--
    Again, many offices have already eliminated rotations either fully 
or partially. We asked for the elimination of rotations shortly after 
Phase II was implemented. However, once rotation officially ends, what 
will replace it? Many offices have few, if any, case technician's (CT) 
so the burden of doing the mail and reception duties fall to the SCT's. 
Logic would suggest the hiring of a mail clerk and receptionist at a 
lower pay than a GS-8 SCT. FMA previously submitted an enhanced 
receptionist PD for consideration. We are pleased to learn that our 
proposal is receiving strong consideration by the Agency. Even with the 
addition of an enhanced receptionist position, we will still be forced 
to rotate to some extent unless without an infusion of FTEs and 
additional positions to handle scheduling.
    In the end, this will have a minimal impact on production without 
an infusion of FTEs. We still need to have someone do the clerical 
work.
Extend Early Case Screening to ALJ's--
    In order for this initiative to succeed we would have to make the 
following assumptions:

         The ALJ's would have time to conduct this review
         The ALJs would be willing to do it, and
         There are a significant number of On the Record 
        decisions available

    Unfortunately we have no empirical data that would support these 
assumptions. The anecdotal information we have would indicate that:

         The ALJs will not have time to go through significant 
        numbers of unpulled files given the number of cases they must 
        schedule, hear and decide to meet ever increasing budgeted 
        goals.
         Although there are some ALJs willing to review raw 
        files, it has been our experience that most will not, and
         Although there are cases that can be paid prior to a 
        hearing and with minimal development, these are the exceptions. 
        A significant number require extensive development.
Short-Form Favorable Decision Format--
    We must have agreement with the Appeals Council and OQA on an 
acceptable format. Once that is achieved, it could result in 
significant production increases.
    We can reduce the number of cases sent to writers and thus reduce 
processing time on unfavorable cases. We could potentially free-up 
writers to perform other tasks.
    The ALJs should be encouraged to complete the form. It should be 
simple enough for them to complete via speech recognition, typing, or 
by writing. We must keep the writer out of the workflow. If the case 
has to go to a writer, to edit or elaborate on the ALJ decision, then 
the new format's effectiveness would be greatly diminished. Although 
the Agency could mandate the use of a short-form, receiving ALJ buy-in 
would be the most effective method if we want a successful initiative.
Bench Decisions--
    The ``bench'' decision is the same idea as the short-form reversal. 
It is all part of the idea to have the ALJ make the complete decision 
and by-pass the writer. Whether the ALJ does it by voice recognition at 
the end of the hearing (a so-called bench decision) or typing later (or 
even handwriting it so an SCT can type the decision) is not material. 
Whatever format the ALJ feels most comfortable with should be the one 
to go with. The buy-in can come by giving them the option as long as it 
meets ALJ needs and is acceptable to everyone. We can't emphasize 
enough the fact that if the case goes to a writer, to add to the 
decision, then we defeat the purpose of the process. Once again, the 
Agency can mandate its use, but ALJ buy-in is the key.
Folder Assembly Service Contract--
    This was an excellent idea to get more cases pulled quickly. The 
initiative should fit well with the short-form reversal since, in 
theory, we will have more cases to write.
    We need enough ALJ's who are willing to hear the additional pulled 
cases. There is no point in pulling more cases if the ALJ's are not 
willing to hear them and we have no other means to dispose of the 
cases. It was mentioned that a new Code of Conduct for ALJ's would be 
issued. Perhaps a minimal standard on the number of cases scheduled and 
heard per month could be part of the code.
    Contracts would be best utilized at the local level. Local 
management should have the authority to find, train and pay the 
contractor in the same way as we pay the Hearing Reporters. Payment, by 
case, seems to make the most sense since that will guarantee a level of 
production. There appears to be a sufficient pool of recent retirees 
from SSA that might be interested in this. Although FMA is fully aware 
of the competitive sourcing initiative, and believes there are 
functions that can be competitively sourced, this is a case where we 
believe we would be better served with personal service contracts 
controlled locally.
    Another benefit of these contracts is that it will free up our 
experienced SCTs so they can devote more time to maintaining their 
analytical skills. E-DIB will virtually eliminate the ``shuffling'' 
paper exercise of the work up process and the analytical skills of the 
SCTs will be used to a higher degree. Maintaining these skills now by 
not spending time on lower graded work, will pay dividends when OHA 
transitions to the electronic folder.
Consistency Between DDS and OHA
    Process Unification Training was supposed to bring consistency 
between OHA and DDS decision making in disability cases. Consistency 
has not happened for several reasons.

        1. LDDS and OHA speak different languages. DDS speaks in a 
        language focused on diagnosis while OHA is focused on 
        credibility. Thus, DDS decision makers focus on objective 
        medical findings and whether complaints are proportionate to 
        objective medical findings. OHA judges focus on concepts in the 
        1996 Social Security Rulings (SSR), such as whether a treating 
        source's medical opinion is well supported (96-2p), whether an 
        impairment could reasonably be expected to produce the alleged 
        symptoms (96-3p, 96-7p). Rarely, if ever, do DDS decision-
        makers address credibility concepts in the 1996 SSRs.
        2. LDDS decision-makers rarely, if ever, address the concept of 
        sustainability whereas (SSR) 96-8p requires such consideration, 
        and such consideration is important at OHA.
        3. LDDS decision-makers often do not resolve conflicts between 
        their opinions and opinions of consultative examiners or 
        treating physicians. For instance, a treating physician 
        (physical medicine) will submit specific Sit/Stand/Walk 
        limitations, which preclude performance of sustained work. 
        However, DDS will check a block on form SSA 4734-U8, p. 7 
        stating that there is no treating source statement regarding 
        the claimant's physical capacities in file, or, if the block is 
        checked yes, will reject the treating sources statement on the 
        basis of lack of objective evidence. Similarly, with regard to 
        mental impairments, frequent are the cases where a consultative 
        examination provides evidence of a severe impairment but DDS 
        reports No Severe Impairment on a Psychiatric Review Technique 
        Form (PRTF). The exigency of time (DDS medical consultants have 
        only 15 minutes to review an unpulled file and make a decision) 
        brings about these failures of DDS to resolve conflicts between 
        their opinions and opinions of consultative examiners or 
        treating sources. OHA must, and attempts to, resolve these 
        conflicts.
        4. LDDS, unlike OHA, has no person who looks at a case as a 
        whole. DDS bifurcates consideration of an individual's mental 
        and physical impairments, sending the case first to one 
        specialty and then to the other. Once both specialties have 
        reviewed the case and made a decision, there is no decision 
        maker who has authority to look at the decisions of both 
        specialties and act like a judge at OHA, who has the authority 
        to accept, remand, or overrule medical determinations.

    The Social Security Administration is an agency that affects the 
lives of millions of Americans, particularly in its disability 
services. With increased staffing and funding, the Agency would be able 
to improve its service to its customers--the American public. The 
missions performed by SSA could be completed at an even higher level of 
proficiency if a meaningful performance management system were 
instituted within the Agency. These changes would allow SSA to provide 
to the public the level of service that is both expected and needed by 
taxpayers.
    FMA would welcome the opportunity to act as a sounding board for 
any initiatives that this Subcommittee, as well as SSA would like to 
create to further enhance the mission of the Social Security Disability 
Program. We thank you, Mr Chairman and the Subcommittee, for your hard 
work and interest on this very important topic.

                                 
 Statement of Larry Jacks, Public Employees Federation, New York, New 
                                  York
    Major changes are required in the national disability program if we 
plan to meet the needs of the disabled and ensure the solvency of the 
disability trust funds. I offer the following steps to simplify the 
program and process.
    1. Establish the age 50 medical severity test. Under the current 
process an applicant may be found disabled at any age due to a less 
than sedentary Residual Functional Capacity. 70% of all Administrative 
Law Judge awards are made using this restriction. This finding is 
HIGHLY subjective and cannot be measured. Under the new process 
applicants under age 50 MUST meet or equal the level of medical 
severity as published in the the Listing of Impairments to be found 
disabled. For applicants age 50 and older, consideration will still be 
given for diminished RFC as the vocational outlook is reduced by age. 
This approach is simple to understand and administer. Program and 
administration costs would be reduced by 35% at all levels.
    2. Replace the current determination process and medical 
improvement standard with Diary Decisions with Recertification. Under 
the current process, decisions are reached on average in 100 days at 
the DDS and appealed denials may take as long as 500 days until heard 
by the ALJ. In addition under the current program FEWER than 5% who are 
put on the disability rolls are ever removed or leave. This results in 
a slow and costly program. Under the new process decisions, will be 
determined much faster because we combine the age 50 severity 
application and a Diary Decision. Decision-makers will make faster 
approvals because decisions will be based on projected medical 
limitations such as cancer with chemo, heart surgery with rehab, severe 
fractures with physical therapy etc. The diary approval will then allow 
the applicant to `recertify' his/her disability 90 days prior to the 
end diary date if the condition remains severe. The medical improvement 
standard WILL NOT apply since recertification will be a de novo 
decision. Decisional timeframes will be reduced for DDS decisions by 
20% and future program and administration costs will be significantly 
reduced while improving customer service and payment of benefits. 
Citizens will receive much needed benefits quicker and exit the rolls 
earlier.
    3. Intake of disability applications will be done by the DDS and 
not SSA. This will result in an immediate savings of 7-10 days in 
process time. State public libraries can be utilized as a gateway for 
applications.
    4. Replace the Reconsideration appeal step with a DDS pre-hearing 
review. Upon review the DDS will process any case that can be found 
fully favorable. Cases that cannot will not be redetermined but rather 
moved forward to the Office of Hearings and Appeals and the ALJ 
decision.
    5. Close the record after step 4.
    6. Regulations are needed to standardize the educational 
requirements, training programs and quality procedures within the DDS 
system. DDS decision-maker turnover and subsequent erractic decisions 
are due to woefully inadequate salaries. The disability decision is a 
complex decision that requires medical, legal and technical expertise. 
In order to recruit and retain a quality DDS workforce, salaries must 
be raised by regulation not left to the States and administrators to do 
it on the cheap. Only the American public is shortchanged.
    7. Create a Social Security Court to provide a uniform review of 
SSA decisions.
    8. Revise the Administrative Procedure Act to give requisite 
authority to manage OHA.
    I appreciate the opportunity to discuss these ideas with you and 
applaud the leadership of the committee in trying to resolve the 
problems with this critical national program.

                                 
       Statement of Philip A. Robinson, Framingham, Massachusetts
    Chairman Shaw, Ranking Member Matsui, members of the subcommittee, 
I am an individual non-attorney claimants representative.
    I work with a former agency employee with a wealth of experience 
and we represent disabled persons before SSA who have problems with the 
admittedly complicated system that is SSDIB and SSIDIB in place today. 
Our purpose is to ensure that the people we represent have an 
opportunity to present their claims for disability and other matters 
before SSA in a cogent manner. It is our goal to ensure that claimants 
receive fair treatment and due process at all levels of the system.
    I applaud the desire of the members of the subcommittee to make the 
disability process work better and am pleased that Commissioner 
Barnhart has quickly begun the process of examining the more disastrous 
experiments that have been in effect for the past years to the 
detriment of claimants, all of whom are your constituents. I am happy 
that the Commissioner and the subcommittee have begun the process of 
listening. I would add to your expert panelists a number of employees 
of the OHA 's across the country. Not just the ALJ Association 
President, not just the Union heads or area Union representatives and 
not just the DDS state Commissioners, but the real people who do the 
work every day in every DDS and Social Security Field Office across the 
country. The real workers. You should travel to them, listen to them 
out of the spot light and seek the larger truths which only they know. 
Even the upper level managers at OHA and SSA (deputies and associates) 
only speak of what you wish to hear, not often of what you should hear.
A brief history of the immediate past.
    For the purpose of these comments, the recent past is 1996 to now. 
The agency budget has been reduced substantially as has the number of 
employees. Many senior and well trained employees throughout the agency 
have left and many more are ready to retire. Tele-service centers 
originally designed to handle basic retirement questions and related 
matters have been expanded to handle many tasks that well trained CRs 
in the Field Offices used to handle. Budget cuts and reductions in 
staff caused the agency to make unrealistic promises, to the Congress 
and this and prior administrations, about this change to the tele-
service mission. The agency has not and cannot now keep those promises.
    Training money has been cut to such an extent that videos are used 
to substitute for what previously were many hours of direct class 
training and employee monitoring in the field over many months. Field 
office personnel are expected to handle the rising applications for DIB 
with fewer employees and no work year credits in the budget for this 
added work load.
    The DDS partnership between the agency and the states does not work 
because training is inadequate and insufficient budget money for 
payroll has led to lower standards and higher turnover. Add to that the 
cultural and regional differences and the disconnects between the 
agency and the DDS and there is a formula for disaster.
    The process unification rulings, which were designed to improve the 
process of developing claims are not followed by the DDS components in 
the individual states. The uniformity of decision making expected in 
this program has never happened. HPI plans implemented at the OHA 
offices across the country have been a disaster, as you are aware, for 
claimants and the agency.
    Emphasis has been placed on speed rather than quality at all 
levels. We have been told that the average Disability Examiner in a DDS 
has about 20 minutes of actual time spread over 2-4 months to make an 
initial disability determination and that decision is usually 
problematic. The agency policy to examine approvals only for quality 
lets horribly unjust decisions pass through to claimants.
    The OHA offices have old outdated computers for use in processing 
their work. A simple examination (without prior announcement) will find 
DOS based systems running on computers so old that school children 
would not use them. Employees at OHA are expected to produce 
outstanding work with outmoded and inadequate computers and programs 
because there is no money to purchase modern computers with compatible 
programs and provide the needed training and technical services. I have 
been in the State offices of a number of Congressional Representatives 
and found the newest and best PC systems money can buy. That grade of 
equipment would be perfect for the agency. We do not believe that the 
Congress has ever appropriated and the agency has not requested the 
funds for this type of upgrade. The purchasing systems, which are based 
on distrust, and take years to complete, ensure that outdated equipment 
is all that is purchased.
A small start has been made.
    Fortunately, HPI has been halted but the problems created by this 
ill-conceived program have had a detrimental effect on the OHA staff, 
promotions and the career tracks of dedicated employees. This may not 
be able to be undone.
What proper funding and training can buy.
    1. DDS disability examiners should be adequately trained and 
instructed to follow the law as written. The goal of a uniform 
interpretation of the laws will not be met unless and until the DDSs in 
every state use the same interpretations of the law as the agency. 
Denials of claims should be examined for errors by DQB offices and 
returned with instructions for corrections. If the error rate for 
approvals is xx% then it is logical that the error rate for denials 
would at least be the same or even higher.
    2. The reconsideration process at DDS should be more than a pro 
forma scan of the records and a quick denial. Doing away with 
reconsideration and extending the time an examiner has to handle an 
initial claim would almost provide the same result as the 2 step system 
at DDS does now. SSA considered the experiment in this prototype a 
failure because more claims were paid and more denials were appealed to 
OHA. A local elected representative once described the disability 
process as follows: ``You apply, you get denied, and then you go 
away''. The public perception of the process is disastrous. I believe 
that DDS management is overreaching in attempting to expand the role of 
DDS in the disability hearing process. However, I also believe that 
with proper training and funding for employee work years and more 
competitive pay scales that the DDS work product can be improved to the 
point where approvals and denials will be more realistically arrived at 
and the number of appeals to OHA will decline.
    3. OHA has substantial numbers of very experienced staff people, 
ALJs and attorneys. Moral is low because of the HPI problems. A lack of 
respect between professional staffers and support staff is obvious to 
all. Productivity has suffered because of management failure at highest 
levels. Accountability is lacking and numbers are over emphasized. 
Utilization of staff is poor. Many attorneys function well above their 
level of competence while others are not competent in their present 
positions. All are rewarded for time in grade.
    4. An institutional attitude to `save the money' is fostered by 
senior management. The term `not cost effective' and variations of same 
appear often in reviews of programs tried and dropped. Generally the 
body of comments describing end results seems to be that too many 
claims were paid. If this is what the Congress really wants, if this is 
to be the goal of every administration then the simple solution is to 
do away with the disability program. Payroll and payout will drop to 
zero. We do not believe that is the intent of either the administration 
or the Congress. It is most assuredly not the desire of the public.
Looking to the future.
    Please do away with the idea of an SDM at any level. No matter how 
experienced a claim manager or SSA employee may be or is expected to be 
the experience of those of us who work representing claimants in states 
where SDM has been tried have been disastrous. DDS and SS employees 
fear face to face conferences with angry claimants and telephone 
interviews have usually been used to convince the claimant not to 
pursue a claim. The DDS claim managers are not doctors or vocational 
experts, yet the SDM model places them in that position. I and other 
claimants representatives have found that communication with our local 
Field Offices where CRs' are knowledgeable about the program is more 
productive. That is a place where staffing can and should be increased 
so that more career track employees can be hired and trained as the 
agency used to do and individual claimants can be encouraged to use the 
experienced people there for information instead of the Tele-service 
centers where lack of knowledge leads to errors and incredibly wrong 
information being provided to people in distress.
    The tele-service centers should be used as originally intended, 
processing retirement information for citizens and legal residents 
whose retirement age is rapidly approaching and who will tax the 
systems across all areas. This may mean reductions in the numbers 
employed in the centers, but that money can be more productively used 
in the FOs' to hire career track employees as the agency used to do.
    Plans for increased technical and computer use including electronic 
filing and processing and file maintenance is not in the agencies 
immediate future and neither are televised hearings. The proper 
equipment is not on hand at this time. The idea is wonderful and should 
be implemented, but it cannot be done with yesterday's technology and 
equipment or can this activity be set up incrementally. To work the 
system needs to be set up in advance in each region on a rolling basis 
from DDS to FO to OHA and AC and for every employee expected to use the 
system. Not one machine, but at every work station and every front 
desk. The equipment exists in embryonic form in the market now and can 
be purchased with simple specifications and off the shelf programs. The 
purchasing process will need to be changed in order to do this. Proper 
equipment including up to date computers (this is one area where 
individuals use free standing PC's) and well trained and well paid 
technical backup for OHA would enable that component to do its intended 
job.
    Changes in the laws and listings and definitions used to define 
`disability' to reflect our modern post industrial society and changed 
work habits should be a priority and can improve the process. Millions 
of our citizens have jobs and work in industries that did not exist 10 
years ago. Skill levels required for even the most mundane jobs are 
constantly rising
    Millions more have illnesses that are controlled or whose effects 
are reduced to an extent that part time work is a possibility. But 
millions more never have that relief available to them. High school 
students working part time after school can, and often do, earn more 
than the dollar amount specified as the threshhold for `substantial 
gainful activity'.
    Each ALJ should be responsible for her/his case load and the HOCALJ 
should not only be the titular head of the office, but should be able 
to manage the entire office.
Who is in charge at the agency?
    The simple answer is every one and no one. No one has any 
responsibility for what goes wrong and no one has the authority to say 
stop. The CALJ should be responsible directly to the Commissioner of 
Social Security. The CALJ should have an ACALJ for DIB who is an 
administrator and an Senior Executive Service career manager for 
operations, both responsible for the day to day functions of OHA and 
answerable to the CALJ.
Myths and excuses to explain shortcomings in the process.
    Social Security Advisory Board which you all know is a 
Congressional created agency to examine the way SS operates and offer 
suggestions for improvements has recently issued a commentary that 
suggests that there are lawyers and representatives who cheat by 
delaying the submission of helpful medical or other evidence to build 
up the amount of the fees payable. The Board also noted that some 
physicians fudge or cheat on the medical reports they submit to the 
agency to help their clients secure benefits. This has become a part of 
the `one size fits all' explanation on why the system is dysfunctional.
    Like all the stories of welfare cheats there is little beyond 
anecdotal evidence. Legitimate claims are denied at every DDS office in 
the country. Medical reports are read by MEs' who never see the 
claimants or examine them, who miss important points in the records and 
opine that people with long-term illnesses will recover in the 
immediate future and become productive members of society. These are 
errors which are difficult to correct in the process and they represent 
a healthy majority of claims that are brought before OHA and allowed. 
However in order to overcome the prior errors more records must be 
obtained, more statements elicited to rebut the errors made. Claims 
that end up in the District and Circuit Courts are remanded less than 
25% of the time and they are occasionally paid but usually returned for 
further development because the agency violated its own rules or 
ignored critical evidence.
    We all know that medical records are often delayed. Physicians 
dealing with lawyers are like oil and water. They fear the lawyers, 
they fear the representatives and clients who ask for records and 
written statements to explain the physical and mental problems of their 
patients. OHA itself and the FO's treat requests to copy the claimant 
files as impositions on their limited resources. Although regulations 
exists instructing OHA and FOs to forward files to the OHA or FO office 
closest to the claimants' representatives because of distance or 
explain why in writing as part of the record, some OHA offices refuse 
to do so causing additional expenses in the of 100s of dollars for copy 
and shipping fees to be taxed to the claimant. The alternative is a 
lost claim at OHA and a potential remand from the AC because the 
claimant was deprived of due process all other matters being properly 
presented.
    ``Experts'' for DDS `are created' by regulations which describe the 
expertise in the rules and laws gained by several weeks of training by 
SSA employees in classroom settings. These experts are not provided 
with the time to properly examine a medical file or paid any reasonable 
sum of money. There is a myth that representatives `purchase' favorable 
medical reports from physicians and/or others in order to win a claim. 
The medical and vocational expert `vetted' by each states DDs and used 
throughout the process do not meet any legal definition of `expert'. 
Most are alive, they breath, they walk, they talk, but they are not 
what SSA says they are with extremely rare exceptions.
    There is no benefit to either the claimant or the representative to 
withhold records or reports. Fees are limited by law and also are part 
of the Federal Code.
A final comment.
    SSA's problems can be solved with trained, adequate staff, money 
and proper equipment.
    Mr. Chairman and members, thank you for the opportunity to present 
this testimony in writing.

                                
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