[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
 COMMISSIONER OF SOCIAL SECURITY'S PROPOSAL TO IMPROVE THE DISABILITY 
                                PROCESS

=======================================================================









                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                  and

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 30, 2004

                               __________

                           Serial No. 108-64

                               __________

         Printed for the use of the Committee on Ways and Means











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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                   SANDER M. LEVIN, Michigan
WALLY HERGER, California                 BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana                   JIM MCDERMOTT, Washington
DAVE CAMP, Michigan                      GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota                   JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                         RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                       MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington                WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                     JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                        XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania               LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona                   EARL POMEROY, North Dakota
JERRY WELLER, Illinois                   MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri               STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

                       Allison H. 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                 BENJAMIN L. Cardin, Maryland
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri           XAVIER BECERRA, California
RON LEWIS, Kentucky                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin


                    SUBCOMMITTEE ON HUMAN RESOURCES

                  WALLY HERGER, California, Chairman

NANCY L. JOHNSON, Connecticut        BENJAMIN L. CARDIN, Maryland
SCOTT MCINNIS, Colorado              FORTNEY PETE STARK, California
JIM MCCRERY, Louisiana               SANDER M. LEVIN, Michigan
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
PHIL ENGLISH, Pennsylvania            CHARLES B. RANGEL, New York
RON LEWIS, Kentucky
ERIC CANTOR, Virginia




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

Advisory of September 23, 2004 announcing the hearing............     2

                               WITNESSES

McIntyre, Hon. Mike, a Representative in Congress from the State 
  of North Carolina..............................................     7
Social Security Administration, Hon. Jo Anne B. Barnhart, 
  Commissioner...................................................     9

                                 ______

National Association of Social Security Management Associations, 
  Buffaloe, Ronald E.............................................    41
American Federation of State, County, and Municipal Employees, 
  Union of American Physicians and Dentists, Dann, Dr. C. 
  Richard,.......................................................    52
Social Security Advisory board, Daub, Hon. Hal...................    37
National Council of Disability Determination Directors, Everett, 
  Sheila.........................................................    56
National Association of Disability Examiners, Marshall, Martha A.    45

                                 ______

Association of Administrative Law Judges, Bernoski, Ronald G.....   102
Consortium for Citizens with Disabilities, Social Security Task 
  Force, Ford, Marty.............................................    70
National Treasury Employees Union, Chapter 224, Hill, James A....    87
National Organization of Social Security Claimants' 
  Representatives, Sutton, Thomas D..............................    79
Federal Managers Association, Social Security Administration, 
  Chapter 275, Zink, Laura.......................................    95

                       SUBMISSIONS FOR THE RECORD

American Bar Association, Robert D. Evans, letter................   112
American Federation of Government Employees, AFL-CIO, Witold 
  Skwierczynski, statement.......................................   114
Arzt, Robin J., New York, NY, statement..........................   120
Blackwell, Bryan S., Dothan, AL, letter..........................   128
Employment and Training Administration, Emily Stover Derocco, 
  statement......................................................   129
Federal Bar Association, Gary Flack, letter......................   131
Jaituni, Sudhir, statement.......................................   134
Merrill, Jeff R., Seattle, WA, letter............................   135
National Association of Disability Representatives, Framingham, 
  MA, James R. Shaw, statement...................................   136
Plumlee, Lawrence A., Dallas, TX, statement......................   137
Schott, S.F., statement..........................................   145
Social Security Disability Coalition, Linda Fullerton, statement.   145
York, Laurie L. Austin, TX, statement............................   149

























 COMMISSIONER OF SOCIAL SECURITY'S PROPOSAL TO IMPROVE THE DISABILITY 
                                PROCESS

                              ----------                              


                      THURSDAY, SEPTEMBER 30, 2004

              House of Representatives,    
               Subcommittee on Social Security,    
                       Subcommittee on Human Resources,    
                               Committee on Ways and Means,
                                                    Washington, DC.

    The Subcommittees met, pursuant to notice, at 1:17 p.m., in 
room 1100 Longworth House Office Building, Hon. E. Clay Shaw, 
Jr. (Chairman of the Subcommittee on Social Security), and Hon. 
Wally Herger (Chairman of the Subcommittee on Human Resources) 
presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
September 30, 2004
SS-11

               Shaw and Herger Announce Joint Hearing on

               Commissioner of Social Security's Proposal

                   to Improve the Disability Process

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security, and Congressman Wally Herger (R-CA), Chairman, 
Subcommittee on Human Resources, Committee on Ways and Means, today 
announced that the Subcommittees will hold a joint hearing on the 
Commissioner of Social Security's proposal to improve the disability 
determination process. The hearing will take place on Thursday, 
September 30, 2004, in the main Committee hearing room, 1100 Longworth 
House Office Building, beginning at 1:00 p.m.
      
    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 Subcommittees and 
for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    In September 2003, during a hearing before the Subcommittee on 
Social Security, the Commissioner of Social Security announced a 
proposal to reform the disability determination process. The 
Commissioner's goal is to enhance the agency's ability to make the 
correct determination as quickly as possible on claims for Social 
Security Disability Insurance (DI), and Supplemental Security Income 
(SSI) benefits. The proposal also aims to help individuals with 
disabilities return to work by establishing a number of new 
demonstration projects. The Commissioner intends to implement the 
proposal through the regulatory process once the Social Security 
Administration (SSA) successfully converts from a paper to an 
electronic disability claim folder.
      
    Individuals with disabilities applying for Social Security DI or 
SSI must first file an application online, via telephone, or in a local 
SSA field office. From there, the application is forwarded to a 
federally funded State Disability Determination Service (DDS) to 
determine medical eligibility for benefits. If the case is denied, the 
applicant may ask the DDS to reconsider the claim, and if the claim is 
denied again, the applicant may request a face-to-face de novo hearing 
with an Administrative Law Judge (ALJ) in the SSA's Office of Hearings 
and Appeals. Applicants who are not satisfied with the ALJ's decision 
may appeal their cases to the SSA's Appeals Council, and finally, to 
the Federal courts. If an individual exercises all rights of appeal, 
the SSA projects it would take over 1,100 days, on average, before the 
individual receives a final decision.
      
    The Commissioner proposes to reform the initial disability 
determination process by establishing Regional Expert Review Units, 
staffed by medical experts, to handle claims from individuals who are 
clearly disabled. These ``Quick Decision'' claims would be earmarked by 
the SSA's field offices, and would be sent directly to the Regional 
Expert Review Units, bypassing the DDSs. State DDSs would continue to 
handle all other claims, but the reconsideration step of the process, 
currently performed by the DDSs, would be eliminated.
      
    After the initial decision, the Commissioner would change the 
process by allowing claimants to request a review by an SSA Reviewing 
Official (RO). The RO could either approve the claim, or prepare a 
recommended denial or a pre-hearing report. If the claim is denied by 
the RO, the claimant could then request a hearing before an ALJ. While 
the de novo hearing process would not change, the claimant's record 
would be closed after the hearing, and the Appeals Council would be 
eliminated. While some cases would be reviewed by an Oversight Panel of 
two ALJs and one Administrative Appeal Judge, the decision rendered by 
the ALJ after the de novo hearing would be the final agency action for 
most claimants.
      
    The Commissioner anticipates that these changes to the disability 
determination system, along with the demonstration projects to help 
people return to work, will reduce processing time by at least 25 
percent, provide quick decisions to people who are obviously disabled, 
improve accuracy and consistency in decisions, and remove barriers for 
those who wish to return to work.
      
    In announcing the hearing, Chairman Shaw stated, ``Since her term 
began, Commissioner Barnhart has rightly made improving the disability 
process one of her top priorities. Her proposal to improve service to 
individuals with disabilities applying for benefits holds real promise. 
In the last year, much feedback has been provided to the Commissioner 
by key stakeholders. This hearing provides the opportunity for us to 
learn more about the details of that feedback, and how the Commissioner 
plans to move forward.''
      
    Chairman Herger stated, ``As we all know, Social Security's 
disability determination process is in need of improvement. 
Commissioner Barnhart is to be commended for putting forward a plan to 
make the process more accurate and efficient, and for focusing on 
return-to-work initiatives. I look forward to learning more about how 
this plan stands to benefit program applicants and recipients, as well 
as taxpayers.''
      

FOCUS OF THE HEARING:

      
    The Subcommittees will examine Commissioner Barnhart's proposal to 
reform the disability determination process and to implement new 
return-to-work demonstration projects.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``108th Congress'' from the menu entitled, ``Hearing Archives'' (http:/
/waysandmeans.house.gov/Hearings.asp?congress=16). Select the hearing 
for which you would like to submit, and click on the link entitled, 
``Click here to provide a submission for the record.'' Once you have 
followed the online instructions, completing all informational forms 
and clicking ``submit'' on the final page, an email will be sent to the 
address which you supply confirming your interest in providing a 
submission for the record. You MUST REPLY to the email and ATTACH your 
submission as a Word or WordPerfect document, in compliance with the 
formatting requirements listed below, by close of business Thursday, 
October 14, 2004. Finally, please note that due to the change in House 
mail policy, the U.S. Capitol Police will refuse sealed-package 
deliveries to all House Office Buildings. For questions, or if you 
encounter technical problems, please call (202) 225-1721.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
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written comments must conform to the guidelines listed below. Any 
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guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies 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. All submissions must include a list of all clients, persons, 
and/or organizations on whose behalf the witness appears. A 
supplemental sheet must accompany each submission 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.

                                 

    Chairman SHAW. Good afternoon. Today, the Committee on Ways 
and Means Subcommittees on Social Security and Human Resources 
are holding a joint hearing to examine the Commissioner of 
Social Security's proposal to reform the disability 
determination process. The Social Security Administration's 
(SSAs) Disability Insurance (DI) and Supplemental Security 
Income (SSI) programs provide critical income support for 
individuals with disabilities. Unfortunately, many people who 
apply for these programs will experience a long wait, in some 
cases 3 or more years, to learn whether they are eligible to 
receive assistance. This wait can place crushing financial and 
emotional burden on individuals with disabilities and their 
families.
    In January of 2003, the U.S Government Accountability 
Office (GAO), designated Federal Disability Programs, including 
the DI and SSI Programs, as ``high-risk.'' The GAO found that 
the agency has difficulty managing its disability programs, as 
evidenced by lengthy processing times, inconsistencies in 
disability decisions across adjudicative levels and locations, 
and challenges with implementing effective quality control 
systems. Without change, these programs would likely worsen as 
the baby boomers age and more individuals enter their 
disability-prone years.
    In response to these challenges, Commissioner Barnhart has 
rightly made improving public service provided by SSAs 
disability programs one of her highest priorities. The agency 
is currently in the midst of an 18-month transition from a 
paper to an electronic disability (eDIB) folder that began just 
last January. Following this transition, the Commissioner has 
proposed implementing a major reorganization of the disability 
determination process. It is this latter proposal that we will 
examine today.
    Key components of this proposal include: a new quick 
decision step to approve benefits for those who are obviously 
disabled; centralized medical expertise; in-line as opposed to 
end-of-line quality review; replacement of the reconsideration 
step completed by the State disability determination agencies 
with a review by a Federal reviewing official (RO) attorney; 
closing the record after the hearing by an administrative law 
judge (ALJ); and elimination of the Appeals Council step. The 
Commissioner's proposal would change almost every facet of the 
disability determination process and affect about 4 million 
applicants a year. Changes of this magnitude must be thoroughly 
vetted and studied in order to protect individuals with 
disabilities and the American taxpayers.
    Today, we welcome the Commissioner, who will tell us more 
about the feedback she has received since premiering her 
proposal before the Subcommittee on Social Security 1 year ago. 
I look forward to learning how that feedback will shape 
implementing regulations and the timetable for moving forward. 
Following the Commissioner, the Subcommittees will hear from 
representatives of the employees who must transform these ideas 
into action, along with advocates for individuals with 
disabilities, claimant representatives, and the Chairman of the 
bipartisan Social Security Advisory board (SSAB) and former 
Member of the Committee on Ways and Means, Hal Daub. Each of 
these individuals and the organizations they represent have 
carefully considered the Commissioner's proposal and have 
offered thoughtful suggestions for change. We thank you for 
your commitment to improving service provided through these 
vitally important programs.
    The disability determination process cannot continue to 
operate the same as it has in the past. Too many vulnerable 
individuals with disabilities are waiting too long for a 
decision from SSA. The Commissioner has said her proposed 
disability determination process will reduce the time between 
an application and a decision by at least 25 percent, improve 
accuracy and consistency in decisions, and remove barriers for 
those who wish to return to work. We must give this bold and 
ambitious plan the attention that it deserves. As I said, this 
is a joint meeting, and now I would defer to Mr. Herger, the 
Chairman of the Subcommittee on Human Resources.
    Chairman HERGER. Thank you, Chairman Shaw. I would like to 
take a moment to welcome Commissioner Barnhart and our other 
witnesses to the hearing today. I am looking forward to hearing 
comments on the disability determination process and ways to 
improve it for all those involved. With that, I submit my full 
statement for the record.
    Chairman SHAW. Mr. Cardin?
    Mr. CARDIN. Thank you, Mr. Chairman. Let me thank you for 
holding this hearing. I particularly appreciate the fact that 
this is a joint Subcommittee hearing between the Subcommittee 
on Social Security and the Subcommittee on Human Resources. 
Since I serve on both of the Subcommittees, it is nice to be 
able to have one hearing and get credit for two attendances.
    Chairman SHAW. You only get to speak once.
    Mr. CARDIN. Oh.
    [Laughter.]
    I want to thank Mr. Matsui for yielding me his time as the 
Ranking Member of the Subcommittee on Social Security, so I get 
double time. Let me welcome all of our witnesses here today, 
and particularly my colleague Congressman McIntyre from North 
Carolina. It is a pleasure to have you here, and I know of your 
interest and work in this area and bringing it to our 
attention, and we certainly appreciate that.
    Commissioner Barnhart, it is always a pleasure to have you 
before our Committee, and we appreciate your leadership at the 
SSA. Every Member of Congress knows about the problem we are 
confronting on disability determination. All they need to do is 
talk to the people in their district office, the number of 
calls that we receive, the number of concerns about the length 
of time for disability determinations, particularly those that 
are on appeal. We know that there is frustration out there 
because of the long time it takes in order to make a full 
determination, particularly when the individual is in the 
appeal process.
    Now, I understand this is a very complex process, and we 
all understand that. We want to get it done right, but we also 
want the process to be streamlined. I particularly appreciate 
the Commissioner's work on computerizing the entire files. I 
find it somewhat surprising that we have not done that to date, 
and I know that she has been fighting battles within the 
Administration to move that forward, and we are making progress 
in that area. I think that is absolutely essential to be done. 
It still takes on average about 3 months for a decision on a 
benefit application, and nearly a year in regards to those 
cases that are appealed to the ALJ. That is a long time. They 
are averages. Of course, there are people that are well beyond 
that time period. It can take, in fact, several years if you go 
through the entire process, and that is just too long, and we 
need to be able to shorten that period of time.
    We need to be able to do that and still maintain the 
independence of the appeal process at the ALJ level. We do not 
want to compromise the integrity of the independent appeal, and 
we also want to make sure that this is still truth-seeking and 
not an adversarial process so that we try to make the right 
decisions. After all, fairness is the key here to treat all of 
our people fairly within the system itself. I think that really 
presents the challenges. You have 2.5 million applications for 
disability that are filed every year, 2.5 million. We have 
half-a-million claims that are appealed to the ALJ on an annual 
basis. The backlog is more than is acceptable. We understand 
that. The Commissioner has attempted certain demonstration 
projects in order to test some ways of getting people through 
the process faster, as well as trying to get people back to 
work, which is always our objective, those who can work. So, I 
look forward to hearing from our witnesses today as we continue 
our partnership in streamlining the process to make it more 
efficient for the people who depend upon disability income, and 
to make sure that we do this in the fairest way. Thank you, Mr. 
Chairman.
    Chairman HERGER. Thank you. Now I would like to introduce 
our first witness, who is a Member of Congress, the Honorable 
Mike McIntyre, Representative from the State of North Carolina. 
Congressman McIntyre, I thank you for your involvement. I 
understand in your private practice you have been involved with 
this, and also you have legislation before us now.
    Mr. MCINTYRE. Yes, sir.
    Chairman HERGER. So, we invite you to present your 
testimony.

 STATEMENT OF THE HONORABLE MIKE MCINTYRE, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. MCINTYRE. Thank you, Mr. Chairman, and thanks to all of 
you for your time this afternoon. In very brief comments, I 
want to say how much it is a pleasure to be with you today as 
we discuss an issue that is of great importance, reforming the 
Social Security disability determination process. As you just 
mentioned, before I came to Congress, I represented several 
individuals in Social Security disability cases in my hometown 
as their attorney in Lumberton, North Carolina, and throughout 
Robeson County. Time after time, I saw the flaws in the current 
system. I saw the hurting citizens suffer needlessly. I saw 
claimants forced to wait and wait and wait several months for 
an appeal that ultimately results in a second denial from the 
exact same agency that denied their first claim.
    Throughout my time here in Washington, I have continued to 
hear these concerns from constituents and caseworkers in both 
my Washington and North Carolina offices. In fact, my District 
Director of Constituent Services, Marie Thompson, who has a 
passion for these issues and the individuals affected by them, 
knows too well the headaches that many claimants face on a 
repeated basis. In fact, she is currently, as my District 
Director, working on over 200 cases that will take literally 
years to finalize, given the current process.
    In addition, the 3 caseworkers in my office handling Social 
Security cases are assisting approximately 500 of our 
constituents who have cases now pending. Many of these 
constituents have already waited for over a year for a decision 
while others are just beginning a process they know may be long 
and, indeed, agonizing. A larger number of these claimants are 
from single-income homes who now have no income at all with 
which to support themselves and their families, thus just 
exacerbating the situation. Many face increasing medical bills, 
while others simply are unable to receive needed medical care 
because they have no money and no health insurance. Others will 
watch as another family member struggles to earn enough money 
to keep the family just barely afloat while waiting. There will 
be families faced with mounting past-due bills and 
disconnection of utilities, basic quality-of-life issues for 
anyone. Yes, there will be those who will indeed lose their 
homes in which they live while they are simply waiting. All of 
this occurs while they battle a condition or an illness which 
keeps them from working, and, unfortunately, there will be 
those who will even lose that battle while they wait.
    To address these concerns, I introduced a bill earlier this 
year that would reform the disability determination process by 
eliminating the first level of appeal. This level, known as 
reconsideration, is redundant, and eliminating it will save 
time and resources and unnecessary delay. I am pleased that 
Commissioner Barnhart and her staff have included the 
elimination of this phase, known as reconsideration, in her 
proposal to reform the disability claims system.
    As someone who has worked on this issue on a personal and 
professional level before coming to Washington, and now over 
the last years on a congressional level, I am committed to 
ensuring that the Social Security disability determination 
process is reformed and is fair to all concerned. Therefore, I 
offer my support and my willingness to work with Commissioner 
Barnhart and Members of both of these Subcommittees represented 
here today on these issues. It is indeed time that we in 
Congress work to make real reform, so that our constituents can 
finally receive the benefits that they deserve. Reforming this 
broken process is the next step to bringing real relief to 
claimants who truly deserve disability benefits and who truly 
do not need to face another unnecessary delay. Thank you, 
thanks to both of you, to your Subcommittees and the Committee 
in general. I thank you, gentlemen, and may God bless you in 
your kind consideration of literally this life-changing matter 
as we consider these important issues involving Social Security 
reform.
    [The prepared statement of Mr. McIntyre follows:]
Statement of The Honorable Mike McIntyre, a Representative in Congress 
                    from the State of North Carolina
    Mr. Chairman, Ranking Member, and fellow colleagues: It is a 
pleasure to be here today as we discuss an issue that is of great 
importance--reforming the Social Security disability determination 
process.
    Before coming to Congress, I represented several individuals in 
Social Security disability cases as an attorney in my hometown of 
Lumberton, North Carolina. Time after time, I saw the flaws in the 
current system. I saw the hurting citizens suffer needlessly. I saw 
claimants forced to wait several months for an appeal that ultimately 
results in a second denial from the same agency that denied their first 
claim.
    Throughout my time in Washington, I have continued to hear these 
concerns from constituents and caseworkers in my Washington and NC 
district offices. My District Director of Constituent Services, who 
flew up from NC and is here today because of her passion for this 
issue, knows too well the headaches that many claimants face on a 
repeated basis. In fact, she is currently working on over 200 cases 
that will take years to finalize.
    In addition, the three caseworkers with my office handling Social 
Security cases currently are assisting approximately 500 of our 
constituents who have cases pending. Many of these constituents have 
already waited for over a year for a decision while others are just 
beginning a process they know may be long and agonizing. A large number 
of these claimants are from single-income homes who now have no income 
at all with which to support themselves and their families. Many face 
increasing medical bills, while many others simply are unable to 
receive needed medical care because they have no money and no health 
insurance. Others will watch as another family member struggles to earn 
enough money to keep the family just barely afloat during the wait. 
There will be families faced with mounting past-due bills and 
disconnection of utilities. And, yes, there will be those who will lose 
the homes in which they live. All of this occurs while they battle a 
condition or illness which keeps them from working. And, unfortunately, 
there will be those who will even lose that battle during the wait.
    To address these concerns, I introduced a bill in July that would 
reform the disability determination process by eliminating the first 
level of appeal. This level, known as reconsideration, is redundant, 
and eliminating it will help to save time and resources. I am pleased 
that Commissioner Barnhart has included the elimination of 
reconsideration in her proposal to reform the disability claims system 
as well.
    As someone who has worked on this issue on a personal level, I am 
committed to ensuring that the Social Security disability determination 
process is reformed and is fair to all concerned. Therefore, I offer my 
support and willingness to work with Commissioner Barnhart and Members 
of the two subcommittees represented here today on these issues. It is 
time that we in Congress stood up and worked to make real reforms so 
that our constituents can finally receive the benefits they deserve. 
Reforming this broken process is the next step to bringing real relief 
to the claimants who truly deserve disability benefits and who truly do 
not need to face any further delay! Thank you, and may God bless you in 
your kind consideration of this important matter!

                                 
    Chairman HERGER. Any questions?
    Mr. CARDIN. Mr. Chairman, let me again thank my colleague. 
We have the benefit of having Mr. McIntyre's advice that we can 
seek while we deal with this issue. I think his practical 
experience particularly in his former role is going to be very 
helpful to this Congress as we try to confront these issues. 
Once again, let me thank you for appearing here today before 
our Committee, and I assure you that we look forward to working 
with you as we try to deal with these issues.
    Mr. MCINTYRE. Yes, sir. We will be available as necessary. 
Thank you. Thank you, gentlemen.
    Chairman HERGER. Thank you.
    Chairman SHAW. Before you leave, I just also want to 
compliment you for your statement. It is good to have somebody 
here who is one of us, and has the experience of being one of 
them and has confronted many of these things. Our Subommittee, 
for the 6 years that I have been Chair, has been examining and 
re-examining ways that we can change the system, and I think in 
a bipartisan way we want to do that so that we can get a quick, 
decisive decision for people that are probably tremendously 
fragile.
    Mr. MCINTYRE. Yes, sir.
    Chairman SHAW. So, your view is valuable to the Committee. 
Thank you.
    Mr. MCINTYRE. Thank you. Thank you, gentlemen.
    Chairman SHAW. The next panel of one is the Honorable Jo 
Anne Barnhart, the Commissioner of the SSA. We are pleased to 
again have you before the Committee and are looking forward to 
your testimony. Ms. Barnhart.

 STATEMENT OF THE HONORABLE JO ANNE B. BARNHART, COMMISSIONER, 
                 SOCIAL SECURITY ADMINISTRATION

    Commissioner BARNHART. Thank you very much, Mr. Chairman.
    Chairman SHAW. I don't know that your microphone is on.
    Commissioner BARNHART. Can you hear me now?
    [Laughter.]
    Chairman SHAW. We can hear you now.
    Commissioner BARNHART. Thank you very much, Mr. Chairman. 
Chairman Shaw, Chairman Herger, Mr. Cardin, and Members of the 
Subcommittees, it is really a pleasure to appear before you 
today to discuss my approach for improving the Social Security 
disability determination process. I always welcome the 
opportunity to appear before this Committee because I so 
greatly appreciate your ideas and insights as well as your 
consistent support for our agency. I am doubly pleased to be 
here today because it was before you that just about a year ago 
I first described my vision for an improved disability system, 
and it is particularly nice to go after Mr. McIntyre, who 
actually endorses one aspect of my proposal.
    Today I would like to update you on how we are proceeding 
to convert my approach into a detailed plan and ultimately into 
an effective process to make the right decision as early in the 
process as possible. I know that your Subcommittees are 
painfully aware

of the length of time that claimants have to wait for an 
initial determination or an appeal. In fact, it was the subject 
of many of your opening comments. Delays in the current system 
occur in spite of the best efforts of the dedicated public 
servants in the SSA and in the State Disability Determination 
Services (DDSs), who are such a vital part of our agency's 
work.
    We have moved forward in several areas: we are implementing 
the eDIB process, which provides the infrastructure that is 
needed to support the new approach; we have conducted a massive 
outreach effort to obtain comments on the current system and 
the new approach, and we are giving thoughtful consideration to 
all of them; we are conducting an exhaustive study of all the 
issues. The Disability Service Improvement staff that I created 
is located organizationally in my immediate office, and it is 
coordinating this effort, making sure that we have all the 
information that we need to make decisions.
    Before I go any further, I do want to take this opportunity 
to emphasize that the new approach is just that. It is an 
approach or an outline. I have made no final decisions on how 
to implement it. Everyone I speak with understands the urgency 
of the need to improve the disability process; because this is 
such an important program and because it is so complex, as you 
have indicated and acknowledged in your opening statements, I 
really needed time to listen to the people involved at all 
stages of the process, both outside of and within the SSA. I 
have personally participated in 51 meetings with more than 35 
organizations involved in the disability process, within our 
agency and outside it. Among the hundreds and hundreds of 
comments that we received, more than 500 came in through our 
website from individuals. Many of those individuals were 
themselves disability claimants or current recipients.
    I am not going to take time here to describe my new 
approach because it is summarized in my written testimony, and 
I know you are all familiar with it. I would say generally the 
approach has been well received. Certainly there are issues on 
which there is not consensus, but every group that I have 
talked to agrees on one thing, and that is that the current 
system needs to be changed. I want to thank everyone who is 
giving us the benefit of their views and sharing their 
concerns. I would like to make a special note of the 
cooperative and constructive attitude of all who have provided 
comments, and especially the individuals and organizations that 
I have met with personally. I really appreciate their 
willingness to work with me to improve the disability process. 
The comments that we have received have been extremely valuable 
and have definitely shaped and are continuing to shape my 
thinking. Many of the decisions are not going to be easy 
because there are multiple considerations for each issue.
    For example, when I developed the new approach, I 
envisioned Regional Expert Review Units (RERU) to provide 
specialized medical and vocational expertise for each step of 
the process. A number of organizations and individuals have 
raised excellent questions about how these units would work, 
questions such as how to ensure that DDSs can access the 
medical expertise they need; how these units could and should 
be staffed; how to use specialized experts in cases of multiple 
disabling conditions; and how experts in these units would 
relate organizationally to the DDSs and to the Office of 
Hearings and Appeals (OHA). Similarly, there is a wide range of 
views as to where responsibilities for quick decisions should 
reside. The new approach calls for field offices to send them 
to the RERUs immediately after taking the application.
    Virtually everyone we have talked to thinks the idea of a 
quick decision process for the obviously disabled is a good 
idea. My idea was to allow DDSs to concentrate more on 
difficult cases by removing the obvious cases from their 
workload. We have heard from a number of parties who think the 
DDSs should handle the quick decision process. Eliminating the 
Appeals Council is another element of the new approach that has 
generated a large number of comments. Advocacy groups have 
expressed concern about the effects of such a step, especially 
because it means closing the record after the ALJ decision. 
These groups have suggested there should be a provision for 
good-cause exceptions. On the other hand, others fear that 
eliminating the Appeals Council could lead to significantly 
more cases being appealed to Federal court and, thus, 
overwhelming the court system.
    I cannot tell you today how I am going to resolve these 
issues because, as I said earlier, I have not made decisions. 
My task is to put together a cohesive package in which every 
element of the process contributes to its effectiveness and 
removes obstacles to our goal to make the right decision as 
early in the process as possible. I expect to make decisions 
relatively soon on the major issues so that we can put together 
a proposed rule on the new approach by early 2005. Of course, 
the draft proposed rule will be available for public comment, 
and I expect that we will receive many comments that will be 
very helpful. I look forward to the opportunity to hear these 
Subcommittees' views as well. When I first described my 
approach to you, I said that it would require having an eDIB 
system fully implemented and in operation long enough for us to 
identify and address any startup problems.
    The new approach to disability claims processing can work 
efficiently only when all components involved in disability 
claims adjudication and review move to an electronic process 
through the use of an eDIB folder. I am pleased to say eDIB is 
right on schedule. Fourteen States have begun using the 
electronic folder, and the first three electronic hearings were 
held in Charlotte, North Carolina, in the last few weeks. I 
know that moving to eDIB poses significant challenges for the 
employees at SSA who are involved at all levels. I want to 
publicly thank them for their dedication, their willingness, 
and their hard work in making eDIB a success.
    I would like to give special thanks to Butch McMillen and 
Sheila Everett from the State of Mississippi. Under their 
leadership, earlier this month Mississippi became the first 
State to completely roll out the electronic folder, with all 
disability examiners (DEs) now using the electronic folder, and 
to thank our Regional Commissioner in Atlanta, Paul Barnes, for 
his superb leadership in making Region 4 the first region to 
lead the way for the Nation.
    Finally, I would like to thank you, Chairman Shaw, Chairman 
Herger, and the Members of the Subcommittees for your support 
and your guidance. I really appreciate the relationship that we 
enjoy, and I look forward to working with you and your staff as 
we continue in our mutual efforts to improve the service 
provided to disabled individuals and their families because 
that is what this is all about. I will be happy to try and 
answer any questions Members of the Committee may have for me.
    [The prepared statement of Commissioner Barnhart follows:]
 Statement of The Honorable Jo Anne B. Barnhart, Commissioner, Social 
                        Security Administration
    It is a real pleasure to appear before these two subcommittees 
today to discuss my approach to improving the Social Security 
disability determination process. I always welcome the opportunity to 
appear before you because I so greatly appreciate your ideas and 
insights as well as your consistent support for our agency. And I am 
doubly pleased to be here today because it was before you that I first 
described my vision for an improved disability system.
    Today I would like to update you on how we are proceeding to 
convert my approach into a detailed plan and, ultimately, into an 
effective process to make the right decision as early in the process as 
possible.
    I know that these subcommittees are painfully aware of the length 
of time claimants have to wait for an initial determination or an 
appeal. And delays in the current system occur in spite of the best 
efforts of the dedicated public servants in SSA and in the state 
Disability Determination Services (DDS), who are such a vital part of 
the agency's work. In fact, when I talk about SSA employees, I also 
refer to those who work in the Disability Determination Services, or 
DDSs.

Where We Are Now

    We have moved forward in several areas:

      We are implementing the electronic disability process, 
which provides the infrastructure needed to support the new approach.
      We have conducted a massive outreach effort to obtain 
comments on the current system and the new approach and are giving 
thoughtful consideration to all of them.
      We are conducting an exhaustive study of all the issues. 
The Disability Service Improvement staff, or DSI, located 
organizationally in my immediate office, is coordinating this effort, 
making sure that we have all the information we need to make decisions.

    Before I go any further, let me emphasize that the new approach is 
just that--an approach or an outline. I have made no final decisions on 
how to implement it. Everyone I speak with understands the urgency of 
the need to improve the disability process. But because this is such an 
important program, and because it is so complex, I needed to take the 
time to listen to people involved at all stages of the process, both 
outside of and within SSA.
    I have made an active personal role in this process one of my 
highest priorities. For example, I have personally participated in more 
than 40 meetings with more than 30 organizations involved in the 
disability process--within SSA and outside the agency. Among the 
hundreds and hundreds of comments we received were more than 500 
comments on our website from individuals, many of them disability 
claimants or recipients.

Elements of the New Approach

    As I said a moment ago, the new approach is designed to make the 
right decision as early in the process as possible. Another major 
purpose is to encourage return to work at all stages of the system. I 
made a decision early on, to focus on those steps that we can implement 
through regulation rather than legislation.
    The approach preserves some of the significant features of the 
current system. Initial disability claims will continue to be handled 
by SSA's field offices; DDSs will continue to adjudicate claims for 
benefits; and Administrative Law Judges (ALJs) will continue to conduct 
de novo hearings and issue decisions.
    But there also are a number of important changes to the current 
system:

      A ``Quick Decision'' step at the earliest stages of the 
claims process for people who are obviously disabled would allow their 
claims to be decided within 20 days.
      Medical expertise within Expert Review Units would be 
available for decision makers at all levels of the process, including 
DDSs and the Office of Hearings and Appeals (OHA).
      The DDS reconsideration step would be eliminated.
      A Reviewing Official (RO) position would be created 
within SSA to evaluate claims appealed from the DDS. The RO could allow 
a claim or agree with the DDS decision.
      The Appeals Council step would be eliminated. The ALJ 
decision would be the agency's final action, unless the case was 
selected for review by an Oversight Panel of ALJs and an AAJ.

    The lynchpin of quality assurance under the new approach is 
accountability and feedback at each level of the process. At all 
levels, the quality process would focus on denials as well as 
allowances, and concentrate on ensuring that cases are fully documented 
at each stage. This last point is crucial because I believe that better 
documentation will allow cases to move through the system more quickly 
and will produce better decisions.
    The new approach would be workable only when SSA's electronic 
disability system--which we call e-Dib--is fully functional so that a 
claimant's file could be accessed by those working on the case anywhere 
in the nation. I'll discuss that in more detail a little later.
    We also are working on several demonstration projects to encourage 
voluntary return to work. I believe these projects will let us learn a 
great deal about how to expand beyond the incentives in the Ticket to 
Work program that your Committee was so instrumental in creating.

Reaction to the New Approach

    I began my presentation by describing our outreach to hear the full 
spectrum of views and concerns from those who are involved at every 
step of the process. Generally, the approach has been well received.
    Certainly, there are issues on which there is not consensus. For 
example, the two most common comments we have received on the Reviewing 
Official step are that the reviewing official does not need to be an 
attorney and that the reviewing official absolutely should be an 
attorney. But every group I've talked to agrees that the current system 
needs to be changed.
    I want to thank everyone who is giving us the benefit of their 
views and sharing their concerns. The comments we received have been 
extremely valuable and have definitely shaped my thinking. Many of the 
decisions will not be easy because there are multiple considerations 
for each issue.
    For example, when I developed the new approach, I envisioned 
Regional Expert Review Units to provide specialized medical and 
vocational expertise for each step of the process. A number of 
organizations and individuals have raised excellent questions about how 
these units would work--questions such as:

      How to ensure that DDSs can access the medical expertise 
they need;
      How these units should be staffed;
      How to use specialized experts in cases of multiple 
disabling conditions; and
      How experts in these units will relate organizationally 
to the DDSs and OHA.

    Similarly, there is a wide range of views as to where 
responsibilities for Quick Decisions should reside. The new approach 
calls for field offices to send them to the Expert Review Units 
immediately after taking the application. Virtually everyone we've 
talked to thinks the idea of a quick decision process for the obviously 
disabled is a good idea. My idea was to allow DDSs to concentrate more 
on difficult cases by removing the obvious cases from their workload. 
But we've heard from a number of parties who think the DDSs should 
handle the Quick Decision process.
    Eliminating the Appeals Council is another element of the new 
approach that has generated a large number of comments. Advocacy groups 
have expressed concern about the effects of such a step--especially 
because it means closing the record after the ALJ decision. These 
groups have suggested that there should be a provision for good cause 
exceptions.
    On the other hand, others fear that eliminating the Appeals Council 
could lead to significantly more cases being appealed to Federal court, 
and, thus, overwhelming the court system.
    I cannot tell you how I will resolve these issues because I have 
not made decisions. My task is to put together a cohesive package in 
which every element of the process contributes to its effectiveness and 
removes obstacles to our goal to make the right decision as early in 
the process as possible.

What Next?

    I expect to make decisions relatively soon on the major issues so 
that we can put together a proposed rule on the new approach by early 
in calendar 2005.
    Of course, the draft proposed rule will be available for public 
comment. I expect that we will receive many comments that will be very 
helpful. And I will look forward to the opportunity to hear your views.

Advancements in Systems Technology

    When I first described my new approach to you, I said that it would 
require having the Electronic Disability System that we call eDIB fully 
implemented and in operation long enough for us to identify and address 
any startup problems. The new approach to disability claims processing 
can work efficiently only when all components involved in disability 
claims adjudication and review move to an electronic business process 
through the use of an electronic disability folder.
    I am pleased to say that eDIB is right on schedule.
    As you know, SSA field offices throughout the agency are now using 
the Electronic Disability Collect System (EDCS) that provides DDSs an 
electronic folder. In the DDSs, we rolled out eDIB in January 2004 
starting in Jackson, Mississippi, and implementation has begun in 14 
states. We expect this process to be complete by June 2005.
    The Office of Hearings and Appeals (OHA) has begun using the new 
Case Processing and Management System. CPMS is a new software system 
for processing cases and managing office workloads in the OHA. CPMS is 
a replacement system and will provide OHA with the ability to work with 
the electronic file.
    When these electronic processes are fully implemented, each 
component 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. This will reduce delays that 
result from mailing, locating, and organizing paper folders.
    I know that moving to eDIB poses significant challenges for the 
employees at SSA who are involved at all levels. And I want to publicly 
thank them for their dedication and hard work that is making eDIB a 
success.

Conclusion

    I'd like once again to thank Chairman Shaw, Chairman Herger and the 
members of these subcommittees for their support and guidance. I look 
forward to working with you and your staffs as we continue our mutual 
efforts to improve the service provided to disabled individuals and 
their families.

                                 

    Chairman SHAW. Commissioner, you propose to establish RERU 
which would centralize the medical expertise to make it 
available to decisionmakers across the country. More detail is 
needed in terms of whether these experts will replace current 
personnel or whether they will be doctors or nurses, or both, 
and what their role would be. My question is: your proposal to 
reform the disability determination process would create new 
medical expert units located in Social Security regional 
offices. Would you agree that on-site doctors at the State DDSs 
currently provide essential services, including reviewing 
cases, training, preventing fraud, and working with other 
doctors in the State to bolster the medical evidence at a lower 
cost?
    Commissioner BARNHART. Let me say, Mr. Chairman, what I 
believe is at the root of your question is the idea that we 
want to have the best possible medical expertise all through 
the disability determination process. My goal in the new 
approach was to augment or fill in gaps that may exist in our 
existing medical expertise. We have very hardworking MCs across 
the country in our DDSs. When you look at the cases that come 
in to the DDSs, not always is the right set of medical eyes 
looking at those cases. Let me give you an example. Doing an 
inventory of the MCs that we have, 2.5 percent of our MCs are 
orthopedic doctors, yet over 20 percent of the cases that we 
decide on an annual basis deal with orthopedic issues. I think 
the medical personnel should reflect and certainly have the 
expertise to be able to handle the types of cases that are 
coming in.
    In one State that I visited earlier this year, I spoke with 
a pediatric oncologist at a DDS, and I said, ``How many of the 
cases that you do have to do with pediatric oncology?'' He 
said, ``About 20 percent.'' I said, ``Well, in the new approach 
I want to change that. I want to make sure you are looking at 
80 percent pediatric oncology cases and that we are using your 
expertise to make the right decision as early as possible.'' I 
have read all the testimony of the other witnesses that are 
appearing here today, and I am aware of the concerns that have 
been expressed, and the basis of the Chairman's question, and I 
would say this: my goal is to improve the availability of 
medical service. In the new approach, I recommended RERUs. As a 
result of the back-and-forth discussions that I have had with 
various interested parties over this last 12 months, I am 
looking at the possibility of having doctors in the DDSs 
provide service to other DDSs. If you are a pediatric 
oncologist in one State, maybe you can help with pediatric 
oncology cases coming in from another State. There are a number 
of issues that need to be dealt with: State licensure 
requirements for physicians, reimbursements between one State 
and another. So, I think that we will get to the right place in 
terms of making sure that we take the greatest advantage we 
possibly can of our existing medical expertise, but at the same 
time fill in the gaps that may exist.
    Chairman SHAW. Is State licensing a problem?
    Commissioner BARNHART. Well, the issue there, Mr. Chairman, 
as I have been advised by the medical commenters we have heard 
from, is that you get licensed to practice in a particular 
State, and so you might, let's just say you are in the State of 
Delaware, my home State, and we are asking you to look at cases 
from Pennsylvania, we have to look at what the implications are 
of doing that and whether we have to address any State 
licensure issues.
    Chairman SHAW. I wonder whether examining a patient and 
testifying would be practicing medicine in another State if you 
are under the guidance of the court.
    Commissioner BARNHART. Those are the kind of issues that we 
are looking at, Mr. Chairman, and I will be happy to keep the 
Committee apprised as we identify the correct answers and 
resolve some of those operational issues.
    Chairman SHAW. It would be helpful if that is not an 
impediment, but you mentioned the specialty of doctors. What is 
the predominant specialty of the doctors that are now 
testifying or doing reviews?
    Commissioner BARNHART. You know, I did not bring the 
listing with me, but I would be happy to submit the inventory 
that we did to the Committee for the record.
    Chairman SHAW. I would appreciate it. I think that is 
important.
    [The information follows:]

    As of May 2004, there were 2,136 Medical Consultants on staff 
within DDSs. Of those, 1,700 (80 percent) were less than full time.

------------------------------------------------------------------------
                                    Percent of DDS      Percent of DDS
       Clinical Specialist               MCs*             Workload**
------------------------------------------------------------------------
Cardiologists                            1.70                6.70
Child Psychiatry                         0.60                0.50
Child Psychology                         0.01                3.70
Endocrinologists                         0.20                3.80
Family Practice                          6.80                0.00
Gastroenterologists                      0.30                2.40
Internists                               6.30                6.30
Neurologists                             1.90                6.80
Oncologists                              0.30                4.70
Orthopedists                             2.50               19.90
Pediatricians                            9.80                0.90
Psychiatrists                           10.70               19.60
Psychologists                           31.20                7.50
Pulmonologists                           0.30                4.70
Rheumatologists                          0.30                6.70
Other                                   17.09                5.80
------------------------------------------------------------------------
*Percentages weighted based upon full-time or part-time status as of May
  2004.
**Workload percentages are based upon primary impairment only for FY
  2003.

                               __________
    Chairman SHAW. Are you eliminating some of the on-site 
doctors, and are you replacing some of them with nurses?
    Commissioner BARNHART. We have not, well, first of all, we 
have not done anything. I was laying out an approach of how we 
might get at the medical gaps that exist. I am listening to the 
comments. We have gotten a number of papers in from DDSs, and 
some of the witnesses today are going to speak to that fact, 
from the National Association of Disability Examiners (NADE) 
and from the National Council of Disability Determination 
Directors (NCDDD), as well as the medical consultant who is 
going to testify. We have talked with all those groups 
ourselves, and so we are looking at how we address the concerns 
that they have raised.
    Chairman SHAW. Thank you. Mr. Herger?
    Chairman HERGER. Thank you. Commissioner Barnhart, one of 
the great satisfactions I have as I travel around my Northern 
California district is to periodically be able to observe those 
individuals who have disabilities that are out working and to 
be able to witness the great sense of self-worth and 
satisfaction that these individuals have of being involved in 
the process. I know that while you are currently working on 
improving the disability determination process, you also are 
conducting demonstration projects to help these people with 
disabilities be able to return to work. The idea that people 
with disabilities can work rather than collect disability 
benefits for years and years is an important concept that needs 
to be made a more integral part of the Social Security 
disability system. If you could, Commissioner, could you bring 
us up-to-date on work-related demonstration projects and any 
other progress that has been made in helping more disabled 
beneficiaries be able to work?
    Commissioner BARNHART. Yes. Let me say, first of all, I 
share your strong belief that return-to-work issues are 
extremely important in providing adequate services, and 
incentives and removing disincentives in these programs to help 
people with disabilities be able to continue to work or start 
to work if they choose to do so is definitely a priority of 
ours, and certainly the Ticket to Work legislation that was 
passed several years ago with the leadership of this Committee 
has made a big difference in terms of reorienting, I think, the 
mission of the SSA in that regard.
    As part of the new approach, I actually outlined four 
different demonstrations that would not wait until an 
individual was adjudged disabled but, rather, would start from 
the very beginning of the process. Not to take the time to 
explain each of them, they all looked at the central theme was 
providing services and benefits earlier in the process to allow 
people to continue working, not necessarily to go on full-time 
disability benefits. I would be happy to provide a write-up of 
those for the record again. None of those have actually started 
yet, but we are in the process of working through in several 
locations hopefully being able to start some of those as early 
as next year.
    I want to emphasize that all of those demonstrations, as we 
contemplate them, would be voluntary. They are not mandatory. 
It would be up to the individual person with disabilities to 
make the decision if they want to avail themselves. The reason 
for delay in some cases is we have to develop a predictive 
model that would tell us whether people with certain kinds of 
conditions and disabilities could be expected to improve, would 
benefit from the kinds of services that we would offer in those 
demonstrations. Right now we have been working with the State 
of Florida, and the State of Florida, in my understanding, in 
January intends to implement the Florida Freedom Initiative. 
This is something that I know that, Chairman Herger, you have 
an interest in, we talked about this I think this summer when I 
testified before your Subcommittee, where we actually modify 
SSI rules to allow, along the lines of individual development 
accounts that have been created in the welfare system to 
encourage people to go to work and to remove the disincentive 
that occurs from accumulation of resources.
    The Youth Transition Program is another demonstration that 
is actually up and running. Six different States are involved 
in that, Mr. Chairman, and this is very important because I 
feel very strongly about this. In a prior life, I was the 
Assistant Secretary for Children and Families and had a lot of 
interaction with the foster care system and the whole issue of 
when children age out of a particular program and oftentimes 
there is a gap in service. The issue here is to make sure that 
when children would age out of SSI for disabled children that 
we have actually taken steps to help move them into making the 
transition to work. So, I have a complete report I could submit 
that details what is happening with every single one of our 
demonstrations that I would be happy to submit for the record 
in addition.
    Chairman HERGER. Without objection, I would like you to do 
that.
    [The information follows:]
                   Updates of Demonstration Projects
Benefit Offset Demonstrations

    Description: The Ticket to Work legislation requires the 
Commissioner to ``conduct demonstration projects for the purpose of 
evaluating . . . a program for title II disability beneficiaries . . . 
under which benefits payable . . . based on the beneficiary's 
disability, are reduced by $1 for each $2 of the beneficiary's earnings 
that is determined by the Commissioner.''
    The National Benefit Offset Demonstration will test a range of 
employment support interventions in combination with a $1 reduction in 
benefits for every $2 in earnings, with the goal of enabling more 
beneficiaries to return to work and maximize their employment, 
earnings, and independence. At the same time, we are developing plans 
for a 4 state demonstration that could be run at a lower cost (and in 
an earlier timeframe). Our intent is to gather information for the 
national demonstraton.
    Status: We plan to conduct this project in two distinct phases: an 
initial four-state pilot project (Connecticut, Utah, Vermont, and 
Wisconsin), and the national study. The purpose of the initial project 
is to collect early information on the demonstration that will be 
useful in developing the national study. We expect to enroll 
participants in the four-state pilot by the end of the calendar year or 
early in 2005. We awarded the contract for the national study on 
September 30, 2004 to Abt Associates.

Early Intervention (EI)

    Description: With the EI project, SSA will, for the first time, 
conduct a demonstration focused on applicants. The concept underlying 
the EI project is that providing services and supports as close to 
disability onset as possible will enable individuals to remain in or 
return to the workforce.
    The project will offer interventions to a sample of Social Security 
Disability Insurance (SSDI) applicants with impairments that may 
reasonably be presumed to be disabling (i.e., they are likely to be 
awarded SSDI benefits) and who are likely to return to work as a result 
of the program. The interventions will include access to a wide range 
of necessary employment services, a 1-year cash stipend equal to the 
applicant's estimated SSDI benefit and Medicare for three years.
    Status: SSA released a solicitation on the process demonstration 
project on August 2, 2004. We hope to award a contract in November 2004 
and begin enrolling participants in early CY 2005.

Disability Program Navigator (DPN)

    Description: SSA and the Employment and Training Administration 
(ETA) of the Department of Labor (DOL) are jointly funding 
approximately 200 DPN positions in 17 states (Arizona, California, 
Colorado, Delaware, Florida, Iowa, Illinois, Maryland, Massachusetts, 
New York, Oklahoma, So,uth Carolina, Vermont, and Wisconsin in the 
first year; and Mississippi, New Mexico, and Oregon in the second 
year). DPNs operate in DOL's One-Stop Career Centers and provide 
seamless employment services to individuals seeking to enter the 
workforce. DPNs also provide an important link to the local employment 
market and facilitate access to programs and services that impact the 
success of individuals with disabilities who are seeking employment.
    Status: The DPN project is in its second year of operation. In June 
2003 DOL awarded cooperative agreement funding to 14 states to 
establish DPNs. In June 2004, DOL continued funding to the 14 original 
states and awarded funding to 3 additional states. DOL's technical 
assistance contractor is conducting a process evaluation in all states 
and will review and evaluate outcomes in selected states. SSA expects a 
final report from the DOL contractor in fall 2005.

Mental Health Treatment Study (MHTS)

    Description: The MHTS will focus on SSDI beneficiaries with mental 
health impairments. It will test the effect of treatment funding on the 
health and health-care/job-seeking behaviors of those beneficiaries. 
The study intervention calls for SSA to pay for the costs of outpatient 
mental health disorder treatments (pharmaceutical and 
psychotherapeutic) and/or vocational rehabilitation that are not 
covered by other insurance for those individuals.
    Status: As a first step in a three-part process (design, pilot, and 
larger demonstration), a pre-design contract was awarded to the Urban 
Institute in September 2003. SSA and the Urban Institute have selected 
a Technical Advisory Panel (TAP) (consisting of national experts on the 
subject) to provide recommendations on demonstration interventions. The 
first TAP meeting was held in June 2004 and the second meeting is 
scheduled for late October 2004.

Homeless Outreach Projects and Evaluation

    Description: Congress provided $8 million in both FY 2003 and 2004, 
for SSA to conduct outreach to ``homeless and under-served 
populations.'' SSA used this earmarked funding to establish the 
Homeless Outreach Projects and Evaluation (HOPE) in support of the 
President's initiative to end chronic homelessness within 10 years.
    The HOPE initiative is focused on assisting eligible, chronically 
homeless individuals in applying for Supplemental Security Income (SSI) 
and SSDI benefits. The HOPE projects will help SSA to demonstrate the 
effectiveness of using skilled medical and social service providers to 
identify and engage homeless individuals with disabilities as well as 
assist them with the application process.
    Status: SSA awarded $6.6 million in cooperative agreement funding 
to 34 public and private organizations in April 2004 and conducted an 
Orientation Conference for the organizations in August 2004. We awarded 
an evaluation contract on September 17, 2004.

Youth Transition Process Demonstration (YTPD)
    Description: To further the President's New Freedom Initiative goal 
of increasing employment of individuals with disabilities, in September 
2003, SSA awarded cooperative agreements to six states (California, 
Colorado, Iowa, New York, Maryland, and Mississippi) for the purpose of 
developing service delivery systems to assist youth with disabilities 
to successfully transition from school to work. During this critical 
period of transition to adulthood, the services provided to youth with 
disabilities can prepare them for postsecondary education, employment 
and economic self-sufficiency.
    The states will establish partnerships to improve employment 
outcomes for youth ages 14-25 who receive SSI or Social Security 
Disability Insurance (SSDI) payments on the basis of their own 
disability. The projects will provide a broad array of transition-
related services and supports to SSI and SSDI applicants and children.
    Status: The demonstration projects are at various stages of 
implementation. Most projects currently are testing their designs while 
others began pilots at the start of the 2004 school year. A technical 
assistance contract was awarded September 30, 2004 to the Virginia 
Commonwealth University. An evaluation solicitation will be released by 
the end of the calendar year. The second year of funding for YTD 
projects was awarded September 30, 2004.

State Partnership Initiative (SPI)

    Description: SSA and the Rehabilitation Services Administration 
(RSA) funded a combined total of eighteen demonstration states in 1998. 
SSA provided 5-year funding to twelve states (California, Illinois, 
Iowa, Minnesota, New Hampshire, New Mexico, New York, North Carolina, 
Ohio, Oklahoma, Vermont and Wisconsin) to develop innovative projects 
to assist individuals with disabilities in their efforts to reenter the 
workforce. These awards helped states develop state-wide programs of 
services and support for their residents with disabilities that 
increased job opportunities for them and decreased their dependence on 
benefits, including SSDI and SSI. California, Vermont, New York and 
Wisconsin implemented SSI waivers to test alternative rules.
    Status: The SPI projects are in the sixth and final year. Eleven of 
the twelve states received no-cost extensions to phase out the projects 
by the end of September 2004. As of August 2004, the states testing 
waivers received no-cost extensions for three to nine months to 
complete waiver closeout and outcome evaluations.

Florida Freedom Initiative

    Description: The Florida Department of Children and Families has a 
CMS waiver program which allows individuals to obtain cash instead of 
certain Medicaid services to allow participants greater control in the 
planning and purchase of supports and services. SSA has waived certain 
SSI Program rules to allow our beneficiaries to participate in the FFI.
    Status: SSA signed an IAA with ASPE/DHHS to provide $100,000 in 
support of the evaluation activities.

Ongoing Medical Benefits

    Description: This project will test the effects of providing 
ongoing health insurance coverage to beneficiaries who wish to work, 
but have no other affordable access to health insurance.
    Status: The design of a national project is under development and 
we expect to start a pilot project (focusing on HIV-AIDS) in 2005.

Interim Medical Benefits

    Description: This project will provide medical benefits to 
individuals with no medical insurance (no ``treating source'' evidence) 
whose medical condition would likely improve with treatment. This 
intervention will facilitate the development of the necessary 
documentation for disability adjudication while providing the applicant 
needed services.
    Status: The projects still are in the preliminary stages of 
development and no specific information is available at this time.

Accelerated Benefits

    Description: These demonstration projects will provide immediate 
cash and medical benefits for a specified period (2-3 years) to title 
II disability applicants who are highly likely to benefit from 
aggressive medical care. This 4-year project will provide immediate 
access to both DI benefits and Medicare coverage by utilizing a 
predictive model currently under development. This project was formerly 
called the ``Temporary Allowance'' demonstration project.
    Status: The projects still are in the preliminary stages of 
development and no specific information is available at this time.
                               __________
    Again, I thank you for working in that area, very important 
to the lives of many people who want to be able to be 
productive as well. So, thank you very much for your work.
    Commissioner BARNHART. Thank you.
    Chairman SHAW. Mr. Cardin?
    Mr. CARDIN. Thank you very much, Mr. Chairman. Commissioner 
Barnhart, again, welcome. I noticed several times that you 
complimented the workforce at the SSA, and I just want to 
underscore that. I have the opportunity frequently to visit and 
see the workforce. I know how hard they work under extremely 
difficult circumstances. The volume of work continues to 
increase, and yet the additional resources for staff has not 
really kept up. I very much appreciate your advocacy for 
adequate support for the SSA.
    Commissioner BARNHART. Thank you.
    Mr. CARDIN. Just to follow up on Mr. Herger's point very 
quickly, it would seem to me that one of the things we could do 
to encourage people who are on SSI to be able to be gainfully 
employed is to deal with the disregard, the wage earnings 
disregard. That has not been changed in a long time from $65.
    Commissioner BARNHART. That is right.
    Mr. CARDIN. It seems to me that that may be one way that we 
really could encourage people to work without the adverse 
consequences if they are unable to maintain gainful employment.
    Commissioner BARNHART. Certainly that is an issue that has 
been discussed, periodically. I think it came up at the 
Subcommittee hearing with you all this summer, and we would be 
happy to provide any kind of technical assistance we can to you 
or Members of the Subcommittee who are interested in looking at 
that issue.
    Mr. CARDIN. I have been told it has been over 30 years 
since we made any adjustment on that.
    Commissioner BARNHART. It has been a very long time.
    Mr. CARDIN. It is time for that to keep up. Again, if we 
really want to have a coordinated effort to try to encourage 
people who can to work----
    Commissioner BARNHART. If I may say, Mr. Cardin, that is 
precisely the point of the Florida Freedom Initiative. One of 
the waivers there, it waives that $65. I think that we will get 
some good empirical evidence as a result of that demonstration 
that may show us the effect it has.
    Mr. CARDIN. That is good. Also, your demonstration 
programs, at least some of the ones that I have looked at, will 
also be providing other services to SSI recipients so that they 
have some help in their effort to be gainfully employed, which 
is one of the points that I really want to underscore. It is 
one thing about cash assistance. It is another thing about 
supplementing cash assistance with additional services so that 
individuals can become more independent. So, I think that you 
are going about that the right way, and we will wait to see 
what, of course, they are voluntary, and I think that also is 
helpful.
    There are 36,000 elderly disabled refugees who will face 
termination of their SSI benefits because of the 7-year 
restriction that was imposed in law. The chief obstacle for 
these individuals of maintaining their benefits toward becoming 
citizens has been basically the time delays in these 
applications being approved. The Administration has recommended 
an extension. There is a bipartisan bill that I am part of in 
Congress that would extend so these low-income refugees would 
be able to continue their SSI benefits.
    My reason for mentioning it at this hearing is that we are 
anticipating that Congress will adjourn next week, and come 
back for a session in the middle of November. I expect a rather 
short session. I am just reaching out to you whether we can 
find some vehicle, some way, some strategy to make sure that 
before Congress adjourns this year that we extend that SSI 
limitation; otherwise, we are going to be faced with thousands 
of individuals being really subject to a hardship. There is 
also, by the way, support in the U.S. Senate. So, we have broad 
bicameral support.
    Commissioner BARNHART. Yes, Mr. Cardin. I certainly agree 
with you. As you stated, we have our own proposal for an 
extension. I think yours allows one more year of extension than 
ours. There are some other relatively minor differences. I feel 
confident that if we got together, we could sit down and work 
out some sort of agreement between us. I do agree that because 
of the fact the clock is ticking for these individuals, it is 
important that we take action. So, I would, certainly like to 
extend the offer to work with your staff to do whatever we can 
to make that become a reality before the Congress adjourns.
    Mr. CARDIN. I appreciate that, and, Mr. Chairman, or Mr. 
Chairmen, both, I just really want, I hope we can find a 
vehicle. Again, this is bipartisan. The Administration supports 
it. I am confident that our leadership would be prepared to 
support a suspension bill if we cannot find another vehicle for 
it to go forward on, and we are certainly willing to work out 
the language between the Administration and the legislation 
that is pending both in the House and the Senate. This should 
be non-controversial. I would just hope that we would find a 
way that we could move that before Congress adjourns this year. 
Thank you.
    Commissioner BARNHART. If I may mention, too, Mr. Cardin, 
you may be interested to know that we at SSA will be doing an 
annual notice to the individuals who are subject to that 
provision to let them know the number of years that they have 
left of eligibility so that they are aware that they need to 
move to file for citizenship in the future.
    Mr. CARDIN. The problem, of course, is that many have, and 
it is in the, in fact, this is the leading cause. They have 
applied for citizenship. It just takes a long time for the 
process to work its way.
    Commissioner BARNHART. Yes. I realize that.
    Mr. CARDIN. Thank you.
    Chairman SHAW. I would say to my friend from Maryland, by 
way of a history on that particular piece of legislation, 
without criticizing your position at all, it was that it was 
originally 5 years, and then we figured that the people needed 
an extra 2 years to complete the application for citizenship. 
Maybe there is some middle ground for those that have already 
applied or something of that nature. The whole thought was that 
we don't want that to be a reason for people coming to our 
shores, and that was the reason for that legislation.
    Mr. CARDIN. I appreciate that, Mr. Chairman, and you are 
absolutely correct. I would just bring to your attention that I 
think the Administration has been convinced that the need for 
the delay, for extending it is not because individuals were 
delinquent in seeking citizenship. It is the process taking a 
lot longer, and that is why the Administration suggested an 
extension. That is why I think you have both houses and both 
parties wanting to do this. So, I would just urge you to take a 
look at the reasons why. It is not because these individuals 
have not tried to become citizens. They have. It is just taking 
longer than we had anticipated for I think some obvious 
reasons, not least of which was September 11th.
    Chairman SHAW. Well, if we are looking for inefficiencies, 
I think the immigration process in this country is probably 
about as inefficient as you could possibly get.
    Mr. Lewis.
    Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Good 
afternoon.
    Commissioner BARNHART. Good afternoon.
    Mr. LEWIS OF KENTUCKY. Our staff contacted the JCUS of the 
United States (JCUS) to request their attendance at this 
hearing, and they were unable to provide a witness, but they 
did submit a letter, which is in each Member's packet. I would 
like to request that be inserted into the record. This letter 
highlights the fact that annually about 77,000 claimants 
request review by the Appeals Council. In addition, last year 
more than 17,000 disability cases were filed in U.S. district 
courts. According to the letter, this suggests that a 
substantial number of cases are being resolved at the Appeals 
Council level without claimants' having to seek judicial 
review. Commissioner, should you eliminate the Appeals Council, 
what will be the impact on the U.S. district courts?
    [The information follows:]
                            Committee on Federal-State Jurisdiction
                                       United States District Court
                                      Wheeling, West Virginia 26003
                                                 September 28, 2004
                Honorable Frederick P. Stamp, Jr. Chair
 Honorable Susan H. Black; Honorable Kathleen A. Blatz; Honorable Glen 
  H. Davidson; Honorable Charles E. Jones; Honorable Kermit V. Lipez; 
   Honorable Howard D. McKibben; Honorable James D. Moyer; Honorable 
  Michael R. Murphy; Honorable Robert E. Nugent; Honorable Loretta A. 
 Preska; Honorable Linda Copple Trout; Honorable Gerald W. VandeWalle; 
                       Honorable Roger L. Wellman

Hon. E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security Committee on Ways and Means
United States House of Representatives B-316 Rayburn House Office 
    Building
Washington, DC 20515-6353

Dear Mr. Chairman:

    I am the Chair of the JCUS Committee on Federal-State 
Jurisdiction.The Committee is responsible for making recommendations to 
the JCUS onproposals regarding the elimination, modification, or 
creation of Federal jurisdiction. This advisory responsibility 
encompasses proposed changes to the manner in which administrative 
claims are screened and the posture in which they become subject to 
review in Federal court.
    I understand that the Subcommittee on Social Security will be 
holding a hearing onSeptember 30, 2004, regarding the proposed 
revisions to the disability claims process. Although the JCUS has not 
adopted a formal position in response to the current proposal and 
therefore is unable to provide a witness as requested by your staff, I 
would like to take this opportunity to share with the Subcommittee the 
status of the JCUS's consideration of this topic.
    The Committee on Federal-State Jurisdiction is guided, as your 
Subcommittee is certainly guided, by the principle that disability 
claimants are entitled to a fair and prompt resolution of their claims. 
The Federal courts have a role in pursuing that principle, albeit a 
limited one. We intend to do what we can to work with you and 
Commissioner Jo Anne B. Barnhart to make a positive contribution to the 
Commissioner's current reform process.
    In April 1994, the Social Security Administration (SSA) launched an 
initiative to revise the administrative process governing Social 
Security disability claims. At that time, the plan called for reducing 
the number of decisional steps from four to two, including the 
elimination of the requirement that a claimant request review by the 
Appeals Council prior to seeking judicial review in Federal district 
court. The resulting two-level administrative review process would have 
consisted of (1) an initial disability determination by a ``disability 
claim manager'' and (2) a hearing before an administrative law judge 
(ALJ). Although the Appeals Council would have continued to exist, it 
would have only been authorized to selectively review cases after they 
had been filed in U.S. district courts.
    In response, the JCUS determined to communicate to SSA its 
seriousconcerns regarding the restructuring of the Appeals Council, 
noting that the proposed role for the.Appeals Council could create 
jurisdictional problems and could have significant caseload 
ramifications. Report of the Proceedings of the JCUS of the U.S. at 38 
(September 1994). Through its many communications to SSA over the next 
several years, the judiciary urged serious reconsideration of the 
proposed elimination of the requirement that a dissatisfied claimant 
must request review by the Appeals Council prior to seeking judicial 
review in the district court. The judiciary stated that the proposed 
acceleration of district court review of disability claim denials was 
likely to be inefficient and counter-productive. It pointed out that 
while about one-third of claimants before the Appeals Council received 
favorable relief at that stage (either through reversal or remand), 
only approximately 10 percent of those appeals in which the Appeal's 
Council granted no relief to the claimant were then submitted for 
Federal judicial review. Thus, the JCUS felt that substituting 
immediate access to the district courts prior to Appeals Council review 
could potentially create a significant increase in the caseload of the 
district courts. The judiciary encouraged SSA to seek to streamline and 
expedite the Appeals Council review process rather than to bypass it. 
The Conference also noted that the screening function performed by the 
Appeals Council furthered consistency and accuracy of decisions within 
SSA while lessening the need for claimants to pursue more costly review 
in Federal district court.
    Recognizing the importance of providing thorough review of benefit-
type claims at the agency level, the judiciary addressed this issue in 
its 1995 LongRange Plan for the Federal Courts. That Plan supports 
measures to broaden and strengthen the administrative hearing and 
review process for disputes assigned to agency jurisdiction, and 
to:Facilitate mediation and resolution of disputes at the agency level. 
The Plan also supports efforts to improve the adjudicative process for 
Social Security disability claims both by establishing a new mechanism 
for administrative review of ALJ decisions and by limiting; the scope 
of appellate review in the Article III courts. In addition, the Plan 
recognizes that agencies need the requisite authority and resources to 
review and, where possible, achieve final resolution of disputes within 
their jurisdiction.
    When Commissioner Barnhart announced in September 2003 plans to 
restructure the disability claims process, our Committee began to 
analyze her approach, to seek additional information, and to determine 
whether another JCUS position was warranted. On February 12, 2004, the 
Commissioner and her staff met with me and staff of the Administrative 
Office of the U.S. Courts. In addition, on June 10, 2004, the 
Commissioner met with our Committee, along with Martin H. Gerry, Deputy 
Commissioner of the Office of Disability and Income Security Programs. 
We: appreciate her efforts and those of her staff to take the time to 
explain her ideas and to solicit comments from us.
    Many of the details and components of the Commissioner's proposal 
regarding initial agency operations are not directly within the scope 
of our inquiry. As mentioned above, the JCUS has set forth a general 
statement supporting measures to broaden and strengthen the 
administrative hearing and review process for disputes assigned to 
agency jurisdiction and to facilitate the resolution of disputes at the 
agency level.
    The Committee on Federal-State Jurisdiction is particularly 
interested in the component of the Commissioner's current approach to 
abolish the Appeals Council, thereby apparently allowing, although it 
is not clear, ALJs' decisions to become the agency's final decision 
subject to judicial review. (See 42 U.S.C. Sec. 405(g).) At the same 
time, SSA intends to create a quality control entity to review certain 
ALJ decisions. As we understand it, if a claim is selected for review 
and the quality control staff disagrees with an allowance or 
disallowance determination, the claim would then be referred to an 
Oversight Panel (two ALJs and one administrative appeals judge), which 
could affirm or reverse the ALJ's decision. In those instances, the 
decision of the Oversight Panel perhaps would be the final agency 
action. These are the details that we now have.
    Under this proposal, however, it is unclear how the agency's 
disability decisions would become ``final'' for purposes of judicial 
review if an optional quality review stage existed. In addition, we do 
not know what standards would apply in selecting; cases for the 
proposed quality assurance phase and how often ALJ decisions would be 
chosen for such optional review. These and other questions that our 
Committee raised at the June meeting; and shared with the Commissioner 
presently remain unanswered, possibly because those decisions have not 
yet been made.
    `We recognize that the Commissioner's efforts are directed toward 
improving the administrative process so that more citizens receive an 
accurate assessment of' their claim for benefits as soon as possible 
and that management accountability can be strengthened. The 
Commissioner apparently views elimination of the Appeals Council as 
contributing to that goal. We have been informed by SSA that 
approximately 77,000 claimants currently request review each year by 
the Appeals Council, with approximately 2% of the claims being allowed 
and 25% being remanded. During the last fiscal year, 17,127 Social 
Security disability insurance and Supplemental Security Income cases 
were filed in U.S. district courts. This suggests that a substantial 
number of cases are being resolved at the Appeals Council level without 
claimants having to seek judicial review. Therefore, before a decision 
is made on whether to eliminate the Appeals Council, we would hope that 
the new claims process would be adequately tested. It may be that 
substituting Appeals Council consideration with judicial review in the 
Federal courts would result in more costs and further delay for many 
claimants.
    I hope the Subcommittee on Social Security finds this information 
helpful. If the JCUS of the United States takes action with regard to 
the changes to the disability claims process now under discussion, the 
Conference will promptly notify your Subcommittee.
            Sincerely,
                                            Frederick P. Stamp, Jr.
                               __________
    Commissioner BARNHART. Well, let me say, as I indicated in 
my opening statement, certainly this is an area where there has 
been substantial concern expressed by many parties throughout 
the system. I would like to mention that I had the opportunity 
to work with the Subcommittee of the JCUS and actually did go 
to New York and meet with them for several hours to answer 
their questions, to present the new approach and answer their 
questions. I saw the letter that the Conference submitted that 
you requested be submitted to the record, and it absolutely 
reflects the concerns they expressed to me, and it is this 
issue of opening the floodgate, as they put it, of cases to the 
courts. At the same time, I tried to use as a guiding point in 
developing the new approach not only making the right decisions 
as early in the process as possible and doing that, improving 
the quality of the record at every step, but also making sure 
that every step of the process added value to the process, 
value particularly commensurate in terms of commensurate with 
the delay that it produced in the time.
    The Appeals Council now takes somewhere around 250 days to 
complete its work. I would like to say that is a huge 
improvement. When I came into this post, it took 447 days for a 
case to go through the Appeals Council, so the staff there has 
worked very hard and are really doing a good job in terms of 
speeding it up. Even so, when one looks at the results of the 
cases that are reviewed by the Appeals Council, what one sees 
is 2 percent of the cases that move to the Appeals Council are 
allowed, approximately 25 percent of the cases are remanded, 
and the remainder of the cases are denied.
    The remand one can say in large measure are due to mistakes 
that were made earlier, inadequacies in the record, and 
documentation, those kinds of things, all of which the new 
approach seeks to address. We substituted at that stage of the 
process an oversight panel which would conduct a full and 
comprehensive quality review of all the decisions that are made 
by the ALJs, allowances and denials both, not just one or the 
other. Those recommendations and the findings of that quality 
review unit go to an oversight panel comprised of ALJs and 
administrative judges to make the final decision on whether or 
not the case decision as rendered by the ALJ should stand or be 
reversed.
    I understand the concerns that the JCUS has, and I guess 
when I talked to them, I tried to explain, and one of the 
things I think is very difficult for all of us to do is when 
you step back and look at the new approach, if you look at the 
results we get today at each step of the process and simply 
apply those to the new approach, then one would say it won't 
make any difference. What I am suggesting is with the new 
approach we will not see the same number of cases moving 
through what we call the waterfall at each step. I am well 
aware of the JCUS's concerns, and for that reason, as we move 
to make final decisions, the whole issue of the Appeals Council 
will be one that is taken very carefully.
    Mr. LEWIS OF KENTUCKY. Thank you.
    Chairman SHAW. Mr. Becerra?
    Mr. BECERRA. Thank you, Mr. Chairman. Commissioner, thank 
you very much again for being here. I think we always 
appreciate your testimony because it is always spoken with a 
lot of clarity, and not only that, it seems like a lot of 
thought and I think a lot of caring involved as well. So, we 
thank you for that.
    Commissioner BARNHART. Thank you very much.
    Mr. BECERRA. You seem to be one of those people who really 
does know how to manage, and we appreciate that.
    Commissioner BARNHART. Thank you.
    Mr. BECERRA. A question regarding the streamlining of the 
process. The concerns that are being raised by eliminating the 
Appeals Council that, while we may be trying to accelerate the 
process, we actually may be hurting ourselves because trying to 
go from the ALJ hearing stage to the Federal district court is 
not only a big step but an expensive step. If the courts are 
correct in saying that it would bog them down, it could become 
an even more tardy step in the process. Comments?
    Commissioner BARNHART. Yes, thank you. That is a concern 
that I have heard, and I appreciate you raising it here. The 
emphasis is to make the right decision as early in the process 
as possible, if we look at how the decisions fall out today, 
approximately 40 percent, around 38 percent, I believe it is, 
of disability claims are allowed at the initial DDS phase. 
About 61 percent are allowed at the ALJ phase, 61 percent of 
those that apply for appeal.
    What I am trying to do is get the allowance level of the 
cases that should be allowed higher earlier in the process, and 
so with the RO that we have, creating the Federal position that 
would be accountable to a single authority at the SSA, it would 
improve consistency in decisions across the Nation at an 
earlier point, because I do not envision ROs working on a 
State-by-State basis. In fact, I think it is important they not 
take cases on a State-by-State basis so that you know that you 
are having more of a random assignment of cases to the ROs, 
which makes it a national decision, not a State-based decision.
    I think what we will see more cases that should have been 
yeses decided at an early stage, at the RO, and then because of 
the prep work that the RO does, the fact they have to issue a 
prehearing report or a recommended disposition, and wherever we 
come out there, because I know some of the advocacy 
organizations say they just one report, they do not want a 
prejudicial title, and I am sensitive to those concerns. When 
that goes forward to the ALJ, it should allow the ALJ to have 
the case better laid out for them in terms of looking at what 
has happened to that point. So, I guess my . . .
    Mr. BECERRA. Let me stop you for a second, Commissioner. I 
sense what you are saying is that by improving the process up 
front, we should be able to get better decisions from the ALJs 
at the later stage and, therefore, we are able to then send 
cases directly to the district court because we believe by that 
stage we really will have a controversy that should be kicked 
up to the highest level.
    Commissioner BARNHART. That is exactly what I am trying to 
say.
    Mr. BECERRA. I have not had a chance to thoroughly review 
your proposal, but having seen how the Federal courts work, it 
is a very imposing process, and I think for the most we are 
talking about claimants who are not very wealthy and who are in 
a difficult situation. I suspect we are going to find that, as 
imposing as it is to go before a reviewer or perhaps an ALJ in 
an administrative hearing, which is very similar in every 
respect to a court trial, it becomes extremely imposing on 
people to go directly to a district court and very expensive. 
We are constantly hearing from the district court judges, at 
least in my 9th Circuit area in the district courts that we 
have there, they are completely swamped. If we do end up with 
the several thousand cases that you currently see going to 
appeal from the ALJs going to the district courts, you could 
see a logjam occur, which could become very difficult but, more 
importantly, very expensive for the claimants to continue a 
case in Federal court. So, I have not come to any conclusions 
either, other than I sympathize with those who raise these 
concerns that bypassing the process rather than trying to come 
up with an even better streamlined review process of an ALJ 
decision could lead to more difficulty than not.
    Commissioner BARNHART. I appreciate what you are saying, 
Mr. Becerra. I do. The concerns that you are expressing have 
been echoed by others involved in this process, and obviously 
they are concerns I take very seriously. I have greater respect 
for the JCUS and certainly realize that whatever action is 
finally taken, if it does not have the basic support of all 
elements in the system, including the district courts, it is 
not going to be a process that is headed for success.
    Mr. BECERRA. Can I mention one other thing? Gosh, I wish I 
had more time because I would love to talk to you about some of 
these other aspects, because I think for the most part, I 
really believe that you are trying to find those ways to 
streamline the system and make it more consumer-friendly for 
the claimants. I have a feeling you are going to really run 
into trouble with the review process that you have for the 
quality assurance, where some of the ALJ decisions, it seems 
like you are saying after the ALJ, that is a final decision, 
and the only recourse you now have is to go to the district 
court. In some cases, you will have this quality review that 
will occur where, indeed, if there is a problem that is found 
by those who are part of this quality assurance committee, or 
whatever it is called, you could actually see a different 
decision come forward from that review, which leads to the 
conclusion, and I will end with this, Mr. Chairman, that you 
leave open the question for the courts at least to consider, if 
you really have a final decision by an ALJ, if there really is 
some other entity administratively that could still undo what 
was done by the ALJ, so I think you are going to run into some 
real issues about whether this is truly a final decision if you 
have this quality assurance detour.
    Commissioner BARNHART. I appreciate what you are saying. 
The role of the oversight panel was actually to render the 
final decision and make it actually, that would be the final 
decision of the agency in the case where they decided based on 
the quality review that the case needed to be decided 
differently. To the point about which cases would be reviewed, 
let me say that was one area that we were looking at because I 
really have solicited comments from everyone I have talked to 
about maybe what we should do is review all the cases that go 
through, that go through serious----
    Mr. BECERRA. You have an Appeals Council.
    Commissioner BARNHART. Seriously, review all cases that go 
through with a quality review, and then only the ones where the 
quality reviewers see it differently than the ALJs saw it, 
those go to the oversight panel, as opposed to doing a sample 
of cases which then does not ensure that everybody is treated 
the same. So, I appreciate the comment----
    Mr. BECERRA. Believe me, everyone is going to want to go 
through the quality review before they have to head to district 
court, which in essence means you have some type of 
administrative review before you go to the courts. Thank you, 
Mr. Chairman, for being very gracious.
    Chairman SHAW. You are most welcome. Mrs. Johnson?
    Mrs. JOHNSON. Thank you very much, and welcome, 
Commissioner Barnhart. First of all, I reread your testimony 
from last year in preparation for this hearing, and it really 
is impressive the degree to which you are really looking at the 
nitty-gritty of how government has worked in the past and 
trying to bring it into the modern era. It will certainly 
improve the quality of service for our disabled people, but in 
the end it will improve the quality of services as well. I was 
curious about your interest in having the reviewers in your 
central offices take over the role that currently the State 
DDSs are playing. They apparently are doing about 20 percent of 
the reviews of the quick decision cases now.
    Why can't they do most of the quick decision cases? One of 
the things that I think was really marvelous about your 
proposal was this categorization of quick decision cases. 
Nothing has been more anguishing to my caseworkers than in an 
ALJ case or a child with cancer or clearly something that is an 
open-and-shut case. Why can't those go to the State reviewers? 
Why wouldn't that be faster, and why wouldn't it save us money?
    Commissioner BARNHART. I appreciate your comments, Mrs. 
Johnson. Perhaps I should back up and say my intent in moving 
the quick decision out of the DDS in the new approach was to 
take a workload away from the DDSs but to leave the resources 
the DDSs currently have in the DDSs, because resources are an 
ongoing concern, particularly with the increase in disability 
claims that we have seen in recent years, and it is a trend 
that continues this year as we are getting about 100,000 to 
200,000 more claims than we had originally anticipated.
    So, the idea was if we pull the quick decision workload 
out, the DDSs where our more experienced and trained workers 
are could focus on the more difficult cases. I recognize, of 
course, in doing that, therefore, the allowance rate for DDSs 
would go down because the easier cases, the obvious cases would 
be done up front, and for that reason was going to combine the 
quick decision allowance rate with the DDS allowance rate so 
that it would not appear to the people in a given State that 
all of a sudden the DDS was denying a larger number of people.
    This is an issue that I have heard a lot from the NCDDD, as 
well as NADE, and one of the things I am looking at is having 
the units in the DDS do the quick decision. I will say this: in 
my discussions with those organizations and their leadership, I 
feel very strongly if we decide to go that route, it needs to 
be a separate quick decision unit in the DDS, not that each DDS 
worker can work some quick decisions cases, because I feel very 
strongly that the focus of quick decision workers needs to be 
the quick decisions. The idea is on the outside it would take 
20 days for these decisions. Not an average of 20 days but 
absolutely on the outside, and so I am discussing some of these 
possible modifications within individuals from those 
organizations.
    Mrs. JOHNSON. Thank you very much. I do think the issue of 
workload is terribly important, and there will be some areas in 
which we can get resources into from our end more effectively 
than other functions possibly. I do appreciate your continued 
focus on what is going to be best for the disabled person. 
Thank you very much. I appreciate your being here today.
    Commissioner BARNHART. Thank you.
    Chairman SHAW. Mr. Pomeroy?
    Mr. POMEROY. Thank you, Mr. Chairman. Madam Commissioner, I 
want to join the comments made by other panel Members about the 
acknowledgment of your great work. For an agency head, 
especially an agency whose work is so critically linked to so 
many Americans all across the country, throwing yourself into 
these management challenges with the competence you have 
demonstrated has really been something to observe.
    Commissioner BARNHART. Thank you very much.
    Mr. POMEROY. I commend you for it. I want to specifically 
acknowledge a couple things and ask you about another thing. On 
telecommunication, I appreciate your expanding the disability 
application process to include being able to relay through 
videoconference over the telephone critically needed 
information without requiring people in rural areas to come 
vast distances. I believe these physical impediments to 
bringing forward an application sometimes discouraged people 
from pursuing that which they ought to and that which they need 
to. It was a telling demonstration in Dickinson, North Dakota, 
that you and I were able to observe on that point.
    Commissioner BARNHART. Right.
    Mr. POMEROY. Well done. Very important to rural America. 
Secondly, and feel free, I think, to elaborate on the eDIB 
renovation. I was not fully appreciative of the delays caused 
by physical management of records in the disability process 
until I had a chance to focus on it in a little more detail. 
Lost records, shipping records back and forth, misplaced files, 
all of these have, I believe, wreaked havoc on any untold 
numbers of claimants if their file gets lost or a critical 
piece of it gets lost. I think having it all move to an 
electronic format is going to really do some good there, some 
superb good there, and I am excited about it.
    The last thing I would ask, and then I would like you to 
comment, but I want to be able to explore this third one most 
fully, and that is how you are coming on these ALJ judges. I 
was alarmed to hear that the pending court challenge had 
basically frozen everything in place on ALJs and your backlog 
was in part you did not have the numbers of ALJs that you 
needed to do that. You had a plan for bringing a number on 
board, but that did require the Office of Personnel Management 
(OPM) to also fully cooperate and execute their end of the 
hiring process on ALJs. It is frustrating to not be able to 
control that piece of the effort to get this area staffed up, 
and I am interested in hearing from you in terms of how things 
are coming between SSA and OPM in getting us to the numbers of 
ALJs that we need. Thank you, and, again, it is a pleasure 
working with you. You are doing a great job.
    Commissioner BARNHART. Thank you very much for your kind 
comments, Mr. Pomeroy, and I just want to say I really enjoyed 
my trip to North Dakota. It is quite something to visit a 
largely rural State like that, and with an expert on the State 
pointing out the specific challenges that individuals in your 
home State face in applying for our benefits and other 
programs. With respect to video hearings, I simply want to say 
I share your view. I think this is such an important new tool 
for us. We have 120 video sites up and operating across the 
counties, and we have a plan to move them out to all of our 
major hearing officers.
    Just as a point of information, we actually conducted in 
the month of August, 953 video hearings, and the time 
difference for a video hearing, and this is what is so 
important and one of the points you were making. The time 
difference is this: The processing time for non-video hearings 
was 518 days. For video hearings, it was 352 days. So, we are 
talking about making significant gains, and that was just for 
the month of August. When I have annual data, I will be happy 
to provide it to you and the Subcommittee for your review.
    In terms of eDIB, as I mentioned, we are right on schedule 
with eDIB. We said we were going to start in January of 2004, 
and we started in January of 2004. The State of Mississippi and 
the State of So,uth Carolina are both fully rolled out with 
eDIB. I want to commend again all the States in Region 4, and 
particularly the State of Florida who, despite the hurricane, 
the many hurricanes, Mr. Chairman, we were talking about before 
the hearing, went ahead and rolled out eDIB on September 20th 
and did not ask for an extension. I think that speaks to the 
confidence that the State DDSs have in this system.
    We have run into issues. We have had glitches. You do with 
any new computer program, obviously any automated system, and 
we are fixing them. We are doing the same thing as we move on 
to the OHA. We have just a few OHA sites, hearing offices up 
able to use the electronic folder at this point, really at a 
pilot stage, but with our new case processing management system 
(CPMS), it has had some stumbles and trip-ups, too, since it 
was rolled out earlier this year, but we are making changes. In 
fact, several new applications to fix some of the issues that 
have been identified by the users are going to into effect this 
week. So, I think we are well on track with eDIB, and we 
already have over 1 million documents stored in our eDIB 
system.
    Just to refresh everyone's memory, when this is up and 
fully operational, it will be the largest repository of 
electronic medical evidence in the entire world. I think a very 
impressive accomplishment for us. We will eliminate the 100 
days that we spend locating cases and reconstructing files, as 
you pointed out, or the 60 days that we spend mailing cases 
back and forth from one area to another. Simply, at the push of 
a button, the case can come up and between viewed from anywhere 
in the country where people have access. So, I am very, very 
happy, and I am also happy to say that we are expecting a good 
rate of return on it, a savings of $1.3 billion for an 
investment of $800 million, and we have received full funding 
for the eDIB up to this point. The President has requested full 
funding and a 6.8-percent increase for SSA. I wanted to do a 
plug for our budget request. My staff would kill me if I left 
here, my budget staff, without doing that. We have always 
appreciated the support we have gotten from this Committee, and 
without the proper resources, it is just impossible to make the 
gains and strides we want to make.
    Finally, with respect to ALJs, you are absolutely right, we 
had a real problem. Part of our backlog is due to the fact we 
were not able to hire ALJs for several years to do the cases. 
That has been decided. We actually, I am pleased to say, hired 
102 ALJs this year, and we are looking to hire the same number 
next year, assuming that we have adequate resources to do that. 
The issue at this point is, and you asked about the status of 
the new register in OPM. We have been advised by OPM that they 
need to redo the examination and they need to pilot it, and, 
therefore, we cannot expect to have a brandnew register until 
the end of calendar year 2005, which means that if the budget 
issues gets resolved, appropriation bills get passed, we get 
sufficient resources to continue to hire ALJs, we will be in 
the situation of using a register that closed actually, I 
believe, in 1999 but really there are people on it from as far 
as 1993. The issue there for us is this: there could be 
individuals who maybe did not score as high for placement on 
the register in 1993 but now, 11 years later, have much more 
significant experience, that would have relevant experience 
that would have placed them much farther in a current register. 
So, that is the situation.
    Mr. POMEROY. Will you be able to use that old list then 
while they are developing the new list?
    Commissioner BARNHART. We will be able to use the old list. 
The issue as we have gone pretty far down the register at this 
point, as you can imagine, because we are not the only Federal 
agency, obviously, that hires ALJs, although we are sort of the 
big gorilla on the block; in the sense that we have over 1,000 
ALJs, I am pleased to say, 1,075 ALJs on duty now. We believe 
we need to have around 1,300. I would be happy, because of the 
Committee's longstanding interest, and Mr. Brady also was very 
active in this issue a few years ago for us, I would be happy 
to submit a list of where all the ALJs were hired, because many 
of them were hired in States that the Committee Members are 
from.
    [The information follows:]

                             ALJ Hires 2004
------------------------------------------------------------------------
                           Report  June   Report  August
       Region & HO            1, 2004        30, 2004          Total
------------------------------------------------------------------------
                         Region I: No New Hires
------------------------------------------------------------------------
                                Region II
------------------------------------------------------------------------
Bronx, NY                        1               1               2
------------------------------------------------------------------------
Buffalo, NY                      1               0               1
------------------------------------------------------------------------
Mayaguez, PR                     0               1               1
------------------------------------------------------------------------
Ponce, PR                        0               1               1
------------------------------------------------------------------------
Queens, NY                       1               0               1
------------------------------------------------------------------------
San Juan, PR                     1               1               2
------------------------------------------------------------------------
Syracuse, NY                     1               1               2
------------------------------------------------------------------------
                               Region III
------------------------------------------------------------------------
Johnstown, PA                    0               2               2
------------------------------------------------------------------------
Morgantown, WV                   0               1               1
------------------------------------------------------------------------
                                Region IV
------------------------------------------------------------------------
Atlanta, GA                      0               1               1
------------------------------------------------------------------------
Birmingham, AL                   0               1               1
------------------------------------------------------------------------
Charlotte, NC                    0               1               1
------------------------------------------------------------------------
Florence, AL                     3               0               3
------------------------------------------------------------------------
Fort Lauderdale, FL              3               0               3
------------------------------------------------------------------------
Hattiesburg, MS                  0               1               1
------------------------------------------------------------------------
Jackson, MS                      1               0               1
------------------------------------------------------------------------
Macon, GA                        2               0               2
------------------------------------------------------------------------
Miami, FL                        3               0               3
------------------------------------------------------------------------
Montgomery, AL                   0               3               3
------------------------------------------------------------------------
Orlando, FL                      2               0               2
------------------------------------------------------------------------
Savannah, GA                     0               1               1
------------------------------------------------------------------------
Tampa, FL                        4               0               4
------------------------------------------------------------------------
Tupelo, MS                       0               4               4
------------------------------------------------------------------------
                                Region V
------------------------------------------------------------------------
Cincinnati, OH                   0               1               1
------------------------------------------------------------------------
Cleveland OH                     3               3               6
------------------------------------------------------------------------
Columbus, OH                     0               1               1
------------------------------------------------------------------------
Detroit, MI                      4               0               4
------------------------------------------------------------------------
Evansville, IN                   2               0               2
------------------------------------------------------------------------
Fort Wayne, IN                   2               0               2
------------------------------------------------------------------------
Grand Rapids, MI                 3               3               6
------------------------------------------------------------------------
Indianapolis, IN                 0               1               1
------------------------------------------------------------------------
Lansing, MI                      0               2               2
------------------------------------------------------------------------
Milwaukee, WI                    2               0               2
------------------------------------------------------------------------
Minneapolis, MN                  0               2               2
------------------------------------------------------------------------
Peoria, IL                       0               1               1
------------------------------------------------------------------------
                                Region VI
------------------------------------------------------------------------
Alexandria, LA                   3               0               3
------------------------------------------------------------------------
Dallas N, TX                     0               1               1
------------------------------------------------------------------------
Houston DT, TX                   0               2               2
------------------------------------------------------------------------
Little Rock, AR                  3               0               3
------------------------------------------------------------------------
Metairie, LA                     2               0               2
------------------------------------------------------------------------
Shreveport, LA                   0               2               2
------------------------------------------------------------------------
Tulsa, OK                        0               2               2
------------------------------------------------------------------------
                               Region VII
------------------------------------------------------------------------
Creve Coeur, MO                  1               1               2
------------------------------------------------------------------------
Kansas City, KS                  2               0               2
------------------------------------------------------------------------
Omaha, NE                        0               1               1
------------------------------------------------------------------------
St. Louis, MO                    1               0               1
------------------------------------------------------------------------
W. Des Moines, IA                1               0               1
------------------------------------------------------------------------
                               Region VIII
------------------------------------------------------------------------
Billings, MT                     0               3               3
------------------------------------------------------------------------
                                Region IX
------------------------------------------------------------------------
Los Angeles DT, CA               0               2               2
------------------------------------------------------------------------
                                Region X
------------------------------------------------------------------------
Spokane, WA                      0               2               2
------------------------------------------------------------------------
    Total                       52              50             102
------------------------------------------------------------------------

                              ----------                              

    Chairman SHAW. Mr. Ryan?
    Mr. RYAN. Thank you. I actually had two questions. One was 
about the ALJs and the backlog, so I think you have covered 
that pretty well. First of all, thank you for the streamlining 
proposal. I think it is overdue, and I am very glad that you 
are implementing it. I just had a quick question. You may not 
be prepared to answer it. I just wanted to get an update on the 
Chicago-Milwaukee situation and the cleanup operation that is 
going on there. If you are not prepared, if you could just send 
me something in writing, that would be great.
    Commissioner BARNHART. I would be happy to submit, provide 
information in writing to you, a complete update of what is 
going on. I can tell you some information that you may be 
interested in, in terms of the workload and what is going on.
    [The information follows:]
                         Chicago File Assembly
                              October 2004
    The total number of cases identified for file assembly is 1,375 
(this number includes cases that were transferred into the hearing 
office (HO).

      1,180 cases, or 86% have been decided (733 or 62% are 
favorable decisions and 279 or 24% are unfavorable, this number does 
not include dismissals or remands).
      195 cases or 14% are at the various processing levels 
awaiting a decision.

Issue

    A contract file assembly unit was started in the Chicago (So,uth) 
HO in November 2002, working cases from various hearing offices in the 
Chicago Region. In early May 2003, HO management discovered that 
significant amounts of material had been removed from the files by 
contract workers, allegedly because it duplicated material already in 
the file. Upon review, it was determined the material was original 
evidence, not duplicate documents.
    On May 9 and May 20, 2003, respectively, both contractors, Training 
So,lutions and Worldwide Industries, were advised that SSA would not 
use their services until it completed a full investigation of the 
situation. On July 23, 2003, SSA subsequently terminated both 
contracts.
    The agency decided to notify all 1,375 claimants affected by the 
actions of these contractors. The notices advised claimants that their 
file may be incomplete and discussed their remedies, including: 
examining their file, having a new hearing, and having a new decision.

Notification Process

      Region V (Chicago) completed initial notification to all 
1,375 claimants.
      Region V sent a second notice to all claimants who failed 
to respond to the first notice.
      In cases where the HO did not hear from the claimant 
after two notices, a closeout letter was issued. The closeout letter is 
required before an ALJ can issue an adverse action (i.e., denial or 
dismissal), thus ensuring that a claimant has been notified three 
times.
      The Appeals Council was alerted of those cases in which 
an adverse decision was released by the HO before all notices were sent 
to the claimants.
      The Council issued a total of 101 remand orders on those 
cases. Most remands (87) were issued before December 31, 2003; the 
remaining (14) were issued by February 13, 2004.
      There are no outstanding cases pending at the Appeals 
Council level.

Claimant Allegations of Missing Evidence

    Two claimants alleged missing evidence upon review of their files. 
The HO is obtaining the missing evidence in both cases.
    More recently, one additional claimant alleged possible missing 
evidence. The allegation was determined to be unfounded, however, as 
the identified treating source had no record or report of any evidence 
that it had submitted to OHA.

Conclusion

    The OHA Chicago Region took all the necessary steps to preserve the 
claimants' due process rights and performed the required notification 
process in every affected case. We are confident the matter has been 
completely and positively resolved to address the issues raised by all 
concerned. In conclusion, no claimant has been adversely affected by 
the events at the Chicago File Assembly Unit.
                               __________
    I wish I could report to you that the situation had eased 
incredibly in Milwaukee in terms of the backlog. Unfortunately, 
it has not. We received 5,299 hearing requests this fiscal year 
to date. This is as of August. I will have fiscal year data in 
approximately another 15 days. We have actually disposed of 
3,635 hearings----
    Mr. RYAN. Three thousand what?
    Commissioner BARNHART. It was 3,635 of those hearings. The 
processing time has averaged 413 days. That is an improvement 
from last year. It was 438 days.
    Mr. RYAN. Are some of the new ALJs going to come to this 
area?
    Commissioner BARNHART. Excuse me, that is an improvement 
from June. I am looking at June, July, and August. It is an 
improvement from June. It was 438, 464 in July, but fiscal year 
to date, 413. So, the average is creeping up on the processing. 
The pending per ALJ, we are at 843 cases per ALJ, and the total 
pending in the office is 8,435.
    Mr. RYAN. Are some of these new ALJs coming to Milwaukee?
    Commissioner BARNHART. Pardon?
    Mr. RYAN. Are you sending some of your new ALJs to this 
region?
    Commissioner BARNHART. Yes.
    Mr. RYAN. Milwaukee and Chicago.
    Commissioner BARNHART. Let me check and see. I can tell you 
where they are going. I have got a list right here. Yes, two of 
the judges are going to Milwaukee.
    Mr. RYAN. The people who had their identities compromised, 
I will not go through the problem we had, but the problem with 
the contract employees with respect to the records that got 
compromised in the Chicago office, is that all but settled now?
    Commissioner BARNHART. It is absolutely settled.
    Mr. RYAN. I know everybody got a notice and everybody got a 
chance to redo their claims. Where are we in that process?
    Commissioner BARNHART. To my knowledge, everything has been 
resolved, and no one had any adverse effect as a result of 
that. Actually, as of today, that contracting that we were 
doing, which simply was to move cases because with the onset of 
hearing process initiative in 2001, it really stalled our 
hearing process in the hearing offices, and we just needed to 
prepare cases. Those contracts, the remaining ones, terminate 
today, and the approach that I am using from this point out is 
we have five cadres basically, special regional units, that are 
going to be providing that service of case pulling that was 
previously done by contractors.
    Mr. RYAN. Like Earl said, and others, I think the 
paperless, the electronic file is really the big answer here, 
but I look forward, and if you could just give me more details, 
if you have them, with respect to the Milwaukee thing, we are 
very concerned about the backlog. I am sure you get this from 
other regions as well, but I am glad you are sending some ALJs 
to Milwaukee because, this is our caseworkers' biggest 
nightmare, and I am just pleased with the reforms, but 
hopefully we can clean up this backlog as quickly as possible.
    Commissioner BARNHART. I appreciate your concern, and 
eliminating the backlog in disability has been one of my top 
priorities since I came into this job, and the service delivery 
budget that I have crafted the last 2 years, and will be 
submitting again to OMB this year hold out as the goal the 
elimination of the backlogs. Unfortunately, despite the fact 
that the last 2 years we did not get the budget request that we 
asked for as an agency, because of productivity enhancements, 
the fact that, as Mr. Cardin pointed out and as he has seen 
firsthand many times at our Baltimore headquarters, the staff 
works very hard in headquarters as well as out across the 
country, we have managed to keep backlogs from growing greater 
than they have, butt they are still growing. The first step in 
eliminating backlogs is being able to have enough trained, 
experienced people on staff to be able to do the work. Of 
course we had the technical stumbling block of not being able 
to hire ALJs, but then we have the resource limitation we may 
face next year.
    Mr. RYAN. All right. Thanks.
    Chairman SHAW. Thank you, Ms. Barnhart. I couldn't help but 
notice the generosity with which my colleagues on the other 
side of the aisle were handing out accolades to you. They are 
not known for such generosity when it comes to----
    Mr. CARDIN. I beg your pardon.
    [Laughter.]
    Chairman SHAW. So, I think that must be, that is probably 
the sincerest form of compliments that you could possibly get 
here in Washington. Obviously you are doing a great job, and we 
are very grateful for the service that you are performing, and 
particularly, in this area of moving this caseload and bringing 
the SSA into this century. I very much appreciate it. Did you 
want to, I have not offended you?
    Mr. CARDIN. No, not at all. We always give praise when 
praise is due, and, of course, I think Commissioner Barnhart, 
because of her strong presence in the Baltimore region, there 
is good reason as to why she is doing such a great job.
    [Laughter.]
    Commissioner BARNHART. Thank you very much.
    Chairman SHAW. Thank you, Commissioner. We really 
appreciate it. At this particular point, I have a letter from 
the Honorable Frederick Stamp, who is the Chair of the 
Committee on Federal-State Jurisdiction of the JCUS, and 
without objection, I would like to place it in the record. Mr. 
Herger?
    [The information was previously published:]
    Chairman HERGER. Thank you. Again, we thank you very much, 
Commissioner Barnhart.
    Commissioner BARNHART. Thank you.
    Chairman HERGER. With that, we will call up our next panel: 
the Honorable Hal Daub, Chairman of the SSAB, former Member of 
the Committee on Ways and Means; Ron Buffaloe, President of the 
National Council of S,cial Security Management Associations 
(NCSSMA); Sheila Everett, President of NCDDD; Martha Marshall, 
President of NADE; and Dr. C. Richard Dann, who is representing 
the Union of American Physicians and Dentists (UAPD), of the 
American Federation of State, County, and Municipal Employees 
(AFSCME), and is from my home State of California. Chairman 
Daub to testify.

STATEMENT OF THE HONORABLE HAL DAUB, CHAIRMAN, SOCIAL SECURITY 
                         ADVISORY BOARD

    Mr. DAUB. Chairman Shaw, Chairman Herger, thank you very 
much for the opportunity to be with you, Mr. Cardin, Members of 
the Committee. I appreciate the opportunity to discuss the 
Commissioner's proposed reforms of the Social Security 
disability process. The independent SSAB has carefully studied 
the disability process over the past several years. We have 
made many recommendations for fundamental change. We 
congratulate our former colleague, who is now the Commissioner, 
for boldly tackling this problem. We applaud her and you for 
making sure that the views of all affected parties are heard 
and considered.
    Today I want to focus on the hearing part of the overall 
process. That is where the greatest delays and most serious 
backlogs occur. Some of the Commissioner's changes will 
expedite the hearings process. A consultant study that the 
Advisory board commissioned identified inadequate development 
of the case record as a major reason why claims bog down. The 
RO position should assure that cases that go on to a hearing 
are fully developed and include a clear decision rationale. The 
RO step should result in fewer cases needing to go to the 
hearings level. It is crucial that the ROs be carefully 
selected and well trained. Other changes, like closing the 
record after the hearing and eliminating the additional step of 
the Appeals Council, may also serve to reduce timelines by 
sharpening the focus on the hearing itself as the final 
administrative step. Due process is much more assured as that 
RO, under the current recommendation, will be an attorney, and 
on our board there is strong bipartisan support to eliminate 
the Appeals Council. I'm looking at how to move the case and 
assure quality from the beginning to the end, the approach is 
take more time in the beginning, which should save a lot of 
time in the end.
    I would like to make two important cautions, however. 
First, the proposed reforms will help in the long run, but they 
are still in the planning stage. Second, although the proposed 
changes may ultimately reduce the appeals workload, the appeals 
process will remain an important element of the system. The 
Commissioner and the Congress need to continue searching for 
both short-run and long-run improvements in that process.
    As of June 30th of this year, there were 612,000 people 
waiting for hearing decisions on their Social Security claims; 
over 170,000 of them have been waiting for more than 1 year. 
The agency has become more productive, but the workloads are 
overwhelming. Pending levels have been rising now for 5 years. 
Just during the recent fiscal year, there has been a 43-percent 
increase in cases that have been in the hearing system for more 
than a year. If these backlogs continue to grow, they will make 
it very hard for the proposed changes to be fully effective.
    I would urge both you and the agency to look carefully at 
the hearings process to find ways to make it operate more 
efficiently. The board has spoken with many ALJs, chief ALJs, 
and employees at the management and staff levels. We have heard 
many suggestions for improvements. I will mention just a few 
that are much more fully detailed in my longer statement, which 
I have submitted for the record, and I will repeat them here 
just in bullet points: the absence of effective rules of 
procedure; the need for more extensive training of judges; the 
need to improve the policy base and to rethink some of the 
rules and regulations that many judges believe undercut their 
ability to deliver supportable decisions; and, last, the need 
for more effective management tools to encourage performance 
and accountability.
    Also, the Commissioner quite properly designed a set of 
proposals that she could implement administratively. I hope, 
however, that you will look for ways that you might 
legislatively support this improved process. The board has, for 
example, suggested that you examine the possibility of 
establishing a Social Security Court, and we have also 
suggested looking at sharpening the hearings process by 
including an individual to represent the agency position.
    I know that this hearing is focusing on the procedural 
changes that the Commissioner is recommending. My last point to 
you: that is an important and urgent need, and she is to be 
commended. However, the Advisory board also believes that the 
time has come for serious consideration of whether the 
definition of disability is consistent with our National goals 
for the disabled. We have issued a report on this and are 
continuing to look at it, and we hope that your Subcommittees 
will also begin to seriously examine this issue. Thank you very 
much.
    [The prepared statement of Mr. Daub follows:]
Statement of The Honorable Hal Daub, Chairman, Social Security Advisory 
                                 Board
    Chairman Shaw, Chairman Herger, Mr. Matsui, Mr. Cardin, Members of 
the Subcommittees. I appreciate this opportunity to discuss the 
Commissioner's proposed reforms of the Social Security Disability 
Process.
    The Social Security Advisory Board has carefully studied the 
disability process over the past several years. We have made many 
recommendations for fundamental change. We congratulate the 
Commissioner for boldly tackling this problem. We applaud her and you 
for making sure that the views of all affected parties are heard and 
considered.
    The Board has always emphasized that it is important to look at the 
disability process as a whole, because changes in one part affect the 
other parts of the process. Today, however, I want to focus my comments 
on the hearings part of the overall process, because that is where the 
greatest delays and the most serious backlogs occur.
    Some of the Commissioner's proposed changes will expedite the 
hearings process. I would begin with two important cautions, however. 
First, the proposed reforms will help in the long run, but they are 
still in the planning stage. Once a final process is decided upon, the 
way in which they are implemented becomes crucial. Second, although the 
proposed changes may ultimately reduce the appeals workload, the 
appeals process will remain an important part of the system. The 
Commissioner and Congress need to continue searching for both short-run 
and long-run improvements to the process.
    One aspect of the Commissioner's approach will improve the quality 
of the case record that makes its way to the hearing process. A 
consultant study commissioned by the Board identified the quality of 
the case record as the key to fair and accurate disability 
determinations. A poorly developed claim at one stage not only affects 
the quality of the decision at that level but also burdens the process 
at the next level. Developing a high quality record requires the 
assessment of complex medical and vocational information. 
Unfortunately, workload pressures at the State agency level sometimes 
lead to decisions being made based on a record that is less than 
complete, and the record that makes its way to the Office of Hearings 
and Appeals is sometimes lacking in evidence and in rationale for the 
decision that was made.
    When claims are appealed to the hearings level, the hearing office 
develops the record independently and without assuming that the State 
agency had all the information available. The hearing office may obtain 
existing medical reports from doctors or hospitals and can order 
consultative examinations. This need for case development is one of the 
reasons cases get bogged down at that level.
    The reviewing official (RO) position that the Commissioner has 
proposed has the potential to expedite the hearing process by ensuring 
that cases that go to a hearing are fully developed and include a clear 
decision rationale. The RO is also authorized to issue allowance 
decisions, which would both expedite decisions and reduce workload 
pressures at the hearings level. For claims that are not allowed, the 
ROs would prepare either a recommended disallowance (if they think the 
evidence indicates that the claimant is ineligible) or a pre-hearing 
report (if they think the record does not definitively show that the 
claimant is ineligible but is inadequate to establish that the claimant 
is eligible). The pre-hearing report would outline what evidence is 
needed to establish eligibility. If a case with a recommended 
disallowance goes to a hearing and is allowed, the administrative law 
judge (ALJ) would describe in the written opinion the basis for 
rejecting the recommended disallowance. If a case with a pre-hearing 
report goes to a hearing and is allowed, the ALJ would describe the 
evidence gathered at that stage to address the points defined in the 
pre-hearing report.
    The reviewing official is clearly an important innovation that has 
potential for significantly improving the process. It is therefore 
important that the new position be implemented thoughtfully. The ROs 
should be carefully selected and well trained. Expectations for the new 
ROs should be well defined and reasonable to ensure that they have 
enough time to do a thorough job. And if they are selected from other 
parts of the agency, it will become important to backfill those 
positions carefully.
    Reduced hearing backlogs are another condition for the success of 
the RO position. If the administrative law judge gets a well-developed 
case with a clear decision rationale, the hearing process will go more 
smoothly and more quickly. But if cases coming from the RO sit in a 
hearing office backlog for months before being heard, the case 
development may no longer be current and the rationale may no longer 
fit the facts. If the very large current backlogs in the hearing 
offices are not dealt with or if delays at the hearings level continue 
to be lengthy, they will make it very hard for the new process to be 
fully effective.
    The number of cases pending at the hearings level has been rising 
for the last five years. As of June 30 of this year, there were 612 
thousand people waiting for hearing decisions on their claims. Over 170 
thousand of them have been waiting for over a year. Pending levels are 
now even higher than they were when the number of disability claims 
spiked in the early 1990s.






    There are reasons for this that you are familiar with. The Azdell 
court case prevented the agency from replenishing its ranks of ALJs as 
judges retired or left for other reasons. The Hearing Process 
Initiative that was implemented in 2000 hurt productivity for a time 
and added to the backlogs. The Office of Hearings and Appeals (OHA) has 
become more productive in recent years, but the workload is 
overwhelming. OHA has been disposing of more hearings cases for the 
last two years, but receipts have also been climbing.






    Just during the current fiscal year, there has been a 43 percent 
increase in cases that have been in the hearing system for more than a 
year. While the new process changes may help in the future, there is 
also a need to deal with these current large and growing backlogs. 
Moreover, the impact of the proposed changes to the disability process 
may be undermined if they have to be implemented in the context of huge 
backlogs.
    So, in addition to the Commissioner's proposals, I would urge both 
you and the agency to look carefully at the hearings process to find 
ways to make it operate more efficiently. The Board has conducted 
public hearings and has spoken with many managers, judges, attorneys, 
and other staff at hearings offices. They have given us many 
suggestions for improvements to the process. Let me give you some 
examples of the recommendations made to us:

      Rules of procedure--Many of those we talked with have 
told us that the absence of effective rules of procedure contributes to 
unnecessary delays in the process. For example, we have heard that 
representatives sometimes get inadequate advance notice of hearings, 
and we have also heard that many hearings have to be postponed because 
of late submission of evidence. Implementing improved rules of 
procedure could make the hearing process more orderly and efficient.
      Need for training--Administrative law judges receive a 
short introductory course of four to five weeks, with no required 
ongoing training of the kind that many States require of lawyers. 
Although much of their work deals with medical and vocational factors, 
the medical training they receive is far shorter than that of State 
agency disability examiners.
      Improved policy infrastructure--Clearer and more 
objective formulation of agency policy has great potential to 
facilitate a quicker more efficient process. Much of the workload which 
now burdens the hearings process reflects an unnecessarily complex body 
of rules and regulations that are subject to differences of 
interpretation at different levels and account for much of the churning 
of cases through appeals and remands. We have frequently heard, for 
example, that the Social Security rulings put an unreasonable burden on 
the hearings process to have a written decision which explicitly 
comments on each item of evidence. In fact, we have heard from agency 
officials that these rules are the cause of many remands of cases that 
were, in fact, decided correctly.
      Management tools--Office managers and supervisors need 
better tools to evaluate and motivate their staffs, and chief judges 
need support in motivating their colleagues. Claimants are entitled to 
fair decisions, but they also are entitled to timely decisions. Those 
goals are not incompatible.

    This hearing is focused on the Commissioner's proposals, all of 
which can be implemented administratively. I hope, however, that you 
would consider ways in which you might support an improved process 
legislatively. The Board has, for example, suggested that you reexamine 
the possibility of establishing a Social Security Court. Concerns about 
national uniformity in policy and procedures have led some to question 
the current arrangement for review by Federal courts. Allowance rates 
in District Courts have varied widely, and courts frequently issue 
decisions that vary from district to district and from circuit to 
circuit, resulting in the application of different disability policy in 
different parts of the country. Over the history of the disability 
program, the courts have played a major role in defining the standards 
for disability. Whether the existing arrangements for judicial review 
represent the best public policy is a question that deserves careful 
study.
    The Board has also suggested another look at whether there should 
be a government representative when the agency's prior decision is 
being reviewed at the hearings level. One reason frequently cited for 
the backlogs in the appeals process is that the administrative law 
judge is required to assume responsibility not only for decision making 
but also for perfecting both the agency's and the claimant's cases. 
Having an agency representative participate in hearings could help to 
clarify issues and introduce greater consistency and accountability.
    Finally, looking at the question of disability even more widely, 
the Advisory Board also believes that the time has come for serious 
consideration of whether the definition of disability in the Social 
Security Act is consistent with our national goals for the disabled. We 
issued a report on this subject last October and hosted a forum on the 
definition of disability in April. This report, The Social Security 
Definition of Disability: Is It Consistent with a National Goal of 
Supporting Maximum Self Sufficiency?, is available on the Board's 
website, www.ssab.gov. The papers delivered at the April Forum are also 
on the website. We hope to foster a continued discussion of the topic. 
Much has changed in the half-century since the disability program 
began. Medical and rehabilitative knowledge and technology have made 
great strides in that time. The nature of work and the workforce has 
changed. And attitudes about disability and work have also been 
revised. It is time to consider whether the old definition still fits. 
As an adjunct to the process changes, SSA will be piloting some 
different approaches to disability benefits that will encourage work, 
and we look forward to discussing their outcomes with you in the 
future.

                                 

    Chairman HERGER. Thank you, Mr. Daub. Mr. Buffaloe to 
testify.

STATEMENT OF RONALD E. BUFFALOE, PRESIDENT, NATIONAL COUNCIL OF 
   SOCIAL SECURITY MANAGEMENT ASSOCIATIONS, SALISBURY, NORTH 
                            CAROLINA

    Mr. BUFFALOE. Chairmen Shaw and Herger, Ranking Minority 
Member Cardin, and Members of the Subcommittees, my name is Ron 
Buffaloe, and I am the Social Security District Manager in 
Salisbury, North Carolina. I am here today as President of the 
NCSSMA. Our organization is comprised of more than 3,200 
managers and supervisors who work in SSA's field offices and 
teleservice centers in more than 1,300 locations across the 
country. Thank you for giving me the opportunity to come before 
you today to talk about the Commissioner's proposal to improve 
the disability determination process and to give our 
association's thoughts about her proposal.
    The NCSSMA applauds Commissioner Barnhart for proposing a 
new approach to disability determinations. As an organization, 
we hold great hope that her proposed changes will shorten 
decision times and pay benefits faster to people who are 
obviously disabled. While our written testimony reviews our 
opinions on all the various aspects of the Commissioner's 
proposals, I am going to spend most of my time today on the 
part that most directly impacts field offices. We note that the 
Commissioner's proposal recommends as its first element, and I 
quote, ``a quick decision step at the very earliest stages of 
the claims process for people who are obviously disabled.'' 
This is not only a great idea, it has been around for a long 
time. The presumptive disability process in the SSI Program is 
essentially a quick decision approach. We think these existing 
procedures need to be refined and broadened.
    We strongly recommend that claims representatives in field 
offices be empowered to make or recommend the quick decisions 
envisioned in the Commissioner's proposal and that those cases 
not meeting the quick decision criteria be moved to the State 
DDSs, without an intermediate step. We also recommend that 
claims representatives be given other functions such as taking 
the first action to secure medical evidence and claims being 
forwarded to the DDS for development and medical decision. This 
is obviously predicated on appropriate medical training being 
given to these field office employees.
    The quick decision step is tailor-made for field offices. 
Many impairments meet the medical listings, and can be allowed 
with minimal medical evidence. This evidence can be obtained 
via telephone and fax, and the efficiencies inherent in local 
field office staff dealing with local treating sources are 
obvious. We also feel this arrangement is compatible with the 
Commissioner's desire to expedite the decision process for 
those individuals who are obviously disabled. We feel this 
approach will serve to streamline and expedite the disability 
process as a whole.
    Well-trained claims representatives with a greater 
knowledge of the disability process would be able to provide 
DDSs with a higher-quality product, even in those cases where a 
quick decision is not possible. Evidence would be requested 
earlier in the process, allowing DDS examiners to make 
disability decisions in a timelier manner. So,me additional 
resources may be necessary to implement this recommendation.
    As to the other parts of the Commissioner's proposal, we 
believe RERUs should be located in selected DDSs, not SSA 
regional offices. They would be organized in the same manner 
envisioned by the Commissioner's proposal and would perform the 
same functions. Additional resources should be allocated to the 
DDSs involved to compensate for this added responsibility. We 
recommend and endorse implementation of the in-line quality 
review process as well as the centralized quality control 
function envisioned by the Commissioner's proposal. We believe 
the DDS reconsideration step should be eliminated. We believe 
the requirement that the RO be an attorney should be 
eliminated. We believe the record should be closed after the 
ALJ decision and that the Appeals Council should be eliminated.
    Finally, we believe all affected components should be 
staffed appropriately. Both DDSs and field offices will need 
additional staff if this new process is to work. The NCSSMA is 
committed to working with all interested parties in making the 
Commissioner's vision of a new and improved disability process 
a reality. We are hopeful our comments will be useful in 
streamlining this process. Again, thank you for this 
opportunity to appear before the Committee. I would welcome any 
questions you may have.
    [The prepared statement of Mr. Buffaloe follows:]
  Statement of Ronald E. Buffaloe, President, National Association of 
   Social Security Management Associations, Salisbury, North Carolina
    Chairmen Shaw and Herger, Ranking Minority Members Matsui and 
Cardin, and Members of the Committee, my name is Ron Buffaloe 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 Salisbury, North Carolina and have worked 
for the Social Security Administration for 31 years. On behalf of our 
membership, I am both pleased and honored that NCSSMA was selected to 
testify at this joint hearing on the Commissioner of Social Security's 
proposal to improve the disability determination process.
    NCSSMA is a membership organization of more than 3200 Social 
Security Administration managers and supervisors who work in SSA's more 
than 1300 field offices and 36 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 34 years ago, 
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.

The Challenge

    SSA's field offices must spend a great deal of their time and 
resources on the disability program. Approximately two-thirds of SSA's 
administrative budget will be spent on the work generated by the 
disability program. We know that this workload will only continue to 
grow as the baby boom generation moves into their ``disability prone'' 
years. Field offices deal directly with disability applicants and 
recipients; they 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 current disability determination procedures 
on their lives.
    The most prevalent criticism heard in field offices is about 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, over a year from the date of initial filing for a decision.

The Commissioner's Proposal

    NCSSMA applauds Commissioner Barnhart for proposing a new approach 
to disability determinations. As an organization we hold great hope 
that her proposed changes will shorten decision times and pay benefits 
faster to people who are obviously disabled.
    We know that processing an increasing number of disability claims 
is one of the major challenges facing the Social Security 
Administration.  We believe it is essential that decisions be made now 
on how best to process this growing workload.
    NCSSMA has been actively involved in all the various projects and 
initiatives in the past to improve the disability process. NCSSMA 
representatives served on steering committees and workgroups in 
connection withvarious pilots. Because of the experience gained from 
the agency's three year Disability Claims Manager Pilot, NCSSMA 
believes that there is compelling evidence of significant potential for 
improving the speed and quality of SSA's initial disability 
determinations by modifying the role of the field office at the 
earliest point in the claims process.
    While we are receptive of and encouraged by the Commissioner's 
proposal for a new approach to disability determination, we believe 
that there will be a better chance of improving speed and accuracy if 
we begin the new approach with a change in the role of the disability 
interviewer at the point the application is filed in the field office.
    The Commissioner's proposal recommends as its first element a 
``quick decision step at the very earliest stages of the claims process 
for people who are obviously disabled.'' This is not only a great idea, 
but it has also been around for a long time. The Presumptive Disability 
(PD) process in the Supplemental Security Income claims process is 
essentially a quick decision approach. To expand this concept and make 
it work as part of the Commissioner's new approach the procedures need 
to be refined, broadened, and implemented in a manner that is both 
effective and takes into account the realities of the Federal-State 
relationship.
    We strongly recommend, therefore, that field office claims 
representatives be empowered to make or recommend the quick decisions 
envisioned in the Commissioner's proposal at the field office level, 
and that those cases not meeting the quick decision criteria be moved 
to the State Disability Determinations Services (DDSs) without an 
intermediate step.
    We would recommend that additional disability responsibilities be 
assigned to claims representatives to permit such disability decision 
making (where arrangements can be made with individual DDSs). We also 
recommend that they be given other functions such as taking the first 
action to secure medical evidence on claims being forwarded to the DDS 
for development and medical decision. This is predicated on additional 
appropriate medical training being given to these field office 
employees.
    There are many impairments that meet the medical listings and can 
be allowed with minimal medical evidence. This evidence can be obtained 
via telephone and fax and the efficiencies inherent in local field 
office staff dealing with local treating sources are obvious. The quick 
decision step is tailor-made for field offices.
    We feel this arrangement is compatible with the Commissioner's 
desire to expedite the decision process for those individuals who are 
obviously disabled. We feel this approach will also serve to streamline 
and expedite the disability process as a whole. Well trained claims 
representatives, with a greater knowledge of the disability process, 
would be able to provide DDSs with a higher quality product even in 
those cases where a quick decision is not possible. Evidence would be 
requested earlier in the process, allowing DDS examiners to make 
disability decisions in a timelier manner.
    Regarding the Commissioner's proposal to establish Regional Expert 
Review Units, we believe these units would be the proper place to 
provide expert support for all disability examiners. The Commissioner's 
proposal indicates that ``Most of these units would be established in 
SSA's regional offices.'' This, we believe, could be a deal breaker for 
the DDSs. We recommend that these units be established in individual 
DDSs within each region. The resources earmarked for the units planned 
for Regional Offices can be diverted to the appropriate DDSs. The 
medical expertise centralized in an individual Expert Review Unit could 
still be made available to decision makers at all levels.
    We understand that the Commissioner envisions that the role of the 
DDS will not diminish under her plan and in fact, anticipates that it 
will expand with the need for more vocational experts and the need to 
manage temporary allowances, early intervention and interim medical 
benefits. We need to point out that these factors could have an even 
greater impact on SSA's field offices where logically the task of 
dealing directly with the claimant on these issues should reside.
    We strongly endorse the implementation of an in-line quality review 
process managed by the DDSs as well as the centralized quality control 
unit to replace the current SSA quality control system. In a joint 
proposal from the National Association of Disability Examiners (NADE) 
and NCSSMA entitled ``The Front End of the Disability Claims Process'', 
submitted to the Deputy Commissioner for Disability in December 2002, 
NADE and NCSSMA recommended that an in-line quality review process be 
established rather than relying exclusively on the current end-of-line 
review.
    We also endorse the elimination of the DDS Reconsideration step. 
The Commissioner's proposal specifically indicates that the additional 
time required for the State DDS examiners to do a more complete job of 
documenting their initial decisions would be compensated by redirecting 
DDS resources freed up by the Quick Decision process. For this to be 
possible under our proposal to locate the Regional Expert Review Units 
in DDSs it is essential that commensurate additional resources be 
allocated to the DDSs.
    The Reviewing Official (RO) position and function in the 
Commissioner's proposal is valid, logical and essential to an improved 
disability process. Here again, as a matter of selling this to the DDS 
community, we believe that this function does not require that the RO 
be an attorney. The Adjudicative Officer (AO) Pilot, which performed a 
similar role, established that this function does not require a law 
degree.
    We strongly endorse the Commissioner's proposal to close the record 
following the Administrative Law Judge decision and to eliminate the 
Appeals Council.

Summary

    To summarize:

      The Commissioner's proposal has the promise to be the 
basis for an improved SSA disability determination process.
      The role of the SSA field office in the initial stage of 
the disability intake process needs to be expanded and modified by 
assigning additional disability responsibilities to claims 
representatives including, where feasible, the initiation of medical 
development, scheduling of consultative examinations, and recommending 
and/or making medical determinations in quick decision cases.
      Expert Review Units should be located in selected DDSs. 
They would be organized in the same manner envisioned by the 
Commissioner's proposal and would perform the same functions. 
Additional resources should be allocated to the DDSs involved to 
compensate for this responsibility.
      We recommend and endorse implementation of the in-line 
quality review process as well as the centralized quality control 
function envisioned by the Commissioner's proposal.
      The DDS Reconsideration step should be eliminated.
      The requirement that the Reviewing Official be an 
attorney should be eliminated.
      The record should be closed after the ALJ decision and 
the Appeals Council should be eliminated.
      Finally, all affected components should be staffed 
appropriately. Both DDSs and FOs will need additional staff if this new 
process is to work.

    NCSSMA is committed to working with all interested parties in 
making the Commissioner's vision of a new and improved disability 
process a reality. We are hopeful our comments will be useful in 
streamlining this process.
    Again, I thank you for this opportunity to appear before the 
Committee. I would welcome any questions that you may have.

                                 

    Chairman HERGER. Thank you, Mr. Buffaloe. Ms. Marshall to 
testify.

     STATEMENT OF MARTHA A. MARSHALL, PRESIDENT, NATIONAL 
     ASSOCIATION OF DISABILITY EXAMINERS, LANSING, MICHIGAN

    Ms. MARSHALL. On behalf of the NADE membership, thank you 
for providing this opportunity.
    Chairman HERGER. Could you speak into the microphone, 
please? There we go. Thank you.
    Ms. MARSHALL. To present our views on the Commissioner's 
proposal to reform the Social Security and SSI disability 
programs. The NADE believes that for people with disabilities 
it is crucial that the SSA reduce any unnecessary delays and 
make the process more efficient. However, any changes in this 
process must be practical and affordable and implemented in a 
manner that allows appropriate safeguards to assure that the 
current level of claimant service is improved or, at the very 
least, maintained. We are not convinced that all parts of the 
Commissioner's approach will achieve this and are concerned 
that some of the proposed changes will, in fact, increase both 
administrative and program costs. The experience of past pilots 
has shown that ideas that may sound good in theory have proven 
to be inadequate to meet the demands for service and 
affordability when implemented on a wide-scale basis.
    We agree with Commissioner Barnhart that successful 
implementation of eDIB is a critical feature of any new 
approach to SSA disability determinations. For eDIB to be 
successful, however, it is critically important that adequate 
infrastructure support and proper equipment be in place. The 
eDIB implementation issues must be addressed quickly and 
efficiently in order to make the process work as intended and 
not cause real delays in the program and in the system. 
Experience with eDIB to date has shown that proper equipment 
has not always been provided to the DDSs, and while technology 
can produce some processing time efficiencies, it is merely a 
tool. It cannot replace the highly skilled and programmatically 
trained DE and DDS medical consultant.
    The Commissioner's approach envisions that quick decisions 
for those who are obviously disabled would be adjudicated in 
RERU. The NADE believes that the DDSs are better equipped in 
terms of adjudicative experience, medical community outreach, 
and systems support to fast track claims and gather evidence to 
make a decision timely, accurately, and cost-effectively. 
Establishing a RERU to handle this workload constitutes an 
additional hand-off with no improvement in the process.
    In addition, at the present time, if an SSI claimant 
presents with a condition that is likely to be found disabling, 
the statute provides for a presumptive disability decision. 
Therefore, currently, an obviously disabled SSI claimant can 
immediately begin receiving cash benefits and medical benefits 
while the DDS obtains the supporting evidence. Unfortunately, 
there is no such provision for Social Security claimants. A 
person found disabled under the SSI Disability Program must 
complete a 5-month waiting period before they can receive cash 
benefits. An allowance, no matter how quickly it is processed, 
will not benefit the individual if he or she has to wait 5 full 
calendar months before receiving benefits. The NADE strongly 
opposes any proposal to remove on-site MCs from the DDSs. These 
MCs interact daily with DEs and offer advice on complex cases.
    The Commissioner has proposed establishment of a Federal RO 
as an interim step between the DDS decision and the OHA. We 
agree that an interim step is necessary to reduce the number of 
cases going to OHA as much as possible. We do not, however, 
believe that this must be handled by an attorney. Decisions 
made at all levels of adjudication are medical-legal ones. 
Disability hearing officers who are programmatically trained in 
disability adjudication as well as in conducting evidentiary 
hearings can handle the first step of appeal between the DDS 
initial decision and the ALJ hearing. Using trained hearing 
officers instead of attorneys will be substantially less 
costly.
    In addition, we do believe that the single decisionmaker 
model should be implemented throughout the new approach, that 
MCs should be basically used to consult with on cases without 
requiring sign-off in every case, unless required by the 
statute. We appreciate the Commissioner's emphasis on quality 
as described in her new approach. We support closing the record 
after the ALJ decision and elimination of the Appeals Council. 
The NADE believes that any proposal to reform the Social 
Security and SSI Disability Programs must balance the dual 
obligations of stewardship and service, and we look forward to 
working with the Congress and with the Commissioner as she 
refines this process. Again, thank you.
    [The prepared statement of Ms. Marshall follows:]
  Statement of Martha A. Marshall, President, National Association of 
                Disability Examiners, Lansing, Michigan
    Chairman Shaw, Chairman Herger, and members of the Subcommittees, 
thank you for providing this opportunity for the National Association 
of Disability Examiners (NADE) to present our views on the 
Commissioner's proposal to reform the Social Security and Supplemental 
Security Income (SSI) disability programs.
    NADE is a professional association whose purpose is to promote the 
art and

science of disability evaluation. The majority of our members work in 
the state Disability Determination Service (DDS) agencies and thus are 
on the ``front-line'' of the disability evaluation process. However, 
our membership also includes SSA Field Office, Regional Office and 
Central Office personnel, attorneys, physicians, and claimant 
advocates. It is the diversity of our membership, combined with our 
extensive program knowledge and ``hands on'' experience, which enables 
NADE to offer a perspective on disability issues that is both unique 
and pragmatic.
    NADE members, whether in the state DDSs, in SSA or in the private 
sector, are deeply concerned about the integrity and efficiency of both 
the Social Security and the SSI disability programs. Simply stated, we 
believe that those who are entitled to disability benefits under the 
law should receive them; those who are not, should not. We also believe 
decisions should be reached in a timely, efficient and equitable 
manner. Any change in the disability process must promote viability and 
stability in the disability program and maintain the integrity of the 
disability trust fund by providing good customer service while 
protecting the trust funds against abuse. Quality claimant service and 
lowered administrative costs that the American taxpayer can afford 
should dictate the structure of any new disability claims process. In 
addition, to rebuild public confidence in the disability program, the 
basic design of any new process should ensure that the decisions made 
by all components and all decision-makers accurately reflect a 
determination that a claimant is truly disabled as defined by the 
Social Security Act.
    In her September 25, 2003 testimony before the Subcommittee on 
Social Security, Commissioner Barnhart presented her approach to 
improving the disability determination process designed to ``shorten 
decision times, pay benefits to people who are obviously disabled much 
earlier in the process and test new incentives for those with 
disabilities who wish to remain in, or return to, the workforce''. NADE 
supports these goals. We appreciate the Commissioner's focus on 
improving the disability program and her willingness to tackle the 
monumental task of improving the disability process and are fully 
committed to working in partnership in this effort.
    NADE believes that for people with disabilities, it is crucial that 
SSA reduce any unnecessary delays and make the process more efficient. 
However, any changes in the process must be practical and affordable 
and implemented in a manner that allows appropriate safeguards to 
assure that timely claimant service is improved, or at the very least, 
maintained. NADE is not convinced that all parts of the Commissioner's 
approach will achieve this and is concerned that some of the proposed 
changes will, in fact, increase both administrative and program costs.
    For the past decade, SSA has attempted to redesign the disability 
claims process in an effort to produce a new process that will result 
in more timely and more accurate decisions. Results of numerous tests 
undertaken by SSA to improve the disability process have not produced 
the results anticipated. The experience of past pilots has shown that 
ideas that may sound good in theory have proven to be inadequate to 
meet the demands for service and affordability when implemented on a 
wide-scale basis.
    There is a pervasive public perception that ``everyone'' is denied 
disability benefits twice and their claim is allowed only when they 
reach the Administrative Law Judge (ALJ) level. In fact, nearly 80% of 
those currently receiving benefits were allowed prior to going before 
an ALJ. In addition, in Fiscal Year 2000, 78% of all cases were finally 
decided in the DDS and were completed in an average case processing 
time of about 85 days at the initial level and 63 days at the 
reconsideration level. The processing delays that appear to be of the 
greatest concern to the Commissioner, and to the public, are delays 
that occur, not at the DDS, but in association with the appeals 
process. Wholesale changes at the DDS level do not address these 
concerns.
    Both formally and informally, NADE has provided extensive feedback 
to the Commissioner on her ``New Approach to SSA Disability 
Determinations''. Our comments are summarized below. In addition, a 
flow chart incorporating NADE's suggestions accompanies this testimony.
    NADE fully supports all efforts to allow earlier access to health 
care, treatment and rehabilitation needs of disabled individuals, as 
well as efforts to assist those individuals who wish to return to work 
by providing them the needed services to allow them to do so. We 
believe that early intervention efforts will provide improved service 
to disabled individuals by providing needed treatment and services 
earlier in their disease process. This early intervention has the 
potential to decrease the lifelong disability payments that some 
individuals receive once they have been determined eligible for 
benefits. Although there are still few details available in the 
Commissioner's approach regarding potential demonstration projects, it 
appears that individuals chosen for participation in these projects 
could be screened based upon age, education, work history and claimant 
allegations. This type of data is currently collected in the initial 
disability interview; using these types of screening criteria would not 
require system changes or other modifications to the existing process.

Therefore, NADE believes that a trained ``technical expert in 
disability'' in a SSA Field Office could screen applicants for 
disability into these demonstration projects. Oversight of these 
projects could be done on a regional basis by Regional Expert Review 
Units as proposed by the Commissioner.
    NADE agrees with Commissioner Barnhart that successful 
implementation of eDIB is a critical feature of any new plan to improve 
the disability program. NADE remains supportive of these new 
technologies as a means for more efficient service to the public. We 
believe that SSA's goal of achieving an electronic disability claims 
process represents an important, positive direction toward more 
efficient delivery of disability payments. However, while technology 
can be expected to reduce hand-offs, eliminate mail time and provide 
other efficiencies, technology is merely a tool. It cannot replace the 
highly skilled and trained disability examiner who evaluates the claim 
and determines an individual's eligibility for disability benefits in 
accordance with Social Security federal rules and regulations.
    In order for eDIB to be successful, it is critically important that 
adequate infrastructure support and proper equipment to make the 
process work effectively and efficiently is in place. Until eDIB is 
fully implemented nationwide, it is impossible to determine critical 
service delivery issues that impact on daily case processing. If DDSs 
are pushed to meet arbitrary deadlines without the necessary hardware 
and software, there will be delays in case processing and no 
improvements in customer service. It is an absolute necessity that eDIB 
implementation issues be addressed quickly and efficiently in order to 
make the process work as intended and not cause real delays in service 
to our most vulnerable citizens. Experience with eDIB to date has shown 
that proper equipment has not always been provided to DDS disability 
examiners to allow for optimal use of this new technology.
    NADE strongly supports the Commissioner's emphasis on quality as 
described in the new approach. National uniform decisions with 
consistent application of policy at all adjudicative levels requires a 
consistent and inclusive quality assurance (QA) review process. A well-
defined and implemented QA process provides an effective deterrent to 
mismanagement, fraud and abuse in the disability program. By including 
both in-line and end-of-line review, accountability can be built into 
every step. We believe that this will promote national consistency 
that, in turn, will build credibility into the process. In addition, 
NADE supports requiring similar medical training for all decision-
makers at all steps in the disability claims process. Making disability 
decisions can be extremely difficult without sufficient medical 
training. Disability is based on a physical or mental medical condition 
and the assessment of how such a condition impacts on a claimant's 
ability to work must be based on an understanding of how such 
conditions normally affect an individual's ability to function. 
Adequate training of all decision-makers in the medical program 
requirements is essential to ensure quality decisions and integrity in 
the disability program.
    Although the Commissioner's approach envisions that ``quick 
decisions'' for those who are obviously disabled would be adjudicated 
in Regional Expert Review Units, NADE believes that the DDSs are better 
equipped in terms of adjudicative expertise, medical community 
outreach, and systems support to fast track claims and gather evidence 
to make a decision timely, accurately, and cost effectively. DDSs 
already process at least twenty percent of allowance decisions in less 
than twenty-five days. In addition, DDS disability examiners are well 
versed in the evaluation of disability onset issues, unsuccessful work 
attempts and work despite a severe impairment provisions to quickly and 
efficiently determine the correct onset for quick decision conditions. 
Establishing a Regional Expert Review Unit to handle this workload 
constitutes an additional hand-off of a claim with no value added to 
the process. We see no need to add another layer of bureaucracy to 
process quick decisions when such cases are already ``triaged'' and 
handled expeditiously by the DDS disability examiners. In order to 
implement a Regional Expert Review Unit for quick decisions, SSA would 
need to change its existing infrastructure to make these decisions and 
provide for hiring, training and housing staff. In addition, business 
processes would have to be developed to secure and pay for medical 
evidence of record.
    In addition, a person found disabled under the Social Security 
disability program must complete a five month waiting period before 
they receive cash benefits. A disability allowance decision, no matter 
how quickly it is processed, will not solve the problem of having to 
wait five full calendar months before being able to receive any cash 
benefits. The SSI disability program does not require such a waiting 
period. In fact, if an SSI claimant presents with a condition that is 
likely to be found disabling, the statute provides for a presumptive 
eligibility decision on the case before obtaining any additional 
supporting evidence. This provision allows the claimant to immediately 
start receiving cash benefits and medical benefits while the DDS 
obtains the supporting documentation needed for the final eligibility 
decision. There is no such provision for Social Security claimants, and 
even

if a final eligibility decision is made earlier, they still have to 
wait five full calendar months before being able to receive any cash 
benefits and, with the exception of individuals diagnosed with ALS or 
undergoing dialysis, twenty-four calendar months before becoming 
eligible for Medicare benefits. This waiting period has caused many 
claimants and their families to suffer severe economic and emotional 
hardship while waiting to receive benefits. It also fosters a 
perception that SSA is denying cash benefits to disabled workers when 
they need these benefits the most. This is especially true for 
claimants who suffer from a terminal illness and have a short life 
expectancy.
    NADE is strongly opposed to any proposal to remove onsite Medical 
Consultants from the DDS. The DDS medical consultant interacts with 
disability examiners on a daily basis and offers advice on complex case 
development or decision-making issues. As an integral part of the DDS 
adjudicative team,DDS medical consultants play a vital role in the 
disability evaluation process, not only in reviewing medical evidence 
and providing advice on interpretation, but also in training and 
mentoring disability examiners, as well as performing necessary public 
outreach in the community. He/she maintains liaison with the local 
medical community and has knowledge of local care patterns and the 
availability of diagnostic studies and state regulations to facilitate 
the adjudication process within the complex Social Security system. 
Most disability applicants have multiple impairments involving more 
than one body system and require a comprehensive view of the combined 
limitations and resultant impact on function. Specialty consultants 
with limited scope and experience cannot fully assess the combined 
effects of multiple impairments on an applicant's functioning. The SSA 
programmatically trained DDS medical consultant has the education, 
clinical experience and decision-making skills, along with expertise in 
evaluating medical records and disease conditions and making prognosis 
predictions regarding a claimant's function and future condition, to 
more accurately assess the case as a whole.
    DDS medical consultants are not only medical specialists--
physicians, psychologists or speech/language pathologists--they are 
also SSA program specialists. There is a very real difference between 
clinical and regulatory medicine and it takes at least a year to become 
proficient in Social Security disability rules and regulations. The DDS 
medical consultant's unique knowledge of SSA's complex rules and 
regulations and regional variants of those regulations, their medical 
expertise in many fields and knowledge of local medical sources, and 
their familiarity with DDS examiner staff, quality specialists and 
supervisors, make them an invaluable asset to the DDS's and the SSA 
disability program as a whole. It is critical that this expertise be 
on-site in the DDSs and readily available to the disability examiner 
for case consultation and questions, particularly in those more complex 
cases and, if as proposed under the Commissioner's plan, disability 
examiners are to, ``more fully document and explain their decisions''.
    The Social Security and SSI disability programs are unique among 
disability programs. The disability examiners who evaluate claims for 
Social Security and SSI disability benefits must possess unique 
knowledge, skills and abilities. Those who adjudicate Social Security 
and SSI disability claims are required, as a matter of routine, to deal 
with the interplay of abstract medical, legal, functional and 
vocational concepts. Disability examiners are required by law to follow 
a complex sequential evaluation process, performing at each step an 
analysis of the evidence and a determination of eligibility or 
continuing eligibility for benefits before proceeding to the next step. 
Adjudication of claims for Social Security and SSI disability benefits 
requires that disability examiners be conversant (reading, writing and 
speaking) in the principles of medicine, law and vocational 
rehabilitation. The disability examiner is neither a physician, an 
attorney nor a vocational rehabilitation counselor. Nevertheless, he or 
she must extract and employ major concepts that are fundamental to each 
of these professions. The disability examiner must appropriately and 
interchangeably, during the course of adjudication, apply the ``logic'' 
of a doctor, a lawyer and a rehabilitation counselor. A disability 
examiner must have knowledge of the total disability program as well as 
proficiency in adult and child physical and mental impairment 
evaluation, knowledge of vocational and job bank information and the 
legal issues which impact on case development and adjudication. It 
takes years before an individual becomes adept at this complex task.
    NADE has long supported an enhanced role for the disability 
examiner and increased autonomy in decision-making for experienced 
disability examiners on certain cases. We were pleased, therefore, that 
in NADE's discussions with Commissioner Barnhart we were told that it 
was her intent in the new approach to enhance the disability examiner's 
role in the disability process. In order to achieve that, we believe 
that the Single Decision Maker (SDM) from the highly successful Full 
Process Model project and currently operating in the prototype and ten 
other states

 should be fully integrated into the new approach. (Under the SDM 
model, medical sign-off is not required unless mandated by statute.)
    Decisions regarding disability eligibility can be considered to be 
on a continuum from the obvious allowances on one end, through the mid-
range of the continuum where only careful analysis of the evidence by 
both adjudicator and medical consultant can lead to the right decision, 
and finally to the other end of the continuum where claims are obvious 
denials. It is at both ends of the continuum where the disability 
adjudicator can effectively function as an independent decision-maker. 
Use of the SDM to make the disability determination, and retaining the 
availability of medical consultant expertise for consulting on cases 
without requiring medical sign off on every case, promotes effective 
and economical use of resources. It is prudent to expend our medical 
and other resources where they can most positively impact the quality 
of the disability claim.
    Of all the ``reengineered'' disability processes proposed or 
piloted in the past, the SDM process has been the most successful. It 
has had a more positive impact on cost-effective, timely and accurate 
case processing than any other disability claims initiative in many 
years. Statistical results have shown that disability examiners 
operating under the SDM model in the twenty states where this concept 
was tested have the same or better quality than disability examiners 
operating under the traditional disability adjudication model. Studies 
of the SDM have demonstrated its value as an integral part of the 
Social Security Administration's disability claim adjudication process. 
NADE strongly believes that the SDM model should be integrated fully in 
any new initial claims process, expanded to Continuing Disability 
Reviews and adopted as standard procedure in all DDSs.
    The Commissioner, in her Approach, has proposed establishment of a 
federal Reviewing Official (RO) as an interim step between the DDS 
decision and the Office of Hearing and Appeals (OHA). NADE agrees that 
an interim step is necessary to reduce the number of cases going to the 
OHA as much as possible. An interim step laying out the facts and 
issues of the case and requiring resolution of those issues could help 
improve the quality and consistency of decisions between DDS and OHA 
components. NADE supports an interim step because of the structure it 
imposes, the potential for improving the consistency of decisions, 
reducing processing time on appeals, and correcting obvious decisional 
errors at the initial level. The establishment of uniform minimum 
qualifications, uniform training and uniform structured decision-
writing procedures and formats will enhance the consistency and quality 
of the disability decisions. NADE is not convinced, however, that 
customer service is improved from the current process if this remains a 
paper review at this interim step.
    NADE believes that this interim step should include sufficient 
personal contact to satisfy the need for due process. We do not believe 
that it needs to be handled by an attorney. There is little, if any, 
data that supports a conclusion that this interim step needs to be 
handled by an attorney. In fact, a 2003 report commissioned by the 
Social Security Advisory Board to study this issue recommended that 
this position NOT be an attorney.
    Decisions made at all levels of adjudication in the disability 
process are medical-legal ones. NADE believes that Disability Hearing 
Officers (DHOs) can handle the first step of appeal between the DDS 
initial decision and the ALJ hearing. DHOs are programmatically trained 
in disability adjudication as well as in conducting evidentiary 
hearings. Using trained Disability Hearing Officers instead of 
attorneys will be substantially less costly. In addition, there is 
currently an infrastructure in place to support DHOs and using such a 
structure will prevent creation of a new costly and less claimant 
friendly federal bureaucracy. Since this infrastructure is already in 
place, national implementation of the DHO alternative can occur very 
quickly.
    NADE supports closing the record after the Administrative Law 
Judge's decision since this decision will, under the Commissioner's 
proposed approach, represent the final decision of the Commissioner of 
Social Security before any subsequent appeal to the federal courts. We 
support providing the assistance of programmatically trained medical 
and vocational experts to the Administrative Law Judges.
    NADE supports elimination of the Appeals Council review step. We 
continue to advocate for establishment of a Social Security Court. As 
long as judicial review of disability appeals continues to occur in 
multiple district courts across the country, a bifurcated disability 
process will continue to exist as different DDSs operate under 
different court rulings and regulations depending upon where the 
claimant lives.
    In summary, NADE's key recommendations are to implement only 
strategies which balance the dual obligations of stewardship and 
service. These are:

      Implement eDIB only with adequate infrastructure support 
and proper equipment.
      Keep Quick Decisions in the DDS.
      Eliminate or reduce the five month waiting period for 
Social Security beneficiaries.
      Extend Presumptive Disability provisions to Social 
Security disability claimants.
      Maintain Medical Consultants on-site in the DDS.
      Fully integrate the Single Decision Maker into any new 
disability process.
      Utilize the current infrastructure of DDS Disability 
Hearing Officers as an interim appeals step.
      Require training in the medical program requirements for 
all decision makers in all components.
      Include both in-line and end of line review at all levels 
of the process.
      Recognize that technology is only a tool. It does not 
replace the highly skilled trained disability examiner.

    NADE appreciates this opportunity to present our views on the 
Commissioner's New Approach to SSA Disability Determinations, and we 
look forward to working with the Social Security Administration and the 
Congress as the Commissioner continues to refine her approach to 
improve the disability process.






                                 
    Chairman HERGER. Thank you very much. Dr. C. Richard Dann, 
please, to testify.

     STATEMENT OF C. RICHARD DANN, M.D., UNION OF AMERICAN 
  PHYSICIANS AND DENTISTS, AND AMERICAN FEDERATION OF STATE, 
      COUNTY, AND MUNICIPAL EMPLOYEES, AUBURN, CALIFORNIA

    Dr. DANN. Mr. Chairman and Honorable Members of the 
Subcommittees, thank you very much for the opportunity to 
present my views on Social Security's new approach to 
disability determinations. I am Dr. Richard Dann from the 
Roseville, California DDS. I am a DDS medical consultant (MC) 
with 21 years experience in disability medicine. I am 
testifying on behalf of the UAPD as well as the AFSCME. Of 
2,100 DDS MCs nationwide, I represent 160 in California and 
hundreds in other States.
    The new approach eliminates the DDS medical consultant, 
replacing us with nurses. At proposed ratios of about 2 to 1 in 
current wages, two nurses would actually cost more than the DDS 
MC replaced. The statutes require MC signatures on denials of 
certain claim types. The DDS MCs fulfill those requirements. It 
is unclear who will make the medical assessments and sign 
medical decision documents if we are eliminated from the DDS. 
New Approach sends easier quick decision cases to a regional 
unit. Currently, DDSs decide 20 percent of all claims in under 
25 days. Skimming quick decision cases from the DDS will 
concentrate a more complex caseload into the DDS. This seems an 
inappropriate time to replace the medical consultant with 
nurses.
    Abandoning the DDS reconsideration step for a regional RO 
is somewhat troubling. An attorney does not have adequate 
medical knowledge to make a better medical assessment than the 
DDS MC. The DDS MCs provide convenient, close on-site medical 
support to the DE. Adding a nurse and a computer between the DE 
and the medical resource will hinder its use. The DDS MC is an 
educator, training DEs, MCs and exam vendors. Off-site regional 
medical experts would have trouble fulfilling these DDS support 
roles. Medical licensure is a problem with New Approach. State 
medical licensure is required for doctors to make diagnoses and 
order diagnostic tests routine parts of casework at the DDS. 
Nurses and attorneys cannot do this. State licensure costs a 
lot and can be difficult to obtain due to a lack of reciprocity 
between States. Regional medical experts would not be licensed 
in every State of their region. Case development will be 
impossible without the State-licensed DDS medical consultant.
    The DDS MCs save millions of dollars each year by obtaining 
medical evidence by phone. Regional medical experts would lack 
familiarity with local medical providers and consultative 
examiners. Regional medical experts would be less able to 
obtain phone evidence.
    The DDS MC approaches cases strategically and saves time 
and cost by recognizing and allowance early. Disability 
examiners consult casually with the on-site medical consultant. 
I can allow cases early that might wrongly be denied by a nurse 
or attorney. I have

done this with multiple throat cancer claims by using my 
knowledge of anatomy to technically review an operative report 
and find evidence for an allowance. Off-site regional experts 
would not as user friendly to the DE.
    To summarize, the DDS medical consultant should be retained 
in New Approach. Social Security Disability is defined, quote, 
``Due to a medically determinable impairment,'' unquote. There 
is no one better to assess this than a physician. The medical 
consultant has superior medical knowledge to a disability 
evaluator, nurse or attorney. Our accessibility and knowledge 
of Social Security regulatory medicine make us a unique asset. 
Federally measured DDS accuracy is greater than 90 percent. The 
DDS MC assessments are more legally defensible than those from 
a DE, nurse or attorney. The DDS medical consultant provides 
unparalleled professional training for the next generation of 
DEs, MCs and vendors.
    Eliminating the DDS medical consultant will waste millions 
of dollars on wrong allowances and fraud, delay true 
allowances, and weaken legal defense, and also impede the DE. 
Importantly, it will erode public confidence in the Social 
Security Disability decision. The DDS stakeholders, UAPD, 
AFSCME, NADE and NCDDD, have all voiced solid support for 
retaining the on-site DDS medical consultant; 2,100 MC jobs are 
threatened by New Approach. Experienced DDS MCs will soon begin 
leaving. We have obligations that will force us to seek secure 
jobs. Many groups have worked diligently to show how Social 
Security goals can be better achieved retaining the DDS MC. We 
are an unparalleled resource to the DDS and Social Security and 
our clients. Let us not let that resource disappear. Thank you 
very much.
    [The prepared statement of Dr. Dann follows:]
 Statement of C. Richard Dann, M.D., Union of American Physicians and 
   Dentists, and American Federation of State, County, and Municipal 
                     Employees, Auburn, California
    Mr. Chairman and distinguished members of this Subcommittee;
    We appreciate the opportunity to testify today regarding the Social 
Security Administration's New Approach to Disability Determinations 
plan.
    I am Dr. Richard Dann, MD, from the Roseville, California 
Disability Determination Service, (DDS). I am a DDS Medical Consultant 
(MC) with over 21 years experience in disabilitymedicine. I am 
testifyingon behalf of the Union of American Physicians and Dentists 
(UAPD) and the American Federation of State, County and Municipal 
Employees (AFSCME). I am one of approximately 2,100 DDS MCs nationwide. 
I am testifying on behalf of the 160 DDS MCs in California and several 
hundred more represented by AFSCME nationwide. I am a shop steward and 
Board Member of UAPD.
    I enjoy my job and obtain great satisfaction performing an 
important medical, fiscal and civil service. I am here to explain why 
the DDS MC is a critical resource in the adjudication of Social 
Security Disability Claims and why MCs should remain in the State DDS. 
In my judgment, eliminating the DDS Medical Consultant will waste 
millions of dollars on erroneous allowances, encourage fraud, delay 
bona fide allowances, weaken legal defense of decisions, and further 
burden the Disability Examiner (DE). But most importantly, it will 
erode the integrity of the SSA disability decision, along with the 
public trust of the American people.
    My job is to act like a medical detective, seeking accurate medical 
assessments to determine if a claimant is disabled under SSA regulation 
by a ``medically determinable impairment.'' I save costs by making 
physician to physician phone calls to treating sources, obtaining high 
quality evidence at no cost. I help to develop local vendor sources and 
monitor their quality. The DDS MC helps provide initial and ongoing 
training of the DE and new MC staff.
    On Sept. 25, 2003, Commissioner Barnhart announced her New Approach 
to Disability Determinations plan. The Commissioner stated that 
applicant service would

improve, and that ``no SSA employee would be adversely affected by my 
approach,'' explaining that included DDS employees and Adjudicative Law 
Judges. The Commissioner then noted that she planned to eliminate the 
position of the DDS MC, later elaborating we would be replaced with 
nurses. The DDS nurse would liaison between the DE and a Regional 
Medical Expert. At the staffing ratio proposed by SSA and current wage 
scales, two nurses would cost more than the MC replaced. Many 
operational specifics have not yet been shared with stakeholders and 
the public. Statutes require DDS MC signatures on denials of pediatric 
and mental health claims. Under the New Approach, who will sign these 
claims? Where would all of these disability trained nurses come from? I 
have helped write several position papers on elimination of the DDS MC 
for UAPD, AFSCME, and the National Association Disability Examiners 
(NADE), all of which have been submitted to this Subcommittee.
    The Commissioner seeks faster disability decisions in her ``Quick 
Decision'' plan, where cases of obvious severe disability would be sent 
to a planned Regional Quick Decision Unit rather than to the DDS. There 
are already mechanisms in place to expedite DDS claim review for the 
obviously disabled and for those in dire need (E.G. PD or Presumptive 
Disability and TERI cases). The speed of the decision must be weighed 
against the accuracy of the decision; speed and quality tend to be 
inversely proportional. Excessive emphasis on speed erodes quality 
substantially. DDS administrators juggle these two factors constantly. 
Very minor regulatory changes at the DDS would accomplish the goals of 
the ``Quick Decision'' part of ``New Approach'' with considerably less 
expense, staff training and change in procedures. The DDS team of 
Disability Examiner and MC currently do quite well in this area, with a 
mean DDS processing time of approximately 85 days nationwide and 75 
days in California. About 20 percent of claims are adjudicated in less 
than 25 days. Only a half hour or so is spent in review by the DDS MC; 
the value added with that short step is enormous. Removing ``Quick 
Decision'' cases will concentrate a more complex caseload into the DDS. 
Accordingly, replacing the DDS MC with nurses at the same time as 
concentrating more difficult cases into the DDS does not make sense.
    The accuracy and quality of the disability decision are heavily 
influenced by the DDS MC. Local DDS inline review and Regional quality 
review keep DDS decision accuracy above 90 percent. Accuracy is 
important; an allowance costs SSA between $100,000 and $200,000. 
Erroneous allowances are very difficult to reverse due to SSA statutes, 
and no one wants to wrongly deny benefits. This is a decision worth 
getting right, for both the claimants and the budget. The quality of 
the DDS decision is excellent, and more, rather than less, reliance 
should be placed on it.
    At the DDS, the MC provides medical knowledge at the doctorate 
level rather than nurse level, peer level review of treating source 
evidence, and inline quality review of the DDS decision. I have been 
able to allow brain cancer cases to proceed quickly where the grade of 
the tumor was not clearly stated, but my knowledge of histopathology 
enabled me to support an allowance. Due to my knowledge of neck anatomy 
and my ability to analyze operative reports, I have been able to 
promptly allow claims for throat cancer that the DE would have denied. 
Conversely, I have prevented inappropriate allowances for claims 
involving multiple traumas due to my knowledge of fracture sites and 
expected bone healing times. MCs recognize functional impacts of 
cumulative impairments as well as potential disease complications a DE 
or nurse cannot.
    Many times every day, I carefully rationalize why a treating 
source's diagnosis or assessment of capacity is inconsistent with the 
medical evidence of record. The claimant's physician may not be as 
objective as SSA would like. A treating doctor's functional capacity 
statement is often noncritical in nature, based solely on what the 
patient tells them. Applicants can distort the truth, deliberately or 
unwillingly, and treating physicians are variably skilled at detecting 
this. They are their patient's advocate, not their judge. Frequently, I 
see statements from treating sources stating that their patient cannot 
walk two hours or sit for six hours a day. Yet, the record shows that 
the claimant lives alone, rides a bike, vacuums, and does his or her 
own grocery shopping. Deliberate exaggeration of symptoms is common, 
involving many cases every day.
    Preventing fraud is a substantial part of our DDS job. There is a 
big difference to SSA between ``uses a cane'' and ``needs a cane.'' The 
DDS MC is best suited to evaluate those diagnoses and statements of 
capability with the case findings. Careful assessment of evidence by 
the DDS MC frequently reveals inconsistencies. DEs and nurses lack the 
scope and depth of a medical doctorate to detect various subtle exam 
and diagnostic findings and critically review treating source 
statements. In Prototype states and under the Single Decision Maker 
(SDM) models, the DE may make the medical assessment on some claims 
without the input of a DDS physician; if the DE has questions or 
concerns regarding aspects of the case, he or she consults with the DDS 
MC. The SDM pilots and Prototype studies have shown at least a 70 
percent rate of consultation with the MC. In non-Prototype DDSs, 
currently the vast majority, the DE summarizes their findings in a 
consult to the MC, who then completes the medical assessment on every 
claim. It is not yet clear in the Commissioner's ``New Approach'' 
exactly what percentage of cases will have MC review or who will 
prepare and sign medical decision documents.
    UAPD and AFSCME continue to strongly support DDS MC assessment for 
every single claim. Statistics have shown absolutely no improvement in 
processing time or accuracy under SDM or Prototype, and a 70 percent 
rate of MC consultation. The continued need for the DDS MC's input is 
clear. In fact, the Agency's own report, #A-07-00-10055, published in 
June 2002, noted increased claim processing times, appeal rates, case 
pending numbers, and an erosion of quality in SDM and Prototype DDSs. 
Current SSA promotional materials assure the public that doctors are 
involved in the disability decision process, and the public expects 
doctors to be utilized on most if not all claims. Imagine the response 
of the public and the courts to denials of benefits by a DE or nurse, 
despite endorsement from treating physicians.
    The ``New Approach'' proposes using offsite Regional Medical Expert 
Units to provide case consultation to DEs via DDS nurse and computer, 
adding a computer and nurse between the DE and medical expert. This 
change complicates the process without any apparent value added, and 
causes some substantial problems. The DEs and DDS Directors have been 
asked for input and have replied universally that remote Regional 
Medical Experts will be much less efficient and user friendly than 
walking down the hall to the familiar MC.
    Medical licensure is another big problem with ``New Approach.'' MCs 
are licensed by state. Most states require state medical licensure to 
make diagnoses and order diagnostic tests, all very routine parts of 
developing cases at the DDS. State medical licensure costs hundreds of 
dollars a year and can be difficult to obtain due to lack of 
reciprocity between states. Regional Medical Experts would find it 
difficult and expensive to be licensed in every state of their Region; 
Region 9 contains California, Hawaii, Arkansas, and Nevada. When 
further testing needs to be ordered, this will be a major problem under 
the ``New Approach'' if there is no state licensed DDS MC onsite.
    The proposed replacement of the DDS Reconsideration Step by a 
Regional Reviewing Official is especially troubling. How can a single 
attorney better assess medical disability than the DDS team of MC and 
DE? How will this attorney obtain adequate medical knowledge to make a 
better medical assessment than the DDS? The low reversal rate of the 
Reconsideration Step certainly does not devalue it. To the contrary, it 
affirms the high quality of initial DDS decisions. With DDS accuracy 
rates averaging above 90 percent, one should not expect substantial 
reversal rates. Reconsideration reversals generally occur when new 
evidence is presented or when disease progresses, not because of 
errors. The DDS MC is a graduate of medical school as well as a 
specialist in SSA disability. They are better qualified than an 
attorney or nurse to do medical assessments of disability. The DDS 
Reconsideration Step maintains integrity of the SSA Disability process 
by providing a prompt second medical evaluation of the claim by DDS DE 
and MC, and should not be exchanged for an attorney Reviewing Official.
    Cost control is another fundamental role of the DDS doctor. The DDS 
MC saves SSA millions of dollars every year. As noted earlier, doctor-
to-doctor phone contact obtains critical medical evidence from treating 
sources quickly and at no cost. The DDS MC applies a strategic approach 
to case processing, and development can cease as soon as a fully 
favorable allowance can be made. Several times a week, I am able to 
allow a case early in development by identifying a single impairment 
severe enough to allow the claim. In cases involving multiple 
diagnoses, early review of the medical evidence by the DDS MC 
frequently leads to prompt allowance without costly time consuming 
consultative exams. Nurses are untrained in this area, and Regional 
Medical Experts would be less able to obtain phone evidence.
    The DDS MC is an educator, training Disability Evaluators, new MCs, 
and Consultative Exam vendors. He or she provide initial and refresher 
medical training to the DEs and provide critical peer training to new 
DDS MC. The MCs help the DDS find and train local CE vendors in program 
requirements, then help monitor for quality. It is not clear how Remote 
Regional Medical Experts might fulfill this important educator role.
    In summary, the DDS MC is an invaluable component of the Social 
Security Disability Program and should be retained in the ``New 
Approach.'' Contrary to the goals stated, the elimination of the DDS MC 
will increase errors, promote fraud, slow processing time, increase 
expenses, make the DE's job tougher, and degrade the integrity of the 
process.
    MC contributions to decision accuracy are critical, preventing many 
inappropriate allowances and denials at both initial and 
reconsideration levels. The current DDS team of DE and MC is the most 
effective way to accomplish the job. By statute, disability must be 
from a medically determinable impairment, and no one is better suited 
to assess this than a physician. The DDS MC provides strategic 
professional case review and has medical knowledge deeper and broader 
in scope than a DE, nurse or attorney. The MC is able to assess SSA 
disability better than most treating sources and provides legally 
defensible medical assessments, more defensible than those of a DE, 
nurse or attorney. The DDS MC provides unparalleled professional 
training to DEs and Consultative Examiners. Those stakeholders most 
closely involved in the DDS process, UAPD, AFSCME, NADE, and NCDDD, 
have voiced solid support for retaining the DDS MC onsite. Their 
knowledge and experience in regulatory medicine and SSA regulations 
makes them uniquely qualified to make this judgment.
    If the DDS MC jobs remain threatened, overwhelming numbers of 
valuable experienced DDS MCs will soon leave due to job uncertainty, 
before any Regional Medical Experts even exist. Many groups have worked 
diligently to show the Commissioner how to achieve her goals without 
eliminating the DDS MC. For over a year now, 2,100 MCs have felt their 
jobs threatened. We have obligations that will soon force many of us, 
myself included, to seek more secure positions. DDS MCs take pride in 
providing the best possible service to our SSA clients and training to 
the next generation of DDS MCs and DEs. We offer an unparalleled 
resource to the DDS and SSA. Let's not let that resource disappear!
    I thank the Chairman and members of the Subcommittee for the 
opportunity to present this statement and am pleased to answer any 
questions you may have.

                                 

    Chairman HERGER. Thank you. Ms. Everett to testify.

  STATEMENT OF SHEILA EVERETT, PRESIDENT, NATIONAL COUNCIL OF 
    DISABILITY DETERMINATION DIRECTORS, JACKSON, MISSISSIPPI

    Ms. EVERETT. Thank you, Mr. Chairman, for the opportunity 
to provide written testimony today and comments before the 
panel. I am the Director for the Mississippi DDSs, and as 
President of NCDDD, represent the disability directors and 
managers in over 54 DDS State agencies and over 16,000 State 
employees. We too applaud the Commissioner's bold vision for 
changes and want to thank her for inclusion of NCDDD in part of 
the process to decide the final plans. We believe that DDSs are 
in an excellent position to offer the Commissioner solutions as 
we are considered to be a very cost effective, productive and 
efficient part of the disability programs. Let me talk about 
our solutions.
    In the area of quality we do concur with the Commissioner's 
definition that quality should be a combination or a balance of 
accuracy, customer service, timeliness, cost and productivity. 
Our solution will deliver consistency and quality across and 
among all components. Our quality plan begins with sound 
disability policy. We will work with the SSA to ensure that 
their policy for disability is concise, clear and communicated 
across all lines. For example, Social Security Disability 
policy has evolved over the last several years from a purely 
medical model to one that has more functioning in the listing 
and in the policy. This has added inconsistency and increased 
administrative costs.
    Our solution would focus on consistently and adequately 
communicating and applying policy to all components. We would 
align the quality reviews with the policy component. We would 
centralize end-of-line reviews. We would review all components 
from the field office to the DDS to the proposed regional 
officials, as well as OHA under the same rules. We would 
institute and end-line or end-process reviews to ensure quality 
at all steps in the process, and we would address the different 
standards of evidence, for example, preponderance of evidence 
standards used by the DDSs and substantial evidence standards 
used by the ALJs. The results of our plan would improve 
consistency and quality among all components and reduce 
administrative cost.
    Regarding quick decisions, we believe we can improve upon 
the current infrastructure already in place in the State DDSs. 
Our data shows that 19 percent of cases are allowed by DDSs in 
25 days or less already. Our solution is to improve the 
profile. We have identified to the Commissioner almost 50 
impairments that would fit this category. We would have highly 
trained and skilled examiners process these cases with 
curtailed and expedited development independent of medical 
consultant input, saving them for more complex cases. 
Therefore, our result would improve the numbers of quick 
decisions, reduce the times to process these, and process these 
cases 26 million fewer dollars than a Federal component. 
Regarding medical experts, the NCDDD solution does leave MCs in 
the DDSs to process and rate cases along with all the other 
duties that they perform. We would place these MCs in 
electronic queues so that medical specialists could be shared 
among all components. Our solution does make MCs available also 
to OHA and ALJs for medical ratings so that we could improve 
consistency and decrease administrative costs.
    We also propose a service delivery expert. This is a highly 
trained DE that would be able to make independent decisions on 
denial claims, also saving medical consultant time for more 
complex cases. We have recognized in the process that it does 
take extra test time for MCs. This would be a great way to 
balance and use those MCs and to decrease administrative costs.
    We concur with the elimination of Recon, and creation of a 
RO. However, we believe that State employees such as our 
current disability hearing officers could also perform this job 
at a cost savings to the agency. We concur with the need for 
vocational specialists that are consistently trained the same 
skill set from the same training used at all components to 
improve consistency in the process. We also concur with all 
demonstration projects and ``return to work.'' In summary, I 
would like to thank the Commissioner for her bold vision, her 
inclusion of NCDDD, and given the proper resources, we believe 
that we could deliver her goals. Thank you.
    [The prepared statement of Ms. Everett follows:]
Statement of Sheila Everett, President, National Council of Disability 
             Determination Directors, Jackson, Mississippi
    Mr. Chairmen, thank you for your invitation to participate in this 
hearing on our thoughts about Social Security Commissioner Jo Anne 
Barnhart's ``New Approach to Changing the Disability Process''.
    Before commenting on specific issues on the topic of today's 
hearing, as the representative of the National Council of Disability 
Determination Directors (NCDDD), I would like to restate the purpose of 
our organization and reaffirm all our previous commitments to 
participate in finding and implementing responsible solutions with 
accountability by all stakeholders.
    The NCDDD is a professional association of Disability Determination 
Services (DDS) Directors and managers of the agencies of state 
government performing the disability determination function on behalf 
of Social Security. NCDDD represents 54 state Disability Determination 
Services (DDS) agencies and over 16,000 staff nationwide. NCDDD's goals 
focus on finding ways to establish, maintain, and improve fair, 
accurate, timely, and economical decisions to persons applying for 
disability benefits.
    We applaud Commissioner Barnhart's bold vision for a new Disability 
process. The Commissioner stated that she was guided by three questions 
from the President as she considers changes to the Social Security 
Disability program:

      Why does it take so long to make a disability decision?
      Why can't people who are obviously disabled get a 
decision immediately?
      Why would anyone want to go back to work after going 
through such a long process to receive benefits?

    Together with those questions, Commissioner focused on two over-
arching operational goals:

    1.  To make the right decision as early in the process as possible.
    2.  To foster ``return to work'' at all stages of the process.

    The NCDDD had nearly every DDS Director's involvement in 
formulating our response, reaction, and recommendations to the proposed 
changes. We presented our position to Commissioner Barnhart and her 
staff on April 7, 2004. At that time, we also discussed the need for 
further research and input in several areas related to this new 
position. Our membership is working to complete those assignments. We 
have a meeting scheduled with the Commissioner and her staff in October 
to discuss our findings. In addition, the NCDDD Officers have begun 
meetings with the Office of Disability Policy to work together on 
common solutions on disability policy. We are actively working with the 
Commissioner and SSA to achieve our common goals in these areas.
    NCDDD has offered several solutions and recommendations to the 
Commissioner to help her achieve her goals and ensure consistency in 
decision making. I will outline the recommendations we believe will 
achieve the Commissioner's goals, best utilize the existing resources 
and staffing, achieve consistency in the program, and allow us to be 
good stewards of the trust funds. DDSs are the most efficient, 
productive, and cost-effective component of the disability process.

Quality

    NCDDD supports the Commissioner's plan to provide quality 
disability decisions. We support her definition of Quality as accuracy, 
customer service, timeliness, cost, and productivity. We concur with 
this ``balance'' in case processing and believe that all components 
should operate under this same definition. We support the concept that 
quality reviews should be centralized and that the policy component 
must play a central role in the review and assessment of quality. We 
further support the concept that quality must be instilled at every 
step in the process and quality measures should be applied consistently 
within and across components. We support the Commissioner's plan to 
instill an in-line, or in-process quality system that would address the 
consistency between the DDS and Administrative Law Judge's (ALJ) 
decisions, the variations among DDSs, and the variation among ALJs. 
Most importantly, it would result in the right decision being made as 
early in the process as possible.
    NCDDD feels that any quality review process should be aligned 
organizationally or in function with SSA's Policy component. Policy 
must be written that is clear, concise, and which lends itself to a 
consistent quality process. We recommend a culture change in which all 
SSA components (Operations, Disability and Income Security Programs, 
Quality Assurance and Performance Assessment, and Systems /eDib) are 
committed to the same intent and definition of Quality. Currently, DDSs 
operate under a preponderance of evidence standard while ALJs operate 
under a substantial evidence standard. All components should focus on 
the same outcomes. Currently some of these components stress competing 
outcomes which result in problems within the program. For example, 
stressing certain workload numbers at one component at the expense of 
another component contributes to cost and time delays in the overall 
process. Another example concerns policy that is written without regard 
to the operational impact on case processing. Over the past few years 
SSA Disability Policy has developed from a medical model to one where 
there is emphasis on the functioning which is subjective and which adds 
unnecessary costs, time delays, and inconsistency to the decision.
    We are willing to work with SSA's Policy Component to ensure that 
SSA disability policy is clear, concise, and consistent among DDSs and 
across all components. We want to work with SSA to ensure an 
operational success in this area and to help the Commissioner achieve 
her goals. We strongly believe that the DDSs need the adequate 
resources to achieve the Commissioner's definition of quality and 
consistent application of policy.
    Lastly, we believe that specific measures of success for these 
quality outcomes should be SMART:

        Specific

        Measurable

        Attainable

        Relevant

        Time based

Quick Decisions

    We concur with the Commissioner that there ought to an expedited 
decision making process for those cases where there is an obvious 
disability. The NCDDD has identified nearly 50 impairments that might 
potentially fit this category. We believe that the documentation 
requirements have grown over recent years to include an expanded role 
of the claimant's functional ability as opposed to a purely medical 
model. This change in the documentation requirements has resulted in 
increased documentation of claims and has decreased the consistency of 
the process. We applaud the Commissioner's approach to identify those 
``Quick Decisions'' and render these decisions expeditiously.
    We believe that the DDSs already achieve this goal in the current 
model and that with further definition of the criteria, the DDSs are 
the best place to make these decisions. We believe that the placement 
of this process at any other component adds an unnecessary level of 
bureaucracy. In fact, even with the current process an NCDDD study 
revealed that 19% of allowance decisions are made in less than 25 days. 
We believe that we can surpass this goal with the current trained 
disability staff and a refined and streamlined process of ``Quick 
Decisions''.
    We further propose that these decisions be given to the DDSs' most 
experienced Disability Examiners so they can correctly and timely make 
as many of these decisions with curtailed development and documentation 
and independent of MC input. Using the current electronic environment 
of case processing (eDib) these cases can be queued to the DDS 
electronically, flagged for a ``Quick Decision'' review, and assured of 
case processing of less than ten days in many instances.
    The DDSs are willing to conduct the disability interview on these 
cases provided we are given the adequate staffing and resources. Our 
cost analysis shows that the DDSs can process these cases $26 million 
dollars less than a federal component.

Medical Experts

    The NCDDD's solution to the Commissioner's use of Medical Experts 
is that we leave the DDS Medical Consultants (MC) in the DDSs so that 
they can continue to provide medical ratings and continued to provide 
the necessary ongoing medical training to adjudicator staff, assist 
with medical/public relations, work with medical source recruitment, 
and provide medical consultant training. We propose an electronic model 
to pool and share DDS and other trained disability medical experts. 
Currently, the process requires all of the DDS MCs as well as the SSA 
Regional Office MCs to process the disability workload.
    Early information has demonstrated increased task time in reviewing 
the medical evidence on-line and preparing the electronic medical 
ratings that are required in the eDib process. However, it is hoped 
that some of this will be offset by the ``end-to-end'' time required of 
the total disability process. The benefits gained by having the ability 
to share these resources in an expanded electronic pool will further 
add consistency to medical ratings. To further enhance consistency, we 
propose these medical experts provide medical ratings to all 
components: DDSs, Reviewing Officials, and Administrative Law Judges 
(ALJs). Currently, resources are expended with the purchase of 
consultative examinations and medical source opinions requested by 
ALJs. We recommend making trained disability MCs available to ALJs who 
will provide medical ratings. This will ensure the consistency of 
medical evaluations and provide the best usage of the Agency's 
resources.
    We believe that leaving these MCs in the DDS can maximize the 
efficiencies, accountability, and productivity of this staff. By 
placing cases for these MCs in an electronic queue, SSA gains the added 
benefit of ensuring consistency and of providing specialists to those 
areas where currently there is none. DDSs support this opportunity for 
expanded MC specialists availablility across the nation and to all 
compontents.

Service Delivery Expert Proposal

    DDS Directors strongly support an enhanced role for experienced 
Disability Examiners (DE) in the decision making process. While we 
support an expanded Quick Decisions process, we maintain that this is 
just one area whereby a highly skilled and experienced DE should be 
able to recommend disability decisions. NCDDD recommends a triage 
decision making process whereby experienced DEs are able to make 
decisions on those obvious allowances and denials. This reserves 
valuable agency resources and MC time to be devoted to those more 
complex medical decisions. We believe that this is an integral step in 
the process ensuring that the trained medical resources are best 
utilized at the appropriate steps in the process.
    Currently, using a test model, there are DDSs who utilize a similar 
model which has demonstrated efficient, cost effective, and quality 
decisions on those cases. We are requesting that the remaining DDSs be 
allowed to participate in this process. We will work with SSA to 
develop and maintain the training to ensure quality and consistency in 
this area.

Elimination of Reconsideration and Creation of Reviewing Official

    NCDDD supports the elimination of the Reconsideration step as it 
currently exists.
    While the Commissioner's plan calls for a federal Reviewing 
Official position as the first level of appeal, NCDDD proposes that 
this function could be achieved by a state Reviewing Official that 
would perform an on-the-record review of the file, give an expanded 
explanation of the reasoning for a denial, process expedited decisions 
in allowance claims, and provide feedback to the quality component for 
purposes of policy and decisional accuracy. While the Commissioner's 
proposed plan calls for an attorney to handle this appeals step, we 
propose that experienced DDS staff with the appropriate skill-sets can 
also be effectively employed to achieve this goal. For example, the DDS 
Disability Hearing Officers currently conduct evidentiary hearings that 
have received very good feedback from various components, including 
OHA.
    The DDSs have long been under-resourced in terms of providing an 
expanded rationale. However, previous tests demonstrated effectiveness 
in this area. The DDSs support the expanded rationale but would also 
need the necessary resources to implement this. We believe that there 
is already a structure in place at the state DDS level that can address 
this appeal level within the parameters outlined above and we are very 
concerned about adding another administrative layer and the increased 
cost associated with this. The state model for appeals saves over $21 
million in administrative costs for SSA.

Vocational Specialists

    NCDDD supports the use of Vocational Specialists (VS) throughout 
the disability process. We propose the following process across all 
components:

      Updated vocational policy
      Vocational training for all adjudicators and VSs for all 
components
      Develop a curriculum and training plan for VSs
      VS certification by SSA
      Identification of VS in all components available for 
consultation
      Electronic queue of VS via the electronic process

    The current model is lacking since SSA has not devoted the 
resources to a comprehensive vocational training package such as the 
basic training model available for DEs. This has been left up to the 
various DDSs to develop their own vocational training packages, leading 
to variations among DDSs in this area. There are even greater 
differences between DDSs and ALJs in regard to Vocational Specialist 
training, causing inconsistency between components. We advocate a 
consistent training module for all VSs and that this staff should be 
utilized consistently among DDSs and across all components via the eDib 
process. NCDDD will work with SSA to develop a Vocational Specialist 
training curriculum. We believe this would ensure consistency within 
and across components. While this expanded vocational training would 
require resources, we believe that overall administrative costs can be 
curtailed as all components use the same vocational criteria. As 
vocational evidence and analysis is consistently applied earlier in the 
process, the agency will realize consistency in case processing as well 
as administrative cost savings.

Demonstration Projects

    NCDDD supports the various ``return to work'' initiatives endorsed 
by a new disability plan and we welcome the opportunity to participate 
in demonstration projects of this nature. Since these demonstration 
projects do not require the electronic infrastructure for 
implementation, we recommend that SSA begin this process immediately. 
We support the notion of early intervention in this area and believe 
that such efforts are not only cost-effective but also serve as a 
social/psychological boost to potential disability applicants involved 
in the process. We support the added resources needed to fully fund 
such endeavors, since we believe that such outreach would also increase 
disability applications.
    We strongly support the transitional (youth) initiatives and 
believe that public Vocational Rehabilitation should play a major role 
in such efforts. We further support ongoing continuation of medical 
benefits as part of the claimant's rehabilitation process and any other 
changes that would entice disabled individuals to return to work.
    In conclusion, we support the Commissioner's desire to structure a 
disability program that renders the right decisions as early in the 
process as possible and that fosters ``return to work'' at all stages 
in the process. We share Commissioner Barnhart's definition of quality 
and her goal of improved consistency in decision making within and 
across components. We are appreciative of the fact that Commissioner 
Barnhart has solicited input from NCDDD in an active manner. We are 
continuing to provide information to her that will help her to achieve 
her stated goals. We are also appreciative of SSA's recent efforts to 
include NCDDD in active discussions regarding disability policy. The 
DDSs will need the necessary resources to effectively implement these 
changes. It is our understanding that an average DDS cost-per-case is 
$400 as compared to the nearly $2000 cost-per-case at the OHA level, 
making us the best value in the entire SSA disability process. We are 
confident that by working together we can achieve our common goal of 
improved service to current and future disabled Americans.
    Mr. Chairmen, thank you for the opportunity to provide this 
testimony today.

                                 

    Chairman HERGER. Thank you, Ms. Everett. The gentleman from 
Florida, Chairman Shaw, to inquire.
    Chairman SHAW. Thank you. Hal, it has been 24 years since 
you and I first came to Congress. We look a little different. I 
never thought at that time that either one of us would have the 
word ``Chairman'' before our name for anything.
    Mr. DAUB. I enjoyed being your classmate, and I enjoy being 
on this side of the microphone now. It is a pleasure to be with 
you today, thanks. I hope you didn't take too much time to 
calculate that 24-year figure.
    Chairman SHAW. I am pretty quick about that. Hal, looking 
at this, and maybe you are not the right person to direct this 
question to, but do any of the Commissioner's recommendations 
require congressional action to implement them?
    Mr. DAUB. In my view, none of them.
    Chairman SHAW. So, these are all administrative processes? 
So, none?
    Mr. DAUB. That can be done without further authorization. 
My last point in my testimony was the electronic claims 
processing, the eDIB system, as we are referring to is 
fundamental. That has to be in place as the launching pad for 
this to work. Assume that that gets done, then reforming the 
process administratively in generally the way that the 
Commissioner is attempting to suggest would be helpful. It is 
still going to run up against a wall of needing to look at the 
one problem that we have, which is, if you look at the 
inconsistencies between the Americans with Disabilites Act 
(P.L. 101-336) goals, and the definition, the 50-year-old 
statutory definition of ``disability,'' which has never been 
changed, and if you look at the improvements that have been 
made in medications, rehabilitation, and therapy, we have made 
so much progress, and we have a very different workplace, but 
we are still saying to people, you are disabled, you cannot 
work, and if you try to work and have a little dignity and a 
little extra money, you are going to lose your health benefits. 
So, Congress does have, as the next step, a very important 
opportunity to look at the statutory definition, which in turn, 
relates back to this whole idea about whether people get hung 
up for, sometimes, 4 and a half years in this current process 
that is pretty much based on an old definition.
    Chairman SHAW. The appellant process, which the 
Commissioner proposes to shorten by removal of one step, that 
is not in the statute, that is in the regulations?
    Mr. DAUB. The appeals process, everything flows inside of 
the current Commissioner's prerogative.
    Chairman SHAW. That is what I wanted, to have that in the 
record. Ms. Marshall, while NADE supports the Commissioner's 
proposal to replace the reconsideration step of appeals with a 
decision by a RO, you are not convinced that such a step 
improves customer service. How would you change the 
Commissioner's proposal so that it would improve customer 
service?
    Ms. MARSHALL. We are not sure exactly what role the RO is 
going to be taking right now. We do think that having this 
person as an attorney rather than having the current process 
that we have with the State Disability Hearing Officers, would 
make it more adversarial, which would be less customer friendly 
we think. The current system, where we have disability hearing 
officers who are programmatically trained, as well as trained 
in the process, would work, we feel, would be more friendly to 
the claimant, more customer friendly and more effective, and 
because we think that medical input, and attorneys are not, 
necessarily are not trained in the medical aspects of the 
disability program, they would not, the decisions they make 
would be, we think, probably less accurate.
    Chairman SHAW. Ms. Everett, the Commissioner, in her 
testimony, mentioned some of the things that were, in a very 
favorable light, I might say, to the Mississippi office, I 
assume that is your office in Jackson?
    Ms. EVERETT. It is.
    Chairman SHAW. Congratulations.
    Ms. EVERETT. Thank you.
    Chairman SHAW. In your testimony you suggest that having 
State disability determination staff conduct certain disability 
interviews, that was on page 6, and appeals processes, that was 
on page 8 of your testimony, would save about 26 million and 21 
million respectively in administrative costs for the SSA. You 
also suggest the need for additional resources to implement 
such a plan. Could you explain how you arrive at these figures, 
and what level of additional staff and resources that you have 
in mind?
    Ms. EVERETT. We are basing our information on the best data 
that we have. We certainly would welcome any independent review 
and assessment of that by SSA, who would have more access to 
data. We certainly take the opportunity to compare current 
infrastructures already in place in the DDSs, and the current 
infrastructures which would need some additional resources, but 
if you had to create independent Federal components to set up 
both independent units with all the ancillary functions at the 
salary differences between the State and Federal levels is how 
we determined the cost differences there. Of course, we need 
the additional resources primarily if we take on additional 
tasks in addition to keeping up with the additional workload.
    Chairman SHAW. Thank you. Mr. Chairman?
    Chairman HERGER. Thank you. The gentleman from Maryland, 
Mr. Cardin, to inquire.
    Mr. CARDIN. Thank you, Mr. Chairman. In the interest of 
full disclosure, let me acknowledge that I was trained as an 
attorney. I notice some of you are recommending that we change 
some of the requirements here. As I said in the beginning, I am 
concerned about how long it takes to get through the process. 
All of you have expressed the same concern. The Commissioner 
has expressed the same concerns. I also am concerned about the 
independent review and the fact that we try to maintain a 
truth-seeking process rather than an adversarial process.
    With that in mind, I want to concentrate on two of the 
suggestions that have been made by the Commissioner that causes 
me at least to want more information about. The first is that 
the ALJ, if he or she disagrees with the ROs, has to document 
or show the difference as to how he or she reached that 
judgment. I am concerned that that could compromise the de novo 
or independent review by the ALJ if that person has the burden 
to justify a change from the RO.
    The second, and many of you have talked to this, is the 
elimination of the Appeals Council. I have been told by staff 
that the statistics show that about one out of every four 
matters that go through the Appeals Council, there is some 
relief to the claimant. In many cases it is remanded, but there 
is some relief. I am concerned that the District Court is not 
well suited to deal with truth seeking, is more adversarial, 
and it might be more difficult for that type of relief to be 
granted at a District Court level rather than within the agency 
at the Appeals Council. So, I would welcome comment from any of 
our panelists in regards to these two issues, whether they 
share these concerns or can help me in alleviating these 
issues. Dr. Dann?
    Dr. DANN. Thank you. I would like to reply to that. With 
the current DDS statistics of 90 percent accuracy and above, as 
noted by Federal agencies, I am very concerned that after 
typically two runs through the DDS at 90-percent accuracy, the 
case then proceeds on to the ALJ and we have a reversal of the 
DDS decision 61 percent of the time. There currently is no 
critical quality review of ALJ decisions, and I believe that is 
what the Commissioner was getting at by having a panel of 
people to review the ALJ decision. I definitely admire your 
quest for the truth, and I think that is what we are all here 
for.
    I would just note that, unfortunately, having been a 
physician for 24 years now, medicine is not an exact science. 
There is a lot of subjectivity to it, and unfortunately, not 
everybody can assess their own capabilities accurately, in fact 
not even their own physician necessarily assesses their 
capabilities accurately. When I was practicing clinical 
medicine I was my patients' advocate and did whatever I could 
for them. I was not their judge, and so I think that it is very 
important to have a review of what we get from community 
physicians by a physician to make sure that what is being 
stated about a person's capabilities is accurate.
    Mr. CARDIN. Appreciate that. Hal?
    Mr. DAUB. At the Appeals Council, about 2 percent of the 
cases get approved, which is about 1,500 cases out of 77,000 
get approved. I need to go back and look at this point that you 
make that it is one out of four, I haven't looked at it that 
way before, who get relief. I think it proves the point when 
you see the reversal rate, and when you look deeper into that 
reversal rate and you see the great disparity between 
jurisdictions as to how cases are resolved. That reversal rate 
does raise questions of consistency, when you take someone who 
is well trained and has been deciding these cases in DDS for 20 
years with great knowledge, particularly of the larger 
caseload, which is mental impairments. It is not like in the 
old days when it was physical, broken arms and bad backs and 
things of that sort. Now, much more of the caseload is mental 
impairment, that are subjective. You begin to ask yourself how 
do you step back from the existing system and adapt what we 
have, given the constraint of keeping a fair process. Certainly 
we can do better than putting somebody through 5 months to wait 
from point of onset, then 2, 3, or 4 years in a process, 
knowing that if they stay in the system long enough and appeal 
it long enough, with the record never being closed, that they 
are probably going to get a reversal and probably going to get 
their benefits.
    Mr. CARDIN. Understand that first.
    Mr. DAUB. So, the RO then fills a need here to do a couple 
of things I think. This is so, whether they are attorneys or 
not; I happen to think that we will get a better quality of a 
file moved into the ALJ system if they are attorneys. They may 
not have as much medical knowledge, but neither does the judge 
who is going to ultimately look at that case. We have trusted 
the judge to be able to deal with the medical evidence, so we 
can trust the RO to put together a more objective file, and the 
judges will tell you, I think, that one of the biggest problems 
they have is that the cases, when they come on appeal, are not 
complete. So, I think that that is a wise step, and it is worth 
the risk to get an overall better result.
    Mr. CARDIN. That is a good point. I just wanted to 
underscore the ALJ is still the first opportunity independent 
of the agency, and that that is important to maintain that. I 
think you make a good point though that it is important that 
the ALJs have the opportunity to do this objectively, and 
having a good complete file in some orderly way is important as 
long as there isn't additional pressure, because there are some 
who already think the ALJ has pressure from the agency, as long 
as there isn't the pressure for conformity to the agency's 
position more so than to what the ALJ thinks is the 
appropriate,
    Mr. DAUB. We put the judge in a tough position, 
Congressman, to wear the hat of a judge in the hearing, not the 
courtroom but the hearing room, and then also have to assure a 
completeness of the record as if they were sort of adversarial 
to the claimant who is sitting there in the ALJ hearing room. 
It is an awkward situation we put the judge under, in a way, to 
wear two hats like that since it is not adversarial, but 90 
percent now almost I think or 85 percent of all the claimants 
that come, come with an attorney into that hearing room.
    Mr. CARDIN. Thank you. Thank you, Mr. Chairman.
    Chairman HERGER. I thank the gentleman. The gentleman from 
Texas, Mr. Brady, to inquire.
    Mr. BRADY. Well, thank you, Mr. Chairman, and thank you for 
holding this hearing. I apologize that I missed the earlier 
testimony, but I got to look at it last night for a period. 
Throughout all the discussions on making this a better system, 
I continue to hear the complaint that the disability cases and 
the information is not complete early enough in the process, 
and it seems in some way that I keep looking for an incentive 
or some requirement that forces these cases really to be 
complete at every stage, each stage in the process. It seems 
that it is better for the claimant, it is better for you as 
decisionmakers, and my question, a simple layman's questions, 
is what can be done to sort of front-load the completeness and 
accuracy of a claimant's record, both medical, occupational, 
all that? Ideas from the panel?
    Mr. BUFFALOE. If I may start on that since I represent the 
managers and the supervisors in the Social Security field 
offices where the claim is taken. Certainly that has been an 
issue as long as we have had disability claims. Part of the 
problem is we do have two components involved, obviously, but 
field office claims representatives who are responsible for 
initiating the application have no medical training. That is 
part of why my organization feels that on the quick decision 
piece certainly, that with some additional training, rather 
than having that handoff and then starting the process after we 
have handed it off to the DDS, that with some additional 
medical training we could avoid that hand-off in many, maybe 
most, of the quick decision cases, and then only later hand off 
the ones that have to go on for additional review and start the 
normal DDS, ALJ process, but that has been something that has 
been with all of us that deal with the disability programs, the 
fact we initiate the claim, our claims representatives, but 
they don't have the medical training. So, we do the shotgun 
approach. We try to gather information on all possible 
disabilities even though there may be only one or two they have 
that actually may be pertinent to a disability decision. We 
would have to gather everything, and then when the DDS gets 
involved, they can focus in on what are the key things that may 
in fact turn out to be an approval of a decision.
    Mr. BRADY. Isn't one of the roles of the claimant's 
representatives or attorney to create as complete a package as 
early in the process? Yes, ma'am?
    Ms. EVERETT. Sometimes we have competing goals. I mentioned 
that we concur with the Commissioner's definition that quality 
be the combination or the balance between all those components. 
Sometimes the DDS's productivity expectations drive some of 
this. Part of what I reference, I talk about the quality all 
throughout the process. It must begin with the field office. It 
must be consistently applied all throughout is part of the 
problem also. The policy speaks to some of it.
    In the past few years, the policy evolved from a more 
purely medical model to one in which there is more subjectivity 
and functioning in the listings in the policy. Mr. Daub 
referenced the fact that we see more mental claims now. We see 
more allegations of mental claims. Whether or not we see more 
mental patients is another area for discussion, but as you 
evolve this policy from a more purely medical model to one that 
has introduced more functioning, therefore more subjectivity, 
it becomes harder to define what is a complete record. Then of 
course we all recognize that between the time a case is decided 
at the DDS, and the 18 months or 2 years that it is seen by the 
ALJs, it is a different case.
    Mr. BRADY. Sure.
    Ms. EVERETT. So, it is a very complex picture.
    Mr. BRADY. Yes, sir?
    Dr. DANN. Congressman, you have hit one of the nails on the 
head. One of our difficulties in the DDS is obtaining good 
quality evidence, and in a timely manner. Right now, the way 
this is done is requests go out to treating physicians for 
their information. That is completely voluntary, whereas in 
other legal, medical-legal programs, a subpoena goes out and 
the record comes. There is no choice of whether or not to send 
that in. I would ask that at some point the Commissioner and 
Congress consider whether or not the medical records for a 
Federal decision like this might be worth a subpoena to obtain. 
You could certainly get better records faster.
    Mr. BRADY. In real life, what kind of impact would that 
have, timely return of requested medical records?
    Dr. DANN. I can tell you on both sides of the coin. I 
practiced occupational medicine for a long time before I joined 
the DDS, and I can tell you in my very fast-paced clinic that 
when record requests came in for Social Security information, 
we would try to get to them, but they were very low on our 
priority list. There was not a substantial amount of 
reimbursement for those records, and unfortunately, they did 
not always go out when they should have, because of that, I 
think that we really should consider the possibility that these 
records are important legal documents, and that maybe they are 
something worth a subpoena.
    Mr. BRADY. Thank you.
    Mr. DAUB. Congressman, let me comment, just briefly. It 
probably is always going to be a very frustrating process at 
the early stage of intake, but the eDIB process of 
electronically building the input more thoroughly and more 
consistently will help. Then, it will improve even more with 
Secretary Thompson's idea of moving to electronic medical 
records. We are starting to see new forms of communicating. 
Physicians now can dictate and have their audible voice 
actually computer type the report. I have watched this myself 
in some offices. Our independent board goes out twice a year to 
field offices, and I have tried to read through a paper file. 
You have to be a magician to read the handwriting that comes, 
not only in original form, but over the fax. To decipher it, 
you spend hours, for nurses, physicians, and consulting groups, 
to just try to figure out what somebody wrote, even if you get 
the records. So, a lot of the things we have to do are just to 
improve the gathering and the clarity of information. I think 
one of the things the Commissioner is saying is that if we 
spend more time in the beginning on that, then a lot of the 
rest of the process isn't going to be so prolonged and so 
costly.
    Mr. BRADY. If you think the handwriting is bad, wait until 
that software tries to decipher a Texas accent.
    [Laughter.]
    The only other point I would make, Mr. Chairman, is I 
think, one, those are good ideas. Two, I still think there is a 
way, especially, I think it is great, I think it is important 
and vital really that claimants have the ability to have 
representatives or attorneys moving their case through this 
process. I think it is that attorney's and representative's 
responsibility to make that document, an application as 
complete and thorough as early as possible in the process. I 
sometimes hear comments on the opposite side of that where that 
may not be happening. At some point I think we need to explore 
their role, if you are getting paid to advocate and complete, 
then we probably need to require that type of job be done so 
that the other decision makers can hopefully reach a decision 
faster and more accurately. So, thank you, Mr. Chairman.
    Chairman HERGER. I thank the gentleman. His time is 
expired. The gentleman from California, Mr. Becerra, to 
inquire.
    Mr. BECERRA. Thank you, Mr. Chairman. Thank you to all of 
you for your testimony. Let me see if I can focus on just a 
couple of items that were discussed with the Commissioner a 
bit, and perhaps, Chairman Daub, you could help me a little bit 
here because of the recommendations made by the board itself, 
the Advisory board. My understanding is that the board also 
recommended or at least suggested consideration of this idea of 
going straight from the ALJ determination to the District Court 
for review.
    Mr. DAUB. A Social Security Court.
    Mr. BECERRA. A Social Security Court, right, which would be 
a totally new entity within the Federal Court system.
    Mr. DAUB. Maybe very responsive to your concern a moment 
ago.
    Mr. BECERRA. Yes, and I think that could be.
    Mr. DAUB. That takes a statutory change, though. That is 
something you all are going to have to do.
    Mr. BECERRA. Did the Advisory board say where we would get 
the money to establish a fully new court system?
    Mr. DAUB. We think that if you look at the way that happens 
now, if there is time to answer your question?
    Mr. BECERRA. Please.
    Mr. DAUB. You are looking at a huge amount of time and 
resources being absorbed now in this whole process of constant 
appeal over time. With no closing of the record, you just keep 
adding a little to it and it changes, and the medical condition 
changes. So, there is a lot of efficiency that can be added. 
When that case gets to a District Court or to a magistrate 
under the current process, they sort of describe it as a shoe 
box. I have talked to magistrates, and they say they get the 
case and it is in sort of a confused state. Then they look at 
it, and it is not nearly in the shape they want it in, so they 
automatically order a remand of the case. Back it comes up 
through the system, and the lawyer got $2,000 simply for going 
for 5 minutes and saying, ``Let us have a remand.'' Federal 
judges don't want to look at these cases. So, it will go to a 
specialized court.
    Mr. BECERRA. What about trying to streamline the process 
after the ALJ before the District Court, where you have a 
functioning administrative review of the ALJ's decision, in 
essence, the appeal of the ALJ's decision, but handled 
administratively so you do it in-house with the expertise that 
you have without creating an entirely new court system or using 
the Federal Court.
    Mr. DAUB. I would certainly be open to that approach, 
except a lawyer is also going to say there was no lawyer in 
there in that hearing room on the other side of that case to 
start with.
    Mr. BECERRA. I think that trying to avoid the adversarial 
conditions that exist in a District Court or in most of these 
settings to begin with, I think it is always good to try to 
have this be as consumer friendly as possible.
    Mr. DAUB. We agree.
    Mr. BECERRA. No one is trying to deny someone benefits if 
they are entitled to them. What we are trying to do is develop 
the best record, so it seems to me that we almost lose the 
spirit of what we are trying to do in these disability claims 
if we make it too adversarial, because this should not be a 
hostile setting. We are not trying to prove that you are not 
disabled. We are trying to get the best evidence to prove 
whether or not you are entitled to the benefits, and to me, 
again, knowing how the courts work and how bogged down they 
already are, and how expensive they are, especially for a 
claimant to use, it seems to me to jump directly to a court 
level, rather than trying to refine the decisions, I think the 
idea that the Commissioner has of making sure that up front 
decisions are made competently, so that from thereon in you are 
developing a good record is obviously the best approach first. 
I would hope that we would avoid trying to circumvent the 
process or shorten it to try to expedite a final decision, and 
instead, take something to the Federal Court level, where the 
rules are much more rigorous, it will not be consumer friendly 
because there it is a court, so it is naturally adversarial. 
There is where the claimant will lose all touch with any 
humanity that exists in a system where hopefully you are not 
trying to undo a claimant's benefits claim.
    Mr. DAUB. With 5 or 6 million people that are on the 
disabled rolls today, costing the Federal Insurance 
Contributions Act Trust Fund about $100 billion, and when you 
begin then to look to 1 person who spends the agonizing 4 to 4-
and-a-half years in that appeals process today.
    Mr. BECERRA. Absolutely, I don't think anyone.
    Mr. DAUB. So, the cost of the court that we are talking 
about should not be all that.
    Mr. BECERRA. I don't think anybody should go through a 
process that runs, that is why we are here. Let us not try to 
accelerate a process and send them to purgatory at the same 
time that we are telling them we are trying to get them 
benefits. Let me ask one last question, and, gosh, it is always 
the case that you run out of time.
    Chairman HERGER. The gentleman's time has just about 
expired.
    Mr. BECERRA. Chairman, I will just ask this last question. 
The record is closed after the ALJ makes a determination under 
the proposal made by the Commissioner. Right now there are 
certain circumstances under which a record can be, additional 
evidence can be supported for the record even after the ALJ has 
submitted his or her decision. It seems to me that there is a 
good claim that can be made that we should at least have an 
exception, a good cause exception to closing the record.
    A quick example would be you have an individual who has 
Multiple Sclerosis (MS) or claims to have MS, and is therefore 
disabled. At the point that the ALJ makes the determination, 
the determination is, no, that is not enough of a disabling 
condition to stop you from being able to function. Time goes 
by. The appeals process goes by. All of a sudden at this stage 
now the medical determination is that this person is disabled 
as a result of MS, but because the record is closed once the 
ALJ decided, that new evidence can't be considered. It would 
seem to me that any recommendation, they should have some 
latitude for the claimant so that at least good cause, if there 
is good cause, then why reject good evidence from being 
considered?
    Mr. DAUB. That should always be the case, and I think even 
under the Commissioner's proposal that will practically be the 
case because a judge will still have the authority at some 
point to find good cause. The problem is now that even if it is 
past the ALJ and is up at the Appeals Council, they can still 
enter the evidence in. In most cases that ought not to be 
allowed. You will never get finality at any stage of the 
proceeding.
    Mr. BECERRA. Well, that is why you say it has to be good 
cause.
    Mr. DAUB. I think you are correct.
    Chairman HERGER. The gentleman's time has expired.
    Mr. DAUB. I think you make a good point, Congressman.
    Mr. BECERRA. Thank you very much.
    Chairman HERGER. Dr. Dann, if you could please provide us 
with more information regarding your statement that eliminating 
the DDS medical consultant will waste money, encourage fraud, 
delay legitimate allowances, and further burden DDS examiners? 
Also, do you have any suggestions that could be implemented 
right away that would further discourage disability applicants 
from attempting to defraud the system?
    Dr. DANN. Yes. The DDS medical consultant saves money in a 
great number of ways, number one, we frequently are able to 
avoid further development of the case. We basically have enough 
evidence to come to a decision and can avoid a consultative 
exam. Those typically cost $100 to $150 per claimant. We can 
avoid erroneous allowances. An allowance in today's Social 
Security system averages a value of $100,000 to $200,000. 
Unfortunately, allegations and subjective evidence are not 
always the truth, and they do need to be critically assessed. 
There is a large difference to us whether a patient uses a cane 
or needs one. We need to look for objective findings to support 
the subjective allegations, swelling, atrophy, deep tendon 
reflex changes.
    The DDS MC avoids fraud by looking for that type of 
findings in the record and looking for inconsistencies. It is 
not unusual for me to get a statement from a treating physician 
that their patient cannot sit more than 6 hours a day, or not 
even 6 hours a day, and cannot walk or stand 2 hours a day. 
That would make them an automatic allowance by our standards, 
and yet in the same record I find evidence that they live 
alone, keep house, do their grocery shopping and ride a 
bicycle. Unfortunately, exaggeration of symptoms is a part of 
multiple claims every day. That is what I do for a living.
    On continuing disability reviews, it is very important to 
be familiar with the statutes here. There is a medical 
improvement review standard. We are not necessarily reviewing 
how a patient is doing today. We are actually reviewing how 
their condition today compares to when they were allowed. It is 
an important legal principle because we do not want to clutter 
the courts with decisions going back and forth, disabled here, 
not disabled there.
    It turns out, unfortunately, that if a bad decision takes 
place, that decision is perpetuated literally ad infinitum, 
because I have seen cases, I assure you, of patients that had 
normal examinations and were assessed by the DDS as having very 
little impairment, no disability, or maybe even a medium level 
capacity for work, and because of some very compelling 
subjective complaints given to an ALJ, or possibly a note from 
their doctor saying that they can't do these things, the 
decision of the DDS was ignored, and the ALJ allowed the claim. 
Erroneous denials, on the other hand, certainly are not only a 
huge disservice to the disabled individual, but they end up 
costing us a great deal later in reconsideration and OHA 
process. It is important to have a physician looking at the 
record to come up with the true medical assessment. Most 
importantly, we are already in place, and I feel that we have a 
lot of experience and a lot of good skills to offer to the 
system.
    Chairman HERGER. Thank you very much, Dr. Dann. Certainly 
while we want to ensure that those who legitimately are 
deserving of the services, we also by the same token want to 
make sure that those who are not, are not defrauding the system 
and the American taxpayers. Thank you very much. I want to 
thank each Member of this panel for your testimony, and you are 
excused.
    Chairman SHAW. For the final panel this afternoon, we have 
Marty Ford, who is a Co-Chair of the Social Security Task 
Force, Consortium for Citizens with Disabilities (CCD); Thomas 
Sutton, who is Vice President of the National Organization of 
Social Security Claimants' Representatives (NOSSCR) from 
Langhorne, Pennsylvania; James A. Hill, who is President of the 
National Treasury Employees Union (NTEU), Chapter 224, 
Cleveland Heights, Ohio; Laura Zink, who is a member of the 
Federal Managers Association (FMA), Social Security, Chapter 
275, Phoenix, Arizona; and Ronald Bernoski, who is President of 
the Association of ALJs from Milwaukee, Wisconsin. Thank all of 
you for being here with us today. We have your full statement 
which will be made a part of the record, and we would ask you 
to summarize as you see fit. Ms. Ford, we will begin with you.

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

    Ms. FORD. Chairman Shaw, Members of the Subcommittee, thank 
you for this opportunity to testify. Improving the disability 
determination process is critically important for people with 
disabilities, and we applaud Commissioner Barnhart for 
establishing this as a high priority. We also applaud her work 
in making the design process an open one. She has sought the 
comments of all interested parties including beneficiaries and 
consumer advocacy organizations. We believe the resulting 
discussions will have a positive impact on the final proposal. 
We have submitted a detailed written response to the 
Commissioner, and I will highlight our key recommendations 
here.
    We strongly support efforts to reduce unnecessary delays 
and to make the process more efficient so long as changes do 
not affect the fairness of the process to determine entitlement 
to benefits. Emphasis on improving the front end of the process 
is appropriate since changes could substantially improve the 
quality of decisionmaking and possibly reduce the need for 
appeals in some cases. However, any changes to the process must 
be measured against the extent to which they ensure fairness 
and protect the rights of people with disabilities. We have 
made the following major recommendations.
    There should not be a separate appeal from the reviewing 
official to the ALJ level. The record should not be closed 
after the ALJ decision. If the record is closed, there should 
be a good cause exception to submit new and material evidence. 
The claimant's right to request review by the Appeals Council 
should be retained. Any changes considered for the Appeals 
Council should be postponed until SSA determines whether the 
electronic folder and other changes improve the timeliness and 
quality of the work at the Appeals Council stage. The 
independence and quality of medical experts, consultative 
examiners and vocational experts need to be ensured.
    We strongly support efforts to implement the eDIB folder 
since it has great potential for improving the adjudication 
process and is critical to the success of the proposed changes. 
An overarching concern is whether claimants and their 
representatives will have appropriate access to the files. We 
have also urged the SSA to ensure protection of original 
documents by requiring that exact, unalterable electronic 
copies of all originals be permanently maintained in the 
electronic folder.
    The Commissioner's proposal would create a new RO position 
prior to review by the ALJ. We support the RO's ability to 
obtain additional evidence, narrow issues in the claim, and 
issue a fully favorable decision. However, we recommend that 
there not be a separate appeal from the RO level to the ALJ 
level. Further, to guarantee the claimant's right to a de novo 
hearing at the ALJ stage, the RO's decision should not be 
entitled to more weight or a presumption of correctness when 
considered by the ALJ.
    The Commissioner's proposal would close the record to new 
evidence after the ALJ decision. While we strongly support the 
submission of evidence as early as possible, there are many 
legitimate reasons why evidence it not submitted earlier and 
why closing the record could be harmful to claimants, including 
changes in the person's medical condition, and the fact that 
the ability to submit evidence is not always in the claimant's 
or representative's control. We believe that the claimant 
should retain the right to submit new and material evidence 
after the ALJ decision.
    The Commissioner's proposal would eliminate the Appeals 
Council and establish an oversight panel to review decisions by 
ALJs. We believe that the claimant's right to request review by 
the Appeals Council should be retained. The Appeals Council has 
important functions that benefit claimants, such as the ability 
to allow new and material evidence, review of improper ALJ 
dismissals and denials of reopening requests, review of ALJ 
unfair hearing allegations, and review of non-disability 
issues. If the Appeals Council is not retained, we believe that 
its function should be carried out by some other appropriate 
entity within the SSA. We fear that elimination of the Appeals 
Council and its important functions could increase the caseload 
of the Federal Courts. In any event, consideration of 
eliminating the Appeals Council should be postponed because 
proposed changes earlier in the process, combined with the 
electronic folder, may relieve pressure on the Appeals Council. 
Again, thank you for this opportunity to testify, and I am 
happy to answer any questions you may have.
    [The prepared statement of Ms. Ford follows:]
    Statement of Marty Ford, Co-Chair, Social Security Task Force, 
               Consortium for Citizens with Disabilities
    Chairman Shaw, Chairman Herger, Ranking Member Matsui, Ranking 
Member Cardin, and Members of the House Ways and Means Social Security 
Subcommittee and Human Resources Subcommittee, thank you for this 
opportunity to testify regarding the Commissioner's proposal to change 
the disability claims process.
    I am Director of Legal Advocacy for The Arc and UCP Public Policy 
Collaboration, which is a joint effort of The Arc of the United States 
and United Cerebral Palsy. 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 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.
    We applaud Commissioner Barnhart for establishing as a high 
priority her administration's efforts to improve the disability 
determination process. We also applaud her work in making the design 
process an open one. She has sought the comments of all interested 
parties, including beneficiaries and consumer advocacy organizations, 
in response to her initial draft. We believe the resulting discussions 
will have a positive impact on the proposals as they are refined into 
official proposals for rulemaking. We have submitted a written response 
to the Commissioner on her initial draft proposal and I will highlight 
our key recommendations here.
    For people with disabilities, it is critical that SSA improve its 
process for making disability determinations. People with severe 
disabilities who by definition have limited earnings from work often 
are forced to wait years for a final decision. This is damaging not 
only to the individual with a disability and his or her family, but 
also to public perception 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 the steps 
proposed do not affect the fairness of the process to determine a 
claimant's entitlement to benefits. Further, changes at the ``front 
end'' can have a significant beneficial impact on improving the 
backlogs and delays later in the appeals process, by making correct 
disability determinations at the earliest possible point. Emphasis on 
improving the ``front end'' of the process is appropriate and 
warranted, since the vast majority of claims are allowed at the initial 
levels. Any changes to the process must be measured against the extent 
to which they ensure fairness and protect the rights of people with 
disabilities.
    Our comments primarily address the proposed changes at the 
reviewing official and later stages, with the following major 
recommendations:

      There should not be a separate appeal from the Reviewing 
Official to the Administrative Law Judge level.
      The record should not be closed after the ALJ decision.
      If the record is closed, there should be a good cause 
exception to submit new and material evidence.
      The claimant's right to request review by the Appeals 
Council should be retained. Any changes being considered for the 
Appeals Council should be postponed until SSA determines whether, once 
in place, the combination of Ae-DIB, the electronic folder and other 
changes planned for earlier stages of the process improve the 
timeliness and quality of work at the Appeals Council stage.
      The independence and quality of medical experts, 
consultative examiners, and vocational experts needs to be ensured.

    Before addressing these areas, we would like to address our support 
for two other features in the Commissioner's proposal: (1) the 
Electronic Folder: AeDIB and (2) retaining access to judicial review in 
the federal court system.

The Electronic Folder: AeDIB

    We support the Commissioner's efforts to implement technological 
improvements, including the electronic disability process, AeDIB. These 
improvements have great potential for improving the adjudication 
process and are critical to the success of any changes. We believe that 
it will reduce delay caused by moving and handing-off files, allow for 
immediate access by any component of SSA or DDS working on the claim, 
eliminate the problems created when paper files become ``lost'' in the 
system, and allow adjudicators to organize files to suit their 
preference.
    An over-arching concern is how claimants and their representatives 
will have access to the files. We have been told that CDs will be 
burned and provided upon request. To know what is in the record at any 
given point during the process, we believe that optimum meaningful 
access requires secure online access with a ``read-only'' capacity.
    In addition, claimants should not be precluded from presenting 
available evidence in any format. We urge SSA to ensure protection of 
original documents, which are valuable and sometimes irreplaceable 
evidence, by requiring that exact, unalterable electronic copies of all 
originals be permanently maintained in the electronic folder.

Retaining current access to judicial review in the federal court system

    The Commissioner's proposal retains the current process of judicial 
review by the federal courts and does not make any recommendations 
regarding creation of a Social Security Court. However, other 
stakeholders have recommended creation of such a court.
    We support the current system of judicial review and strongly 
oppose creation of a Social Security Court. We believe that both 
individual claimants and the system as a whole benefit from the federal 
courts deciding Social Security cases. Proposals to create either a 
Social Security Court to replace the federal district courts or a 
Social Security Court of Appeals to provide for consideration of 
appeals of all Social Security cases from district courts have been 
considered, and rejected, by Congress and SSA over the past twenty 
years.
    It is important to consider the impact of the Commissioner's 
proposals on the workload of the federal courts. For example, 
elimination of the Appeals Council could dramatically increase the 
number of cases being filed in federal court, as there would be no 
opportunity for a claimant to see review of an ALJ's decision within 
the agency. While neutral on its face, this step would, in all 
likelihood, result in federal district courts urging creation of a new 
court to hear these cases, as a way to reduce their overall caseloads. 
This is another reason why it is so important to move more slowly in 
consideration of the Commissioner's proposal to eliminate the Appeals 
Council.

I. Reviewing Official (RO)

    In general, we support the proposal to create a ``Reviewing 
Official'' (RO) position. The RO has features similar to those employed 
in the Senior Attorney Program in the 1990's: the RO would be a federal 
employee and would be an attorney; the RO should have a level of 
expertise and training similar to the OHA senior staff attorneys; and 
the RO should be able to obtain additional evidence, narrow issues in 
the claim and, if warranted by the evidence in the record, issue a 
fully favorable decision. And, like the rest of the administrative 
process, the RO stage would not be viewed as an adversarial process, a 
position we support. We do, however, have several concerns about this 
stage.

     A Separate Appeal To The ALJ Level Should Not Be Required.

    To create a more streamlined process, we have supported elimination 
of the reconsideration level and adding some type of predecision 
contact with the claimant. We are concerned that, as initially 
proposed, the RO stage will become a replacement for reconsideration 
and, as a result, will not streamline the process. Further, by 
requiring a separate appeal to the ALJ level, many claimants will be 
discouraged from appealing denials and drop out of the process. We 
recommend that one appeal from the initial decision stage should cover 
review by both the RO and the ALJ (if a fully favorable decision on the 
record cannot be issued by the RO).

      The RO Should Issue Only One Type Of Decision In All 
Cases That Are Not Fully Favorable To The Claimant, The ``Pre-Hearing 
Report.''

    We are concerned that issuing more than one type of RO decision 
will be confusing to claimants and could discourage them from pursuing 
an appeal, if a separate appeal to the ALJ is ultimately required. 
While we understand the distinction between the two types of decisions 
outlined in the proposal, we recommend that there should be only one 
title for all decisions, preferably the more neutral and less 
intimidating title, ``pre-hearing report.''

      The RO Decision Should Not Be Accorded A Presumption Of 
Correctness.

    The proposal describes a process where the ALJ must describe in 
detail the basis for rejecting the RO's Recommended Disallowance or 
respond in detail to the RO's description of evidence needed in the 
Pre-Hearing Report. This could build in a bias to deny a claim, because 
it will be easier to issue an unfavorable decision, especially if there 
are administrative demands to reduce processing times.
    To guarantee a claimant's right to a de novo hearing before an ALJ, 
the RO's decision should not be entitled to more weight than other 
evidence in the folder or be given any presumption of correctness. As a 
de novo process and to ensure the ALJ's independence, the ALJ should 
not be required to explain why he or she is not following the RO's 
report. However, in order to provide accountability and to provide a 
record for the next reviewing level, we understand the need for every 
adjudicator to explain the rationale for his or her decision.

II. The Right to a Full and Fair Hearing Before an ALJ

    A claimant's right to a hearing before an ALJ is central to the 
fairness of the adjudication process. This is the right to a full and 
fair administrative hearing by an independent decision maker who 
provides impartial fact-finding and adjudication. As described above, 
in order to guarantee a claimant's right to a de novo hearing before an 
ALJ, the RO's decision should not be entitled to more weight than other 
evidence in the folder.Since there is a need to avoid a built-in bias 
for denial (by making it easier for ALJs to adopt the RO decision than 
to issue a different decision), the ALJ should not be required to 
respond in more detail than required by the current regulations.

III. The Record Should Not Be Closed After the ALJ Decision

      The Claimant Should Retain The Right To Submit New And 
Material Evidence After The ALJ Decision.

    We strongly support the submission of evidence as early as 
possible. 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) the need to keep the process informal; (2) 
changes in the medical condition which forms the basis of the claim; 
and (3) the fact that the ability to submit evidence is not always in 
the claimant's or representative's control. For these reasons, the 
record should not be closed to new and material evidence submitted 
after the hearing decision.

     Keep the process informal

    For decades, Congress, the United States Supreme Court, and SSA 
have recognized that the informality of SSA's process is a critical 
aspect of the program. Closing the record is inconsistent with 
Congress' intent to keep the process informal and with the intent of 
the program itself, which is to correctly determine eligibility for 
claimants, awarding benefits if a person meets the statutory 
requirements.
    The 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 staff should be encouraged to 
work with claimants to obtain necessary evidence and better develop the 
claim earlier in the process. But, to the extent that important and 
relevant evidence becomes available at a later point in the claim, the 
claimant should not be foreclosed from submitting it, since this is not 
an adversarial process but a ``truth-seeking'' process.

     Changes in the medical condition

    Claimants' medical conditions may worsen over time and/or diagnoses 
may change. Claimants undergo new treatment, are hospitalized, or are 
referred to different doctors. Some conditions, such as multiple 
sclerosis, autoimmune disorders or certain mental impairments, may take 
longer to diagnose definitively. The severity of an impairment and the 
limitations it causes may change due to a worsening of the medical 
condition, e.g., what is considered a minor cardiac problem may become 
far more serious after a heart attack is suffered. It also may take 
time to fully understand and document the combined effects of multiple 
impairments. Further, some claimants may be unable to articulate 
accurately their own impairments and limitations, either because they 
are in denial, lack judgment, or simply do not understand their 
disability. By their nature, these claims are not static and a finite 
set of medical evidence does not exist.

      The ability to submit evidence is not always in the 
claimant's or representative'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 penalizes 
claimants for factors beyond their control, including situations where: 
(1) DDS examiners fail to obtain necessary and relevant evidence and do 
not use forms tailored to specific impairments or the SSA disability 
criteria; (2) Neither SSA nor the DDS explains to claimants or 
providers what evidence is important, necessary and relevant for 
adjudication of the claim; (3) Claimants are unable to obtain records 
either due to cost or access restrictions; (4) Reimbursement rates for 
providers are inadequate; and (5) Medical providers delay or refuse to 
submit evidence.
    The current system provides a process to submit new evidence at the 
ALJ hearing and, if certain conditions are met, at later appeals levels 
(see discussion below). So that claimants are not penalized for events 
beyond their control, the opportunity to submit evidence should not be 
eliminated in the name of streamlining the system.
    Filing a new application is not a viable option. Requiring 
claimants to file a new application simply to submit new and material 
evidence 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 Title II 
disability cases, Medicare benefits could be delayed, since eligibility 
begins only after the individual has received Title II disability 
benefits for 24 months; (3) in Title II disability 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 (4) 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 and Congress responded by addressing this serious problem. 
Since legislation enacted in 1990, SSA has been required to include 
clear and specific language in its notices describing the possible 
adverse effect on eligibility to receive payments by choosing to 
reapply in lieu of requesting review.
    Apart from these harsh penalties, 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. While 
AeDIB may make the application procedure more efficient, it also may 
make it more reasonable for SSA to take new evidence at later stages of 
the process.
    Current law already sets limits for submission of new evidence 
after the ALJ decision. 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.'' At the federal district court 
level, the record is closed and the court will not consider new 
evidence. Under the Social Security Act, the court can remand for 
additional evidence to be taken by the Commissioner (not by the court), 
but only if the new evidence is (1) ``new'' and (2) ``material'' and 
(3) there is ``good cause'' for the failure to submit it in the prior 
administrative proceedings.
    We recommend that these rules be retained. In any event, changes 
would require congressional action.

      Recognize ``Good Cause'' Exception For The Post-ALJ 
Decision Submission Of New And Material Evidence.

    While it benefits claimants to submit evidence as soon as possible, 
there are many reasons, as discussed earlier, why they are unable to do 
so and for which they are not at fault. If SSA's rules are changed to 
provide that the record is closed after the ALJ level, there should be 
a good cause exception that allows a claimant to submit new and 
material evidence after the ALJ decision is issued.
    We recommend an approach similar to that which already exists in 
SSA's regulations for extension of time to file an appeal if the 
claimant can show ``good cause'' for missing the deadline. The 
regulations are constructed so that SSA has general discretion in 
making the ``good cause'' determination with several criteria that must 
be considered: the circumstances that led to missing the deadline; 
whether SSA actions were misleading; whether the claimant did not 
understand the requirements; and whether the claimant has any physical, 
mental or linguistic limitations.
    This construct could be adapted to ``good cause'' determinations 
for submitting new evidence. It is important that the regulations do 
not include an exhaustive list of reasons since each case turns on the 
facts presented.

IV.  Retain the Claimant's Right to Request Review of Unfavorable ALJ 
        Decisions

    Under the proposal, the Appeals Council would be eliminated. 
Centralized quality review staff would review a sample of ALJ 
allowances and denials. If the staff disagrees with the ALJ decision, 
the claim would be referred to an Oversight Panel for review. The 
claimant would have no opportunity to request administrative review of 
unfavorable ALJ decisions. The next level of appeal would be to federal 
district court.
    We recommend retention of a claimant's right to administrative 
review of an unfavorable ALJ decision. Because of the important 
functions provided by the Appeals Council (discussed below) and because 
it is at the end of the administrative appeals process, we also 
recommend that any consideration of elimination of the Appeals Council 
be postponed while the changes at the earlier levels of the process are 
implemented. These changes may result in less pressure on the back end 
of the process, making it unnecessary to consider implementing the 
proposed change at this level. As described below, the Appeals Council 
plays an important role in protecting the rights of claimants and 
beneficiaries:

      The Appeals Council Can Provide Efficient Review And 
Effective Relief To Claimants.

    The Appeals Council currently provides relief to over twenty-five 
percent of claimants who request review, either through outright 
reversal or remand back to the ALJ. The Appeals Council has made 
significant improvements in reducing its backlog and processing times. 
When it is able to operate properly and in a timely manner, the Appeals 
Council provides claimants with effective review of ALJ decisions.
    A major basis for remand is not the submission of new evidence, but 
rather legal errors committed by the ALJ, including the failure to 
consider existing evidence according to SSA regulations and policy, the 
failure to apply correct legal standards, and the failure to follow 
procedural requirements. By providing relief in these cases, the 
Appeals Council allows the Commissioner to rectify errors 
administratively, rather than relying on review in the federal courts. 
As recognized by the Judicial Conference of the United States, the 
Appeals Council can act as an effective screen between the ALJ and 
federal court levels and prevent a significant increase in the courts' 
caseloads.
    In addition, the procedure to request review is relatively simple. 
SSA has a one-page form that can be completed and filed in any Social 
Security office, sent by mail or faxed. In contrast, the procedure for 
filing an appeal to federal district court is much more complicated 
and, unless waived, there is a filing fee, which may be cost-
prohibitive for a claimant. Under the current process, there is a large 
drop-off in appeals from the Appeals Council to federal court. As a 
result, having an administrative mechanism to correct injustices is 
essential.

      The Ability To Submit New And Material Evidence

    Claimants can submit new evidence at the Appeals Council level in 
appropriate situations, as described earlier. There is no provision in 
the Commissioner's proposal that would allow submission of new evidence 
after the ALJ decision; therefore, a procedure for addressing such 
circumstances would be lost.
    Asking the ALJ to reopen his or her decision to submit new evidence 
is problematic from a claimant's perspective. First, the claimant needs 
to affirmatively request the reopening which creates another hurdle for 
pro se claimants. Second, a claimant cannot appeal the ALJ's decision 
to deny the request for reopening (see discussion in next section).
    Also, eliminating the right to request review would prevent review 
of situations where the ALJ should have obtained the evidence in the 
first place.

      Review Of Improper ALJ Dismissals And Denials Of 
Reopening Requests

    Current regulations provide that an ALJ can dismiss a request for a 
hearing under certain circumstances, such as: lack of good cause of 
both the claimant and representative for failing to appear at the 
hearing; lack of good cause for failing to request a hearing within the 
60 day time period; and application of res judicata (which precludes 
consideration of an issue because of a prior, final decision on that 
issue). When an ALJ dismisses a hearing request, a notice of dismissal 
must be sent, stating that there is a right to request that the Appeals 
Council vacate the dismissal action.
    Dismissals generally are not subject to judicial review. However, 
by regulation, claimants have the right to request review of ALJ 
dismissals by the Appeals Council. A significant number of appeals to 
the Appeals Council are for inappropriate dismissals and many of these 
claims are remanded. If the right to request review by the Appeals 
Council is eliminated, many claimants will essentially be unable to 
have these improper decisions reviewed. As a result, they would be 
ineligible for benefits, perhaps forever.

      Reviewing Allegations Of Unfair ALJ Hearings.

    The Appeals Council (AC) reviews allegations that a claimant's 
right to a full and fair hearing has been violated. If the allegation 
is supported, the AC will either reverse the denial of benefits or 
remand the case to a different ALJ for a new hearing.
    A recent report by the Government Accountability Office (GAO), SSA 
Disability Decision Making: Additional Steps Needed to Ensure Accuracy 
and Fairness of Decisions at the Hearing Level, GAO-04-14 (Nov. 2003), 
emphasizes the necessity of providing a viable process to review 
allegations that an ALJ hearing was unfair. Eliminating the current 
review mechanism provided by the AC would be a step backwards.

      Review Of Nondisability Issues

    The AC reviews cases that do not involve a claim for disability 
benefits, such as survivors' eligibility. Also, many disability claims 
will have related nondisability claims, e.g., whether the claimant has 
engaged in SGA, overpayments due to earnings. The process must continue 
to accommodate the need for these reviews.

V.  The Proposed Oversight Panel Does Not Provide Fair and Adequate 
        Review of ALJ Decisions

    The Oversight Panel would consist of two ALJs (who will rotate onto 
the panels) and one Administrative Appeals Judge (member of the Appeals 
Council). In addition to the loss of the important functions of the 
Appeals Council, we are concerned that the Oversight Panel (OP), as 
proposed, does not provide fair and adequate review of ALJ decisions.
    We seriously question whether a process in which ALJs review the 
decisions of other ALJs will offer a neutral review of each case. Are 
ALJs likely to reverse another ALJ when their roles might be reversed 
in the future, with the other ALJ now considering the quality of their 
decisions? In addition, we have several concerns about the impact of 
the proposed review process on claimants. How will the claimant know 
that the decision is final or that it is under review? Will the same 
due process safeguards currently provided when the Appeals Council 
intends to reopen a claim be afforded by the Oversight Panel?
    When would the decision be ``final'' for judicial review purposes? 
It seems that a fair amount of confusion will arise to determine 
whether a decision is final for the court's purposes. Given the costs 
involved in filing a court action (and the additional time without 
needed benefits), it would be especially unfair to the claimants to 
eliminate their opportunity to seek review within SSA.
    How will SSA address cases in which it determines that additional 
evidence should have been secured by the ALJ? There is no process for 
remand in the proposal. Would the OP secure the additional evidence and 
make the final decision? As the OPs will be ad hoc panels, basically 
meeting electronically from their offices anywhere in the United 
States, it is difficult to see how that process would permit securing 
additional evidence.
VI.  Maintain The Independence And Ensure The Quality Of Medical 
        Experts, Consultative Examiners, And Vocational Experts

      Changing the role of medical advisors.

    Under the Commissioner's proposals, the medical advisors currently 
located in the state DDSs would be moved to regional medical expert 
units. They would be available to provide advice to DDS staff, 
reviewing officials, and administrative law judges. In clarifying the 
proposal, SSA has indicated that the same medical advisor would not be 
used at the ALJ stage that was used at the DDS or RO level in a case.
    We generally support this approach but have several concerns: 
Advocates in the field have raised questions and concerns about this 
portion of the SSA proposal. These concerns include: By concentrating 
medical expertise in a few locations, will the agency's medical advice 
be too insular? Is it realistic to expect that SSA will be able to 
create the walls between medical experts at the DDS and RO levels and 
those at the ALJ level, especially if they are all located in regional 
units? Will the interactions among experts in the regional offices make 
it less likely that they will feel comfortable disagreeing with or 
second-guessing their colleagues? Will it be more difficult to 
determine whether a medical advisor has the appropriate expertise? Will 
this change create a sealed system of medical expertise that will not 
seek the advice of medical experts in the claimants' own communities? 
Will it be more difficult to ensure that people with multiple 
impairments have their cases reviewed by physicians with the type of 
crosscutting expertise needed to evaluate the combined effect of their 
impairments?

      Improving the quality of consultative examinations

    One important theme in the Commissioner's proposal is the emphasis 
on securing higher quality and more comprehensive evidence earlier in 
the process, preferably at the DDS level. We are very concerned that 
steps be taken to improve the quality of the consultative examination 
(CE) process. There are far too many stories about inappropriate 
referrals, short perfunctory examinations, and examinations conducted 
in languages other than the applicant's. This is wasted money for SSA 
and unhelpful to low-income individuals who do not have complete 
medical records documenting their conditions and who need a high 
quality CE report to help establish their eligibility.
    Another concern is increased use of volume providers for CEs. SSA 
has a long and troubling history of using such examiners. Congress last 
devoted its attention to the problems with use of volume provider CEs 
in the early 1980s. SSA's goal should be to improve the quality of CEs 
used--past experience in these programs shows that using volume 
providers is antithetical to securing high quality examinations. In 
order to secure quality examinations and reports, SSA may need to 
increase its payment for CE examinations. As having quality information 
early in the process should improve the decisionmaking and may shorten 
the process, purchasing higher quality CE examinations would be a cost-
effective investment.
    Another very significant concern is that the regionalization of the 
medical advisors will lead to increased use of volume provider CEs, 
possibly even to national volume provider CE contracts.

      Consideration of vocational evidence earlier in the 
administrative process

    The Commissioner has indicated her intention to better incorporate 
vocational expertise into the DDS stage. A significant number of ALJ 
decisions are based on medical-vocational factors. A certain percentage 
of these cases could be allowed earlier in the process if the medical-
vocational rules were applied properly. Also, it may result in greater 
agreement between DDS and ALJ decisionmaking, as ALJs already generally 
consider vocational evidence and expertise in making their decisions.

Conclusion

    As organizations representing people with disabilities, we strongly 
support efforts to reduce unnecessary delays for claimants and to make 
the process more efficient. However, these changes should not affect 
the fairness of the process to determine a claimant's entitlement to 
benefits. As changes are made to the proposal and as more details 
become available, we look forward to working with SSA to ensure that 
the new process meets the needs of both the agency and people with 
disabilities.
    ON BEHALF OF:
        American Association of People with Disabilities
        American Council of the Blind
        American Foundation for the Blind
        BazelonCenter for Mental Health Law
        Brain Injury Association of America
        National Alliance for the Mentally Ill
        National Association of Councils on Developmental Disabilities
        National Association of Disability Representatives
        National Association of Protection and Advocacy Systems
        NationalLawCenter on Homelessness & Poverty
        National Organization of Social Security Claimants' 
        Representatives
        National Rehabilitation Association
        NISH
        The Arc of the United States
        United Cerebral Palsy
        United Spinal Association

                                 

    Chairman SHAW. Thank you, Ms. Ford. Mr. Sutton?

    STATEMENT OF THOMAS D. SUTTON, VICE PRESIDENT, NATIONAL 
  ORGANIZATION OF SOCIAL SECURITY CLAIMANTS' REPRESENTATIVES, 
                    LANGHORNE, PENNSYLVANIA

    Mr. SUTTON. Thank you, Mr. Chairman, for inviting us to 
testify. I am Thomas Sutton. I am Vice President of the NOSSCR. 
We are over 3,400 attorneys and other advocates representing 
claimants for benefits across the United States before both the 
agency and the Federal Courts. Our written testimony that has 
been submitted for the record conveys our view that the 
Commissioner's goals and many of her proposals are worthwhile. 
We share her goal of reducing the processing time required to 
decide disability claims and will continue to work with her to 
accomplish that goal. At the same time, however, we have very 
serious concerns about some aspects of her proposal, especially 
the plan to eliminate the Appeals Council. I will focus my 
brief remarks entirely on this issue.
    The elimination of the Appeals Council with nothing to 
replace it for claimants seeking review of their cases would be 
virtually certain to create an explosion in the number of cases 
filed in the District Courts. This is obviously a major concern 
to an already over-burdened Federal Judiciary as evidenced by 
this week's letter to your Subcommittees from Judge Stamp, 
which you have already admitted to the record, Mr. Chairman.
    Judge Stamp points out in his letter from the JCUS that in 
the last fiscal year about 77,000 claimants requested review by 
the Appeals Council. Approximately 2 percent of the claims were 
allowed outright and 25 percent were remanded to an ALJ for a 
new hearing. In the same fiscal year 17,000 Social Security 
cases were filed in the U.S. District Courts. To quote Judge 
Stamp, ``This suggests that a substantial number of cases are 
being resolved at the Appeals Council level without claimants 
having to seek judicial review. Therefore, before a decision is 
made on whether to eliminate the Appeals Council, we would hope 
that the new claims process would be adequately tested. It may 
be that substituting Appeals Council consideration with 
judicial review in the Federal Courts would result in more 
costs and further delay for many claimants.''
    We could not agree more with Judge Stamp from JCUS. I can 
personally attest from conversations with judges in the court 
in which I practice most often, that is the U.S. District Court 
for the Eastern District of Pennsylvania, that the judges are 
extremely concerned about the impact that the abolition of the 
Appeals Council would have on their dockets. The numbers cited 
by Judge Stamp provide a stark illustration of the problem we 
have. Using this current reversal and remand rate as a 
benchmark of the Appeals Council is overturning 27 percent. 
This would mean that of the 77,000 cases filed with the Appeals 
Council in the last fiscal year, we would expect over 20,000 
would be reversed or remanded because they were not correctly 
decided by the ALJs. However, under the Commissioner's 
proposal, if because they could no longer request review by the 
Appeals Council, all of those claimants filed suit in the 
courts, as they should because the Commissioner erroneously 
decided their claims, we know that, the Social Security 
caseload of the courts would more than double. It is currently 
about 17,000 cases. That would add another 20,000 or so cases.
    However, the situation is actually worse than that. Under 
current regulations the vast majority of claimants who are 
denied by the Appeals Council accept the outcome and do not 
file suit. However, if claimants know that over a quarter of 
the cases denied by ALJs would have been overturned by the 
Appeals Council if it still existed, they will obviously be 
more inclined to file suit in hopes that theirs are among the 
27 percent which the Commissioner would agree have merit. As a 
result of that effect, the actual impact of Appeals Council 
elimination could easily be a tripling of the number of cases 
filed in the courts. This would obviously be an unacceptable 
outcome for both the courts and claimants, as the backlogs 
which have plagued the SSA would simply be shifted to the 
District Court.
    The Appeals Council backlog has been a major problem, as 
this Committee well knows, for us and our clients. Under the 
Commissioner's leadership the backlog has greatly declined over 
the last couple of years. At this point the average wait to a 
decision is about 8 months, which is still too long for us, but 
is certainly a vast improvement. Moreover, we are getting 
decisions from the Appeals Council on cases that should be made 
by the agency and should not have to go to the courts.
    I want to give you just a few examples from my own firm's 
case files. Miss M was a young woman with a bright future until 
she suffered a catastrophic head injury. She was granted 
disability benefits immediately, but was later terminated in a 
decision she did not understand how to appeal. After several 
appeals, the Appeals Council acted earlier this year to 
reinstate her benefits retroactive to the date she was 
terminated, based on their rulings protecting claimants who are 
mentally unable to pursue their appeal rights. Had the Appeals 
Council not acted, Miss M would have been forced to appeal 
again to a Federal Court, which almost certainly would have 
remanded her case to an ALJ again, resulting in even more delay 
in her ability to receive the benefits that never should have 
been cut off in the first place.
    In another case, Mr. H was denied benefits by an ALJ 
despite his documented mental retardation. After the Appeals 
Council received new evidence showing that he had also had a 
foot amputated due to severe diabetes, it awarded benefits to 
Mr. H outright, it didn't remand for a new hearing, just 
awarded him. Had the record been closed to new evidence at the 
time of the ALJ decision, a new application, which is all Mr. H 
could have done, if successful, would have resulted in a loss 
of 5 years worth of retroactive benefits for Mr. H who was 
disabled all along. These are just a couple of examples, Mr. 
Chairman. As these cases illustrate, the Appeals Council has 
played an essential role in providing relief to claimants, by 
considering new evidence, by obtaining their own medical expert 
opinions and resolving cases that did not need to be filed in 
the Federal Courts, thus saving time and expense for claimants.
    On their behalf, we urge the Commissioner to reconsider her 
proposal to abolish the Appeals Council, or at the very least, 
to retain the right of claimants to request review of ALJ 
decisions by some component of the SSA, the review panels that 
she has spoken of, for example, without having to file suit in 
Federal Court. Without such appeal rights, the Federal Courts 
will be inundated with disability cases which could and should 
have been resolved by the agency. Thank you.
    [The prepared statement of Mr. Sutton follows:]
Statement of Thomas D. Sutton, Vice President, National Organization of 
  Social Security Claimants' Representatives, Langhorne, Pennsylvania
    Chairman Shaw, Chairman Herger, Ranking Member Matsui, Ranking 
Member Cardin, and the Members of the Social Security and Human 
Resources Subcommittees, thank you for inviting NOSSCR to testify at 
today's hearing on the Commissioner's proposal to improve the 
disability claims process. My name is Thomas D. Sutton and I am the 
vice-president of the National Organization of Social Security 
Claimants' Representatives (NOSSCR).
    Founded in 1979, NOSSCR is a professional association of attorneys 
and other advocates who represent individuals seeking Social Security 
disability or Supplemental Security Income (SSI) benefits. NOSSCR 
members represent these individuals with disabilities in legal 
proceedings before the Social Security Administration and in federal 
court. NOSSCR is a national organization with a current membership of 
3,400 members from the private and public sectors and is committed to 
the highest quality legal representation for claimants.
    I currently am an attorney in a small law firm in the Philadelphia, 
PA area. Adding to my experience in legal services programs, I have 
represented claimants in Social Security and SSI disability claims for 
the past 18 years. While I represent claimants from the initial 
application through the Federal court appellate process, the majority 
of my cases are hearings before Social Security Administrative Law 
Judges and appeals to the Social Security Administration's Appeals 
Council. This also is true for most NOSSCR members. In addition, I 
represent claimants in federal district court and in the circuit courts 
of appeals.
    We agree with the Commissioner that reducing the backlog and 
processing time must be a high priority and we urge commitment of 
resources and personnel to reduce delays and make the process work 
better for the public. We strongly support changes to the process so 
long as they do not affect the fairness of the process to determine a 
claimant's entitlement to benefits.
    NOSSCR is a member of the Consortium for Citizens with Disabilities 
Social Security Task Force and we endorse the testimony presented today 
by Marty Ford on behalf of the Task Force. Specifically, we support 
CCD's major recommendations in response to the Commissioner's proposal:

     There should not be a separate appeal from the Reviewing 
Official to the Administrative Law Judge level.
     The record should not be closed after the ALJ decision.
     If the record is closed, there should be a good cause 
exception to submit new and material evidence.
     The claimant's right to request review by the Appeals 
Council should be retained.
     Any changes being considered for the Appeals Council 
should be postponed until SSA determines whether, once in place, the 
combination of Ae-DIB, the electronic folder and other changes planned 
for earlier stages of the process improve the timeliness and quality of 
work at the Appeals Council stage.
     The independence and quality of medical experts, 
consultative examiners, and vocational experts needs to be ensured.

    My testimony today will focus on two provisions of the 
Commissioner's proposal: (1) closing the record after the ALJ decision; 
and (2) eliminating the Appeals Council. Like CCD, we believe that the 
record should remain open and that claimant-initiated review by the 
Appeals Council should be retained.
    Before addressing these two issues, I would like to state our full 
support for several provisions in the Commissioner's proposal.

      A de novo hearing before an ALJ is retained.

    A claimant's right to file a request for hearing before an 
Administrative Law Judge (ALJ), which is central to the fairness of the 
adjudication process, will continue under the Commissioner's proposal. 
This right affords the claimant with 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. 
The ALJ asks questions and takes testimony from the claimant, may 
develop evidence when necessary, considers and weighs the medical 
evidence, evaluates the vocational factors, all in accordance with the 
statute, agency policy including Social Security Rulings and 
Acquiescence Rulings, and circuit case law. 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.

      The process will remain nonadversarial and SSA will not 
be represented at the ALJ level.

    We support the Commissioner's decision to retain a nonadversarial 
process. This will keep the disability determination process informal 
and focused on the intent of the program itself, which is to correctly 
determine eligibility for claimants. Past experience, based on a failed 
project in the 1980's, demonstrated that government representation at 
the hearing level led to extensive delays and made hearings 
inappropriately adversarial, formal, and technical. Based on the 
intended goals of better decision-making and reducing delays, the pilot 
project was an utter failure. In addition, the financial costs could be 
very high. Given the past experience and the high costs, we believe 
that the limited dollars available to SSA could be put to better use by 
assuring adequate staffing and developing better procedures to obtain 
evidence.

      Review in the federal court system is retained.

    We support 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 
properly 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 actions.
    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 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 
by helping to establish the standards for termination of disability 
benefits, denial of benefits to persons with mental impairments, rules 
for the weight to give medical evidence, and 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 court precedents 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 new courts, if created, would 
involve new expenditures. We believe that with limited resources, 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.
    We share concerns about the growth in the number of civil actions 
filed in federal court. We believe that there are ways to lessen the 
workload impact on SSA and the courts, and that in many cases, 
claimants should not be required to appeal to the court level to obtain 
relief. We also believe that the technological improvements discussed 
later in my testimony will help to alleviate this problem.
    We are ready to work with SSA and the courts to find ways to make 
the court process more efficient for all parties involved.

THE RECORD SHOULD REMAIN OPEN FOR NEW EVIDENCE AFTER THE ALJ DECISION

    The Commissioner's proposal would close the record to new evidence 
after the ALJ decision. In the past, similar proposals to close the 
record have been rejected by both SSA and Congress because they are 
neither beneficial to claimants nor administratively efficient for the 
agency. We recommend retention of the current process for submission of 
new evidence.
    NOSSCR strongly supports the submission of evidence as early as 
possible, since it means that a correct decision can be made at the 
earliest point possible. However, there are many legitimate reasons why 
evidence is not submitted earlier and thus why closing the record will 
not help claimants, including: (1) worsening or clarified diagnosis of 
the medical condition which forms the basis of the claim; (2) factors 
outside the claimant's control, such as medical provider delay in 
sending evidence; and (3) the need to keep the process informal.
    Under current law, new evidence can be submitted to an ALJ and it 
must be considered in reaching a decision. Contrary to assertions by 
some that there is an unlimited ability to submit new evidence through 
the court levels, the current regulations and statute are very specific 
in limiting that ability 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\ While the Appeals Council remands about one-fourth 
of the appeals filed by claimants, it is important to note that the 
reason for most remands is not the submission of new evidence, but 
rather legal errors committed by the ALJ, including the failure to 
consider existing evidence according to SSA regulations and policy and 
the failure to apply the correct legal standards.
---------------------------------------------------------------------------
    \1\ 20 C.F.R. Sec. Sec. 404.970(b) and 416.1470(b).
---------------------------------------------------------------------------
    At the federal district court level, the record is closed and the 
court will not consider new evidence. Under the Social Security Act, 
the court is only allowed to remand under specified circumstances.\2\ 
The Act provides for two types of remands:
---------------------------------------------------------------------------
    \2\ 42 U.S.C. Sec. 405(g).

    1.  Under ``sentence 4'' of 42 U.S.C.Sec. 405(g), the court has 
authority to ``affirm, modify, or reverse'' the Commissioner's 
decision, with or without remanding the case; and
    2.  Under ``sentence 6,'' the court can remand (a) for further 
action by the Commissioner where ``good cause'' is shown, but only 
before the agency files an Answer to the claimant's Complaint; or (b) 
at any time, for additional evidence to be taken by the Commissioner 
(not by the court), but only if the new evidence is (i) ``new'' and 
(ii) ``material'' and (iii) there is ``good cause'' for the failure to 
submit it in the prior administrative proceedings.

    Because courts hold claimants to the stringent standard in the Act, 
remands occur very infrequently under the second part of ``sentence 6'' 
for consideration of new evidence submitted by the claimant. The vast 
majority of court remands are not based on new evidence, but are 
ordered under ``sentence 4,'' generally due to legal errors committed 
by the ALJ.
    Several examples from cases handled by NOSSCR members emphasize the 
importance of new evidence obtained after the ALJ decision. These 
examples demonstrate that the ability to submit new evidence and have 
it considered is beneficial to the claimant and the agency:

      The Appeals Council awarded benefits based on new 
evidence related to the claimant's multiple sclerosis. The new evidence 
consisted of a four page Multiple Sclerosis Questionnaire from the 
treating physician and a medical journal article.
      The Appeals Council affirmed the allowance in a 
subsequent application filed in 2000 and found that the claimant also 
met the disability criteria for mental retardation in a prior 
application. The Appeals Council considered and admitted new evidence 
submitted by the claimant's attorney, and obtained a medical opinion 
from a staff consultant who agreed with the finding of disability.
      The Appeals Council awarded benefits to a claimant with 
bipolar disorder. His condition had deteriorated after receiving the 
ALJ denial. He became more depressed and his judgment and insight 
lapsed. He rationalized that since the ALJ found him able to work, he 
must not be mentally ill or need his medications. He had another 
psychotic break that progressed from disposing of a recent inheritance 
impulsively to engaging in some dangerous behavior and he eventually 
was involuntarily hospitalized.
    ``Good cause'' exception. If the Commissioner decides to close the 
record, there should be a ``good cause'' exception that allows a 
claimant to submit new and material evidence after the ALJ decision is 
issued. The statutory provision for sentence 6 court remands could be 
adopted. The ``good cause'' exception for district court ``sentence 
six'' remands for new and material evidence is well-developed. A review 
of published court decisions shows a wide variety of reasons why 
evidence was not submitted prior to the court level, including:

      Medical evidence was not available at the time of the 
hearing.
      The claimant was unrepresented at the hearing and the ALJ 
did not obtain the evidence.
      Medical evidence was requested but the medical provider 
delayed or refused to submit evidence earlier.
      The claimant underwent new treatment, hospitalization, or 
evaluation.
      The impairment was finally and definitively diagnosed. 
The claimant's medical condition deteriorated.
      Evidence was thought to be lost and then was found.
      The claimant's limited mental capacity prevented him from 
being able to determine which evidence was relevant to his claim.
      The existence of the evidence was discovered after the 
proceedings.
      The claimant was unrepresented at the hearing and lacked 
the funds to obtain the evidence.

CLAIMANT-INITIATED REVIEW BY THE APPEALS COUNCIL SHOULD BE RETAINED

    The Appeals Council, when it is able to operate properly and in a 
timely manner, provides claimants with effective review of ALJ 
decisions. The Appeals Council currently provides relief to nearly one-
fourth of claimants who request review of ALJ denials, either through 
outright reversal or remand back to the ALJ. The Appeals Council has 
made significant improvements in reducing processing times and its 
backlog. The Commissioner has recently testified that in November 2003, 
the average processing time was 252 days, down from 467 days in 
November 2001.
    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.'' \3\ The 
Judicial Conference also recognized the Appeals Council's role as a 
screen between the ALJ and federal court levels, noting that 
``[c]laimants 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:
---------------------------------------------------------------------------
    \3\ 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.
    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.
    The CCD testimony has outlined a number of reasons why it is 
important to retain the important functions of the Appeals Council that 
benefit claimants such as: the ability to submit new and material 
evidence; review of improper ALJ dismissals and denials of reopening 
requests; review of ALJ unfair hearing allegations; and review of 
nondisability issues. Cases handled by NOSSCR members demonstrate the 
critical role of the Appeals Council in providing fair and effective 
administrative review of ALJ decisions:

     Substantive review of claim

          The Appeals Council awarded benefits to a claimant 
        with a diagnosis of bipolar disorder with depression. The 
        treating physician noted that medications were only partially 
        effective and that the claimant had not been able to cope with 
        normal stress.
          The Appeals Council awarded SSI benefits under 
        Listing 12.04, relying on their medical consultant's report 
        that the claimant had bipolar disorder of lifelong duration 
        with an overlapping diagnosis of Post Traumatic Stress 
        Disorder. Evidence indicated significant limitations.
          The Appeals Council remanded because the ALJ erred in 
        finding that the claimant had no ``severe'' mental impairment. 
        The treating source evidence showed that the claimant had post-
        traumatic headaches and was incapable of even low stress jobs 
        due to symptoms of visual disturbances, mood changes and 
        hallucinations.
          The Appeals Council remanded, finding that the 
        claimant's work as a data entry clerk more than 15 years 
        earlier was not past relevant work. Further, although the 
        vocational expert (VE) testified that there were transferable 
        skills that the claimant had learned from vocationally relevant 
        work, the VE did not mention the specific skills. Given her 
        mental residual functional capacity, the claimant would not be 
        able to perform the jobs identified by the VE.

      ALJ bias

          The Appeals Council reversed, finding that the ALJ 
        was biased and demonstrated prejudice by statements made 
        throughout the hearing, including inappropriate use of words 
        and phrases regarding the claimant's weight and evidence from 
        the treating physician.
          The Appeals Council reversed an ALJ denial in an SSI 
        childhood disability claim. The Appeals Council found that the 
        ALJ was biased, noting that ``certain lines of questioning 
        directed at the claimant's mother during the hearing were 
        inappropriate and lacked objectivity.''
          The Appeals Council remanded the case to a different 
        ALJ, finding that the claimant was denied a full and fair 
        hearing because the ALJ was abusive.

      Review of hearing dismissals

          The Appeals Council found good cause for the claimant 
        and her representative's failure to attend the hearing, and 
        remanded for a new ALJ hearing. The ALJ had dismissed the first 
        hearing request. The claimant had moved to a different state 
        before the hearing and had asked to have the claim transferred. 
        She was unaware the hearing had been dismissed, which was 
        supported by the notice of hearing being returned by the post 
        office as ``address unknown.''
          The Appeals Council found good cause based on the 
        dislocation in the claimant's affairs caused by her 
        hospitalizations, and based on the prompt action by her 
        attorney in faxing the appeal.

    The ALJ erroneously used the date that the request for hearing 
arrived at the district office as the date of appeal, and dismissed the 
appeal as filed one day late. The ALJ made no attempt to contact the 
claimant or her representative about submitting evidence of good cause 
or timely filing. The claimant's attorney showed that the request was 
timely faxed and that the claimant was psychiatrically hospitalized.

      Review of other procedural issues

          Post-hearing evidence

            The Appeals Council remanded because the ALJ failed 
        to consider the claimant's request for a supplemental hearing 
        and failed to rule on the claimant's objections to post-hearing 
        interrogatories to the VE as required by agency policy.
            The Appeals Council remanded because the ALJ 
        obtained additional medical evidence after the hearing and did 
        not proffer the evidence to the claimant's representative for 
        review and comments as required by agency policy.
            The Appeals Council remanded because the ALJ failed 
        to submit material to the claimant or representative for a 
        post-hearing, pre-decision review and comment according to 
        agency policy, and also for his inadequate explanation for 
        rejecting the treating physician's opinion.

          Right to appoint legal representative

            The Appeals Council remanded after finding that a 
        minor in state foster care had the right to appoint a legal 
        representative to pursue an appeal of a disability cessation 
        and overpayment determination. The ALJ had determined that the 
        minor had no right to a hearing because she was in the legal 
        custody of the state and the state had not signed the appeal 
        form. The Appeals Council found that the minor had properly 
        appointed a legal representative who properly had filed a 
        hearing request. Further, good cause had been shown for filing 
        an untimely appeal (the State/Guardian had not appealed a 1998 
        disability cessation) because the minor was not notified of the 
        initial cessation and overpayment determinations. On remand, 
        the ALJ ruled that the minor's disability continued and the 
        overpayment from the cessation was eliminated.

          Reopening

            The Appeals Council remanded, finding that the ALJ 
        did not provide adequate notice in the Notice of Hearing that, 
        as required by regulations, he intended to reopen the favorable 
        portion of a partially favorable DDS decision. An ALJ may 
        consider new issues, but only after proper notice.
            The Appeals Council decision found that a 
        subsequent application, filed just 2 months after the initial 
        determination on the prior claim, constituted an implied 
        request for reopening. A prior final determination may be 
        reopened for any reason within 12 months of the date of the 
        notice of the initial determination.

OTHER ISSUES

A. Provide SSA With Adequate Resources To Meet Current And Future Needs

    To reduce delays, better develop cases and implement technological 
advances, SSA requires adequate staffing and resources. We urge 
commitment of sufficient resources and personnel to resolve the waiting 
times and make the process work better for the benefit of the public. 
To this end, NOSSCR supports removing SSA's administrative budget, like 
its program budget, from the discretionary domestic spending caps.

B. Technological Improvements

    Commissioner Barnhart has announced major technological initiatives 
to improve the disability claims process. NOSSCR generally supports 
these initiatives because they have the potential of dramatically 
reducing processing times for disability claims.

     The Electronic Folder

    In several states, SSA has begun to process some disability claims 
electronically. Evidence from medical sources, including consultative 
examinations, is received either in electronic form or in paper form, 
which is then scanned and turned into an electronic document. The 
project is enormous in scope and ambitious in both design and 
implementation. This initiative has the prospect of significantly 
reducing delays by eliminating lost files, reducing the time that files 
spend in transit, and preventing misfiled evidence.
    We want to thank the Commissioner for her inclusive process to seek 
comments about these changes, which will help to ensure that claimants 
benefit from these important improvements. Several NOSSCR members 
recently were invited to an Office of Hearings and Appeals in 
Mississippi, the first state to implement the electronic folder and 
eDIB, for an explanation and demonstration. Our members reported back 
that they had a very productive meeting and we appreciate this valuable 
opportunity to provide input.
    Several of our concerns regarding eDIB have been answered through 
these meetings. First, advocates can continue to submit evidence that 
is on paper. It will then be scanned into the system by SSA. Advocates 
also can choose to submit evidence by email.
    Second, advocates can continue to request copies of the file. SSA 
will ``burn'' a CD and send that to the appointed representative and to 
unrepresented claimants as well. Representatives can then print out the 
file or view it on their own computers. In addition, at some point in 
the future, SSA plans to set up a special, secure website for the use 
of appointed representatives. With their assigned identification 
numbers, they will be able to go online to see the contents of their 
clients' folders.

     Video teleconferencing

    The Commissioner has announced her plan to expand the use of video 
teleconferencing (VTC) for ALJ hearings. The initiative has the 
potential to reduce processing times and increase productivity.
    Where available, ALJs can conduct hearings without being at the 
same location as the claimant and representative or the medical or 
vocational experts. In general, we support 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.
    NOSSCR members who have participated in VTC hearings have reported 
a mixed experience, depending on the travel benefit for claimants, the 
quality of the equipment used, and the hearing room set-up. Also, some 
have raised concerns that the ALJ's inability to see the claimant in 
person will be disadvantageous.
    We are in the process of surveying our members regarding their 
participation--or nonparticipation--in VTC hearings. To date, the 
surveys we have received indicate that receptivity remains mixed. We 
would be glad to share the results and comments with you and the 
Commissioner when the survey is final.

     Digital recording of hearings

    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 some 
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 for representatives or transfer to the district court as 
part of the administrative record.

CONCLUSION

    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 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.
    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 in meeting the challenges.
    Thank you for this opportunity to testify before the Subcommittees 
on issues of critical importance to claimants. I would be glad to 
answer any questions that you have.

                                 

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

   STATEMENT OF JAMES A. HILL, PRESIDENT, NATIONAL TREASURY 
     EMPLOYEES UNION, CHAPTER 224, CLEVELAND HEIGHTS, OHIO

    Mr. HILL. Good afternoon. My name is James Hill. I have 
been employed as an attorney advisor at the Cleveland OHA for 
over 21 years. I am also the President of Chapter 224 of the 
NTEU that represents attorney advisors and other staff members 
in approximately 110 OHA hearing and regional offices across 
the United States. I thank Chairman Shaw and Chairman Herger 
for inviting me to testify at this hearing. Testifying today is 
a pleasure. I have testified before the Subcommittee on Social 
Security on numerous occasions over the past 10 years. On most 
of those occasions I criticized the SSA for failing to 
effectively deal with the backlog problem at OHA. I do not 
enjoy public criticizing the SSA. The major initiatives 
formerly advanced by the SSA, the disability process redesign 
and hearings process improvement plan were, as I predicted, 
failures.
    The only effective program at reducing the backlog, the 
Senior Attorney Program, which was terminated by HPI, was a 
temporary solution that did not address long-term systemic 
problems. The salient fact is that for the last 10 years the 
Social Security Disability Program has been in crisis. It still 
is, but now for the first time a plan has been advanced that 
addresses its systemic shortcomings and will finally end the 
crisis.
    Perhaps the most important factor in successfully dealing 
with crisis situations is leadership. I believe that the 
leadership provided by the Subcommittee on Social Security, 
particularly its Chairman, Clay Shaw, and Ranking Member Robert 
Matsui, has provided a stable environment in which wide-ranging 
improvements in the process can be instituted. I also note with 
pride the role that my congressional representation, Stephanie 
Tubbs Jones is playing in improving the disability process. Of 
course, the need for dynamic leadership does not end here at 
the Hill. The quality of leadership at the SSA will be a major 
factor in determining whether the agency can meet the 
expectations of the American public. With Commissioner Jo Anne 
Barnhart and her executive staff, the SSA finally has the 
leaders with the vision, the will, the intelligence and the 
courage to solve the long-term disability crisis at the SSA.
    The SSA leaders are confronting a disability adjudication 
system that is fundamentally flawed. It is clear that wide-
ranging systemic changes are necessary. However, these changes 
must address the actual flaws, and not, as in the past, simply 
be the result of philosophical leanings and the bureaucratic 
inclinations of senior SSA officials. To this end, Commissioner 
Barnhart and Deputy Commissioner Martin Gerry, conducted an 
objective review of the entire disability system, resulting in 
a remarkably accurate picture of its strength and weaknesses. I 
believe that for the first time senior SSA officials truly 
understand the deficiencies and strengths of the current 
system. This insight, combined with the Commissioner's 
commitment to create a process which serves the needs of the 
public rather than the dictates of the bureaucracy, has led her 
to propose a plan for implementing fundamental process changes 
that will provide a level of service of which we can all be 
proud.
    The plan is comprehensive and involves extensive changes 
such as the replacement of paper folders with electronic 
folders, the formation of a quick decision process to service 
those with obvious disabilities, the elimination of 
reconsideration determination, the elimination of the Appeals 
Council, a completely revamped process-wide quality assurance 
system, the creation of three-judge panels to review ALJ 
decisions, and the creation of the RO position to provide an 
intermediary step between the State agency and the ALJ. These 
are fundamental changes that address fundamental flaws in the 
current system.
    I am convinced that this plan, if implemented, will result 
in an efficient, effective and most importantly, a fair 
adjudicatory process. The plan advocated by Commissioner 
Barnhart will finally end the disability crisis and provide the 
American public with a level of service it deserves. Of course, 
implementing such a comprehensive plan will require adequate 
funding. I urge the Congress to provide the funding necessary 
to implement this plan as expeditiously as possible. Thank you.
    [The prepared statement of Mr. Hill follows:]
  Statement of James A. Hill, President, National Treasury Employees 
              Union, Chapter 224, Cleveland Heights, Ohio
    My name is James Hill. I have worked as an Attorney-Adviser in the 
Office of Hearings and Appeals for over 21 years. I am also the 
President of Chapter 224 of the National Treasury Employees Union 
(NTEU) that represents Attorney-Advisers and other staff members in 
approximately 110 OHA Hearing and Regional Offices across the United 
States. I thank the Subcommittees for allowing me to testify regarding 
Commissioner Barnhart's proposal to reform the disability determination 
process.

The Backlog at OHA--A Problem Inherited by Commissioner Barnhart

    The current disability backlog problem at OHA is neither recent nor 
unique. Nonetheless, a quick review of the history of the number of 
cases pending at OHA demonstrates that the backlog problem is not 
altogether intractable. The backlog problem in the SSA disability 
program began in the early 1990s. Primarily as a result of increased 
receipts and SSA inaction, cases pending at OHA hearing offices rose 
from approximately 180,000 in 1991 to approximately 550,000 cases 
nationwide by mid-1995. However, by October 1999 the number of cases 
pending was reduced to 311,000. Since 1999, a number of factors 
including the termination of the Senior Attorney Program, increased 
receipts, and the implementation of the disastrous Hearings Process 
Improvement Plan (HPI) have resulted in a record number of cases 
pending. Currently, there are approximately 660,000 cases pending at 
OHA hearing offices and processing times in some hearing offices are 
significantly in excess of one year.







    As discouraging as the increase in cases pending may be, it does 
not fully reflect the harmful effect of the inefficient disability 
process on the public. Average processing time at OHA was approximately 
270 days in 2000; it is currently nearly 400 days. This is an 
unconscionably long wait for a disability decision, and it is causing 
untold harm to some of the most vulnerable members of society. None 
will dispute that the public deserves far better service than SSA is 
presently providing.
    There is no question that the current disability system is 
fundamentally flawed and that wide ranging systemic changes are 
necessary. SSA recognized this as early as 1993 and in response 
proposed the ``Disability Process Redesign'' (DPR), a plan so complex 
and misguided that despite the expenditure of millions of dollars, it 
was never implemented. By 1995 the backlog problem at OHA had become so 
severe SSA empowered its experienced Attorney Advisors to review cases 
and issue fully favorable on-the-record decisions where justified. This 
was known as the Senior Attorney Program. During the period from 1995 
through 1999 Senior Attorneys produced over 220,000 fully favorable on-
the-record decisions with an average processing time of just over 100 
days. It is not a coincidence that during the time the Senior Attorney 
Program was in operation the number of cases pending at OHA hearing 
offices dropped from 550,000 to 311,000.
    The Senior Attorney Program was focused on a specific problem: the 
many cases coming to OHA that could be adjudicated favorably to the 
claimant without the need for an ALJ hearing. It was a small, low cost 
program that addressed a specific operational reality. It did not 
address the systemic problems plaguing the disability adjudication 
process. Nonetheless, the termination of the Senior Attorney Program 
was a bureaucratic blunder.
    SSA's next foray into solving the ``disability crisis'' was the 
disastrous Hearings Process Improvement Plan. Unfortunately, HPI was 
implemented with catastrophic results. SSA Management believed that the 
Hearings Process Improvement Plan (HPI) obviated the need for the 
Senior Attorney Program. Since the advent of HPI the number of cases 
pending in OHA hearing offices has more than doubled. The 
implementation of HPI disrupted nearly every aspect of hearing office 
functioning with predictable results. A persistent lack of vision and 
leadership at SSA resulted in programs such as DPR and HPI that did not 
realistically address the root causes of the problems. Not 
surprisingly, they failed to improve the disability process, and in 
fact, wasted resources while actually harming the adjudicatory process.

The Beginning of a Solution

    At the beginning of her term, Commissioner Barnhart was confronted 
by a discredited disability process with severe structural and 
operational problems at all levels. Commissioner Barnhart and Deputy 
Commissioner Martin Gerry conducted a truly objective review of the 
entire disability system resulting in a remarkably accurate picture of 
its strengths and weaknesses. I believe that for the first time senior 
SSA officials truly understand the deficiencies at each level of the 
current system. This insight combined with the Commissioner's 
commitment to create a process which serves the needs of the public 
rather than the dictates of the bureaucracy, has led her to propose a 
plan for implementing fundamental process changes that will provide a 
level of service of which we all can be proud.
    It is apparent that a considerable amount of research and insight 
went into the process of formulating this plan. The systemic problems 
that have plagued the disability adjudicatory process have been 
identified and politically plausible and operationally sound solutions 
have been advanced. Specifically, problems including the State 
Agencies' inadequate development of the record, their cursory rationale 
for unfavorable determinations, and their chronic failure to award many 
deserving claimants are all addressed and potentially solved through 
the ``Quick Decision Process'', the elimination of the Reconsideration 
Determination, and the creation of the Reviewing Official. Additional 
problems including long delays at the hearing level, the lack of 
adequate development prior to the ALJ hearing, closing the record after 
the ALJ decision, the lack of decisional consistency at the various 
levels of adjudication, the excessive number of voluntary remands from 
the U.S District Courts, and the lack of an effective appellate process 
are also addressed and potentially solved.
    Other mechanisms which will be employed to improve the adjudication 
process are the elimination of regional Disability Quality Bureaus 
(DQBs) and the introduction of an integrated quality control process, 
the placement at the regional level of medical and vocational experts 
who are available to adjudicators at all levels, and the replacement of 
the Appeals Council with three judge review panels.
    Commissioner Barnhart recognizes that the SSA disability 
adjudication system must be a truly integrated system that better 
utilizes the expertise of its various components in the most efficient 
manner. To view or analyze each component individually without 
considering its role in the entire system leads to a distorted view and 
introduces needless inefficiencies. The Commissioner's Approach must be 
viewed in its totality, recognizing the effects changes at one level 
have at the other levels.

Quick Decision--An Excellent Idea

    In order to provide benefits to those who are ``obviously 
disabled'', the Commissioner has proposed ``The Quick Decision 
Process'' It will significantly improve the disability adjudication 
process for those claimants with specified medical conditions that 
normally result in a finding of disability. A Panel of Medical Experts 
that will be located in various regional offices will review those with 
verified medical conditions and quickly determine whether these 
claimants should receive disability benefits. The Commissioner projects 
that approximately 10 % of initial claims can be handled through this 
process. The Quick Decision process will perform a valuable service in 
identifying those ``obviously'' disabled claimants.

The Role of the State Agency

    The disability adjudication process is an integrated process that 
should promote the efficient, accurate, and fair adjudication of 
disability claims. An efficient disability adjudication process must 
recognize that some adjudicatory tasks are better performed by one 
component than by others. The Commissioner has proposed changes that 
will permit State Agencies to focus on fully developing the record thus 
improving the efficiency of the entire process as well as improving 
their own decision making.
    The State Agencies are far better situated to develop the record 
than either the Reviewing Official or the OHA Hearing Office. They have 
the facilities and expertise to efficiency acquire medical evidence. 
The Commissioner's plan recognizes and utilizes this expertise. 
Consequently, primary responsibility for developing the record should 
be placed upon the State Agencies. Securing possession of the medical 
documents necessary to adjudicate a claim is a difficult and at times a 
time-consuming process.
    Accurate adjudication of disability claims requires a relatively 
complete compilation of the record. Decisional consistency is 
significantly enhanced if, at the different levels of adjudication, the 
adjudicators are considering essentially the same record. The 
Commissioner's plan places emphasis on the full development of the 
record at the earliest practicable time--at the State Agency level. The 
elimination of the Reconsideration Determination eases the time 
constraints under which the State Agencies currently operate, and will 
permit more complete development at the initial level. The 
Commissioner's Plan includes feedback mechanisms and in extreme cases, 
a remand process that will combat the lack of a realistic incentive to 
properly develop the record before sending the case to OHA. More 
complete development initially will lessen the necessity of expending 
considerable time and resources developing the record at OHA and permit 
more timely adjudication.
    Better development at the State Agency means better decision making 
at that level, fewer cases being appealed to OHA, and fewer resources 
being expended at the OHA level to develop cases. It also permits both 
the State Agency and OHA to make the right decision as quickly as 
possible.
    The overall efficiency of the adjudication process is enhanced by 
the changes suggested by the Commissioner.
    The Commissioner's Approach will provide the resources for the 
State Agencies to more completely develop a case. The Commissioner has 
promised that the appropriations provided to the State Agencies will 
not be decreased. The State Agencies will receive 10% fewer cases 
because of the Quick Decision Process. This combined with the 
elimination of the Reconsideration Determination will permit more 
resources to be directed toward more completely developing the record.

The Role of the Reviewing Official (RO)

    Perhaps the most innovative initiative contained in the 
Commissioner's approach is the creation of the Reviewing Official (RO), 
a federal attorney with complete adjudicatory authority placed between 
the State Agency and the ALJ. The RO process does more than replace the 
current Reconsideration Phase. The Reconsideration Determination has 
very little credibility with the public or with ALJs because it is 
viewed as a mere rubber stamp of the initial determination. One of the 
recommendations from the Association of Administrative Law Judges, and 
one that we fully support, is that the RO and the ALJ use the same 
standards for adjudication. Past experience with the Senior Attorney 
Program and the current ALJ review of unpulled files demonstrates that 
the application of those standards results in a fully favorable 
decision in approximately 30% of the cases reviewed. The review and 
decision making by the RO will result in many disabled claimants being 
awarded benefits in as little as 30 days rather than subjecting the 
claimant and the Agency to the time and resource consuming activities 
associated with conducting a full ALJ hearing.
    One of the most important aspects of the RO process is to introduce 
an element of credibility that is presently lacking prior to the ALJ 
hearing. Currently, the State Agencies provide almost no rationale for 
their unfavorable determinations which seriously undermines their 
credibility. The Commissioner recognizes that it is essential to the 
success of her Approach that the decisions made by the RO be recognized 
as independent decisions by an individual who has the discretion to 
award or deny benefits as justified by the record. To ensure the 
credibility of the RO decision, it must be a well reasoned, 
comprehensive and literate explanation of why a claimant is or is not 
entitled to disability benefits. To be effective the RO must establish 
its credibility with claimants, the State Agencies, Administrative Law 
Judges and most importantly with the American public. The importance of 
attaining this credibility cannot be overstated.
    The Commissioner's Approach demands that the RO issue an accurate, 
complete, convincing, and legally defensible decision that explains in 
detail the rationale for each finding of fact and conclusion of law. 
This necessitates that the RO have extensive legal and disability 
program knowledge and experience. This requires the legal expertise of 
an attorney to apply the rules, regulations and law to the evidence and 
to make and issue a legally defensible decision. It also demands 
extensive knowledge and experience in evaluating the functional effects 
of medical impairments. Fortunately, SSA already employs personnel with 
the education, training, and experience to decide and draft disability 
decisions necessary to assure the success of the RO process--OHA 
Attorney Advisers. Attorney Advisors have many years of experience in 
deciding and/or drafting disability cases, and with minimal training 
and expense, can effectively perform the functions of the RO from its 
inception.
    Another objective of the Commissioner is to facilitate decisional 
consistency at all decisional levels. The inconsistency of decision-
making between the State Agencies and the ALJs is undeniable. Through 
the Process Unification effort, the agency did take some measures to 
attempt to create a higher level of consistency. Despite some level of 
success, primarily represented by an increase in payment rates by some 
State Agencies, decisional consistency still eludes the Agency.
    The introduction of the RO will significantly improve decisional 
quality as well as consistency through all the levels of adjudication. 
The Commissioner's Approach requires substantial interaction between 
the RO and the State Agencies. If the RO decision is different from 
that of the State Agency, the RO's written decision will explain to the 
State Agency why a different decision was reached. In extreme cases, 
the RO will be able to remand cases to the State Agency. This level of 
communication, both formal and informal, between the RO and State 
Agency will result in improved decision making by both entities and 
promote decisional consistency without adversely affecting the 
claimants.
    The increased level of decisional consistency promoted by the RO 
will result in the reality and perception that the proper decision is 
being made at the lowest possible level. The RO decision will present 
the ALJ and the claimant with a comprehensive explanation of why the 
Agency denied the claim. While it imposes no limitation on the ALJ, it 
does help focus the issues in controversy leading to a more efficient 
hearing process. By providing the claimant with a detailed explanation 
of why his/her application was denied, the RO assist the claimant in 
marshalling evidence needed to establish disability.

The ALJ Hearing

    The Commissioner's approach wisely retains the Administrative Law 
Judge hearing process essentially unchanged. Hearing offices will 
continue to prepare cases for hearing, Administrative Law Judges will 
continue to conduct due process hearings, and the decisional 
independence of the ALJ continues to be protected by the APA. However, 
concern has been expressed about the relationship between the RO and 
the ALJ. The Commissioner has made it clear that the RO decision is not 
entitled to any deference on the part of the ALJ. The Commissioner's 
Plan recognizes that the reality of the de novo hearing must be 
maintained and the freedom of the ALJ to decide cases based upon his/
her evaluation of the evidence and the appropriate law and regulations 
must be preserved.

Elimination of the Appeals Council

    Another bold initiative proposed by the Commissioner is the 
elimination of the Appeals Council and the claimant's right to make an 
administrative appeal of the ALJ decision. While on its surface the 
elimination of the Appeals Council appears to be detrimental to 
claimants, that is not the case. The effect of the elimination of the 
Appeals Council must not be viewed in isolation, but in the context of 
the entire adjudicatory process. Improvements in the decision making 
process at the State Agency level, the introduction of the RO, and the 
quality assurance program proposed by the Commissioner render the 
administrative review of ALJ decisions unnecessary. We believe that 
considering the Commissioner's New Approach in its totality, an 
additional administrative appeal of the ALJ decision is unnecessary.
    As currently constituted the Appeals Council serves two distinct 
purposes. It serves as an appellate body and as a quality assurance 
entity, but performs neither with distinction. This is not intended to 
disparage the hard-working employees at the Appeals Council, but rather 
its basic concept and design. The Commissioner's approach replaces the 
Appeals Council with an end-of-line review by a centralized quality 
control staff and a potential review by a Commissioner's Oversight 
Panel. The Agency, in its effort to improve quality assurance at the 
ALJ level of adjudication, should take care not to repeat its mistakes 
of the early 1980s when it attempted to interfere with ALJ decisional 
independence. In order to avoid the appearance of interference with ALJ 
decisional independence, it is essential that ALJs be intimately 
involved in any quality assurance program.
    There is concern that the lack of a right of administrative appeal 
of the decisions of Administrative Law Judges will result in a 
substantial increase in the caseload of the District Courts. We agree 
that any action that significantly increases the caseload of the 
district courts is unacceptable. However, we believe that the 
assumption that eliminating the Appeals Council will significantly 
increase District Court caseload is unwarranted. While such an 
assumption is sustainable if one considers the elimination of the 
Appeals Council in isolation, it is far less sustainable when one 
considers the whole breadth of the Commissioner's plan. In that light, 
we expect that after a period of adjustment, the increased quality of 
the adjudication system will actually decrease the number of cases 
filed at the District Court. It will certainly significantly decrease 
the number of voluntary remands.
    Currently, the State Agency unfavorable determinations are given 
little credibility due to their nearly complete lack of a comprehensive 
explanation to the claimant and his/her representatives why he/she is 
not entitled to the disability benefits. Consequently, it is commonly 
believed that the first step at which an individual can receive fair 
consideration of his/her application is at the ALJ level. Therefore, 
appeal to the Appeals Council represents the second time that the 
claimant's application receives fair consideration. The lack of 
credibility of the determinations made prior to the ALJ decision 
virtually mandates an additional (second) level of appeal.
    The Commissioner's approach contains an entirely new step, the 
review and decision by the Reviewing Official. As noted earlier, the RO 
will bring a level of credibility far in excess of that of the current 
Reconsideration Determination. The RO will apply the same adjudicatory 
standards as the ALJ. For those cases in which the RO cannot issue a 
decision favorable to the claimant, the Commissioner's Approach 
mandates that the RO prepare a detailed explanation of why the claimant 
is ineligible for benefits. It is essential that the explanation of why 
the claimant is, or is not, entitled to disability benefits be 
thorough, fair and unbiased. The decision of the RO will be the first 
step at which the claimant receives a detailed and credible explanation 
of why he/she is not entitled to disability benefits. Under the 
Commissioner's approach, the ALJ decision will be the second level at 
which a claimant receives a detailed decision from an independent 
decision maker. In as much as the ALJ process involves a de novo 
hearing rather than the appellate review currently performed by the 
Appeals Council, dissatisfied claimants actually have more substantial 
review and greater opportunity to achieve a favorable result than 
provided by the current system. The combination of the RO process and 
the ALJ hearing renders an additional administrative appellate step 
unnecessary in most circumstances. The claimant always retains the 
right to appeal to the District Court.
    While appealing unfavorable decisions to the District Court is 
appropriate, claimants should not have to file an action in the 
District Court to contest a dismissal of a Request for Hearing. We 
believe a three judge panel should consider appeals of dismissals. If 
the claimant is dissatisfied with the decision of that panel, then 
appeal to the District Court would be appropriate.
    The Commissioner's Approach introduces major changes to the SSA 
disability process, and if properly implemented, it will result in 
substantial improvement in disability adjudication. However, it will 
require substantial changes in both organization and systems. The 
Commissioner has made it clear that inauguration of her new approach is 
predicated upon the successful implementation of Ae-DIB. SSA has had 
sufficient experience with implementing substantial process changes 
without ensuring the necessary system improvements are in place to know 
the dangers of premature implementation. Fortunately, Ae-DIB is 
progressing as well as can reasonably be expected. While the 
Commissioner's prudence in this matter is welcomed, the transition to 
her ``New Approach'' should begin as soon as practicable.

Ae-DIB

    The years 2004 and 2005 will be notable in SSA history for a number 
of reasons, not the least of which are the changes in business 
processes driven by Information Technology (IT). This year saw the 
introduction of a new case tracking system (CPMS), and the change from 
analogue to digital recording of hearing proceedings, the further 
expansion of video teleconferencing for conducting hearings, and the 
implementation of the electronic folder are all in the immediate 
future. Each of these programs, once installed and operating properly 
will improve Agency operations. By far the most far reaching change 
will be brought about by the electronic folder. The savings, both in 
time and money, that can be realized by converting from paper folders 
to electronic folders are substantial and will result in improved 
service to the public. The electronic folder will significantly 
increase the Agency's flexibility in managing its workload and permit 
cases to be processed more expeditiously.
    These innovations recognize the advances in information technology 
and demonstrate SSA's commitment to maximize the efficient use of its 
limited resources. NTEU is concerned that the hardware and software 
currently in hearings offices is inadequate to the demands that the 
electronic folder will place upon them. We are further concerned that 
not enough effort has been expended in considering the needs of the end 
user in using the electronic folder. The functionality of that 
interface will have a significant impact on the functionality of the 
entire system.

Conclusion:

    Since 1993 SSA has been aware that its disability adjudication 
process has been fatally flawed. It was not designed to process the 
workload now imposed on it. Previous attempts to improve the process, 
the Disability Process Redesign and Hearings Process Improvement Plans 
were fundamentally flawed and actually degraded the level of service 
provided to the public.
    SSA, under the leadership of Commissioner Barnhart and Deputy 
Commissioner Gerry, has proposed a new process which if properly 
implemented will result in an adjudicatory process that serves the 
needs of the claimants and as well as the public at large. Given the 
magnitude of the problems facing SSA, only a program that is bold and 
innovative will achieve the desired result. Commissioner Barnhart has 
delivered such a plan. NTEU recommends that SSA implement the 
Commissioner's proposal to reform the disability determination process 
as quickly as practicable.

                                 

    Chairman SHAW. Thank you, Mr. Hill. Ms. Zink?

STATEMENT OF LAURA ZINK, MEMBER, FEDERAL MANAGERS ASSOCIATION, 
 SOCIAL SECURITY ADMINISTRATION, CHAPTER 275, PHOENIX, ARIZONA

    Ms. ZINK. Chairman Shaw and distinguished Members of the 
Subcommittees, thank you for this opportunity to voice some of 
the concerns managers and supervisors at the Social Security 
OHA have with the SSA Commissioner's proposal for reforming the 
disability process. I am here as a member of the FMA, which 
represents the interests of nearly 200,000 managers, 
supervisors and executives serving in the Federal Government. 
Within FMA we represent executives, managers and supervisors in 
all Social Security Program Service Centers, the Office of 
Central Operations and the OHA.
    Last year Commissioner Barnhart unveiled her proposal for 
restructuring the OHA, and the appeals process. We at the FMA 
support the Commissioner's overall mission to support the 
disability adjudication process, including her commitment to 
retention of the due process hearing and the modernization of 
the disability claims process, including migration of the eDIB 
folder, otherwise known as eDIB. However, there are some 
remaining challenges and concerns that need to be addressed 
while the reforms move forward. The most significant concern to 
managers and supervisors agency side is a lack of meaningful 
performance management system. Our employees have vague and 
nearly unenforceable performance standards. Supervisors are not 
permitted to document performances, good or bad, in personnel 
files. The pass/fail appraisal system is a disservice to our 
employees and to the American people. There is no incentive for 
excellent performance because every employee gets the same 
appraisal. Moreover, our performance award system is 
disconnected from performance appraisals of necessity, because 
when you look at their appraisals, you cannot tell one employee 
from another, and nobody likes it.
    In a September 2003 poll, many Federal employees expressed 
their dissatisfaction with the current system. Seventy-six 
percent of respondents do not believe that the pass/fail system 
is an improvement over the more traditional multi-tiered 
performance appraisal system. Sixty-eight percent indicated 
that the biggest problem with pass/fail was that outstanding 
performers get the same rating as low performers. Where is the 
incentive to excel in that?
    In addition to the need for an appropriate performance 
management system, we're still woefully short on meeting 
staffing needs of the current workload seen by the OHA. At the 
hearing office level we are devoting extensive resource to the 
preparation of a more automated system. However, we must 
recognize that we are facing a workload crisis today which will 
continue into the foreseeable future. Between 2002 and 2012, 
SSA expects the disability rolls to grow by 35 percent. 
Currently OHA has 600,000 cases pending at the hearing level. 
That is more than a year's worth of work. Even though our 
production has increased year after year, we are unable to keep 
pace with the increasing receipts. We will not fully realize 
the benefits of automation for at least 2 to 3 years. In the 
meantime we must deal with the paper claims that are with us 
now, and that will continue to come to us for the next year or 
2. In order to address this shortfall, we need additional 
staff.
    It is widely recognized that Social Security and the 
Federal Civil Service in general is facing a huge retirement 
wave. Sixty percent of Federal managers and 50 percent of the 
overall Federal workforce will be eligible for retirement in 
the next few years, including me. It makes sense for us to hire 
employees, both ALJs and support staff now to reduce the 
backlog of cases now and over the next several years. Attrition 
will bring the staff levels back down over time. The OHA 
affects the lives of millions of Americans. With increased 
staffing and funding the agency would be able to improve its 
service to its customers, the American public.
    Last, the Commissioner's proposal to eliminate the Appeals 
Council and replace it with decentralized oversight panel is 
particularly troubling. The Appeals Council is the only body 
that reviews cases from the entire Nation, and is responsible 
for the implementation of the Commissioner's policies. In a 
disability program that is supposed to be uniform and 
consistently administered nationwide, it is extremely valuable 
to have one body that can spot trends, regional variations and 
potential problems. We are concerned that without the Appeals 
Council our National perspective may be lost.
    Additionally, the Appeals Council performs a number of 
crucial functions. It provides the only recourse and dismissal 
cases, and provides protection for unrepresented claimants who 
would otherwise have to navigate their way through the Federal 
Courts. The council further deals with a number of due process 
issues which arise at the hearing level, and handles 
allegations of bias and unfairness from claimants. Last, it 
plays a vital role in the preparation of cases for court review 
and performs nationwide quality assurance. These functions are 
essential and best performed by one central body. Thank you for 
your time and for allowing me to speak on behalf of the many 
dedicated and hardworking OHA managers and supervisors.
    [The prepared statement of Ms. Zink follows:]
 Statement of Laura Zink, Member, Federal Managers Association, Social 
         Security Administration Chapter 275, Phoenix, Arizona
    Chairman Shaw, Ranking Member Matsui, Chairman Herger, Ranking 
Member Cardin and Members of the Subcommittees on Social Security and 
Human Resources:
    Thank you for allowing us at the Federal Managers Association (FMA) 
to testify about the challenges and opportunities facing the 
implementation of the Social Security Commissioner's proposal to 
improve the disability process as it relates to the Office of Hearings 
and Appeals (OHA) in the Social Security Administration (SSA).
    FMA represents the interests of the nearly 200,000 managers, 
supervisors and executives serving in the Federal government. Within 
FMA, we have Conferences divided along agency lines, one of which is 
the FMA-Social Security Administration (SSA) Conference representing 
executives, managers, and supervisors in all Social Security Program 
Service Centers, the Office of Central Operations, and the Office of 
Hearings and Appeals.
    Last year, Social Security Commissioner Jo Anne Barnhart unveiled 
her proposal for restructuring OHA and the appeals process. While FMA 
supports certain aspects of the Commissioner's plan, we cannot support 
her proposal to eliminate the Appeals Council in favor of the creation 
of Oversight Panels. The Appeals Council is the only body that reviews 
cases from the entire nation and is responsible for the implementation 
of the Commissioner's policies. In a disability program that is 
supposed to be uniform and consistently administered nationwide, it is 
extremely valuable to have one body which can spot trends, regional 
variations and potential problems. We are concerned that, without the 
Appeals Council, our national perspective may be lost.
    Additionally, the Appeals Council provides the only recourse in 
dismissal cases, deals with a number of due process issues which arise 
in the hearing process, and handles allegations of bias and unfairness 
from claimants. These are important workloads that can best be 
performed by one central body. Moreover, we continue to have concerns 
about underlying problems in the hearings and appeals process, which, 
if not specifically addressed, will continue to inhibit the success of 
any reform plan.
    Briefly, FMA supports the:

      Due Process Hearing;
      Recommendation to close the hearing record following the 
decision by the Administrative Law Judge (ALJ);
      Acceleration of the use of the Electronic Disability 
Folder (eDIB), video teleconferencing, digitally recorded hearings, and 
a strong management information system;
      Need to aggressively address the staffing issue in the 
Social Security Administration (SSA);
      Agency's efforts to make meaningful improvements to the 
OHA process;
      Elimination of the reconsideration step only after the 
full implementation of the Reviewing Official (RO) position; and,
      Establishment of the Regional Expert Medical Units.

    The most significant underlying problems we see include:

      The lack of a meaningful performance appraisal system;
      Severe staffing shortages and imbalances; and,
      The cumbersome and lengthy process to hire and assign 
ALJs.

    While we believe that some of Commissioner Barnhart's proposals may 
have a positive impact on OHA processes in the long term, others, such 
as the elimination of the Appeals Council, should not be implemented. 
It is also important to note that full implementation of other aspects 
of the proposal will take time. The plan is predicated on the 
successful implementation of eDIB, which even the most optimistic 
forecasts indicate will take two to three years. Additional changes 
will then be followed by the necessary learning curve for affected 
employees. This two to three year process is expected to see initial 
disruptions in office operations and a decrease in productivity. The 
July 2, 2004 GAO report, Social Security Administration: More Effort 
Needed to Assess Consistency of Disability Decisions (GAO-04-656), 
noted that SSA should proceed with caution in implementing e-DIB, to 
avoid rushing into practices that are not sufficiently tested.
    Meanwhile, OHA is facing a growing backlog of pending hearing cases 
which needs immediate attention. Over the past two years the hearing 
offices have made tremendous strides in improving the disposition rate 
and efficiency, and the Appeals Council has significantly reduced its 
pending workload. However, because of the aging of the American 
population, OHA is receiving more new cases than ever before, but we 
have not been given staff increases to keep up with the ever-growing 
workload. The rate of receipts is projected to continue to rise. At the 
end of Fiscal year 2003, we had 556,369 pending SSA cases at the 
hearing level. At the end of August, 2004, we had 625,587; an increase 
of more than 69,000 cases. The backlog will not decrease until staffing 
levels are increased. OHA desperately needs some short-term relief in 
the form of additional employees to deal with the current situation.
    In recent years, OHA has reached a number of milestones:

      In FY 2002, we produced the largest number of 
dispositions in history, 532,106.
      In FY 2003, OHA exceeded that performance with 571,928 
dispositions.
      This represents an increase of almost 40,000 cases.
      In FY 2004, OHA piloted and then implemented nationwide 
the transition to CPMS, the case-management piece of Ae-Dib.
      In FY 2004, despite the challenges of CPMS, OHA has 
produced 503,384 cases through August 2004 (final numbers for the FY 
are not yet available).

    In spite of these accomplishments, we continue to fall behind 
because of the increasing receipts. The solution must be increased 
human resources as well as increased flexibility for managers to assign 
those resources.

Meaningful Performance Measurement

    As we previously mentioned in testimony submitted to the 
Subcommittee in September 2003 the development of a meaningful 
performance management system should be a top priority for SSA and OHA. 
The success or failure of any initiatives will be directly related to 
management's ability to hold all employees accountable for their work. 
Without meaningful performance measurements, we will achieve only 
limited success at best.
    Many of the problems within the disability process parallel the 
deterioration of our performance management system. Our performance 
management system began to decay in the late 1980s and has steadily 
regressed. Group-based accountability, introduced under HPI, only moved 
us further from individual accountability. The current Pass/Fail 
appraisal system does not provide incentives for high performance, and 
we continue to see the grave consequences of this failed structure.
    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 level 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. Finally, our rewards (Rewarding) system is 
essentially a ``do-it-yourself'' process. Rewards are currently 
determined by regional and national panels, which make their decisions 
almost exclusively using written recommendations with little knowledge 
of the offices or the nominees. The recommendations--written by the 
employees themselves--do not always provide an accurate view of an 
employee's workload or their ability.
    In a September 2003 poll conducted by FedNews Online, many Federal 
employees expressed their displeasure with the current Pass/Fail 
appraisal system that is used throughout the government. Seventy-six 
percent of the poll's respondents do not believe that the Pass/Fail 
system is an improvement from the more traditional five-level 
performance appraisal system. Sixty-eight percent of respondents 
indicated the biggest problem with the Pass/Fail system was that 
outstanding employees were given the same performance rating as 
mediocre employees.
    Our current performance management system sends the message that 
performance does not need to be individualized. 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'' under current criteria. Award money is distributed 
according to a formula based on the number of employees on the payroll. 
This distribution is completely devoid of any recognition for 
performance, even at the 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 absolutely critical that our employees are provided with 
clear goals. These goals must be understandable, measurable, 
verifiable, equitable, and achievable. An Associated Press article 
dated May 27, 2002 describes how the Department of Veterans Affairs has 
succeeded in slashing their backlog of pending claims. VA Secretary 
Anthony Principi was quoted as saying, ``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.
    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.
    In October 2003, a Human Resources Management Consortium of forty-
six organizations--most of them Federal agencies--asked the National 
Academy of Public Administration to conduct a comprehensive review of 
the use of broadband pay in the public and private sectors. The 
Academy's Human Resources Management Panel oversaw this important 
effort. Over a 19-month period, the Panel worked with a three-member 
Academy project team to produce four reports, culminating in 
Recommending Performance-Based Federal Pay in May 2004. The final 
report's recommendations include:

      Transition to the integrated band structure should be 
completed within five years. Individual agencies should be allowed to 
develop their own schedules based on their human capital plans, budgets 
and performance management systems.
      Individual agencies should be accountable for planning 
and implementing performance management systems that identify 
outstanding performers, those who meet performance expectations and 
employees who fail to meet expectations. The systems should demonstrate 
a clear linkage or ``line of sight'' to the agency's mission and 
operating goals.
      Each agency should define a new position to provide 
support to managers in implementing new performance systems and dealing 
with day-to-day pay and performance issues.
      Agencies should provide extensive performance training 
for managers who are responsible for the implementation and 
effectiveness of the new system.
      OPM and agencies should both develop linked 
communications strategies, which are key to the system's success. These 
strategies should delineate the process used to develop policies and 
practices.
      New system rollouts should be managed as organizational 
change.

    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 we realize it will take several 
years to have an effective system in place. Nonetheless, any initiative 
implemented prior to having a meaningful performance management system 
will have minimal impact.

Staffing Imbalances

    In an April 18, 2003 letter sent to A. Jacy Thurmond Jr., Associate 
Commissioner of OHA, we outlined a number of issues related to the 
staffing of hearing offices. Since the late 1980s, OHA has used the 
employee-to-ALJ ratio of 4.5-to-1 to determine staffing. This ratio is 
basically applied to all hearing offices regardless of individual 
office dynamics. However, since the ratio was established, conditions 
have changed at OHA offices. Staffing of OHA offices should reflect the 
current needs of those offices.
    We at FMA fully recognize that there must be a general formula in 
place in order for a central office to be able to compare the regions' 
staffing levels. However, a useful staffing formula must be derived by 
performing work studies on various positions to determine the amount of 
time that is required on average to support an ALJ. Since the current 
4.5: 1 ratio was established, OHA's technology capabilities have 
advanced significantly and these advancements have dramatically altered 
numerous work functions and, correspondingly, the time it takes to 
perform the functions. Furthermore, we feel that it is shortsighted to 
use such a formula in the strictest sense, regardless of how much 
effort was devoted to work-studies. Focusing only on the pre-set, 
``ideal'' ratio--without considering other internal or external factors 
that impact an office's ability to serve the public--will prevent OHA 
from placing itself in the best position to meet coming challenges. The 
formula needs to be reviewed and updated as procedures, technologies, 
and dynamics change to ensure a true staffing picture. We believe that 
our actual staffing needs will be better realized with the following 
changes:

      Regions should have the flexibility to staff based on 
``actual'' needs and not just ``predetermined'' ratios.
      Position mix must be considered in any staffing 
determination.
      Ratios or guidelines have their place, but must be 
reviewed and updated as advancements in technology are realized. In 
addition, the regions should have the flexibility to surpass the pre-
determined ratio when office dynamics warrant additional staffing.
      For purposes of a general guideline ratio, only ``pure'' 
production employees should be included.

    In order to be in a position to handle the anticipated increase in 
workload, we must have the flexibility to staff offices according to 
their actual needs. Should the agency move forward with its proposal to 
eliminate the reconsideration step, the workload of OHA will likely 
increase immediately. This is currently the experience in prototype 
states which operate with no reconsideration step. Reviewing officers 
should be in place and fully trained before the reconsideration step is 
eliminated nationwide. Consideration should be given to not restrictin 
the RO position to attorneys only. There are many qualified and 
knowledgeable paralegal analysts who would increase the pool of 
candidates available. If this does not occur, employees new to their 
positions will be faced with the inevitable increase in receipts that 
will follow the elimination of this step. In our view, this could 
create another backlog situation. It is critical that new staff is 
already on board, trained, and ready to meet the challenge of this 
anticipated spike in workload.

Automation Initiatives

    Potentially, these initiatives--including eDIB, video-
teleconferencing, and voice recognition software, will have the 
greatest impact on productivity and will significantly alter the way we 
do business. Sufficient resources need to be devoted to testing and 
implementing e-DIB, as it will ultimately eliminate manual case 
preparation, in addition to providing significant savings on mail & 
storage costs. As we move closer to this reality, we need to look at 
the entire structure of the hearing offices 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. The positive impact that eDIB can have 
on the SCTs who now spend much of their time preparing the cases for 
ALJ review would be substantial. The full implementation of eDIB will 
allow SCTs to spend time on other functions that will help to decrease 
the backlog OHA currently faces.
    We have been very pleased to see the advance of video hearings. 
This has been implemented in more locations, and more sites are slated. 
This initiative is already saving time and money in providing more 
timely hearings for claimants who live a distance from their servicing 
hearing office. We applaud the Commissioner's actions in putting this 
important initiative on the fast track.

Appeals Council

    We are very concerned with the Commissioner's proposal to eliminate 
the Appeals Council and create Oversight Panels consisting of two ALJs 
and one Administrative Appeals Judge. As part of the plan outlined in 
her testimony a year ago, the Commissioner concluded that the Appeals 
Council level of the current process should be eliminated because it 
``--adds processing time and generally supports the ALJ decision.'' We 
disagree with that conclusion, and submit rather that the Appeals 
Council level of the process contributes to the achievement of the 
Commissioner's stated goals and provides important benefits to 
disability claimants.
    While it does require some time for the Appeals Council to consider 
requests for review, great strides have already been made in more 
effectively processing the Appeals Council workload. Pending requests 
for review have decreased dramatically and now number approximately 
50,000 cases. Average processing time has been reduced significantly, 
standing at 251 days at the end of August 2004. At that time, nearly 
half the requests for review received by the Council were worked to 
completion within 105 days. Technological changes currently being 
developed (e.g., digital recording of hearings and the development of 
an electronic folder) and policy changes being considered (closing the 
administrative record after the hearing) will result in further 
significant improvements.
    The benefits added to the disability adjudication process by 
Appeals Council review make a substantive positive contribution to 
achieving the goals stressed by the Commissioner:

      Three to four percent of requests for review result in 
the issuance of a favorable decision without the necessity of the much 
longer appeal process to Federal court. The Council also remands about 
24 percent of the request-for-review cases it considers, ultimately 
resulting in additional favorable decisions without court action or 
unfavorable decisions more likely to withstand court scrutiny on 
appeal.
      Review by the Appeals Council is the only recourse 
available to claimants who have had their requests for hearing 
dismissed. The Council grants review in a large percentage of these 
cases, providing an avenue for these claimants to receive due process 
and a substantive decision.
      Many claimants are not represented. The Appeals Council 
is the last recourse for those who lack the understanding or resources 
to pursue their case in Federal court. For them, the Council provides 
an avenue to appeal the Administrative Law Judge's decision in a non-
adversarial setting.
      The Council's workload also includes review of favorable 
hearing decisions that have not been appealed. Exercise of this 
function prevents payment of benefits in cases where an allowance is 
not warranted by the law and facts of the case.
      The Council also plays a vital role in the preparation of 
cases for court review, processing requests for voluntary remand, 
preparing court remands, and reviewing final decisions after court 
remand. These functions are essential to the efficient processing of 
the civil action workload.

    In her testimony last year, the Commissioner stressed the need for 
disability claims to be better developed and indicated the need for 
consistency in disability adjudication. The Appeals Council contributes 
to the achievement of both these objectives. By remanding cases, the 
Council sets a higher standard for case development. The Council is the 
only body that reviews disability cases on a national basis. The 
Council has developed principles and guidelines that have insured 
consistent actions by Administrative Law Judges throughout the country. 
If national consistency is the objective, the Appeals Council is the 
logical body to be tasked with continuing oversight of this effort.
    Stakeholders in the disability process, including claimants' 
representatives and advocacy groups, value the contribution of the 
Appeals Council and support retention of the request for review. 
Previous studies dealing with the elimination of the request for review 
indicated that the workload of the courts would increase dramatically 
if the Appeals Council review level were to be abolished. Reports by 
the Judicial Conference of the United States have indicated that most 
claimants do not seek judicial review after Appeals Council action, and 
that Appeals Council review lessens clogging of court dockets. The 
Conference viewed the prospect of eliminating Appeals Council review 
unfavorably.
    The Office of Hearings and Appeals Management Association (FMA 
Chapter 275) agrees that the disability adjudication process needs to 
foster fully developed case records to support accurate and timely 
decisions which are consistent and of high quality. For 64 years the 
Appeals Council has contributed to the achievement of these goals by 
providing a final level of appeal and review within the Social Security 
Administration. Such experience and public service are invaluable. The 
Council should continue to be a driving force in improving the 
disability adjudication process.

Conclusion

    The Office of Hearings and Appeals within the Social Security 
Administration affects the lives of millions of Americans with 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 OHA 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 OHA 
to provide to the public the level of service that is both expected and 
deserved by taxpayers.
    FMA has long served as a sounding board for the Legislative and 
Executive branches in an effort to ensure that policy decisions are 
made rationally and provide the best value for the American taxpayer, 
while recognizing the importance and value of a top-notch civil service 
for the future. We at FMA would welcome the opportunity to do the same 
for any initiatives that Congress, as well as SSA, would like to 
develop that would further enhance the mission of the Office of 
Hearings and Appeals.
    We want to thank you again, Chairman Shaw, Ranking Member Matsui, 
Chairman Herger and Ranking Member Cardin, for providing FMA an 
opportunity to present our views and for the hard work and interest of 
the members of both Subcommittees on this very important topic.
    We look forward to working with Congress, the Commissioner, and 
other stakeholders in finding solutions to the challenges facing SSA in 
our collective pursuit of sustaining excellence in public service.

                                 

    Chairman SHAW. Thank you, Ms. Zink. Mr. Bernoski, you are 
certainly no stranger to this Committee. Welcome back.

  STATEMENT OF RONALD G. BERNOSKI, PRESIDENT, ASSOCIATION OF 
        ADMINISTRATIVE LAW JUDGES, MILWAUKEE, WISCONSIN

    Mr. BERNOSKI. Thank you, Mr. Chairman. Thank you for 
inviting us to testify. We commend the Commissioner for her 
attempt to reform the Social Security disability process. The 
plan is mostly simple and direct with some complex changes in 
eDIB. We are committed to working with the Commissioner to 
ensure that her program succeeds. The ALJ hearing remains at 
the center of the Social Security adjudication system, and we 
believe that the ALJ hearing should become more formal and 
developed. With appeals going directly to the Federal Court, it 
is imperative that we have an improved level of expert 
testimony at our hearings, and we will also need highly 
qualified decision writers to ensure that our written decisions 
pass the scrutiny of the Federal Courts. Also the staffing 
problems that we have talked about many times of HPI must be 
corrected.
    The plan eliminates the Appeals Council, with the appeal 
going directly to the Federal Courts. We agree with this change 
because the Appeals Council has lost its utility to the 
disability process. The plan also calls for three-judge quality 
control panels. It is not clear how these panels will function, 
but it appears that they will review live cases. A decision of 
the panel will become the decision of the Commissioner unless 
appealed. We have some concerns with this proposal. There is no 
indication that the claimants have a right to appear before 
these panels or that the claimants have a right to appeal their 
cases to a panel. A claimant has an interest in a favorable 
decision, and we suggest that any such quality review be done 
on closed files after the appeals time has lapsed. This is to 
protect the claimant's right in the case.
    We suggest a quality review mechanism be built into the 
appeal to the Federal Court from the ALJ. This can be done by 
providing for a delay in the perfection of the appeal for a 
period such as 60 days. During this period, the case could be 
reviewed by the Office of General Counsel to determine if the 
agency will defend the case. If the case is not defended, it 
would then be returned to the ALJ for further action. The plan 
also contains the new position of the RO. This person is an 
attorney who reviews the case on appeal from the DDS. The RO 
can either allow the claim or prepare a report for further 
action by the ALJ. We suggest that this report be a memorandum 
for the file and not a decisional document.
    It is also important that the RO be provided with 
sufficient support staff to fully develop the record. Mr. Daub 
spoke about that earlier. The CPMS is a new case tracking 
system which has gotten off to a slow start, but we want to 
work with the Commissioner to cure its defects. The eDIB is a 
larger system that is more complex. We are encouraged by this 
concept but have some concern with the size of the project. 
Now, eDIB was recently implemented on a limited basis in the 
Charlotte, North Carolina Hearing Office, and the information 
that we have received indicates that the first hearing went 
very well. However, much remains to be done on that system, and 
we should look at things such as the utility of the system for 
handling large cases with many exhibits, the efficiency of 
inputting documents into the system, determining how the 
claimants will use this new electronic system for the review of 
their files, how the system will be used at remote hearing 
sites, the impact of the system on the size of the hearing 
room, the number of computers that will be required in the 
hearing rooms, the impact of this system on the office users, 
and whether there will be a continued need for paper files.
    Based on our experience with CPMS we have concern with 
ruling out eDIB too quickly, because we believe that there are 
going to be problems that can't be anticipated, and that 
caution is advisable. However, we are committed to working with 
the Commissioner to make this reform a success. We also believe 
that the agency must adopt the rules of procedures that were 
recently recommended by a Joint Rules Committee. These rules 
are needed to implement the Commissioner's reform plan. The 
agency should also deal with the use of Social Security numbers 
as case identifiers on documents that are electronically 
transmitted, as we explained in our written testimony.
    Last, on the persistent issue of the OPM's lack of capacity 
to efficiently administer the ALJ system, we suggest that there 
be a joint hearing between this Subcommittee and the 
Subcommittee on Administrative Law in the Committee on the 
Judiciary. We recommend the adoption of a Conference of ALJs 
similar to the bill that was introduced by Congressman Gekas in 
the 106th Congress. Thank you very much.
    [The prepared statement of Mr. Bernoski follows:]
      Statement of Ronald G. Bernoski, President, Association of 
            Administrative Law Judges, Milwaukee, Wisconsin
I. INTRODUCTION

    Thank you for the opportunity to testify 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 administrative law judges 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.
    We commend Commissioner Barnhart for her plan to reform the Social 
Security disability process. During the past 15 years the agency has 
made several attempts to reform the disability process, but 
unfortunately each effort has failed. The Commissioner's proposed plan 
has the advantage of being simple and direct, yet it includes a 
significant challenge on an unprecedented scale. E-Dib, or the 
electronic file, is an innovative and bold change in the agency's 
collection, transmission, and retrieval of data. Smaller electronic 
systems are in existence. The SSA system will include all of the 
components of the Social Security Administration as well as the fifty 
state agencies involved in initial disability determinations. The 
transition from paper files to electronic files will be a difficult, 
but not impossible test, for the judges who hear disability cases. 
However, it is vital that the Commissioner receive adequate funding to 
implement her entire reform plan. If only a portion of E-dib is 
completed, we will be left with a struggle of working with the 
confusion of two systems or face the dilemma of stepping back from an 
achievable technological advancement.

II. THE ADMINISTRATIVE LAW JUDGE HEARING

    In September of last year, the Commissioner testified before this 
Subcommittee. She stated that claimant advocacy and claimant 
representative organizations strongly recommended retaining the de novo 
hearing before an administrative law judge. The Commissioner's reform 
plan follows these recommendations and the administrative law judge 
hearing is retained as the center of the agency's adjudicative process. 
We completely agree with this action.
    The Administrative Procedure Act was enacted by the Congress in 
1946 to ensure fairness in the agency adjudication system in the 
Federal government. The Act left the hearing examiners (now 
administrative law judges) within the agencies as qualified employees, 
but provided them with additional protections to ensure full and fair 
hearings for the American public [see Ramspeck et. at. v. Federal Trial 
Examiners Conference, 345 U.S. 128 (1953)]. We recommend that the 
intent of Congress be fully implemented and that the SSA hearing 
process be made more formal. We urge the agency to adopt, by 
regulation, rules of practice and procedure for ALJ hearings. Practice 
and procedure rules have been proposed by a joint rules committee 
established by the Associate Commissioner of the Office of Hearings and 
Appeals. Also, with a high percentage of claimants represented by 
counsel at our hearings we recommend the establishment of an agency 
representative to balance the interests of what has become one-sided 
advocacy. If the claimant is not represented at the hearing, the agency 
representative would provide assistance to the claimant.
     Under the Commissioner's reform plan, the administrative law judge 
hearing will be the last agency action for many claimants. We support 
the concept of closing the administrative record after the ALJ hearing. 
This makes it imperative that the administrative law judge hearing is 
full, fair and complete with all relevant evidence included in the 
hearing record. The hearing decision must be prepared in a manner that 
is legally sufficient and meets all agency and legal standards. ALJs 
need highly qualified, professional decision writers to insure that our 
decisions pass the scrutiny required of direct appeals to the Federal 
district courts.
    SSA actions alone will not make the ALJ hearing process more 
professional. Congress plays an important role. When creating the 
Administrative Procedure Act, the Congress vested considerable 
authority in the Civil Service Commission (now the United States Office 
of Personnel Management) and gave it the responsibility to regulate the 
administrative law judge function in the Federal government. The Office 
of Personnel Management (OPM) has the responsibility to maintain a 
testing system that qualifies applicants for entry upon a register that 
provides new administrative law judges to the agencies. Traditionally, 
OPM administered this responsibility through an Office of 
Administrative Law Judges. Regrettably, OPM has backed any from its 
responsibility for the administrative law judge function in the Federal 
government. It recently abolished its Office of Administrative Law 
Judges and dispersed the functions of this Office within OPM in an 
indefinable manner. For what we believe is the first time in its 
history, OPM does not have a test in place for applicants for the 
administrative law judge position. A new test has been promised for 
years. The ALJ register has been closed to new applicants for over 5 
years. The lack of effective management of the administrative law judge 
program by OPM has made it extremely difficult for agencies, including 
SSA, to hire new judges. This problem must be addressed to allow the 
Social Security Administration and other agencies to hire the new 
administrative law judges needed to maintain the various programs in 
the Federal government.
    Rep. George Gekas (R-PA) attempted to address this problem in the 
106th Congress by introducing the Administrative Law Judge Conference 
of the United States Act (H.R. 5177). This legislation would have moved 
the functions of the Office of Administrative Law Judges from OPM and 
placed them in an Administrative Law Judge Conference. The Conference 
was to be headed by a Chief Judge who reported annually to both the 
Congress and the President. The Chief Judge was to be responsible for 
regulating the Federal administrative law judge program and for 
promulgating a code of professional conduct for Federal administrative 
law judges modeled after the America Bar Association model code for 
administrative law judges. The administrative law judges remained as 
qualified employees of the agencies and the existing authority of the 
agencies and judges was not changed in any manner. The concept was 
patterned after the Judicial Conference of the United States and it 
provided a needed organization and structure for the Federal 
administrative law judge system. We ask that legislation of this type 
be supported by each member of this joint Subcommittee.

III. APPELLATE REVIEW

    The Commissioner's reform plan eliminates the Appeals Council. We 
agree with this change. There have been many studies and comments on 
the utility of the Appeals Council to the Social Security disability 
process. In a prior report, the Administrative Conference of the United 
States recommended that the Appeals Council be either improved or 
abolished. The main weakness of the Appeals Council is that it has not 
developed a true appellate function in the Social Security disability 
process. Its decisions do not have any precedent and its authority has 
not been developed. As such, it merely serves as a ``pass-through'' 
area for the claimants on their way to the Federal courts and it adds 
no value to the process.
    The reform plan provides for a centralized quality control staff 
that would review administrative law judge decisions. If the quality 
control review disagrees with an administrative law judge decision, it 
will be referred to an oversight panel for review. This panel consists 
of two administrative law judges and one administrative appeals judge. 
The decision of the panel becomes the final decision of the 
Commissioner, unless it is appealed to the Federal court. We have 
considerable concern with this change. The claimant does not have any 
right of appeal to the panel, and it is not clear whether the claimant 
has any right to representation before the panel. If the claimant has 
received a favorable decision from the administrative law judge, he/she 
has a clear interest to protect in the decision before the panel. We 
recommend that any quality control review conducted by the agency be 
performed on closed files where the appeals time has lapsed. This will 
eliminate the problem of interfering with a ``live'' case where the 
claimant has an interest to protect.
    The reform plan provides that if the administrative law judge 
decision is not reviewed by the panel it will become the final decision 
of the Commissioner, unless it is appealed to the Federal court. As is 
currently the case, the claimant will continue to have a right of 
appeal to the Federal court under existing law. We agree that the 
Federal districts courts should continue to have jurisdiction of Social 
Security disability cases. To act as a filter for appealed cases, we 
recommend that SSA consider a procedure to return certain cases to the 
administrative law judges before jurisdiction is perfected in the 
Federal courts. This could be accomplished by establishing a time 
period (e.g. 60 days) before the appeal to Federal court is perfected. 
During this time period, the attorneys for the agency's Office of 
General Counsel could review the cases and decide which cases, if any, 
the agency will not defend in court. The cases that the agency decides 
not to defend in court would be returned to the administrative law 
judge for further action. Jurisdiction in the Federal courts gives a 
safeguard to the claimant by providing a forum that is outside the 
agency and allows for independent judicial review of the case. In the 
1980's the Federal courts proved the value of this review by protecting 
the claimants from widespread agency abuse.

IV. REVIEWING OFFICIAL

    The plan creates a new position in the Social Security disability 
system. This position is the SSA reviewing official (RO) and it a 
Federal position. If the claimant files a request for review of a DDS 
determination, the claim would be reviewed by the RO. This person will 
be an attorney, who will be authorized to review the case and to either 
issue an allowance decision in the case or concur with the DDS denial 
of the claim. This is a review of the file, and the claimant will not 
appear before the RO. If the claim is not allowed, the RO will prepare 
a written report on the recommended disallowance which discusses the 
evidence in the case. We believe that this report should not be an 
agency decisional document and it should instead be a memorandum for 
the file to assist the administrative law judge. If the report is a 
decisional document, the claimant will have a right to state his/her 
case to the RO in writing prior to the issuance of the report. This 
will add time to the process and require an appeal from the RO to the 
administrative law judge hearing.

V. CENTRALIZED MEDICAL PANELS

    The reform plan provides for centralized medical panels that would 
be available to disability decision makers at all levels. These units 
would be organized around clinical specialties, such as, 
musculoskeletal, neurological, cardiac and psychiatric.We are 
encouraged by this proposal, because we believe that any method 
employed to improve the quality of the medical evidence at the 
administrative law judge hearing is beneficial. The reform plan 
provides for a ``quick decision'' process which could use this expert 
medical resource. We support the quick decision process so that pay 
cases can be identified as early in the process as is possible. We 
suggest that the medical panels for the State DDS disability reviews 
and the administrative law judge hearings be separate to provide a 
``fresh look'' of the case at each level of the administrative review. 
However, if a needed medical specialist is present on only one of the 
panels, this expert should be available to all adjudicators. Heretofore 
hard to obtain medical testimony could be obtained at our hearings by 
use of the video conference system that the agency is acquiring. This 
new technology allows administrative law judges access to needed 
medical experts not otherwise available. Video testimony also gives the 
claimant a better opportunity to cross examine the witness as well as 
providing for a more efficient use of the expert's time.

VI. CPMS

    Conversion to an electronic work environment needs to be well 
planned. The initial version of the Case Processing and Management 
System software did not live up to expectations. That version of CPMS 
made the change to this new system more difficult than it needed to be. 
The General Accounting Office forecast this result in a briefing and 
report submitted to the Subcommittee earlier this year.\1\ GAO 
presented four main points of concern. I will address only one: the 
failure to adequately consult with actual end-users at the field 
offices of the Office of Hearings and Appeals at each step of the 
software design process. The feedback we receive from the field is that 
no judge, staff member or field manager with knowledge of our process 
would plan CPMS the way it was designed. I will give you just two 
examples since they are symptomatic of many other problems with CPMS 
which actually impede the ability of an OHA to get the work done. The 
solutions we propose will cure these and many similar problems.
---------------------------------------------------------------------------
    \1\ U.S. General Accounting Office, Electronic Disability Claims 
Processing: Social Security Administration Needs to Address Risks 
Associated with Its Accelerated Systems Development Strategy, GAO-04-
466 (Washington, D.C.: March 26, 2004).
---------------------------------------------------------------------------
    The first example is: A clerk assigned to a judge cannot always run 
a listing of his or her assigned judge's cases.
    This occurs because the Systems division at SSA, for reasons not 
entirely clear but seemingly in the interests of confidentiality of 
data, have limited access by individuals to only those cases actually 
assigned to those individuals.\2\ This excessive internal secrecy and 
limited access to data impedes getting the work done. We all need to be 
able to work together to accomplish our mission. We recommend that CPMS 
be transparent at the local office level. What we urge is that every 
individual at a local office have access to the status of all cases 
within an office. CPMS' limited access policy blocked rapid responses 
when action was required and an employee was available to take such 
action except for an internal block. Such compartmentalization can also 
be destructive to local office morale. ALJs and members of our support 
staff are acutely aware of the long waits claimants endure before a 
disability hearing is held. When staff fields a phone call or mail 
inquiry for which immediate action can save a claimant days or weeks of 
wait but can't act because they are blocked by artificial barriers it 
is extremely frustrating to them.
---------------------------------------------------------------------------
    \2\ Managers are an exception to this policy.
---------------------------------------------------------------------------
    The second example is: CPMS is unforgiving.
    It is imperative that even simple mistakes are not made in CPMS. 
Once a mistake is entered into the system there is no easy way to 
correct it. If a mistake is made an employee must delete all the work 
to that point and start that step from the beginning. For example, a 
judge in Miami decided to make his own entries in CPMS to assist the 
office in closing out as many cases as possible. He found in favor of a 
claimant and established an onset date in January. When he entered the 
date, he mistakenly typed 11 which is November, rather than 01 for 
January. He then saved and closed the case. A staff member at the 
office discovered the mistake before the case was mailed. However, he 
discovered that no one in the entire agency could correct his clerical 
error. An entirely new file had to be recreated with all the data 
having to be re-entered into this new file to correct this simple 
error.
    When the Group Supervisor in Miami complained about this problem to 
a Systems person, he was told the solution was simple: ``Don't make 
mistakes.'' The agency must find a user friendly way to correct 
mistakes in CPMS. We urge greater emphasis on ongoing consultation with 
the employees in the field who actually use the new electronic process. 
This coordination and receipt of feedback from the field will become 
even more critical when we transition to work with electronic files.

VII. E-DIB

    Accelerated Electronic Disability Claims Processing (AeDib) is the 
foundation upon which the Commissioner intends to construct her Reform 
Plan. We know that a change of the magnitude contemplated by E-dib will 
not be perfectly smooth. As we have learned with the CPMS phase it is 
critical that there be flexibility within the agency to address 
problems that are highlighted by experiences in the field. The AALJ is 
encouraged by the efforts of SSA at its highest levels to consult with 
us on this monumental transformation. However, much of the nitty-gritty 
of implementation occurs at lower echelons of the agency as well as 
within hearings and appeals' management. It is at these levels that we 
see a need for more open communication and a new found sense of 
cooperation. The vision and scope of the Commissioner's plan requires 
more flexible and invigorating management to open effective lines of 
cooperation with all levels of the agency.
    We believe the Electronic Disability Collect System of E-dib has 
great potential to assist judges in rendering decisions and to speed up 
the overall process. The EDCS contains structured data that unlike the 
data in the Electronic Folder may be searched and manipulated easily by 
the judge. We recommended early that the agency not simply convert 
standard government forms to electronic format but that they take the 
time to revalidate the data collected in the old hardcopy forms to make 
sure the data is relevant today and actually helps a judge render a 
decision. We continue to urge the agency to fully act on this 
recommendation.
    The Document Management Architecture part of E-dib has not been 
piloted for a sufficient time to comment on its utility. However, the 
initial reports are promising. It is my understanding the first hearing 
involving a pure Electronic Folder has just taken place at the 
Charlotte, North Carolina OHA. However, based on our experience with 
CPMS, we have concerns about the rapidity of the roll-out of E-dib.

VIII. Discontinue use of SSN as a Case Identifier

    Although this does not fit perfectly under any AeDib category, this 
issue should be addressed by the agency. First, Chairman Shaw we 
applaud you and your Subcommittee for your leadership role in 
introducing the Social Security Number Privacy and Identity Theft 
Prevention Act of 2003 (H.R, 2937) and holding hearings on this most 
important issue to all of us. At the hearing Mr. Patrick P. O'Carroll, 
the Acting Inspector General of the Social Security Administration, 
declared in his prepared statement:
    Perhaps the most important step we can take in preventing SSN 
misuse is to limit the SSN's easy availability. We believe legislation 
designed to protect the SSN must strictly limit the number's 
availability on public documents. As long as criminals can walk into 
the records room of a courthouse or local government building and walk 
out with names and SSNs culled from public records, it will be 
extremely difficult to reverse the trend.\3\
---------------------------------------------------------------------------
    \3\ Statement of Patrick P. O'Carroll, Acting Inspector General, 
Social Security Administration Testimony Before the Subcommittee on 
Social Security of the House Committee on Ways and Means (June 15, 
2004).
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    We have recommended to the agency during the AeDib process that it 
discontinue the use of SSNs as a disability decision and case 
identifier. It could be easily accomplished \4\ Until this is done we 
might have an Electronic Folder but we cannot even e-mail the Exhibit 
List to an attorney because the case is identified by the claimant's 
SSN and the agency rightfully has a prohibition on transmitting SSNs 
over the internet. We will instead need to print out the list and send 
it by regular mail. This is inefficient.
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    \4\ Under HOTS cases could be searched using the first four letters 
of the claimant's last name and the last four digits of their SSN. The 
agency could easily use the entire last name of the claimant and the 
last four digits of the SSN to identify a claimant's disability claim 
file and decision.

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IX. THE NEED FOR PROCEDURAL RULES

    In 1969 SSA ALJs issued about 20 to 30,000 dispositons. This year 
we will conduct over 500,000 hearings. In 1969 few claimants were 
represented. Presently 88% of claimants are represented at the hearing 
level. The old concept of an informal hearing made sense for un-
represented claimants. But today very skilled and assertive 
representatives effectively advocate on behalf of their clients. We 
work in a different judicial environment. Yet judges conduct hearings 
today in exactly the same manner they did thirty years ago; without 
procedural rules. As one example where rules would greatly assist our 
judges, the agency does not have a rule which requires attorneys to 
submit evidence in a timely manner before a hearing. The orderly 
submission of evidence is a basic requirement of any other adjudication 
system. Presently, attorneys can and do show up at hearings with 100 or 
more pages of new evidence. An ALJ is then faced with two distasteful 
choices. The judge can either conduct a hearing without time to 
adequately review new evidence or add further delay to the process by 
postponing the hearing. It is a terribly inefficient system with the 
American public paying for this inefficiency.
    Adoption of procedural rules is needed to make new technologies 
more efficient. The video hearing system provides another example. A 
judge reports waiting while the attorney faxed seventy-five pages of 
new evidence to him which needed to be read before the hearing could 
proceed. We need updated procedural rules to provide the disability 
hearing process with an efficient system which can take full advantage 
of our new technology.
    Thank you.

                                 

    Chairman SHAW. Thank you. Mr. Brady?
    Mr. BRADY. Thank you, Mr. Chairman. In the written 
testimony, because it shortens the time in the verbal 
discussion today, several of you cited what you would include 
in the good faith exception to closing the file after the ALJ 
case. Can each of you talk about sort of some key points that 
ought to be part of that exception?
    Mr. SUTTON. Yes. Congressman Brady, if I could address 
that. As a practitioner who has been doing these cases for 
years, I will give you some examples of what that would look 
like. For example, we had a client who appeared before an ALJ 
with orthopedic injuries that caused pain that was so severe 
that her doctors actually considered amputating her leg to stop 
it, but she had no attorney when she appeared before the judge, 
and she did not know to go and get that evidence. It wasn't 
obtained until after the judge had denied her case. It was 
appealed to the Appeals Council by my firm. We obtained that 
evidence, submitted it to the Appeals Council. The Appeals 
Council remanded the case to the judge and said, ``Look at this 
evidence,'' at which point of course the judge granted her 
benefits. That is a perfect example of the kind of good cause 
for new evidence coming in, unrepresented people who don't 
understand what their burden is.
    There are also cases where diagnoses are unclear, people's 
symptoms are very well documented in the medical records, but 
they do not know exactly what is causing them, and then perhaps 
3 months or 6 months after a judge denies a case, you find out, 
well, it was MS, or it was Amyotrophic Lateral Sclerosis, or it 
was some terrible disease. At the time the judge had the case 
he or she saw it as, these are unexplained complaints of pain 
and there is no objective documentation to explain, and so it 
is denied.
    If you cut off the record and don't allow that opportunity 
to bring the evidence before the agency, it doesn't work. You 
really can't bring it to court, by the way. There is a 
statutory provision for evidence to be brought to the court if 
a case gets that far, but it is an extremely stringent standard 
there that usually is not met. The courts, of course, don't 
have doctors on their staffs to evaluate that new evidence. The 
Appeals Council does, and that is why it is so important, I 
think, to have that safety valve for new evidence that can come 
in after the point that the ALJ decides the case.
    Mr. BRADY. Thank you. Ms. Ford?
    Ms. FORD. I would just echo what Tom has just explained. I 
think Mr. Becerra used an example earlier this afternoon about 
a person who has MS and the documentation of that does not come 
in until after the ALJ has made a decision. In that situation, 
you would not want to force someone to start over completely, 
and there could be some serious implications in whether or not 
they could get benefits if they were not allowed to continue 
this case, but instead, had to start over with a new claim.
    Mr. BRADY. In that case you stressed documentation. In a 
case like that, wouldn't the issue of MS or the illness being 
raised to the ALJ, wouldn't you as an ALJ want to obtain that 
document before you rendered a decision? There is a difference 
between an absence of any knowledge of an illness and the 
documentation that justifies it.
    Mr. SUTTON. Sometimes, Congressman, in my experience, 
judges are conscientious and they do make an effort to try to 
get that evidence for a claimant, let us say, particularly one 
who doesn't have counsel at the hearing. There comes a point 
where the judge can become frustrated with the absence of 
certain tests, that kind of documentation. You know, if the 
treating physicians aren't referring that claimant for the 
proper tests, MS is a perfect example. There are multiple tests 
that have to be done. It is a triangulation effect that the 
clinicians have to go through to actually diagnose the disease. 
Unfortunately, with many claimants having little or in some 
cases no health insurance, getting referrals to have that kind 
of expensive testing is easier said than done. The ALJ could 
order a consultative exam, but those usually aren't going to 
pay for or do the kind of intensive testing or specialty 
referral that is really needed.
    So, those things happen. They happen sometimes not when 
they should and not as early as they should, and we have to 
have a process that at least allows claimants, who are in a 
position where they cannot just wave the magic wand and get the 
referral that they need, to be able to bring that evidence to 
the agency when they get it, show that they had good cause for 
not having it before, and that may allow them, as Marty said, 
to get benefits when they otherwise would be cut off. We have 
cutoff dates in this program. There are dates when insurance 
expires, when you have been out of work so long. Sometimes it 
is no answer to a claimant to just say, ``File a new 
application.'' They can never get benefits unless a decision is 
reconsidered and overturned, perhaps in light of new evidence.
    Mr. BRADY. Any other panel members want to comment?
    Judge BERNOSKI. Under the Commissioner's plan, if the case 
goes directly from the ALJ to the Federal Court, the current 
Federal statute for that appeal from the agency to the Federal 
Court has a case closing aspect to it. So, as the Commissioner 
indicated during her testimony, the case is going to close as a 
matter of existing law. To answer your question directly as to 
what the new cause standard should be, we suggest there should 
probably be two tests, the first one would relate to evidence 
that is not in existence at the time of the hearing, that would 
be reason for allowing that evidence be received to the record 
subsequent to the hearing; or second, if the claimant could 
offer a good explanation why evidence that was in existence at 
the time of the hearing was not offered at the hearing. It 
would be a two-prong test.
    Mr. BRADY. Thank you. I appreciate it. Mr. Chairman, I am 
just sort of at a point on this, it seems like our whole system 
is sort of a series of safety nets to catch the claimants that 
fall through the net in front of them in each step of the way. 
I think one thing the Commissioner is trying to do that I 
support is to tighten and strengthen those nets early on in the 
process, so we find and help as many claimants so that we don't 
build in a series of five or six different steps, but try in 
fact to catch the claimants who need the help as early on I the 
process. I think as an idea and as an approach that is a good 
one to take. Thank you, Mr. Chairman.
    Chairman SHAW. Thank you, Mr. Brady. Mr. Sutton, you have 
made the argument as to the excessive litigation that would 
result if the Appeals Council was eliminated. Could I ask the 
other panel members to comment on that? Ms. Ford, you have an 
opinion on that? I would like to go to Judge Bernoski.
    Ms. FORD. Thank you. I think that is an important point, 
that the Federal Courts could be swamped with cases that really 
don't belong there. I also fear that claimants won't be able to 
take cases forward. Some won't have the wherewithal to know how 
to get through the process. Making an appeal--or filing a case 
in the Federal Courts--is far more complicated and more costly 
to an individual, and if they haven't had legal representation 
up until that point, it may be beyond their ability to even 
consider it. So, you would have a claimant who possibly should 
have been entitled to benefits who doesn't get them.
    Chairman SHAW. Judge?
    Mr. BERNOSKI. Mr. Chairman, our suggestion does have that 
additional feature, it allows the agency to have the quality 
review system built into the appeals process. We suggest that 
there be a period of time between the time that the appeal is 
filed and the perfection of the appeal. I said 60 days, but it 
could be for any period that is determined, during which the 
agency can have another look at the case. The Office of General 
Counsel would look at the case and decide whether or not this 
is a case that should be defended. If it is, it would go on to 
the court. If not, it would be returned back to the ALJ for 
further action. This, I think, would keep a huge number of 
cases from moving to the Federal Courts.
    Now, with relationship to the claimants having the 
knowledge to bring the case to the Federal Court, most of the 
claimants are now represented at the ALJ hearing. I think Mr. 
Daub indicated 80 percent or 85 percent of the claimants are 
represented, so that knowledge currently exists in the system. 
They have an attorney, and these attorneys certainly know how 
to bring the cases to the Federal Courts. Also the Federal 
Courts provide a ``pauper waiver'' of the filing fee where the 
claimants, upon filing an affidavit, can file the case in the 
Federal Court at no charge.
    In the previous testimony there seemed to be some concern 
about the claimants and the complexity of the Federal Courts, 
and there seemed to be a belief that the case before the 
Federal Court is a trial. It is not. The case goes to Federal 
Court on certiorari, so it is simply at that point an argument 
before the magistrate or the Federal judge based on the record. 
It is not a complex hearing. The hearing is before the ALJ, and 
that is why we recommend it be a more formal and complete 
hearing, so that the Federal Courts, if they do get the case, 
have a better record than is now being sent to them.
    Chairman SHAW. Mr. Sutton?
    Mr. SUTTON. If I could just briefly respond. I have great 
respect for Judge Bernoski. The problem with this proposal, as 
I see it, that the Commissioner has made to replace the Appeals 
Council with these review panels is twofold. First, as to that, 
claimants have no ability to request review. It is purely a 
matter of whether the Commissioner says, ``We are going to 
review all claims'' or a sample. It is totally at the 
Commissioner's initiative. Claimants have no way to obtain 
review, to know whether their case is being reviewed or 
anything of the kind, and that is the fundamental problem with 
it as an idea for replacement of the Appeals Council.
    Judge Bernoski's testimony has noted that problem. He has 
suggested and his association suggested that the Office of 
General Counsel review all these cases to somehow decide 
whether they really belonged in Federal Court or not. Is that 
all 200,000 ALJ denials a year? Is it 3 times the 17,000 
filings you now have in District Court? You are going to have 
those cases filed because people who are not satisfied with the 
ALJ denial, believe there is really a wrong and a legal error 
there and they have no place else to go. The Office of General 
Counsel, I can tell you because I litigate against them every 
week, has a hard enough time defending the 15,000 to 17,000 
filings a year now; to tell them that they are going to 
essentially replace the Appeals Council to review the merits of 
these ALJ decisions I believe is completely untenable.
    Chairman SHAW. Thank you. Mr. Hill, in your testimony you 
talk about the lack of consistency in decisionmaking and note 
that the, and I am quoting you, ``inconsistency of 
decisionmaking between the State agencies and the ALJs is 
undeniable.'' That is the end of your quote. Given that it will 
take some time to implement aspects of the Commissioner's plan. 
Do you have any suggestions for improving the consistency of 
decisions right away?
    Mr. HILL. Sir, that is a very difficult proposition, 
because I think when you hear, and we heard it earlier, the 
State agencies believe they are right 90 percent of the time, 
yet ALJs are overturning 61 percent of the cases that come to 
them. Overturning is even a wrong word. The cases can be very 
fundamentally different when an ALJ finally makes a decision 
because it is a year or 2 years older. One easy way is 
obviously to truncate the process so we do not have such a huge 
period of time between them. The other one I think is probably 
more fundamental, and it comes down to the end, two factors, 
one, the quality assurance program. At the State agency level, 
because of statutory requirements, a preponderance of payments 
are reviewed. At the ALJ level, because of a system of appeals, 
very few people who are awarded benefits appeal the award. It 
is primarily review of denials, and there are built in factors. 
It is easier at the State agency to deny a case, to get it by 
quality assurance. It is easier at the ALJ level to pay a case 
if there is some problem with it.
    I think that is a very practical problem that exists, and 
that is something that the Commissioner is going to address by 
having a process-wide quality assurance system. The other 
fundamental problem deals with the ALJs looking at the evidence 
and applying the rulings, the regulations and the statute. The 
State agency is applying, and the problems are much more 
specific and the agency will say that everybody is applying the 
same law, but one is very specific, the other is more general. 
We lawyers are used to dealing with generalities and applying 
facts of a specific circumstance to generalized law and 
regulations. That is what we do. I think that fundamental 
difference of what is being applied, they tried to address it 
with the PUTT, which was process unification. To some extent 
they did, but it has been very incomplete. I think it is 
another one of the failures that has plagued us for the past 10 
years, and I really don't have a quick solution that can be 
done out of hand.
    Chairman SHAW. Thank you very much. Thank all of you for 
being here and waiting. We have been in session now for 3 
hours, and I appreciate your patience with us, but this is a 
most important subject and it is one that has plagued this 
Committee and I might say the Subcommittee on Social Security 
for many, many years. As long as I can remember looking at it, 
there has been a tremendous problem moving these cases along. I 
see from the two panels that there is quite a bit of 
disagreement, but I think that expediting these cases is 
tremendously important, and of course, at the same time 
maintaining fairness. Thank you for being here. The Hearing is 
adjourned.
    [Whereupon, at 4:08 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
                                           American Bar Association
                                               Washington, DC 20005
                                                   October 14, 2004

The Honorable E. Clay Shaw and the Honorable Wally Herger

Chairmen, Subcommittee on Social Security and Subcommittee on Human 
    Resources
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515-4315

Dear Chair Shaw and Chair Herger:

    On behalf of the American Bar Association, I thank you and the 
members of your respective subcommittees for your interest in the 
Social Security Administration's disability determination process. The 
American Bar Association is well aware of the myriad challenges that 
confront the Social Security Administration, and we agree that few are 
as pressing as the need to reduce unnecessary backlogs and delays in 
the processing of disability claims and appeals. We have long advocated 
increased efficiency and fairness in this system, and we have drawn 
upon the experience and expertise of our membership to develop a wide 
body of recommendations in this area. During the past year, we have 
carefully examined Commissioner Barnhart's proposals, we have met with 
the Commissioner and her staff, and we have shared with her our 
positions on various elements of her plan.
    We support the Commissioner's goal of making a correct decision as 
early in the process as possible. To accomplish this objective, the 
Social Security Administration must communicate with claimants at all 
levels of the determination process, and must provide them with the 
information they need to understand the process and their 
responsibilities as well as the availability of legal representation. 
We recommend that SSA increase its efforts to educate the medical 
community about eligibility criteria used in the disability program and 
the kind of evidence required to establish eligibility for benefits. In 
gathering medical evidence, SSA should consult a claimant's health care 
providers and compensate them adequately for providing relevant medical 
information. SSA also should give special weight to reports from 
treating physicians and should hold consultative examiners to the 
highest medical standards. We are interested in the concept of using 
nurse consultants as case managers to collect medical evidence and 
coordinate the services of medical experts, but we do caution against 
sole reliance on a nurse for medical assessments, particularly where a 
claimant has multiple impairments.
    We also support the proposal to eliminate reconsideration. We agree 
that the process and the claimant could be well served by a Reviewing 
Official (RO) whose job is to marshal all the evidence, prepare a 
report on the claim, and issue allowances when claims are clear. 
However, we do not support requiring a separate appeal to the 
Administrative Law Judge if the RO recommends disallowance. This 
requirement would simply replace reconsideration with another level of 
appeal. It is likely to discourage some claimants from pursuing 
legitimate claims, and to delay the scheduling of a hearing for others 
who do appeal.
    We commend the Commissioner's decision to retain the claimant's 
right to a de novo hearing before an administrative law judge. Hearings 
should be on the record, and the administrative law judges who conduct 
those hearings should be appointed pursuant to Sec. 3105 of the 
Administrative Procedure Act, Title 5 U.S.C., and applying standards 
consistent with the law and with published regulations. We also support 
the Commissioner's plan to preserve the non-adversarial nature of those 
hearings. We have cautioned against a return to the days of the 
``Government Representation Project,'' about which we have expressed 
concerns related to cost, effectiveness, and fairness to claimants. On 
the issue of when to close the record, the ABA has not taken a specific 
position. We recently urged that Medicare beneficiaries be provided the 
opportunity to reopen the record after the ALJ hearing, upon a showing 
of good cause. We note that current law already restricts the 
circumstances under which evidence may be submitted after the ALJ has 
rendered a decision.
    The Commissioner's proposal as currently articulated eliminates the 
Appeals Council and replaces it with an oversight panel that reviews 
ALJ decisions. Claimants who disagree with an ALJ decision would not be 
permitted to request such a review; they would be required to appeal 
directly to federal court. The ABA has not taken a specific position on 
whether to retain or eliminate the Appeals Council, or whether to 
replace it with another form of review panel. However, we have long 
been concerned about significant delays at this level as well as agency 
attempts to use own-motion review by the Appeals Council to compromise 
the independence and impartiality of ALJ decision-making. In 1986, we 
urged a complete study of Appeals Council procedures and functions to 
determine whether review by this body is necessary and to explore 
possible changes in the Council's structure, methods of operation, 
delegation of authority, and its role as policy maker. We also 
recommended 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.
    We have seen improvement in the processing of cases at the Appeals 
Council level in recent years, and we encourage the Commissioner to 
consider the consequences of eliminating this level of appeal. 
Witnesses at the September 30 hearing discussed such issues as the need 
for timeliness of decision making, for fair and adequate review of ALJ 
decisions, for due process safeguards for claimants, and for finality 
of the agency decision (for judicial review purposes). They also raised 
concerns about the cost of court appeals, the burden on unrepresented 
claimants, and the burden on federal courts. We caution also that 
changes to this level of appeal not create additional delays or 
compromise the independence and impartiality of administrative law 
judge decision making.
    Finally, mention has been made of creating Article I courts to hear 
Social Security appeals. The ABA has consistently opposed legislation 
to create Article I Social Security courts. We have observed that 
efforts to establish a separate court appear to be motivated by 
concerns over the volume of appeals and the need for uniformity of 
decision-making in these cases. At last week's hearing, concern also 
was expressed about the likelihood of an increased burden on Article 
III courts if the Appeals Council is eliminated. We have posited in the 
past that Social Security appeals are not drains on federal court 
resources because they are on the record reviews that in many, if not 
all, jurisdictions are considered by magistrates. The more significant 
problem is the need for accurate determinations at the agency level, 
particularly in the early stages of the process. Fixing the system at 
the front end will reduce the need for appeals. Simply shifting such 
appeals to another court system is not a practical solution.
    We appreciate Commissioner Barnhart's efforts to address these 
important issues and we commend you for your ongoing efforts in this 
area. We respectfully request that this letter be made a part of the 
record of the September 30, 2004 hearing.
            Sincerely,
                                                    Robert D. Evans
                                                           Director

                                 
 Statement of Witold Skwierczynski, American Federation of Government 
    Employees, American Federation of Labor-Congress of Industrial 
                             Organizations
    Chairman Shaw, Chairman Herger, Ranking Members Matsui and Cardin, 
and members of the Social Security and Human Resource Subcommittees, I 
thank you for the opportunity to present this statement regarding the 
Commissioner Barnhart's proposals to change the process for making 
determinations regarding application's for Social Security disability 
benefits.
    As the President of the American Federation of Government 
Employee's National Council of Social Security Field Operations Locals, 
I speak on behalf of approximately 50,000 Social Security 
Administration (SSA) employees in over 1500 facilities nationwide. The 
employees represented by our union work in Field Offices, Program 
Service Centers, TeleService Centers, Regional Offices of Quality 
Assurance, Offices of Hearings & Appeals, Regional Offices, 
Headquarters Offices, the Wilkes-Barre Data Operations Center, and 
other facilities throughout the country where retirement and disability 
benefit applications and appeal requests are received, processed, and 
reviewed.
    The primary message our union hopes to convey to the members of the 
Subcommittee is that Commissioner's proposed changes to Social 
Security's Disability Determination Process will undermine the rights 
of the disabled to gain access to benefits they have earned and that 
the Social Security system has a duty to provide. As employees of the 
Social Security Administration, we have devoted our lives and our 
careers to making the promises of Social Security a tangible reality 
for our fellow citizens. We care deeply about the elderly, the 
survivors of a breadwinner who has perished, and the disabled. We take 
our responsibility of making sure that all those who are eligible to 
receive Social Security benefits receive them, and that in their 
encounters with our agency, they find our processes helpful, fair, and 
efficient.
    Unfortunately, Commissioner Barnhart's Disability Determination 
``Reform'' undermines those goals. Ultimately, it sets up an 
adversarial relationship between the SSA and those whose disabilities 
have led them to seek access to Disability benefits under Social 
Security. To make matters worse, the impact of these proposed 
``reforms'' will fall most heavily on those who are both poor and 
disabled, because they are the group least likely to be successful in 
navigating a ``reformed'' system designed to require them to jump 
through numerous and complex legal hoops in order to gain access to the 
Social Security Disability benefits they have earned and that they 
need.
    Not surprisingly, the occasion of having suffered an illness or 
injury that renders one disabled and in a position to apply for Social 
Security Disability Benefits often leaves our fellow citizens in an 
extremely weak position financially, physically, and emotionally. In 
many, if not most cases, their disabling condition inhibits their 
ability to seek or secure effective legal representation. The 
particulars of the Commissioner's proposed ``reform'' to the Disability 
Determination process would appear to exploit this fact. The inevitable 
result will be denial of Disability Benefits to those who meet all the 
program's explicit required criteria, but not the implicit required 
criteria of aggressive and competent legal counsel and the funds to pay 
for it.

The Commissioner's ``Reform'' the Disability Determination Process is 
        Misguided

    As SSA employees who know first-hand how the agency's policies and 
procedures affect beneficiaries, we can tell you that the Disability 
Determination Process has flaws and is thus in need of some reform. Yet 
the changes Commissioner Barnhart is pursuing do not address the areas 
that are actually in need of improvement. For example,the 
Commissioner's plan does little to address the need for 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 continues to be inconsistent and 
problematic. Because of wide variation from state to state among the 
Disability Determination Service (DDS) workforce, a claimant's chances 
of being approved for disability benefits depends in large part on 
where he lives. There is also variation based upon whether a claimant 
has the resources to obtain medical attention.
    SSA records 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 whose income or resources make this 
impossible. In addition, 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.

Finally, SSA records clearly expose the inconsistencies among State DDS 
decisions. More than 65 percent of Social Security disability claims 
for benefits are approved in New Hampshire, while less than 32 percent 
of those who file for benefits in Texas are approved. This was recently 
addressed in the Government Accountability Office's (GAO, formerly the 
General Accounting Office) report, GAO-04-552T.
    GAO found that the state DDS's have:

      Two times the turnover of the federal workforce that 
performs similar work, resulting in increased costs to SSA for hiring 
and training, as well as increased claims-processing times;
      Difficulties in recruiting and hiring examiners due to 
state-imposed compensation limits, which has contributed to increases 
in claims-processing times, backlogs and turnovers;
      Critical training needs that are not being met, which 
have a large impact upon their examiner's ability to make disability 
decisions.

    It seems certain that the state DDS will continue to be plagued 
with problems, in spite of SSA's efforts to provide additional 
resources. So long as inconsistent initial decisions are being made by 
state DDS's, we believe that it is unethical to eliminate the 
reconsideration process as Commissioner Barnhart's ``reform'' requires.

AFGE Critique of Commissioner's Plan

    If inconsistency as a result of the patchwork of state DDS 
decisions is a problem, how can eliminating a claimant's opportunity to 
seek reconsideration of that decision be the solution? As preposterous 
as it is, taking away a claimant's opportunity to have a DDS decision 
reconsidered is one of the key elements of the Commissioner's anti-
beneficiary ``reforms.'' The six main components of the Commissioner's 
plan are as follows:

      Elimination of the Reconsideration Process,
      Creation of a ``Quick Decision'' Process
      Creation of a ``Reviewing Official (RO)''
      Elimination of the Appeals Council Review
      Closure of the record
      Changes quality review to ``end-of-line''

Eliminating the Reconsideration Process

    The reconsideration process occurs after a DDS office makes an 
initial decision to deny a claim for disability benefits and marks the 
first level of appeal for a claimant. Currently, approximately one out 
of every five SSI recipients receives a favorable decision at the 
reconsideration level. Therefore, to eliminate the reconsideration 
process would take away opportunities for appeal at a less contentious 
stage and would eliminate the checks and balances of DDS examiner's 
decisions. Eliminating an opportunity that now proves successful for 20 
percent of disabled beneficiaries who access it is unconscionable.
Creation of a ``Quick Decision'' Process

    The Commissioner's plan to create a ``Quick Decision'' unit would 
mean that the DDS's receive and make decisions on the most difficult 
disability claims--a task that many DDS examiners will not be able to 
accomplish easily, since examiners have been found to lack the 
knowledge and skills to make such decisions as determined in GAO's 
January 2004 report on the ``Strategic Workforce Planning Needed to 
Address Human Capital Challenges Facing the Disability Determination 
Services.'' These ``Quick Decisions'' will relegate to the DDS all 
complex cases. They are a poor substitute for putting adequate 
resources into initial claim determination. The number of complex cases 
that will be sent to the state DDS offices will lead to backlogs and 
increased litigation as claimants who do not land in the ``quick 
decision'' category end up in the adversarial and litigious vortex 
described below.

Creation of a ``Reviewing Official''

    The Commissioner's decision to implement a ``Reviewing Official 
(RO)'' for the purpose of evaluating and recommending decisions to 
Administrative Law Judges (ALJ) will forever change our relationship 
with the public. Under the Commissioner's proposal, the Reviewing 
Official, who will be an attorney, will prepare a pre-hearing report. 
If the reviewing official recommends denial of the claim, the only way 
an ALJ can overturn the Reviewing Official's decision will be through a 
written legal brief that refutes every point made by the Reviewing 
Official.
    The brief must describe the supporting evidence and basis for his/
her decision if that decision conflicts with that of the Reviewing 
Official. Not only will this procedure result in forcing already over-
worked ALJs to spend more time and resources on each case, it will also 
create new delays, backlogs, and litigation. Even more disturbing from 
the perspective of those who view the role of SSA as facilitating--not 
impeding--the delivery of Social Security benefits to those who meet 
eligibility requirements is that it places the new and increased 
burdens upon claimants. They will now have not only to make the case 
that they meet eligibility requirements, but they will also have to 
disprove every argument a Reviewing Official has put forth against 
them. This change will require the claimant to hire an attorney to 
pursue his/her claim for benefits, and dramatically increase the 
likelihood of prolonged litigation that serves neither SSA nor the 
claimants.

Elimination of Appeals Council Review

    The Commissioner's plan is to deprive claimants of what was the 
last step in the appeal's process, the Appeals Council Review. In its 
place would be a sample end of line review and ALJ oversight that would 
review only a few decisions made by the Office of Hearings and Appeals. 
This change represents a loss in due process rights for claimants and 
beneficiaries, as access to end of line review and ALJ oversight is at 
the agency's discretion, and once a case is selected for end-of-line 
review, no testimony or other input on the part of the claimant is 
permitted.
    Under the current appeal review process, approximately 28 percent 
of the cases reviewed by the Appeals Council have resulted in a 
decision either to reverse a decision to deny benefits, or to remand 
the case back to the DDS for further development. Of the cases remanded 
to DDS, approximately 75 percent result in allowances, according to 
SSA's own data.
    Replacing the Appeals Council with an oversight panel means that 
once a claim has been denied, either by the ALJ or the oversight panel, 
the claimant must appeal to the Federal District Court. Unfortunately, 
this process is too expensive for most SSI beneficiaries to pursue. 
Claimants who live in rural areas will also be disadvantaged by the 
fact that few attorneys who practice near them will have been admitted 
to practice in Federal District Court. Once again, the ability to 
achieve benefits will depend on the claimant's financial resources and 
where he or she lives.

Closure of the Record

    The Commissioner proposes closing the record after each claim has 
been processed. However, claimants who are disabled but do not have 
adequate health benefits or resources may not have sufficient medical 
evidence to support a claim. Under the Commissioner's ``reform'' even 
if the claimant is eventually able to obtain the proper, official 
medical evidence to support the claim, if it is not submitted during 
the life of the claim, the claim cannot be reopened for consideration. 
This is blatantly unfair to claimants, and flies in the face of SSA's 
long tradition of compassion and service.
    In addition, this policy will create massive increases in 
duplicative workload and increases in litigation. Claimants' attorneys 
will recommend, prudently, that their clients file subsequent claims 
for benefits each and every time new medical evidence becomes available 
in order to protect their retroactivity. The problems that will be 
created by this ``reform'' will be enormous, as SSA's does not have the 
capability to house or track multiple, corresponding claims.

Changing Quality Review to ``End of Line''

    The Commissioner proposes that the quality review of all disability 
claims be accomplished at the ``end-of-line.'' This means that after 
all decisions have been made, a quality review will be done, rather 
than the ``in-line'' review that has traditionally been performed. 
Therefore, if a decision were improperly rendered at any level, the 
errors will not be addressed in a timely manner. Additionally, the 
oversight panel responsible for conducting the ``end-of-line'' reviews 
will have the authority to overturn all decisions, approvals or 
denials, creating a breach of due process and a more hostile 
relationship with the disabled community.
    If the claim has been denied, either by the ALJ or the Oversight 
Panel, the claimant must appeal to the Federal District Court. 
Unfortunately, this process is too expensive for most SSI recipients to 
pursue. Claimants who live in rural areas will have less access to 
attorneys who practice law in Federal District Courts. Once again, the 
ability to achieve benefits will depend on the resources available to 
an individual and where that person lives.
    AFGE believes, based upon our long experience in serving the 
public, that when the disabled community begins to experience these 
harsh ``reforms'' the response will be anger and resentment. The 
proposed changes by the Commissioner do nothing to improve the 
disability decision-making. They simply reduce processing time by 
eliminating steps and opportunities for claimants to make their case, 
and create an adversarial posture between the agency and those we 
should be serving.

Does the Commissioner's ``Reform'' Include Establishing Temporary 
        Benefits?

    There is reason to believe that the Commissioner's new approach, 
once fully implemented, will include an effort to introduce ``time 
limited'' or ``temporary'' disability benefits in Social Security. A 
radical move such as this is would have an enormous and detrimental 
impact Social Security's disability programs.
    AFGE does not make this charge lightly. Earlier this year, union 
representatives became aware of SSA's plans to implement temporary 
allowance demonstration projects that would provide immediate cash and 
medical benefits for a specified period (12-24 months) to disability 
applicants. AFGE has also learned from concerned members of management 
who are unwilling to come forward publicly that the use the of the 
demonstration project authority masks the agency's intention to move 
directly to national implementation.
    In July, 2004 meetings with SSA officials, AFGE representatives 
explained that we had become aware of the plan to replace the current 
disability system with ``time limited benefits.'' Those officials did 
not deny such plans existed and seemed very concerned about the Union's 
awareness of these plans.
    The introduction of ``time-limited'' disability benefits in Social 
Security will have far-reaching consequences for beneficiaries and the 
burdens and requirements that SSA places upon them in the context of 
the overall Social Security system. A determination by SSA regarding 
the length of time that an individual can be expected to remain 
disabled will inevitably be inaccurate for numerous beneficiaries. 
Further, the decision to experiment with the only source of income 
support that many who are both severely disabled and poor have appears 
to have been taken with virtually no public debate.
    AFGE urges Members of these Subcommittees to seek an assessment of 
the economic impact of ``time limited benefits.'' Given, the lack of 
clear guidelines for determining expected medical improvement, the time 
frames are determined at the discretion of the agency. If the 
Administration should follow through with plans to limit disability 
benefits to a 24-month period for recipients who are expected to 
medically recover in a 2-3 year period, it is possible that the vast 
majority of disabled recipients can be placed in this category.

AFGE Recommendations

    AFGE believes that immediate attention needs to be given to three 
specific issues regarding the Social Security Disability Benefit 
program: 1) Provide proper staffing and resource allocations, 2) Ensure 
consistent disability decisions in a more expeditious manner, and 3) 
Maintain quality, face-to-face 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 have insisted that 
SSA's disability structure has flaws that need to be addressed. The 
Commissioner's proposals, unfortunately, fail to address or resolve any 
of the systems real problems. Institutional problems continue to be 
overlooked. Communication between headquarters and operations in the 
field remains poor. SSA's approach of discouraging open discussion of 
problems continues to exist. 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 to solve existing 
problems. Although there used to be an open door policy between the 
Commissioner and our union, it no longer exists.
    AFGE understands that long-lasting progress will only be achieved 
with the assistance of those who not only understand the problems, but 
who 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.
    As I emphasized in previous testimony before the Social Security 
Subcommittee, 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 just over half of SSA's 
initial disability claim processing time goal of 120 days. Customer 
service improved dramatically. 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. Unfortunately, no actions were 
taken to implement any of these successes, and the pilot was 
terminated. AFGE urges Congress to direct the SSA justify the 
elimination of this successful and innovative experiment. It is part of 
the answer to the disability problem.
    It seems apparent that the primary reason why 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 have 
been based on political considerations and the fear of losing work. 
Congress should be very concerned when SSA spends millions of dollars 
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 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. However, the 
Commissioner refuses to act on the AFGE's recommendation. 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 likes the DCM, employees enthusiastically support it 
and that it provides substantially better service than the current 
disability product. We hope that Members of this Subcommittee will take 
the necessary action to ensure 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). There is no question 
that the AO would better serve the public than the Commissioner's 
proposed Reviewing Official position. The AO, who is not an attorney, 
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 did SSA terminate a 
methodology that achieved their objective? SSA should reexamine its 
decision.
    The AO could be either a federal or state employee and, in fact, 
was located in DDS offices, ALJ Hearing offices, SSA Field Offices and 
Program Service Centers. By locating the position in multiple 
locations, the agency ensured the public more accessibility and 
individualized service in processing their hearing requests. In 
addition, by situating AO's away from hearing offices, SSA was 
separating these employees from the bureaucratic OHA management 
structure.
    Although SSA never released any valid pilot results for the AO, 
preliminary data indicated that the AO's were able to issue favorable 
decisions in 17% of the hearings cases. These cases were decided based 
on the evidence of record and did not require hearings before an ALJ. 
For the remaining cases, the preliminary data indicated that AO's did a 
good job of fully developing the record and preparing the case for 
hearing.
    Many hearings offices reported that the AO's work resulted in 
significant time savings in cases decided by an ALJ. The preliminary 
data indicated that, midway through the pilot, the quality of the AO 
was approaching that of the ALJ's.
    Unfortunately, SSA abolished the AO position in March 1999 despite 
the fact that AO's were responsible for quicker decisions for some 
applicants and a streamlined, efficient, expeditious hearing for 
others. AFGE suspects that management resistance to this disability 
improvement was centered on OHA fears of losing institutional control 
of a portion of the hearings process. Such fears should not be 
accommodated.
    SSA will be unable to continue to process disability claims in a 
timely and efficient manner unless the Administration and Congress 
provide additional resources. Absent appropriate financing for 
additional staffing, SSA cannot guarantee provision of timely payment 
of benefits, correct administration of complex regulations or training 
and mentoring for either current employees or new workers.
    Unless Congress acts to increase SSA's administrative budget, the 
agency's service levels will continue to decline, as SSA will never be 
able to hire the FTE's necessary to address its workloads. We believe 
that SSA's administrative budget should be set at a level that fits the 
needs of Social Security's taxpayers and beneficiaries rather than at 
an arbitrary level which fits within the government's overall 
discretionary spending cap. If SSA's administrative budget is not 
explicitly excluded from the cap on discretionary spending, SSA is 
forced to compete with other Federal agencies for scarce resources 
within the spending limits defined by law. The result will continue to 
erode SSA's ability to provide adequate service to tens of millions of 
Americans in the next decade.

Automated Electronic Disability Benefits (AeDIB)

    SSA initially decided direct Offices to implement the Electronic 
Disability Claims System (EDCS) gradually, beginning slowly and 
eventually achieving 100 percent use as the DDS's gained access. 
Unfortunately, SSA management has been overzealous in the 
implementation of EDCS. This has caused tremendous problems for front 
line Claims Representatives (CR) throughout the country. Neither 
staffing nor interview appointment schedules has been adjusted to 
enable employees to produce the EDCS claims that management has been 
demanding from them. More and more employees are complaining of health 
and safety problems that are a direct result of excess keying involved 
in EDCS claims.
    The recent decision by SSA to accelerate the national rollout of 
its AeDib initiative has resulted in many problems across the nation. 
Our union has conducted a nationwide survey of SSA's field office 
employees. Some of the problems identified include:

      Lengthier interviews due to additional keying time;
      Missed and delayed breaks and lunches;
      Prolonged waits in the reception area/delayed or missed 
appointments;
      Increased backlogs;
      Additional staff needed;

    Lengthier interviews. Of those employees who responded to the 
Union's survey, 25% of offices overall reported spending an additional 
30-45 minutes keying into the EDCS over the traditional paper process. 
38% reported an additional 45-60 minutes. 24% reported more than an 
additional 60 minutes. The remaining 13% reported an additional 15-30 
minutes.
    Missed and delayed lunches and breaks. Overall, 72% of the offices 
reported missed lunches and breaks because of EDCS claims.
    Prolonged waits in the reception area. 75% of the offices reported 
claimants were waiting longer in reception areas. 80% said appointments 
were frequently or sometimes delayed or missed because of EDCS, 
resulting in an angry public.
    Increased backlogs. Increased backlogs of work were reported 
universally in most post-entitlement areas: re-determinations, medical 
and work Continuing Disability Reviews (CDR), overpayments, and 
worker's compensation were cited in virtually every response received.
    Additional staff needed. 90% of the respondents reported they need 
20-40% more staff because of the EDCS process.
    While software enhancements may improve the EDCS process, they will 
not completely resolve the problems that are being experienced. As AFGE 
understands the EDCS process, the time saved will be at the back end of 
the disability process, not the front end. Therefore, the time involved 
to input manually volumes of medical information that was once provided 
by the claimant in writing will always be a factor. Additionally, SSA 
is already moving forward to require other disability forms, such as 
the medical report form for appeals, to be manually input by Claims 
Representatives. This will only compound the problems already 
identified.

Conclusion

    The Social Security system's Disability programs are a crucial 
component of the social safety net, and AFGE's Social Security members 
take great pride in providing service to disability beneficiaries. We 
are sincerely concerned about the wellbeing of disability 
beneficiaries, and consider our role as helping those who are 
unfortunate enough to have experienced a disability to obtain the 
Social Security benefits they have earned. We do not believe that it is 
proper for SSA to set up roadblocks to impede those with legitimate 
claims from obtaining their benefits. After careful study of the 
Commissioner's Disability ``reform'' plan, however, we believe that it 
is impossible to characterize it in any other way.
    The Social Security Administration has a long and proud tradition 
of working constructively with its unionized workforce to make the 
Social Security system efficient, fair and ``customer-friendly.'' That 
is why Social Security remains so popular and successful. The public 
service ethos that SSA employees have embraced will inevitably be 
undermined if Commissioner Barnhart's controversial Disability reforms 
are allowed to go forward. Instead of providing care and assistance to 
the disabled, the ``reforms'' will force us into an adversarial and 
litigious position against the disabled. We urge you to intervene and 
stop this ``reform'' from proceeding.
    This concludes my statement. I will be happy to answer any 
questions that Members of the Subcommittee may have.

                                 
             Statement of Robin J. Arzt, New York, New York
    Mr. Chairmen and Members of the Subcommittees:
I. INTRODUCTION

    Thank you for the opportunity to submit this statement. My name is 
Robin J. Arzt. I am an Administrative Law Judge (``ALJ'') who has been 
hearing Social Security disability and Medicare cases for over ten 
years at the Office of Hearings and Appeals (``OHA'') of the Social 
Security Administration (``SSA'') in New York, New York, and formerly 
in the Bronx, New York. This statement is presented in my individual 
capacity.
    My position as an Administrative Law Judge with the Social Security 
Administration is stated in this statement for identification purposes 
only. This statement was written in my private capacity and without the 
use of federal government resources or federal work time. No official 
support or endorsement by the Social Security Administration or the 
United States is or should be inferred. The views expressed in this 
statement are mine and do not necessarily represent the views of the 
Social Security Administration or the United States.

II.  COMMENTS ON COMMISSIONER BARNHART'S PROPOSAL TO IMPROVE THE 
        DISABILITY PROCESS

    The Commissioner presented wide-ranging proposals to redesign the 
disability claims process from the initial determination stage through 
the final administrative decision step during her September 25, 2003, 
testimony before the Subcommittee on Social Security. At the hearing, 
the Commissioner proposed the elimination of the DDS reconsidered 
determination step. The Commissioner also proposed the creation of an 
SSA Reviewing Official (``RO''), who would be an attorney and would 
review a claimant's claim file upon the claimant's appeal from an 
adverse initial determination by the agency of a benefits application. 
The RO would have authority to grant a benefits claim but no authority 
to deny a claim outright If an RO does not fully grant a benefits 
claim, the claimant has a right to appeal for a de novo hearing before 
an ALJ appointed pursuant to APA. (On February 13, 2004, senior SSA 
officials publicly stated that the ROs essentially would replace the 
DDS reconsidered determination step and administratively are expected 
to be placed within the OHA but not in the OHA hearing offices.) The 
Commissioner also recommended the retention of a claimant's due process 
right, upon appeal from the agency's claim denial, to a de novo 
administrative hearing before an APA ALJ. In addition, the Commissioner 
also proposed to replace the Appeals Council with Oversight Panels that 
will include ALJs. (The Commissioner since has stated publicly that the 
Oversight Panels are intended to be a quality review process, not the 
final administrative appellate step.)
    The Commissioner is encouraging input from a wide range of 
stakeholders to aid in developing the details of her proposals prior to 
issuing proposed regulations, as she stated during her September 25, 
2003, and February 26, 2004, testimony before the Subcommittee on 
Social Security. The Commissioner's bold proposals and inclusive 
process are appreciated.
    It is excellent that the Commissioner is recommending the retention 
of the claimants' due process right, upon appeal from an RO's 
disability claim denial, to a de novo administrative hearing before an 
APA ALJ, who is an independent decisionmaker. The Commissioner's 
recognition that the APA provisions were enacted for the benefit of the 
claimants and to enhance the disability process should be commended. 
The Commissioner made her support of the ALJs and their role in the 
disability process clear during her September 25, 2003, testimony 
before the Subcommittee on Social Security. The Commissioner also 
reported that ALJ case ``productivity rates [in FY 2003] were the 
highest in history'' during her February 26, 2004, testimony before the 
Subcommittee on Social Security.
    Only those proposals by the Commissioner that bear upon the SSA 
appellate administrative levels are commented upon in this statement. 
The remainder of this statement addresses the Commissioner's proposals 
regarding the (1) treatment of an RO's Recommended Disallowance or Pre-
Hearing Report in an ALJ's decision, (2) administrative placement of 
the RO within SSA, and (3) replacement of the Appeals Council with 
Oversight Panels. My comments are made in the context of how the 
proposals will impact upon the consistency of case outcomes at the 
different decision levels, and how these proposals may be modified and 
implemented to maximize the consistency of disability decisions between 
the administrative levels and between the administrative levels and 
initial court level. I also make comments that address concerns about 
preserving the de novo nature of the ALJ hearing and ALJ decisional 
independence, the timeliness of decisions at the final administrative 
level, reduction of appellate caseloads at the administrative and court 
levels, status and use of the Appeals Council Administrative Appeals 
Judges (``AAJs'') on the Oversight Panels, and wide acceptance of the 
SSA proposed regulations that may be issued to implement the proposals. 
I also raise APA and other due process issues that are presented.

A.  Treatment of a Reviewing Official's Recommended Disallowance or 
        Pre-Hearing Report in an ALJ'S Decision

    The Commissioner proposes that, if an RO does not grant a 
disability claim, the RO will issue either (1) a Recommended 
Disallowance when the RO believes that the evidence shows the claimant 
is not disabled, or (2) a Pre-Hearing Report when the RO believes that 
the evidence is insufficient to determine eligibility for disability 
benefits. The Pre-Hearing Report will state what evidence is needed to 
successfully support the claim. The Commissioner also proposes that, 
only when an ALJ is granting disability benefits, an ALJ's decision 
must either state in detail why the RO's Recommended Disallowance is 
being rejected, or describe the new evidence added since the RO's Pre-
Hearing Report that corresponds to the list of evidence that the RO 
said is needed for a successful claim.
    There is no proposal that either requires details in the ALJ's 
decision regarding why the ALJ is accepting an RO's Recommended 
Disallowance, or requires a description of the new evidence supporting 
a denial of the claim in reference to an RO's Pre-Hearing Report. 
Therefore, the Commissioner's proposal would require that an ALJ 
provide a more extensive defense of granting benefits than denying 
benefits when discussing the RO's Recommended Disallowance and Pre-
Hearing Report in the ALJ's decision. Accordingly, the proposal 
presumes the correctness of the RO's assessment as to what evidence is 
sufficient to grant or deny a disability benefits claim, which may 
incorrectly be interpreted as a requirement that the RO's assessment is 
entitled to some degree of deference.
    The Commissioner told AALJ officers on October 24, 2003, that her 
proposal regarding how an ALJ must address the RO's Recommended 
Disallowance or Pre-Hearing Report in the ALJ's decision is not 
intended to interfere with the APA and Social Security Act requirements 
for an ALJ's decision. However, despite the Commissioner's good 
intentions for the proposal, the presumption of the correctness of the 
RO's assessment of the evidence that is embodied in the proposed 
disparity in the required treatment of the RO's documents by the ALJ 
that depends upon the outcome of the case does impinge upon the de 
novo, \1\ independent nature of the ALJ's hearing and decision process. 
Holding a de novo hearing means to hear a matter anew, as if it is 
being heard for the first time and no decision previously was 
rendered.\2\ De novo review is ``independent'' review.\3\ Accordingly, 
such an impingement will foster a perception of agency pressure to deny 
cases, unfairness, and improper deference to the RO documents in ALJ 
denials among claimants and their representatives that likely will 
result in an increase in the number of appeals from ALJ denials of 
benefits.
---------------------------------------------------------------------------
    \1\ The ALJ level of review is a de novo review. Mathews v. 
Eldridge, 424 U.S. 319, 339 n. 21 (1976).
    \2\ Ness v. Commissioner, 954 F.2d 1495, 1497 (9th Cir. 1992).
    \3\ Premier Communications Network, Inc. v. Fuentes, 880 F.2d 1096, 
1102 (9th Cir. 1989).
---------------------------------------------------------------------------
    Moreover, any specific regulatory requirement that that the ALJ 
address the RO's documents would create the potential for erroneous 
arguments on appeal and appellate findings that an ALJ's decision is 
deficient for a failure to adequately address or defer to the RO's 
Recommended Disallowance or Pre-Hearing Report. The standard for a 
sufficient ALJ decision on appeal is whether there is substantial 
evidence in the record to support the decision, not whether the ALJ 
adequately addressed the contents of a prior decisionmaker's 
recommended decision or report.\4\
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    \4\ ``The Appeals Council will review a case if (1) There appears 
to be an abuse of discretion by the administrative law judge; (2) There 
is an error of law; (3) The action, findings or conclusions of the 
administrative law judge are not supported by substantial evidence; or 
(4) There is a broad policy or procedural issue that may affect the 
general public interest.'' 20 C.F.R. Sec. 404.970(a).
---------------------------------------------------------------------------
    Therefore, augmenting the Commissioner's proposal to require such 
statements regarding the RO documents in all ALJ decisions, regardless 
of the outcome, does not cure all of the issues that the proposal 
raises. The creation of these issues by the proposal suggests that the 
proposal is not the most effective way to achieve greater consistency 
between the RO and ALJ decisions, since the likely increase in the 
number of appeals from ALJ denials and appellate error regarding how 
ALJs address the ROs' documents will defeat any potential for an 
increase in decision consistency between the RO and ALJ levels that the 
proposal is intended to achieve.
    To preserve the independent, de novo nature of the ALJ hearing and 
decision, I respectfully submit that the Commissioner consider omitting 
a requirement that an ALJ address the RO's documents from her proposed 
regulations. (Even if the proposal is not part of the Commissioner's 
proposed regulations, the ROs' documents still would be helpful in 
developing the cases for the ALJ level.) The APA and Social Security 
Act already require that an ALJ discuss the evidence in rendering the 
decision on a disability benefits claim without reference to the 
outcome of the ALJ's decision or prior agency determinations.
    The APA requires that all agency administrative decisions, 
including ALJ ``decisions . . . shall include a statement of (A) 
findings and conclusions, and the reasons or basis therefor, on all the 
material issues of fact, law, or discretion presented on the record; 
and (B) the appropriate rule, order, sanction, relief, or denial 
thereof.'' \5\ Title II of the Social Security Act sets forth the 
elements to be included in agency administrative decisions regarding 
eligibility for disability benefits:
---------------------------------------------------------------------------
    \5\ 5 U.S.C. Sec. 557(c).
---------------------------------------------------------------------------
    Any such decision by the Commissioner of Social Security which 
involves a determination of disability and which is in whole or in part 
unfavorable to such individual shall contain a statement of the case, 
in understandable language, setting forth a discussion of the evidence, 
and stating the Commissioner's determination and the reason or reasons 
upon which it is based. Upon request by any such individual or upon 
request by a wife, divorced wife, surviving divorced mother, surviving 
divorced father husband, divorced husband, widower, surviving divorced 
husband, child, or parent who makes a showing in writing that his or 
her rights may be prejudiced by any decision the Commissioner of Social 
Security has rendered, the Commissioner shall give such applicant and 
such other individual reasonable notice and opportunity for a hearing 
with respect to such decision, and, if a hearing is held, shall, on the 
basis of evidence adduced at the hearing, affirm, modify, or reverse 
the Commissioner's findings of fact and such decision.\6\
---------------------------------------------------------------------------
    \6\ 42 U.S.C. Sec. 405(b)(1) (emphasis added).
---------------------------------------------------------------------------
    Decisions regarding supplemental security income eligibility under 
Title XVI and Medicare eligibility under Title XVIII of the Social 
Security Act must include the same elements as decisions regarding 
Title II disability eligibility.\7\
---------------------------------------------------------------------------
    \7\ 42 U.S.C. Sec. Sec. 1383(c)(1)(A), 1395ff(b)(1).
---------------------------------------------------------------------------
    Instead of the proposal of a requirement that an ALJ address the 
RO's documents, which places a higher burden on ALJs to justify 
granting benefits than denying them, I respectfully submit that an 
effective way to increase the consistency of decisionmaking between the 
RO and ALJ decision levels would be to require that the RO use the same 
legal standards for determining disability as those by which the ALJs 
are bound, rather than the current practice of having the initial 
agency decisionmakers use a different and primarily medical set of 
standards. Since the ROs will be attorneys, implementation of legal 
standards for their decisionmaking will be met with a success that 
demonstrably has not been possible with non-attorney decisionmakers, 
such as the failed Process Unification Training for DDS decisionmakers 
and Adjudication Officer initiatives in the 1990s.

B.  The Administrative Placement of the Reviewing Official within SSA

    As is stated above, senior SSA officials recently stated that the 
ROs essentially would replace the DDS reconsidered determination step 
and administratively are expected to be placed within the OHA but not 
in the OHA hearing offices. If an RO does not fully grant a benefits 
claim, the Commissioner's proposal would provide a claimant the right 
to appeal for a de novo hearing before an ALJ. Accordingly, the RO's 
action on a benefits claim would be the last step of the Commissioner's 
initial decision of the benefits claim, an adverse decision from which 
the APA and Social Security Act provide for an appeal with reasonable 
notice and opportunity for a hearing on the record before an APA 
ALJ.\8\
---------------------------------------------------------------------------
    \8\ 5 U.S.C. Sec. 554(a); 42 U.S.C. Sec. Sec. 405(b)(1), 
1383(c)(1)(A), 1395ff(a)-(b)(1).
---------------------------------------------------------------------------
    Since the ROs would make the Commissioner's initial decisions of 
benefits claims, I respectfully submit that the Commissioner is 
required by the APA to administratively place the ROs outside of OHA. 
The APA requires a separation of the adjudication function of a federal 
administrative agency from its investigative and prosecutorial 
functions to preserve the decisional independence of ALJs when 
conducting a hearing or deciding a case. ``[An ALJ] 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.\9\ ``The APA separation of functions doctrine [set 
forth in 5 U.S.C. Sec. 554(d)] requires only that the prosecutor and 
the adjudicator each be responsible to the agency head by a separate 
chain of authority.'' \10\ This provision safeguards against undue 
agency influence and ensures that claimants receive independent 
adjudications of their claims. Therefore, SSA may not place its ROs in 
the same chain of command to the Commissioner as the ALJs, since the 
ROs perform SSA's investigative and prosecutorial functions in 
rendering initial determinations of benefits claims.
---------------------------------------------------------------------------
    \9\ 5 U.S.C. Sec. 554(d)(2).
    \10\ Columbia Research Corporation v. Schaffer, 256 F.2d 677, 680 
(2nd Cir. 1958).

---------------------------------------------------------------------------
C.  Replacement of the Appeals Council with Oversight Panels

    The Commissioner's proposals include replacing the Appeals Counsel 
with a ``Centralized Quality Control Review'' (``CQCR'') function 
within SSA with the final step of administrative review being by 
``Oversight Panels'' of two ALJs and one Administrative Appeals Judge 
(``AAJ'') upon referral of cases by CQCR staff. The individual ALJ's 
decision will be the final Commissioner's decision, if it is not 
reviewed by the CQCR or if it is affirmed by an Oversight Panel. If an 
Oversight Panel changes the outcome of the decision, then the Oversight 
Panel decision becomes the final Commissioner's decision. A claimant 
may appeal any final agency action to a United States District Court, 
but no claimant's right of appeal from an ALJ's decision to an 
Oversight Panel is stated. AAJs are subordinate employees who currently 
serve on the SSA Appeals Council.
    I offer the following information regarding the ALJ appellate panel 
concept as AALJ has been proposing it to explain the many demonstrated 
benefits that a fully developed appellate panel system will bring to 
increase consistency between the final SSA administrative decision and 
initial court decision.
    The Commissioner's Oversight Panel proposal borrows from my 
proposal for local appellate panels of three ALJs as the final step to 
replace the Appeals Council in the Social Security Act claims 
administrative process. The appellate panel proposal is part of a 
detailed proposal by AALJ that I authored for an ALJ-administered 
independent adjudication agency for Social Security Act benefits cases 
with the exclusive jurisdiction to make the final administrative 
decisions of Social Security Act Title II, XVI and XVIII benefits 
claims. (The detailed adjudication agency proposal is embodied in an 
AALJ policy position paper and my below-mentioned forthcoming law 
review article, which are available upon request. A summary of the 
adjudication agency proposal was submitted to the Subcommittee on 
Social Security as AALJ President Ronald G. Bernoski's statement for 
the record of the June 28, 2001, hearing on Social Security Disability 
Programs' Challenges and Opportunities.)
    Under the AALJ proposal, the claimants and the SSA would have a 
right of appeal of an individual ALJ's decision to an appellate panel 
staffed by ALJs that would consist of three ALJs who would review the 
cases regionally or locally. The appellate panels would be akin to the 
Bankruptcy Court appellate panels. Based upon the Bankruptcy Court 
experience, the appellate panel model (1) is an appellate system that 
can handle a large caseload, (2) results in higher quality decisions 
because of expertise, (3) results in substantially fewer appeals to the 
courts and a substantially lower reversal rate by the courts because of 
the bar's and courts' confidence in the high quality of the decisions, 
which reflects a higher degree of decision accuracy by three expert 
decisionmakers working together, (4) results in a substantially reduced 
federal court caseload, (5) results in a shorter disposition time 
because the large pool of about 1,000 SSA ALJs permits the timely 
determination of appeals that cannot take place with a small body such 
as the Appeals Council, and (6) affords the claimants access to a local 
appellate process. The elements and merits of the Bankruptcy Court 
appellate panel process are discussed in detail at the end of this 
statement.
    The AALJ proposal for local ALJ appellate panels to replace the 
Appeals Council was favorably and extensively commented upon and 
recommended for use within SSA OHA in a March 2002 report commissioned 
by the SSAB.\11\ It is the SSAB report that apparently brought the AALJ 
appellate panel proposal to the Commissioner's attention, given the 
Commissioner's reference to one of its authors, Professor Jeffrey 
Lubbers, as a source during her September 25, 2003, testimony before 
the Subcommittee on Social Security.
---------------------------------------------------------------------------
    \11\ Paul Verkuil and Jeffrey Lubbers, Alternative Approaches to 
Judicial Review of Social Security Disability Cases 19-21, 56, 63-68 
(March 2002), available at www.ssab.gov/verkuillubbers.pdf. This 
article includes an exhaustive survey of the many recommendations over 
the last 20 years to abolish the Appeals Council and suggested 
replacement mechanisms, including the AALJ proposal.
---------------------------------------------------------------------------
    I am gratified that the Commissioner is proposing the panel 
approach to replace the Appeals Council. However, so far, it does not 
appear from the Commissioner's September 25, 2003, testimony and 
subsequent public statements that a claimant may appeal an individual 
ALJ's decision to an Oversight Panel. This is a major departure from 
AALJ's recommendation that would eliminate many of the benefits of the 
appellate panel concept, including much greater decisional consistency 
between the final administrative and initial court levels and fewer 
appeals to the federal courts. The Commissioner states that the CQCR 
and Oversight Panels are a quality review process, not an appellate 
step, as an explanation for why there is no claimant's right of appeal 
to an Oversight Panel. Another departure from the AALJ proposal is the 
use of an AAJ, a subordinate SSA employee with no protections for 
decisional independence, as one member of the three-member Oversight 
Panels. Also, the Commissioner has not yet determined whether the 
Panels will be regional or local for better access to the claimants, as 
AALJ recommends. Finally, the Commissioner has not yet determined 
whether Panel membership will rotate among the SSA ALJ workforce.
    I respectfully submit that the quality review step posited by the 
Commissioner to the Oversight Panel level is an appeal, not only 
quality review, since the outcome of the case may change and, if it 
does, the Panel decision becomes the final decision of the 
Commissioner. Quality review usually involves a post mortem review of 
closed cases. The claimants must have a right to appeal to the Panels 
in order for the claimants, SSA, the courts, and the American public to 
receive the many demonstrated benefits to the Social Security 
disability process of an appellate panel process, including faster 
appellate decisions, increased consistency between the final SSA 
administrative decisions and initial court decisions, and fewer federal 
court appeals.
    Without claimant appeals to the Oversight Panels, the District 
Courts will be inundated with appeals from the individual ALJ 
decisions, and will not have the benefits of the higher quality 
decisions and reduction of caseloads that would result from the better 
decisions by the Panels. There are about 100,000 claimant appeals to 
the Appeals Council per year, which would be a burden for the District 
Courts.
    Also, permitting the agency appellate review of an ALJ's decision 
by an Oversight Panel, which is relatively easier, faster and lower 
cost than a District Court appeal, but limiting the claimants to only a 
District Court review of an adverse ALJ decision, raises substantial 
fairness and due process issues. The omission of the claimants' right 
to access the final administrative appellate step to review an ALJ's 
decision increases the risk that erroneous denials of benefits will not 
be corrected because some claimants, particularly pro se claimants, who 
would be able to pursue a relatively simple administrative appeal will 
not have the wherewithal to bear the additional burden of prosecuting a 
court appeal.
    So that Social Security claimants, SSA, the federal courts, and the 
American public reap the benefits of a Bankruptcy Court appellate 
panel-style process, I respectfully submit that the Commissioner 
consider modifying her Oversight Panels proposal and issue regulations 
that provide that (1) a claimant has a right of appeal to the Oversight 
Panels, (2) the Oversight Panels is the final step of administrative 
review that must be taken by a claimant in order to seek judicial 
review of the Commissioner's decision in the claimant's case, (3) only 
independent decision makers may serve on the Oversight Panels, meaning 
ALJs who have the protections of the APA that have been put in place 
for the benefit of the claimants, (4) the Oversight Panels will be 
constituted regionally or locally for claimant access, (5) the 
Oversight Panels will be constituted from the full nationwide SSA ALJ 
workforce to ensure nationwide ALJ participation, and (6) there will be 
rotation of Oversight Panel duty among the ALJs in the SSA ALJ 
workforce to ensure that the Panel ALJs have recent line experience 
with hearing and deciding cases. All of these suggested modifications 
are the elements of the Bankruptcy Court appellate panel process that 
have made that process a demonstrated success.
    The 27 AAJs from the Appeals Council may be afforded protections 
for decisional independence for the benefit of the claimants by 
grandfathering the AAJs into ALJ status, as was done in the 1970s for 
the administrative judges who heard SSI cases.\12\
---------------------------------------------------------------------------
    \12\ ``In 1977, Congress enacted Public Law Number 95-216, 
containing a section entitled Appointment of Hearing Examiners, which 
deemed the temporary ALJs to be permanent ALJs appointed pursuant to 5 
U.S.C. Sec. 3105 of the APA.'' Robin J. Arzt, Adjudications by 
Administrative Law Judges Pursuant to the Social Security Act are 
Adjudications Pursuant to the Administrative Procedure Act, 22 J. Nat'l 
Ass'n Admin. L. Judges 279, 304 & n. 96 (Fall 2002) (citing, Social 
Security Amendments of 1977, Pub. L. No. 95-216, 91 Stat.1509, 1559 
(1977)).
---------------------------------------------------------------------------
    The appellate panel system should result in faster and much higher 
quality decisions than those produced by the Appeals Council, but only 
if it functions as an appellate step for both the claimants and agency. 
A fully developed appellate panel process greatly will enhance the 
consistency of outcome between the final administrative step and 
District Court step, and thus reduce the number of appeals, just as it 
has between the Bankruptcy Court appellate panels and next level of 
judicial review.
    My law review article, which is based upon the AALJ independent 
adjudication agency proposal,\13\ includes a detailed statement of the 
ALJ appellate panel proposal and description of the successful 
Bankruptcy Court experience with the appellate panel process that I 
reprint as follows for the Subcommittees' reference as the remainder of 
my statement.\14\ (Minor edits have been made to make the footnote 
references internally consistent.)
---------------------------------------------------------------------------
    \13\ Robin J. Arzt, ``Recommendations for a New Independent 
Adjudication Agency to Make the Final Administrative Adjudications of 
Social Security Act Benefits Claims,'' 23 J. Nat'l Ass'n Admin. L. 
Judges 267-386 (Fall 2003).
    \14\ Id., at 356-361.

``Final Administrative Appellate Review by the United States Office of 
---------------------------------------------------------------------------
        Hearings and Appeals

``PROPOSED TERMS FOR: FINAL ADMINISTRATIVE APPELLATE REVIEW BY THE 
        UNITED STATES OFFICE OF HEARINGS AND APPEALS

    ``The Chief Judge shall establish a Social Security Appellate Panel 
Service in each region composed only of ALJs in the hearing offices in 
each region who are appointed for a period of years by the Chief Judge 
to hear and determine appeals taken from ALJ decisions issued pursuant 
to 42 U.S.C. Sec. Sec. 405(b), 1383(c), and 1395(b). ALJs who are 
appointed to a Social Security Appellate Panel Service by the Chief 
Judge shall be appointed and may be reappointed. The Chief Judge shall 
designate a sufficient number of such panels so that appeals may be 
heard and disposed of expeditiously. Multi-region panels may be 
established to meet the needs of small regions. An appeal under this 
section shall be assigned to a panel of three members of a Social 
Security Appellate Panel Service, except that a member of such service 
may not hear an appeal originating in the hearing office which is the 
member's permanent duty station or the hearing office where the member 
is on a temporary detail assignment.

``EXPLAINATION OF PROPOSED TERMS FOR: FINAL ADMINISTRATIVE APPELLATE 
        REVIEW BY THE UNITED STATES OFFICE OF HEARINGS AND APPEALS

    ``The USOHA will have a two tier appellate process: first, a 
decision after a hearing by an ALJ, and then an appeal to a local panel 
of three ALJs akin to the Bankruptcy Court Appellate Panel model. The 
Appellate Panels will be required to give deference to the individual 
ALJs' decisions, if they are supported by substantial evidence in the 
record. This proposal is modeled in p principle on the Bankruptcy Court 
Appellate Panel statute.\15\
---------------------------------------------------------------------------
    \15\ 28 U.S.C. Sec. 158 (1993).
---------------------------------------------------------------------------
    ``The Bankruptcy Court Appellate Panels were made permissive, not 
mandatory, and thus are not used in all Circuits, because of a 
Constitutional issue whether the use of the Panels is an improper 
delegation of Article III court jurisdiction over private rights in 
bankruptcy from the District Courts. Bankruptcy Court Appellate Panel 
review is a substitute for District Court review only upon all parties' 
consent and appeals go directly to the regional Circuit Courts of 
Appeals. Because there is no Constitutional jurisdiction issue for 
administrative cases involving entitlement to public rights that were 
created by statute, such as administrative determinations of 
entitlement to Social Security Act benefits, the Bankruptcy Court 
Appellate Panel model may be modified to make it mandatory for Social 
Security Act benefits cases.\16\
---------------------------------------------------------------------------
    \16\ Thalia L. Downing Carroll, Why Practicality Should Trump 
Technicality: A Brief Argument for the Precedential Value of Bankruptcy 
Appellate Panel Decisions, 33 Creighton L. Rev. 565 (2000); Hon. 
Barbara B. Crabb, In Defense of Direct Appeals: A Further Reply to 
Professor Chemerinsky, 71 Am. Bankr. L.J. 137 (1997); Tisha Morris, The 
Establishment of Bankruptcy Panels Under the Bankruptcy Reform Act of 
1994: Historical Background and Sixth Circuit Analysis, 26 U. Memphis 
L. Rev. 1501 (1996); Thomas A. Wiseman, Jr., The Case Against 
Bankruptcy Appellate Panels, 4 Geo. Mason L. Rev. 1 (1995).
---------------------------------------------------------------------------
    ``The appellate panel system is one of the key features that makes 
the self-governing ALJ model superior to the current structure and 
commission model in providing high quality service and decisions for 
the claimants. The Bankruptcy Court system is another nationwide 
network of tribunals that hears a high volume of cases in a specialized 
area that are generated mostly from individual petitioners. There are 
ninety-two Bankruptcy Courts situated in proximity to the District 
Courts.\17\ There are 140 Social Security hearing offices.\18\ Over 
1,500,000 cases were filed in Bankruptcy Court in 2002.\19\ As is 
stated above, over 500,000 cases are brought before Social Security 
ALJs every year. Accordingly, Social Security claimants can benefit 
from the use of an appellate system that has proven to work on a large 
scale.
---------------------------------------------------------------------------
    \17\ 28 U.S.C. Sec. 152 (2003).
    \18\ See Social Security Online, available at http://ftp.ssa.gov/
oha/hearing_process.html.
    \19\ Judicial Facts and Figures of the United States Courts: 1988-
2002, Table 5.1, available at http://www.uscourts.gov/ 
judicialfactsfigures/table5.1.htm.
---------------------------------------------------------------------------
    ``In addition to being an appellate system that can handle a large 
caseload, the appellate panel system has several other benefits that 
would afford timely, high quality service to the Social Security 
claimants and Medicare beneficiaries and providers and likely reduce 
the requests for judicial review:

    1.  First and foremost, appellate panel decisions result in higher 
quality decisions. A survey of bankruptcy practitioners revealed that 
two-thirds of them believed that the appellate panel decisions were 
``better products'' than District Court decisions.\20\
---------------------------------------------------------------------------
    \20\ Wiseman, supra note 17, at 7.
---------------------------------------------------------------------------
    2.  The confidence in the high quality of the appellate panel 
decisions by the bankruptcy bar has resulted in less than half as many 
appeals to the Circuit Courts as there are from District Court 
decisions.\21\ In the Ninth Circuit in 1987, only 10% of appellate 
panel decisions were appealed compared to 25% of the District Court 
decisions.\22\ Also, appellate panel decisions are reversed at the 
Circuit Court level less often than District Court decisions.\23\ Thus, 
appellate panels substantially reduce the federal courts caseload, 
which reflects a higher degree of decision accuracy.
---------------------------------------------------------------------------
    \21\ Morris, supra note 17, at 1509, 1517-19 (citing, Final Report 
of the Federal Courts Study Committee, 74-76 (1990); Wiseman, supra 
note 17, at 7).
    \22\ Id.
    \23\ Id.
---------------------------------------------------------------------------
    3.  Appellate panels have a short average disposition time, which 
was only 75 days in the Ninth Circuit in 1994.\24\
---------------------------------------------------------------------------
    \24\ Morris, supra note 17, at 1530.
---------------------------------------------------------------------------
    4.  Appellate panels afford access by the claimants, Medicare 
beneficiaries, and providers to a local appellate process.
    5.  The large pool of over 1,000 ALJs permits the timely 
determination of appeals, which has not occurred with the SSA Appeals 
Council, as stated above in part III(C). Timely and high quality review 
cannot occur with a commission, which likely will not have more than 
twelve members and would have to resort to hiring SSA Appeals Council-
type reviewers to handle the caseload.
    6.  Appellate panel work fosters the development of expertise by 
the panel members, which leads to better decisions.\25\
---------------------------------------------------------------------------
    \25\ Id. at 1509 (citing, Final Report of the Federal Courts Study 
Committee, 74-75 (1990)).
---------------------------------------------------------------------------
    7.  The opportunity for appellate work increases judges' morale and 
is viewed by judges as an honor and an opportunity to ``improve 
judicial service to the litigants.'' \26\
---------------------------------------------------------------------------
    \26\ Id. (quoting, Federal Courts Study Commission, Working Papers 
and Subcommittee Reports, Vol. 1, 364 (1990)).
---------------------------------------------------------------------------
    8.  Although the panel work would increase the workload of the 
ALJs,and thus additional judges likely will be required and additional 
travel and other administrative costs incurred, \27\ given the 
elimination of the Appeals Council,with its staff of 27 AAJs and over 
800 support personnel and substantial facilities,\28\ and the 
elimination of the DHHS Medicare Appeals Council, the costs for the 
appellate panels, which can meet in already established local 
facilities, likely will be less than the cost of the two Appeals 
Councils. The SSA Fiscal Year 2000 Annual Performance Plan states that 
the annual cost of the Office of Appellate Operations, which includes 
the SSA Appeals Council, was $575 million.\29\ The SSA Fiscal Year 2000 
Performance and Accountability Report states that the unit cost for the 
SSA Appeals Council to hear a case is $440.\30\ Since the SSA Appeals 
Council processed 146,980 appeals in fiscal year 2000, the cost of the 
SSA Appeals Council process apparently was $64,671,200 in fiscal year 
2000.\31\ Thus, unlike the Bankruptcy Court Appellate Panel Service, 
which was a new process in addition to the appellate step that already 
was available, the Social Security Appellate Panel Service is replacing 
a failed appellate review step that already exists and is funded.
---------------------------------------------------------------------------
    \27\ Id. at 1512-13, 1520-22.
    \28\ See Social Security Online, available at http://www.ssa.gov/
oha/about_ac.html.
    \29\ SSA Fiscal Year 2000 Annual Performance Plan 35, available at 
http://www.ssa.gov/budget/app/00appfin.htm#WorldClass.
    \30\ Fiscal Year 2000 Annual Performance and Accountability Report 
119, available at http://www.ssa.gov/finance/fy00acctrep.pdf.
    \31\ Id.

    ``Thus, in summary, based upon the Bankruptcy Court experience, the 
appellate panel model (1) is an appellate system that can handle a 
large caseload, (2) results in higher quality decisions because of 
expertise, (3) results in substantially fewer appeals to the courts and 
a substantially lower reversal rate by the courts because of the bar's 
and courts' confidencein the high quality of the decisions, which 
reflects a higher degree of decision accuracy fromthree expert 
decisionmakers working together, (4) results in a substantially reduced 
federal court caseload, (5) results in a shorter disposition time 
because the large pool of about 1,000 ALJs permits the timely 
determination of appeals that cannot take place with a small body such 
as the SSA Appeals Council or a Commission, and (6) affords the 
claimants access to a local appellate process.
    ``A final point that should be considered is whether the appellate 
panel decisions should be given precedential value by the individual 
ALJs sitting in either the hearing office or entire region where the 
appeal originated.\32\ However, the policy-making authority of the SSA 
and DHHS cannot be usurped.''
---------------------------------------------------------------------------
    \32\ Downing Carroll, supra note 17, at 571-77.
---------------------------------------------------------------------------
    (My position as an Administrative Law Judge with the Social 
Security Administration is stated in this statement for identification 
purposes only.)

                                 

                                              Dothan, Alabama 36301
                                                 September 28, 2004

Congressman E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Congressman Wally Herger
Chairman, Subcommittee on Human Resources
United States House of Representatives
Ways and Means Committee
1100 Longworth House Office Building
Washington, D.C.

Dear Congressmen Shaw and Herger:

    This letter is to be placed in the record of the above-referenced 
hearing. I am an attorney in Dothan, Alabama. I represent numerous 
individuals with claims for social security disability. I have some 
concerns and comments regarding the proposed changes in the claims 
administration process.

     1.  The record should be fully developed by a fully staffed 
Disability Determination Service. Currently, there is a great lack of 
uniformity in obtaining and reviewing claimant's medical records. 
Regional Expert Review Units should be accessible to all claimants.
     2.  Adequate compensation and information regarding the standards 
for assessing disability should be given to doctors who respond to 
requests for narrative letters.
     3.  The eDIB should require the scanning and notation of all 
documents contained in the claimants file, and should be backed up off 
site. A copy should be transmitted to the claimant or representative 
free of charge, and a paper copy should be provided to unrepresented 
claimants.
     4.  Digital recording of hearings should be required and available 
to the claimant or representative upon request. The use of video 
teleconferencing should be discouraged unless requested by the 
claimant. The lack of personal contact in assessing disability and 
inaccessibility of the judge, hearings officer (assistant) and experts 
to the claimant and counsel is simply too damaging to utilize this 
process.
     5.  The reconsideration level should be omitted in all states, 
whether under the present designation or a Reviewing Officer. It has 
been very successful in Alabama and the other states in which it was 
eliminated. Very few cases are allowed on reconsideration. It is more 
feasible to proceed directly to the ALJ for a hearing.
     6.  The hearing before the ALJ should be the next step after 
initial denial to expedite the process.
     7.  There is no need for SSA to have staff attorneys at hearings 
or reviewing the record, such as a Reviewing Offical. However, staff 
attorneys could review cases for on the record decisions.
     8.  Favorable decisions should be issued with a brief form stating 
the basis for the decision but without the great detail required when 
the claim is denied. This would allow approved claims to be issued more 
rapidly to people who desperately need the help. Issuance of decisions 
from the bench in appropriate cases would help as well.
     9.  The record should be held open for evidence that could not be 
submitted prior to the hearing.
    10.  Appeals council review upon request of the claimant should be 
retained as a useful buffer to the district court. Other review of 
determined cases is not appropriate barring an appeal.
    11.  The Federal District court should be retained as the court of 
last resort, pending review by the normal means.

    Thank you very much.
            Very truly yours,
                                                 Bryan S. Blackwell

                                 
      Statement of Emily Stover Derocco, Employment and Training 
                Administration, U.S. Department of Labor
    Mr. Chairman, thank you for the opportunity to provide the 
Employment and Training Administration's (ETA) perspective on ``return 
to work'' efforts for individuals with disabilities.
    ETA supports the return to work efforts carried out by the Social 
Security Administration (SSA), which has been a subject of this 
hearing. We also believe that the One-Stop Career Center system 
established under the Workforce Investment Act can play a vital role in 
helping individuals with disabilities enter jobs or return to work.

Striving for Full Engagement in the Labor Market

    On February 1, 2001, President Bush announced his New Freedom 
Initiative, an effort to eliminate barriers to equality that many 
Americans with disabilities face. One of five key components of this 
initiative is ``Integrating Americans with Disabilities into the 
Workforce.'' This includes expanding educational and employment 
opportunities and promoting full access to community life for people 
with disabilities. ETA is committed to achieving this goal.
    Although it is critically important that individuals with 
disabilities have the opportunity to become fully engaged in the labor 
market, unfortunately, unemployment and underemployment remain 
unacceptably high for people with disabilities. According to the 2000 
Census, among the civilian non-institutionalized population age 21-64, 
only 57% of individuals with disabilities are employed, compared with 
77% of individuals without disabilities.
     Meanwhile, the demand for skilled workers in our nation is 
outpacing supply, resulting in attractive high-paying jobs that go 
unfilled. It is necessary that we tap into new or previously untapped 
or underutilized skilled labor pools, such as individuals with 
disabilities, to help ensure that industries have the supply of skilled 
workers they need in order to successfully compete in today's economy. 
Through our efforts surrounding the President Bush's High Growth Job 
Training Initiative (HGJTI), we have been hearing directly from 
employers about the importance of this critical issue.
    The HGJTI is a strategic effort to prepare workers to take 
advantage of new and increasing job opportunities in high-growth/high-
demand and in economically vital industries and sectors of the American 
economy. The foundation of this initiative is partnerships that include 
the workforce investment system, business and industry, training 
providers and economic development entities working collaboratively to 
develop solutions to workforce challenges facing industries and to 
develop maximum access for American workers to gain the competencies 
they need to obtain jobs and build successful careers in these 
industries.
    To date, ETA has focused on 12 ``high-growth'' industries. These 
industries have high growth in new jobs, a high rate of change in 
workforce skill needs, or are industries with new and emerging careers. 
The targeted industries include: automotive, advanced manufacturing, 
biotechnology, construction, energy, financial services, geospatial 
technology, health care, hospitality, information technology, retail, 
and transportation sectors.
    Through the HGJTI we have conducted executive forums to identify 
the challenges these industries face. Through these forums, I have 
personally had the opportunity to meet with these industry leaders and 
listen as they identify their greatest workforce challenges. Although 
different industries may face unique challenges, one clear, overarching 
challenge faced by these diverse industries is finding a sufficient 
pool of skilled labor.
    In response to the challenges that are identified, ETA holds 
``solution forums'' to help these industries find solutions to the 
challenges they face. Representatives from all sectors have agreed with 
ETA that one ``solution'' to the shortage of skilled labor is finding 
access to new and/or previously untapped or underutilized labor pools, 
including individuals with disabilities. ETA believes that the One-Stop 
Career Center system can play a strong role in brokering relationships 
between these industries and the skilled labor they need, including 
individuals with disabilities, and helping individuals with 
disabilities obtain the current skills needed for gainful employment.

Interagency Coordination

    In addition to our efforts under the HGJTI, we are also working 
closely with other federal agencies to develop coordinated strategies 
designed to move individuals with disabilities into competitive 
employment. These efforts support President Bush's New Freedom 
Initiative by addressing several policy issues surrounding integrating 
Americans with disabilities into the workforce.
    To enhance coordination across agencies, ETA has convened an Inter-
Agency Coordinating Forum for Individuals with Disabilities and the 
Workforce. The forum offers an arena in which federal leaders can 
develop strategies, share information, and coordinate efforts around 
serving individuals with disabilities. Participants in this Forum 
include high-level participation from DOL's Office of Disability 
Employment Policy (ODEP), Veterans Employment and Training Services 
(VETS) and ETA; the Department of Education's Office of Special 
Education and Rehabilitative Service (OSERS); the Social Security 
Administration's Office of Disability and Income Support Programs; and 
the White House Domestic Policy Council.
    At our most recent Forum, we had the opportunity to meet with 
employers to discuss strategies that the federal government can 
undertake to help employers hire individuals with disabilities. They 
identified challenges and activities, including:

      Making the ``business case'' for hiring people with 
disabilities, and letting other businesses know the value of hiring 
individuals with disabilities.
      Integrating information at the Federal level to provide 
tools, resources, and promising practices.
      Not only making information available, but also 
conducting an awareness campaign around hiring individuals with 
disabilities.
      Helping employers access and recruit individuals with 
disabilities, and, conversely, helping persons with disabilities 
understand the pathway through the public workforce system to employers 
with good jobs with career ladders and good benefits.

    ODEP, working with its DOL colleagues, is engaged in activities 
that address a number of these challenges. ODEP is currently compiling 
promising disability employment practices from both the federal and 
private sectors and providing the information and resources that 
employers need to successfully recruit, develop, retain, and return 
individuals with disabilities to work. Through its Employer Assistance 
Referral Network (EARN), ODEP is in the process of developing the 
``business case.'' This work will help employers access, recruit and 
retain individuals with disabilities. Furthermore, ODEP's Job 
Accommodation Network (JAN) provides free, nationwide technical 
assistance and training on accommodation strategies for new and 
returning workers.
    Moreover, over the past 18 months ODEP has partnered with HHS' 
Office on Disability (OD) to address, with other federal partners 
(Education, Commerce, Justice, Transportation, HUD, SSA, and Interior), 
the comprehensive service needs, including employment, of young adults 
with disabilities between the ages of 16 to 30. ODEP, in conjunction 
with ETA, has also worked with the HHS Substance Abuse and Mental 
Health Services Administration (SAMHSA) as a key federal partner in 
helping to develop and implement SAMHSA's mental health systems 
transformation plan pursuant to the report of the President's New 
Freedom Commission on Mental Health.

Efforts to Enhance the Capacity of One-Stop Career Centers

    In order for the One-Stop Career Center system to fully assist 
individuals with disabilities and the industries who seek to hire 
individuals with disabilities, One-Stop Career Centers must be 
physically and programmatically accessible. Although there is still 
work to be done, the One-Stop Career Center system has become 
increasingly accessible through initiatives such as the Disability 
Program Navigator, Work Incentive Grants, and the issuance of the 
Workforce Investment Act (WIA) Section 188 Disability Checklist.
    First, the Disability Program Navigator (DPN) is a collaborative 
effort funded by DOL and SSA. The DPN is a position in the One-Stop 
Career Center that helps people with disabilities ``navigate'' through 
the enormous challenges of seeking work. Complex rules surrounding 
entitlement programs, along with fear of losing cash assistance and 
health benefits, can often discourage people with disabilities from 
working. DOL and SSA have established the DPN to better inform 
beneficiaries and other individuals with disabilities about the work 
support programs now available through One-Stop Career Centers, 
including facilitating access to counseling on the impact of employment 
on the individual's cash assistance or health benefits.
    Navigators work closely with other programs funded by SSA. Examples 
include the Benefits Planning, Assistance, and Outreach (BPAO) program, 
which helps SSA beneficiaries make informed choices about work, and 
Area Work Incentives Coordinators (AWIC) whose duties include assisting 
with public outreach on work incentives, training on SSA's employment 
support programs for personnel, and monitoring disability work-issue 
workloads in their areas.
    Through grants to seventeen states, approximately 120 Navigator 
positions were established in One-Stops in program year 2003, with 
another 80-100 positions to be added in program year 2004. These 
navigators are building the capacity of the One-Stop Career Center 
system to serve individuals with disabilities and to help these 
individuals find and retain employment.
    Also, Work Incentive Grants have helped local areas increase the 
employability, employment and career advancement of people with 
disabilities through enhanced service delivery in the One-Stop Career 
Center system. These grants have been used to support physical access 
to services for people with disabilities.
    In addition, DOL's Civil Rights Center (CRC), in cooperation with 
ETA and ODEP, developed a ``WIA Section 188 Disability Checklist'' to 
help ensure One-Stop Career Centers are accessible for individuals with 
disabilities. The Checklist is designed to ensure meaningful 
participation of people with disabilities in programs and activities 
operated by recipients of financial assistance under WIA.
    Finally, there is opportunity for One-Stop Career Centers to 
participate more fully as Employment Networks in the Ticket-to-Work 
program, authorized by the Ticket to Work and Work Incentives 
Improvement Act (TTWWIIA). Through this program, eligible individuals 
are given a ticket that can be voluntarily used to obtain employment-
related services at Employment Networks (EN) or State Vocational 
Rehabilitation (VR) agencies. The purpose of the Ticket program is to 
give SSI and SSDI beneficiaries greater choice of service providers, 
beyond the traditional VR agencies. An EN or VR agency that accepts a 
ticket assumes responsibility for coordinating and delivering 
employment-related services to the beneficiary.
    To date, One-Stop Career Center participation as Employment 
Networks has been minimal. ETA is committed to continue working with 
SSA to maximize One-Stop Career Center participation in the Ticket-to-
Work program.

Conclusion:

    In conclusion, ETA is working to carry out the mandates of the 
President's New Freedom Initiative, to meet the needs of employers and 
to help individuals with disabilities integrate into the labor force. 
As such, ETA strongly supports SSA in its return to work efforts. ETA 
and SSA continue to work collaboratively to help individuals with 
disabilities enter the workforce for the first time or return to work. 
Further, the One-Stop Career Center system can play a strong role in 
helping individuals with disabilities find or return to work, through 
community connections, connections to employers and the system's pulse 
on the labor market.

                                 

                                            Federal Bar Association
                                               Washington, DC 20037
                                                   October 13, 2004

The Honorable Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
U.S. House of Representatives
Washington, D.C.20515

Dear Chairman Shaw and Chairman Herger:

    The FBA Social Security Section appreciates your leadership in 
holding the joint hearing on September 30 on the Commissioner of Social 
Security's proposal to improve the disability process. We request the 
inclusion of this correspondence in the record of that hearing.
    As you know, the Federal Bar Association is the foremost national 
association of private and government lawyers engaged in practice 
before the federal courts and federal agencies. Sixteen thousand 
members of the legal profession belong to the Federal Bar Association. 
There are also within the FBA over a dozen sections organized by 
substantive areas of practice, including the Social Security Section. 
The Federal Bar Association's Social Security Section, unlike other 
organizations associated with Social Security disability practice and 
representing the narrow interests of one specific group, encompasses 
all attorneys involved in Social Security disability adjudication, 
including attorney representatives of claimants, administrative law 
judges, Appeals Council judges, staff attorneys in the SSA Office of 
Hearings and Appeals and Office of General Counsel, U.S. Attorneys and 
U.S. Magistrate Judges, District Court Judges and Circuit Court Judges.
    The Social Security Section of the Federal Bar Association 
generally applauds the September 25, 2003 proposal of Jo Anne Barnhart, 
Commissioner of Social Security, to improve the disability adjudication 
process. The Commissioner is appropriately concerned about speeding up 
accurate determinations of disability. The FBA is hopeful that the 
Commissioner's initiative can be implemented to achieve these goals 
while preserving the claimant's right to a fair hearing.
    The Commissioner has documented what our experience has confirmed: 
the current system devotes excessive time to waiting for substantive 
administrative action. The elimination of review levels and the 
addition of procedural innovations like the Reviewing Official can 
enhance the prompt, accurate determination of disability.
    Our specific comments in this statement address the merits of five 
components of the Commissioner's proposal: the elimination of the 
reconsideration level; the establishment of the reviewing official; 
preservation and improvement of the ALJ hearing; elimination of the 
Appeals Council; and the closing of the record.

Elimination of Reconsideration Level

    The elimination of the reconsideration review level is a 
meritorious proposal to speed up the accurate adjudication of 
disability claims. As suggested by the Commissioner, in too few 
adjudications do reconsideration reviewers accurately distinguish 
obviously disabled claimants from unentitled applicants. The FBA 
supports the Commissioner's proposal to save time and money by 
eliminating the reconsideration level and permitting claimants to 
proceed to the hearing level sooner.

Establishment of the Reviewing Official

    The Reviewing Official (RO) concept is also a well-conceived 
improvement to speed up the adjudication process. Hopefully, the RO 
will be able to promptly identify claimants whose medical records 
establish that they are disabled, but were not awarded benefits at the 
initial level for whatever reason. The RO can approve these 
individuals' claims without the necessity of a full hearing. The RO 
also may be able to obtain additional documentation either from 
treating medical professionals or from consultants to establish 
disability without the need for hearing.
    We believe the RO should be an attorney familiar with due process, 
who by legal training remains open to new evidence and legal 
persuasion. The incumbent of this important position must be sensitive 
to the rights of the claimant and the independence of the ALJs, as well 
as the administrative requirements of the Social Security system. We 
believe an attorney's legal training will help to assure that the RO 
can administer these conflicting demands.
    However, we believe if the RO cannot allow the case, the RO should 
issue a prehearing report, rather than making some sort of ``denial''. 
This action will preserve the de novo review nature of the hearing 
process; a prehearing report will act as a road map to the claimant and 
the administrative law judge (ALJ) at the hearing. The Commissioner's 
idea of a ``recommended disposition'' encroaches on the independence of 
the ALJ, and the claimant's right to a fair hearing with full 
administrative due process.
    We believe the Commissioner's proposal should make explicit that 
the RO's decision is not entitled to more weight than any other 
evidence in the administrative record. There should be no presumption 
that the RO's disposition is an adjudication, unless it is fully 
favorable to the claimant. Moreover, determinations that are not fully 
favorable to the claimant should be automatically reviewed by the ALJ. 
That is, the claimant would not need to file a second request for 
hearing after the RO's denial in order to have his case heard by an 
ALJ. These modifications, as well as the RO's issuance of a prehearing 
report, would serve to preserve the independence of the Administrative 
Law Judge and the claimant's right to a fair hearing with full 
administrative due process.

Preservation and Improvement of the ALJ Hearing

    We applaud the Commissioner's preservation of the role of ALJs. The 
Federal Bar Association has consistently supported the role of the 
Administrative Law Judge in the adjudication of Social Security 
disability appeals. The ALJ presides over a non-adversarial process in 
which the claimant is present, but the government official who rejected 
the claim for benefits is not. The claimant may well be wary of such a 
system and may doubt that the ALJ will impartially and independently 
hear the claim for benefits. Yet that is exactly what is expected of 
the ALJ. It is for this reason that the FBA is gratified that the 
Commissioner's plan preserves the independence of the ALJ in the 
adjudication process, and recognizes the pivotal role played by the ALJ 
in providing process due every American seeking fair and accurate 
determinations of disability. The ALJs are key to the effectiveness of 
the adjudicatory process.
    We believe the independence and quality of both medical experts and 
consulting medical professionals utilized throughout the administrative 
system must also be assured. Such independence is essential to the 
success of the hearing process and will promote accurate 
determinations. Expert, impartial, professional examinations and 
testimony are crucial to the goal of accurate determinations of 
disability. The Commissioner should assure that medical professionals 
are truly independent, knowledgeable witnesses who testify to the 
claimant's impairments and resulting abilities and limitations. Their 
examinations and testimony will permit the ALJ to accurately determine 
the entitlement of claimants to disability benefits.

Elimination of the Appeals Council

    While we agree with the Commissioner that the abolition of the 
Appeals Council will result in a faster adjudicatory process, we fear 
there will be a significant loss to the administrative process without 
the Appeals Council determinations and an inundation of the Federal 
Courts with disability cases. According to the Social Security 
Administration, the Appeals Council receives about 77,000 requests for 
review each year. The Appeals Council remands 25% of the appeals back 
to the ALJ. That represents over 19,000 cases that are filtered out and 
do not reach federal court. According to Judge Frederick Stamp, chair 
of the Committee on Federal-State Jurisdiction of the Judicial 
Conference of the United States, 17,127 Social
    Security disability insurance and supplemental security income 
cases were filed in federal district courts during the last fiscal 
year. Without the Appeals Council filter, that number could well have 
doubled. In light of these caseload ramifications for the federal 
courts, we are concerned by the proposal to abolish the Appeals Council 
without knowing further details about the operation of the optional 
quality review stage. Without these details, it is difficult to 
criticize the Commissioner's proposal.
    We foresee significant administrative difficulties by simply 
abolishing the Appeals Council and permitting dissatisfied claimants to 
proceed to District Court. The ALJs' mistakes of law or fact will not 
significantly decline merely because of the new administrative process. 
The Commissioner's proposed quality assurance Oversight Panels may 
correct some of these errors. However, we fear that in doing so, they 
may unintentionally interfere with or undermine ALJs' authority and 
independence. (For example, it is unlikely that a quality Oversight 
Panel that did not see and hear a medical or lay witness would overrule 
an ALJ's credibility finding.) Moreover, the Oversight Panels 
apparently do not provide claimants a procedure to correct or even 
raise gross errors contained in ALJ decisions. Timely submitted, 
definitive evidence that was not seen or considered by the ALJ, for 
example, could well change the administrative outcome. Under the 
Commissioner's proposal, a claimant's only recourse is to go to federal 
court. Unless administrative procedures ameliorate the likelihood of 
these probable outcomes, federal courts will be inundated with Social 
Security litigation.
    The Commissioner's quality assurance program is intended to prevent 
a tidal wave of cases surging into the federal courts. Yet the 
Commissioner has not explained how the Oversight Panel will: select 
cases for review, how many cases will be reviewed; whether the claimant 
can request review (petition for certiorari); or whether the panels 
will consider new and material evidence. The devil is in the details, 
and the stakeholder community needs to know these details before we can 
adequately respond to the proposal of the Commissioner to abolish the 
Appeals Council.

Closing the Record

    There should always be a ``good cause'' exception that authorizes a 
``late'' submission of evidence to the administrative proceedings. 
Sometimes after a decision, a claimant further undergoes a medical 
test, responds to a new treatment, or sees a new specialistwho 
clarifies the claimant's medical condition. Sometimes an ALJ's decision 
transforms seemingly irrelevant information into relevant evidence. If 
the evidence is new and material, and there is good cause for the 
failure to produce it previously, then the evidence should be made part 
of the administrative record and considered. The federal courts 
regularly grapple with determining whether the evidence meets this 
standard. The meaning of the existing law, 42 U.S.C.Sec. 405(g), is 
clear. Such a ``good cause'' exception should similarly apply at the 
administrative level, just as it already does at the federal court 
level, and become part of the improved disability appeal process.
    We appreciate the opportunity to offer these comments and continue 
to remain available to you and your staff in your conduct of oversight 
of these important matters.
            Very truly yours,
                                                         Gary Flack
                                                           Chairman
                                            Social Security Section

                                 
           Statement of Sudhir Jaituni, Roseville, California
Subject: Record for submission on DDS Medical Consultants (MC)

    I am a Physician who works as MC at Roseville branch DDS in CA for 
almost a year. Although I am relatively new in this position, I am very 
impressed by the high quality of my co-workers, both the MCs and 
Disability Examiners (DE). There is great amount of dedication and hard 
work by both these professionals to maintain the quality. Also a sense 
of helping disabled in our community pervades in the culture of work 
environment.
    I believe the team work between the MC and DEs has worked with 
enormous success to achieve outstanding quality both in terms of 
timeliness and accuracy. The contribution of MC towards both of these 
goals is invaluable and cannot be replaced by regional experts or by 
other professional such as Nurses on day by day basis or cost efficient 
manner.. This is because an MC provides timely, on-site consults to 
his/her team of DE, who he/she knows well. MC also acts as specialist 
in medical field of his/her training (e.g. I have in-depth knowledge of 
cancer). We have a broad mix of medical specialties at our branch and 
we regularly take advantage of each other's expertise by informal 
consults. MCs also save money by judicious approach to the process, 
based on evaluation of objective medical findings both via review of 
medical records and consultation with treating doctors with whom we 
tend to reach great rapport.
    I spend anywhere from 15 minutes to an hour on each case for the MC 
component of disability determination so there is no delay or back log 
of work due to MC consultation. Instead it helps DE in avoiding over or 
under development of case in reaching favorable decision. Many cases 
are expedited by using presumptive disability or TERI route.
    I hope my comments will be helpful to the committee and I apologize 
for an informal way of writing. Thank you for allowing my input.

                                 

                                                  Edmonds, WA 98026
                                                 September 28, 2004

U.S. House Ways & Means Committee
Joint Hearing on SSA Disability Determination Proposals
1100 Longworth HOB
Washington, DC, 20515

Dear Committee Members,

    Thank you for this opportunity to comment on the issues before Ways 
& Means as you begin formal discussions of Commissioner Barnhart's 
proposals. As a medical consultant to the DDDS offices here in 
Washington and a concerned citizen, I cannot overemphasize the 
importance of these proceedings. Primarily I would like to declare my 
support to the testimony you will hear from the National Council of 
Disability Determination Directors (NCDDD) and the National Assn of 
Disability Examiners (NADE). My own perspective is also shared here for 
the record.
    The Commissioner's objectives are honorable and ambitious. Like 
most of my DDDS colleagues, I share her goals of improving service to 
our claimants and speeding up the application process. In documents 
available to you from NCDDD and NADE, we who serve on the front lines 
of the determination process have some areas of agreement with 
Commissioner Barnhart, and some areas of deep concern. These 
organizations represent those of us who do the daily work, making the 
complex decisions that provide disability benefits to the neediest of 
America's needy. I urge you to consider their testimony.
    Following are some highlights of the issues before you. I direct 
these comments to you as a citizen, a family physician, a taxpayer, a 
cancer survivor, and as someone with three years of experience with 
DDDS; enough to know the system, but not long enough to lose my public 
perspective.

    1.  NCDDD and NADE support the proposal to bring the disability 
determination process into the electronic age. I wholeheartedly concur. 
Implementation of `eDib' has already begun, and Commissioner Barnhart 
will speak highly of these efforts. However,

        Rolling this system out to the states is, at least by 
some accounts, proving more difficult than expected, consuming 
significant time & resources.
        The software and systems utilized are already behind 
the times. If we are to improve efficiency in the long run with this 
system, updates and improvements will be needed that may be more costly 
than anticipated, pulling money away from already strained areas.
        Likewise, full implementation of eDib will be such a 
fundamental change for DDDS and SSA, it is unlikely our system will 
tolerate any other large-scale changes in the near future.

    Suggestion: The online/electronic conversion is the priority. If 
this is properly completed, many of the Commissioner's goals will be 
met (reduced processing time, improved accuracy and better 
documentation). Almost everything else should be considered very low 
priority.

    2.  NCDDD and NADE strongly oppose reorganization of the DDDS 
Medical Consultants (``MCs''). The Commissioner hopes to improve 
efficiency and accuracy by removing the MCs from the DDDS offices and 
placing a few of us in regional offices (Regional Expert Review Units), 
accessible for online or perhaps chart-based consultation in select 
cases. It may not be an exaggeration to say that this will paralyze the 
DDDS offices, though I don't suspect NCDDD or NADE will use quite so 
strong a term in public.

        Presently, DDDS MCs have several important roles--
reviewing initial, reconsideration-level and continuing disability 
claims, improving documentation, mentoring both new and experienced 
adjudicators, providing quality assurance, and interacting directly 
with treating providers to get additional, often vital information for 
a claim. These services disappear under the current proposal for 
restructuring.
        DDDS adjudicators are a well-trained, motivated, 
altruistic group, but their job is already difficult enough. Moving the 
MCs off site will be yanking the proverbial rug out from under their 
feet. Even the most experienced, well-trained adjudicators (15 years 
and counting) have difficulty with the depth of medical information MCs 
interpret every day. Our high staff turnover brings less experienced 
folks to my desk even more frequently. Even if our adjudicators are 
given more time to process each case, the fact is many cases hinge on 
careful medical review of the application. Asking our staff to bear 
this burden alone, with only nurse (one of the initial proposals) or 
occasional online specialist review is asking too much. Quality, 
accuracy, documentation and adjudicator retention will nosedive.
        The Commissioner implies that only medical specialists 
will have a role in her new system, again with the hope of improved 
accuracy and efficiency. NCDDD, NADE and I instead support the 
continued involvement of primary care physicians. Rarely these days are 
applications based on one alleged condition. Generally we consider the 
combined impairment of things like heart disease, musculoskeletal 
conditions and neurologic findings. While we value the occasional input 
of an orthopedic or cardiac specialist, moving such cases from desk to 
desk hardly improves efficiency, especially when the great majority of 
cases fall within my expertise as a primary care MD well-trained in 
Social Security policies.
        Keeping MCs on site not only preserves the fundamental 
service we provide with individual claims, it keeps us available for 
questions from QA staff, supervisors, trainers and managers. Removing 
us shifts the entire paradigm and will dismantle the support network 
within the DDDS offices. The resulting errors will further burden the 
review and appeal system, counter to one of the clear long-term goals 
of our process. For what little may be gained by centralizing the MCs, 
much will be lost.

    Suggestion: Leave the Medical Consultants, from both primary care 
and specialty backgrounds, on site at the DDDS offices. Establishment 
of the electronic determination process will provide unprecedented 
access to needed specialty and reviewer input, while maintaining the 
critical and complex role of on-site MCs.

    3.  NCDDD and NADE do not support the proposal to develop Quick 
Decision units. The Commissioner believes these new units, staffed by 
`medical experts', will speed service for claimants who are obviously 
disabled. I am concerned that this expenditure of resources may 
actually fragment our process, and do little to speed up claims.

        There are three steps to our process--gathering of 
information, decision, and review/appeal. Quick Decision units will not 
affect the first or the third. The second is not at all time consuming, 
and (as suggested by NCDDD & NADE) can be kept within the DDDS offices. 
Cases brought to an MC with adequate documentation of entities like 
widespread cancer, severe renal failure, and incapacitating stroke 
require only minutes to process.

    Suggestion: Improving our tools for evidence gathering will do far 
more to reduce processing time, and should receive priority. Quick 
Decision units are unnecessary. Consideration should also be given to 
improving training at SSA field offices, and even placing trained DDS 
adjudicators on site to identify and prioritize high probability 
claims.

    4.  NCDDD and NADE generally support the elimination of the `recon' 
step as it currently exists, as well as the number of appeals available 
to a claimant after an ALJ hearing. As an alternative to the 
reconsideration step, the Commissioner proposes review by an SSA 
Reviewing Official. NCDDD and NADE believe this step should be left to 
the more qualified DDDS staff, perhaps dedicating some of our most 
seasoned adjudicators with a broad knowledge of the medical, vocational 
and procedural aspects of our policies. Compared with the more narrow 
experience of a social security attorney, our staff is better qualified 
for this task. Currently, SSA regulations require a Medical Consultant 
(MD or psych PhD) signature for all reconsideration claims; are we 
prepared to modify that standard in the name of moving a minority of 
cases faster?

    Suggestion: If the `recon' step is modified in the name of 
expediency, highly experienced DDDS adjudicators should be recruited to 
fill the `RO' posts, rather than attorneys, and easy access to DDDS 
Medical Consultants should be maintained.
    NCDDD, NADE, the DDDS staff and consultants all share the same 
goals. We are dedicated to providing superb service to our claimants. 
And we welcome efforts to improve the complicated determination 
process, including those proposed by the Commissioner, yet we remain 
acutely aware of the risks of unnecessary reform and reorganization.
    Let us see how we are doing once the electronic conversion is fully 
in place. The additional, large-scale changes may have effects quite 
contrary to those predicted by the Commissioner. As our claims continue 
to increase in quantity and complexity, now is not the time to take 
apart the DDDS engine. Thank you for your time.
            Respectfully yours,
                                                    Jeff R. Merrill

                                 
    Statement of James R. Shaw, National Association of Disability 
               Representatives, Framingham, Massachusetts
    The National Association of Disability Representatives, Inc. (NADR) 
is a not-for-profit organization comprised of attorneys and 
professional non-attorneys representatives who provide representative 
services for persons seeking to obtain or maintain disability benefits 
from the Social Security Administration. Our goal is to continually 
improve the quality of representation for impaired and disabled 
individuals before the Social Security Administration.
    We commend Commissioner Barnhart and the Social Security 
Administration for their hard work to redesign and improve the 
disability determination process. We believe that continued input from 
various entities whose constituents are impacted, as well as 
professional organizations, will provide Commissioner Barnhart with 
valuable ``real world'' information, allowing her to cultivate the 
original proposal into a very workable plan.
    In particular, we strongly agree with other advocacy groups on the 
primary importance of enacting changes that reduce unnecessary delays 
for claimants. All parties involved in the process must continue to 
make this system become as efficient as possible in order to obtain the 
correct decision as early in the process as possible. Efficiency, 
however, should not impact the fairness of someone's entitlement to 
benefits.
    Many of NADR's members have worked in a professional position for 
various state agencies' disability determination services or other 
tertiary positions such as vocational experts testifying in disability 
hearings. We understand the fundamental problems that exist within the 
programs but must stress the importance of removing claim backlogs, 
therefore eliminating or at least decreasing delays at the later stages 
of appeal. Standardization of much of the system for more consistent 
decisions as early as possible should be the methodology to attain this 
goal.
    Since its inception in March 2000, NADR has strongly disputed the 
philosophy propounded by other organizations such as NOSSCR that only 
persons who have passed the bar are qualified to perform representation 
services. We believe that the simple possession of a Juris Doctorate 
has little or no bearing upon successful representation. Skills and 
knowledge of the Social Security process, among other traits, 
distinguish a good representative from one who might not be competent. 
Those of us who are not attorneys but who have made this our profession 
continue to seek parity with our colleagues who are attorneys. We 
believe that knowledge and experience are more important than an 
educational degree in determining whether an individual is qualified to 
provide such specialized assistance to impaired persons.
    NADR is a member of the Consortium for Citizens with Disabilities 
(CCD) and agrees strongly with the position espoused in its Committee 
statement except for one issue found in Section I. Reviewing Official 
(RO).
    CCD maintains that the Reviewing Official should be an attorney. 
However, in keeping with our long held philosophical underpinnings of 
parity, NADR believes that the RO does not need to be an attorney, but 
should be anyone, attorney or not, who has sufficient knowledge of the 
Social Security disability system. We join other organizations like the 
National Council of Disability Determination Directors (NCDDD) and the 
National Association of Social Security Management Associations 
(NASSMA) in this view.
    Our belief is that any person who by training and education has the 
knowledge, expertise, and experience to understand the requirements of 
proper adjudication of claims and can formulate written opinions that 
can be substantiated at higher levels of review is qualified to be an 
effective Reviewing Official. This may include but not be limited to:

    1.  Anyone who has significant expertise and experience in the 
representation of disability clients before the Social Security 
Administration;
    2.  Anyone who has attained senior status in an adjudicatory 
position within Disability Determination Services; or,
    3.  Anyone who has attained senior status in an adjudicatory and/or 
review/brief writing position within the Office of Hearings & Appeals.

    In order to ensure maximum protection of claimants' rights, we 
vehemently stress that candidates for this position should not be 
exclusively limited to attorneys, as this may significantly limit the 
scope of the job and very well may deprive the system and clients of a 
better qualified person for said job.
    On behalf of the National Association of Disability 
Representatives, I am pleased to have provided the Subcommittee with 
our views.

                                 
     Statement of Lawrence A. Plumlee, Dallas, Texas Introduction:
    I appreciate the House Subcommittee on Social Security's holding 
this ``Joint Hearing on Commissioner of Social Security's Proposal to 
Improve the Disability Process''. A wide range of suggestions have 
recently been made to improve the Social Security disability 
determination process, which at present is both slow in operation and 
non-uniform in its application.
    I testify here today on behalf of myself, a physician trained at 
Johns Hopkins University, and a former EPA health advisor, who is 
president or on the board of directors of several disability groups. I 
wish to discuss today the experience of the determination of disability 
under the direction of State Agency Consultants in Texas, and the 
lessons that it may provide to the consideration of some of the new 
proposals.
    I previously testified to this Subcommittee about the recent 
history of the Texas Rehabilitation Commission (TRC) Disability 
Determination Services (DDS) at the hearing of September 25, 2003. My 
testimony is now available at http://waysandmeans.house.gov/
hearings.asp?formmode=printfriendly &id=1847.
    TRC determines nearly a quarter million Social Security disability 
(SSDI and SSI) claims per year at the initial, reconsideration, and 
Continuing Disability Review (CDR) levels on behalf of SSA at a cost of 
approximately $300 each. There have been a number of problems in the 
determination of Social Security disability in Texas in recent years. 
In my 2003 testimony, I cited about 45 newspaper articles on the 
subject published in the Houston Chronicle during 2001-3, mostly 
written by reporter Alan Bernstein.
    Since that time, TRC has been dissolved as an agency, with its 
functions taken over by the new Texas Department of Assistive and 
Rehabilitative Services (DARS) as a part of a reorganization of 12 
agencies within the Texas Health and Human Services Commission (HHSC) 
into 5 departments. The centralized Texas DDS unit, however, operates 
under much the same external parameters as before.

II. Problems at TRC-DDS during 1996-2002:

    Contributing to the problems at TRC-DDS during the late 1990's and 
early 2000's was the fact that SSA under-funded Texas DDS disability 
determinations during the period 1998-2001. (Notably, the cost of DDS 
disability determination is only about 2-3% of total SSA disability 
program costs.)
    TRC Board minutes show these problems developing. The official 
approved minutes of the September 14, 2000 meeting of the TRC Board 
states on page 8:

``TRC Disability Determination Services Update:

    Chairman Kane called on Mr. Dave Ward, Deputy Commissioner for 
Disability Determination Services (DDS) to give the DDS Report.
    Mr. Ward updated the Board on DDS for Fiscal Year 2000 and on the 
Fiscal Year 2001 outlook, using a slide presentation (Attachment 3). He 
reported on the FY 2000 targets versus the FY 2000 forecasts, with 
respect to case receipts, case clearances, continuing Disability Review 
(CDR) cases, and Production Per Work Year (PPWY). He discussed hard 
targets (CDR cases) and soft cases. Mr. Ward noted that DDS was close 
to hitting its targets despite the federal government's reduction of 20 
positions, the hiring freeze, no overtime, and being restricted to only 
1 Disability Examiner (DE) class. He reported that DDS was 30 
production points above the rest of the nation. Mr. Ward also informed 
the Board that DDS had been assisting the region to reach its overall 
workload target.
    Mr. Ward discussed DDS's FY 2000 profile. He reported that DDS has 
initiated a Program Operations Restructure Plan and start-up of 
Cooperative Disability Investigation Unit in Houston. He also reported 
that DDS is ``down'' four operating units and has staged pending of 
21,000 cases. Mr. Ward discussed the award structure. Persuant to Dr. 
Novy's request, Mr. Ward explained that DEs and the technical support 
staff working with them are eligible for state incentive awards. 
Seventy-five awards were given out. Sixty percent of DDS staff received 
some type of incentive award. These included lump sum merit raises.
    Mr. Ward reported on DDS's 2001 Outlook and discussed the numbers 
for Fiscal Year 2001 SSA Targets versus Fiscal Year 2001 DDS Proposals, 
with respect to case receipts, case clearances, CDR case, and PPWY. Mr. 
Ward stated that DDS would be in a rebuilding phase for the next 18-20 
months and that the preceding year had hurt its infrastructure. He 
reported that he had informed the ``feds'' that DDS needed three DE 
classes. . . .''
    Three months later, the official approved minutes of the December 
7, 2000 meeting of the TRC Board states on page 13:

``TRC Disability Determination Services Update:

    Chairman Kane called on Mr. Dave Ward, Deputy Commissioner for 
Disability Determination Services (DDS) to give the DDS Report.
    Mr. Ward updated the Board on DDS for fiscal year 2000 and on the 
fiscal year 2001 Profile, using a slide presentation (Attachment 9). He 
reported on the fiscal year 2000 targets versus the FY 2000 actual 
performance, with respect to case receipts, case clearances, continuing 
Disability Review (CDR) cases, and Production Per Work Year (PPWY). He 
reported that DDS exceeded all goals and targets despite the federal 
government's reduction of 20 positions, the hiring freeze, no overtime, 
and being restricted to only one Disability Examiner (DE) class. He 
noted specifically that DDS was 30 production points above the rest of 
the nation. Mr. Ward explained, however, that without overtime, DDS 
will be hard pressed to continue on target, unless targets are reduced. 
He stated that budgeting probably will not get to DDS until January 
2001.
    Mr. Ward discussed DDS's fiscal year 2001 profile. He reported 
that, according to SSA OD, the ``budget will not be sufficient to 
handle workload.'' He noted that CDRs are high priority and that a 
large Disability Examiners class is expected for January 2001.

Questions/Comments from the Board

    Chairman Kane questioned whether this is the first time that 
Congress has said ``we'' won't be able to make our targets. Mr. Ward 
stated that this was correct.''
    After TRC-DDS posted the lowest ``initial approval rate'' in the 
nation in 2000, and the ``fake examiner'' scandal broke on September 9, 
2001, SSA Region VI Commissioner Horace Dickerson traveled from Dallas 
to Austin to give the TRC Board ``an update on SSA's review of TRC''. 
The official approved minutes of the TRC Board meeting of September 20, 
2001 states on page 11-14:
    ``Commissioner Dickerson stated that over the last two and a half 
years, SSA has not been able to provide all the funding needed by DDSs 
to process all of the claims that they have received. He acknowledged 
that this has resulted in backlogs this fiscal year across the nation, 
as well as in Texas. He stated that the $83 million in funding to Texas 
DDS this fiscal year will allow it to process about 230,000 claims. . . 
.''
    ``Overtime. He explained that earlier in the year, the Dallas 
Region, including Texas, recognized that the Region did not receive its 
appropriate share of the national Disability Determination funding. As 
a result of input by the Dallas Region, SSA increased the spending 
authorizations for Texas twice this calendar year. He pointed out that 
Texas DDS has escalated its hiring plans, has added over eighty DEs and 
over eighty adjudicators, and has implemented an overtime plan to 
reduce backlogs.''
    The failure of SSA to fund the Texas DDS contributed to a number of 
problems during that era. The problems included:

    1.  Texas had the lowest ``initial approval rate'' in the nation in 
2000 for Social Security disability claims--29% in September 2000 
compared to a national average of about 45%. (Houston Chronicle 3-18-01 
C.2, 4-22-01 p4) A number of reasons have been suggested to explain the 
low rate, including that Texas examiners determined claims ``reach 
different conclusions on cases that require certain judgments to be 
made on an individual's capacity to work'' than the rest of nation. 
(Houston Chronicle, 6-10-01 A.8.)

    The low approval rate in Texas raises issues of claimants' rights 
to equal protection of the laws as compared to residents of other 
states.

    2.  Texas DDS developed a backlog of about 75,000 claims in mid-
2001--roughly 3 months processing. (Houston Chronicle, 5-3-01 A.1)
    3.  Texas DDS management responded to the backlog in 2000-1 by 
implementing a ``waiting list'' (using undisclosed selection criteria) 
for ``overtime processing'' (unequal treatment) by ``fake examiners'' 
(code name signature fraud) on about 12,000 claims. (Houston Chronicle 
9-9-01 A.1,A.20) ``Waiting list'' claims had no single examiner 
assigned who understood the entirety of the case or had responsibility 
for its outcome. The use of ``fake examiners'' was ostensibly stopped 
several weeks after the story was published by the Houston Chronicle. 
(Houston Chronicle 9-26-01 A.1)

    This two-tier processing raises issues of due process regarding 
quality of decision making and accountability, and issues of equal 
protection of the laws with respect to both claimants whose claims were 
processed differently, and Texas claimants as compared to residents of 
other states.
    Two tier processing additionally raises a due process concern about 
claim pre-judgment. The criteria for selection of cases for ``waiting 
list'' processing has not been disclosed. The concern is that a first-
glance decision made by a file clerk rather than a Disability Examiner 
(DE) or State Agency Consultant (SAC) as to the validity of a claim in 
the absence of medical evidence while determining whether to use 
``waiting list'' processing, and thus whether or not to process it with 
a single examiner, may determine the outcome of the claim irrespective 
of the merits of the case, which, for Pro Se claimants, may further 
prejudice the record subsequently submitted to an ALJ on appeal to SSA. 
The concern is thus that ``first impressions'' by a file clerk before 
development might have determined the ultimate outcome of the decision.

    4.  A 2003 audit of Texas DDS by the SSA Office of Inspector 
General (OIG) found that between 1998 and 2001 Texas DDS made payments 
to selected hospitals for Consultative Examinations (CE's) that were 
equal to those paid by TRC's Vocational Rehabilitation program, but in 
excess of the SSA's Maximum Allowed Payment Schedule (MAPS) rate. 
(March 2004 A-15-02-12051 Audit Report.) TRC's reimbursement rates were 
set from TRC's creation in 1969 until 2001 by TRC's Medical 
Consultation Advisory Committee (MCAC), and were approved by the TRC 
Board. It is beyond doubt that any SSA Region VI Commissioner could 
fail to understand how TRC set its rates. SSA's OIG audit found, 
however, no written documentation that a waiver was issued by SSA 
Region VI to TRC-DDS. The total excess payment to hospitals during 
those three years was about $3.6 million plus $359,000 in TRC overhead 
charges on about 49,000 claims, so the per-procedure overpayment to 
selected hospitals was significant. In response to this audit, the new 
TRC Interim Commissioner blamed the problem on their immediate 
predecessor who had just been reassigned to HHSC, and asked that 
reimbursement of the money be waived. This situation, however, must be 
considered to be a management failure by SSA Region VI to oversee the 
Texas DDS properly.
    5.  In April 2001, Dallas Administrative Law Judge (ALJ) 
Christopher Lee Williams sued TRC-DDS and SSA for the failure of TRC-
DDS to perform psychiatric CE's on indigent claimants whose claims he 
remanded back to TRC-DDS for further development. (See Williams v. 
Massanari, et al., N.D. TX cause no. 03:01CV816, filed 04-30 2001.) The 
case was dismissed for lack of standing because ALJ Williams had not 
been harmed.

    Thus, TRC-DDS overpaid selected hospitals for CE's performed, 
apparently without written approval from SSA Region VI, even while some 
indigent claimants could not get a CE exam even when DDS was ordered by 
a SSA ALJ to provide one, so that those claimant's claims would 
necessarily be denied for lack of medical evidence of disability, which 
is required under the Social Security Act. Whether these claimants so 
denied CE's could successfully sue the Texas DDS for violation of their 
rights to due process and equal protection of the laws, or SSA Region 
VI for failure to oversee TRC-DDS, when TRC-DDS, while overpaying 
selected hospitals for some examinations, refused to do an examination 
on an indigent claimant even after an ALJ indicated that a medical 
examination was necessary to determine their claim properly remains, 
apparently remains untested.

    6.  ``Kenneth S. Apfel, Commissioner of the Social Security 
Administration under President Clinton, spoke at a seminar where 
government officials and other experts said they were unable to 
completely explain the state's relatively low approval rates in 
disability cases. 'Half the answer is known, half the answer is not 
known', said Apfel, now a University of Texas professor. But Texas can 
start on increasing its approval rates by training case workers at the 
Texas Rehabilitation Commission to take a wider approach to whether 
disability applicants can no longer work, he said. Case workers in many 
other states grant disability benefits more often by looking beyond 
purely medical evidence to see whether people can continue to function 
at work, Apfel said. `I don't think you've done enough in Texas', he 
said.''(Houston Chronicle, 10-18-01 A.29.)

    In evaluating disability claims on about $300 apiece, there is 
limited ability to do claimant evaluations. The inference from Kenneth 
S. Apfel's statement is that few Vocational Evaluations (VE's) were 
being done at TRC-DDS during this era. It seems logical that, on a 
limited disability determination budget with a total cost fixed to 
national rates, with TRC-DDS overpaying selected hospitals 
significantly for CE's, DDS might at the same time reduce VE's in order 
to balance their budget.

    1.  Texas is said to have a lower Social Security disability 
approval rate for ``psychiatric disorders'' than other states. A letter 
to the editor by Leslie Gerber, director of public policy, Mental 
Health Association, Houston stated of Social Security disability 
recipients in Texas that ``in 1999, only 22.8 percent had a psychiatric 
disability, compared to the national average of 32.1 percent, which is 
nearly one and a half times higher.''(Houston Chronicle, 3-18-01 C.3.)
    It has been argued, that due to the above combination of factors, 
tens of thousands of otherwise legitimate Social Security claims in 
Texas were improperly denied during this era, with a total fiscal 
impact to claimants of hundreds of million dollars.
    In summary, while the problems at TRC-DDS during this era were 
multifactorial and complex, it would appear that SSA failed to properly 
fund disability determinations in Texas; backlogs occurred; claim 
documentation suffered while payment rates to large hospitals did not, 
yet SSA Region VI failed to oversee payments; claim denial rates went 
up; a stop-gap ``waiting list'' program with unspecified selection 
criteria was instituted; and indigent claimants unable to afford 
documentation, and those whose claims were selected for the ``waiting 
list'', were denied due process. This was subsequently followed by 
newspaper articles, pickets, hearings, audits, resignations, and 
reorganizations.

III.  Compensation of State Agency Medical Consultants at the Texas 
        DDS:

    During the late 1990's, TRC-DDS began compensating State Agency 
Medical Consultants (SAMC's) and State Agency Psychiatric Consultants 
(SAPC's) working as independent contractors to advise Disability 
Examiners determining Social Security disability claims on a ``piece 
work'' basis.
    Before TRC-DDS had the lowest ``initial approval rate'' in the 
nation, and two years before the ``fake examiner'' scandal broke, the 
minutes of the September 18, 1999 meeting of the TRC Medical 
Consultation Advisory Committee (MCAC) record a presentation by 
Elizabeth Gregowicz reviewing the operation of DDS. After a 
presentation on the SSA's ``Redesign'' pilot program for improving DDS 
operations and its rollout, the discussion, chronicled on page 4, 
turned to SAMC compensation:
    ``Commissioner Arrell raised the question about our payment of 
State Agency Medical Consultants (SAMC), indicating that TRC-DDS 
recently made a change in how we do that. Ms. Gregowicz noted that our 
budget from SSA has been shrinking in the last 10 or so years, and 
consequently, DDS' have been looking for ways to enhance operational 
efficiencies. Texas implemented a ``pay-per-case'' concept versus 
``pay-per-hour'' for SAMC services. It appears that productivity has 
increased and there is increased efficiency. Dr. Vickers said he 
initially thought quality would suffer, but notes this has not 
happened. The Disability Examiners are more thorough and quality has 
improved. The SAMCs are contract workers and pay their own social 
security and income tax. There are no ``employee'' benefits since the 
SAMCs are not employees.''
    The roughly 40 TRC-DDS SAMC's and SAPC's budgeted to earn more than 
$100,000 per year on SAC contracts in 2002-3 were listed as contractors 
on TRC's web site at http://www.rehab.state.tx.us.
    Some of the SAC ``piece work'' consultants were budgeted to earn as 
much as $628,000 in a year on their DDS contracts. By comparison, 
typical salaries for physicians employees at Texas HHSC agencies are 
$7-10,500 per month. This suggests that some Texas DDS SAMC's and 
SAPC's are evaluating a LARGE number of claims each year, and that 
these high-volume examiners may disproportionately affecting DDS 
processing statistics and claims outcomes.
    Some of these consultants also held other contracts with TRC itself 
(e.g. perhaps with the Vocational Rehabilitation program), which are 
listed in the Historically Underutilized Business (HUB) database on the 
Texas Building and Procurement Commission web site at http://
www.tbpc.state.tx.us.
    It seems arguable that a physician earning over $360,000 per year 
doing ``piece work'' disability evaluations may not be spending an 
appropriate amount of time to consider each individual claim, 
particularly if they also have other contracts with the state.
    Several example TRC-DDS SAMC and SAPC contracts are notable. The 
statistics that follow have been compiled from TRC prospective 
quarterly budget estimates and PBPC HUB retrospective historical data 
for the years 2002-3 without respect to fiscal versus calendar years, 
and thus the figures are somewhat approximate. (Note that some of these 
contracts might include a ``supervisory'' bonus.) These figures, 
however, outline the general issue:

    1.  SAMC (``S.S.'') was budgeted to earn in both 2002 and 2003 
about $550,000 a year on their DDS SAMC disability determination piece 
work contract, plus another $300,000 directly from TRC (e.g. which may 
be for examinations or other services, such as with the Vocational 
Rehabilitation program, which also might possibly require the services 
of a clinic and/or staff) in each of those years, and is budgeted to 
earn $628,000 on their DDS SAMC piece work contract alone in 2004.
    2.  SAMC (``M.D.'') was budgeted to earn between $530,000 and 
$600,000 in 2003 on their DDS SAMC piece work contract, in addition to 
about $320,000 directly from TRC for other work, although in 2002 they 
were budgeted to earn only $330,000 in DDS SAMC piece work, plus 
$178,000 directly from TRC for other work, and in 2004 are budgeted to 
earn only $270,000 in DDS SAMC piece work fees.
    3.  SAMC (``F.C.'') is budgeted to earn $552,000 in DDS SAMC piece 
work fees in 2004, although they were budgeted to earn only about 
$156,000 in DDS SAMC piece work fees, and $139,000 from TRC for other 
work, in 2003.
    4.  SAMC (``J.B.'') was budgeted to earn $429,000 in DDS SAMC piece 
work fees, in addition to $39,000 from TRC for other work in 2002, but 
is not listed as a TRC contractor in either 2003 or 2004.
    5.  SAPC (``S.D.''), a ``Chief or Emeritus SAPC'', was budgeted to 
earn $311,000 in DDS SAPC piece work fees, plus another $190,000 from 
TRC for other work in 2003, but was not listed as a contractor in 2004, 
and has likely become a staff member at the Texas DDS agency.
    6.  SAPC (``J.C.'') was budgeted to earn $368,000 in DDS SAPC piece 
work fees, plus another $205,000 from TRC for other work in 2003, 
although they were budgeted to earn only $157,000 in DDS SAPC piece 
work fees in addition to $195,000 from TRC for other work in 2002, but 
are budgeted to earn $468,000 in DDS SAPC fees 2004.

    There are concerns that the piece work compensation of State Agency 
Consultants may induce a bias in disability determinations against 
claimants with a) chronic conditions, b) complex conditions, c) 
conditions whose origin, diagnosis, or effects are obscure, d) 
conditions with a need to consider vocational factors in the evaluation 
of disability, and e) claimants who reopen claims, reapply for 
benefits, or have large files.
    ``Piece work'' compensation may thus arguably result in unequal 
treatment both between claimants whose claims are evaluated by ``high 
volume'' as compared to ``low volume'' SAMC's, and claimants whose 
claims are evaluated by ``high volume'' SAMC's in Texas as compared to 
claimants in other states.
    ``Piece work'' compensation might also provide a financial 
incentive for a SAC to decide a claim on the spot based on the evidence 
already in the record, rather than to request a CE or VE which may 
delay the decision by many weeks.
    Thus, while in 2000-1 TRC-DDS management with limited funding used 
``fake examiner'' document fraud to expedite Social Security disability 
claims processing--having had the lowest ``initial approval rate'' in 
the nation in 2000; Texas DDS began about 1999 to expedite disability 
claims by compensating State Agency Consultants on a ``piece work'' 
basis, some of whom now earn over a half million dollars per year in 
piece work fees.
    The ``piece work'' compensation policy has apparently helped solve 
the backlog problem at Texas DDS, but one must ask: is this due process 
in accordance with SSA national program standards, and does this afford 
claimants equal protection of the laws?
    The U.S. Constitution speaks directly on the issue a person's 
rights to due process and equal protection of the laws with respect to 
the actions of state governments:
    ``No state shall make or enforce any law which shall abridge the 
privileges or immunities of citizens of the United States; nor shall 
any state deprive any person of life, liberty, or property, without due 
process of law; nor deny to any person within its jurisdiction equal 
protection of the laws. '' (The Fourteenth Amendment to the 
Constitution of the United States, Section 1, sentence 2.)
    The U.S. Constitution also speaks directly on the issue a person's 
rights to due process with respect to the actions of the U.S. 
Government:
    No person shall be held to answer for a capital, or otherwise 
infamous crime, unless on a presentment or indictment of a grand jury, 
except in cases arising in the land or naval forces, or in the militia, 
when in actual service in time of war or public danger; nor shall any 
person be subject for the same offense to be twice put in jeopardy of 
life or limb; nor shall be compelled in any criminal case to be a 
witness against himself, nor be deprived of life, liberty, or property, 
without due process of law; nor shall private property be taken for 
public use, without just compensation. (The Fifth Amendment to the 
Constitution of the United States.)

IV. Lessons Learned From the Texas DDS Experience:

    It would appear that when SSA cut the Texas DDS disability 
determination budget, in a matter of time backlogs occurred as waiting 
claims began to be classified as ``staged pending''; claimant CE and VE 
documentation suffered; a ``piece work'' compensation program was 
instituted for the physician medical consultants; and as denial rates 
went to the highest in the nation, the waiting list went from one to 
three months, and management instituted a two tier ``waiting list'' 
processing scheme compromising quality and accountability. As a result, 
claimant rights to due process and equal protection of the laws 
suffered.
    Overall, a budget cut of perhaps on the order of $10-20 million 
from what Texas DDS ought to have been funded for operational costs for 
proper disability claim development and determination, arguably 
resulted an industrial-scale degradation in determination quality, and 
in the denial of tens of thousands of claimants to several hundreds of 
millions of dollars in benefits, including to SSDI disability benefits 
which disabled workers had paid insurance premiums for to the District 
of Columbia over their entire working careers.
    In creating SSA, Congress delegated disability determinations to 
the states while the program was being developed during the 1930's 
because at the time only the states had the institutional capability to 
assess disability at local locations throughout the nation. This 
historical decision has had consequences today.
    State DDS programs are subject to SSA budget constraints, while 
operating in virtual secrecy, a situation which can easily result in 
violation of claimants' U.S. Constitutional and statutory rights.
    Further, state disability determination directors are often 
appointed by the state governor or by senior state agency officials, 
and are thus subject to internal state politics and domestic political 
agendas.
    It is in this context that we review current proposed changes to 
the national Social Security disability determination system.

     1.  We believe that control of the ``initial'' levels of SSA 
disability determination by state officials at state DDS agencies will 
continue to present an ongoing problem of regional bias in what is 
purported to be a national social insurance program.
     2.  We believe that SSA Regional Commissioners should have not 
only the authority but also the responsibility to manage the process of 
disability determination at state DDS agencies, including ensuring that 
cases are properly developed, and that CE's and VE's are properly 
performed.

    Claimants must be fully informed of their rights in the disability 
determination process, particularly as the process is being changed.

     3.  We believe that claimants must be fully informed at every step 
in the SSA disability determination process, including their right to 
directly submit medical evidence to the state agency at the time of 
their initial application, and in notice of decisions of their rights 
to appeal versus reapply.

    We feel that a failure by a state DDS to properly develop claims 
constitutes a bias against claimants with complex medical conditions, 
who have limited financial resources, who file Pro Se without a lawyer, 
who are homeless, or who have mental conditions. Failure to properly 
develop cases further prejudices consideration of claims on appeal to 
the SSA Administrative Law level. This forces claimants denied proper 
development out of the ``nonadversarial'' system created by Congress, 
forcing them to either forfeit rights without recourse, or to litigate 
a case in Federal District Court.

     4.  We believe that every disability claim where there is a 
colorable allegation of social insurance coverage ought to be fully 
developed by a state DDS Disability Examiner.
     5.  We believe that SSA should fund state DDS agencies at 
sufficient levels to do CE examinations on the majority of claimants, 
and VE evaluations on a substantial fraction of claimants.
     6.  We believe that every disability claim developed by state DDS 
agency ought to be reviewed by a physician consultant, rather than just 
a nurse or a lawyer.

    ``Piece work'' compensation may improve State Agency Consultant 
efficiency, but efficient does not mean fair.

     7.  We believe that while State Agency Consultants compensation 
may include production bonuses, it should not be entirely ``piece 
work''. We believe that ``piece work'' compensation institutes a bias 
against several classes of disability claimants.

    In a complex disability claim, with medical records from multiple 
sources, and with continuing development of medical evidence, there may 
be problems with obtaining medical evidence in a timely manner.

     8.  If the reconsideration step of the SSA disability 
determination process is eliminated, we believe that methods must be 
available to claimants to ensure that the entirety of their medical 
records are available for consideration by the decision maker before 
the initial decision is made.

    The development of an electronic case file system at SSA puts into 
the hands of senior DDS officials and their parent agencies--who are 
subject to budgetary and political pressure--a tool which with they may 
do industrial-scale fraud, should they choose to use it in such a 
manner.
    At present, a Social Security disability claimant may walk into a 
SSA Office of Hearings and Appeals (OHA) office after filing an ALJ 
appeal of a DDS denial and obtain a photocopy of their case file as 
developed and determined by the state DDS, take it home, and spend 
months analyzing it. Often an ALJ appeal is a claimant's first 
opportunity to review how the state DDS developed their claim. The 
claimant may find, for instance, that state DDS failed to request their 
medical records from all providers; requested medical records for the 
wrong dates; received and cited medical records subsequently found to 
be missing from the case file; and even culled medical records from the 
case file sent in directly by the claimant. They may also find that 
State Agency consultants evaluated their claim while the file was 
incomplete.
    Disability Determination fraud by a State Agency is particularly 
likely when a senior official at a state DDS under budgetary or 
political pressure is willing to institute an official policy of fraud. 
This occurred for example at TRC-DDS when an official assigned a ``fake 
name'' disability determination computer account for each of the 
agency's 25 claims evaluation units, such as demonstrated in a 
memorandum published in the Houston Chronicle on September 9, 2001.
    Claim documentation is presently available in paper format in most 
states. In computer format the destruction and forging of records would 
be much less obvious, and the files would be much less accessible to 
claimants for verification.

     9.  Safeguards must be built into any computerized claims system 
by which SSA can ensure the authenticity of medical records, provenance 
of documents, decision authority in determinations, and an audit record 
of all transactions, in order to ensure claimants due process, even 
should a state DDS agency head or SSA Regional Commissioner wish to 
officially sanction disability determination fraud for political or 
budgetary goals.

    Nothing but the ``light of day'' will change the back-room tactics 
of the ``good `ol boys'' in some state DDS agencies in trashing 
disability claims as their personal prejudices dictate.

    10.  Claimants must be allowed to examine their computerized case 
file at any time, and to obtain a personal copy of the records in order 
to ascertain their completeness and accuracy.

    In a complex disability claim, with continuing development of 
medical evidence, not all medical evidence may be available within the 
first few years of the onset of disability.

    11.  We believe that if the proposal to close the hearing record 
after the ALJ hearing is effected, there ought to be a good cause 
exception which allows the submission of additional medical records.

    Lack of proper appellate review of DDS denials exists in Texas 
because of the close relationship between the Texas DDS and the SSA 
Region VI office, the relatively small number of claims remanded by the 
SSA Appeals Council, and limitations on access to the Texas Federal 
District Courts for indigent and Pro Se persons, including limited 
access to legal resources due to the notoriety of the Texas 
Unauthorized Practice of Law Subcommittee.

    12.  We believe that the SSA Appeals Council has a legitimate 
function, in that about 25% of appealed claims nationally are either 
remanded or reversed. At the same time, we believe that the one year 
backlog at the Appeals Council is too long.

    Texas DDS maintained one of the highest ``accuracy'' statistics in 
the nation, even during 1999-2001 while they had problems which 
included having the lowest ``initial approval rate'' in the nation, 
engaging in failure to do CE's and VE's while overpaying selected 
hospitals for those done, and using ``fake examiners'' and doing 
``waiting list'' processing. Obviously these ``accuracy'' statistics 
have an internal bias due to the self-fulfilling effect of a state DDS 
agency denial of a SSA disability claim, and do not reflect the true 
accuracy of claims determinations.

    13.  We believe that the ``accuracy'' statistics for state DDS 
agencies should be revised to avoid the internal bias inherent in the 
current method.
    14.  We believe that given the number of irregularities in Social 
Security disability determinations in Texas from 1996 to present, 
claims determined during that period should be reviewed, and claims 
with questionable handling (e.g. failure to do a CE or VE) should be 
redetermined.

    Let me close with the following quote:
    ```It rings a very serious fire bell that the Social Security 
justice system is not treating all of the applicants equally or 
consistently' said U.S. Rep. John Culberson, R-Houston. `And that is a 
recipe for disaster under our American system of law.''' From: ``Judges 
Vary Sharply on Disability Approval: Social Security Rulings Concern 
Lawmakers'', Alan Bernstein and Dan Feldstein, Houston Chronicle, 7-14-
02 A.1.

                                 
          Statement of Sheryl Schott, Los Angeles, California
    I am a Pediatric Medical Consultant with LA West, whose primary 
objective is to make the right decision the first time, in as timely a 
manner as possible, and with as little expenditure as possible. In my 
10 years with the program, I have educated the DEAs to refer promptly 
to me any case in which phone calls to Treating doctors, hospitals, 
labs can allow me to make a proper determination rapidly and without 
additional cost.
    I routinely call treating doctors, getting essential information to 
avoid the purchase of consultative examinations, as well as Medical 
Record Departments and labs who did not respond to DEA efforts alone. 
Indeed, most Pediatricians and Pediatric specialists in this area are 
very well known to me, through my years of service, and VERY responsive 
to my phone calls and questions, again generally at no charge to the 
department.
    I know many of my colleagues, just as concerned, who perform the 
same actions daily. We end up saving the state and federal government 
significant funds as in the following situation which has occurred 
quite a number of times--Lost folder case on premature infants. The DEA 
wanted an automatic continuance on the basis of the lost folder, but I 
insisted on the reconstruction, not previously done, which documented 
the impairment of premie/growth--the basis for the comparative point 
decision, the child had no new impairments in interim, and thus this 
altered the determination dramatically to a cessation.
    Another situation which has arisen in my experience, is where the 
DEA incorrectly interpreted reports from Pediatric Cardiologist in the 
case of a child with complex cyanotic congenital heart disease, who had 
already undergone 2 surgical procedures. The
    TP Pediatric Cardiologist reported ``doing well'' but it could be 
determined from the physical exam findings that this was 
``comparatively speaking'' to another child with complex cyanotic heart 
disease, as the child continued with findings of cyanotic heart 
disease. This was overlooked on the DEA's review of the case. There are 
also many occasions where I find that the DEA has mistakenly identified 
different notes/reports in the file, leading to errors in their 
assessment of the correct determination.
    While my colleagues and I strive to educate the DEAs in our 
division as to all the above, and routinely answer multiple daily 
informal questions on the full range of medical and pediatric 
impairments and syndromes, as well as the adequacy of medical evidence 
in a certain case or the necessity for multiple consultative exams on a 
case, we recognize the benefits of our ``team'' function in making the 
correct determination. The interposition of a RN is not only 
unnecessary, but would also place an expensive extra link into a newly 
broken chain. Nor could the RN serve all the functions of a Medical 
Consultant
    My colleagues and I are proud of the job that we do and our prime 
objective is to assist/ educate/expedite the right decision within our 
team.

                                 
  Statement of Linda Fullerton, Social Security Disability Coalition, 
                          Rochester, New York
    Our group and experiences, are a very accurate reflection and 
microcosm of what is happening to millions of Social Security 
Disability applicants all over this nation. The current Social Security 
Disability program and the process that an applicant endures when 
filing for disability benefits, causes irreparable harm and has many 
serious side effects including unbearable stress, depression, and in 
some cases the depression is so severe that suicide seems to be the 
only option to get rid of the pain, of dealing with a system riddled 
with abuses against the disabled, already fragile citizens of this 
country. According to past GAO reports, the SSD system is at HIGH RISK 
but Congress keeps ignoring the problem.
    The Social Security Disability New Approach Program is a welcome 
change from what we have seen in decades past. Everyone that I have 
dealt with there has been very courteous and responsive to our concerns 
and I am very grateful for that. We keep in constant communication with 
them as much as we are allowed to participate. But from what I can see 
the proposals that are being suggested so far, by the Disability New 
Approach Program, will not do very much to relieve this horrendous 
situation in the very near future. While they are doing their very best 
with the resources they have, they cannot do it alone, as many things 
needed to truly reform this system, must be legislated by Congress. In 
addition we ask that in future Congressional hearings, members of the 
Social Security Disability Coalition be allowed to actively participate 
instead of being forced to always submit testimony in writing, after 
the main hearing takes place. We are willing to testify in person 
before Congress and we should be permitted to do so. We want a major 
role in the Social Security Disability reformation process, since any 
changes that occur have a direct major impact on our lives and well 
being.
    The time it takes to process a Social Security Disability claim 
from the original filing date is now, in many cases, at least 1-3 years 
or longer. If claimants provide sufficient medical documents when they 
originally file for benefits they shouldn't be denied at the initial 
stage, have to hire lawyers, wait years for hearings, go before 
administrative law judges and be treated like criminals on trial.The 
current SSD process seems to be structured in a way to be as difficult 
as possible in order to suck the life out of applicants in hope that 
they give up or die in the process, so that Social Security doesn't 
have to pay them their benefits. To a population that is already 
compromised, this is unacceptable and this issue must be made a 
priority for every member of Congress since it is a life and death 
situation for millions. Many SSD applicants are losing EVERYTHING in 
the process of applying for benefits, their homes, all their financial 
resources, their healthcare and worse yet their lives.
    The current claims process is also set up to line the pockets of 
the legal system, since you are encouraged from the minute you apply to 
get a lawyer. Why should you need to pay a lawyer to get benefits that 
you have paid into all your working life? The SSD program is structured 
so that it is in a lawyer's best interest for your case to drag on 
since they automatically get paid a percentage of a claimant's retro 
pay--the longer it takes the more they get even if they do almost 
nothing. From the horror stories I hear from claimants many attorneys 
are definitely taking advantage of that situation. The stress and worry 
that applicants are forced to endure while applying for SSD benefits 
causes further irreparable damage to their already compromised health 
and is totally unacceptable. Many lose everything, and now in addition, 
are also forced into a level of poverty on top of their illnesses, 
which they will have to live with the rest of their lives since they 
can no longer earn a living. Due to the devastation on their lives and 
health, the Ticket to Work program, and any chance of possibly getting 
well enough to return to the workforce, even on a part time basis, is 
now out of the question.
    The SSA Customer service is extremely poor and in major need of 
improvement across the board. If any corporation in this country did 
business like the SSA, the majority of employees would be fired on the 
spot, and the company would be shut down within a year. Here is just a 
small sampling of the constant complaints we receive about the Social 
Security Disability system and its employees:

     Extraordinary wait times between the different phases of the 
disability claims process

     Employees being rude/insensitive to claimants

     Employees outright refusing to provide information toclaimants or 
do not have the knowledge to do so

     Employees not returning calls

     Employees greatly lacking in knowledge of and in some cases 
purposely violating Social Security and Federal Regulations (including 
Freedom of Information Act and SSD Pre-Hearing review process).

     Claimants getting conflicting/erroneous information depending on 
whom they happen to talk to at Social Security--causing confusion for 
claimants and in some cases major problems including improper payments

     Complaints of lack of attention or totally ignoring--medical 
records provided and claimants concerns by Field Officers, IME doctors 
and ALJ's.

     Fraud on the part of DDS/OHA offices, ALJ's, IME's--purposely 
manipulating/ignoring information provided to deny claims.

     Complaints of lost files and files being purposely thrown in the 
trash

     Complaints of having other claimants information improperly filed/
mixed in where it doesn't belong causing breach of security

     Poor/little coordination of information between the different 
departments and phases of the disability process

     These complaints refer to all phases of the SSD process including 
local office, Disability Determinations, Office of Hearings and Appeals 
and the Social Security main office in MD (800 number).

SOCIAL SECURITY DISABILITY COALITION--SSD SYSTEM REFORM GOALS

    We want to have claimants who have actually gone through the SSD 
system themselves to be part of a group who actually participates in 
the Social Security Disability New Approach program and which has major 
input and influence on the decision making process before any final 
decisions/changes/laws are instituted by the SSA Commissioner or 
members of Congress. This is absolutely necessary, since nobody knows 
better about the flaws in the system and possible solutions to the 
problems, then those who are forced to go through it and deal with the 
consequences when it does not function properly.
    We want disability benefits determinations to be based solely on 
the physical or mental disability of the applicant. Neither age, 
education or any other factors should ever be considered when 
evaluating whether or not a person is disabled. If a person cannot work 
due to their medical conditions--they CAN'T work no matter what their 
age, or how many degrees they have. This is blatant discrimination, and 
yet this is a standard practice when deciding Social Security 
Disability determinations and should be considered a violation of our 
Constitution. This practice should be addressed and eliminated 
immediately.
    All SSD case decisions must be determined within three months of 
original filing date. When it is impossible to do so a maximum of six 
months will be allowed for appeals, hearings etc--NO EXCEPTIONS. 
Failure to do so on the part of SSD will constitute a fine of $500 per 
week for every week over the six month period--payable to claimant in 
addition to their awarded benefit payments and due immediately along 
with their retro pay upon approval of their claim. SSD will also be 
held financially responsible for people who lose property, automobiles, 
IRA's, pension funds, who incur a compromised credit rating or lose 
their health insurance as a result of any delay in processing of their 
claim, which may occur during or after (if there is failure to fully 
process claim within six months) the initial six month allotted 
processing period .
    Waiting period for initial payment of benefits should be reduced to 
two weeks after first date of filing instead of the current five month 
waiting period.
    Prime rate bank interest should be paid on all retro payments from 
first date of filing due to claimants as they are losing it while 
waiting for their benefits to be approved.
    Immediate eligibility for Medicare/Medicaid upon disability 
approval with NO waiting period instead of the current 2 years.
    SSD required medical exams should only be performed by board 
certified independent doctors who are specialists in the disease that 
claimant has (example--Rheumatologists for autoimmune disorders, 
Psychologists and Psychiatrists for mental disorders). Independent 
medical exams requested by Social Security must only be required to be 
performed by doctors who are located within a 15 mile radius of a 
claimants residence. If that is not possible--Social Security must 
provide for transportation or travel expenses incurred for this travel 
by the claimant.
    Too much weight at the initial time of filing, is put on the 
independent medical examiner's and SS caseworker's opinion of a claim. 
The independent medical examiner only sees you for a few minutes and 
has no idea how a patient's medical problems affect their lives after 
only a brief visit with them. The caseworker at the DDS office never 
sees a claimant. The decisions should be based with much more weight on 
the claimant's own treating physicians opinions and medical records. In 
cases where SSD required medical exams are necessary, they should only 
be performed by board certified independent doctors who are specialists 
in the disabling condition that a claimant has (example--
Rheumatologists for autoimmune disorders, Psychologists and 
Psychiatrists for mental disorders). Currently this is often not the 
case.
    All Americans should be entitled to easy access (unless it could be 
proven that it is detrimental to their health) and be given FREE copies 
of their medical records including doctor's notes at all times. This is 
crucial information for all citizens to have to ensure that they are 
receiving proper healthcare and a major factor when a person applies 
for Social Security Disability.
    ALL doctors should be required by law, before they receive their 
medical license, and made a part of their continuing education program 
to keep their license, to attend seminars provided free of charge by 
the SSA, in proper procedures for writing medical reports and filling 
out forms for Social Security Disability and SSD claimants.
    More Federal funding is necessary to create a universal network 
between Social Security, SSD/SSI and all outlets that handle these 
cases so that claimant's info is easily available to caseworkers 
handling claims no matter what level/stage they are at in the system. 
All SSA forms and reports should be made available online for 
claimants, medical professionals, SSD caseworkers and attorneys, and be 
uniform throughout the system. One universal form should be used by 
claimants, doctors, attorneys and SSD caseworkers, which will save 
time, create ease in tracking status, updating info and reduce 
duplication of paperwork. Forms should be revised to be more 
comprehensive for evaluating a claimant's disability and better 
coordinated with the SS Doctor's Bluebook Listing of Impairments.
    Institute a lost records fine--if Social Security loses a claimants 
records/files an immediate $1000 fine must be paid to claimant.
    Review of records by claimant should be available at any time 
during all stages of the SSD determination process. Before a denial is 
issued at any stage, the applicant should be contacted as to ALL the 
sources being used to make the judgment. It must be accompanied by a 
detailed report as to why a denial might be imminent, who made the 
determination and a phone number or address where they could be 
contacted. In case info is missing or they were given inaccurate 
information the applicant can provide the corrected or missing 
information before a determination is made. This would eliminate many 
cases from having to advance to the hearing and appeals phase.
    The SSA ``Bluebook'' listing of diseases that qualify a person for 
disability should be updated more frequently to include newly 
discovered crippling diseases such as the many autoimmune disorders 
that are ravaging our citizens. SSD's current 3 year earnings window 
calculation method fails to recognize slowly progressive conditions 
which force people to gradually work/earn less for periods longer than 
3 years, thus those with such conditions never receive their `healthy' 
earnings peak rate.
    A majority of SSD claimants are forced to file for welfare, food 
stamps and Medicaid, another horrendous process, after they have lost 
everything due to the inadequacies in the Social Security Disability 
offices and huge claims processing backlog. If a healthy person files 
for Social Service programs and then gets a job, they do not have to 
reimburse the state once they find a job, for the funds they were given 
while looking for work--why are disabled people being discriminated 
against? Claimants who file for Social Service programs while waiting 
to get SSD benefits, in many states have to pay back the state out of 
their meager SSD/SSI benefits once approved, which in most cases keeps 
them below the poverty level and forces them to continue to use state 
funded services. They are almost never able to better themselves and 
now have to rely on two funded programs instead of just one. This 
practice should be eliminated. In all states there should be immediate 
approval for social services (food stamps, cash assistance, medical 
assistance, etc) benefits for SSD claimants that does not have to be 
paid back out of their SSD benefits once approved.
    The claims process should be set up so there is no need whatsoever 
for claimant paid legal representation when filing for benefits and 
very little need for cases to advance to the hearing and appeal stage 
since that is where the major backlog and wait time exists. The need of 
lawyers/reps to navigate the system and file claims, and the high SSD 
cap on a lawyer's retro commission is also a disincentive to 
expeditious claim processing, since purposely delaying the claims 
process will cause the cap to max out--more money to the lawyer/rep for 
dragging their feet adding another cost burden to claimants. Instead, 
SS should provide claimants with a listing in every state, of FREE 
Social Security Disability advocates/reps when a claim is originally 
filed in case their services may be needed.
    Audio and/or videotaping of Social Security Disability ALJ hearings 
and during IME exams allowed at all times to avoid improper conduct by 
judges and doctors. A copy of court transcript should automatically be 
provided to claimant or their representative within one month of 
hearing date FREE of charge.
    Strict code of conduct for Administrative Law Judges in determining 
cases and in the courtroom. Fines to be imposed for inappropriate 
conduct towards claimants.
    We have heard that there is a proposal to give SSD recipients a 
limited amount of time to collect their benefits. We are very concerned 
with the changes that could take place. Since every patient is 
different and their disabilities are as well, this type of ``cookie 
cutter'' approach is out of the question. We especially feel that 
people with psychological injuries or illness would be a target for 
this type of action. Some medical plans pay 80% for treatment of 
biological mental heath conditions, but currently Medicare only pays 
50% for an appointment with a psychiatrist. This often prohibits 
patients from getting proper treatment and comply with rules for 
continual care on disability. The current disability review process in 
itself is very detrimental to a patient's health. Many people suffer 
from chronic conditions that have NO cures and over time these diseases 
grow progressively worse with no hope of recovery or returning to the 
workforce. The threat of possible benefits cut off, and stress of a 
review by Social Security again is very detrimental to a recipients 
health. This factor needs to be taken into consideration when reforming 
the CDR process.
    NOTE: The problems with the Federal Social Security Disability 
program cause an extra burden on state Social Service programs, which 
could be greatly reduced once this Federal program is fixed, and the 
states along with the claimants would reap the benefits in the long 
run. State politicians need to put pressure on congress to put more 
funds into the SS system to hire more qualified claim examiners and 
better educate employees, doctors and the claimants themselves to speed 
up the process.
    In closing, most of us were once hard working, tax paying citizens 
with hopes and ``American dreams'' but due to an unfortunate accident 
or illness, have become disabled to a point where we can no longer 
work. Does that mean we are not valuable to our country, or give the 
government and politicians the right to ignore or even abuse us? Due to 
circumstances beyond our control, and on top of our disabilities, we 
now live the American nightmare with no hope of relief in sight! 
Contrary to popular opinion, nobody willingly chooses this type of 
existence. Politicians are supposed to work FOR us not ignore us. 
Anyone reading this, could suddenly find themselves dealing with these 
issues in the future, and we are holding you accountable to fix these 
problems now! Nobody thinks this horrible existence could ever happen 
to them, but there are millions of Americans who are suffering and 
dying due to this negligence, and our lives depend on your cleaning up 
this mess immediately! Currently we are considered ``disposable'' 
people by general and government standards, so our cries and screams 
are ignored, they would prefer that we just shut up or die. I am here 
to tell you those days are over now. We are watching, we are waiting, 
we are disabled and we vote!

                                 
               Statement of Laurie L. York, Austin, Texas
    Thank you for this opportunity to provide comments to this hearing 
on the Commissioner's proposal to improve the disability claims 
process. I am an attorney in private practice representing clients in 
the Social Security Disability claims process.

I. Introduction:
    Texas Disability Determination Services (DDS) is a fully federally 
funded unit operating under federal law to evaluate Social Security 
disability (SSDI and SSI) claims filed at the ``initial'' (initial and 
reconsideration) level in Texas at its central office in Austin as 
agent for the Social Security Administration (SSA). It was operated 
from 1969 to March 1, 2004 under the management of the Texas 
Rehabilitation Commission (TRC) by Texas state employees.
    TRC-DDS had a number of problems during the past few years, ranging 
from having the lowest ``initial approval rate'' in the nation in 
2000--a 31% approval rate compared to a 45% rate nationally, the use of 
two tier ``waiting list'' processing by ``fake examiners'' (code names 
with forged signatures) on about 12,000 claims during a period of 
backlog in 2001, a widespread failure to do Vocational Evaluations and 
consider vocational factors in the determination of disability, the 
payment in excess of SSA rates for Consultative Evaluations (CE's) to 
selected providers, the refusal to do CE's on indigent claimants in 
some cases even when ordered by a SSA Administrative Law Judge (ALJ), 
and a low overall combined DDS and SSA approval rate for psychiatric 
conditions within the state.
    A review of the recent history of TRC and its DDS agency may be 
found in the testimony of Lawrence A. Plumlee, M.D. to this 
Subcommittee at the hearing of September 25, 2003, which is now 
available at http://waysandmeans.house.gov/
hearings.asp?formmode=printfriendly &id=1847. Notably, the roughly 45 
newspaper articles on the determination of Social Security disability 
in Texas published in the Houston Chronicle during 2001-3 are cited, 
mostly written by reporter Alan Bernstein.
    There are also indications that TRC-DDS has demonstrated an 
historic bias against chemical injury claims, as described in the 
testimony of Stephen A. McFadden, M.S. to this Subcommittee at the 
hearing of September 26, 2003, which is now available at http://
waysandmeans.house.gov/hearings.asp? formmode=view&id=1837.
    This bias against chemical injury and treatment inconsistent with 
SSA national program standards is supported by statements made by 
Wesley Davis, the Spokesman of SSA Region VI, to the Houston Chronicle 
while trying to explain Texas' having the lowest ``initial approval 
rate'' in the nation in 2000, first, in March 2001, by citing a large 
number of disability claims by ``under-educated manual laborers in the 
oil industry and elsewhere'' who ``commonly get injured on the job'' as 
an explanation--thus admitting not only the bias against chemical 
injury claims at TRC but the significance of the size of the impacted 
group (Houston Chronicle 3-11-01 A.1.), and second, in June 2001, by 
the statement that Texas disability examiners ``reach different 
conclusions on cases that require certain judgements to be made on an 
individual's capacity to work'' than those of the rest of the nation, 
thus admitting a lack of equal protection of the laws in TRC's DDS 
operation. (Houston Chronicle 6-10-01 A.8).
    The impact of these historic policies at TRC-DDS and SSA Region VI 
are significant. The testimony of Stephen A. McFadden, M.S. to this 
Subcommittee at the hearing of January 26, 2004, which is available at 
http://waysandmeans.house.gov/
hearings.asp?formmode=printfriendly&id=2125&keywords=, estimates that 
between the 12,000 ``fake examiners'' cases, the bias against chemical 
injury claims by ``oil well firefighters'' cases, the failure to do 
Vocational Evaluations, and the bias against psychiatric conditions and 
those ``regarded as psychiatric'', in the context of having the lowest 
``initial approval rate'' in the nation in 2001, approximately 30-
50,000 otherwise legitimate Social Security claims were denied during 
the period from 1996-2003, or about 7-10% of the total Social Security 
disability claimant pool of about a half million recipients in Texas, 
with a total fiscal impact of about half a billion dollars during those 
years.
    This gross failure of the Social Security disability determination 
process in Texas cannot be excused on grounds of budgetary constraint. 
Only about 2-3 percent of the total SSA disability program budget is 
spent on claims determination. The Texas DDS operation has a target 
total determination cost of under $300 per claim. Obviously, $300 will 
not even buy the average claimant a Consultative Evaluation by a 
licensed physician.
    For Social Security disability claims to be determined for under 
$300 in Texas apparently requires a reduction in the number of 
Consultative Examinations and Vocational Evaluations performed by DDS, 
impacting claim documentation, and thus limiting the ability of 
decision makers (DDS DE's and SAMC's and SSA ALJ's) to make a finding 
of disability based on evidence of a ``medically determinable 
impairment'' as required by SSA national program standards.
    Former Commissioner of Social Security Kenneth Apfel referred to 
the failure of TRC-DDS to do Vocational Evaluations or to train 
Disability Examiners (DE's) to consider vocational factors in the 
determination of disability in a speech at a September, 2001 conference 
sponsored by the Disability Policy Consortium. ``I don't think you've 
done enough'', said Apfel of the TRC-DDS' consideration of vocational 
factors (Houston Chronicle article 10-18-01 A.29).
    Dallas SSA Administrative Law Judge (ALJ) Christopher Lee Williams 
sued TRC-DDS, TRC, and SSA in April 2001 because TRC-DDS refused to 
perform Consultative Examinations on indigent claimants whose cases he 
remanded back to TRC for further development, e.g. as is allowed under 
SSR 97-2p Prehearing Case Review, documentation without which ALJ 
Williams would presumably be forced to deny those claims for lack of 
evidence, for example due to lack of evidence of a psychiatric medical 
diagnosis on indigent homeless persons applying for disability. 
(Williams v. Massanari, et al.; N.D. Texas Case No. 03:01CV816, filed 
04-30 2001) ALJ Williams' suit was dismissed for lack of standing on 
the ground he had not been harmed. Subsequently, a SSA audit found that 
DDS was paying selected providers in excess of SSA approved rates 
(March 11, 2004 A-15-02-12051 Audit Report.).
    Since the above cited testimonies were submitted to the 
Subcommittee, a number of changes have occurred in the determination of 
disability in Texas.

      The Commissioner of TRC was replaced on November 1, 2003 
after over 22 years.
      The Emeritus Chief State Agency Medical Consultant 
(SAMC), who had held the position of DDS Medical Director or Chief SAMC 
for much of the period 1974-2000, retired about that time.
      On March 1, 2004, TRC and its board were dissolved after 
35 years of operation, with its DDS, Vocational Rehabilitation, and 
Early Childhood Intervention functions being integrated into the new 
Texas Department of Assistive and Rehabilitative Services (DARS), along 
with programs for the blind, deaf, and hard of hearing from other 
agencies, while internal support functions were spun off to the Texas 
Health and Human Services Commission (HHSC).
      The TRC Deputy Commissioner for DDS was replaced on March 
4, 2004, and the new head of Texas DDS, Mary Sconci-Wolfe, was given 
the title of DARS Assistant Commissioner for DDS.

    This reorganization occurred as part of plan to reorganize 12 state 
agencies with a total budget of $7 Billion into 4 new HHSC departments. 
As a result of these changes, TRC thus effectively ceased to exist as a 
government entity on March 1, 2004.
    The Texas DDS operation, however, continues under the name DARS-
DDS, at the same centralized office located at 6101 Oltorf, Austin TX, 
78741, in the same locked facility with armed guards not open to the 
public, still operating under federal rules with federal funding.
    As of October, 2004, the new 9-member DARS ``Assistive and 
Rehabilitative Services Council'' has yet to be appointed by the 
governor, and thus DARS is still operating without board oversight more 
than six months after its creation. The lack of board oversight is 
significant because the statutory authority of DARS and its Council 
must be reformulated from the prior state statutes governing the 
several agencies from which DARS was formed, minus functions which in 
the future will be shared with other HHSC agencies. More importantly, 
this means that DARS-DDS is also operating without board oversight. 
This is an important factor in managing an agency with a long history 
of claimant due process and equal protection problems.
    As of October, 2004, the new DARS-DDS--now seven months old--is 
being operated by Mary Sconci-Wolfe, a former TRC manager, under the 
direction of DARS Commissioner Terrell I. Murphy (previously of head of 
the Texas Commission for the Blind). DARS operates under the direction 
of the newly appointed Texas HHSC Deputy Executive Commissioner for 
Social Services Anne Heiligenstein, and HHSC Executive Commissioner 
Albert Hawkins, who has presided over the Texas HHSC reorganization, 
without board oversight by the proposed Assistive and Rehabilitative 
Services Council, and with an incomplete statutory mandate.
    In short, TRC, its Commissioner, and its Board have been dissolved, 
and with it accountability for the operation of the DDS agency has been 
compromised, yet it would appear that the Texas DDS agency continues to 
operate much as before.

II. TRC-DDS and SSA Region VI Policy: Backlogs, Waiting Lists, and 
        ``Fake Examiners'':

    In order to better understand this history, I recently obtained 
under the Texas Public Information Act the official approved minutes of 
the TRC Board meeting of September 20, 2001, which was held at DDS less 
than 2 weeks after the Houston Chronicle published a photocopy of an 
internal TRC email assigning passwords for computer accounts for 25 
``fake'' names of ``overtime'' examiners.
    The TRC Board was a volunteer oversight board which nominally had 
six members. The newly appointed Chairman A. Kent Waldrep presided at 
the meeting, his predecessor having been named to the HHS Board leaving 
a vacancy. Board member Doyle was absent. The Commissioner of TRC, who 
normally attends, and TRC Medical Director did not attend, while the 
Associate Commissioner for Human Resources had recently ``terminated 
his employment with TRC to relocate out of state.''
    The four attending members of the TRC Board heard Social Security 
Administration Region VI Commissioner Horace Dickerson give ``an update 
on SSA's review of TRC.'' The highlighted sections of the discussion 
below are quoted directly from the official minutes:
    ``Commissioner Dickerson stated that over the last two and a half 
years, SSA has not been able to provide all the funding needed by DDSs 
to process all of the claims that they have received. He acknowledged 
that this has resulted in backlogs this fiscal year across the nation, 
as well as in Texas. He stated that the $83 million in funding to Texas 
DDS this fiscal year will allow it to process about 230,000 claims.''
    [Thus, SSA Region VI Commissioner Dickerson admitted to the TRC 
Board that the cause of the processing backlogs at TRC-DDS during 1999-
2001, which precipitated subsequent problems, was lack of funding of 
DDS disability determinations by SSA. Notably, the cost of DDS 
disability determination is only about 2-3% of total disability program 
costs.]
    ``. . . He pointed out that Texas DDS has been recognized 
nationally as one of the best DDSs in the country. He also noted that 
in May 2001, Texas DDS received a Commissioner's Citation, which is the 
highest honor that the Commissioner of SSA can bestow on a DDS, and 
this was based on their outstanding performance.''
    [Notably, Larry G. Massanari was Acting Commissioner of Social 
Security from March to November 2001, and this award was given the year 
after TRC-DDS had posted the lowest ``initial approval rate'' in the 
nation, while it had a backlog of about 3 months claims, just 4 months 
before the ``fake examiner'' scandal broke--a situation which was 
stated to exist for about a ``year''.]
    Allowance Rate. He explained that allowance rates do not measure 
the quality of DDS decisions, rather they reflect the number of people 
who apply, as well as the type and severity of the disabilities alleged 
by applicants. He revealed that one out of every thirty-five Texans 
receive a disability check under the Social Security program. He 
addressed the Chronicle's comparison of Texas' allowance rate to that 
of New Hampshire. He explained that New Hampshire also has one in 
thirty-five ratio, so the comparison is not a valid comparison. 
Commissioner Dickerson also noted that last year, SSA published new 
rules for evaluating mental impairments, which were expected to 
increase the allowance rate. Beginning in September, the allowance rate 
for Texas DDS increased significantly and, except for a few months 
early in this calendar year, the initial allowance rate in Texas 
paralleled that of the national average.''
    [In fact, the population ratio of persons on Social Security 
disability reflects determinations made over many years, whereas the 
determinations in 2000 in Texas were lower than in previous years, and 
increased after the rate became a controversial political issue. It may 
also be that, due to the use of manual labor in agriculture and hazards 
in the oil industry, there are more people disabled on a per-capita 
basis in Texas than in New Hampshire.]
    Overtime. He explained that earlier in the year, the Dallas Region, 
including Texas, recognized that the Region did not receive its 
appropriate share of the national Disability Determination funding. As 
a result of input by the Dallas Region, SSA increased the spending 
authorizations for Texas twice this calendar year. He pointed out that 
Texas DDS has escalated its hiring plans, has added over eighty DEs and 
over eighty adjudicators, and has implemented an overtime plan to 
reduce backlogs.
    Commissioner Dickerson stated that, contrary to the media reports, 
SSA was aware of DDS' overtime plan and remarked that the practices 
used by Texas DDS are neither unusual nor improper. These are internal 
tracking measures used to track the processing of work. He stated that 
SSA has no requirements that DDS identify examiners on correspondence 
to claimants or attorneys. He noted that some states choose not to 
include examiners' names on correspondence, primarily for security 
reasons.
    In conclusion, Commissioner Dickerson stated that SSA recognizes 
that there are problems in its Social Security Disability program. He 
noted that these problems are national in scope, and, to be succinct, 
there is more work than resources. This is true in Texas and the 
country. He stated that Deputy Commissioner Dave Ward and his 
management staff have done and continue to do what SSA thinks is a 
tremendous job for SSA and for the people of Texas and that SSA [Dallas 
Region] looks forward to a long association with them.
    [By his testimony to the TRC Board, SSA Region VI Regional 
Commissioner Horace Dickerson thus admitted SSA knowledge of, and 
sanction of, the use of two tier ``overtime'' processing and ``fake 
examiners'' by TRC-DDS, as described by articles in the Houston 
Chronicle.]
    SSA Region VI Commissioner Horace Dickerson thus sanctioned the use 
of these questionable techniques by TRC-DDS by claiming, in short, that 
DDS is an agent of SSA, SSA is authorized under the Social Security Act 
to do whatever it wants, and he, as Regional Commissioner, therefore 
authorizes their use. Given the Regional Commissioner's sanction, TRC-
DDS and SSA Region VI itself are arguably running rogue ``cowboy'' 
operations.
    [Note that the ``fake examiner'' issue is not simply an internal 
accounting tool at TRC-DDS. The effect of a claim being placed on the 
``waiting list'' was that no single Disability Examiner processed it, 
and thus no examiner understood the entirety of the claim, no examiner 
was accountable for the outcome, that this was different than normal 
claims not on this overtime plan, and that the selection criteria for 
placing claims on the ``waiting list'' has not been disclosed. There 
are thus major due process and equal protection issues with this 
practice, impacting claimants' U.S. Constitutional and statutory 
rights.]

TRC Board Members' Questions/Comments

    Chairman Waldrep expressed his and the Board's appreciation for 
Commissioner Dickerson's remarks.
    Chairman Waldrep asked, what is your reaction to recent newspaper 
articles about using coded names to assign claims on overtime?
    Commissioner Dickerson explained that the methodology employed by 
DDS to manage overtime is an internal process, which helps staff to 
effectively manage the overtime. While it is not done at the direction 
of SSA, it does occur in other DDS Social Security field offices. From 
SSA's vantage point, it is not done to mislead the public or the 
recipient to whom the correspondence is being sent. He again pointed 
out that some states, in the interest of security, do not include a 
name or even a signature block on correspondence. Commissioner 
Dickerson reiterated that SSA does not have a problem with the overtime 
methodology used by Texas DDS.
    Board member Novy asked, when a customer calls and asks for the 
name that was on the letter [DDS correspondence], how is the call 
received? Is there a specific person who takes the call? Is it based on 
the last name? How does this work?
    Deputy Commissioner Dave Ward responded that the last name of the 
DDS staff noted on the correspondence is that of the person to whom the 
case is assigned. That named person or the person's designee, if he/she 
is not available, takes the call. The caseload is attended and the 
telephone calls are answered.
    Board member Novy stated that the process, as explained by Deputy 
Commissioner Ward, is acceptable as long as someone is taking calls. 
She explained that she is from Houston and regrets the type of 
reporting that has been done. It was unbalanced and hurtful to the good 
people who are doing good work. Ms Novy expressed her appreciation to 
Commissioner Dickerson for his attendance and for his comments.
    Vice Chairman Wilkerson stated that State Representative Coleman 
has requested a study of the DDS's procedures for determining who is 
disabled, and asked if Commissioner Dickerson is aware of any issues or 
any areas in which TRC-DDS does not adhere to SSA procedures?
    Commissioner Dickerson responded that he is not aware of any areas 
in which TRC-DDS is not adhering to SSA rules. He stated that he is 
aware of the legislative directives surrounding this, but from SSA's 
vantage point the DDS is adhering to all procedures. SSA is in fact 
working with DDS to make sure that it is aware of the allowance rate, 
initial claims, and claims that are processed in DDS. SSA plans to be 
very vigilant in providing information to DDS so that it can share the 
information with the Board and with others relating to the allowance 
rate at the appeals level at Social Security to ensure that a full 
picture is in place.
    Board member Stribling asked, if any differences were attributable 
to interpretation or whether interpretations were standardized?
    Commissioner Dickerson stated that the rules are standard, but 
there is a great deal of room for interpretation. SSA is working to 
streamline the process and refine the rules so that there will be 
uniformity in terms of interpreting what is done at SSA, and in making 
the disability decisions. He explained that they are not yet where they 
need to be, but they are working closely with their Administrative Law 
Judges (ALJ), the DDSs, and all of those who make decisions on 
disability claims to ensure that all are following the same rules and 
can arrive at the same place and make the right decision.
    [This statement must be considered in the light of the quote in the 
Houston Chronicle of SSA Region VI Spokesman Wesley Davis saying in 
June 2001 that Texas disability examiners ``reach different conclusions 
on cases that require certain judgments to be made on an individual's 
capacity to work''. Note that SSA Region VI Commissioner does not deny 
that there are such differences.]
    Acting Commissioner Mary Wolfe stated that Texas DDS' accuracy 
rating should speak to this issue as SSA examines the accuracy of the 
case work that is being done.
    Commissioner Dickerson agreed with Ms. Wolfe's statement. He 
further stated than not only is SSA very diligent at looking at the 
accuracy, it also wants to make sure that those who apply for and are 
entitled to benefits receive benefits, as well as making sure that 
those who do not meet the requirements do not receive benefits. To 
ensure accuracy, DDS has internal procedures to review the work that is 
produced. Additionally, there are pre-effectuation reviews, which are 
conducted before the decision is effectuated to ensure that decisions 
are in compliance with SSA rules. He reported that Texas DDS has the 
highest accuracy rate among the large states and in comparison with all 
other states, it has a very good rate of accuracy in production.
    Chairman Waldrep thanked Commissioner Dickerson for his attendance 
and for the partnership that TRC has shared with SSA in carrying out 
the job of serving people with disabilities in Texas. He attributed 
Commissioner Dickerson's leadership as making the difference in that 
partnership and stated that the Board/TRC is grateful to have him in 
that position.
    Commissioner Dickerson stated that he appreciates the support that 
SSA has long received from TRC. He also expressed his appreciation for 
the leadership of Chairman Waldrep and Dave Ward and his management 
team, his medical consultants, and all the adjudicators, of whom Texas 
should be proud for the way in which they daily perform their duties 
and responsibilities.
    Chairman Waldrep stated he is very proud of DDS and all of the men 
and women who work hard every day to ensure that people in the state 
who have disabilities and who are eligible and deserve benefits receive 
benefits. He stated that he was disappointed in the Houston Chronicle 
and its reporting on DDS, which misleads the public into thinking that 
the agency is not doing its job. He requested that elected officials 
work in partnership with the agency, as Commissioner Dickerson and his 
office does, to ensure that DDS/TRC does its job. He stated TRC is not 
perfect but the history, facts, and figures conveyed by Commissioner 
Dickerson back up the agency's pride in trying to be the very best in 
delivering services to the state. He stated that it is very 
discouraging when someone prints non-truths. Chairman Waldrep stated 
that he has met with the Governor's Office and TRC has his full 
support.
    Chairman Waldrep stated if anyone has an issue with this agency or 
any other agency, please go to the agency first and work with the 
agency to find out the facts.
    Chairman Waldrep stated that he intends to write a letter to the 
editor of the Houston Chronicle and informed Commissioner Dickerson 
that he and his office have TRC's full cooperation and support.

III.  TRC-DDS and SSA Region VI Policies versus SSA National Program 
        Standards:

    The TRC Board meeting of September 20, 2001 meeting was chaired by 
Mr. A. Kent Waldrep, author of the book ``Fourth and Long: The Kent 
Waldrep Story'', who had incurred a spinal cord injury while playing 
football in college, is wheelchair-bound, had been on the TRC Board 
since 1990, but had just been appointed as TRC Board Chairman by the 
Governor. This was Mr. Waldrep's first meeting as Chairman. His 
predecessor of 15 years had recently resigned to accept an appointment 
to the HHS board by the Governor just as the 2000 ``initial approval 
rate'' scandal broke at DDS. TRC Board members including the Chairman 
were volunteers, and had limited authority, acting only to direct the 
Commissioner--represented in this meeting by Acting Commissioner Mary 
Sconci-Wolfe. The absence of the TRC Commissioner, who had held that 
position for 20 years, and the TRC Medical Director from the meeting, 
during this controversial period is notable. Mr. Waldrep's experience 
with DDS was in fact quite limited, in that as late as the prior 
quarterly meeting he demonstrated a lack of understanding of the basic 
fact that DDS is fully a federally funded agency that brings money into 
the state rather than a state funded assistance program that takes 
money out of the state budget. Some might wonder if such Chairmanship 
of the Board in the midst of this crisis might deflect criticism from 
the Board's management of the agency. The effect of the letters that 
Mr. Waldrep speaks of writing in this passage in order to try to 
publicly justify TRC-DDS's position and to create harmony may be found 
in the Houston Chronicle on October 14, 2001 A.39 and October 17, 2001 
p28.
    The absence of senior TRC officials, and the effusive mutual praise 
lavished among the participants upon each other in the discussion of 
DDS operations, must both be considered in light of the seriousness of 
the charges that had been made. The Houston Chronicle had published 
copies of forged signatures by DDS examiners less than two weeks 
before, supporting a presumption of 12,000 counts of document fraud and 
Fourteenth Amendment violations of due process and equal protection of 
the laws by state TRC-DDS managers against Texas Social Security 
disability claimants. These are acts which may arguably include civil 
liability under 42 U.S.C. 1985 ``Conspiracy to interfere with civil 
rights'' and 42 U.S.C. 1986 ``Action for neglect to prevent'', not to 
mention criminal civil rights violations under 18 U.S.C. Part I Chapter 
13, including conspiracy, against both DDS and TRC, and Fifth Amendment 
due process and statutory equal protection violations by SSA Region VI 
officials and their managers.
    Should there be any question whether these policies were in fact 
sanctioned by SSA, including 1) failure by SSA to properly fund the 
Texas DDS operation, 2) the use of two tier ``overtime processing'' 
(unequal treatment), and 3) ``fake examiners'' (document fraud and due 
process violations), 4) a bias against chemical injury claims, and 5) 
state disability determination standards ``different'' than in the rest 
of the nation, one need only observe that Social Security Region VI 
Commissioner Horace Dickerson--who stood before the TRC Board to admit 
the failure of SSA to adequately fund TRC-DDS determinations and to 
justify the use of ``overtime processing'' and ``fake examiners'', and 
Region VI Spokesman Wesley Davis, who admitted a bias against chemical 
injuries and ``different'' determination standards in Texas as compared 
to other states to a Houston Chronicle reporter, still hold those 
positions at SSA Region VI as of October, 2004, more than 3 years after 
the events described above occurred.
    The references to the high ``accuracy'' of TRC-DDS disability 
determinations must be considered in the context of the limited 
opportunity for appeal above the ALJ level or for judicial review in 
the SSA disability process, particularly for Pro Se claimants in 
Federal District Courts (FDC) of Texas. The SSA Region VI Commissioner 
backed the policies of TRC-DDS, which may include policies admitted by 
Regional Spokesman Wesley Davis in June 2001 to be ``different'' than 
in other states, so a significant number of reversals by Region VI 
ALJ's acting under the direction of the Region VI Chief ALJ in Dallas 
would not be expected. The suit by ALJ Christopher Lee Williams might 
be seen as an example of this--not even a Dallas ALJ could challenge 
the TRC-DDS policy denying Consultative Examinations to indigent 
claimants in April 2001. ALJ denials may be appealed to the SSA Appeals 
Council (AC) in Falls Church, VA, however, as of 1995, the AC remanded 
cases back to the ALJ in about 24% of AC appeals nationally, and 
reversed decisions in only about 3% of appeals--about 1,600 SSDI and 
SSI reversals in 1995. In 1995 only about 680 claims were reversed in 
FDC reviews nationally.

IV.  TRC-DDS Allowed Reimbursement Rates for Consultative Examinations 
        in Excess of SSA Rates for Selected Hospitals; SSA Region VI 
        Did Not Manage DDS Appropriately:

    Recently, the SSA Office of Inspector General audited $247,350,859 
in administrative costs that TRC reported for TX-DDS operations for the 
period October 1, 1998 through September 30, 2001, including the rates 
that Texas DDS reimbursed hospitals for Consultative Examinations 
(CE's), some of which were in excess of the Maximum Allowable Payment 
Schedule (MAPS)--although they were equal to that used in the TRC 
Vocational Rehabilitation program, and the management of these rates by 
SSA Region VI officials. (Office of the Inspector General, Social 
Security Administration, ``The Administrative Costs Claimed by the 
Texas Disability Determination Services, March 2004 A-15-02-12051 Audit 
Report'') The SSA OIG concluded, in summary, that TRC-DDS paid selected 
hospitals more than allowed by SSA for CE's, and that TRC-DDS felt that 
they had been authorized by SSA Region VI to do so, but the OIG found 
no records of such an authorization.
    ``We attempted to find out if any special waiver or privilege was 
provided to hospitals with RCCs. According to the SSA Dallas RO, the 
RCC rates were implemented a number of years ago when different SSA and 
DDS employees were involved in overseeing these issues. The validity of 
their use had never been discussed. . . .''
    ''We believe that the RCC is not a part of the TX-DDS fee schedule. 
The SSA Regional Office and TX-DDS disagreed with us. We believe that 
SSA needs to obtain a formal determination from its Office of General 
Counsel to resolve this issue. We believe that SSA should recover the 
payments in excess of MAPS unless the Office of General Counsel makes a 
formal determination that the RCC is part of TX-DDS' official fee 
schedule.'' . . .
    ``We compared the amount that was authorized to be paid under MAPS 
to the amount actually paid the hospital using an RCC. We found of the 
52,692 records paid using RCC, 49,071 exceeded MAPS. The amount paid to 
hospital providers exceeded the MAPS allowed amount by $3,611,678. . . 
.''
    ``Indirect costs for TX-DDS are determined under a negotiated 
annual indirect cost rate agreement. The TX DDS computes its indirect 
costs by multiplying the approved percentage rate to the direct costs 
of the TX-DDS. Some direct costs, such as, (capital) equipment, 
building alterations, and renovations are not to be included as part of 
the base. The annual indirect cost rate is for a State FY (September 
1st through August 31st). CE costs are included in the base for the 
computation of indirect costs. . . .''
    ``We believe the SSA Regional Commissioner should instruct the TX-
DDS to conform to the POMS by adhering to MAPS, the authorized fee 
schedule, for paying hospital provider CEs. Lastly, the RO should more 
closely monitor TX-DDS fees paid for CEs. . . .''
    ``As a result of our audit, we recommend that:

    1.  SSA require that TRC adhere to POMS DI 39545.210, 1.a., 
requiring CE payment amounts not to exceed the authorized fee schedule 
and specifically, discontinue selectively paying Texas hospitals higher 
amounts than the approved fee schedule.
    2.  TRC, pending the SSA Office of General Counsel's determination, 
reimburse SSA $3,611,679, resulting from CE payments in excess of the 
authorized fee schedule known as MAPS. The TX-DDS should adjust their 
financial reports, Forms SSA-4513, accordingly.
    3.  TRC, pending the SSA Office of General Counsel's determination, 
reimburse SSA $359,515 for indirect costs paid as a result of the 
overstated direct cost base (CEs in excess of MAPS.) The TX-DDS should 
adjust the financial reports, Forms SSA-4513, accordingly.
    4.  SSA's Dallas RO more closely monitor the fees paid by TRC for 
CEs.
    5.  SSA seek a legal opinion as to whether the use of the RCC 
method, which allows the TX-DDS to pay hospital providers a percentage 
of their normal customary billing amount for CEs, constitutes a fee 
schedule in accordance with POMS and Federal regulations. SSA should 
then establish a clear policy on contracts with CE vendors and ensure 
that policy is implemented consistently across the DDSs. (This is a new 
recommendation added to our final report which was not included in the 
draft report provided to SSA and TRC for comments.)''

    ``. . . For Recommendations 2 and 3, both SSA and TRC disagreed 
with reimbursing the excess funds drawn by the DDS. In SSA's response, 
the Regional Commissioner stated it is difficult to know what happened 
in the past since the staff making earlier decisions are no longer 
overseeing DDS operations and may have discussed the TX DDS' RCC 
method. TRC indicated that before the RCC method was established, 
extensive research, study, and vendor negotiations were undertaken to 
arrive at rates that would assure clients received quality medical 
services at the best price. SSA's comments, in and of themselves, do 
not provide sufficient evidence of whether the Regional Commissioner or 
his staff gave explicit or implicit approval of the TX-DDS' use of the 
RCC methodology. . . .''
    ``With respect to our recommendations that SSA seek reimbursement, 
the Regional Commissioner continues to request that these 
recommendations be removed, or at least deferred until the legal issues 
have been resolved.''
    Notably, the above policies were undoubtedly effected during the 22 
year tenure of TRC Commissioner Vernon Arrell 1981-2003, and at least 
continued under the tenure of TRC Deputy Commissioner for DDS Dave Ward 
1996-2002. This clearly indicates that TRC-DDS engaged in purchasing 
expenditures in violation of SSA national program standards during 
1998-2001, SSA Region VI did not either enforce the SSA standards or 
provide a waiver, and that Region VI and TRC-DDS have placed the blame 
on former managers and asked that reimbursement be waived. Note, 
however, that the overpayment to selected hospitals by DDS occurred 
even while DDS refused to do CE's on indigent claimants whose claims 
were remanded to DDS by ALJ Christopher Lee Williams, and thus 
claimants' rights to due process may have been affected.
    SSA Region VI Commissioner thus sanctioned after-the-fact the 
excess payments by TRC-DDS to selected hospitals performing CE's in 
violation of SSA national program standards, against the opinion of the 
SSA Office of Inspector General, despite the fact that other claimants 
at the time were denied CE's, thus arguably denying them their U.S. 
Constitutional and statutory rights to due process and equal protection 
of the laws. A review of operations 1998-2002 thus shows that SSA 
Region VI and TRC-DDS were rogue ``cowboy'' operations that failed to 
enforce claimants rights to due process and equal protection of the 
laws in accordance with SSA national program standards.

V. Summary:

    The failure of SSA to adequately fund TRC-DDS to do disability 
determinations during 1999-2001 has been admitted by SSA Region VI 
Commissioner Horace Dickerson. (Testimony to TRC Board, minutes 9/20/
01.) An SSA OIG Audit has shown that TRC-DDS overpaid certain medical 
providers for Consultative Examinations during 1998-2001. (``March 2004 
A-15-02-12051 Audit Report'') This occurred even while indigent 
claimants were denied CE's in 2001. SSA Region VI Commissioner argued 
against repayment. The use of two-tier ``waiting list'' (unequal 
treatment) processing and ``fake examiners'' (document fraud) by TRC-
DDS was also sanctioned by SSA Region VI Commissioner Horace Dickerson, 
who still holds that position. (Testimony to TRC Board, minutes 9/20/
01.)
    A bias against chemical injury claims, e.g. of workers disabled 
``in the oil industry and elsewhere'' who ``commonly get injured on the 
job'' but are not considered totally disabled by TRC-DDS was admitted 
in March 2001, as was the fact that Texas disability examiners ``reach 
different conclusions'' than those in other states was admitted in June 
2001, by SSA Region VI Spokesman Wesley Davis, who still holds that 
position. (Houston Chronicle 3-11-01 A.1, 6-10-01 A.8.)
    SSA Region VI and Texas DDS have demonstrated a willingness to 
compromise claimant rights to due process and equal protection of the 
laws in order to meet budgetary targets and engage in improper bias. 
Several tens of thousands of Social Security disability claims were 
denied as a result, with a fiscal impact on the disabled of on the 
order of several hundred million dollars during that era. According to 
the OIG, $3.6 million was spent improperlybetween 1998 and 2001 due to 
lack of oversight of TRC-DDS by SSA Region VI. It is thus clear that 
TRC-DDS and SSA Region VI during this era were rogue ``cowboy'' 
operations. Such injustice demands timely remedy.

                                 
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