    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                         FOURTH IN A HEARING SERIES ON
                       SECURING THE FUTURE OF THE SOCIAL
                     SECURITY DISABILITY INSURANCE PROGRAM

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

                                    HEARING

                                   before the

                        SUBCOMMITTEE ON SOCIAL SECURITY

                                     of the

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

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 27, 2012

                                   __________

                              Serial No. 112-SS18

                                   __________

             Printed for the use of the Committee on Ways and Means

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                          COMMITTEE ON WAYS AND MEANS

                         DAVE CAMP, Michigan, Chairman

    WALLY HERGER, California             SANDER M. LEVIN, Michigan
    SAM JOHNSON, Texas                   CHARLES B. RANGEL, New York
    KEVIN BRADY, Texas                   FORTNEY PETE STARK, California
    PAUL RYAN, Wisconsin                 JIM MCDERMOTT, Washington
    DEVIN NUNES, California              JOHN LEWIS, Georgia
    PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
    GEOFF DAVIS, Kentucky                XAVIER BECERRA, California
    DAVID G. REICHERT, Washington        LLOYD DOGGETT, Texas
    CHARLES W. BOUSTANY, JR., Louisiana  MIKE THOMPSON, California
    PETER J. ROSKAM, Illinois            JOHN B. LARSON, Connecticut
    JIM GERLACH, Pennsylvania            EARL BLUMENAUER, Oregon
    TOM PRICE, Georgia                   RON KIND, Wisconsin
    VERN BUCHANAN, Florida               BILL PASCRELL, JR., New Jersey
    ADRIAN SMITH, Nebraska               SHELLEY BERKLEY, Nevada
    AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
    LYNN JENKINS, Kansas
    ERIK PAULSEN, Minnesota
    KENNY MARCHANT, Texas
    RICK BERG, North Dakota
    DIANE BLACK, Tennessee
    TOM REED, New York

             Jennifer Safavian, Staff Director and General Counsel

                      Janice Mays, Minority Chief Counsel

                                     ______

                       SUBCOMMITTEE ON ON SOCIAL SECURITY

                          SAM JOHNSON, Texas, Chairman

    KEVIN BRADY, Texas                   XAVIER BECERRA, California
    PATRICK J. TIBERI, Ohio              LLOYD DOGGETT, Texas
    AARON SCHOCK, Illinois               SHELLEY BERKLEY, Nevada
    RICK BERG, North Dakota              FORTNEY PETE STARK, California
    ADRIAN SMITH, Nebraska
    KENNY MARCHANT, Texas

                                C O N T E N T S

                                   __________

                                                                       Page

    Advisory of June 27, 2012, announcing the hearing................     2

                                   WITNESSES

    Panel 1:

    The Hon. Michael J. Astrue, Commissioner, Social Security
      Administration, Testimony......................................     7

    Panel 2:

    Ethel Zelenske, Director of Government Affairs, National
      Organization of Social Security Claimants' Representatives, on
      behalf of the Consortium for Citizens with Disabilities Social
      Security Task Force, Testimony.................................    38
    The Hon. D. Randall Frye, President, Association of
      Administrative Law Judges, Testimony...........................    50
    Jeffrey Lubbers, Professor, American University Washington
      College of Law, Testimony......................................    63
    Richard J. Pierce, Jr., Professor, The George Washington
      University Law School, Testimony...............................    87

                           SUBMISSIONS FOR THE RECORD

    David McCaskey...................................................   141
    Disability Law Center, Inc.......................................   143
    Federal Administrative Law Judges Conference.....................   145
    Federal Bar Association..........................................   147
    Max Rae..........................................................   157
    National Organization of Social Security Claimants'
      Representatives................................................   159
    Scott Daniels....................................................   163

                       MATERIAL SUBMITTED FOR THE RECORD

    Questions for the Record:

    The Honorable Michael J. Astrue 1................................   165
    The Honorable Michael J. Astrue 2................................   173
    Ethel Zelenske 1.................................................   182
    Ethel Zelenske 2.................................................   199
    The Honorable D. Randall Frye....................................   202
    Richard J. Pierce, Jr............................................   219

                         FOURTH IN A HEARING SERIES ON
                       SECURING THE FUTURE OF THE SOCIAL
                     SECURITY DISABILITY INSURANCE PROGRAM

                                  ----------

                            WEDNESDAY, JUNE 27, 2012

                 U.S. House of Representatives,
                           Committee on Ways and Means,
                               Subcommittee on Social Security,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 2:00 p.m., in
    Room B-318, Rayburn House Office Building, the Honorable Sam
    Johnson [Chairman of the Subcommittee] presiding.
        [The advisory of the hearing follows:]

    HEARING ADVISORY

     Chairman Johnson Announces the Fourth in a Hearing Series on Securing
         the Future of the Social Security Disability Insurance Program

    Wednesday, June 27, 2012

        U.S. Congressman Sam Johnson (R-TX), Chairman of the House
    Committee on Ways and Means Subcommittee on Social Security today
    announced the fourth hearing in the series entitled, ``Securing the
    Future of the Disability Insurance Program.'' This hearing will focus
    on the disability appeals process. The hearing will take place on
    Wednesday, June 27, 2012, in room B-318 Rayburn House Office Building,
    beginning at 2:00 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 Subcommittee and
    for inclusion in the printed record of the hearing.

    BACKGROUND:

        Applications for disability benefits have reached historic levels
    resulting from more women in the workforce, the recession and slow
    recovery, and baby boomers reaching their disability-prone years. The
    2012 Annual Report of the Board of Trustees projects that the
    Disability Insurance (DI) program will be unable to pay full benefits
    beginning in 2016.

        In fiscal year (FY) 2011, the examiners at the State Disability
    Determination Services (DDS) made an initial determination on almost
    3.3 million disability claims. According to the Social Security
    Administration's (SSA) longitudinal data, 79 percent of all disability
    benefit awards are made at the DDS.

        Claims that are not approved by the DDS, whether at the initial or
    reconsideration level, can be appealed to the hearing level, where the
    claimant has the opportunity for a face-to-face hearing before an
    Administrative Law Judge (ALJ). In FY 2011, 662,765 hearing requests
    were completed with 58 percent of requests awarded, 29 percent denied,
    and 13 percent dismissed. The average waiting time for an ALJ decision
    is 354 days. Today, 77 percent of ALJs are meeting the agency's annual
    productivity expectation of 500-700 cases. Currently, individual ALJ
    award rates vary from 1 to 99 percent.

        Individuals whose claims are denied by an ALJ may appeal to the
    SSA's Appeals Council (AC), which is the final step in the
    administrative process. In addition, the AC may on its own motion
    review an ALJ decision. In FY 2011, the AC made 103,681 decisions,
    awarding benefits in 2 percent of its cases, denying benefits in 74
    percent, and remanding 21 percent back to the ALJ level. Individuals
    who are denied at the AC may pursue an appeal through the federal
    district court, the federal court of appeals, and the U.S. Supreme
    Court. In FY 2011, the federal courts decided 13,271 cases, awarding
    benefits in 3 percent of cases, denying benefits in 42 percent, and
    remanding back to the SSA 46 percent of cases. Of those remanded cases,
    67 percent were subsequently allowed by an ALJ.

        Further, over years the federal circuit courts have issued
    decisions that conflict with the SSA's interpretation of the Social
    Security Act (Act). In response, the SSA may appeal the decision or
    implement the circuit court's decision through an acquiescence ruling.
    While such rulings allow cases to be treated similarly within the
    circuit, the result is that claimants are treated differently in
    different circuits. There are currently 42 acquiescence rulings in
    effect.

        Under the Act, the ALJ decides on behalf of the Commissioner
    whether benefits are due, and is required to apply the SSA's
    regulations and policies; under the Administrative Procedure Act (APA),
    the ALJ is an independent decision-maker whose work product cannot be
    questioned. This tension between the Act and the APA makes program
    oversight and quality review of outcomes difficult for the agency to
    assess and manage.

        In announcing the hearing, Social Security Subcommittee Chairman
    Sam Johnson (R-TX) said, ``Those sidelined from working because of a
    disability must be able to count on a fair and timely hearing by a
    Social Security judge. Americans need to know that the same rules apply
    to everyone. This hearing will tell us whether the appeals process we
    have today works and if not, what changes ought to be made.''

    FOCUS OF THE HEARING:

        The hearing will focus on the Social Security appeals process
    including its history, legal requirements, and the degree to which the
    current process provides fair, accurate, and consistent outcomes while
    balancing the needs of claimants and taxpayers.

    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
    ``Hearings.'' 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,
    submit all requested information. ATTACH your submission as a Word or
    WordPerfect document, in compliance with the formatting requirements
    listed below, by the close of business on Wednesday, July 11, 2012.
    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 or (202) 225-3625.

    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
    printed record, and any written comments in response to a request for
    written comments must conform to the guidelines listed below. Any
    submission or supplementary item not in compliance with these
    guidelines will not be printed, but will be maintained in the Committee
    files for review and use by the Committee.

        1. 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.

        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.

        Note: All Committee advisories and news releases are available on
    the World Wide Web at http://www.waysandmeans.house.gov/.
        Chairman JOHNSON. Welcome to the committee. Good afternoon.
    It is our fourth hearing on Securing the Future of the Social
    Security Disability Insurance Program. Today we will focus on
    how Social Security disability claims are appealed and whether
    the process works as well as claimants and taxpayers have a
    right to expect.
        In earlier hearings, we have highlighted the explosive
    growth of the program. At a time when the number of workers
    paying into the system has increased nearly 70 percent between
    1970 and 2011, the number of people receiving disability
    benefits has increased by over 300 percent, from 2.6 million
    people to 10.4 million. By 2021, the number of beneficiaries
    will exceed 12 million. By then, total benefits paid will reach
    $196 billion. That is a 52 percent increase over the $129
    billion paid in benefits over the last year.
        Besides the overall workforce, more women in the workforce,
    aging of the baby boomers into their disability-prone years,
    and relaxed eligibility requirements have all contributed to
    this growth.
        The continued growth is putting a real strain on Social
    Security disability. As we heard from the Public Trustees at
    our hearing last week, without Congressional action the
    Disability Insurance Trust Fund will only be able to pay 79
    percent of benefits beginning 2016, just 4 years away. The path
    we are on is unsustainable.
        Further, disability applications have spiked even higher
    than expected due to recession and the snail's pace recovery,
    reaching an unprecedented 3.3 million last year. Resulting
    appeals have further increased pressure on an appeals process
    that is struggling to keep up.
        Americans are also paying more for Social Security to
    administer its programs. Costs are up 68 percent compared to 10
    years ago, and last year administering disability programs cost
    nearly $7 billion, two-thirds of Social Security's operating
    budget of $11.4 billion.
        Turning to the appeals process, those whose initial claims
    for benefits have been denied have the right to appeal through
    four levels of appeal: Reconsideration by the State agency,
    hearing by an Administrative Law Judge, review by the Appeals
    Council, and Federal court review. An open record allows
    claimants to add new evidence to the file through every step of
    the appeals process. Even though about 79 percent of all awards
    are made at the State Disability Determination Services,
    according to Social Security, last year about 860,000 claimants
    filed appeals to appear before an Administrative Law Judge.
        Americans are rightly paying attention to the hearing
    process. Even though claimants are waiting close to a year on
    average for a decision, almost 12 percent of ALJs decide 200 or
    fewer cases per year. This is in spite of the fact that Social
    Security has asked these judges to do 500 to 700 cases
    annually. Also, the decisions of so-called outlier judges who
    deny or allow most of the cases they hear can't be questioned.
        The claimants' representatives are part of a billion
    dollar-plus a year industry encouraging appeals and making a
    living by collecting their fees from benefits awarded their
    clients. Further, when cases are appealed to Federal courts,
    the courts have taken it upon themselves to reinterpret what
    the Social Security Act requires, resulting in varying policies
    applied in different parts of the country in what is supposed
    to be a national program.
        Now, I know some of my colleagues believe that all of these
    problems can be solved if we will just give Social Security
    more money. In fact, over the last 6 years, funds have been
    poured into the hearing level for ALJ hiring, staff hiring, new
    offices, and technology fixes. And while service has improved,
    it seems success is always just a little further down the road
    and depends on even more resources.
        Yet, in these tough fiscal times, Social Security has done
    well. Its operating budget increased this year compared to last
    year despite a 1.5 percent decrease in the discretionary
    spending cap. In fact, while Social Security is subject to the
    same long-term domestic spending limit enacted in the Budget
    Control Act, that same bill authorized an additional $11
    billion over the budget caps for Social Security to increase
    continuing eligibility reviews in its disability programs.
    There were 95 Democrats, including the minority leader and the
    ranking member of the full committee, who supported the bill.
        Understanding why the appeals process works the way it does
    is just as important as making sure that those who deserve
    benefits receive them. So let us ask the hard questions to
    determine if we can fundamentally do better. Why do over 20
    percent of the claimants who are ultimately awarded benefits
    have to wait at least a year for a decision? How can benefits
    be awarded to those who qualify as soon in the process as
    possible, and why does Social Security channel so many of its
    resources to the most expensive step in the appeals process,
    even when the cost to process a case before an ALJ is more than
    twice what it costs a State agency to make the same decision?
        Why aren't claimants' attorneys doing a better job of
    submitting all of the evidence earlier? Should representatives
    be able to encourage a client who has waited months for a
    hearing to wait even longer so they will get a judge who is
    more likely to award them benefits? And why do some judges hold
    hearings for 10 minutes and others for 2 hours? And some of
    them don't even hold them.
        Today, we have a number of outstanding witnesses before us,
    including the Commissioner who has done more to engage the
    attention of Congress on a wide array of needed improvements to
    the appeals process than any other Commissioner in decades. So,
    let us take a good look at all sides of this process and find
    out what we can do better for everyone. I want to thank you
    again for being here.
        And I now recognize the ranking member, Mr. Becerra, for
    his opening remarks.
        Mr. BECERRA. Mr. Chairman, thank you very much, and thanks
    for calling this fourth hearing in our series focusing on
    Social Security's Disability Insurance Program. Before we delve
    into the details of Social Security's appeal process, I want to
    first take a step back and look at the big picture.
        Social Security is vital to millions of severely disabled
    American workers and their families. The benefits are modest,
    averaging just over $13,000 a year or about $35 a day for a
    typical disabled worker. These benefits, however, are a
    lifeline for the more than half of the disability insurance
    recipients, the DI recipients, who would live in poverty
    without Social Security.
        DI recipients are only a small fraction of the most
    vulnerable Americans with disabilities and serious illness. The
    eligibility criteria to qualify for Social Security disability
    are tough. Social Security's appeals process helps ensure that
    all workers who are eligible and who have earned DI receive it.
        The disability application process begins with the State
    Disability Determination Service, or DDS, which makes a
    decision on the application. The DDS is an important part of
    the disability determination process, but alone, it is not
    always sufficient to ensure that individuals get the disability
    benefits that they have earned. The decision about whether an
    individual is disabled enough to qualify for benefits can be a
    difficult one.
        In addition, there can be complicating factors in
    individual cases. For example, some people with disabilities do
    not have access to medical care and therefore they do not have
    the medical records needed to prove their case. Recognizing
    these realities and challenges, Congress and the Social
    Security Administration created an appeals process to help
    ensure that everyone who meets the eligibility requirements
    gets the benefits that they have earned.
        The current appeals process has a number of strengths, and
    of course there is always room for improvement. It is designed
    to be fair and accessible. It is non-adversarial so judges can
    focus on fact finding and applying the law. It is impartial
    because independent judges take a fresh look at the case, and
    their decisions are not based on meeting certain allowances or
    denial rates, and it is face to face, and that may be the first
    time that a person who is claiming disability may see an
    evaluator face to face and actually be able to talk to that
    particular evaluator.
        We are going to hear a number of ideas today about how to
    improve the appeals process. I will be evaluating those
    different ideas using a very simple standard. Will it ensure
    that Americans who are eligible for benefits are able to get
    them or will it create procedural hurdles or other obstacles
    that would deny access to benefits that they have otherwise
    earned?
        Budget decisions by Congress also affect whether Social
    Security is fair to hardworking Americans and their families.
    We have seen how the Social Security Administration can reduce
    waiting times when Congress provides adequate funding for SSA
    to process claims quickly and accurately. In 2008, waiting
    times for appeals hearings were at an all-time high of 535 days
    of waiting. In fiscal year 2009 and 2010, Congress, then under
    Democratic control, provided SSA with a total of $2.2 billion
    worth of new resources to reduce backlogs, and waiting times
    dropped to 340 days. Still a lot, but compared to 535 days, far
    better.
        This current Congress has cut the Social Security
    Administration's budget in 2011 and 2012. With less funding and
    fewer employees, it is inevitable that hardworking Americans
    will have to wait longer to receive the benefits that they have
    earned. We are already starting to see the negative effects of
    these budget cuts. Waiting times for initial benefit decisions
    are on the rise and are likely to go from 111 days to over 130
    days by the end of this year. Waiting times for appeals
    hearings have crept up from the 340 days in October of 2011 to
    the current wait time of 350 days. So once again, we are
    heading in the wrong direction when it comes to Americans
    getting the benefits they have earned.
        SSA is now facing an even bigger cut under what is called
    sequestration, the automatic cuts scheduled by the Budget
    Control Act passed last year. Although Social Security benefits
    are protected, under sequestration if Congress doesn't act
    soon, SSA's operating budget will be cut by more than $1
    billion on January 2 even though 100 percent of the costs of
    administering Social Security is paid for by workers through
    their Social Security taxes that they pay and put into the
    trust fund. A billion dollar cut to SSA would translate into 40
    days where SSA offices would be closed over the course of a
    year. No one should be surprised if these harsh cuts to SSA's
    budget damage Social Security's well-earned reputation and
    undercut SSA's ability to continue to capably serve Americans
    as it has for over 77 years.
        Mr. Chairman, the most immediate threat to the Social
    Security disability appeals process is the budget cuts that
    would prevent appeals from being heard at all. I hope we can
    work together to make sure Americans get the Social Security
    benefits that they have earned and deserved, and I today look
    forward to our witnesses' comments on how the appeals process
    itself can be improved.
        And with that, I yield back.
        Chairman JOHNSON. Thank you. As is customary, any member is
    welcome to submit a statement for the record. And before we
    move to our testimony, I want to remind our witnesses to please
    limit your oral statement to 5 minutes. However, without
    objection, all the written testimony will be made part of the
    hearing record.
        We have two panels today. The first one is a single
    witness, Commissioner of Social Security, Michael J. Astrue.
    Welcome, Commissioner. You may proceed.

      STATEMENT OF THE HONORABLE MICHAEL J. ASTRUE, COMMISSIONER,
                     SOCIAL SECURITY ADMINISTRATION

        Mr. ASTRUE. Thank you, Mr. Chairman.
        Mr. Chairman, Ranking Member Becerra, Members of the
    Subcommittee. During my first week as Commissioner in February
    of 2007, I testified before this subcommittee about the
    hearings backlog. To put it mildly, you were extremely upset
    about the delays your constituents faced while waiting for a
    disability decision. The backlogs had steadily risen throughout
    the decade, and the plan I inherited to fix those backlogs was
    draining resources and making the problem worse.
        At that time, over 63,000 people had been waiting over
    1,000 days for their hearing, some of them were waiting as long
    as 1,400 days. We were failing the public.
        Rather than devise yet another signature initiative that
    would not stand the test of time, we went back to the basics.
    We developed an operational plan that focused on the nitty-
    gritty work of truly managing the unprecedented hearings
    workload. We made hundreds of incremental changes, using video
    more widely, improving information technology, simplifying
    regulations, standardizing business processes, and establishing
    ALJ productivity expectations to name just a few. We also
    committed the resources our employees needed to get this work
    done and done right.
        This plan has worked. Average processing time which stood
    at 532 days in August of 2008 steadily declined for more than 3
    years, reaching its lowest point of 340 days in October 2011.
        In 2007, filing rates had been stable for some time. So
    looking at the number of pending cases was a reasonable, if
    imperfect, method to measure progress. As the recession hit and
    the number of requests for a hearing dramatically increased, we
    steadily improved our performance when measured by average
    processing time, the best metric for tracking progress,
    particularly in times when filings were changing rapidly.
        Like a line in a store, the customer's experience depends
    not on how many other people are waiting, but on how quickly we
    help them. In August 2008, people waited an average of 532
    days. Today, that is about 350 days.
        Average processing times also became more uniform around
    the country. The most dramatic improvements have occurred in
    the most backlogged offices. Average processing time in Atlanta
    North dropped from 900 days to 351 days. Oak Park, Michigan,
    improved from 764 days to 254 days. Columbus, Ohio, went from
    881 days to 351 days. Currently, no office in the country has
    an average processing time greater than 475 days. Fifteen
    offices have hit our ultimate goal of 270 days or less, and
    many others are getting close.
        These numbers are even more impressive because we have
    given priority to the oldest cases which are generally the most
    complex and time consuming. Five years ago, we defined an aged
    case as one waiting over 1,000 days for a decision. Through the
    steady work of our employees, we now define an aged case as one
    taking over 725 days to complete. Next fiscal year, our
    management goal is to raise the bar on ourselves again by
    focusing on completing all cases over 675 days. This emphasis
    on eliminating aged cases increases average processing times.
    So we also look ahead to see how long people in the queue have
    been waiting for a hearing. Today, that number is just 208
    days, and we are hopeful that figure will drop again next year.
    By contrast, the average wait was 324 days at the beginning of
    fiscal year 2007.
        Despite our employees' hard work, the progress in
    addressing our hearings backlog is happening more slowly than
    the public deserves. If we are not adequately funded and we
    cannot timely hire enough qualified ALJs and support staff, our
    progress will erode. We have already had to make decisions that
    have slowed progress such as canceling our plans to open eight
    new hearing offices in Alabama, California, Indiana, Michigan,
    Minnesota, Montana, New York, and Texas.
        Amid huge economic and budgetary unpredictability, we have
    stayed focused on eliminating the causes of your moral outrage
    in 2007. Now we need Congress to enact the President's budget
    request so that we can meet our commitments to the American
    public.
        Thank you, and I will be happy to answer any questions you
    may have.
        [The prepared statement of Mr. Astrue follows:]

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        Chairman JOHNSON. Thank you, sir. Appreciate your
    testimony. And since this may be your last meeting with us, we
    thank you for your service to Social Security and to the
    government.
        Mr. ASTRUE. Thank you very much. I have been actually
    waxing a little sentimental. I realized it has been 27 years
    since I first testified before the Ways and Means Committee,
    and it is a real privilege to work with an institution that
    touches the American public in so many ways from taxes to
    health care to Social Security to trade.
        Chairman JOHNSON. Thank you. As is customary, for each
    round of questions, I will limit my time to 5 minutes and ask
    my colleagues to also limit their questioning to 5 minutes as
    well.
        Options that would allow Social Security to better manage
    the hearing process, Commissioner, protections are included in
    the Administrative Procedures Act to ensure that Administrative
    Law Judges are able to make decisions without agency
    interference. In our next panel, Judge Frye testifies that
    using an APA official protects a claimant's constitutional
    right to due process, but Professor Lubbers from our next panel
    says the Supreme Court has not agreed with this rationale in
    the case of hearing for benefits. Also, Professor Lubbers
    testifies that ALJs are not required by Social Security law.
        You have said that ALJ decisional independence places
    limits on your ability to manage the performance of judges even
    when some judges process far fewer or far more cases than peers
    or award or deny far more or fewer cases than their peers. And
    you have also discussed your challenges with the Office of
    Personnel Management providing you with qualified ALJ
    candidates, including the fact that they don't do background
    checks, even for lifetime appointments.
        And you have also told us that disciplinary action against
    an ALJ takes up to 2 years to process while the judge can stay
    home with full pay and benefits. Given all of this, why do we
    need ALJs at all to do the work?
        Mr. ASTRUE. I was trying to figure out what the question
    was going to be.
        I think the question has been asked several times before,
    and I know we got Professor Lubbers' testimony right before the
    hearing so I did take a quick look at the statute. The general
    authorizing language for conducting hearings doesn't specify
    administrative law judges. That didn't stop me from trying to
    look at the statute, and I think there is some--we will get
    back to you on the record, but it looks to me, and I will be
    interested in what my friend, Mr. Lubbers, and what Judge Frye
    have to say, it does look to me in other places in the statute
    that Congress has assumed that the ALJs are now part of the
    process, and I think we will have to go back and give you a
    formal opinion for the record on that. But I am looking
    specifically at 42 USC 423(h) as one example where Congress
    seems to assume that they are in fact embedded in the process
    at this time.
        [The information follows: Transcript Insert 1]

        [GRAPHIC] [TIFF OMITTED] T0262.016

        Chairman JOHNSON. Yeah. I don't think it is mandatory at
    all under congressional edict. Professor Pierce on our next
    panel recommends eliminating the role of ALJs as decision
    makers or at least amending the law to make it clear that
    Social Security has the power to evaluate the performance of
    judges and take needed action. And in my opinion, you don't
    have that.
        What are the pros and cons of changing the law to make
    clear that Social Security has the power to hire their own
    judges and evaluate their performance?
        Mr. ASTRUE. Well, I certainly think that when this
    committee was regularly reviewing the performance of the Office
    of Personnel Management regarding the ALJ process, that was
    very constructive from my point of view. We saw real progress
    that we had not seen in the previous decade. Since the last
    time that we testified together, I think that it has not--that
    change has disappeared. And so I do think--Commissioners have
    been testifying since 1977 before this committee about
    difficulties with OPM on the administrative law judge process.
    I think that you need to look at this with some intensity and
    say has that agency consistently and timely provided quality
    judges, not only for us, but for all Federal agencies.
        And I think that the definition of qualified that they use
    is totally inappropriate because in order to be a judge, there
    is a high level of professional accomplishment and a high level
    of moral character that should be required. And when we say
    well qualified, we are using a different standard from what the
    Office of Personnel Management has been using, and I think the
    fact that we have made so much progress in the last 5 years
    comes from using that higher standard.
        Something that I think you should be pleased about, Mr.
    Johnson, because I know it has been one of your concerns, is
    the number of outliers has been reduced dramatically in the
    last 5 years. If you look, you have used the 85 percent
    standard. We have gone from almost 20 percent to about 5
    percent that are allowing more than 85 percent of those cases,
    and that is largely the influence of hiring right. A judge who
    is arrogant, who behaves badly, is also not going to apply the
    statute that you have enacted faithfully.
        So I think the emphasis on quality in the judges is
    important, and I have to say, over decades I don't think the
    standard of the Office of Personnel Management has been high
    enough.
        Chairman JOHNSON. Well, I think they have no requirements
    for judges, and we need to get some in. I am going to ask one
    more question.
        Last December, the Wall Street Journal published an article
    entitled ``Two lawyers strike gold in U.S. disability system.''
    The article is about a law firm, Binder & Binder, which
    collected $88 million in fees, all paid from claimants' past-
    due benefits. In their testimony, Professors Pierce and Lubbers
    of our next panel refer to the incentive representatives may
    have had to drag out cases since the fees are a percentage of
    the client's past-due benefits.
        Is it true that the longer it takes to get a decision, the
    higher the representatives' fee will be?
        Mr. ASTRUE. Yes, it is, Mr. Chairman.
        Chairman JOHNSON. And you don't agree with that, do you?
        Mr. ASTRUE. Well, I think it has been a concern for many
    years. In I think it was 1987 when this subcommittee took up
    the attorney fee matter, I was part of the team on the other
    side that raised some concerns about the economic incentives of
    the current system. So it is clearly a risk.
        I think most of the attorneys and representatives most of
    the time are very honorable about not abusing the system, but
    the incentive is there, and I think we do see a significant
    minority of representatives abusing the system from time to
    time, both in this and manipulation of assignment of judges.
        Chairman JOHNSON. Part of the problem is they are appointed
    for life. You can't get rid of them.
        Mr. Becerra, you are recognized for 5 minutes.
        Mr. BECERRA. Mr. Chairman, thank you, and Commissioner,
    thank you for being here and also thank you for your years of
    service to the people of this country.
        Let me make sure, I want to be clear on something. The FICA
    tax, which everyone pays when they get their paycheck every
    week or month, they see a deduction for FICA, that is the money
    that goes into Social Security and Medicare, the FICA tax that
    we see, the contribution that workers make and have been making
    for 77 years to the Social Security Trust Fund and the Social
    Security system.
        That FICA tax money, which is used to cover Social
    Security, covers benefits and also your operating expenses.
        Mr. ASTRUE. Yes. It is a specific appropriation. We can't
    just tap that money. It is a specific appropriation that is
    then drawn from the trust fund, yes.
        Mr. BECERRA. So Congress sends you money, it is
    appropriated money, and ultimately Congress gets reimbursed by
    the trust fund for the money it has given to you to operate.
        Mr. ASTRUE. I am not sure I fully follow the question, Mr.
    Becerra.
        Mr. BECERRA. So the money for you to pay your employees and
    to cover all of your overhead, your lights, your computers, you
    don't get extracted directly from the trust fund. The trust
    fund has the money. You get an appropriated amount, then
    Congress makes sure that the trust fund covers what the
    appropriation was?
        Mr. ASTRUE. Yes, I think that is essentially right.
        Mr. BECERRA. So essentially workers, when they make that
    tax contribution, the FICA tax contribution, they are paying
    for the cost not just of the benefits for today's Americans who
    are retired and getting a pension benefit through Social
    Security or who are disabled and getting a benefit, those
    workers through their FICA taxes are also paying for the cost
    of administering all of the Social Security program?
        Mr. ASTRUE. Yes, that is right.
        Mr. BECERRA. Yet, we are finding that Congress, and I think
    you said something in your testimony, that Congress so far this
    year is--you are going to be getting a lower amount than you
    requested in your budget. I think you said something in your
    testimony. I was struck by it. Something over the past 2 years,
    the gap between what the Social Security Administration needs
    to serve the American public and the resources actually
    appropriated by Congress was the biggest, the gap was the
    biggest it had been in 20 years. So as I say, it has been more
    than $2 billion short of what it needed to process all claims
    promptly, reduce wait times for disability cases, answer its
    phones and perform all of the other work it does to serve the
    American public.
        So no matter how hard your employees at SSA work or how
    well you prioritize, eventually Americans are going to be
    paying the price for the shortchanging of your agency when it
    comes to the budgetary needs that you have. And so when you
    mentioned the wait times for these appeals hearings or the wait
    times to have your initial application processed, that is the
    consequence of not having the resources to get the work done.
        Mr. ASTRUE. Yes, and let me stress that I think we are
    different from most other Federal agencies in that because of
    demographics and because of the recession our workloads have
    gone up dramatically. You know, we are not like certain other
    agencies that can simply prioritize things differently. When
    people come and apply for benefits we have to process those
    claims, we have to process the appeals. We are taking in more
    than a million applications more each year between disability
    and retirement than what we had originally projected driven by
    the recession, and I think in fact if this recession had been
    less deep and less long, it would have made a huge impact on
    the hearings backlog. I think we would be at the 270 by now if
    the recession hadn't been so deep and long.
        Mr. BECERRA. So the recession is making the problem deeper
    and more people are applying but you are getting less money to
    try to operate and provide those services. My understanding is
    that you have already had to close a case processing center and
    that you have had to cancel the opening of eight new hearing
    offices and a telephone service center that could have served
    quite a few of these folks who are applying for services and
    benefits.
        Let me ask one other question with regard to your ALJ
    policy, the policy for these judges, and thank you, by the way,
    for your commitment to review some of the policy changes that
    you are trying to move forward with, and in this case with
    regard to the disclosure of the names of these judges at the
    hearing level in advance of the hearing, we had a conversation
    about that. Can you real quickly, and my time is going to
    expire soon, just give me a sense of the status of your review
    and when do you expect to take steps to revise this policy in
    light of the concerns that have been raised about the perhaps
    over broad nature of the policy itself and how it might be
    detrimental to those applicants for disability benefits.
        Mr. ASTRUE. Right. We viewed the policy, I think, and have
    from the get-go really as a stopgap until we come up with a
    broader, more effective solution. I think this is an issue that
    caught us a little bit off guard. I don't think until our
    management information got better we didn't realize how much
    the system was being manipulated and in how many ways and at
    what cost to the integrity of the system.
        We have a team working on this. I have met with the team.
    We are meeting again the second week in July. I think on the
    initial reaction, we don't think--the good news is we don't
    think that we need to come to Congress for statutory changes.
    We think that we can address this with a pretty complicated mix
    of administrative initiatives and regulatory initiatives. What
    the exact mix of those are and whether the administrative
    things that we could do more quickly make sense without some of
    the regulatory initiatives, we are not sure yet. So we have, to
    say we have a plan at the moment would be overstated. I think
    we have more of a plan to have a plan. But I think we will have
    a better sense late July, early August. But it would have to go
    through the rulemaking process on key parts of it. That will
    mean it will be a little slow. It is a particularly difficult
    time of the year to get things through the rulemaking process
    but we are working on it. We will do the best we can as fast as
    we can.
        Mr. BECERRA. Thank you. Thank you, Mr. Chairman.
        Chairman JOHNSON. Thank you. Mr. Marchant, you are
    recognized.
        Mr. MARCHANT. Thank you, Mr. Chairman. Welcome,
    Commissioner. Thank you for your visit last week. We had a good
    visit.
        Mr. ASTRUE. It was indeed.
        Mr. MARCHANT. I appreciate it. State Disability
    Determinations award roughly 79 percent of all awards at a cost
    of about a third of what it costs a judge to process a request
    for a hearing. Beyond compassionate allowances and quick
    determination screenings that you already have in place, what
    can be done, what more can be done to resolve the deserving
    claims at the State level?
        Mr. ASTRUE. I think that is a great question. I think--and
    very timely. We just issued a press release I believe on Monday
    on what I think is one of the most significant things will
    change the basic paradigm of how we do business.
        An enormous amount of our administrative budget is spent
    chasing down, collecting, and organizing stray, generally paper
    medical records. And we often don't know for sure that we have
    them all. So it is not only a big cost, a big source of cost
    and delay but also of inaccurate decisions. When we move to a
    world where most Americans have a completely electronic medical
    record, it will enormously improve what we are doing. We have
    done some small pilots with a few of the providers and insurers
    who are already there. What we have started now with Kaiser
    Permanente is our first large-scale effort in this area, and I
    think this is going to be tremendously important, and it is
    going to take probably 3 to 5 years to work out the
    arrangements, and the private sector is moving slowly for a
    variety of reasons. But we are going to get there, and you will
    see 3 to 5 years from now a dramatic improvement I think in our
    costs, our speed, and our quality when we can essentially push
    a button and in most cases get a complete medical record
    electronically.
        Mr. MARCHANT. And during the entire process, the medical
    record stays open throughout the entire appeals process?
        Mr. ASTRUE. Yes, that is right.
        Mr. MARCHANT. So is there any merit to closing the records
    at some point so that somebody that is making the decision can
    actually make a decision without having to the next day take in
    new information and make another decision? Is there a fair
    process where you close the case?
        Mr. ASTRUE. Well, we thought so, and in the New England
    region, we still have closure of the record before the ALJ 5
    days before the hearing.
        To use the phrase from the testimony, to put it mildly,
    this subcommittee took umbrage when we tried to propose that
    notice and comment rulemaking and made it extremely difficult
    for the agency to pursue that. But we proposed that and had to
    withdraw that in 2008, I believe.
        Mr. MARCHANT. Okay. And the last question I have for you,
    and I come from a State legislative background, and I believe
    that the local, State determinations are probably the most
    efficient ones. But with the rise of disability claims that we
    have seen in the last few years and with the State having an
    integral part of the qualification for unemployment benefits
    and the State also having an escalating Medicaid expense, have
    you noticed, or is there a trendline where States are trying to
    shift people from unemployment into disability and then from
    disability where they stay on disability, I think it is 2
    years, and then they go from Medicaid to Medicare, and the
    State then basically can shift them from the Medicaid element
    where they are putting a match in over into the Medicare
    element? Do you see States that are developing a philosophy
    towards that?
        Mr. ASTRUE. Anecdotally, we think the answer to that
    question is yes to some extent. Maybe not so much unemployment
    as TANF. We actually brought in an academic expert a few years
    ago to help us try to track and document that. It has been very
    difficult to provide hard evidence of that. But we do think
    that there are States that for their own budget reasons are
    putting up barriers to State benefits and requiring an
    application to us for disability even though there is no reason
    to believe that the person is disabled. So we do see some of
    that. How big, how big a factor that is, I don't think that we
    know. I think it is relatively small, but it is an abuse that
    exists and we wish that States would not do that.
        Mr. MARCHANT. Thank you, Mr. Chairman.
        Chairman JOHNSON. Thank you. Mr. Brady, you are recognized.
        Mr. BRADY. Thank you for the discussion, Representative
    Marchant, about the need to make these determinations as early
    as possible. But Commissioner, thank you for your service and
    leadership of the agency and wish you well.
        Mr. ASTRUE. Thank you.
        Mr. BRADY. Going forward.
        You have a great servant's heart. So thanks for what you
    are doing.
        Mr. ASTRUE. Thank you.
        Mr. BRADY. Two questions. One dealing with fraud both at
    the front end and those applying for it at the back end. There
    are people who are capable of working but--and do but defraud
    us in the process of continuing disability reviews. What is the
    status of our efforts to fight fraud within disability and what
    more can we do again to capture the money we really need for
    people who are truly disabled?
        Mr. ASTRUE. Sure. So, I know that I and other Commissioners
    have been through this in the past. And I know that there have
    been efforts to come up with a mechanism that would allow us to
    do this that hasn't been successful yet. But the single most
    important thing is timely review of existing beneficiaries. We
    all know that there is an enormous payback to the taxpayer from
    timely continuing disability reviews. Those have dropped
    dramatically in the years before I got here. They have gone up
    dramatically. But remember, I don't set them. I come and I
    plead and I beg here in Congress, and I have been somewhat
    successful so the number has gone up pretty significantly and
    substantially but it is not where it should be. And this past
    year we had to reverse, we were geared up, we thought, both
    committees in appropriations passed 582,000 and then at the
    last minute the bill passed and the number was 435. And we had
    to not only not hit a more appropriate level, we had to
    reallocate a lot of resources halfway through the fiscal year.
        Coming up with a mechanism so that the agency has the
    resources to do that work is, I think, tremendously important.
    I think some of the new technologies that we have put in place
    have very high returns as well. We have ways now of checking
    assets with banks. The early returns were 20 to 1 return. We
    don't think we are going to see that on an ongoing basis. We
    don't know yet what the return is, but the return on that is
    very high. We are trying to come up with a similar system for
    other types of assets, real estate assets, and things like
    that.
        Also, I put in a pitch for the Inspector General for budget
    reasons, the number of CDI units which are these joint SSA, IG,
    local law enforcement units which have been very successful, I
    think, on the whole. The number of those that we have are going
    down rather than up, and I think that is penny wise and pound
    foolish.
        Mr. BRADY. How about at the front end? One, thank you for
    that comment on timely reviews. How about on the front end and
    through the process, not just those who are hiding assets but
    those, and providers who are enabling those to try to defraud
    the system with medical disabilities. What percentage of
    applicants are we now identifying through the process on the
    front end?
        Mr. ASTRUE. Right.
        Mr. BRADY. You know, who are attempting to defraud the
    system?
        Mr. ASTRUE. It is relatively small, but the disability
    examiners are actually quite good about being alert on these
    things and they do do a significant number of referrals. Some
    of our administrative law judges have been very sharp about
    this, too. One of the more spectacular ones that we are working
    on now came because of a very alert ALJ.
        I would say if you were going to focus on one thing, I
    think that the treating physician rule historically, you know,
    relied on a different paradigm. You know, there was a time when
    we all had a Marcus Welby as a personal physician, and that is
    not true anymore. In fact, we are increasingly seeing
    physicians who are essentially extensions of the lawyers doing
    the representation, I mean often sometimes physically housed
    within those complexes.
        I don't know that those kinds of physicians should be given
    the same deference that the court interpretations of your
    statute require us to do, and the courts are also all over the
    place in terms of treating physician.
        I know there is always a lot of skepticism about the
    agency's view on this. So what I would say to you is get some
    good outside advice on that. At least reconcile the conflicting
    court interpretations so that we do this uniformly and fairly
    around the country. But I think it is also a fair question to
    ask, given how the world has changed, is the rule that struck
    people as appropriate 34 years ago still appropriate today.
        Mr. BRADY. Are there significant resources and are there
    insignificant punishments for either physicians who are
    complicit or complainants' reps who are complicit? Do you think
    we have what is needed in place to prevent that type of fraud?
        Mr. ASTRUE. Probably not. I think we have tried to do more.
    I will be candid with you. I think that there is probably more
    we can do administratively. We are struggling with the
    resources, I think, but we are trying to do that. I think there
    probably are some places where we could use some more help from
    the Congress. So if I could get back to you on the answer for
    the record on that I think it would be a better response.
        [The information follows: Transcript Insert 2]

        [GRAPHIC] [TIFF OMITTED] T0262.017

        [GRAPHIC] [TIFF OMITTED] T0262.018

        Mr. BRADY. Great. Thank you, Mr. Chairman.
        Chairman JOHNSON. Thank you. Mr. Doggett.
        Mr. DOGGETT. Thank you, Mr. Chairman. And thank you,
    Commissioner.
        I have a follow-up on the same two concerns that Mr.
    Becerra raised.
        Mr. ASTRUE. Sure.
        Mr. DOGGETT. First with reference to your budget, the
    moneys that finance your budget are from taxes that have
    already been paid and are being paid. Those taxes are not going
    down. It is a question of whether we provide the resources to
    Social Security to effectively and efficiently provide the
    services that a worker who has the misfortune of disability
    would expect. And you mentioned some goals on appeals, for
    example.
        Is it correct that currently, that you do not have the
    resources to replace Social Security Administration employees
    who retire or depart to another job?
        Mr. ASTRUE. As a general matter, Mr. Doggett, yes, that is
    correct. We have got a hiring freeze in place with some very
    limited exceptions that relate to backlog reduction.
        In addition, we have, and I will give you the exact number
    for the record, probably slightly over a thousand temporary
    employees that basically we are waiting to see what happens
    with sequestration. We have gone up to the 1 percent statutory
    limit more or less on the retired annuitants. We have also, to
    the extent that we have made exceptions in the hiring over a
    lot of objections from some of my people, I have said the
    people that have been with us the longest, that is where our
    obligation is first. So to the extent that we have done hiring
    in the last 6 months it has been temporary so that if we have a
    deep cut under sequestration, we will let those people go and
    take less out of the people that have been working for us for
    20, 30 years. So we have got a large group of people who are
    hanging in the balance waiting to see what happens with
    sequestration.
        [The information follows: Transcript Insert 3]

        [GRAPHIC] [TIFF OMITTED] T0262.019

        Mr. DOGGETT. And while your oral testimony referred to the
    significant progress you have made in reducing the backlog on
    the time that an appeal takes, those numbers are beginning to
    trend back up, aren't they? In recent months they have gone up
    from the low that you talked about last October?
        Mr. ASTRUE. Slightly. And I think statistically I would
    call it approximately level. And there is some wobble. I am
    swearing in 40 judges tomorrow and we have got some more
    coming. So I think that by the end of the year there is a good
    chance that we will be essentially level for most of the year.
        Mr. DOGGETT. Is it unlikely that you can meet your
    objective of 270 days unless your budget is fully funded?
        Mr. ASTRUE. Yes. So let me, let me be totally forthcoming.
    I think we were making extremely good progress on the 270.
    There were doubters. So Congress asked GAO to look at it and
    they gave us a 78 percent probability a couple of years ago of
    hitting it. I will be honest with you, it is very unlikely we
    are going to hit the 270 on time now. And it is a combination
    of the recession, timely judges from OPM, and funding for
    staff. I am doing all I can on each of those three things, but
    those are the critical factors.
        Mr. DOGGETT. Let me turn to my second concern, and that is
    the question of the change that was made last December so that
    someone who is coming to bring an appeal can find out who the
    judge is.
        Mr. ASTRUE. Right.
        Mr. DOGGETT. And I have been a judge before coming to
    Congress and I have also been a litigator, and it was always
    important to me whether I was bringing a claim or defending a
    claim to know who I would be presenting that claim to. As it
    relates to in-person conferences, not video conferences, is
    there any good reason why the practice that Social Security has
    followed in the past of letting someone know before they walk
    in the hearing room who the judge is, why that ought not to be
    continued?
        Mr. ASTRUE. Yes. So I think in fact it embodies a fairly
    important principal of justice. And again, I think if we had
    realized the extent to which random assignment was being
    manipulated, we would have acted sooner, and that is because
    when you have as much manipulation as we are concerned that we
    have, the consequence of that is that the 15 percent of the
    claimants who are not represented are, by definition, getting
    the stingiest judges. And I don't think, I mean, these tend to
    be the people who are the least sophisticated and tend to be
    the people who are the most impoverished. And I don't know how
    you can say----
        Mr. DOGGETT. If it is in fact random assignment, why can't
    you announce who the judge is before you walk in the room?
        Mr. ASTRUE. But Mr. Doggett, it is not random assignment.
    What we have discovered is that claimants' reps have found a
    number of ways to manipulate the system and that the principle
    of random assignment has been violated in any of a number of
    ways. This is why it is taking us so long to come up with a
    fix. It is not just the video hearings, it is not just, you
    know, the particular problem we had at Huntington. As we have
    dug into this, there are a variety of problems around the
    system that come from nonrandom, you know, the random
    assignment being violated. And what we are trying to do is get
    a handle on that as best we can with a permanent solution. But
    in the meantime, I don't think it is fair or appropriate that
    the people who are, as a general matter, on the bottom end of
    the spectrum get the judges that are least likely to award them
    benefits. I just don't--I mean, we are supposed to be
    representing these people, too. And that is what judges are
    supposed to do when they come into hearings. They are not
    supposed to be----
        Mr. DOGGETT. I hope you will supplement the record on
    specifically what--if there is random assignments, specifically
    what has occurred that you can't resolve in some other way than
    denying an opportunity to find out who the judge is before you
    walk in the room and on video conferences specifically so long
    as there is agreement that if you agree to a video conference,
    you get the judge that is assigned in the video conference,
    what is wrong with that?
        Mr. ASTRUE. If you allow a friendly amendment to your
    request, what I would like to do is come up and brief staff
    because several of these issues that have come up which are not
    public have or potentially have a law enforcement dimension to
    them. So I would rather not lay that out in the record. And I
    also would rather not--to the extent that we are being
    defrauded or the system is being abused, I would rather not lay
    out publicly how it is done as a roadmap for others until we
    can do this. So what I would like to do, and hopefully we can
    do this on a friendly, bipartisan basis with the majority and
    minority staff, is come up and go through some of these other
    things that we have come across that have given us the basis
    for significant concern.
        Mr. DOGGETT. Thank you.
        Chairman JOHNSON. There is a little bit of manipulation
    among the law firms, too, that represent some of these people.
    They are in it for the money.
        Mr. BECERRA. I think that is more on the video.
        Mr. DOGGETT. And that is why because he really didn't
    respond on the video part. If you agree to a video hearing and
    you get whatever judge is to be assigned at random from one of
    the national centers, why isn't that sufficient protection on
    video?
        Mr. ASTRUE. Well, because under the current rules, you are
    allowed to manipulate and pick and choose. You can see who you
    get on the video and then you could decide to decline.
        Mr. DOGGETT. But if you are restricted and your only
    choice, and you change it and your only choice is to get the
    judge assigned on the video, why isn't that sufficient?
        Mr. ASTRUE. Well, we are looking exactly at doing that, but
    I believe that my, at least interim advice from general counsel
    is that I need to do that through notice and comment
    rulemaking. The other thing, again without compromising what is
    happening, the other technique, and I am concerned also about
    this on some other levels from a claimant's perspective, is
    that a number of reps who have gotten into the practice of
    simply withdrawing an appeal and then refiling. And that is
    another way in which random assignment has been manipulated in
    some part. And some of this is our fault. Some of this, you
    know, I don't know that we have been entirely consistent even
    in applying our own rules. So it is a difficult problem. It is
    an important principle of justice to get this right. And we are
    trying to take the time to do this right. And in the interim I
    think what we are doing we acknowledge it is not perfect and we
    have not represented that we want to continue to do it
    indefinitely. I would be delighted to go back to telling people
    who the judge is. I don't think it is the--I think the
    criticism is a little bit overwrought in that, you know, it is
    the same, VA, NLRB, I don't believe you get notice of the
    judge. Most worker's comp you don't get notice.
        I, too, was a trial attorney in my reckless youth. In the
    Massachusetts Superior Court, at least in 1985, when I tried my
    first case, you didn't know who your trial judge was until you
    walked in and then it changed on a monthly basis. So you know
    you couldn't really design a case for the predilections of a
    judge because a judge would change multiple times over the
    course of a trial.
        So again, I am not defending what we are doing. And I have
    been, I think, straightforward. I don't want to continue. I
    would be perfectly happy to put the judge's name back on. But I
    don't want to do it until I fix things that are important for
    the integrity of the system.
        Mr. DOGGETT. Thank you. Thank you, Mr. Chairman.
        Chairman JOHNSON. That was a good answer. Thank you so
    much. And, you know, during your term you have worked with two
    different administrations and your dedication to doing the job
    to the best of your ability has never wavered in my view. The
    American people and we are grateful for your focus on the
    disability program. During these challenging times and along
    with your achievements, thanks for your service, your
    leadership.
        I have one final question. Based on your experience, what
    advice would you give your successor?
        Mr. ASTRUE. Buy a flak jacket. I think that the most
    important thing is to realize that you do take a lot of
    criticism in this job. And it is because Social Security is
    such an important institution to the public and the
    expectations are very high. We are in a world where it is going
    to be very hard to satisfy those expectations in the coming
    years.
        What I would urge my successor to do would be in part to
    urge all of you, you know there are several ways to try to do
    this better. You know, one is to spend more money on the status
    quo. The other is simplification, and we have tried to do what
    we can from a regulatory point of view. This committee I don't
    think has ever gone systematically back through the Social
    Security Act and say, well, is what we made sense in 1964,
    1977, 1992, doesn't make sense today. And it is an
    extraordinarily complicated act. And I think that there are
    opportunities where we shouldn't come--any kind of partisan
    divide where we can say look, let us just make it simpler. I
    mean, one of the things that saved us the first year, we did
    administratively, is we realized for 30 years we have been
    requiring original birth certificates brought into the office
    or mailed to us with every retirement application and we did
    not need that because we could authenticate through other more
    modern needs. It made sense in 1965, but it did not make sense
    in 2007.
        I think there are a lot of opportunities to straighten out.
    This is only one small part. This is probably only about 10
    percent of the Social Security Act right here, and I think that
    we can find opportunities--maybe you should get some outside
    expert advice, but I think you could find a lot of ways to
    simplify it that would lower our administrative costs. So if
    you don't want to give us the money, there are other ways to do
    it. And I think that, I actually regret that I hadn't given
    this speech a little bit earlier and asked you to consider
    doing that. And I think for the next person I think it is good
    advice.
        Chairman JOHNSON. Modernize the system. We can do that.
        I forgot Mr. Smith. I apologize. I forgot Mr. Doggett
    first. So you are the second one. You are recognized.
        Mr. SMITH. Thank you, Mr. Chairman, and thank you,
    Commissioner, for your service, and certainly for your time
    here today.
        Going back to I think what Mr. Doggett was talking about a
    little bit, my office has worked with a situation where it is
    our understanding that an applicant's attorney recommended the
    applicant request a delay of their hearing because they felt
    they would get a different, perhaps a more favorable hearing
    from a different ALJ. Obviously this raises questions and some
    were touched on a bit earlier, certainly about the uniformity
    of the system and perhaps what you could point to in addressing
    that uniformity. But I would say even more so when we talk
    about the workload, if one judge has prepared to hear a case
    and then ends up not doing anything with it and then someone
    else has to prepare and who knows what circumstances will
    surround that as well. How should we address this? What would
    you have to say about moving forward and perhaps on the judge
    anonymous policy that was touched on earlier as well?
        Mr. ASTRUE. I think the thing to do is to work with us to
    try to get some consensus on particularly the things that we
    need and notice and comment rulemaking. I have been surprised
    at least a few times where things that looked like there was
    consensus and not very controversial became very controversial
    in the rulemaking process, and sometimes the Congress
    contributed to that.
        So I think what we are trying to do is to try to figure out
    as much of a consensus approach as possible, and I do want to
    give some credit to the, to NOSSCR, the attorneys group,
    because they have already come to us and put some things on the
    table which I think we would have thought were unlikely to try
    to help us to fix this problem. And I want to commend them for
    you know taking that step in the public interest. And I think
    if we can all work together on this to try to devise a
    combination of administrative and regulatory approaches to
    straighten this out and just get it done and get it over with
    as quickly as possible, then I think the world will be better
    off.
        Mr. SMITH. Okay. Thank you. I yield back.
        Chairman JOHNSON. Thank you. Thank you for your testimony.
        We will proceed to our second panel now.
        And will the witnesses please on the second panel take your
    seats?
        Ethel Zelenske, Director of Government Affairs, National
    Organization of Social Security Claimants' Representatives, on
    behalf of the Consortium for Citizens with Disabilities Social
    Security Task Force on the left, or your right.
        The Honorable Randall Frye, President, Association of
    Administrative Law Judges. Welcome back.
        Jeffrey Lubbers, who is Professor at American University
    Washington College of Law.
        And Richard Pierce, who is Professor at the George
    Washington University Law School.
        Thank you all for being present.
        And Ms. Zelenske, you are recognized. Please go ahead with
    your testimony.

     STATEMENT OF ETHEL ZELENSKE, DIRECTOR OF GOVERNMENT AFFAIRS,
          NATIONAL ORGANIZATION OF SOCIAL SECURITY CLAIMANTS'
    REPRESENTATIVES, ON BEHALF OF THE CONSORTIUM FOR CITIZENS WITH
                DISABILITIES SOCIAL SECURITY TASK FORCE

        Ms. ZELENSKE. Chairman Johnson, Ranking Member Becerra, and
    Members of the Subcommittee. Thank you for inviting me to
    testify today on behalf of the CCD Social Security Task Force.
        Title II and SSI cash benefits are the means of survival
    for millions of individuals with severe disabilities. In the
    past, I represented claimants at all administrative levels and
    in Federal court. My experience made me all too aware that
    behind the numbers are individuals whose lives have unraveled
    while waiting for decisions.
        I recently received an email from a gentleman who appealed
    to the hearing level. This is how he described the appeals
    process from a claimant's perspective: ``I just don't
    understand why everyone is denied two times and forced to wait
    to have a hearing. I was very prepared from the onset with my
    documents. SSA was sent letters from my neurosurgeon,
    neurologist and two separate pain management doctors who I have
    been going to on a monthly basis for the past 8 years. Being
    denied was mind numbing. We lose everything we worked for over
    the years during the waiting process. I am currently over
    $100,000 in debt and have sold everything of value, including
    our wedding rings. My car was repossessed, and now my home of
    18 years is in jeopardy.
        The pressures of my medical issues have caused our marriage
    of 18 years to collapse. I have never been a fragile man. I am
    educated with a university degree. I have been active in my
    community and even own my own small company. It is hard enough
    for a family or a person just to deal with an illness, but it
    is harder when the government can keep your life on hold while
    you are ill.''
        While the wait for a hearing is still too long, processing
    times have been significantly reduced over the past few years,
    now around 350 days, dropping more than 6 months. We support
    the Commissioner's goal of reaching 270 days by the end of next
    year. However, we are deeply concerned that any progress will
    be stymied due to a lack of adequate resources for SSA, thus
    putting that goal and other critical workload benchmarks at
    risk. We appreciate the subcommittee's past support to provide
    SSA with adequate funding and urge support for the President's
    fiscal year 2013 request that will allow SSA to continue to
    move forward.
        Central to the fairness of the SSA appeals process is a
    claimant's right to a hearing before an ALJ. While ALJs have
    recently come under increased scrutiny, it is important to
    recognize several points. Favorable ALJ decisions account for
    only about one in five allowances with the vast majority made
    by DDSs. The overall ALJ allowance rate has been dropping, and
    it is at the lowest level in years. There are many legitimate
    reasons why ALJs reverse DDS decisions, as detailed in my
    written statement. And favorable ALJ decisions are being
    reviewed by SSA to determine compliance with agency rules and
    policies but in a manner consistent with the law ensuring the
    independence of ALJs.
        We do not support proposals to have the government
    represented at hearings. The longstanding view of Congress, the
    Supreme Court and SSA is that the process is informal and not
    adversarial. SSA had a previous pilot where the agency was
    represented. I represented clients at a hearing office in the
    pilot and can confirm Congress' findings at the time that the
    pilot did not achieve its purported goals. It led to longer
    processing times, did not improve the quality of decisions and
    did not result in better prepared cases. While radically
    changing the process, the expense was enormous, costing more
    than $1 million per year in 1986 dollars for just five hearing
    offices. Today there are more than 140 hearing offices.
        We support many of the Commissioner's initiatives to reduce
    processing times and make the process more efficient, including
    technological improvements, such as online access to electronic
    claims folders and the ability to file appeals and submit
    evidence electronically. Also, there are a number case
    screening mechanisms that expedite decisions without
    sacrificing accuracy.
        I am glad to report that the gentleman I described earlier
    was found eligible through one of these hearing level screening
    initiatives. My written statement discusses our recommendations
    for improving the process for people with disabilities, such as
    increasing the time for hearing notices and helping claimants
    to obtain representation earlier in the process to assist with
    development of the claim. We also provide recommendations to
    better develop claims at the initial levels so that the correct
    decision can be made at the earliest point possible and then
    the unnecessary appeals can be avoided. Thank you and I would
    be happy to answer any questions.
        Chairman JOHNSON. Thank you.
        [The prepared statement of Ms. Zelenske follows:]

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        Chairman JOHNSON. Randall Frye you are recognized.

        STATEMENT OF THE HONORABLE D. RANDALL FRYE, PRESIDENT,
                ASSOCIATION OF ADMINISTRATIVE LAW JUDGES

        Judge FRYE. Thank you very much.
        Mr. Chairman, Ranking Member Becerra and Members of the
    Subcommittee, thank you very much for the opportunity to be
    here this afternoon to talk about some very important issues
    with respect to the disability adjudicatory system at the
    Social Security Administration.
        I am president of an organization that represents 1,400
    judges, and I feel like the weight of all 1,400 are on me every
    day because I hear from them on a regular basis, and I
    understand the trauma that is ongoing dealing with a rather
    significant backlog.
        There are some good things, however, that are happening at
    the agency, good things that result from your actions: 3 years
    ago you responded favorably in a budget context that permitted
    the agency to appoint several hundred additional judges and
    staff, and we have dealt with the backlog. We have worked
    exceptionally hard.
        It is troubling to hear or to think that come January, the
    bottom may fall out of this progress. So I urge you on behalf
    of all of the American people to, please, do what you can to
    ensure that this agency is funded so we can continue with the
    disability backlog.
        While I think the judges and the staff have worked well,
    there are some things that haven't worked so well, and we have
    some ideas that we would like to share with you. What isn't or
    hasn't worked well, quite frankly, is that--and believe me, we
    understand the importance and need for goals in everyone's
    life, personal and professional. Goals have driven this
    democracy to the highest levels. What we have been faced with
    as judges, however, are not goals; they have been quotas.
    Quotas are destructive, and they force decisions before they
    are ready. If you understand the process, as you most certainly
    do, under the present structure, judges have the responsibility
    of wearing three hats, incredible responsibilities in wearing
    three hats, representing the government or the people,
    representing the claimant's interest and of course ensuring
    that the law is applied correctly to a decision. That is a heck
    of a burden if you think about it.
        It requires the judge to engage in rather aggressive and
    vigorous examination of a claimant. Oftentimes that puts one at
    loggerheads with the claimants and claimant's represent--it
    almost places the judge in truly an adversarial relationship in
    the process. That is not a healthy judicial environment. It is
    not good in my view to have the judge wear three hats.
        It is certainly good that the record is developed. Indeed,
    without record development, we cannot make a decision.
        An answer we think to this problem and an answer that at
    long term would save money is to have the government
    represented. If you think about it, and I have said this
    before, how many corporations or companies that you know of
    would go to court, facing a lawsuit where the plaintiff is
    seeking $300,000, without representation? That is what is
    happening in our courtrooms. The government comes without
    representation.
        Indeed, I recognize part of my responsibility is to
    represent the government, but what I am trying to communicate
    to you is that it is a very difficult process. It is a balance
    that sometimes gets skewed.
        We believe the advocacy of a government rep would be
    important, but even more important from the claimant's
    perspective, a government representative would be assigned the
    cases early in the process. The government representative would
    develop or ensure development of evidence is in the record. The
    government representative would work with the claimant and the
    claimant's attorney to pay the case as early as possible,
    without a hearing. Thus saving the more expensive time for
    conducting a hearing and having to issue a written decision
    after a hearing.
        The government rep has a lot of value. It is the individual
    that would be designated in a hearing office that the attorney
    on behalf of a claimant could call and talk to about a case to
    find out the status of a case. Right now, if you talk to many
    representatives, it is quite difficult to talk to anyone in a
    hearing office; not because we are unfriendly, it is just that
    everybody is swamped with work.
        The problem with the quotas is particularly perplexing to I
    think anyone, any professional who has to have time to consider
    important and complex issues. What has happened to us is
    because with all of the wonderful programs the agency has
    established over the last few years, the easier cases are
    getting addressed before a hearing or many of them are. The
    cases we hear are far more difficult.
        Chairman JOHNSON. Can you close? Your time has expired.
        Judge FRYE. I am sorry, I will indeed. I have other points
    that I made in my statement. And I would like if at all
    possible to submit a statement on the APA and its applicability
    to our hearings at the close of hearing.
        Chairman JOHNSON. Sure.
        Judge FRYE. Thank you very much.
        Chairman JOHNSON. Thank you, sir.
        [The prepared statement of Judge Frye follows:]

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        Chairman JOHNSON. Mr. Lubbers you are recognized.

     STATEMENT OF JEFFREY LUBBERS, PROFESSOR, AMERICAN UNIVERSITY,
                       WASHINGTON COLLEGE OF LAW

        Mr. LUBBERS. Thank you, Mr. Chairman, Ranking Member
    Becerra, for inviting me to be here today. I am a Professor of
    Practice in Administrative Law at American University
    Washington College of Law where I have taught since 1996. As I
    note in my biography from 1975 to 1995, I worked at the
    Administrative Conference of the United States, ACUS, and am
    now serving as special counsel at the revived Administrative
    Conference. However, I want to emphasize that my views I am
    expressing today are just my own and as an administrative law
    professor and should not be ascribed in any way to the
    Administrative Conference.
        The growth of the SSA disability adjudication program has
    been phenomenal.
        Chairman JOHNSON. Is your mike on?
        Mr. LUBBERS. The growth of SSA disability adjudication has
    been phenomenal. In 1973, the then president----
        Chairman JOHNSON. I forget mine, too.
        Mr. LUBBERS [continuing]. Of the Association of ALJs
    reported that the number of disability proceedings reaching the
    hearing level had, quote, ``jumped to an unbelievable 56,000.''
    That year the per judge disposition rate was 143 cases per
    year. Today those numbers seem miniscule.
        Commissioner Astrue has said that he expects the case load
    to reach 832,000 in fiscal year 2012 with about 1,400 ALJs. The
    per judge disposition rate has more than quadrupled to 594. And
    this rise in caseload shows no sign of slowing down.
        Now to sketch out the legal context of the program, I would
    mention that although SSA benefits once received are an
    entitlement, which means that the government cannot terminate
    benefits without a formal hearing. It is not so clear, based on
    Supreme Court case law, whether that level of due process
    applies to initial applications and denials of benefits. The
    Supreme Court has never held that an applicant for public
    benefits possesses a property interest protected by due
    process.
        Another unresolved issue is whether the formal adjudication
    provisions of the APA are applicable to SSA disability
    adjudications. While this is an interesting legal and
    historical question, it is one that I don't think is all that
    crucial to resolve because, ultimately, the issue of the APA's
    applicability is up to Congress, and the APA itself gives both
    Congress and the agency a lot of flexibility.
        But to clarify my own answer to this question that you
    mentioned, I think that if you just look at the language of the
    Social Security Act, an APA hearing would not be mandatory, but
    that analysis is probably trumped by the clear message Congress
    and this subcommittee sent in the 1970s when it converted the
    temporary SSI judges into full-fledged ALJs.
        Now, over the years, I have urged a number of key process
    reform proposals that I summarize in my testimony, many of
    these ideas were included in SSA's 2006 DSI reform proposal.
    However, other than a couple of the proposals, the rest of the
    DSI program was prematurely terminated apparently due to
    resource constraints caused by the crush of caseload pressures
    that worsened after 2006.
        I would like to see a renewed effort to implement these
    process reforms. However, that may not be possible now. So I
    have suggested some possible options and approaches in dealing
    with some of these caseload pressures. Some of them are
    incremental, such as increasing the use of rulemaking and
    increasing the use of video communications technology, and some
    more fundamental. Some of the more fundamental change options
    might include modifying the role of Appeals Counsel to increase
    the quality control review of grant cases and to use selected
    appeals counsel decisions as systemwide precedents; second,
    replacing both the Appeals Counsel and the district court
    stages with a Social Security court; third, making SSA hearings
    adversarial, although I am not convinced that that would be
    cost beneficial; and fourth, taking advantage of the APA
    provision that allows specially designated administrative
    judges, even in APA hearings.
        Now this last option requires a bit more explanation. If
    Congress does become persuaded that circumstances require that
    hiring more ALJs is no longer the tenable answer, Congress
    could specially provide for or designate another type of
    adjudicator under the APA. Congress has done this occasionally.
    A prime example is the special authority given to the Nuclear
    Regulatory Commission to use atomic safety and licensing board
    panel members to hear nuclear licensing cases. In those cases,
    Congress wanted to provide the agency with the flexibility to
    not only use law trained judges to hear licensing cases, but
    also scientists. Now some have suggested using doctors as
    adjudicators. I am not sure that is a good idea, but I do think
    that there are enough problems with the ALJ program to perhaps
    lead Congress to suggest that there is a need for a specially
    tailored SSA ALJ program. And in doing that, Congress could
    allow SSA to basically hire its own judges, using the OPM
    process. They have done that with the NRC and with boards of
    contract appeals.
        Congress could also consider departing from the current ban
    on performance appraisals for ALJs. I know there are arguments
    on the other side of that issue.
        So there are a number of things Congress could do if they
    specially designated Social Security ALJs. My overall point
    here is that the SSA's ALJ program size and perhaps the
    character of its cases may now require some special treatment.
    By providing the menu in my testimony with some commentary
    along the way, I hope I can assist this committee in performing
    its historical role in protecting the viability of this
    historic program.
        Chairman JOHNSON. Thank you, sir.
        [The prepared statement of Mr. Lubbers follows:]

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        Chairman JOHNSON. Mr. Pierce you are welcome aboard. Go
    ahead.

      STATEMENT OF RICHARD J. PIERCE, JR., PROFESSOR, THE GEORGE
                    WASHINGTON UNIVERSITY LAW SCHOOL

        Mr. PIERCE. Chairman Johnson, Ranking Member Becerra, and
    other Members of the Committee, thank you for giving me the
    opportunity to share my views on this important topic. To me,
    there are two major problems at present with the present Social
    Security disability program. One is that it is increasingly and
    unsustainably generous. The proportion of the population that
    has been determined to be disabled has doubled. The cost of the
    program has more than quadrupled, and that is primarily due to
    ALJ grants after two denials by State agencies.
        The other problem is related to that; there is massive
    variation in the ALJ grant rates. The latest numbers I have
    seen were 8.6 percent grant rate for one judge; 99.7 percent
    for another judge. This is a problem that has been extremely
    well documented for over 35 years. A book written by six
    reachers in 1968-1978, excuse me, concluded that the identity
    of the judge is far more important than facts of the case in
    determining the outcome of the case. If you don't address that
    problem in some way, 35 years from now, someone else is going
    to be telling you that it still exists.
        I think there are three sources of the problem. First of
    all, let me back up and say that one of the reasons this is so
    difficult is most of the cases that are in the subject of dual
    denials at the State level and grants at the ALJ level involve
    one of two disabilities, mental disease and pain. And the
    National Institute of Medicine and the National Institute of
    Mental Health tell us that over half the population suffers
    from one of those conditions. Obviously, we cannot have a
    situation in which over half of the population is qualified as
    permanently disabled.
        What judges have to do, and it is difficult for any
    decisionmaker, judge or not, is to figure out whether someone
    is so severely mentally ill or so severely subject to chronic
    pain that they are not able to work. And when you look at the
    variation in the ALJ grant rates and you look at the overall
    increase in the grant rates over time, it is quite obvious that
    while some judges are continuing to grant disability only to
    those with severe mental illness or severe pain, some now grant
    them routinely to people with minor mental illness and minor
    chronic pain.
        And by the way, I fit in both categories, so I suppose I
    should have applied a while back. The sources of the problem
    are three: First of all that the administrative law judges
    cannot be subjected to any process of evaluation or system of
    quality control. You are in a position to correct that problem
    and I hope you will.
        The second is that this whole system of decision making was
    designed to operate without lawyers. Well, today, 85 percent of
    the applicants are represented by lawyers or other professional
    representatives. This has changed the nature of the process
    dramatically and certainly as a contributor both to the wide
    variation in grant rates and to the increase in the number of
    people who are determined to be disabled. Something needs to be
    done about that.
        What I think you need to do, what I would urge to you do,
    is reduce the extremely generous fees that are now available
    that, as I read a report the other day, amounted to $1.5
    billion last year and change the method of calculating the fees
    to eliminate this problem of a major economic incentive to
    delay cases.
        The third source is, frankly, the courts. The courts pay no
    attention to what you say in your statutes about scope of
    review. I have in my testimony citations to studies that show
    the courts absolutely do not pay any attention. What I would
    urge at least initially there is that the Social Security
    Administration start taking cases, more cases, to the United
    States Supreme Court. It has shown over the years far more
    respect for your views about scope of review than have the
    district courts and the circuit courts. It may take two or
    three cases, but I think that is what has to be done.
        And to help that along, I am going to file a petition for
    rulemaking at SSA next week to urge them to take an action that
    most certainly will get them into court. And I hope the United
    States Supreme Court will then get the lower courts back doing
    what you have told them to do. Thank you.
        Chairman JOHNSON. Thank you, sir. I appreciate that.
        [The prepared statement of Mr. Pierce follows:]

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        Chairman JOHNSON. Judge Frye, the agency has published its
    expectations to do 500 to 700 cases a year. In your testimony,
    you say the current misplaced emphasis on numbers has perverted
    our system of justice. So are you saying there should be no
    expectations?
        Judge FRYE. No.
        Chairman JOHNSON. That judges should take as much time as
    they like as claimants wait in line?
        Judge FRYE. Absolutely not, as I indicated earlier, I
    strongly believe in goals, but the better standard a wider
    range. If you just do the numbers, if you can look at a paper
    file of 600 pages of medical evidence, do you want a judge to
    spend 2 hours on that or do you want a judge to spend whatever
    time he or she needs to understand the case? That is the
    problem with you have to do 500; you have to do 700. Judges
    work hard--to do those numbers, they are working 7 days a week.
    I get emails every week complaining and asking for some help.
    So, no, we are working hard, and we believe in goals, and
    judges are responding to goals. Most professionals don't work
    well with unreasonable quotas.
        Chairman JOHNSON. How many did you do last year?
        Judge FRYE. You know, I don't know. I have--I am 90 percent
    on official time, but I honestly don't know, probably somewhere
    around 50 to 100.
        Chairman JOHNSON. Okay. Well, I was in the office in
    Dallas, and I can tell you that one judge out of 12 was working
    a normal day.
        I understand one of the ALJ union vice presidents in the
    Buffalo hearing office told judges not to process more than 300
    cases a year. Is the union pushing that?
        Judge FRYE. I have never heard that statement, and I
    honestly find it incredible.
        Chairman JOHNSON. Thank you.
        And earlier this year, after the Inspector General reported
    that claimants or their representatives were declining video
    hearings so that a case would be assigned to a judge who
    allowed more cases, Social Security is now not identifying the
    ALJ until the day of the hearing. Do you think that is right or
    wrong?
        Judge FRYE. I think all of our hearings should be
    transparent, should be open to the public. I think our notice
    of hearing should clearly set forth all of the issues of the
    hearing, including the judge's name. The government can't do
    its business in secret.
        Chairman JOHNSON. I hear you.
        Ms. Zelenske, do you know why claimant representatives
    would cancel hearings for their clients who had been waiting
    months to see a judge?
        Ms. ZELENSKE. There are many legitimate reasons why people
    ask for a continuance if that is what you are asking. I mean,
    the claimant may be ill and unable to travel to the hearing
    that day. I mean that is usually the most typical reason that
    people ask for a continuance of the hearing. I mean, I get from
    the reports we get from our members, it wouldn't normally be
    because the evidence----
        Chairman JOHNSON. What percentage of them are done by TV
    nowadays, do you know? Any of you?
        Ms. ZELENSKE. SSA has that information. I think I saw--I
    think it may be around 5 percent.
        Chairman JOHNSON. So, is that all?
        Ms. ZELENSKE. I could be wrong.
        Chairman JOHNSON. They have it rigged for more than that.
        Professor Lubbers, with a program this large and this
    complex, does it make sense that Social Security can't oversee
    the performance of judges for consistency? And are there any
    other programs that you know of that do it right?
        Mr. LUBBERS. I think, and I have written on this government
    wide, that I think that administrative law judges should be
    subject to some sort of performance appraisal in a peer review
    way conducted by the chief judges at the agencies. And doing
    that properly would not infringe on their independence.
        I think in this particular program where the caseload
    pressures are so great and efficiency is such an important
    value, I think there is even a stronger reason do it in a
    Social Security Administration program.
        Chairman JOHNSON. Thank you.
        Mr. Becerra, you are recognized.
        Mr. BECERRA. Chairman, thank you.
        And to the witnesses, thank you very much for your
    testimony.
        Judge Frye, I want to ask you about some of your comments
    about this current informal process that is used. I have deep
    concern with what you said about moving toward an adversarial
    system. Let me tell you why, we just heard the commissioner
    tell us that he has a very tight budget, a budget that doesn't
    allow him to do everything he needs to do, which is putting a
    greater load on many of your fellow judges.
        Where would we get the money to pay for the new now
    government attorneys that you would want to have conduct these
    adversarial hearings where now you would have a more formal
    presentation of documents, and it seems to me, not only do you
    increase the cost of going through that administrative appeals
    process now, but you probably prolong it to the point of maybe
    having appeals to the appeals hearing to the different stages
    going up to the Federal courts, in which case now Social
    Security is now having to pay for representation at the court
    level, Federal court level as well.
        I would think that we would want to recognize that, one, we
    are talking about typically the poorest folks in America who
    are the sickest, probably the frailest, who probably do not
    have money to hire really high-powered attorneys, maybe hire an
    attorney, but we are not talking about hiring, you know, the
    Jones & Jones law firm. My sense is that it would be better to
    give you quite a bit of power to conduct the informal hearing
    to try to extract as much information as you can from the
    individual or his or her representative. And therefore, you
    feel comfortable that you can go at that individual if have you
    to go at them pretty harshly or treat them with a little bit
    more care because they may be very ill, in which case what you
    are trying to do is extract the information as best you can, so
    you can come out with the decision. Ultimately, that individual
    still can go above you if he or she is not satisfied with your
    decision, but at least what we do is give you quite a bit of
    discretion to try to come up with a good decision and then, of
    course, deal with the outlier judges who are granting too many
    or too few.
        Judge FRYE. I could give you so many different answers to
    each of the points you make.
        I think, however, with respect to government representation
    and the cost, there would be so much savings from the appeals
    of cases at the higher range that was mentioned earlier, 99
    percent, I suspect you would save billions ultimately. Now,
    there is another built-in savings----
        Mr. BECERRA. Do me a favor, send me whatever you can to
    corroborate what you just said.
        Judge FRYE. We will do the math. And I would be most happy
    to.
        [The information follows: Transcript Insert 4]

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        The other savings, quite frankly, and it is a huge savings,
    we are one of the--my background is with the National Labor
    Relations Board. And I well know the regional office structure
    there and how they function. This agency also has a regional
    office function, the district offices. But in addition, we have
    ODAR, Office of Disability Adjudication, having regional
    offices that performed no direct case adjudications. These are
    very expensive. They are in the most expensive cities in the
    government, occupying the most expensive space. Maybe 30 years
    ago, that layer of management and that layer of bureaucracy was
    okay. I don't think we can afford it anymore. Those resources
    should be in direct----
        Mr. BECERRA. Now, you are going into a little beyond what I
    asked, but fair. I think anything you can tell us that will
    help us reduce cost, I--we would love to hear it. I am
    concerned about moving what is an informal hearing process into
    a very formal adversarial process.
        And Ms. Zelenske, let me see if I can ask you the same
    question because you represent or your organization helps
    represent a lot of claimants that go before the Social Security
    agency for these benefits, disability benefit hearings. What is
    your opinion about moving toward, from an informal non-
    adversarial hearing process to a more formal adversarial
    process, where you would have attorneys on each side going at
    it in front of a judge?
        Ms. ZELENSKE. I did have experience with that in the pilot
    in the mid-1980s, and it didn't really work out the way it was
    intended. It was cases weren't allowed more, and they weren't
    better developed, which I think was one of the bigger issues
    about it.
        If you think about it, the people, the claimants going into
    a hearing are asked very personal questions about their lives
    and what is going on in their lives. And I think you want to
    keep it more as informal as possible. It is still nerve-
    wracking for them when they go into a hearing. It is their day
    in court. It is their day dealing with the government. And you
    want to try to keep it informal.
        I mean, I have to say that from my experience, when I did
    hearings, most of the ALJs weren't adversarial with the
    claimants. They were trying to elicit the information or have
    the representative help get the information out that is
    necessary to make the determination to see if they are eligible
    under the statutory definition of disability. And I think that
    this is why you don't want to turn it into an adversarial
    process.
        Mr. BECERRA. Mr. Chairman, thank you very much. And thank
    you all for your testimony. Please, any information you can
    provide us to help guide us, we would very much appreciate it.
        Chairman JOHNSON. Mr. Marchant, you are recognized.
        Mr. MARCHANT. Thank you, Mr. Chairman.
        Mr. Pierce, can you explain to this member of the committee
    the disincentive or the incentive for a lawyer that takes a
    disability case to resolve the case quickly as opposed to over
    a period of a year or two?
        Mr. PIERCE. As I understand it, there is no incentive to
    resolve it quickly. There is the opposite incentive because the
    fee is dependent on the amount of the past benefits that are
    awarded. And so there is a natural incentive to delay as long
    as possible in order to maximize the potential fee.
        Mr. MARCHANT. So it is just a pretty simple math equation
    for most of the lawyers?
        Mr. PIERCE. That is my understanding.
        Perhaps Professor Lubbers has looked at it in more detail
    than I have.
        Mr. LUBBERS. No, but I think Mr. Astrue reaffirmed that
    position when he talked about most claimants' representatives
    didn't do this, but that some minority did.
        Mr. MARCHANT. And Judge, what was the average age or what
    is the average age of a case once you sit down and begin to
    focus on it? What is the time that has elapsed from the time
    the person called the State, made the claim from that date, and
    then what is the average time of the mature claim, once they
    get to the appeal process?
        Judge FRYE. Of course, it varies depending on the office
    staffing and so forth, but the typical case that I have been
    hearing is somewhere close to 2 years old from the time it was
    filed. And what typically happens once the process that the
    State agencies process the case and they come to the hearing
    level, usually that is when the attorneys get involved and far
    more development is done at that point. I think that is also a
    reason that you see judges' decisions that disagree with some
    of the DDS. It is not because they made a bad decision; it is
    just that there is more evidence at the time the hearing is
    conducted. I think, in most cases, I think you are looking at 2
    years by the time you file the application.
        Mr. MARCHANT. So that person either has a support system in
    place, are the claimants allowed to advance fees, advance
    expenses to the claimants?
        Judge FRYE. No, no. They may in certain circumstances, such
    as I know some lawyers will assist the claimant in getting an
    examination by a medical doctor, for example. But I don't know
    about any direct payment.
        Mr. MARCHANT. Is it legal or illegal?
        Judge FRYE. That is a very good question. I have never had
    it come up before.
        Mr. MARCHANT. That is a very common practice in other parts
    of law. I wondered if it had pervaded this element.
        Judge FRYE. I----
        Mr. MARCHANT. You talk about--what would be the claim
    amount at 2 years?
        Judge FRYE. What would be the attorney's fee at 2 years?
        Mr. MARCHANT. No, the claim.
        Judge FRYE. It would depend on the earnings of course of
    the claimant. It would be the monthly benefit times the--
    whatever number of months back benefits would be payable, so
    there could be a lump payment of $10,000. I have had it as high
    as $30,000 and $40,000.
        Mr. MARCHANT. So we are talking in the $10,000 to $40,000
    range, usually?
        Judge FRYE. Right.
        Mr. MARCHANT. So that is not enough of a financial
    incentive for a lawyer to go out and advance living expenses to
    someone while their case was developing?
        Judge FRYE. I am not sure I can answer that. I don't know.
    If wouldn't be for me, but I am not sure. I couldn't answer for
    all lawyers.
        Mr. MARCHANT. Do any of you know of any situations where
    that is the case?
        Ms. ZELENSKE. I don't think attorneys would be allowed to
    advance, I guess, what you are talking about sort of the cost,
    the benefits, the possible benefits.
        What does happen and I used--my practice was with legal
    services so I never charged claimants fees. And what we would
    do--I think attorneys do that now is there is an agreement if
    you are going to get an independent examination or you have to
    pay for medical records, you have an agreement with the
    claimant that if they win the claim, that they will pay you
    back. We do that even at my Legal Aid office. We didn't have a
    lot of money, but we wanted to get that examination. But I
    don't think you would be allowed to advance living costs like
    you described.
        Mr. MARCHANT. So most lawyers that appear before you,
    Judge, are they single practitioners? Are they in law firms
    that advertise on Sunday nights, late, that have hats on?
        Judge FRYE. All of the above. I think typically it is a
    boutique, small law firm. There are a number of solo
    practitioners, but usually a small firm of three to four to
    five individuals. Oftentimes, it is combined with workers' comp
    practice because they kind of overlap to some extent. For the
    most part, they are highly skilled and competent attorneys who
    appear before us in cases.
        Mr. MARCHANT. I have a sister that I assisted through this
    process years ago, and I found that to be the case. It was a
    sole practitioner. This was his practice. He certainly could
    not have become rich off of this process and seemed sincere in
    trying to get it resolved as quickly as possible, yet it took 2
    years, and it was finally resolved.
        And a big part of our case work still in our district
    offices is this, referring people and assisting people.
        Judge FRYE. I am sure.
        Mr. MARCHANT. After they have been turned down.
        Thank you, Mr. Chairman.
        Chairman JOHNSON. Thank you.
        Professor Lubbers, it is my understanding that the district
    courts should uphold the agency decision if there is evidence
    in the file that supports the decision. Do you believe
    magistrate justices are applying that standard of review?
        Mr. LUBBERS. Well, the APA standard is that if there is
    substantial evidence to support the agency's decision, it
    should be upheld, the substantial evidence test. And I think
    the statistics show that in the Social Security caseload area,
    the district courts are either remanding or reversing at a much
    higher rate than in other programs.
        So why that is, many of these cases do go to the magistrate
    judges first and then to the Social Security judge. Professor
    Pierce made some comments about the courts not holding the
    statutory standard. It may be that these judges don't see that
    many cases individually, so they feel sorry for the claimants
    in those cases.
        Chairman JOHNSON. Is that right?
        Mr. LUBBERS. I think the statistics do show that they do
    not affirm the agency as often as courts do in other programs.
        Chairman JOHNSON. How much fraud do you reckon is in this
    system? Do you have any estimate at all?
        Mr. LUBBERS. I think you should ask the IG.
        Chairman JOHNSON. Yeah, the IG is into it.
        What is the role of the appeals council in setting
    procedural decisions or establishing quality control?
        Mr. LUBBERS. Well, as I understand it, the appeals council
    does mostly hear cases where the claimant has been denied and
    makes an appeal to the Appeals Counsel. But in a small number
    of cases, very small number of cases, the appeals counsel does
    review granted cases, just for quality control purposes. But
    because of their caseload and the denied cases, they can't do
    much of that. So I would like to see them do more of that, and
    I would also like to see them write some decisions that would
    be used as precedent decisions and that those precedent
    decisions would be circulated throughout the administrative law
    judge----
        Chairman JOHNSON. So all the judges could follow them?
        Mr. LUBBERS. Follow it. They would be supposed to follow
    them. And that is, for example, the way--not that this is the
    greatest comparison--but the Board of Immigration Appeals does
    have certain decisions that they make precedential and are
    supposed to be followed by the immigration judges.
        Chairman JOHNSON. Professor Pierce, how is Social Security
    supposed to balance the fact that ALJ decisions should not be
    interfered with as the Administrative Procedure Act requires
    with ensuring consistent outcomes and productivity needed to
    administer this national program?
        Mr. PIERCE. Well, I would start by saying I certainly don't
    think that anybody in the Social Security Administration should
    attempt to influence the outcome of any individual case.
        But it is pretty easy to do what, for instance, the vast
    majority of law schools do to their law professors and say that
    your grades have to be in a particular range, and it is pretty
    easy to conform to those norms. And if the alternative is what
    we now have, an 8.6 percent probability of a yes before one
    judge and a 99.7 percent probability before another, I don't
    think there is any question that due process and equal
    protection of law would be served very well by establishing
    some boundaries within which we expect judges to have grant
    rates.
        Chairman JOHNSON. I appreciate that comment, thank you.
        Mr. Becerra, you have another question.
        Mr. BECERRA. Yeah, a couple questions.
        I want to make sure I dispel any notion that there aren't--
    judges, Judge Frye don't you have some template that you get to
    use? We have Federal district court decisions that have been
    handed down that give you some guidance. My understanding is
    the Social Security Administration also tries to provide you
    with a template where there are screens where you all can sort
    of go through some threshold questions that you have to get--
    you have to answer yourself through these hearings to figure
    out if the claimant has answered those adequately to be able to
    get to the point of saying yes or no, that they should be
    entitled to benefits. So I think the point that Mr. Lubbers
    makes, which I think is a good one, is to try to standardize
    this more so that judges aren't left to their own devices. And
    I think Mr. Pierce has gone to that as well. So you have some
    way of evaluating when a judge does or doesn't grant these
    benefits.
        But I want to stress something, and I think it came out in
    some of the earlier testimony, we are not talking about rich
    folks. And even if these folks win these benefits, we are not
    talking about them getting millions of dollars. As you
    mentioned, it is maybe $10,000 a year, and maybe because they
    didn't get the benefits for the longest time because the
    process took a year or two to finish, they are getting $20,000.
    But most of that is money that they probably have to use to pay
    back family and friends and others that they borrowed money
    from to provide for their assistance while waiting to see if
    the Social Security Administration would grant their disability
    claim.
        The reason I point that out is because I fear that we are
    going to start to treat this the way we treat the regular legal
    system, where we have attorneys going at it, and you figure you
    better get the higher priced attorney who does this all the
    time and you better be prepared to go after them really hard
    because you want to win your case. This is the not the case
    where you are going to come down with a six figure judgment.
    This is very basic benefits, and the folks we are talking about
    are the frailest of the frail.
        And I asked staff to get me some information on the whole
    process itself, and this is from the Social Security
    Administration, where they go through and give their--this is
    2011's disability workloads. They can't give us 2012 because it
    is still ongoing. So, at the initial level, how many people
    submit an application for disability benefits? Excuse me,
    3,295,806 disability decisions were issued by the Social
    Security Administration in 2011. How many of those decisions
    were to allow benefits? Thirty-four percent. Two-thirds, 66
    percent, were to disallow at that initial stage. So, right
    away, two-thirds of all those applicants were denied benefits.
    Of those two-thirds that are denied, some of them say, okay,
    you deny it, that is it. Many will say, wait a minute, I that
    you made the wrong decision, I want you to reconsider. So they
    go to the next level of appeal, which is in many cases
    reconsideration; not every jurisdiction has that interim level
    of reconsideration.
        Appeals to reconsideration--how many of those appeals to
    reconsideration did the Social Security Administration
    receive--853,142. They issued 819,710. Of the 819,710 decisions
    on reconsideration, how many of those were to grant benefits at
    that stage now? Twelve percent; 88 percent of those individuals
    who sought benefits after that initial rejection at the second
    level, how many at the second level of 819,000 decisions, how
    many were allowed? Only 12 percent. So now have you 88 percent
    that is denied. They say, wait a minute, we still think you are
    wrong; what can I do to appeal that? Now you can get to that
    ALJ. This is now at the administrative appeal level. So you are
    now at the third level where you are constantly narrowing down
    the universe of folks who are appealing, and by the way, you
    are now probably getting to the more complicated cases, where
    it is not a simple clear fact of whether you get the benefits
    or not. At the administrative judge level, the hearing level,
    662,775 cases were decided. How many were allowed? Fifty-eight
    percent of those cases were allowed; 13 percent were dismissed;
    29 percent were denied. There are still two other levels of
    appeals, the so-called appeals council, which is much smaller,
    only 103,000 in decisions. Only 2 percent of the individuals
    got allowance of benefits, and then, of course, you go to the
    Federal court from there, where the allowance rate for 13,271
    decisions was 3 percent.
        My point here is to say this: There are different steps
    along the way and every time you narrow the number of folks who
    are appealing because the cases are probably more complicated,
    more severe, and so you have a lot of work, Judge Frye, to do
    because you are dealing with folks that after two stages of
    being told no, they still believe yes, and so you are making
    some very important decisions. That is why some of us believe
    you should be able to be aggressive through an informal
    process, where you can do all the questioning, as Ms. Zelenske
    mentioned, of that individual, the personal questions. Try to
    make it as easy as possible for SSA to come out with a
    decision. But it is a tough process, and I hope we recognize
    that we are dealing with folks who are for the most part very
    poor and very frail. We appreciate your testimony and anything
    you can do to help enlighten us on how to move forward would be
    appreciated.
        Mr. Chairman, it has been a great hearing, as have been the
    previous hearings on this matter. With that, I yield back.
        Chairman JOHNSON. Thank you. I would like to ask unanimous
    consent to enter into the record a report by the Congressional
    Research Service which provides an overview of Administrative
    Judges and how they differ from ALJs and some examples of how
    administrative judges are used by other agencies. Everybody has
    received a copy of that.
        Without objection, so ordered.
        [The information follows: Transcript Insert 5]

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        Chairman JOHNSON. Again, I want to thank you all for being
    here today and for your testimony. I look forward to continuing
    this discussion on ways to secure the future of this important
    program at our next hearing. You know, Social Security is a
    vital part of this Nation, so we need to protect it, and I
    thank you all for being here. With that, the committee stands
    adjourned, thank you very much.
        [Whereupon, at 3:53 p.m., the subcommittee was adjourned.]

        [Submissions for the Record follow:]

                                 David McCaskey

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                          Disability Law Center, Inc.

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                  Federal Administrative Law Judges Conference

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                            Federal Bar Association

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                                    Max Rae

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           Organization of Social Security Claimants' Representatives

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                                  ScottDaniels

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                       MATERIAL SUBMITTED FOR THE RECORD
                           Questions for the Record:
                       The Honorable Michael J. Astrue 1

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                       The Honorable Michael J. Astrue 2

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                                Ethel Zelenske 1

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                                Ethel Zelenske 2

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                         The Honorable D. Randall Frye

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                             Richard J. Pierce, Jr.

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