[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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