[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





                  CONTINUING OVERSIGHT OF THE SOCIAL 
 SECURITY ADMINISTRATION'S MISMANAGEMENT OF FEDERAL DISABILITY PROGRAMS

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

                                HEARING

                               before the

                     SUBCOMMITTEE ON ENERGY POLICY,
                      HEALTH CARE AND ENTITLEMENTS

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 19, 2013

                               __________

                           Serial No. 113-72

                               __________

Printed for the use of the Committee on Oversight and Government Reform





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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington             ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming           DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia                 PETER WELCH, Vermont
THOMAS MASSIE, Kentucky              TONY CARDENAS, California
DOUG COLLINS, Georgia                STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina         MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan        Vacancy
RON DeSANTIS, Florida

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                    Stephen Castor, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

      Subcommittee on Energy Policy, Health Care and Entitlements

                   JAMES LANKFORD, Oklahoma, Chairman
PATRICK T. McHENRY, North Carolina   JACKIE SPEIER, California, Ranking 
PAUL GOSAR, Arizona                      Minority Member
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
JASON CHAFFETZ, Utah                     Columbia
TIM WALBERG, Michigan                JIM COOPER, Tennessee
PATRICK MEEHAN, Pennsylvania         MATTHEW CARTWRIGHT, Pennsylvania
SCOTT DesJARLAIS, Tennessee          TAMMY DUCKWORTH, Illinois
BLAKE FARENTHOLD, Texas              DANNY K. DAVIS, Illinois
DOC HASTINGS, Washington             TONY CARDENAS, California
ROB WOODALL, Georgia                 STEVEN A. HORSFORD, Nevada
THOMAS MASSIE, Kentucky              MICHELLE LUJAN GRISHAM, New Mexico


























                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 19, 2013................................     1

                               WITNESSES

Mr. Patrick P. O'Carroll, Jr., Inspector General, Social Security 
  Administration
    Oral Statement...............................................     6
    Written Statement............................................     8
Mr. Glenn E. Sklar, Deputy Commissioner, Disability Adjudication 
  and Review, Social Security Administration
    Oral Statement...............................................    16
    Written Statement............................................    18
Mr. Jasper J. Bede, Regional Chief Administrative Law Judge, 
  Region III Office of Disability Adjudication and Review, Social 
  Security Administration, Accompanied by Marianna Lacanfora, 
  Acting Deputy Commissioner, Office of Retirement and Disability 
  Policy
    Oral Statement...............................................    29
    Written Statement............................................    31

                                APPENDIX

The Hon. James Lankford, a Member of Congress from the State of 
  Oklahoma, Opening Statement....................................    66
The Hon. Jackie Speier, a Member of Congress from the State of 
  California, Opening Statement..................................    68
Chart Submitted for the Record by Mr. Sklar......................    73

 
     CONTINUING OVERSIGHT OF THE SOCIAL SECURITY ADMINISTRATION'S 
              MISMANAGEMENT OF FEDERAL DISABILITY PROGRAMS

                              ----------                              


                       Tuesday, November 19, 2013

                  House of Representatives,
    Subcommittee on Energy Policy, Health Care and 
                                      Entitlements,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:10 a.m., in 
Room 2154, Rayburn House Office Building, Hon. James Lankford 
[chairman of the subcommittee] presiding.
    Present: Representatives Lankford, Jordan, Walberg, 
Farenthold, Speier, Duckworth, Horsford and Lujan Grisham.
    Staff Present: Ali Ahmad, Communications Advisor; Brian 
Blase, Senior Professional Staff Member; Molly Boyl, 
Parliamentarian; Lawrence J. Brady, Staff Director; Daniel 
Bucheli, Assistant Clerk; Sharon Casey, Senior Assistant Clerk; 
John Cuaderes, Deputy Staff Director; Adam P. Fromm, Director 
of Member Services and Committee Operations; Linda Good, Chief 
Clerk; Christopher Hixon, Deputy Chief Counsel, Oversight; Mark 
D. Marin, Director of Oversight; Emily Martin, Professional 
Staff Member; Laura L. Rush, Deputy Chief Clerk; Sharon 
Meredith Utz, Professional Staff Member; Jaron Bourke, Minority 
Director of Administration; Aryele Bradford, Minority Press 
Secretary; Adam Koshkin, Minority Research Assistant; Suzanne 
Owen, Minority Senior Policy Advisor; and Brian Quinn, Minority 
Counsel.
    Mr. Lankford. The committee will come to order.
    I want to begin this hearing by stating the oversight 
mission statement. We exist to secure two fundamental 
principles: First, Americans have the right to know the money 
Washington takes from them is well spent; and second, Americans 
deserve an efficient, effective government that works for them. 
Our duty on the Oversight and Government Reform Committee is to 
protect these rights. Our solemn responsibility is to hold 
government accountable to taxpayers because taxpayers have the 
right to know what they get from their government.
    We will work tirelessly in partnership with citizen 
watchdogs to deliver the facts to the American people and bring 
genuine reform to the Federal bureaucracy. This is the mission 
of the Oversight and Government Reform Committee.
    Social Security Administration oversees two large Federal 
disability programs, Social Security Disability Insurance 
Program and the Supplemental Security Income Program, both of 
which have grown rapidly over the last 25 years. The growth in 
these programs is a significant threat to the truly disabled, 
who are often pushed to the back of the line, and who face 
large benefit cuts in the future if the program is not reformed 
and reformed quickly.
    Rapid growth in these programs corresponds to a period of 
time when the typical job became less physically intensive, and 
the health of Americans nearing retirement improved. The 
consensus of expert academics and researchers from across the 
political spectrum attribute a large portion the growth of the 
program to a slower economy and a more subjective criteria for 
entry.
    In June, this subcommittee held its first oversight hearing 
related to the Social Security Administration's management of 
these programs. At that hearing the committee heard testimony 
from two former and two current administrative law judges. The 
testimony revealed significant problems in the Social Security 
appeals process, an avenue by which more 300,000 applicants 
typically gain access to the program each year.
    One overarching theme of the testimony was that the 
agency's push to reduce the backlog had an unintended 
consequence of judge putting too many people onto the program 
who are able to get back to work. In subsequent months 
committee staff received numerous briefings from agency 
officials and conducted three transcribed interviews with 
Social Security Administration law judges.
    The committee has learned that some judges employ shortcuts 
and do not consider all the evidence available prior to 
reversing a previous decision. It is important to emphasize the 
disability cases typically only reach ALJs after applicants 
have been denied twice at the local disability determination 
level. Moreover, for all practical purposes, an ALJ decision to 
allow benefits is an irrevocable commitment of taxpayer funds 
since payroll decisions are not appealed, and less than 1 
percent of disability beneficiaries ever return to the 
workforce.
    The committee's most recent transcribed interview is with 
regional Chief Administrative Law Judge for Region III, Jasper 
Bede. Judge Bede testified that if a judge's reversal rate is 
anything over 75 percent to 80 percent, or the judge disposes 
of more than 700 cases a year, it raises a red flag that the 
judge my be issuing poor-quality decisions. Two other judges 
interviewed by the committee testified that judges who decide 
over 700 cases a year are not doing a thorough job in 
evaluating all the evidence.
    The committee obtained Social Security adjudication data 
back to 2005. Some simple statistics indicate a substantial 
problem. For instance, between 2005 and 2012, more than 930,000 
individuals were approved for benefits by a judge with an 
approval rate in excess of 80 percent. In fact, more than a 
third of the agency's judges have approved more than 80 percent 
of applicants in at least 1 year. Between 2005 and 2012, nearly 
500,000 individuals were approved for benefits by a judge who 
disposed of more than 700 cases in a year.
    During his interview Judge Bede singled out seven judges in 
Region III. His disposition data was indicative of a problem 
with their decisionmaking. But Judge Bede also testified that 
he was powerless to do anything with these judges because the 
of agency policies and management.
    These problems raise three important questions: Did the 
agency fail to stop red flag judges because the agency is 
focused on processing as many cases as possible? Who has been 
held responsible for allowing hundreds of judges to essentially 
rubber-stamp people on the program for years? Will the agency 
prioritize continuing disability reviews, CDRs, for individuals 
who have gained access to the program because of one of these 
judges?
    In addition to prioritizing medical CDRs for individuals 
approved by red flag judges, the agency should immediately 
suspend several judges and conduct a review of the decisions 
and practices.
    While some reforms to correct the broken disability 
determination process will need congressional action, there are 
many steps the agency can unilaterally take to better protect 
American tax dollars and those most in need. Unfortunately the 
agency is moving very slowly to adopt needed changes and to 
clarify perverse regulations.
    The decision grid has not been significantly revised since 
the 1970s. Although hearings are nonadversarial, the agency has 
not required that claimants and their representatives submit 
all evidence, favorable and unfavorable, in advance. Moreover, 
it should not take the agency more than 4 months to reply to 
questions for the record to this committee as it did for this 
last hearing.
    I hope today's hearing will provide the committee with some 
clarity about the agency's plan to move forward and, quite 
frankly, what we in Congress can do to help in the process.
    Social Security Disability serves the most vulnerable in 
our Nation, and the individuals who are sitting in front of me 
have committed their life to protecting those individuals and 
helping in any way we can, and we are grateful for your 
service. And we are hopeful that this conversation today will 
be a conversation on how we can continue to protect those most 
vulnerable. But we cannot ignore glaring issues that are 
driving the program into insolvency. If we do not aggressively 
deal with the fraud, costly mistakes and legislative fixes 
required, we will see those in greatest need put in tremendous 
risk. I believe it is time to fix the system, and we intend to 
work with this administration in a bipartisan way to prioritize 
these solutions today.
    Mr. Lankford. With that, I would like to recognize the 
very-not-feeling-good ranking member from California Mrs. 
Speier.
    Ms. Speier. Mr. Chairman, thank you. Thank you for holding 
this hearing. I thank all the witnesses for participating. And 
I want to commend the chairman for not suffering from attention 
deficit disorder, which is typically what happens here when you 
take an issue on, you have one hearing, and you go away. You're 
sticking to it, I'm proud that you are, and as a partner want 
to make sure we fix this as well.
    Having said that, disability insurance benefits are a 
lifeline, a true lifeline, for millions of Americans who can no 
longer work in any capacity because of a serious disability. 
This is a benefit that American employees pay for, and we need 
to remember that, through their FICA taxes. While the number of 
applicants and beneficiaries have increased over the past 
several years, this was an increase that was projected more 
than 20 years ago as a result of my generation of baby boomers 
that have become more susceptible to disabilities as they have 
aged and the fact that there are an increasing number of women 
in the workforce.
    Every program needs vigorous oversight and strong policies 
in place to prevent waste, fraud and abuse. Again, I commend 
the chairman for focusing on this issue. But it is also 
important to note that the Social Security Administration has 
initiated significant efforts to improve management, oversight 
and accountability for the disability adjudication and review 
process, particularly since we last met.
    For instance, the agency is reviewing the quality of ALJ 
decisions to ensure their legal sufficiency, and Appeals 
Council reviews ALJ's decisions and provides useful feedback to 
individual ALJ's regarding the quality of their decisions and 
to the agency regarding its policy guidance.
    The recently created Division of Quality conducts reviews 
of ALJ award decisions before the benefits go out and conducts 
discretionary reviews of denial decisions. These reviews help 
ensure the quality of ALJ decisions and allow the agency to do 
a focused review of specific issues related to the hearing 
process at a hearing office or with a specific ALJ.
    In addition, SSA has initiated efforts to address concerns 
raised by ALJ's and others regarding some disability 
adjudication and review policies. For instance, the SSA has 
noticed a proposed rulemaking that will require a claimant to 
submit all evidence that relates to their disability claim in a 
timely manner. This regulation will enhance the accuracy of 
disability determination and address the concerns that some 
claimants or their representatives are withholding evidence 
that may not be favorable to their claims.
    The fact is that the national allowance rates have gone 
down since 2008 from 61 percent to 47 percent, its lowest rate 
since the 1990s. It's important to ensure that these 
determinations are done fairly and thoroughly, but it is 
equally important to ensure that ongoing benefits are proper.
    And let me emphasize this: Continuing disability reviews, 
which are periodic reviews of disability awards to determine if 
the beneficiary continues to meet the disability criteria, are 
critical--and I underscore that--critical to the integrity of 
the system. Unfortunately there are too few of them. These 
reviews are highly effective means for reducing overpayments or 
identifying fraud.
    We know that this system is at a tipping point. We do not 
want to see these benefits reduced for those who legitimately 
should be receiving Social Security Disability. So if we 
actually focus in on CDRs, we can save money and make sure that 
those who deserve these benefits receive it. In fact, for every 
dollar spent on CDRs yields $9 of program savings. According to 
the IG, SSA could have avoided paying $556 million in 2011 if 
they just performed medical CDRs in the backlog when they were 
due. So it is more than troubling to hear that there is 1.3 
million backlog of scheduled CDRs this year.
    It borders on outrageous to learn that these benefits are 
still being paid to some who have died or who have been 
incarcerated. Let's be clear: This is partly Congress' fault. 
Funding for the SSA has fallen dramatically in the past 2 
fiscal years. It is up to Congress to provide the funding the 
agency needs to fulfill its mandate to effectively monitor 
program integrity and save taxpayer dollars.
    I hope my chair and colleagues would agree that given the 
clear cost-benefit analysis provided by the inspector general, 
we should ensure that the agency has sufficient funds to 
conduct all of its scheduled CDRs and continue other program 
improvements that have allowed it to reduce its backlog and 
increase efficiencies, while improving program integrity.
    But even in the context of overall improvement, there 
clearly is still abuse of the system by some bad actors. A 
recent investigation conducted by the U.S. Senate Homeland 
Security and Government Affairs Committee and the Senate 
Permanent Subcommittee on Investigations identified evidence 
related to a scheme to defraud SSA in implicating a law firm, 
an ALJ in Huntington, West Virginia, and doctors. As Senator 
Tom Carper, chairman of the committee, stated, ``While we don't 
have any evidence that this is more than an isolated case, one 
example of inappropriate action of this nature is one too 
many.''
    I look forward to hearing from our witnesses on how we can 
work together to continue this trend of improvement.
    Mr. Lankford. Thank you.
    Mr. Lankford. Committee members will have 7 days to submit 
open statements for the record.
    Mr. Lankford. We will now recognize our panel today. 
Patrick O'Carroll, Jr. is the inspector general at the Social 
Security Administration. Thank you for being here.
    Mr. Glenn Sklar is the Deputy Commissioner for Disability 
Adjudication and Review for the Social Security Administration. 
You have a return engagement for being here, so I appreciate 
you being here again.
    Judge Jasper Bede is the Regional Chief Administrative Law 
Judge for Region III, Office of Disability Adjudication and 
Review, Social Security Administration. Thank you for being 
here.
    Marianna LaCanfora--is that right----
    Ms. LaCanfora. That's right.
    Mr. Lankford. --is the Acting Deputy Commissioner for 
Retirement and Disability Policy of the Social Security 
Administration. Ms. LaCanfora is not testifying today as far an 
opening statement, but is open to doing questions. So pursuant 
to that, as far as answering questions as well, we swear in all 
witnesses according to committee rules. If you would please 
stand and raise your right hand.
    Do you solemnly swear or affirm that the testimony you're 
about to give will be the truth, the whole truth, and nothing 
but the truth so help you God?
    Thank you. You may be seated.
    Let the record reflect the witnesses have all answered in 
the affirmative.
    In order to allow time for discussion, I'm going to ask you 
to limit your testimony to 5 minutes. You see a little clock in 
front of you. That will tick down from 5 to zero. You will a 
little red light that comes on when you get to zero. We would 
like to be as close as possible. We will have a little bit 
leniency, but we like to have plenty of opportunity for 
questions as we go through this.
    With that, Mr. O'Carroll, we recognize you first for an 
opening statement.

             STATEMENT OF PATRICK P. O'CARROLL, JR.

    Mr. O'Carroll. Good morning Chairman Lankford, Ranking 
Member Speier and members of the subcommittee.
    This fiscal year SSA projects that it will pay about $190 
billion to 18 million disabled workers, their dependents and to 
disabled SSI recipients, and receive about 3 million new 
disability claims. Determining who's eligible for benefits and 
who continues to be eligible is an overwhelming task. My office 
has spent over 18 years conducting audits and investigations 
aimed at helping SSA perform this duty as quickly, carefully 
and as accurately as possible.
    Looking first to those already receiving benefits, my 
office has long urged SSA to conduct more continuing disability 
reviews, or CDRs, and more SSI redeterminations. We 
consistently encourage Congress to fund these critical reviews. 
With the return on investment of 9 to 1, appropriations for 
these reviews are a sound fiscal policy.
    After dedicated funding ended in 2002, CDRs and SSI 
redeterminations declined over 60 percent, creating a 
significant backlog. While SSA has been conducting more reviews 
since 2009, the backlog has nevertheless continued to grow. As 
a result, SSA continues to make payments that could be avoided.
    For example, according to past audit work, about $3.3 
billion in SSI payments could have been avoided in just a 2-
year period, and up to $1.1 billion in disability benefits 
could have been avoided in 2011 alone.
    The OIG doesn't merely focus on CDRs and redetermination; 
we provide sound reasons for funding and conducting them. For 
example, in a recent review we found that SSA hadn't conducted 
79 percent of childhood CDRs and 10 percent of age 18 
redeterminations within the timeframes required by law, with 
the cost over 4 years was $1.4 billion.
    Payments made because of delayed reviews of current 
beneficiaries are troubling because they are largely avoidable, 
but payments made to people who should never have been awarded 
benefits at all is equally troubling. We focus closely on the 
Office of Disability Adjudication and Review and administrative 
law judges in our audit work to help SSA ensure that 
undeserving applicants do not receive disability benefits.
    For example, we recently issued a report on risk factors at 
hearing offices, and we found that while ODAR had created 19 
separate ranking reports that measured hearing office 
performance using individual risk factors, it did not combine 
these risk factors to better identify problem areas. As a 
result of that, we are conducting an audit that does just that. 
We believe the new model that analyzes multiple risk factors 
will help to identify outlier offices as well as hearing 
offices with best practices that can be emulated.
    My written statement identifies more audits planned for 
fiscal year 2004 and beyond, all aimed at helping ODAR continue 
to improve the timeliness and accuracy of its decisionmaking. I 
would be remiss, however, if I did not point out that 
disability fraud is the issue my office confronts on a daily 
basis.
    Individuals committing disability fraud is disturbing 
enough, but doctors, lawyers and other third parties who 
facilitate fraud for scores or hundreds of beneficiaries is 
intolerable. A recent operation in Puerto Rico illustrates how 
a handful of facilitators can put many ineligible people on the 
disability rolls, and our work in the Commonwealth isn't 
finished. Nor is our work elsewhere, as you might have seen in 
recent news headlines and stories. While I can't discuss these 
open cases, I can tell you they both remain very much active.
    Moreover, in July, we launched a disability fraud pilot. 
Its sole mission is to identify, investigate and prosecute 
doctors, lawyers, interpreters and others who commit large-
scale fraud. Meanwhile our long-standing and highly successful 
Cooperative Disability Investigations, or CDI units, continue 
to try and identify fraudulent applications before benefits are 
ever paid. Since the program was established in 1998, CDI 
worked nationwide and has resulted in projected savings of $2.5 
billion. I am happy to discuss the CDI program in more detail 
today if you have any questions.
    Through our audit and investigative work, our disability 
fraud pilot and our CDI units, we will keep working with SSA 
and the subcommittee to improve the disability programs and to 
reduce fraud, waste and abuse. I thank you again for this 
opportunity to testify, and I'll be happy to answer any 
questions.
    Mr. Lankford. Thank you.
    [Prepared statement of Mr. O'Carroll follows:]


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    Mr. Lankford. Mr. Sklar.

                  STATEMENT OF GLENN E. SKLAR

    Mr. Sklar. Chairman Lankford, Ranking Member Speier, 
members of the subcommittee, my name is Glenn Sklar, and I'm 
the Deputy Commissioner for the Office of Disability 
Adjudication and Review. In this capacity I oversee SSA's 
hearings and appeals operations. It has been my honor to serve 
for over 22 years in an agency where our mission affects nearly 
every American.
    From my start at Social Security as one of the founding 
members of Social Security's Office of Inspector General to my 
time working as a top executive with the quality component, to 
my current role leading the hearings and appeals operation, I 
have done my best to balance the demands of delivering high-
quality work in a high-volume, public service environment.
    With me today is Jasper Bede, the Regional Chief 
Administrative Law Judge in the Philadelphia region, as well as 
Marianna LaCanfora, Acting Deputy Commissioner for the Office 
of Retirement and Disability Policy.
    When I came to the hearings and appeals operation in 2010, 
I found an organization that was in transition. In 2007, 
Congress made it abundantly clear that we were morally 
responsible for getting timely answers to Americans whose lives 
hung in the balance. Some claimants were waiting as long as 
1,400 days for an answer.
    Our hearing operation has made and continues to make 
significant and substantial progress in addressing the quality, 
accountability and timeliness of our hearing decisions. We have 
steadily reduced the average wait time for a hearing decision 
from a high of 512 days in fiscal year 2007 to just 375 days in 
fiscal year 2013. This progress was made while handling a 
staggering 800,000 requests for a hearing annually.
    My repeated message for employees is that we're accountable 
for providing quality decisions, meaning timely, policy-
compliant, legally sufficient, and factually accurate 
decisions. To help our employees to meet that expectation, 
we've improved our hiring processes, updated how we train, 
developed tools to give judges policy feedback, established a 
Division of Quality, and begun collecting and analyzing data, 
mountains of data, to truly measure how we were doing.
    We have capped the number of cases an ALJ may be assigned 
to clearly signal that more than speed matters. Data, not 
supposition, show that we have closed loopholes and improved 
feedback and consistency. For denial decisions we have seen 
increasing concordance between ALJ decisions and the Appeals 
Council. We have increasing amounts of data to detect areas of 
noncompliance on allowances. We're using that data to provide 
better feedback to our decisionmakers.
    Our ALJs have qualified decisional independence to enhance 
public confidence in the fairness of our process, and to ensure 
that ALJs reach their decisions free from pressure to reach a 
particular result. ALJs must, however be consistent with the 
law and agency policy. In addition, we successfully tested our 
authority to manage ALJs and hold them accountable in cases 
brought to the Merit Systems Protection Board.
    Fortunately, most ALJs want feedback and information that 
will help them accomplish the dual responsibilities of 
timeliness and quality. To help our ALJs, we are taking a 
number of steps such as emphasizing the need for policy 
compliance, providing quarterly training on difficult topics 
and annual training for a significant percentage of ALJs, 
giving ALJs access to realtime data that highlight where they 
might be making mistakes and encouraging them to self-correct, 
in standardizing the electronic business process and developing 
an electronic bench book to help judges work electronically.
    We also established a Division of Quality that reviews a 
statistically valid sample of favorable determinations for 
accuracy and policy compliance before the money goes out the 
door. We've reduced the maximum number of cases that we assign 
to our ALJs each year to 840 cases per ALJ. And we started 
collecting and analyzing data to determine how we can make the 
hearings and appeals process better.
    Making disability decisions for Social Security is a 
challenging and complex task. I am proud of our ALJs to rise to 
the challenge every day. Thank you for inviting me here today, 
and I stand ready to answer any questions you might have.
    Mr. Lankford. Thank you.
    [Prepared statement of Mr. Sklar follows:]


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    Mr. Lankford. Mr. Bede.

                  STATEMENT OF JASPER J. BEDE

    Judge Bede. Chairman Lankford, Ranking Member Speier and 
members of the subcommittee----
    Mr. Lankford. Sorry to interrupt you. Could you pull your 
microphone a little closer to you there? 
    Judge Bede. Is that better?
    Okay. Again, Chairman Lankford, Ranking Member Speier and 
members of the subcommittee, my name is Jasper J. Bede. I serve 
as the Chief Administrative Law Judge for Region III, the 
Philadelphia region. I have been in this position with the 
Social Security Administration since April of 2006. Prior it 
that I served as a hearing office Chief Administrative Law 
Judge in the Wilkes Barre, Pennsylvania, hearing office from 
2002 to 2006. I was appointed to the position of Administrative 
Law Judge in 1999 after working in the Social Security 
Administration as an appeals officer, supervisory attorney 
advisor, and an attorney advisor. Prior to my service with the 
Social Security Administration, I served as an officer in the 
United States Army.
    Region III includes Delaware, the District of Columbia, 
Maryland, Pennsylvania, Virginia and West Virginia. The 
population we serve in Region III is a reflection of the wider 
population of the United States. We serve clients from farm 
laborers and coal miners to medical researchers and software 
designers. Many of the claimants who appear before our judges 
have unskilled work backgrounds and less than a high school 
education; however, we also see claimants who have achieved the 
highest level of education and worked in the most skilled 
professions.
    Region III has 18 hearing offices, 150 administrative law 
judges, and approximately currently 742 support staff. Our 
pending caseload is now over 99,000 cases, and in fiscal year 
2013, we closed 80,753 cases with an average processing time of 
407 days.
    Region III ranks as first in the Nation in quality 
measures, with an average 87.7 percent Appeals Council agree 
rate, and we also have the first- and second-ranked hearing 
offices in the Nation in our Johnstown, Pennsylvania, and Seven 
Fields, Pennsylvania, hearing office.
    As the Chief ALJ Region III, my job is to make our offices 
best serve the claimants and contribute to ODAR's mission of 
providing timely and quality service to the public. I 
frequently visit hearing offices in my region, and I emphasize 
our goals of providing timely, policy-compliant decisions. I 
set up one-on-one meetings with our new ALJs, any new ALJs in 
my region, and I make myself available to all staff.
    With regard to the ALJs, if I learn of an issue, I work 
with the hearing office Chief Administrative Law Judge to 
discuss the issues and assist the affected administrative law 
judge. If informal discussions with the ALJ do not correct the 
problem, I may counsel the ALJ or issue a formal reprimand. For 
more serious issues I can request that the Chief ALJ initiate 
proceedings with the Merit Systems Protection Board.
    Thank you for the opportunity to be here today, and I would 
be happy to answer any questions that you may have.
    Mr. Lankford. Thank you.
    [Prepared statement of Judge Bede follows:]


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    Mr. Lankford. We're going to do several rounds of 
questioning today. So our goal is that everyone will have about 
5 minutes to be able to jump in a round of questions, and after 
that's concluded, we'll open it up to a broader conversation 
for all of us.
    Mr. Sklar, there is no question you walked into a 
situation; your leadership, we're grateful for your background, 
your experience. I've spoken to several people in multiple 
different regions across SSA, and they all have great respect 
for you. That's a good word. So I'm grateful that you're there 
and in that position, but you're in this position to be a 
leader for this system, and we need a leader for the system. 
You see it full well. You've already taken actions for some of 
these things.
    So the push that we're going to go have today is not 
personal to you at all. This predates you and your leadership 
by far, and there are issues that we need to deal with on this.
    We have several things that are all coming down on us. One 
is we've had a bottleneck of getting into the system, which is 
a flood of people that have applied through both a generational 
shift and I would say also an openness that it appears it's 
easy to get on, and so even more people are trying to jump into 
the system to test it and find out how easy it is to be able to 
get on. And the second part of this is the CDR reviews, those 
reviews coming in. So we've got two bottlenecks on either side 
of this, and we're getting an awful lot of people into the 
middle of it, and we have to be able to process this.
    I want to talk a couple of these things on it. Judge Bede, 
you had several high-performing, let's say, judges that are 
in--that were in your district on it. Judge Bridges, who, when 
we run the numbers on it--we just looked at the testimony that 
you gave to us--75 to 80 percent. If they are doing a reversal 
rate that high, that should raise some sort of a red flag, do 
you agree with that, if you got an 80 percent reversal rate as 
a judge, of reversing the two previous decisions?
    Judge Bede. Well, without being specific to Judge Bridges 
or any other administrative law judge, if we have reversal 
rates that high currently, that would raise some questions. It 
would be an indicator, but it wouldn't necessarily indicate, 
establish that the decisions being made are wrong. Each case 
has to be looked at individually. And it is possible to sit on 
the bench and find 45 people in a row are disabled and 2 weeks 
later find 25 people in a row are not disabled.
    Mr. Lankford. Right.
    Judge Bede. It's each individual case.
    But a very high production rate with a very high reversal 
rate or a very low reversal rate does raise some questions.
    Mr. Lankford. Our observation, obviously, is they've 
already been denied twice. We've had two folks that have gone 
through their files, that have looked through, that are on the 
State level trying to evaluate it. And they go through this 
third process, and if they are reversing 80 percent of the time 
previous, there is either a problem on the previous side, or 
there's a problem on the judge's side, but that seems like a 
very high percentage.
    Judge Bede. Since you chose a Pennsylvania judge----
    Mr. Lankford. I can----
    Judge Bede. No, I want to indicate----
    Mr. Lankford. Let me just say this----
    Judge Bede. Because in Pennsylvania they would only be 
denied once.
    Mr. Lankford. Okay. That's good to know actually. But on 
several of these, when I go through it, we ran just from 2005 
on, a typical case, once they're approved, is about $300,000 in 
lifetime benefits. And so we just tried to run through the 
actual cost of this. This is not a scientific number, this is a 
ballpark number.
    So Judge Bridges basically since 2005 has approved about 
$4.5 billion in benefits; Judge Daughtry, 2005 to 2011, I see 
$2.5 billion; Judge Taylor, $2.5 billion. So we are dealing 
with very serious dollars on it. Not all of those are 
incorrect, I'm not trying to accuse that, but there are 
significant amounts. If we looked at all judges nationwide that 
did an 80 percent approval rating or higher, if we just took 
maybe even the 10 or 15, almost 20 percent for some that are 
above 80 percent, there's still about $100 billion that we have 
questions on to say this is a very high approval rating. And so 
a lot of our questions are just going to process through how is 
this happening either early in the process that they're being 
denied when they shouldn't be, and so it's become more 
difficult for someone who is truly disabled to get into the 
system, or how is it there's such a high reversal of that?
    Mr. Sklar, do you want to jump in on that at all just for 
perspective? 
    Mr. Sklar. Just to add a little bit of perspective, I would 
draw your attention to my written testimony, and there is a 
chart there, and I think you've seen that chart before. It may 
look a little bit different in that there's even fewer outliers 
on that chart than the last time I was before this committee. I 
think it is a fairly dramatic retrenchment----
    Mr. Lankford. But there has been a significant change in 
the last couple of years, and we're grateful for that, just the 
attention to be paid to it.
    Mr. Sklar. I think so. If you look at the global level, 
some of the practices we put in place are really starting to 
have an impact. Even looking at this eye chart, you notice the 
case cap coming into effect and biting down. It's about a 50 
percent reduction on the number of cases that at one particular 
ALJ was handling.
    It's tough. It's a very large system. It has variability 
bill in it; it's meant to. Judges have qualified decisional 
independence drawing off a congressional statute, the 
Administrative Procedures Act. So you do the best you can with 
the system you have and try to put in rational ideas in light 
of some of the constraints we have.
    Mr. Lankford. Okay. Yield to the ranking member.
    Ms. Speier. Thank you, Mr. Chairman.
    Along the same lines let me ask you, Mr. O'Carroll, do 
these appear to alarm you when you have those kinds of approval 
rates or reversals of decisions made in the States? And if they 
do, what steps should be taken to determine whether or not the 
quality of the decision has been accurate?
    Mr. O'Carroll. Ranking Member Speier, on those, again, 
probably where we started down the road with these was in 2008 
we did an audit where we took a look at the hearing offices and 
the rates of the different offices on it. At that time there we 
were taking pretty much a look at the bell curve of it and 
where the vast majority of, you know, decisions were being 
made, the numbers that were being done on it. And, again, we 
were trying to give management information to ODAR that they 
could use in terms of what are the outliers on it. And, again, 
when you're starting to take a look at the outliers that are 
doing a lot of approvals or a lot of denials, in both cases we 
wanted the quality reviews for ODAR to be taking a look at them 
for a couple of reasons.
    Ms. Speier. I have limited time, and I've a lot of 
questions to ask you. What should the quality review encompass? 

    Mr. O'Carroll. Well, that should be taking a look at the 
encompassing on it. They can't target, that's the other issue, 
because of judicial independence. You can't just say that we're 
going to take a look at every one of the hearings of this judge 
because they're at that level.
    What they can be doing is they can be taking a look at 
trends, they can be taking a look at high numbers or whatever 
and giving advice back. And we've asked them do it, and they 
are doing it now. There's a quality review section that we work 
with at times to be--again, to find more information on the 
outliers.
    Ms. Speier. All right. So you approve of the quality review 
that's going on right now?
    Mr. O'Carroll. Yes, I do.
    Ms. Speier. Anything more that should be happening in that 
regard?
    Mr. O'Carroll. Yes. We're telling them that there's about 
19 things that they take a look at on terms of decisions, and 
what we're saying to them is that they ought to narrow it down 
to maybe 4 or 5 major ones on it and then be taking a look at 
that as, again, to help on picking out outliers, because as it 
is now, it is like a large scoreboard. We're telling them to 
take a fewer number of them and take a look at those specific 
things.
    Ms. Speier. Would you provide that to the committee?
    Mr. O'Carroll. Yes, I will.
    Ms. Speier. All right. You referenced Puerto Rico. How did 
that come into focus for you? Was there a whistleblower, or was 
it just something you just at some point decided to review?
    Mr. O'Carroll. I think Puerto Rice is a good example of, 
you know, government at its finest. What happened was with 
Puerto Rico--two things happened really. One was is that noted 
in the DDS in Puerto Rico, the disability determination center 
there started noticing that they were getting the same type of 
diagnoses coming in on all the different people applying for 
benefits at the time coming from this one specific doctor. They 
brought it to our attention, we started taking a look at it, 
and pretty much at the same time period the press was taking a 
look at which offices were doing very high--which States were 
coming up with very high allowances of disability, and that 
resulted in some media attention that was going on at the same 
time.
    Ms. Speier. So let me ask you this: When there has been, as 
you pointed out, billions of dollars of payments made 
inappropriately, when we then go back to try and get repayment 
or refund, what percentage of those individuals are in a 
capacity to refund, and do we put liens on their property? What 
do we do to get the money back that they had received 
inappropriately?
    Mr. O'Carroll. Well, there's a number of ways on it. One is 
that if it's criminal, we'll make it a decision of the court to 
pay it back. If it's civil, and we go in civil monetary 
penalties, if the person has resources, we'll fine them, and 
we'll be asking for fines on top of whatever was paid 
incorrectly. SSA will then establish an overpayment on it, and 
that overpayment will be paid back if they have the resources 
on it, or if they don't have the resources on it, if they ever 
get any benefits in the future, it will be taken away from any 
future benefits on it. As you can probably tell, Congresswoman, 
a lot of the resources on these people here----
    Ms. Speier. Is limited, right?
    Mr. O'Carroll. It is limited.
    Ms. Speier. So the likelihood of getting repayment is not 
very good. So I guess I'm trying to look at ways of 
discouraging the fraudulent applicant from even coming forward.
    Mr. O'Carroll. We agree.
    Ms. Speier. Whether it is a notice to them on the 
application that if, in fact, it is found that you are 
fraudulent in your actions here, that these are the kinds of 
things that you will be subject to, something to kind of scare 
them into not moving forward. And I'd love your thoughts on 
that at a later point.
    Mr. O'Carroll. Okay, because we believe, as with Puerto 
Rico, it's a good deterrent on it, and also our belief is to 
stop it before they go out in terms of what we have at the CDI 
units that I'll talk about later to stop it before benefits----
    Ms. Speier. So the CDR, there's this huge backlog. How much 
money would we have to set aside so that these CDRs could be 
appropriately handled and save us $9 for every $1 we spend?
    Mr. O'Carroll. I'd have to get back to you on the exact 
amount that what it is. What we're asking for is them to be 
doing more than 500,000 CDRs a year. We would like that to be 
doubled, and that would then have a better effect.
    Ms. Speier. Maybe in an subsequent conversation we can ask 
Mr. Sklar.
    Mr. Lankford. I will just do that right now, if that's okay 
with you.
    Mr. Sklar, do you know the number on that.
    Ms. LaCanfora. If I might respond?
    Mr. Lankford. We've brought a technical expert with you. 
Thank you.
    Ms. LaCanfora. So in the fiscal year 2014 President's 
budget, we have a request. We call it the Program Integrity 
Administrative Expense Proposal, and we are asking for $1.2 
billion. If we were to get that money, we would be able to do 
just over 1 million medical CDRs.
    Ms. Speier. And you project what kind of savings from that?
    Ms. LaCanfora. Oh, that I don't have off the top of my 
head, but I can get you that.
    Ms. Speier. Well, if it's $9 for every $1, we can basically 
make that case.
    Ms. LaCanfora. Yes.
    Mr. O'Carroll. It could be even be more than that.
    Mr. Lankford. Your recommendation on this is 500,000; you-
all's request is a million.
    Mr. O'Carroll. No, I had said double.
    Mr. Lankford. Okay.
    Ms. LaCanfora. So this year we did almost 500,000, so----
    Mr. Lankford. Okay, got it. So it's an additional 500,000 
then.
    Mr. O'Carroll. Yes, Mr. Chairman.
    Mr. Lankford. Thank you.
    I yield to Mr. Farenthold.
    Mr. Farenthold. Thank you very much. And I would like to 
follow up on the CDRs for a second as well. You said there's a 
huge backlog. Did I miss the number? Do we have the number that 
we need to be doing?
    Mr. O'Carroll. Yes, Congressman, 1.3 million is what the 
backlog is right now.
    Mr. Farenthold. I just want to make sure I copied that 
correctly.
    Now, Mr. O'Carroll, let me ask you this: So as you go 
through the CDRs, you're finding folks who have either gotten 
better--but, I mean, how many of these are fraudulent claims to 
begin with that you're looking at? I mean, is the money better 
spent looking at it after the fact, or is the money better 
spent kicking up the initial evaluation?
    Mr. O'Carroll. Very good question. What we feel is that, 
one, once they get on, it's very difficult to know whether they 
were disabled at the time that they got on, with the idea of 
the CDRs is to catch--not catch, but to identify them if they 
have improved.
    Mr. Farenthold. I'm good with ``catch,'' because if you're 
filing a fraudulent claim, you're ripping off the American 
people. I'm okay with ``catch.''
    Mr. O'Carroll. Okay, good.
    The other one, I guess, is it's easier--rather than letting 
the animal or the horses out of the barn and trying to catch 
them, our thought is to keep them in the barn or to keep people 
from getting the benefits in the beginning if they are not 
entitled. And that's one of the reasons why we try to have our 
cooperative disability units where if a person comes in 
reporting to have a disability on it, and the disability 
examiners find that this doesn't really, you know, track 
correctly on it, they refer it to this unit, and then this unit 
will be taking a look at either--a couple of things. One is the 
different types of records out there. So, for example, if a 
person is coming in saying they are extremely sight impaired, 
and we take a look and run information on motor vehicles and 
find out they have a commercial driver's license, I guess 
that's what we'd call a clue.
    Mr. Farenthold. Right.
    Mr. O'Carroll. Other ones that we look at is results--it's 
sort of interesting. We are now going to social media where a 
person comes in and says that they're incapable of walking or 
being in crowds. And we take a look at their Facebook page, and 
it shows them in a band or a social group that's out there 
working all the time where we have pictures of them, you know, 
doing other things.
    Mr. Farenthold. Let's get back to the fraud in general. We 
talked about going and getting the money paid back and getting 
fines. Are the penalties a sufficient deterrent, or do we need 
to be looking at kicking up the penalties as well?
    Mr. O'Carroll. Congressman, I would say that the penalties 
that are out there now for people committing fraud against the 
government are good. They are a good deterrent on it. The 
problem with it is getting the prosecutions for it. In our 
cases what we're finding is it's very difficult to be able to 
show that much of a loss to government that a U.S. attorney's 
office would be interested in putting into all the resources to 
take a person to trial.
    Mr. Farenthold. What about penalties for enablers; that 
would be doctors or lawyers that continue to prosecute or 
authorize or document these claims?
    Mr. O'Carroll. The penalties are there. They're strict. 
I've got to tell you on one good example that we're having, 
which has gotten a lot of publicity, is within Puerto Rico 
where we had a bunch of doctors and others, nonattorney reps 
and reps that were bringing people on. The U.S. Attorney's 
Office there--I was down there and met with the U.S. attorney 
on it. She assures us that, one, the penalties will be strict, 
that they're going to be enforced, and that there should be 
jail time involved. So I think that we're going to have a very 
good signal that is sent on that when they use the laws to 
enforce it.
    Mr. Farenthold. Again, some disabilities are temporary in 
nature can improve with medical treatment or technology, 
improve to where that disability is not as disabling, I guess, 
if you will. Do you think there are adequate incentives within 
the system for a person to work whatever programs, say, their 
physical therapist gives them, or to continue treatment for 
whatever mental disorder, or is there a sense, well, I'm on 
this for good, I'm just going to--I don't have to work, I'm 
getting a check in the mail?
    Mr. O'Carroll. Well, let's put it this way: I would prefer 
the latter not be the word that's out there on the street. And 
what we're hoping to do is to send a signal that if you have 
improved, you shouldn't be getting the benefit, and what we're 
trying to do with that.
    By the same token--and I got to say as we monitor that, the 
SSA takes a look at what are the risks--not the risks, what are 
the success rates of different types of illnesses, et cetera, 
and then those are the ones that we're saying should be brought 
in for the CDRs.
    Mr. Farenthold. Listen, I don't think any of us here want 
to deny benefits to somebody who needs benefits. We need to 
make sure that there's adequate resources to provide benefits 
for everyone who needs it, while still encouraging people to 
live a good and fulfilling life. I find that I'm a whole lot 
happier when I'm actually out doing something and not sitting 
at home.
    I yield back. Thank you.
    Mr. Lankford. Ms. Duckworth.
    Ms. Duckworth. Thank you, Mr. Chairman.
    The Social Security Disability Insurance and Security 
Income program provide a critical lifeline that allows nearly 
12 million severely disabled Americans the opportunity to live 
dignified lives. The benefits that they earn through this 
program are very modest, about $1,000, $1,100 a month, barely 
above the--at the poverty level. And they generally represent 
the majority of the income for the recipient.
    But knowing this, I want to make sure that people who don't 
deserve it are not getting it. So, Mr. O'Connor--Mr. O'Carroll, 
I'm sorry, in your audit your office identified some issues 
regarding the termination of disability benefits following a 
CDS cessation determination. So even for the 500,000 that are 
being conducted and decisions are being made, if the decision 
is that--to remove the person from the--to terminate the 
benefits, I'd like to talk about how we go about doing that. 
And if you could talk a little bit about your recommendation 
for enhancing the ability of the processing system to perform 
automated terminations and the like. Since we do have a 
backlog, and we're not doing quite enough, and when we finally 
do have a determination, are we actually following through?
    Mr. O'Carroll. What we're finding on that, Congresswoman 
Duckworth, is about--in our audit we found about 30 percent of 
the time that a person was identified as having improved and 
should have been ceased in terms of getting their benefits, 
that they weren't enacted. And we found I think it was about 
half of that, 16 percent, in the SSI side of the house.
    We made recommendations to SSA to automate that so they 
could get the word out immediately. And one of the things that 
we found when we did the audit at that time was that many times 
once the disability review was done, it was put on a piece of 
paper, put on the front of the folder for that individual on 
it, and then when it got refiled or whatever it was, the 
termination notice slipped off, was not found or whatever, and 
it never was enacted. As a result of that, we told SSA that it 
would make much more sense to automate this so that when the 
person is turned off when the record is pulled up, that it'll 
show that they were declined, and that it would be done much 
more quickly. That we recommended to SSA, it was part of our--
they agreed with us on it, and they said that they'll implement 
it with resources allowing.
    Ms. Duckworth. It hasn't been implemented?
    Mr. O'Carroll. I think I'll turn to SSA on that one.
    Mr. Lankford. I'm going to ask you to turn your microphone 
on.
    Ms. LaCanfora. My apologies.
    There's a two-part process that we've undertaken, and we 
appreciate the work that the inspector general did. It was very 
helpful for us. And the first part of our process is that 
although the termination of a continuing disability review is 
not automated, we are doing what we call runs. So in other 
words, we go into the system annually, and we look for those 
cases in the same way that the IG did when they identified the 
ones that weren't getting terminated. So we have been doing 
that now for a couple of years, and we will continue to do that 
to make sure that there are none slipping through the cracks. 
So that's part one.
    Part two, which is our longer-term plan, is to fully 
automate the process. It's a little bit more complicated than 
meets the eye, but we do intend to do that. In the meantime we 
will do the annual run or the sweep to make sure we don't have 
cases falling through the cracks.
    Ms. Duckworth. So if we're looking at about 16 percent are 
not actually being carried through, roughly, Mr. O'Carroll, is 
that 16 percent of the 500,000?
    Mr. O'Carroll. That's 16 percent of SSI.
    Ms. Duckworth. Of SSI.
    Mr. O'Carroll. And DI, the disability side, is a much 
higher percent. It's almost 30 percent weren't. And that was 
also, too--I got to say not at all, and I guess a delayed one, 
about 3 months at least.
    Ms. Duckworth. Okay. Ms. LaCanfora, how much--when you're 
going through manually and doing this review, are you catching 
the 16 percent on SSI and the 30 percent on the disability? The 
IG is saying that that's what they're seeing.
    Ms. LaCanfora. Yes. We didn't corroborate their numbers, 
because their numbers obviously were a sample that they took, 
and then they projected those numbers against the entire 
universe. We are not, you know, tracking the percentages per 
se, but we are making sure that we capture them. So we're using 
sampling criteria to look at any case where the DDS has or the 
ALJ has decided that that person is no longer disabled and 
making sure that that decision is carried all the way through 
to our payment records in every case.
    Ms. Duckworth. What's your projection for stage 2? How long 
is that going to take to implement, to go fully automated?
    Ms. LaCanfora. I'm very encouraged by the discussions that 
we've been having in the agency and our ability to do that, so 
while I don't have a timeline, I'm hopeful that it will not be 
far off.
    Ms. Duckworth. Five years, two years, ten years?
    Ms. LaCanfora. Two or less.
    Ms. Duckworth. Thank you.
    Mr. O'Carroll, in your testimony you said that the IG's has 
long placed a high priority on allegations of third-party 
facilitator fraud. What other initiatives are taking place to 
root out third-party facilitator fraud?
    Mr. O'Carroll. Congresswoman, that's sort of--one of our 
thoughts when we came up with Puerto Rico and some other places 
on it where it looked like outsiders were facilitating people 
getting onto the rolls, what we decided to do was take sort of 
a hybrid of what we use with our CDI units where we have local 
law enforcement as well as our agents involved, and what we've 
started to do was to start using automated records going 
through trying to look for any type of association, looking for 
the boilerplate diagnoses, other issues on it.
    We've got pilots going in the California region and the 
Chicago region right now, and what we're doing with it is that 
we're identifying anybody who's bringing large amounts of 
people onto the rolls and making sure that all of their ways of 
doing it is legal, and that it's not bending the rules or 
whatever on it. So we've got a team which we have an 
administrative law judge that's assigned from ODAR working with 
our investigators on it, and we're trying to look for any 
anomalies in terms of people coming on. Like I say, we've been 
doing that pilot for about 8 months now, and we've got about 
four different major investigations going because of it.
    Ms. Duckworth. Thank you, Mr. Chairman.
    Mr. Lankford. Thank you.
    Mr. Horsford, before I recognize you on that, just to let 
you know, when Mr. Horsford concludes, I'm going to open this 
up for colloquy for all of us to be able to engage in a 
conversation with our witnesses. So we're going to shift from a 
5-minute time period to just an open colloquy. So if you want 
to participate in that, you're obviously welcome to do that as 
well.
    Mr. Horsford, you are recognized for 5 minutes.
    Mr. Horsford. Thank you, Mr. Chairman. I would like to 
thank you for your opening comments to Mr. Sklar that this is 
in no way personal, and actually, in fact, under his 
leadership, there have been major improvements on the 
administration side of the aisle, improvements that we need to 
keep making progress towards.
    But unfortunately, there also seems to be some 
misrepresentation of some of the facts that are being presented 
today. And so I want to kind of just allow the opportunity for 
some of our witnesses to bring forward all of the information 
that the committee should consider.
    Mr. Sklar and Judge--is it Bede?
    Judge Bede. Bede. Close enough.
    Mr. Horsford. Apologize for that.
    Does the allowance rate of the judges the majority 
identifies today say anything conclusive about whether or not 
the judges correctly applied the law and agency guidance to the 
applications for disability benefits that came before them?
    Mr. O'Carroll. I'll take it first, and then I'll let Judge 
Bede jump in.
    I will say the allowance rate right now is probably at a 
40-year historic low, so that's just an observation, and we've 
been very consistent in pushing the policy compliance message. 
I believe the judges are really responding well not just to 
training, but to automated tools, to feedback. They've shown a 
willingness to listen, and I'm really impressed.
    So, Judge Bede, other thoughts? 
    Judge Bede. No, I would agree with that and also indicate 
that the mere fact that a case has been seen twice by the State 
agencies and yet is reversed by the administrative law judge 
does not mean that either one of them was wrong. At the time 
the DDS, the Disability Determinations Service, ruled on the 
case, it may clearly have been that the claimant was not 
disabled. By the time it gets to an administrative law judge, 
time has passed, the record has been augmented, the claimant's 
condition may have deteriorated. And so what was once a clear 
affirmation that the claimant was not disabled becomes a clear 
reversal that the claimant is now disabled. So the figures 
themselves may lead you to feel that you have to look behind 
the facts, but they don't establish any correctness or 
incorrectness.
    Mr. Horsford. So the allowance rate alone doesn't say 
anything about the quality of the decisions?
    Judge Bede. Absolutely.
    Mr. Lankford. Would the gentleman yield for one moment? 
Would that include a judge that approves 99.4 percent of all 
cases, because we have some judges like that as well? Should 
that raise a red flag?
    Judge Bede. Well, it should raise a red flag, but it does 
not mean that any particular case was wrongly decided.
    Mr. Lankford. I do understand that on that, but there is 
some signal with that as well to say there may be an issue here 
at some point.
    Judge Bede. Absolutely.
    Mr. Lankford. I yield back. I apologize.
    Mr. Horsford. I think the issue, Mr. Chairman, becomes the 
fact that we're not providing all of the cases, and it's my 
understanding that the Appeals Council's job is to actually 
perform the reviews of judges' decisions and collect 
information on the quality of those decisions; is that correct, 
Mr. Sklar?
    Mr. O'Carroll. Yes, that's correct. And just to provide a 
little bit of perspective, I know we spent a lot a time talking 
about fraud and antifraud measures this morning, but for 
perspective it is important to recognize that the fraud 
incidence rate in this program is really quite low, typically 
less than 1 percent, and our overhead cost runs about 2 
percent.
    So it is a well-run program. I know in any system you can 
always do better, and that's why we're here. We're glad the 
committee is having this hearing, and we welcome the feedback.
    Mr. Horsford. Mr. Sklar, in the presentation of the charts 
earlier, did the majority ever ask you for statistics on the 
quality of judges--the decisions before they put up the chart 
on the allowance rate of certain judges?
    Mr. Sklar. I'm not aware of that particular request, no.
    Mr. Horsford. And so how is it, then, that we were able to 
then just see a certain select few decisions by judges rather 
than taking into account the decisions of a larger percentage 
that reflect all the work of the administration?
    Mr. Sklar. I think it's a fair point. Again, it's a very 
large corps. There are over 1,500 judges, and I'm sure there 
are judges on the low end of the spectrum as well we could have 
put up on the screen with allowance rates around 10 percent.
    Mr. Horsford. So can you provide that information to the 
committee?
    Mr. Horsford. And, Mr. Chairman, can we have as a part of 
this conversation--I know this is the second hearing that 
you've held on this issue, but I think it will be worthwhile 
for the committee to see both the high and the low range and 
the full scope rather than just highlighting, you know, 142, 
which represent about 10 percent of all the judges' decisions 
rather than, you know, the full scope and the range.
    Mr. Lankford. I would have no issue trying to provide that 
to both sides, and we try to be very fair to be able to provide 
everybody all the data on it. Our issue on it is, there are 
truly disabled people, that we're about 2-1/2 years away from 
insolvency in this program, that can be hurt on this if we 
don't find a way to be able to resolve this issue soon. And I 
do not want the truly disabled to be hurt in this process while 
some people, whatever small number that may be that we are 
aware of we're not catching.
    And in the ALJ process, if we're not able to do reviews, if 
there is a judge that's out there that is not held to account 
and there's not a good process to hold someone to account in 
that, we need to find a way to do that. All of us have 
accountability, all of us, and so there should be clear lines 
of accountability that when there's a problem we address it 
whether it's low or high, either way.
    Ms. Speier. Could I just ask a follow-up question? You 
referenced, Mr. Sklar, that the actual fraud rate is very low, 
less than actually the administrative costs, which is important 
to keep in mind. But is that fraud rate low in part because we 
don't have the resources to do the CDRs? And that's a question 
really to you and to Mr. O'Carroll.
    Mr. O'Carroll. I guess the first one, the only thing, that 
I always get put in the position on this one, the agency says 
that it's less than 1 percent for the amount of fraud, is our 
concern on it is, is when you have billions of dollars going 
out every day, 1 percent is a very high number, and to any 
taxpayer any dollar that's misspent is a high number to it.
    So our feeling on it is, is that, yes, we're taking a look 
at--when you take a look at improper payments and you go across 
the board for improper payments, the improper payment level for 
SSA is less than 1 percent. That's improper payments, and 
that's ones that shouldn't go out. And of that, a portion of it 
or a large portion of it is fraudulent, which is what we're 
taking a look at. And our feeling on it is, is any antifraud 
methods that you can be doing to discourage fraud or good CDRs, 
as you brought up, is one.
    If we did more CDRs on it, it would have two effects. One, 
we would identify people that are being put on--or that are 
getting on the rolls that shouldn't be put on the rolls, which 
would identify the fraud, and the other part of the CDRs is as 
a deterrent, just so that you know that when you are getting 
better, if it's a 50/50 whether you're going to come in and say 
that you're better and ask to be removed from it, it lets 
everybody know that the agency is going to be checking back to 
see if you got better. And I think that's something that we all 
hope for is, is that we give you benefits and that you get 
better.
    Mr. Lankford. Just to clarify before I move to Ms. Lujan 
Grisham, we are going to recognize you for 5 as well, the 1 
percent number, that is improper payments, in other words we 
sent a payment to someone that they either shouldn't have 
received that or they're deceased now or whatever it may be. 
That's not a statement of we have 1 percent of people that if 
we were to go out and test in the field with CDRs, we only have 
1 percent of the folks that are receiving disability that 
shouldn't receive disability. Is that clear?
    Mr. O'Carroll. Correct, Chairman.
    Mr. Lankford. Okay.
    Ms. Speier. So it could be higher?
    Mr. O'Carroll. Yes.
    Mr. Lankford. Ms. Lujan Grisham.
    Ms. Lujan Grisham. Mr. Chairman, thank you very much.
    And, panelists, thank you very much for being here today.
    We all agree, we want a zero percent, if that would ever be 
a realistic number, we want there to be no bad actors and we 
don't want any mistakes. We don't want constituents who are 
trying to receive disability benefits who don't qualify, and we 
don't want folks in the administration making mistakes. And 
anything that we do in this committee, anything that you do 
that improves the opportunity for these programs is meaningful. 
And I appreciate the chairman's statement that, you know, we 
want to make sure that we do everything we can to have a 
benefits program that's available for future and current folks 
who are waiting for these disability benefits.
    But I would point out a couple of things, and one is that 
folks on disability, you know, can be stabilized, we hope, and 
some things improve, but they're permanently disabled, they 
don't get better. It's kind of like the Medicaid program for 
persons with developmental disabilities, and across the country 
we require a level of care review every year, and as far as I 
know, you cannot cure Down Syndrome. So you have that every 
year unless there was a pretty significant misdiagnosis early 
on.
    People live longer. These programs are going to be more and 
more expensive. And it is something that we are going to have 
to think about as future policymakers, about what we spend, 
clearly, and how we do that, and what we can do to prevent 
disabilities and maybe get beyond a growth rate that we see in 
this country. And coming from a State where we have some of the 
highest disability populations, and just disabilities due to 
accidents from alcohol, significant issues that we could 
certainly as a State work harder to do a betterjob. And of 
course, you know, I worry as much as anyone about the fact that 
not only do you take a long time--thank you for improving that 
to a year. In my poverty law days it took 3 years to get 
somebody's disability application approved, and then I would 
have to explain to them how they didn't get any health care 
benefits for 2 years but had been deemed disabled and sick.
    So it's still a tough, since the Medicare benefit is 24 
months later after the disability determination, it's a program 
that's got some interesting--you get sicker before you get 
better, but then we're worried about how much money we're 
spending and what the efficacy is. And I could spend 3 more 
minutes before you ever get to anything about what you're doing 
currently about a program that we just don't do these programs 
right. We're still learning how to make them fair and 
judicious, effective, and keep out fraud on all ends for these 
programs.
    So I just wanted to say I appreciate those efforts. I think 
they're important. And like everybody here, I expect government 
programs to work, and I want to ferret out folks who are taking 
advantage at any level, both providers, judges, and the 
administration, and constituents, and however they're taking 
advantage.
    Given that you have had lots of questions about the judges' 
actions and what you're doing in your quality review process, 
I'm going to talk a little bit more about the error rate, and I 
don't think given what I've heard today or read that the 
approval rates don't demonstrate whether the benefits are 
correctly or incorrectly denied.
    So it's my understanding, then, Mr. Sklar, that the 
Division of Quality reviews a random sample then of the ALJ 
decisions to award benefits. Am I correct about that, that it's 
all random?
    Mr. Sklar. Yes.
    Ms. Lujan Grisham. And then based on that random review, 
how often do we identify that the benefits are incorrectly 
awarded?
    Mr. Sklar. Again, I could supply that information for the 
record. It's pretty technical, and I don't want to take you 
down the wrong path. But we are using that data to inform 
future policies and to give feedback to the judges. We give it 
to them in real time, and we're seeing significant behavioral 
changes on behalf of the judges.
    Ms. Lujan Grisham. I would really be interested if it's all 
right with the committee and the chairman that we continue to 
get that information because then it really goes to, as you do 
those random reviews, you're seeing a change of behavior, I 
would be interested in what that indicates, what we think that 
indicates so that as we're looking at resources for the CDR and 
related programs that there's a partnership about what really 
makes a difference. Because as you then go to the appeals 
portion, how often then does the appeals council reverse those 
judges' decisions? Do we have that data?
    Mr. Sklar. So just one quick comment. There also is a 
second type of review done by the Division of Quality. We also 
do focused reviews. Those are after the money has gone out. 
They're closed case reviews. But in that instance you actually 
can be a little bit more targeted, you can look at individual 
ALJs, you can look at individual hearing offices or 
representatives or a combination of representatives and judges 
working together. Whatever you want to look at you can look at, 
and we do pick areas where we think it will be productive.
    Ms. Lujan Grisham. That would be great. So, again, with the 
committee's approval, I would love more information about the 
focused reviews, and instead of asking--and this has been 
helpful. I also believe that there's a certain number of people 
who don't know that they should appeal, poor advocacy advice, 
poor legal advice, disability prevents them, particularly if 
it's a mental health disability, can't get it done. Is there a 
process to take a look at how many people should have been 
approved those disability benefits but are never in a position 
to actually do the appeal?
    Mr. Sklar. From time to time we do take a look at 
unappealed cases. We can try to get you whatever data we have. 
That actually might fall more under the purview of our policy 
folks as well, but we'll put together what we can on appeal 
cases.
    Ms. Lujan Grisham. I would love that. I would love, 
frankly,--I've only got a couple--I think I'm over--as much 
information about what we could do and how we could do this 
better so that folks get those benefits when they need them. 
We're spending less then on the care and services that they 
need, but that income gives them an opportunity to access the 
healthcare system and related supports, including housing as an 
example, and that this whole process is streamlined and 
effective so that we're making the best decisions about 
preserving it for future beneficiaries.
    Thank you, Mr. Chairman.
    Mr. Lankford. Thank you.
    Ms. Lujan Grisham. I yield back.
    Mr. Lankford. We will get into some of those conversations 
right after I recognize Mr. Walberg.
    Mr. Walberg. Thank you, Mr. Chairman.
    And thanks to the panel for being here. Sorry I missed much 
of it being in another committee hearing. But I did have some 
questions, especially flowing from our last opportunity on this 
issue.
    Mr. O'Carroll, what are the actual savings, I would be 
interested to know, associated with CDRs or redeterminations?
    Mr. O'Carroll. Congressman, what we found with CDRs, it's 
about a 9-1 return on investment, and with the SSI or the 
redeterminations it's about a 5-1. However, last year when we 
went back and----
    Mr. Walberg. For each dollar spent, there's $9 gained.
    Mr. O'Carroll. Yeah.
    Mr. Walberg. Or $5 gained in the case of----
    Mr. O'Carroll. Yes, Congressman. We figure it's about 
$1,000 to do a CDR, and then when you start taking a look at 
for every CDR that a person is turned down or is off the rolls, 
it's a significant savings on it. So that's where we're 
figuring the 9-1.
    However, we went back, and that's over a long period of 
time. Last year, I guess in 20--yeah, last year, we took a look 
at it again, just to see in a 1-year period what the return on 
investment of it was, and at that time it went up to 13-1. So 
it's a very, very, you know, cost-effective way of doing it, 
these CDRs, it's a good investment.
    Mr. Walberg. What recommendations then have been made and 
what has SSA done to address the CDR backlog?
    Mr. O'Carroll. Well, recommendations--and I'll let SSA 
answer what they've done on it--our recommendation was to do 
more of them to reduce the backlog because when you figure for 
every year that the backlog remains where it's at, it's over a 
billion dollars that could have been saved by reducing the 
backlog on it. So we're telling SSA, one, to stay current, 
which would be not to increase the backlog on it. And they've 
been doing a fairly good job of staying current on it. So the 
backlog hasn't been growing. In fact, it was staying flat. Last 
year it went up a little bit. It went up about 100,000 last 
year on it. So our recommendation to SSA is to put more 
resources towards CDRs so that, one, they're staying current, 
and, two, they reduce the backlog on it.
    Mr. Walberg. Do you feel they've been doing that, putting 
more resources to it?
    Mr. O'Carroll. I think they have been doing more on it. I 
don't know whether they've done--I think, to my liking, they 
should be doing more. But I've got to say is over the last few 
years that their, you know, integrity work that they have been 
doing is increasing. It's staying, as I said, current, which is 
very good, so the backlog hasn't grown.
    So, one, I guess the best thing I can say is we encourage 
them to do more. We're asking probably also, too, is we're in 
agreement with them, if money is earmarked or designated in the 
appropriation to be done on the CDRs, they will do it. And 
whenever they are given extra money to do CDRs, they are done.
    So I guess the thing that I could take away from this is, 
is that we encourage an integrity fund be established that 
forces them to do CDRs, and that way any other competing 
resource issues that they have won't reflect on it, and they 
will do the CDRs and do it.
    Mr. Walberg. Okay. Before I go to Mr. Sklar, how many 
taxpayer dollars would be saved per year if SSA performed CDRs 
on time?
    Mr. O'Carroll. What we're saying right now is, is between 1 
to 2 billion dollars is saved every year by reducing the CDRs 
and doing them all on time.
    Ms. LaCanfora. May I offer a number as well that might help 
to answer your question? And this was an answer to a question 
that Ranking Member Speier posed earlier in terms of the return 
on investment. So Mr. O'Carroll said that the return on 
investment is $9 saved for every $1 spent. And another number 
that you may find handy is that in this fiscal year, fiscal 
year 2012, we're asking for $1.2 billion to be able to do CDRs, 
and if we get that money we could do just over 1 million CDRs. 
And if you include the amount of Medicare and Medicaid savings 
that we would get if we spent that money, it would amount to 
$40 billion over 10 years in savings.
    Mr. Walberg. Okay, thank you.
    Mr. Sklar, will the agency prioritize erasing the 1.3 
million backlog of CDRs.
    Mr. Sklar. Actually I'll defer to my counterpart.
    Ms. LaCanfora. We share your interest in getting current 
with CDRs. We think it's one of the most critical 
responsibilities that we have.
    Mr. Walberg. With those type of dollars, I would hope so.
    Ms. LaCanfora. That's right. And we have shifted resources. 
To your question earlier about have we committed and have we 
made progress, in every year since 2007, with one small 
exception, we have increased both the number of medical CDRs 
and SSI nonmedical redeterminations. Right now we're at an all-
time high, over a million SSI nondisability redeterminations 
performed in the last fiscal year.
    So what we're asking for from the Congress is the adequate 
funding to be able to continue along those lines. And in terms 
of shifting resources, we have done that. I think this 
committee knows that we close our field offices to the public 8 
hours a week. We close at noon on Wednesdays, we close an hour 
earlier every day than we used to. And we did that specifically 
so that we could focus more attention on program integrity work 
instead of dealing directly with the public, taking claims.
    Mr. Walberg. Thank you.
    Mr. Lankford. For those that are here on the dais that have 
not been in one of these conversations before, what I'm going 
to do is I am just going to open it up to open conversation, 
not do a limited 5-minute time period. We are going to try to 
run through a bunch of questions, and that allows interaction 
both here on the dais and with the witnesses as well. We have a 
lot of issues that I want to make sure that we get covered. 
It's sometimes difficult to do in a structured 5-minute time 
period.
    And what we have talked about briefly as we started this 
hearing, and what I spoke with you about before the hearing 
started as well is it's one thing to talk about the problems, 
we've got to talk about solutions. And so what I would like to 
do is run through some of the things that have been proposed, 
either the IG has proposed or we have heard from Senate 
committees or other House committees here, or, Mr. Sklar, you 
actually laid some of these things out in the past, and to be 
able to run through what are the ideas of how do we fix this, 
where do we go.
    And so I would like to just start kind of peppering through 
this, and we're able to interact at a new level. If you have 
another statement that you want to jump in on, we'll jump in as 
we go.
    Let me ask the first question on it. As far as the limited 
dollars, more dollars should be invested in the CDR side of it 
or the CDI side of it or is it just at both ends? Which one 
gets us a greater bang for the buck, actually doing more 
investigation before they get in at the beginning or more 
investigations once they're actually in the system?
    Mr. O'Carroll. Boy, that's a tough question. I've got to 
say on both of them, what we've asked for with the integrity 
fund is considering both of them, because also the other issue, 
what gets it a little more complicated is, is when CDIs are 
done, and if as a result of doing--I'm sorry, when a CDR is 
done, if as a result of it there's something either 
questionable, suspicious, or anything that needs some follow-up 
investigation on it, that's where the CDI units come in handy. 
And we found by working with judges and ODAR, if there's a 
question that comes up in an appeal, the CDI units are equipped 
to be able to go out and be able to validate or find more 
information on it. So I've got to say they're both linked very 
closely together, and if there was anything in terms of 
guidance from an integrity fund I would like them both to be 
considered.
    Mr. Lankford. Is it the assumption, if you're talking about 
the $1.2 billion, is the assumption that it's for both or is 
that just CDRs?
    Ms. LaCanfora. That's strictly medical CDRs.
    Ms. Speier. So what's a CDI then?
    Mr. O'Carroll. A CDI unit is basically what we're taking a 
look on. The bottom line is it's about $100,000 per CDI unit, 
and that's----
    Mr. Lankford. And they'll do how many cases with that?
    Mr. O'Carroll. And of that we have 26 CDI units in 21 
States at the moment on it. We would like to expand it into all 
the States. And what happens with that on it is, is the IG 
supports the investigator in it, SSA supports the location as 
well as the local investigators on it, the DDS employees, and 
the MSS or Social Security employees. So most of the expense 
goes to SSA.
    Mr. Sklar. If I could just jump in on this, too, I'm a bit 
of a compromised witness on this one in that I helped set these 
up about 15 years ago. I think they're a tremendous value. 
They're front-end fraud detection. We've had a lot of 
discussions on the podium about how much to get back after the 
money has gone out the door, and we all know not that much.
    Mr. Lankford. Right.
    Mr. Sklar. We do the best we can. We have collection tools. 
But ultimately you're getting pennies back on the dollar. You 
have to catch it at the front end. And it's the type of cases, 
the complex fraud conspiracies that Mr. O'Carroll's office has 
been working on and we try to support that you can use a CDI 
unit to get at the front. So I would be a strong advocate. I've 
never understood why we don't have a CDI unit in every State.
    Mr. Lankford. How do we fix that? Give me just a for 
instance here. When you've got a Judge Daugherty who is 99 
percent approval, all the issues that come up, you've got to 
look at the focused review of the judge and how do we even get 
into this process, but a CDI should have caught this early on 
or some kind of process to say we have a problem here. So it's 
either a focused review of the judges or it's some kind of 
investigation at the beginning of it to determine same doctors, 
same judge, same process, all run out of a few trailers in West 
Virginia, maybe there's a problem here; yes, there is. And 
obviously the IG is able to identify that and start working 
through the process. That's part of what my question is, how do 
we get it on the front end?
    Mr. Sklar. This is actually the infrastructure to get in on 
the front end. I've always been confused why we haven't been 
funded to have one in every State. I think it's very important.
    Ms. Speier. Okay, but to that point, Mr. Bede, you're in 
charge in West Virginia, correct?
    Judge Bede. I am not currently involved in the operation of 
the Huntington, West Virginia, office.
    Ms. Speier. But you were?
    Judge Bede. I was, until the Wall Street Journal article.
    Ms. Speier. Okay. So in hindsight now, do you feel that 
there should be some role for a person like you in each office 
to review the work of judges to see if there is any kind of 
collaboration going on? Did you miss that?
    Judge Bede. Well, I'm not in West Virginia, and in the 
local office there could be, if it becomes clear to other 
people--in this office apparently one judge was doing this, and 
it was not, at least at first, clear to other people in the 
office. So if he isn't going to report it----
    Ms. Speier. Well, he's clearly not going to report it, 
right?
    Judge Bede. Right.
    Ms. Speier. I mean, He's part of the cabal?
    Judge Bede. It makes it very difficult.
    Ms. Speier. So I guess I'm trying to understand, is 
everyone so autonomous that there's no oversight of any of 
these judges?
    Judge Bede. Well, no, that's not the case. There is 
certainly oversight. But what we're saying is that we cannot 
tell a judge how to decide a case.
    Ms. Speier. No, but we're not asking that.
    Judge Bede. Right. No, I recognize that. But once it's 
decided, it falls into the purview of the Office of Appellate 
Operations. I don't have the staff or--well, I just don't have 
the staff to look at every judge's decision every day.
    Mr. Lankford. Do you have the authority to step in, though? 
If you have a suspicion that that there's a problem, who has 
the authority to step in?
    Judge Bede. Yes, if I have a suspicion or if a suspicion is 
raised that there are unsavory activities, then we would look 
at that, and we would probably refer it to the Inspector 
General's office, and obviously keep our--the Chief Judge's 
office and the Deputy Commissioner's office in the loop as 
well.
    And that's what we have done in other cases, and none of 
them as significant as this, but there have been other doctors 
who no longer have licenses, reports----
    Ms. Speier. Some of those things are really obvious.
    Judge Bede. --medical reports that are the same for----
    Ms. Speier. I mean, if someone's dead or someone doesn't 
have the ability to practice medicine anymore, those are 
gimmes. This is where there's a concerted effort, a cabal to, 
you know, rig the system.
    So, Mr. O'Carroll, you have a comment to make here?
    Mr. O'Carroll. Thanks. One of the comments that I made 
amongst our own Office of Inspector General is, is I don't want 
to have to be reading about another hearing office or anything 
else in the newspaper on it. I would rather us identify it in 
advance. And so as a result of that, we have a group working 
with Glenn Sklar's office on it on trying to look for outliers 
or try to find, again, somebody, any type of connections 
between lawyers and judges or anything elsewhere where we're 
taking a look at doctor providers that are all doing this 
thing.
    So, anyway, I've got to assure you is, is that we're doing 
everything we can to be working with the office of ODAR to 
identify any anomalies out there and try to stop them before 
they happen. And I've got to say Huntington got by us in regard 
to--there's a lot of issues on it that came out at the last 
hearing on it and different things about it is, is that we're 
trying to find what--I guess what went wrong and what we can 
use to identify it. That's why we have our pilot right now on 
disability fraud.
    Mr. Lankford. All right. Go ahead.
    Mr. Sklar. I'm sorry, if I may. Just one comment. One thing 
that is really quite different. We have a very well developed 
electronic recordkeeping system now. We're collecting reams and 
reams of data. And in many ways I would call it big data at 
this point where we're going in and looking for patterns and 
anomalies and really leveraging modern technologies. We have 
experienced programmatic people, economists, statisticians 
plowing through the data to try to find the next problem.
    So I think if you look back, Puerto Rico is a good example 
of where we caught it, 4-1/2 years ago the employees in the 
Puerto Rico DDS found it and they turned it over to Mr. 
O'Carroll's office.
    Ms. Speier. Four years ago, though.
    Mr. Sklar. Well, it does take a really long time to put 
together a complex conspiracy case, and they had surveillance, 
and they needed to--there was a lot of work that needed to be 
done. We actually supported them many steps of the way. But 
Huntington was a little bit different.
    Ms. Speier. Well, how long has your big data been 
operational?
    Mr. Sklar. I would say for the last 2 or 3 years, and quite 
frankly----
    Ms. Speier. So you should have found Huntington. I guess 
I'm trying to----
    Mr. Sklar. Yeah.
    Ms. Speier. I'm not trying to----
    Mr. Sklar. Yeah.
    Ms. Speier. No one is trying to beat anyone up here. We are 
trying to find out what we have to do to make sure that there 
aren't more Huntingtons in our future. And we do know one 
thing: If there is a void, people find a way to fill it. If 
there's a void in terms of finding the Huntingtons, there are 
going to be Huntingtons all over this country, because there 
just happen to be folks out there that are going to try to rip 
off the system. It's just the reality.
    And, Mr. Chairman, I just asked my staff to research this, 
and I think this is very helpful to this discussion. When the 
Affordable Care Act passed one of the things that was included 
in it was money for Medicare fraud over 10 years, $350 million 
over 10 years, so it's $35 million a year. In the 3 years that 
it's been operational, so a total of $100 million that has been 
spent, they have already recovered $10.7 billion in fraud. So 
we know that those folks are out there, and they're going to 
prey on the Medicare system, they will prey on the social 
security disability system. They will prey on any worker's comp 
systems.
    They are professional rip-off artists, and it's our job to 
shut them down and be smarter than them in terms of shutting 
the door before they even get to open it. So you've got to 
provide us more kind of help in what we need to craft so that 
you can get your job done and so that we don't ever have to 
beat you up.
    Mr. Lankford. I fully agree on that.
    Let me walk through a couple of things as well, and other 
members should feel free to be able to jump in on issues here. 
On the claimant representatives, the duty of candor, issue to 
clear regulations requiring claimant representatives to submit 
all relevant evidence in advance. Are we in agreement? I know 
you mentioned before on this, Mr. Sklar, that this is a pilot 
in some areas. How is that moving? Where do we go from here?
    Mr. Sklar. Things are moving pretty rapidly. We had a 
wonderful study done by the Administrative Conference of the 
United States. We took that study very seriously, we have had 
serious discussions back at Social Security. And I can't say 
very much about it, but let's just say something has moved from 
Social Security to the Office of Management and Budget in that 
regard.
    Mr. Lankford. Okay. Is that something we can talk about 
more off line?
    Mr. Sklar. Yes.
    Mr. Lankford. Okay.
    Mr. Walberg. Could I just jump in on that same issue, the 
duty of candor? Who represents the taxpayer in the hearing 
process? As I understand it, both sides aren't represented? Who 
represents the taxpayer?
    Judge Bede. Well, as an administrative law judge, there is 
a duty to represent, to protect the taxpayer as well as to 
ensure that the claimant gets a fair hearing, and all of our 
administrative law judges are aware of that and take it very 
seriously, possibly with the exception of a few judges who 
allow all of their cases. But it is part of the job of the 
administrative law judge to ensure that benefits are not 
awarded frivolously and that the government is--the trust fund 
is protected.
    Mr. Walberg. But it seems to me, advise me if I'm off base, 
but if the hearings are nonadversarial, why does only one side 
have representation? Are we missing something, especially when 
we're talking about the load, the backlog, and all the rest 
that goes on, are we missing something in not having direct 
representation for both sides?
    Judge Bede. I personally don't think that having the 
government represented would add a whole lot to the process. I 
don't know if Commissioner Sklar----
    Mr. Sklar. If I could just chime in really quickly on the 
history. This was set up, this program was set up quite some 
time ago as a nonadversarial program, and it has been enshrined 
in Supreme Court case law as such. We did try a brief array in 
the 1980s with a government rep project and were ultimately 
shut down by a combination of the Federal courts and outrage in 
Congress.
    Since that time we have made a lot of changes. We've 
actually beefed up the staffing behind the judges. For example, 
we do have clerks that marshal the evidence and exhibit the 
file and get everything ready, we do have decision writers 
behind the ALJs, we have senior attorneys they can turn to if 
they have a tough policy decision and they want to work up the 
file. So it's not just the ALJ by himself or herself anymore. 
There's literally four or five people standing behind every 
administrative law judge.
    Mr. Lankford. Can I ask you a question on that 
specifically? Are those, all those support folks around there, 
are they assigned to a specific judge or they're still working 
with the pool? Because part of the conversation we had with the 
judges was they didn't know which technical person was going to 
be assigned to them. Just that relationship between the judge 
and their assistant doesn't seem to actually happen in this 
particular setting. I know there are some issues we talked 
about before, them being union and supervising and all those 
kind of dynamics, but is there a need to get decision writers 
and technicians assigned to specific ALJs, that they form that 
rhythm and know what's going on, or is it your opinion that 
should not happen, they should continue to be a pool?
    Mr. Sklar. Actually it's somewhat interesting. We have both 
models running right now.
    Mr. Lankford. Okay.
    Mr. Sklar. In the traditional hearing office model it is a 
pool model, and for various reasons you've mentioned previously 
they don't directly supervise the staff. On the other hand, we 
have the national hearing centers, there are five of them 
nationally, they are all video units, they do only video cases, 
and they supervise their law clerks. And quite frankly, the 
judges love the model and the law clerks really seem to like 
the model a lot.
    Mr. Lankford. Is that something that could be multiplied 
out that you're finding efficiency in or just preference?
    Mr. Sklar. Again, it's something that certainly could be 
expanded, and we've looked at it. But we do run into labor 
issues with that as well.
    Ms. Duckworth. Mr. Chairman, I wanted to add on to this. 
I'm a little confused because I want to make sure that we 
understood, I have a better understanding, on what resources 
you need. Some of these things seems like these are models and 
pilots you're putting into place so that you have the 
capability to do it, and then there are some issues that have 
to do with funding as a resource, which is the 2014 budget 
looking at the money so that you can do the CDRs, over 1.2 
million CDRs.
    Are there other things that you need from us to help you? 
For example, Mr. O'Carroll, you talked about the MIRS, the 
Medical Improvement Review Standards, and how someone who is 
incorrectly put onto, has been determined as being disabled, 
actually SSA has a hard time taking them off the rolls because 
those standards are there. Is that fix a legislative fix or is 
that an SSA fix?
    Mr. O'Carroll. That one would be, I guess, a little bit of 
both. One is, is that by law, once they've been found, you 
know, as disabled on it, it's impossible to go back and review 
it again, which is the whole issue of the improvement on it. If 
you're incorrectly diagnosed, there's no way you're going to be 
able to show improvement. So that's a little bit, one, by law, 
they're entitled to it, and two is by SSA, you know, 
instructions. But the agency----
    Ms. Duckworth. So if one of these doctors that's 
collaborating says that this person is disabled but they're not 
disabled and they're put on to the rolls, we don't have a way 
to take them off or MIRS makes it that much more difficult to 
take them off?
    Mr. O'Carroll. We can take them off. The exception on it is 
fraud, and if we can show there was fraud in the fact that they 
were put on it, yes, we can take them off. Good example on that 
was in Puerto Rico we have identified 71 people that doctors 
have put on erroneously on it. We can take them off and did 
take them off immediately because it was fraud involved.
    Ms. Duckworth. But incompetence is not an excuse?
    Mr. O'Carroll. No.
    Ms. Duckworth. Okay.
    Ms. LaCanfora.
    Mr. O'Carroll. And the other one, though, again, I guess on 
this one here what we're talking is, is that you were asking 
what resources are necessary. I just want to go on record here 
is, is that, one, we talked about the CDI units and how 
effective they are and the return on investment on it, and I 
agree, and that's very, very important.
    Another one that I've got to say is, is that, you know, in 
our case here we've got, you know, our auditors, as we saw with 
all this information that we've been able to give you in terms 
of the medical improvements and the CDRs, et cetera, is because 
of our audit work, and then in terms of trying to prevent 
anything as an example of, you know, Puerto Rico or any places 
where there's a systemic attack against SSA, our investigators 
are there doing whatever they can.
    But I've got to tell you, our resources are very limited. 
Over the last few years we've had about a 10 percent reduction 
in staff, simply because we've stayed at level funding on it. 
As every cost goes up, 90 percent of my costs are really just 
on salary and, you know, and office, brick and mortar. So all I 
can do really is just keep subtracting staff in order to make 
our bills.
    So, anyway, when you're asking what you can do to help us 
is, one of those things is for us to be able to get a set 
budget where we can, you know, be able to at least go back up 
to our allotment of investigators and auditors to be able to 
look into stuff like this.
    Ms. Duckworth. Ms. LaCanfora, you wanted to say something.
    Ms. LaCanfora. I just want to take a very quick opportunity 
to attempt also to answer the question about what you can do 
for us, because I think it's twofold. One is adequate and 
sustained funding, not just the program integrity funding to do 
the CDRs, but adequate and sustained funding for the entire 
administrative budget. We have been operating for the past 3 
years a billion dollars below the President's budget request. 
Since 2010 we have lost 12,000 employees across the Social 
Security Administration, making it increasingly difficult for 
us to just do the basic work that we're tasked to do, let alone 
trying to solve some of the more systemic problems.
    And number two, I would just like to encourage the 
committee to continue highlighting the issues you've been 
highlighting because I can speak from a policy standpoint, we 
have a lot of irons in the fire, so to speak, we have a lot of 
areas in the policy realm where we're looking to improve upon 
current processes, and we can talk about some of those. But I 
think it's, you know, to the credit of the committee that 
you've prompted us to continue to think about these things and 
work hard to, you know, fill gaps where they exist.
    Ms. Speier. What about the appeal of a decision by the ALJ? 
The only appeal right now is an automatic appeal if it's 
denied. What happens--on the one hand Mr. Bede says, well, the 
ALJ is representing the taxpayer and the injured worker or the 
injured individual, but I don't think you can represent both 
sides adequately, frankly. I think that's a mischaracterization 
of what an ALJ can really do. So there is no appeal process. 
The question is, should there be on behalf of the taxpayer?
    Mr. Sklar. So just to clarify, with the new Division of 
Quality we do look at roughly five to seven thousand unappealed 
fully favorable cases each year, and that's new, and that adds 
some balance. We were looking at hundreds of thousands of 
denials. They were appeals from people who lost. But on the 
cases that were paid, nobody was looking at those cases in any 
systematic way in a large number.
    So now we're doing that. It's a statistically valid sample 
that can help us drive policy changes. We also feed back the 
data to the individual judges. But to be clear, it's still only 
five to seven thousand cases when we're running an operation 
that's moving 800,000 cases annually. So----
    Ms. Speier. And just by doing that doesn't mean that that 
individual doesn't get the benefits either.
    Mr. Sklar. Well, actually, sometimes their lawyers are very 
upset because, yes, you would, indeed, intercept the benefits 
in those live cases.
    Ms. Speier. You do?
    Mr. Sklar. Yes. So that authority exists, but we're only 
funded to do a certain number of these items or we can only 
afford to do a certain number of these cases.
    Ms. Speier. So of the five to seven thousand cases that you 
have intercepted, so to speak, how many of them were the 
benefits actually not provided in the end?
    Mr. Sklar. I can supply that for the record for sure. We 
have that data.
    Mr. Lankford. Okay. Can I ask how you picked that five to 
seven thousand? Was it just a random sampling or were you 
targeting certain----
    Mr. Sklar. So that's a really good question, because under 
a 1998 regulation we are not allowed to target, we are not 
allowed to target judges, we are not allowed to target hearing 
offices.
    Mr. Lankford. So let me review. Huntington, West Virginia, 
when that's happening and you see these very high numbers, 
you're not allowed to go back in, in targeted review on that?
    Mr. Sklar. That's exactly right, not on live cases.
    Mr. Lankford. We've got to fix that.
    Mr. Sklar. And to be clear, we did sample some of those 
cases, but it was a relatively small sample, and they began to 
ask the right questions. If they were looking at dozens of 
these cases, I'm pretty confident they would have gotten to the 
right place.
    Ms. Speier. So your hands are actually tied?
    Mr. Sklar. To a certain extent. I just want to be 
abundantly clear, though, we can look at closed cases anytime 
we want, but then the money's gone. So you can look at closed 
cases for any reason, you can target cases where a judge has 
paid at exorbitantly high levels, low levels, where they have 
put out huge numbers of dispositions, tiny numbers of 
dispositions, you can target for any number of factors, but you 
cannot do it on live cases pursuant to a regulation that's been 
in place since the late 1990s.
    Ms. Speier. To that point, if you're doing all this data 
collection now that's much more sophisticated and you can see 
trends, then to not be able then to drill down is 
counterintuitive.
    Mr. Sklar. I just want to be precise, though. We can drill 
down on cases where the money has gone out the door, closed 
cases. We cannot drill down on live cases before the money goes 
out.
    Mr. Lankford. Well, what about targeted reviews of an ALJ 
or of a group of ALJs or questions on that? What can be done on 
that and what is being done on that?
    Mr. Sklar. We do do focused reviews. Again, they're on 
closed cases where the money has gone out the door already, but 
that is helpful at times, you can see what's happening. And we 
will typically feed that back to the line managers if there's a 
problem, and they will have those conversations.
    Mr. Lankford. And is there a way to be able to discipline a 
judge or to be able to confront them and say this is it? Or it 
has the appearance at least of several years ago that when 
judges were high producing, they were sent more cases. They 
would seem to affirm them to say, okay, you're reversing a lot 
of cases, you're dealing with a lot of cases, let's send you 
more. That's not true anymore, it appears?
    Mr. Sklar. Correct.
    Mr. Lankford. And grateful for that. But how do we handle 
this as far as when we see there is an issue, some sort of 
discipline so that there is the accountability that's built 
into it?
    Mr. Sklar. Yeah. First, we're going to try with voluntary 
compliance, we are going to give them a chance to get better, 
and most do, and most are very agreeable. They're surprised. 
They've been doing this for 20 years and nobody has given them 
feedback. So we're happy to give them that feedback. We 
actually set up a tool called How Am I Doing? It's an 
electronic tool. They can actually look at their remands coming 
back. So we think that is helping to change behavior.
    But in instances where folks refuse to comply, and 
occasionally you'll actually have an ALJ who says, I refuse to 
follow the policy, then you're into a whole nother realm. And 
there are procedures for conduct and performance violations, 
and we do use those procedures.
    Mr. Lankford. How often?
    Mr. Sklar. They do take a long time.
    Mr. Lankford. How often?
    Mr. Sklar. In my written testimony I've talked about 20 
cases where a judge has either been terminated or left 
voluntarily.
    Mr. Lankford. We mentioned before as well that the CDR 
review, in going through the process of that, there's a term 
that I discovered I was not familiar with, but the more that I 
read and the more people I talked to in different parts of the 
country in DDS offices and such I heard this term for CDRs that 
was used behind the scenes of, not then, not now. I don't know 
if you've heard that before, but it's the perception of they 
weren't disabled before, they're still not disabled now, but 
there's nothing we can do about it because we can't show that 
they've had medical improvement because they really shouldn't 
have been disabled in the first place, and now we're stuck.
    It seems that there's a standard to get on disability that 
they can't have any involvement in any vocation in the United 
States right now, that they can't significantly function in our 
economy. If they somehow get past that, then there's a 
different standard, if they have medical improvement or not. Am 
I reading that correctly, that once you're in it, it's medical 
improvement, not whether you can engage in the economy, but 
going into it there's a standard that you have to be able to 
engage in the economy?
    Ms. LaCanfora. You have summarized that pretty well. And so 
this is one of the issues that we're looking at really closely, 
because the law does require that a person show medical 
improvement in order for us to terminate benefits. There is, 
though, one exception to that, the exception that Mr. O'Carroll 
mentioned----
    Mr. Lankford. Right, fraud.
    Ms. LaCanfora. --if it's clearly fraud. But in addition to 
that there's what we call the error exception, which is if we 
believe that an error was made initially, not necessarily 
fraudulent behavior, but it was just a bad decision, we do have 
the legal authority to go back and revisit that decision and 
terminate benefits.
    Now, what you're hearing when you go around the country is 
the fact that adjudicators are not really doing that often.
    Mr. Lankford. Right.
    Ms. LaCanfora. It's a very infrequently used provision. And 
what we're doing now is we're taking a sample of cases and 
we're doing a comprehensive review to try to understand why 
it's not being used. Is it a training issue? Is it a clarity of 
policy issue? Do we need to amend the regulations so that they 
give more teeth, let's say, to the process?
    We're not entirely sure how to make better use of that 
error exception, but we think we do need to do that. So the 
comprehensive case review we have underway now will help us 
to--help to inform our next steps in terms of whether we need 
to go the rulemaking process, the training route, or a 
combination of those.
    Mr. Lankford. But you have the authority right now to do 
that as far as the error possibility, to say we believe there 
was an error made in a previous case. You already have that 
authority? That's not something you need from us?
    Ms. LaCanfora. We do, but understand that it's quite 
complicated, and we can't, for example, substitute judgments, 
okay? The regulations are very clear on that. So you can't say, 
oh, gee, I just think Judge Bede did a bad job and I'm going to 
substitute my judgment for his. So one of the reasons I think 
that adjudicators are reluctant to use it is because it's a 
very complicated rubric that you have to go through in order to 
use the error exception.
    Ms. Speier. So what would you recommend then?
    Ms. LaCanfora. So, again, we're doing a comprehensive case 
review because we want to look at real cases and figure out 
where we should have used this exception, why we didn't, and 
then we're going to move toward probably a multipronged 
approach, but we may need to amend our regulations to make them 
more clear so that adjudicators can use them more readily.
    Ms. Speier. I guess what I'm asking, though, it sounds like 
the error exception is not being used. You're going to review 
that and see why it's not being used. But the truth is it's not 
being used. So if that's the case, then we need to provide you 
with a tool that allows you to more simply and easily address 
cases where they should never have received the benefit in the 
first place.
    Ms. LaCanfora. I'm not saying that at this point we need 
legislative change. I think we may be able to make better use 
of the error exception through our regulatory process.
    Ms. Speier. Okay.
    Mr. Sklar. If I could bring a little bit of light on 
something we're trying to do at both the DDS level and at the 
hearings level, we are trying to get our adjudicators to better 
rationalize, memorialize, and explain why they allowed 
somebody, and that's really, really important, because without 
a really good rationale it becomes almost impossible when a CDR 
comes up to take that person off the rolls if, indeed, they've 
shown medical improvement, because you're going against 
nothing. You have to show medical improvement from a certain 
baseline.
    So we've done a couple things in this regard. We've 
introduced an electronic tool, the Electronic Case Analysis 
Tool, at the DDS level, the State agency level, where they 
actually have to memorialize and rationalize their decisions. 
And quite frankly I think it's been exceptionally helpful both 
in the CDR realm and even more helpful for the judges, because 
now the judges know why the case was denied at the lower level.
    So if you ask me, one of the reasons why the allowance rate 
is going down at the hearings level, I think they're actually 
looking at why the DDS denied the case. There's now a rationale 
and pretty thoughtfully done. We're actually trying to get the 
judges a similar type of tool, an Electronic Bench Book, so 
that they have a policy-compliant electronic tool to 
rationalize, memorialize their case as well. Of course they 
have decision writers, but we think it's really nice if they 
can get some of the work and some of the policy-compliant 
instructions to the writers in this tool.
    Ms. Speier. In the West Virginia case, without, you know, 
harming the actual case itself, was the bench in that West 
Virginia city, Huntington, I guess it is, did any of them come 
forward? I mean, do judges know about the work of other judges?
    Mr. O'Carroll. That's a tough one that I've got to be 
really cautious on because it's an open investigation. So I 
can't really talk in terms of the witnesses on it. But I've got 
to say, there was a culture in that office that became pretty 
apparent in terms of a number of, you know, people in it raised 
concerns over time, and a lot of alarm bells, you know, had 
gone off and just weren't addressed.
    Ms. Speier. So why didn't any of them become 
whistleblowers? Or, I mean, is there a bounty hunting 
opportunity for people that come forward in a situation like 
that? I mean, it sounds like there were people that recognized 
there was a problem, and then the management declined. And 
those are my words, not yours, so I'm not putting them in your 
mouth. I'm a big believer in allowing whistleblowers protection 
and compensation when they come forward.
    Mr. O'Carroll. We agree completely on that. In fact, one of 
my jobs as the Inspector General is, is the protection of 
whistleblowers, to encourage them to come forward, to protect 
them after they do come forward, and if there is any form of 
retaliation to, you know, to prosecute management for doing it.
    So, yes, we send a signal out there, you know, for 
whistleblowers to come forward, we will protect them, and there 
has been examples of it. You know, as becomes apparent with any 
of these situations on it is, is that in retrospect when you're 
looking back on it, you're seeing a lot of, you know, signals 
that should have been addressed where people came forward with 
issues. I've got to say when we look back on it, they're not 
always--even though you're a whistleblower and you're 
complaining, it may not be as specific as we want it. And what 
we found is a lot of times there's interoffice issues that are 
going on with their time and attendance and it's not 
necessarily fraud or some issue like that. So that's where they 
get overlooked. And that's why we're trying now to, you know, 
to, one, send the signal out there, is if there is an issue on 
it, bring it forward, and we will investigate it.
    Mr. Sklar. Just one quick comment, too. My personal 
opinion, the best line of defense is your front line, and we've 
really spent an inordinate amount of time trying to reaffirm 
the need to speak up. And having spent 8 years in the Inspector 
General's office before taking this job, I've really been very 
active in that regard, and we've seen our referrals to Mr. 
O'Carroll's office shoot up quite, quite dramatically.
    So I do think a lot of it is messaging. I do think a lot of 
it is making it safe for your employees to come forward, they 
feel like they won't get in trouble, they won't get second 
guessed. And we have really put a premium on making sure that 
if any hint of retaliation or reprisal, that's not okay.
    Ms. Speier. Are they eligible for the award system that 
exists in the Federal Government when you call attention to a 
cost or a savings?
    Mr. O'Carroll. Yes, they are.
    Mr. Lankford. Let me ask Mr. Sklar something that's not 
politically challenging or difficult, let's do something simple 
like revising the grid.
    So the grid, my understanding was, several years ago tried 
to go through revision, and Members of Congress and multiple 
outside special interest groups screamed so loud about it that 
the whole thing was scuttled. And we're still stuck with a grid 
from the 1970s where it talks about elevator operators and such 
as, you know, meaningful jobs that are out there, and more 
sedentary jobs like computers that is the top area for the jobs 
now are not listed on there because it just wasn't a major job 
during that time period. Age issues, everything else becomes a 
big issue. How do we do this? We talked about it a little bit 
before about getting a study on this and getting going. How do 
we get this fixed?
    Ms. LaCanfora. Okay. So a great question and a fair 
characterization of the situation. We have two separate work 
efforts related underway. One is that we are updating right now 
the Dictionary of Occupational Titles, which is that book with 
the 12,000 jobs in it that you referenced. It hasn't been 
updated for decades. We have a contract right now with the 
Bureau of Labor Statistics, an interagency agreement, and we 
have a great relationship with them. It's been in place since 
2010. We've already done three phases of data collection out 
across the country using field economists that go into real 
businesses and collect data about how jobs are done across the 
country. That process is moving along. It's a multi year 
initiative because it's very complicated.
    Mr. Lankford. Right.
    Ms. LaCanfora. The book that we end up with has to be 
legally defensible.
    Mr. Lankford. Done when? When's your target date for 
completion?
    Ms. LaCanfora. 2016 is our hope.
    Mr. Lankford. Just in time for a new President to scuttle 
it, but that's a whole different issue.
    Ms. LaCanfora. But understand, for the undertaking the 
timeframe is very quick.
    Mr. Lankford. It's huge.
    Ms. LaCanfora. It really is, and that's a target.
    Mr. Lankford. But then it has still got to go through all 
the rulemaking and all the fight and everything else or you're 
seeing it complete by then?
    Ms. LaCanfora. We are hoping for something usable. It might 
be a phased rollout, a phased implementation. But we are not 
even sure we are going to need to modify regulations. I mean, I 
can't make any promises, but we're trying to update it in a way 
that it doesn't require dramatic redesign of program rules.
    Mr. Lankford. Okay, so that's one aspect of the employment 
side, but we've still got age, we've still got everything else.
    Ms. LaCanfora. Okay. So the other stuff, which really falls 
into the category of the grid, okay, which is, you know, I look 
at it as a chart that you use where you incorporate the factors 
that we're statutorily required to consider--age, education, 
residual functional capacity, which is the ability to do work. 
We take those factors into consideration, and the interplay of 
those factors are considered. And then we basically use this 
grid or this chart to determine, then, what your finding of 
disability is, disabled or not.
    And you're right that we haven't updated that in a long 
time. Right now we're taking a very careful look at that 
because the reason we were unsuccessful in the past is because 
the changes that we made were not evidence based. And that's 
what we learned from that experience, that in order to make a 
change to the disability programs which are going to have 
rippling effects for millions of people's lives and potentially 
have, you know, billions of dollars of implications one way or 
another, it's got to be evidence based, it's got to be sound.
    So what we're doing now is we're revisiting the grid issue 
and working with the Disability Research Consortium, and this 
is a group of highly skilled economists around the country that 
are working with us to look at those factors that we have to 
statutorily consider--age, education, work experience--and how 
other disability systems use those factors in the government 
and outside of the government, and they're going to give us 
some sort of an environmental scan and some advice on how we 
might want to change our rules. So by getting that evidence 
base or that research base beneath us, we think we will be in 
much better position to make sound changes in the grid rules.
    Mr. Lankford. And what's your timing on that part of it?
    Ms. LaCanfora. The Disability Research Consortium work 
should be finished in the middle of fiscal year 2014, July, 
June or July of fiscal year 2014, and then depending on what 
they come back with we will be shaping our next steps.
    Mr. Lankford. So we're talking about the middle of next 
year we'll have some sort of proposal that's out there, and 
then it's a matter of a couple years to get it out or you've 
got data in from them by middle of next year and then it's to 
start putting the proposal together?
    Ms. LaCanfora. So we have data, but we are simultaneously--
you know, we know where the vulnerabilities are, so we're 
trying to simultaneously work with the Disability Research 
Consortium and in house to be prepared to do what I think will 
end up being rulemaking, hopefully in fiscal year 2014.
    Mr. Lankford. Under 18 and over 18 at the same time or just 
all adult focused?
    Ms. LaCanfora. We're right now focused on adults.
    Mr. Lankford. Okay.
    Ms. Speier. Can we talk about the under 18 group, because 
I've never seen them actually defined that way before. And I 
would just like to understand it better. Why are persons under 
the age of 18 eligible for disability benefits when they 
probably haven't worked 40 quarters for starters, right?
    Ms. LaCanfora. So we're talking about the two different 
programs that you mentioned in some of the opening remarks. The 
Social Security Disability Insurance program is the insurance 
program for those people who have worked and earned sufficient 
quarters of coverage to get benefits. The program under which 
disabled children become entitled is the SSI or the 
Supplemental Security Income program, which is a needs-based 
program for disabled children and doesn't require any work 
having been done.
    Ms. Speier. Are there any problems in that program?
    Mr. Lankford. Yes.
    Ms. LaCanfora. Well, let me just say, we think that there's 
always room for improvement for sure. And we have a partnership 
right now with the Institute of Medicine, and they're looking 
very carefully at our childhood disability program. We actually 
have a consensus committee that they have put together with 
medical experts that are going to help us take a really close 
look at the SSI childhood program and identify ways for 
improvement.
    Ms. Speier. Mr. O'Carroll?
    Mr. O'Carroll. Yeah, one of the things, in fact I was 
thinking about it before when we were talking about 
overpayments and I was talking about the overpayment being in 
the 1 percent range, that was in relation to the disability 
side of SSA. In relation to the SSI side, just as the chairman 
just echoed, in terms of the issues with SSI are much higher. 
That's in about the 6 percent range on it. And a lot of that's 
because it's self-reported income on the people that are 
benefits for it.
    As Ms. LaCanfora just explained is, is that it's a needs-
based program, and a lot of times, you know, it's based on what 
a person says what their income is, is whether or not they're 
eligible for the program. And what we're finding now along 
those lines is, and I applaud SSA for doing it, is there's a 
lot of electronic financial information out there that can be 
used to run people against to see when they're claiming that 
they're indigent to see if they do have resources. And SSA has 
been making great strides in terms of using financial 
intelligence to be able to identify people on it. But the SSI 
program does have a much higher overpayment rate.
    Ms. Speier. But for the disabled children, is there----
    Mr. O'Carroll. And the children part of it is, is one of 
those, because what happens with the children is oftentimes 
with children they do improve, you know, in terms of their own 
medical information on it. And we're asking SSA to do more 
continue or redeterminations on children. And then again at age 
18, that's before they get into the adult portion of it, 
they're mandated to be doing redeterminations on those to 
decide before they become an adult whether they're going to be 
on the benefits for the rest of their life, and that's an 
important one, and that's oftentimes neglected.
    Mr. Lankford. This is my big issue with when we have 
anything that smacks towards an error or fraud in SSI. We have 
a child 10, 11 years old that is labeled as disabled. If the 
redetermination process doesn't go well, they carry over into 
adulthood, all the potential of that kid is sapped away. They 
are told from when they're 10 years old, you are disabled, you 
cannot, and are set aside.
    I ran into a young man about 2 years ago in his early 
twenties that had Social Security questions for me, and I asked 
him why he's asking me that. It was very unusual for someone in 
their twenties to ask me about Social Security, and I just 
asked him flat out if he was on SSDI. And he hesitated and said 
yes. And I said, may I ask what for? Because I had this great 
conversation, we're in this large event, he had been 
socializing with those people, and he said, well, I'm ADHD.
    And my first thought was, and I said to him, we need to 
help you get a job, because we're losing you. We're losing all 
that you could produce and all that you could do.
    So the questions that I have on this is when I went and 
pulled the under 18 numbers, and I see the rise in two 
different areas, number one being ADHD, number two being speech 
language pathology and speech language delay as far as the top 
two reasons that are rising for those, both of those, there are 
a lot of issues and questions about how long. For instance, 
ADHD, is that they qualify without medication or they qualify 
with? Because if someone has medication on it and they meet 
these different markers without, but they go on medication, 
obviously often they're very functional in a social environment 
and are very engaged, but if they're off that medication 
they're not. Do we know how that is done?
    Ms. Speier. Mr. Chairman, I have personal experience with 
ADHD with a child, and I think that this would be ripe for a 
hearing on just looking at children under the age of 18 who are 
eligible for SSI because of ADHD. And let's really drill down 
on this. I'm stunned to hear this, really stunned.
    Mr. Lankford. Can you give us just an answer whether it's 
before or after medication for that?
    Ms. LaCanfora. Sure. So we require that anybody, whether 
it's ADHD or any other course, so any other disabling 
impairment, that the individual comply with the course of 
treatment that the physician is prescribing. If they are not 
complying with a course of treatment and therefore the 
condition is deteriorating, then that's grounds for us to deny 
the claim.
    I would also add----
    Mr. Lankford. But I'm saying do they meet the standard and 
the criteria that's being set after medication or before 
medication?
    Ms. LaCanfora. After compliance with the course of 
treatment.
    Ms. Speier. So sometimes it's behavioral, sometimes it's 
pharmaceutical drugs that are prescribed.
    Judge Bede. In these cases there's also the issue of 
obviously SSI people are low income, and there may be no 
treatment because there's none available to the child.
    Ms. Speier. Well, there should be now under the Affordable 
Care Act.
    Judge Bede. Yes, under the Affordable Care Act there is 
now. But in the past they would be put on benefits and would 
then be entitled to Medicaid. They would get treatment, and 
they would improve, and leave the rolls.
    Mr. Lankford. Then what?
    Judge Bede. They would lose their medical care and would 
deteriorate. And we would see that on not a lot, but we would 
see that occasionally.
    Mr. Lankford. Same thing for speech delay, because when you 
get into speech delay or articulation issues, that becomes a 
socialization issue on it. But to have a child that has a 
difficult time with articulation or a delay in articulation, 
that's a completely different issue. To see the rise of the 
speech--now, language is a different issue, that's mental 
processing, but the speech side was very surprising to me.
    Judge Bede. And it also very often responds to speech 
therapy.
    But personally I have not seen a lot of those cases. I take 
your word that if they show up in the statistics. And I don't 
know whether that's been allowed at the State agency level or 
at the hearing level, but I have not noticed a significant 
problem with allowing children with developmental delays.
    Ms. Speier. Mr. O'Carroll, have you looked at this issue, 
and is it more prevalent in some States than others?
    Mr. O'Carroll. I'll tell you, we haven't done work on it. 
It's on our work plan to be looking at it. Amongst other things 
there were a large, I guess, regional concern on it in, I 
think, the Massachusetts, where it got a lot of media attention 
and everything else within the last year. So it's on our radar 
screen as--you know, as an issue to be taking a look at, but we 
haven't done any work.
    Ms. LaCanfora. May I just also add, I just want to 
reiterate very briefly we are right now under contract with the 
Institute of Medicine, the National Academies of Science. They 
are the premier authority in this area, and they are looking 
very specifically at the childhood program and some of these 
issues. And that is under way as we speak and will be done in 1 
year.
    Mr. Lankford. So we're 1 year away from that one. Is that 1 
year away from data or from a proposal?
    Ms. LaCanfora. From their recommendations to us.
    Mr. Lankford. Okay. I know we're hitting the noon hour 
here, and I'm very aware of everyone's stomach and that you all 
have been seated for 2 hours. I'm very aware of that and want 
to be able to honor it.
    What I'd like to do on it--do you have any additional 
questions or comments? What I'd like to be able to do is follow 
up with Mr. Sklar if we can. Maybe Mr. O'Carroll can join us on 
this, we'll have to just see on the timing on it, and whoever 
you'd like to invite to be able to join in.
    I have a long list of all the reforms that have been laid 
out and the ideas that are out there. What I'd like to do is 
try to figure out what are the things that you all are already 
working on? As I've already mentioned, this is already in 
process. What's our time period for completion on these? What 
is the legislative need that the ranking member and I need to 
work on; to say where do we need to push on this, whether that 
be funding, whether that be a change in the law or the statute? 
What is it that is needed from you to be able to make progress 
on this? And what of it is management-related, quite frankly; 
to say where is it you need greater oversight or a push; to say 
if there's an anomaly out there, how do we deal with that?
    So if there's an obvious, you look after the fact to 
Huntington, West Virginia, and to say, okay, it's obvious once 
you look at it after the fact, how do we get some of those 
things to ping up earlier and get some of the review process to 
be able to come through?
    As Mr. O'Carroll has already said, we never want it to 
happen again, but we're going to have people that are going to 
try to run the system on it. It did not take us but a moment to 
sit down at the computer and just to type in Social Security 
Disability, and what came up first was an ocean of law firms 
telling you how to game the system; if you'll use this term, 
this is what you need to submit into it, that becomes the first 
thing that you get when you search on Social Security 
Disability. You have people after you that are trying to game 
the system. That is their bread and butter to do it.
    We need to protect in any way that we can to help guard the 
taxpayer and individuals and, most importantly in this process, 
those vulnerable disabled individuals that will take a hit 2-1/
2 years from now and will have even more instability in their 
life if we don't do something for this.
    So I appreciate your work on it. I'd like to have some 
offline conversations on some of these to see if we can't form 
a list of to-dos, what we can do, what you can do; is that 
fair?
    Other questions or comments?
    Ms. Speier. Mr. Chairman, let me just say this has been, I 
think, one of our best hearings, and we can really work 
together to make the system work better, and that's really our 
charge to do that. And I think it's very clear that unless we 
have more money to do the CDRs and to fund Mr. O'Carroll's 
operation, we're not going to succeed.
    So it's really important for us to do the responsible thing 
here, and I will work hand in glove with you to make it 
accountable, but also to give them the resources so they can 
make sure the right people are getting these benefits.
    Thank you.
    Mr. Lankford. Thank you for your time and for being here 
today. We'll follow up and continue on through the process.
    This hearing is adjourned.
    [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]












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               Material Submitted for the Hearing Record


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