    [Senate Hearing 114-424]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-424

                EXAMINING DUE PROCESS IN ADMINISTRATIVE HEARINGS

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

                                     HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                   REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                                     OF THE

                                  COMMITTEE ON
                             HOMELAND SECURITY AND
                              GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 12, 2016

                                   __________

                       Available via http://www.fdsys.gov

             Printed for the use of the Committee on Homeland Security
                            and Governmental Affairs

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            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                        RON JOHNSON, Wisconsin, Chairman
    JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
    ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
    RAND PAUL, Kentucky                  JON TESTER, Montana
    JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
    MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
    KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
    JONI ERNST, Iowa                     GARY C. PETERS, Michigan
    BEN SASSE, Nebraska

                      Christopher R. Hixon, Staff Director
                  Gabrielle A. Batkin, Minority Staff Director
               John P. Kilvington, Minority Deputy Staff Director
                         Laura W. Kilbride, Chief Clerk
                       Benjamin C. Grazda, Hearing Clerk

           SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                       JAMES LANKFORD, Oklahoma, Chairman
    JOHN MCCAIN, Arizona                 HEIDI HEITKAMP, North Dakota
    ROB PORTMAN, Ohio                    JON TESTER, Montana
    MICHAEL B. ENZI, Wyoming             CORY A. BOOKER, New Jersey
    JONI ERNST, Iowa                     GARY C. PETERS, Michigan
    BEN SASSE, Nebraska
                         John Cuaderess, Staff Director
                      Eric Bursch, Minority Staff Director
                          Rachel Nitsche, Chief Clerk

                               C O N T E N T S

                                     ------
    Opening statement:
                                                                       Page
        Senator Lankford.............................................     1
        Senator Heitkamp.............................................     3
    Prepared statement:
        Senator Lankford.............................................    27
        Senator Heitkamp.............................................    29

                                   WITNESSES
                             Thursday, May 12, 2016

    Theresa Gruber, Deputy Commissioner, Disability Adjudication and
      Review, U.S. Social Security Administration....................     5
    Hon. Marilyn Zahm, Administrative Law Judge, Buffalo, New York,
      Office of Disability Adjudication, and President, Association
      of Administrative Law Judges...................................     6
    Joseph Kennedy, Associate Director, Human Resources Solutions,
      U.S. Office of Personnel Management............................     8

                         Alphabetical List of Witnesses

    Gruber, Theresa:
        Testimony....................................................     5
        Prepared statement with attachment...........................    30
    Kennedy, Joseph:
        Testimony....................................................     8
        Prepared statement...........................................    69
    Zahm, Hon. Marilyn:
        Testimony....................................................     6
        Prepared statement with attachment...........................    57

                                    APPENDIX

    Chart submitted by Judge Zahm....................................    68
    Statements submitted for the Record:
        Federal Administrative Law Judges............................    74
        Allsup, Inc..................................................    77
        National Organization of Social Security Claimants'
          Representatives............................................    83
    Responses to post-hearing questions for the Record:
        Ms. Gruber...................................................    89
        Ms. Zahm.....................................................   103
        Mr. Kennedy..................................................   120

                EXAMINING DUE PROCESS IN ADMINISTRATIVE HEARINGS

                                  ----------

                             THURSDAY, MAY 12, 2016

                                     U.S. Senate,
                            Subcommittee on Regulatory,
                          Affairs and Federal Management,
                        of the Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 9:04 a.m., in
    room SD-342, Dirksen Senate Office Building, Hon. James
    Lankford, Chairman of the Subcommittee, presiding.
        Present: Senators Lankford, Sasse, Heitkamp, and Tester.

                 OPENING STATEMENT OF SENATOR LANKFORD

        Senator Lankford. Good morning, everyone. Welcome to
    today's Subcommittee hearing. Today we are going to look at
    several issues surrounding administrative law judges (ALJs),
    their independence, and the importance of due process as
    provided by the Administrative Procedures Act (APA). The APA
    validates due process principles through the guarantee of an
    administrative hearing before an independent decisionmaker.
    These independent and impartial decisionmakers are most often
    administrative law judges.
        The office of the ALJ is unique in our Federal Government.
    Although they are like Federal judges in the sense that we
    expect them to preside over formal administrative adjudications
    independently, ALJs are, in fact, executive branch employees
    selected by the Office of Personnel Management (OPM) to oversee
    adjudications as required by law. Though ALJs are spread
    throughout the executive branch, our focus today will center on
    ALJs from the Social Security Administration (SSA), as they
    employ the largest number of Federal ALJs. ALJs are hired
    through the Office of Personnel Management. OPM is tasked with
    reviewing all ALJs' qualifications. And OPM has made strides in
    providing qualified ALJs to the Social Security Administration
    and elsewhere across the executive branch.
        At the same time, over the last four 4 years, Congress has
    appropriated significant resources so that the Social Security
    Administration could hire more ALJs to address its backlog of
    disability claims. Yet, the agency has been unable to hire
    sufficient numbers of approved ALJs to tackle the rising
    backlog of cases--a backlog which topped 1 million last year
    and, may I say, in my own State of Oklahoma around 13,000. But
    instead of hiring more ALJs, in a misguided effort to expedite
    the adjudications process, the Social Security Administration
    is in the process of moving tens of thousands of pending cases
    from ALJs to non-APA attorney examiners, who are regular
    employees of the agency and lack the requisite decisional
    independence. In March, SSA posted close to 30 non-APA
    ``Attorney Examiners'' job openings to support this initiative.
    The Social Security Administration proposal raises important
    questions about whether cases heard by non-APA attorneys
    constitutes a violation of the Administrative Procedures Act.
    Further, Social Security regulation makes repeated reference to
    a claimant's right to an independent decision from an ALJ.
        SSA's newfound policy also raises procedural issues. Given
    the magnitude and potential economic effect of the Social
    Security Administration's proposed reinterpretation of its own
    rule here, it appears that the rule should also have been
    submitted by SSA to the Office of Information and Regulatory
    Affairs (OIRA). Economics aside, the proposal creates an
    inequity where some claimants will receive the independent
    decision guaranteed to them by the APA and others may not.
    Furthermore, for non-disability cases the loss of due process
    is compounded by the fact that a majority of these individuals
    are unlikely to have access to attorney representation due to a
    lack of a financial incentive for that attorney representative.
    But once a sizable number of claimants have been denied a
    hearing before an ALJ, there is the potential that the Social
    Security Administration's proposal to move cases away from ALJs
    to non-APA attorneys could result in a large class action
    lawsuit.
        While we all share the goal of eliminating the hearing
    backlog--and I do agree we all share that goal--it is our
    concern not just about meeting those results; we must also
    focus on how we get there. Accordingly, there are three main
    points I would like to address today:
        First, I would like to focus on the how attorney examiners,
    drawn from the SSA's own ranks, can be said to appear
    impartial, especially to the extent that they may review cases
    de novo.
        Second, I would like to know more about the Social Security
    Administration's policy pivot, which in the past allowed for
    certain transfers on a case-by-case basis, to permit now large-
    scale transfers of entire classes of cases.
        Third, I believe we need to carefully consider alternative
    proposals to the Social Security Administration's untested and
    legally ambiguous policy, such as using retired ALJs from local
    offices to hear these cases. If the Social Security
    Administration believes that there are not enough qualified
    ALJs to meet the current demand, shouldn't they and OPM instead
    focus on new recruitment efforts to increase the supply of
    worthy applicants?
        There are a lot of issues as we deal with Social Security
    right now. There are some success stories. I met yesterday with
    the Inspector General (IG), talking about the fraud that has
    now been exposed in the West Virginia case. It is a $600
    million fraud case that was exposed. There are others on the
    horizon. I am proud of the work that SSA is doing in changing
    some of the processes for handling ALJs and some of the
    oversight and some of the intentional things they are doing to
    be able to work on the backlog. We just have to make sure that
    we do this right.
        There are millions of dollars in each of these fraud areas,
    and there is a lot that is pending in case we have an exposed
    area for a class action lawsuit. It has got to be done right.
        We are happy to have with us here today Deputy Commissioner
    Theresa Gruber from the Social Security Administration,
    Associate Director for H.R. Solutions Joseph Kennedy from the
    Office of Personnel Management, and Marilyn Zahm, an ALJ from
    the Social Security Administration, to help us navigate these
    important issues. We are grateful for your testimony. I look
    forward to the issues we will discuss at this hearing.
        With that, I would like to recognize Ranking Member
    Heitkamp for her opening remarks.

                 OPENING STATEMENT OF SENATOR HEITKAMP

        Senator Heitkamp. Thank you, Mr. Chairman, and thank you
    for that great outline of why we are here today. I think over
    several decades, Congress has held dozens of hearings about the
    Social Security Administration and its management of retirement
    and disability benefits. This oversight is important since
    traditional Social Security and Social Security disability are
    critical and important programs that impact people all across
    the Nation, and in North Dakota.
        Since I took office in 2013, literally hundreds of North
    Dakotans have asked me for help in navigating the Social
    Security programs. It works out to about five new cases every
    month. Many of these individuals are seeking help with the
    appeal of a disability claim. Others find themselves subject to
    overpayments or caught in some other kind of bureaucratic
    struggle. Nationwide, there are over 1 million people awaiting
    a decision or hearing by the Social Security Administration.
    These millions of individuals find themselves caught up in
    bureaucracy, struggling to find the correct path forward--
    whether it is submitting the correct medical proof or
    understanding the disability program rules. It is critical that
    today we keep these citizens in mind.
        Our interest today in the big and complicated subject of
    Social Security disability is relatively narrow. We want to
    learn about the Social Security Administration's proposal to
    shift certain non-disability appeals away from the realm of
    administrative law judge hearings to proceedings presided over
    by administrative appeals judges (AAJs) and attorney examiners
    within the agency's Appeals Council. This proposed action has
    raised, I think, very serious questions about whether this
    change will accomplish what the Social Security Administration
    hopes to achieve and, most importantly, the impact of this
    policy on the thousands of Americans seeking appeals of these
    decisions.
        I look forward today to better understanding the
    differences between ALJs and attorney examiners, as well as the
    challenges the Social Security Administration faces in managing
    competing needs and challenges. I want to fully understand the
    rationale for this change and, most importantly, get clarity on
    how claimant due process will be affected if this plan is
    implemented.
        Those who are familiar with the work of this Subcommittee
    know that we are interested--in fact, charged with the
    responsibility of improving the efficiency, transparency, and
    effectiveness of our Federal Government. This hearing provides
    an opportunity to discuss how this proposal meets those
    standards, while ensuring the integrity and fidelity of
    administrative appeal decisions.
        Finally, given the important role that the Administrative
    Procedures Act plays in much of this Subcommittee's work, I
    welcome testimony that illuminates how and why the independence
    conferred upon ALJs by the APA should be preserved or enhanced.
    That is a critical question here, because it seems that we have
    taken a turn and deviated from what has always been the norm
    when you make a change like this, especially when it involves
    due process under law, the only opportunity that someone has to
    present their case, impartiality, the fact that you should have
    an opportunity to not be judged by people who probably already
    were part of a system that judged your claim. It is a troubling
    set of facts, but my mind I think remains open to better
    understand how we can improve efficiency but not take shortcuts
    on due process or on the rights of citizens of this country,
    especially to critical programs like the Social Security
    program.
        So thank you again. I look forward to your testimony, and I
    look forward to this Committee's discussion after your
    testimony.
        Senator Lankford. Thank you. At this time we will proceed
    with testimony from our witnesses.
        Ms. Theresa Gruber is the Deputy Commissioner for
    Disability Adjudication and Review at the U.S. Social Security
    Administration. Ms. Gruber has served the Social Security
    Administration in various capacities since starting with the
    Minnesota field office in 1991. She has a Bachelor of Arts from
    St. Mary's University in Minnesota.
        Ms. Marilyn Zahm is an administrative law judge at the
    Buffalo, New York, Office of Disability Adjudication and Review
    with the U.S. Social Security Administration, where she was
    appointed in 1994. She is in the first year of a 3-year term as
    president of the Association of Administrative Law Judges. You
    know what the best role is in any association? Past president.
    [Laughter.]
        Yes, and you are in your first year of 3 years as the
    president, so you have to take it on.
        Before becoming an ALJ, Ms. Zahm was a litigator for the
    National Labor Relations Board (NLRB) and legal services
    authority.
        Mr. Joseph Kennedy is Associate Director for Human
    Resources Solutions at the U.S. Office of Personnel Management.
    He has worked on H.R. reform in various capacities within the
    OPM office and was a Fellow to Congresswoman Morella. Mr.
    Kennedy received his Bachelor of Arts from the University of
    the District of Columbia.
        I would like to thank all of our witnesses for appearing
    before us today. It is the custom of the Subcommittee to swear
    in witnesses, so if you do not mind, I would like to ask you to
    please stand and raise your right hand. Do you swear that the
    testimony that you will give before this Subcommittee will be
    the truth, the whole truth, and nothing but the truth, so help
    you, God?
        Ms. Gruber. I do.
        Judge Zahm. I do.
        Mr. Kennedy. I do.
        Senator Lankford. Thank you. You may be seated. And let the
    record reflect the witnesses have all answered in the
    affirmative.
        We are using a timing system today. You will see a clock in
    front of you as you start your oral testimony. Obviously, your
    written testimony is already a part of the permanent record. In
    your oral testimony, if you can stay as close to 5 minutes as
    you can, that will allow question time, and we will have
    interaction time for a while.
        Ms. Gruber, we are honored to be able to receive your
    testimony first.

    TESTIMONY OF THERESA GRUBER,\1\ DEPUTY COMMISSIONER, DISABILITY
      ADJUDICATION AND REVIEW, U.S. SOCIAL SECURITY ADMINISTRATION

        Ms. Gruber. Thank you, Chairman Lankford, Ranking Member
    Heitkamp, and Senator Sasse. My name is Theresa Gruber. As the
    Deputy Commissioner for Disability Adjudication and Review
    since July 2015, I am responsible for SSA's hearings and
    appeals operation. Thank you for inviting me today to discuss
    the significant public service challenge that we face, over 1.1
    million individuals and their families awaiting a hearing
    decision.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Gruber appears in the Appendix on
    page 30.
    ---------------------------------------------------------------------------
        I began my career at SSA in a Minnesota field office, as
    you said, and I have known firsthand the faces behind each
    appeal and am profoundly aware that they are counting on us to
    make decisions in their cases.
        It troubles me that people are waiting an average of 17
    months for a hearing decision, and in some places the wait is
    considerably longer. Any wait, but especially this wait, is too
    long for Americans who are facing hardship, having to make
    unimaginable choices between one basic need like paying a
    mortgage or rent over another equally important one. The status
    quo is unacceptable.
        Given the urgency of the situation, we must take every
    reasonable step to reduce the amount of time people across the
    Nation wait for a hearing decision. As outlined in my written
    testimony, we have developed a comprehensive multi-year plan:
    the Compassionate and Responsive Service (CARES) plan.
        A key pillar of that plan is our significant and
    collaborative effort to timely recruit, hire, and retain enough
    administrative law judges, to meet the extraordinary demand.
    And I thank both my colleagues on the panel for their help
    toward that end.
        We know, though, that progress on that front will not come
    fast enough to address the critical need to increase decisional
    capacity quickly, so ALJ hiring is not our only strategy.
        Our plan combines a number of initiatives to help increase
    decisional capacity. One of the initiatives, the Adjudication
    Augmentation Strategy, is part of an all-hands-on-deck approach
    where we will use highly qualified administrative appeals
    judges, or AAJs, from the Appeals Council to help bring down
    the backlog. These adjudicators will hold hearings, where
    necessary, and issue decisions in non-disability cases and in
    disability cases that are already pending before them that may
    have otherwise been remanded back to an ALJ. If we are going to
    be successful in reducing wait times for Americans, we must
    increase our decisional capacity at the hearing level.
        Let me assure you at the outset that our decision to have
    AAJs on the Appeals Council hold hearings and issue decisions
    in certain cases comports with due process. Since its inception
    in 1940, the hearings process has safeguarded a claimant's
    right to due process and continues to do so.
        The fundamental requirement of due process is that the
    decisionmaker be fair and impartial. While hearings have
    generally been conducted by ALJs, previously called
    ``referees'' and then ``hearing examiners,'' our Appeals
    Council members have always had the authority to hold hearings
    and issue decisions. When our Appeals Council members take
    these actions, they follow the same rules as ALJs.
        Our hearings process provides, for example, a neutral
    decisionmaker; an opportunity to make an oral presentation to
    the decisionmakers; an opportunity to present evidence and
    witnesses; an opportunity to confront and cross-examine
    evidence and witnesses; the right to appoint a representative;
    and a decision based on the record with a statement of the
    reasons for the decision. Our Appeals Council members will
    provide no less.
        The augmentation strategy is just that: an augmentation of,
    not a replacement of, ALJs. In fact, with adequate and
    sustained funding, we plan to have a record number of ALJs on
    board by fiscal year (FY) 2018, that number being 1,900.
        We will continue to collaborate with Congress, our
    employees, our Federal partners like OPM, our union, and
    advocates to reduce wait times. We have made some progress. We
    are on target this year to reduce the wait time for those who
    have waited the longest.
        The Fiscal Year 2017 President's budget request gives us
    the best chance to stay on track to fulfill our collective duty
    as public servants and take the steps we need.
        The people and families waiting are not just numbers or a
    distant statistic. They are people in our communities, and for
    some of us in our families, each entitled to a quality and
    timely hearing decision, and I am confident both our ALJs and
    AAJs will provide. We ask for your support, and I thank you for
    your time today. And we will be happy to take any questions.
        Senator Lankford. Thank you. Ms. Zahm.

      TESTIMONY OF HONORABLE MARILYN ZAHM,\1\ ADMINISTRATIVE LAW
    JUDGE, BUFFALO, NEW YORK, OFFICE OF DISABILITY ADJUDICATION AND
      REVIEW, U.S. SOCIAL SECURITY ADMINISTRATION, AND PRESIDENT,
                ASSOCIATION OF ADMINISTRATIVE LAW JUDGES

        Judge Zahm. Chairman Lankford, Ranking Member Heitkamp,
    Senator Sasse, thank you for this opportunity to discuss the
    Social Security Administration's plan to divert two categories
    of cases from administrative law judges to attorney examiners.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Judge Zahm appears in the Appendix on
    page 57.
    ---------------------------------------------------------------------------
        As mentioned, I am president of the Association of
    Administrative Law Judges, and the views I express today are
    those of the judges.
        No one is more aware of the seriousness of the
    unprecedented pending caseload than the ALJs, who every day see
    the toll that waiting for a hearing can take on a claimant.
        The agency plans to hire 65 new attorney examiners with the
    internal organizational title of administrative appeals judges,
    along with close to 300 staff, to hold hearings and issue
    decisions on non-disability and remanded cases.
        The agency's initiative to remove these cases from ALJs
    violates the Administrative Procedure Act, which requires APA
    judges to hear APA cases. It also violates the agency's own
    regulations. Moreover, this plan eliminates valuable rights
    that have been granted to the American public.
        For decades, ALJs have conducted evidentiary hearings on
    appeals made from adverse agency determinations in conformity
    with SSA's own regulatory scheme set out in the Code of Federal
    Regulations (CFR). The regulations guarantee the right to a
    hearing before an ALJ.
        What SSA plans to do is to remove categories of cases from
    ALJs and have these cases heard by their own hand-picked
    people. It contends that Appeals Council attorneys are
    equivalent to ALJs. This is simply not true.
        Please review the chart\1\ that is included and is up here
    on the floor--yes--comparing ALJs to Appeals Council attorneys
    with regard to qualifications in hiring, discipline, hearing
    authority, ex parte contacts, performance reviews and bonuses,
    and claimants' appeals rights.
    ---------------------------------------------------------------------------
        \1\ The chart referenced by Judge Zahm appears in the Appendix on
    page 68.
    ---------------------------------------------------------------------------
        Why are all these safeguards and rules for APA judges
    important? They are what gives the American public confidence
    that they will get a fair hearing, that a judge is independent
    and cannot be improperly influenced by the agency. This is the
    very right that Congress granted to the American people when it
    passed the APA in 1946.
        These new Appeals Council attorneys, who have never held
    SSA hearings or issued decisions, will have to undergo
    training, and since they will all be located in the D.C. area,
    they will have extensive and costly travel to hold hearings.
        SSA has told the Association of Administrative Law Judges
    (AALJ) that this new program is temporary and will last for one
    year. But the precedent of having decisions made by individuals
    who are not APA judges will be long-lasting.
        Under the agency's plan, claimants who appear before these
    Appeals Council adjudicators will lose their right to a level
    of appeal. Instead of simply writing a letter to the Appeals
    Council to obtain a review of their cases, their recourse will
    be to file an action in Federal district court, a much more
    difficult and expensive endeavor.
        The regulations SSA uses to justify its plan do not provide
    sufficient legal support for its position. I refer you to the
    legal analysis prepared by administrative law expert Dean
    Harold Krent, who has concluded that these regulations do not
    permit the agency to transfer whole categories of cases to the
    Appeals Council for hearing. This plan is a case of unnecessary
    bureaucratic overreach.
        The AALJ has suggested an alternative use of these
    resources to reduce the pending caseload. The particulars are
    set out in my written Statement. Our proposal does not violate
    a claimant's right to an independent APA adjudicator or a
    claimant's right to an internal level of appeal, nor does it
    contravene long-standing regulatory procedures.
        In conclusion, SSA's initiative to supplant ALJs with
    Appeals Council attorneys eliminates APA protections for the
    American public in the name of expediency. Not only is this
    plan ill-advised, it will not make a dent in the backlog of
    pending cases. More likely, a court challenge will necessitate
    the rehearing of all of these cases by an ALJ. We are adamantly
    opposed to this plan.
        Thank you.
        Senator Lankford. Thank you. Mr. Kennedy.

       TESTIMONY OF JOSEPH KENNEDY,\1\ ASSOCIATE DIRECTOR, HUMAN
        RESOURCES SOLUTIONS, U.S. OFFICE OF PERSONNEL MANAGEMENT

        Mr. Kennedy. Chairman Lankford, Ranking Member Heitkamp,
    and Members of the Subcommittee, I am pleased to have the
    opportunity to testify this morning regarding the role of OPM
    with respect to the hiring process for administrative law
    judges.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Kennedy appears in the Appendix
    on page 69.
    ---------------------------------------------------------------------------
        ALJs help ensure fairness and certain procedural
    requirements are met in administrative proceedings before
    Federal agencies. Twenty-eight Federal agencies employ ALJs,
    and as of September 2015, there are approximately 1,800 ALJs
    across the Federal Government.
        Consistent with the Administrative Procedure Act and civil
    service law, OPM is responsible for establishing ALJ
    qualifications and classification standards, developing and
    administering the ALJ examination, and maintaining a register
    of qualified candidates. To preserve the independence of ALJs,
    OPM approves certain personnel actions affecting incumbent and
    former ALJs, such as promotions, transfers, reassignments,
    reinstatements, and details, and approves agencies' position
    descriptions for ALJs.
        To provide surge support, OPM also administers the ALJ loan
    program and the senior ALJ program. To be qualified, applicants
    must be licensed and authorized to practice law and must also
    have 7 years of relevant experience. ALJ applicants also must
    undergo an examination. For the 2013 examination, OPM
    psychologists surveyed the Federal ALJ population and worked
    closely with incumbent ALJs from across the country to develop
    the current multi-hurdle assessment process.
        Given the breadth and the input from ALJs across the
    government and the rigor with which the exam was developed, OPM
    has great confidence in the ability of this examination to
    identify high-quality candidates for ALJ positions across
    government. Under this examination process, applicants who meet
    the preliminary qualification requirements go through an online
    assessment. Applicants in the higher-scoring subgroup are
    invited to participate in the in-person component of the
    examination. Eligible candidates are then placed on the ALJ
    register based on their final numeric rating. Agencies make
    selections from the candidates provided by OPM consistent with
    the law governing Competitive Service.
        OPM is confident there is a robust list of candidates on
    the current register to cover the near-term hiring needs of
    agencies. However, we recognize that SSA is facing an
    unprecedented challenge to manage their current backlog. We are
    working closely with SSA leadership to respond to the
    increasing need of ALJ candidates they need to meet their
    hiring goals to manage the backlog.
        For example, during the past year, OPM processed additional
    applicants under the 2013 announcement and added candidates to
    the register. OPM also opened the ALJ examination for new
    applicants by April 1st, as required by the Bipartisan Budget
    Act of 2015. Prior to opening, OPM conducted an extensive
    recruitment effort, targeting national bar associations, women
    and minority bar associations, ALJ associations and unions,
    chief ALJs, and various veterans organizations. When the
    announcement was posted, it yielded more than 5,500
    applications, the largest applicant pool in more than 15 years.
    OPM is currently reviewing the applications to determine which
    applicants meet preliminary qualifications. After we complete
    the administration of the examination, which will take some
    time, OPM will add the candidates who successfully completed
    all the components of the examination to the register. The new
    candidates and the candidates currently on the register will
    remain there until they are appointed to an ALJ position or
    until OPM develops and administers a new ALJ examination.
        While keeping in mind its government responsibilities, OPM
    has worked collaboratively with SSA for over a year to assist
    SSA with its hiring needs. OPM meets with SSA officials,
    providing suggestions to their hiring process, and as noted
    previously OPM recently administered the examination to an
    additional wave of 2013 applicants to further supplement the
    list of available candidates on the register. These efforts
    added depth to the pool OPM draws from to provide candidates to
    agencies that employ ALJs, including SSA. OPM is committed to
    continue working with SSA so it can appoint more ALJs.
        Thank you for having me here today, and I will be happy to
    answer any questions you may have.
        Senator Lankford. Thank you, Mr. Kennedy. Thank you to all
    of our witnesses for their testimony today. This conversation,
    as is the habit of this Subcommittee, is a more open dialogue
    as we go through the questions, and so we will have a lot of
    back-and-forth.
        I want to get just a couple clarifying statements here at
    the beginning of this. Ms. Gruber, how many ALJs does the
    Social Security Administration have right now?
        Ms. Gruber. At last count, 1,506.
        Senator Lankford. OK. And your statement is we need to get
    to 1,900.
        Ms. Gruber. That is our current hiring plan: 250 this year,
    250 next year, 250 the following year. I will say we have
    slightly adjusted our expectation this year because we are
    trying to gauge whether this summer, will be able to hire
    enough ALJs to meet the 250. So I am thinking 225 to 250 will
    be our target for this year. But by that, we would top out at
    about 1,900.
        Senator Lankford. Do you have enough in the pool from what
    OPM is sending you? My understanding is OPM is sending about
    5,000--they get about 5,000 applications coming in for ALJs.
    Then they are whittling that number down to try to get you the
    number that they would recommend from the pool that then they
    are handing to you. Do you have enough to be able to get to
    that 250 number? Or are you saying there are not enough
    qualified folks to be able to get to the 250 number?
        Ms. Gruber. Just to be clear, as for the new exam, we will
    not have access to those names until about, I would say, the
    spring of 2017, although we are working collaboratively with
    OPM to see if there is any way to streamline and speed up that
    timeline.
        With respect to the----
        Senator Lankford. How many do you have access to now? If
    that is the spring of 2017, do you have access to some in the
    spring of 2016?
        Ms. Gruber. As Mr. Kennedy testified, they updated our
    registers or our certificate of eligibles both in November and
    in March. Right now, we are interviewing from the March
    certificate. We have 81 certificates for 81 different
    geographic locations. In each geographic location, we have
    multiple vacancies, generally, two or three. In some places we
    have as high as six, seven, or eight vacancies.
        When we received our aggregate list of certificates in
    March, we received about 5,800 names. It is important, though,
    to recognize for us that is not the number of candidates--and
    if I were an ALJ candidate myself, I would apply for many
    locations. So when we looked at the 5,800, we actually only
    have access to, I think, 260 unique names for vacancies across
    81 offices. What we are doing right now is interviewing those
    individuals----
        Senator Lankford. So wait. I am sorry to interrupt you.
        Ms. Gruber. Sure.
        Senator Lankford. You have 260 applicants for----
        Ms. Gruber. Unique names that we can consider for the
    vacancies across 81 locations, correct.
        Senator Lankford. So when we talk about 5,000 on this, for
    OPM, how many does OPM receive as far as applicants total that
    you have worked down to that 260 then? Is that the 5,000 number
    that I have seen before? There are 5,000 applicants as you
    interview and go through the first stage and as you are getting
    down to about 260, then they are trying to apply to multiple
    locations from there?
        Mr. Kennedy. Mr. Chairman, thank you for that question.
    When we receive about 5,000 applicants, you typically will see
    about maybe 50 percent of those will actually fall out.
        Senator Lankford. Right. And so you are thinking there are
    2,500 or so that are going through the process. Then that
    actually gets down to 260? That is what I am trying--this is a
    new number for us, to say there are 260 individual names.
        Ms. Gruber. Sure. Again, as Mr. Kennedy had said, there are
    applicants who apply for the exam.
        Senator Lankford. Sure.
        Ms. Gruber. Then they go through a number of stages in the
    OPM process, and as he had said, about half fall out. What
    actually gets referred is the list of eligibles to all the
    hiring agencies, which might be, for example, 2,500 names. When
    we go in, we say we have 81 locations that we would like lists
    of eligibles for. They give us a list of 75 names per location,
    and what I was explaining is when we go through the process of
    saying how many of those 75 names per location across 81
    certificates are duplicates, we only really have 260 unique
    individuals.
        For example, if I hire Candidate A for Newark, New Jersey,
    and Candidate A also applied for Fargo, North Dakota, I cannot
    hire that candidate for Fargo. I have to move down the list.
    And that is where the difficulty comes. It is really a numbers
    thing for us.
        Senator Lankford. OK. So part of the question then I have
    is that when I wrote a letter earlier to Carolyn Colvin about
    this, the statement came back to me, ``We cannot hire enough
    qualified ALJs to be able to actually hit the backlog numbers
    that we need,'' which begs the question then: Who are the AAJs
    here that are these individuals? Because the first thing that
    comes up is if you cannot hire enough of these and you say,
    well, we cannot hire enough of these and so we are going to go
    to these, it is an obvious question to say are we getting
    people less qualified than we are getting for the ALJs? Who are
    these individuals that are then being tapped on as the AAJs?
        Ms. Gruber. Thank you, Mr. Chairman, for the question. One
    thing I will also say is, we have seen in both your opening
    statement and Judge Zahm's statement, talk about attorney
    examiners. That is really the personnel title for this
    position. Attorney examiners on a position description are
    administrative appeals judges. They are the administrative
    appeals judges that staff our Appeals Council. They are the
    administrative appeals judges that are referred to even on
    OPM's own website. And it is the administrative appeals judges
    back, in the early 2000s that Congress acted to bring on par
    from a pay standpoint with ALJs. The pay scale for both are
    exactly the same.
        In terms of who they are, many are internal hires, although
    we do plan, as we open the positions to also have external
    vacancies.
        Senator Lankford. So do they have other tests that they
    will do internally?
        Ms. Gruber. Well, in terms of what we look for are people
    who have good interpersonal skills. We look for people who
    understand the sequential evaluation process. That is why a
    number of internal candidates will certainly be individuals
    that will compete well.
        Senator Lankford. So what I am trying to figure out is--and
    it is one of the things that we have tried to search through
    everything to figure out who these individuals are. When you
    are talking about bringing on other individuals to be able to
    supplement, I know who ALJs are. I know the training that they
    have. I know the background; I know the qualifications. I
    cannot seem to figure out who these individuals are other than
    they are internal. Are they internal to the Washington, D.C.,
    office? Do they have other jobs? And will they retain those
    other jobs while they are also doing this so this is really
    kind of a part-time--occasionally, they are going to do some of
    these hearings, but at other times they are going to do
    something else with their tasks? Or who are these individuals,
    and what is their interaction with other individuals? An ALJ
    obviously is separate and independent through the process. They
    are receiving a case. I do not know if these other individuals
    are sequestered away from other folks that are in the middle of
    the decision process because I just do not know.
        Ms. Gruber. Thank you again for the question.
        First, in terms of how we are recruiting, we are opening
    job vacancies across the country. They can be individuals who
    are in the Baltimore-Washington area. They can be individuals
    across the Nation. We have opened the vacancies internally. We
    plan to open external vacancies as well. Not everybody, I would
    certainly say, who applies to be an administrative appeals
    judge, is someone who has ever even applied for an ALJ
    position.
        In terms of the training, we are working right now on a
    pretty significant training plan that mirrors and tracks
    closely the plan in terms of ALJ training. One big difference
    between administrative appeals judges currently is they do not
    conduct face-to-face hearings. Part of the training that we do
    for a new ALJ who has never done a hearing in our process, we
    teach them sequential evaluation. We teach our AAJs the same
    thing. We teach a class on how to conduct and do fair and
    impartial hearings.
        The same will happen with our AAJs. We look for people with
    good interpersonal skills because I think that is one other
    thing to point out. Our process is non-adversarial. That is
    unlike other administrative law proceedings. We need people who
    can understand how to work with a claimant who comes to us at a
    very difficult time. And as both have said--or as you had said
    in your opening remarks, I think about 20 percent of our
    claimants are not represented. So it takes a unique kind of
    skill. And we are a high-production environment.
        Senator Lankford. OK. I would expect, though, when you are
    talking about the non-disability cases, these are folks that
    are coming back--they may have retirement or pension issues or
    overpayments. I would expect them to have a much lower number
    for representation because, quite frankly, the representatives
    are paid to get someone on disability, not necessarily someone
    is overpaid, there is no benefit to them to do that. So I would
    expect for these administrative judges you are talking about
    that very few would have representation with them. Is that
    correct?
        Ms. Gruber. When you look at the non-medical piece, I think
    that that is a fair----
        Senator Lankford. OK. So then I am still trying to get an
    answer to my initial question. Will these individuals also do
    something else? Or will they solely be dealing with these
    cases, these 40,000 cases? Or will they do the case hearings at
    times but they also do something else at other times?
        Ms. Gruber. In our Appeals Council, the other category of
    cases that folks handle are cases that are pending for the
    Appeals Council review. That is at 30,000. All of the members
    will do that piece, but we will segregate out a group of the
    judges to focus solely on the non-disability cases
        Senator Lankford. So they will solely focus on hearings, is
    what they are hired for, they are not current employees that
    will do something else part-time and they will also do----
        Ms. Gruber. In terms of the non-DIB cadre, they will be
    solely dedicated to that. The rest are already doing the work.
    We are simply proposing that they would expand the amount of
    work they do.
        Senator Lankford. OK. We will have a lot of questions here.
    I do not want to take up all the time here for our interaction.
        Senator Heitkamp. Obviously we are concerned about taking a
    process that we believed was required by law, which is an
    independent ALJ, and now doing a process internally that draws
    upon some of the folks who have already done the informal kind
    of adjudication, which was unsatisfactory. Right? You have an
    informal process where you review these and obviously have
    denied benefits, resulting in the need for an appeal. That is
    where we are at, right?
        So what we are trying to get at is are these same people
    who are involved in this informal process of determining
    appeals going to be the ones that sit as now a fact finder for
    what could result in an appeal to the Federal district court?
        Ms. Gruber. No, they are not.
        Senator Heitkamp. OK. Good. That is what I need to know,
    because we are trying to figure out why you are doing this. We
    understand that you are in crisis when you have this many
    appeals pending. I want to know, in your decisionmaking, what
    was the matrix of ideas that came in? And why didn't you choose
    an idea that would beef up the ALJs whether you go back and
    find some retired Article III judges, whether you go back and
    find retired ALJs to come on to amp up, the ability to do this,
    working with OPM? I understand the OPM process, and we do not
    want people classified as ALJs unless they are clearly
    qualified. But by the same token, we do not want people
    deciding cases unless they are qualified. And so why do we
    think we need this level of qualification for an ALJ but have
    someone within your agency doing these tasks without the same
    level of qualification?
        I think we are buying ourselves--I think our concern here
    is, No. 1, to understand your decisionmaking, and I applaud
    you. The last thing we want to do here is tap down creative
    thinking on how we solve governmental problems. But we also do
    not want to buy ourselves a bigger problem, and I think that
    the Chairman in the front end here talked about, the potential
    for a class action, the potential for more appeals to the
    district court, which would, in fact, result in more resources
    being utilized and more time in the appeals process.
        And so what were the alternatives that you examined coming
    to this decision to make this change?
        Ms. Gruber. Thank you, Ranking Member Heitkamp. One of the
    things that I think is important for me, when I came into this
    job, I was asked to look at the challenge that faces us and
    what can we bring to bear to address it. As I have said in my
    testimony, both written and oral, this piece of the plan is a
    small part of our overall plan. There is no single silver
    bullet or solution.
        Senator Heitkamp. But you have to admit it is small but
    controversial.
        Ms. Gruber. Absolutely.
        Senator Heitkamp. So you are taking on a lot of water for
    something that you are calling small.
        Ms. Gruber. But I do think that it is important for me to
    say we are looking at business process changes. A number of the
    business process changes in our plan are about how can we best
    support our decisionmakers, our ALJs, so that they can do what
    only they can do, which is conduct hearings and issue
    decisions.
        We are looking at a lot of IT innovations, a lot of
    changes, how we can move out manual work and paper workloads,
    how we can leverage video so that we can erase service
    imbalances from State to State, which there certainly are, when
    I look at wait times.
        Senator Heitkamp. But when the public says you made a
    decision to hire your own judges, it seems like I would say,
    the system is rigged.
        Ms. Gruber. I do not think that that is actually the case.
    The rigor with which we look to hire administrative appeals
    judges mirrors the rigor, in my mind----
        Senator Heitkamp. Then why not hire administrative law
    judges?
        Ms. Gruber. I think that is part of the----
        Senator Heitkamp. That is the problem. You cannot come here
    and say we are going to do this and de facto they have the same
    qualifications, the same ability, and the same independence as
    an ALJ. I go back to then why not hire ALJs? That is the
    disconnect for us here.
        Ms. Gruber. But we are not adopting one construct over
    another. Our plan calls for aggressively hiring ALJs at the
    same time we are utilizing all of our other strategies. To hire
    ALJs----
        Senator Heitkamp. I do not think you are answering my
    question. And I do not mean to be combative. I came into this
    without a strong opinion one way or the other and recognizing--
    because as I said in my opening comments, this is something
    that I do consistently. Our office spends a lot of time dealing
    with your office on appeals. People, especially elderly people,
    struggle with process. They struggle with understanding the
    bureaucracy. We help them navigate that. We get great responses
    from you. So I did not come to this--but I keep hearing the
    same thing, which is we are not taking shortcuts, it will be
    impartial and independent, they will have the same
    qualifications, the appeals rights will not be violated because
    we will keep an adequate record.
        Then I keep going back to if you can find people who can do
    that, who have the level of qualifications, why can't they be
    ALJs? Why do we have to have this hybrid risking the potential
    for, a lot of mischief later on?
        Ms. Gruber. Again, I think that from my standpoint it is a
    matter of timing. We are hiring as many ALJs as we can. I will
    give you an example, though, from 2015. We planned to hire----
        Senator Heitkamp. I get it. I get it that you can hire
    faster than you can through the process of OPM.
        Ms. Gruber. But we have not set that process aside. We are
    trying----
        Senator Heitkamp. I get that. But why can't we amp up the
    OPM process so that there is more--these same people who you
    say are qualified to do this, or looking at kind of how do you
    clear this backlog. And so I think, Mr. Kennedy, the question
    comes back to you. Do you believe that OPM can meet the needs
    of Social Security as they are looking at trying to take care
    of this backlog and do their job? I mean, I am sympathetic to
    them.
        Mr. Kennedy. Thank you, Senator. We are confident that we
    have the number of candidates on the current register to meet
    agency projections as we know them.
        Senator Heitkamp. No. Let us assume that she now tells you
    she wants to hire ALJs instead of going the route that she is
    committed to. What is your role? And how do you meet her needs
    in providing a pool? She has already explained that, the
    numbers get skewed because somebody applies for five different
    positions so you count them five times in the numbers. That is
    not helpful to her. It is not helpful to us to understand this
    problem.
        Mr. Kennedy. Thank you for your question, Senator. In March
    of this year, we added additional names to the register. We
    released the new re-administration of the current exam, and we
    will be adding additional names. That will take some time
    because the process is a really detailed and structured process
    to get through.
        We will be also meeting with SSA later on this month in our
    Innovation Lab to think through other creative ideas of how OPM
    and SSA can work together to meet their backlog. We take this
    very seriously.
        Senator Heitkamp. But I think she is telling you that she
    does not have enough qualified people in the pool that you have
    sent in order to take care of her backlog. That is what she is
    saying, and so they are turning to an alternative method. And
    if that is not the reason why they are turning to an
    alternative method, then we really have a lot bigger discussion
    here.
        Mr. Kennedy. Senator, I think that is something that OPM
    and SSA are working through. OPM looks at the examination
    process that we put ALJs through. It is potentially the most
    comprehensive examination in government. And we feel those who
    come through that process are extremely qualified.
        We do know that the Social Security Administration has some
    concerns, and we want to sit with our colleagues and make
    certain we better understand that to see what we can do in the
    future to support our colleagues.
        Senator Lankford. I am just as turned around, though,
    because I understand if there are 250 openings this year and
    you get 260 applicants for it, I am fairly confident you are
    not going to be able to hire 250 people out of 260 applicants.
    So if we are starting with 5,000 and we end up with 260 at the
    end, are we agreed that is the number that we are at? Because I
    have heard 5,000, I have heard 2,500. And I am trying to figure
    out how to be able to get the accurate number here.
        Mr. Kennedy. Senator, I do not have the actual number with
    me. I will be more than happy to get the number to you.
        Senator Lankford. Somehow we need to be able to followup,
    and we will get that for the record in the days ahead, because
    that is a critical aspect of--if OPM is not sending enough
    people over that are qualified, then we need to obviously get
    that resolved, and that is very helpful to everyone on this.
        I do share Senator Heitkamp's concern on this that the more
    that we go outside the structure and the system, the more
    exposed that we are and the more exposed the taxpayer is to
    some sort of litigation so we have a class action suit coming
    in the days ahead. So that is the concern here.
        And the other concern is, Is this a temporary program or do
    you think this is a long-term structure? Is this a temporary
    program?
        Ms. Gruber. It is a temporary program. It is a program that
    we believe will be temporary as we bring down the backlog----
        Senator Lankford. So what does temporary mean? Help us
    understand.
        Ms. Gruber. And Judge Zahm----
        Senator Lankford. Because, by the way, in the Federal
    Government, it is hard to find anything temporary. [Laughter.]
        Ms. Gruber. Judge Zahm, I know that you said that someone
    had said a year.
        Judge Zahm. Yes. More than once.
        Ms. Gruber. OK. What I intend is that this will be in play
    until about 2020, which is our target for eliminating the
    backlog and reducing our wait time to 270 days.
        Senator Lankford. So starting that in 2017, about a 3-year
    time period to actually use these individuals to try to help.
    And you are talking about dealing with about 40,000 cases of
    1.1 million----
        Ms. Gruber. Correct.
        Senator Lankford [continuing]. Creating a training
    structure, a hiring structure, a whole unique section for
    40,000 people. And I am still confused why we should do that.
    Is it your expectation that most of these hearings will be done
    by video or will be----
        Ms. Gruber. Yes.
        Senator Lankford [continuing]. Done in person?
        Ms. Gruber. The expectation is most of the hearings will be
    done by video. And I think it is also important to note just
    for the record that ALJs travel today.
        Senator Lankford. Sure.
        Ms. Gruber. And we spend roughly a little over about $1
    million today to support traveling. So I do anticipate there
    will be some travel, but right now about 30 percent of our
    claimants opt out of the option to have a video hearing.
        Senator Lankford. 30 percent of the total group or 30
    percent of this non-disability----
        Ms. Gruber. 30 percent of the total.
        Senator Lankford. What is the percentage of this non-
    disability group that opt out of the video?
        Ms. Gruber. I would have to----
        Senator Lankford. Because that is a very different section.
        Ms. Gruber. Right. So as to not give you the wrong
    information, I would have to submit that for the record,\1\ if
    I may.
    ---------------------------------------------------------------------------
        \1\ Approximately 8.5 percent of non-disability claimants opted for
    an in-person hearing instead of a video hearing.
    ---------------------------------------------------------------------------
        Senator Lankford. OK.
        Ms. Zahm, can I ask you a question on this? Of your history
    and background around this, how many folks opt out on a video
    hearing? And you had mentioned in your testimony as well that
    this creates an entirely new large bloc. Historically, someone
    could opt out as an individual, as a single person, in order to
    be able to make the decision that they are going to avoid this
    process and they are going to expedite it. Now we are talking
    about a whole class of people being pulled, 40,000 people. What
    has been your experience in the past of how many people
    actually opt out either the video conference at this level or
    opt out of this entirely?
        Judge Zahm. I would say probably that Terrie's 30 percent
    is probably accurate. I do not have access to those figures.
    However, I would note that in the application for these
    attorney examiner positions, the agency said there would be 50
    percent travel. So they are anticipating these people will
    travel 50 percent of the time.
        Senator Lankford. So is the assumption that individuals
    then would say, ``I do not want to do the video conference,''
    and at that point they are going to have to travel?
        Judge Zahm. Correct.
        Ms. Gruber. No, the assumption in that is that we tell
    prospective applicants, ``You might have to travel.'' So some
    people say, ``I do not want to apply for that job because it
    might involve travel.'' In terms of claimants, they will have
    the same rights to either opt in or opt out of video.
        Senator Lankford. Right. But is it your expectation at this
    point that 30 percent of the folks--or 30 percent of the
    individuals will say, ``I do not want to do a video
    conference,'' and these new AAJs are going to have to travel to
    those locations?
        Ms. Gruber. I do not have any information to suggest that
    we would widely vary from the 30 percent, but, again, I will
    look at these two specific categories of cases to see if the
    opt out is higher or lower than the typical hearing
    population.\1\
    ---------------------------------------------------------------------------
        \1\ Approximately 24.6 percent of claimants declined a video
    hearing following an Appeals Council remand.
    ---------------------------------------------------------------------------
        Senator Lankford. Some of this goes back to the legal
    standing as well. Ms. Zahm, you brought this up as well. We are
    crossing into unknown territory because it has not been done
    before. We are talking about 40,000 people. We are talking
    about, I think, a significant exposure for a class action suit
    once it is all said and done. We are trying to come back and
    redo these things. Most of these individuals will not have
    representation with them because the class of cases that are
    coming through do not have representation.
        Our office had asked the Social Security Administration for
    information of how did you come to this legal decision, which
    we thought was a fair question of oversight. The response that
    we got back was, ``That is attorney-client privilege, and we
    cannot tell you how we came up with this decision.''
        Attorney-client privilege is not recognized by Congress.
    Executive conversations, that is exempted can get access to.
    But the conversation internally within the agency and your
    conversations of how you came to the legal justification on
    this is something that should be appropriate in our oversight.
        Senator Heitkamp. Yes, and it would suggest that you guys
    are concerned about litigation when you are trying to privilege
    that information. If it is just legal advice, then why
    privilege it? The taxpayers paid for it. Let us see it.
        You said in your testimony you always have authority. We
    now have a legal brief in the testimony here that you do not
    have the legal authority. That is a foundational piece for us
    to understand in oversight. And so we have not even talked
    about that. We start from the beginning. Is this legal what you
    are doing? And are we buying, like the Chairman said, a
    lawsuit? We have a difference of opinion. We have one--and the
    only person who has presented any kind of argument--and,
    obviously, this is not a court of law. But the only person who
    has presented any argument is Ms. Zahm. And so, in order to do
    our job of oversight, we need to know what your legal
    justification is so we can evaluate it here. Otherwise, we will
    draw our own conclusions on what your legal authority is. And
    we may only consider the evidence in front of us, and that
    would not be good for you because we do not have yours.
        Senator Lankford. So can we get it?
        Senator Heitkamp. Yes.
        Ms. Gruber. I just want to make sure that I am clear. In
    Attachment C to my testimony was a summary of our legal
    analysis, and I know that staff had late last week met with
    your staffs to talk. We included our Office of General Counsel
    (OGC). I would be very happy to set up any sort of additional
    setting where we can go at length through the legal analysis.
    Our point of view is that, and our legal analysis is that, we
    have had longstanding regulatory authority to vest the Appeals
    Council with these functions.
        Senator Lankford. But in individual cases, not in whole new
    blocs of cases. Has that ever been done before?
        Ms. Gruber. No, it has not been done before. But what I can
    say is that this is a very small percentage.
        Senator Heitkamp. Do you understand that when you take a
    classification of claimants and you say these folks are going
    to get the ALJ and these folks are not going to get the ALJ,
    you may have an equal protection problem? I am just saying, we
    are not exaggerating, I do not think----
        Senator Lankford. No.
        Senator Heitkamp [continuing]. The concern that we have for
    your legal underpinnings. And, sometimes the fix that you
    create to a problem has unintended consequences, and that is
    our concern.
        I want to go back to taking a look at where you are--what
    your thought process was in selecting this alternative. And if
    there is a way that we can better understand the kind of
    relationship that you have with OPM, the concerns that you have
    about OPM, whether we are looking at, recruiting people who
    have already been vetted and in the system, there is probably
    some 67-, 68-year-old, former ALJs or judges who could be
    brought back on a temporary basis to adjudicate some of these
    claims. Those are the kinds of things that I need to know. What
    was your decisionmaking process?
        Ms. Gruber. Like I had said, Ranking Member Heitkamp----
        Senator Heitkamp. I know. It is a small part.
        Ms. Gruber. I was not actually going to say that. What I
    was going to say is we are using senior ALJs to the greatest
    extent that we can. And we have worked with our judges' union
    and our management associations to let us recruit as many
    senior ALJs as we can.
        One of the things that we are looking to collaborate with
    OPM on is what incentives, what kind of--staying with us a
    little bit longer incentives can we provide. So senior ALJs are
    part of our plan, absolutely. In fact, right now we have--I
    think the latest number was right around 21 senior ALJs. If I
    can get more than that, that helps us, for example, in 2015,
    for the 50 ALJs we were unable to hire, even though our target
    was 250, that translates into 25,000 lost hearings. Any way
    that we can speed up our hiring of ALJs, that is a key tenet of
    our entire plan, as is recruiting enough ALJs to meet our
    hiring targets.
        In terms of the analysis--and I appreciate the question--
    the first thing I asked is, What options are available to us
    legally? That is where this option, which I think had been
    talked about many years in the past, how can we use the Appeals
    Council differently? Again, the Appeals Council is currently
    the group that reviews ALJ decisions today. That is their
    function, to review. It is the Appeals Council that has led
    most of the quality efforts that we have seen over the past
    several years that have resulted in lower remand rates to ALJs,
    that have resulted in better quality numbers in terms of agree
    rate. The second thing I looked at was cost-effectiveness, and
    then, finally, operational viability?
        And so, again, I think that our plan looks at this. How do
    we augment, how do we increase decisional capacity?
        One of the other things that we are actively using are data
    analytics. How can we pinpoint those cases that do not need to
    go to an ALJ of any sort, that because there has been a change
    in the condition or a worsening, can we identify--can we make a
    decision sooner in the process? And we have seen excellent
    initial outcomes from those efforts.
        To me, it is really about looking at cases at every stage
    of the process and how can we make it better, and that is what
    we have laid out in our plan. But this piece is about
    increasing decisional capacity, and for me it is not choosing
    one type of adjudicator in favor of another. And it is not
    abandoning in any way the ALJs. In fact, I think the evidence,
    at least from my standpoint, shows a significant long-term
    investment in the ALJ construct now and moving forward.
        Senator Lankford. So if I am picking this up still
    correctly, we are still talking about trying to get from OPM
    more people in the process, more qualified people in the
    process. If there were more people coming from OPM, qualified,
    ready to go in this, this would not have been considered?
        Ms. Gruber. I would think----
        Senator Lankford. Because you have the funding that is
    necessary to hire the ALJs. You are talking about bringing on
    quite a few additional folks, these AAJs. You have already said
    they are the exact same pay scale. They are going to require
    300 additional staff around them. You have enough money to be
    able to hire and bring on all of those additional folks, so you
    clearly have enough money to be able to hire the ALJs as well.
    This is about the number of qualified people coming in the
    process.
        Ms. Gruber. I think that that is a fair assessment.
        Senator Lankford. OK. So somehow we have to be able to
    resolve this back-and-forth on how we are getting more
    qualified folks in there. If you are identifying qualified
    people but they are not getting over here to OPM to be able to
    come back to you, we are standing up a new temporary system for
    three years and spending a tremendous amount of money creating
    a new system and, we believe, creating a system that is legally
    vulnerable for us long term, that we have asked for the
    justification on this, and I understand you do not want to be
    able to turn over everything on this. I do think it is
    important so that we get the documents, even if we see them in
    camera, that we have the ability to be able to go through the
    legal justification because there are real questions here that
    I would assume your counsel would have gone through and would
    have given you all the different alternatives.
        But at the end of the day, we have still got to have more
    people, and even three years past this time, we may still have
    the same situation here. So from the OPM side of it, how do we
    increase the flow?
        Mr. Kennedy. Mr. Chairman, thank you for that question. Out
    of respect for the Ranking Member, I do want to give the number
    that I at least have right now. There are currently about 600
    candidates on the register, and we clearly will be able to
    increase that number when the other exam actually is--when we
    actually put additional individuals----
        Senator Heitkamp. Does that include the duplication that
    Ms. Gruber is talking about?
        Mr. Kennedy. No. This would be 600 individuals.
        Senator Heitkamp. Individuals.
        Mr. Kennedy. Yes.
        Senator Heitkamp. And geographically dispersed?
        Mr. Kennedy. Geographically dispersed. And one thing I want
    to say, because I want to make certain that everyone
    understands, that SSA and OPM are working together. We are
    trying to make certain that we typically try to give at least
    three names for every vacancy. SSA brought it to our attention
    a few months back that we need to make certain we are doing a
    better job on the unique names, and we are trying our best to
    make certain that we are responding to provide more unique
    names.
        Again, I think that everyone understands that SSA is just
    in an unprecedented situation, and I think the more we talk
    with SSA, the more the two organizations work together, we are
    going to remedy this. This is important for both of us. We are
    going to remedy this.
        Senator Heitkamp. But we do not want the inefficiency of
    starting this whole process when we could, fix the one that we
    have. I think that is really the challenge. As the Chairman
    outlined, we are taking on a lot of work, a lot of training, a
    lot of folks here on a temporary basis, if we could just get to
    making this process that you have work better.
        Senator Lankford. Can I ask a question? Was OPM involved in
    creating the job description for these attorney examiners? Was
    this something that you cooperatively did together?
        Mr. Kennedy. No. The Office of Personnel Management would
    not have had a role in that, sir.
        Senator Lankford. So the creation of the job description
    and the design of this just SSA did on their own?
        Ms. Gruber. And just to be clear, the administrative
    appeals judge position, which is what we functionally call it,
    has been around for several decades. This is not a new job
    description for us.
        Senator Lankford. OK. Mr. Kennedy, one of the statements
    you made just brought this to my mind. You were talking about
    the unprecedented backlog. I wish in some way this was an
    unprecedented backlog. You go back to 10 years ago, 12 years
    ago, we are still dealing with a 500-day wait, where you have
    17 months through the process to be able to wade through it.
    And so this is not new. The sheer numbers, we are dealing with
    1.1 million now in the backlog, but the time period to wait for
    the individual is not unprecedented.
        So I guess one of the background questions we did not ask
    on this, Ms. Gruber, and what you are sensing at this point is
    the why. Why have we reached this number? Why do we have these
    high numbers in the backlog that cannot seem to come down? We
    continue to invest more resources in this. We continue to see a
    growing amount here.
        Ms. Gruber. Thank you, Mr. Chairman. The why is difficult.
    Certainly, back in 2007-08 when we saw a similar backlog, maybe
    not the total pending at 1 million but, rather, right around
    the 750,000 mark, the wait times, like you said, were over 500
    days. Part of the why is a number of years, about three years,
    of funding that was $1 billion less than the President's
    budget. I do think continued growth in receipts--right now, the
    main factor in our issue where we are is that our receipts
    continue to outpace our dispositions. And until that dynamic
    shifts, we are going to continue to grow the backlog. And that
    is a problem for us.
        So I would say funding is a big factor. I do think
    continued receipts is a big issue in it, and ensuring that
    staff at all
    levels--ALJs, our support staff, our administrative appeals
    judges at the Appeals Council--no matter what role they play,
    are accountable and productive.
        Senator Lankford. Right. Ms. Zahm, why do we have a
    backlog?
        Judge Zahm. The American public is getting older, so that
    is a factor. The recession was a factor. And I noticed in the
    agency's submission of their chart of ALJ hiring, there were
    years when there was no hiring, so the cases accumulated.
        We also do not have the most efficient system. We have made
    suggestions to the agency on how to modernize our adjudicatory
    system. We need to have some rules of practice. We need to have
    more support for the ALJs. This is a very labor intensive
    process, and the courts have added more and more layers of
    requirements on ALJs in terms of issuing decisions, and it
    takes longer to do so.
        It always takes longer to do a good job than a slipshod
    job, and the danger with the backlog is that the pressure to
    get the cases out the door may undercut the quality of those
    decisions.
        Senator Lankford. Right, and that was our concern in 2010
    when it seemed to be a higher priority on getting things out
    the door and just decreasing the backlog than getting good
    cases. We do not want to have that again because every one of
    these cases is $300,000 to the Federal taxpayer. And if the
    paperwork is not done right and if we do not have a good
    opinion at the end of it, we have no way to evaluate whether
    this person has had any medical improvement. And so they are in
    the system forever regardless of their physical condition
    because we do not have a good paperwork trail on it. So it is a
    nightmare scenario for the American taxpayer.
        I do not know of a single place that I have traveled in my
    State of Oklahoma, not one, where somebody in that region has
    not said to me, ``I have a cousin, I have a neighbor, I have
    someone that is on disability. They work for cash all the time.
    They are very engaged.'' It is a common conversation in many
    areas. The West Virginia cases that were just exposed were $600
    million in fraud. And in my conversations with the Inspector
    General yesterday, we have another case coming out soon that
    will be even larger than that one dealing with disability fraud
    that is coming out.
        This is an incredibly important issue to a lot of people,
    both for the individuals that are truly disabled, that while
    they are waiting 500-plus days, their counsel has told them,
    ``Do not go get a job, do not work,'' because if you are
    working, that is the first thing the ALJ is going to ask you,
    ``Are you working now? '' Well, if you are working now, then
    clearly you can work at another time. And so no matter what
    situation they are in, they are waiting 500 days without a job
    for a decision, and so they have either got this huge gap in
    their employment record, or they are truly disabled, and they
    have waited a year and a half for a hearing. So either way it
    is a really bad situation for them.
        Judge Zahm. Yes.
        Senator Lankford. So the resolution, you all understand, we
    understand it. We just want to make sure at the back end of it
    we are not having to redo it and we have a backlog that gets
    even bigger because we created another system, and then that
    system did not work, and now everything is even worse with the
    new set.
        Senator Heitkamp. I think the question becomes where do we
    go from here, Mr. Chairman. Obviously, we hope that this
    oversight Committee hearing has at least raised some flags
    within the Social Security Administration to maybe, slow down
    implementation of this idea, to think differently or at least
    have this ongoing discussion.
        We can talk until we are blue in the face, but if your
    decision is we are going to proceed, for us to try and do
    something here to stop you from proceeding, let me tell you,
    that is a difficult thing for us to get done.
        And so I am curious on where we are today. Are you, gung-ho
    we are going to get this done, we are going to move ahead? Or
    will you kind of take a pause here with us and help us better
    understand this?
        Senator Lankford. Or find a way to get more ALJs.
        Ms. Gruber. Yes, as I said in my oral testimony it is about
    capacity. My history is working with the disability process.
    One of my first jobs in the Senior Executive Service (SES) was
    to look at a backlog at our initial level and ask ``how do we
    increase capacity''. And some of the solutions were not popular
    ones. But certainly at the end of the day, my job is to make
    sure claimants are not harmed, and that is my absolute
    commitment. I think the issues raised here, the issues raised
    by Judge Zahm, are ones that I will take back and, with my team
    look at very closely.
        I do think, we have not given you insight, deeper insight
    into the legal analysis we have done. I myself am not an
    attorney, but the summary we gave, laid out the regulations
    that really flow from the Social Security Act. And nowhere in
    the Social Security Act, in Section 205 or anywhere else, does
    it talk about the type of decisionmaker that must preside at a
    hearing. But I understand, we certainly have a longstanding
    practice where we used ALJs.
        That said, I would like to find a way to meet with you.
        Senator Heitkamp. I guess what I am saying is we would
    prefer that you hit the pause button on this idea so that we
    can better understand the oversight, better understand where
    you are at, and have further conversations about this.
        Senator Lankford. And I would comment only in the legal
    aspects of it. It has not been done before. It will be
    challenged because it has not been done before. De novo cases,
    for instance, are clear within the statute that they cannot be
    transferred to a non-APA decisionmaker. There are some areas
    that are pretty clear in it. And to try to transfer a whole
    class of cases into a new area rather than individuals is a big
    shift, and there will be a lot of challenges. And at the end of
    the day, I do not want us to end up with a longer backlog
    because we tried a novel theory that may or may not have
    worked. That is why the legal opinion on this is so important
    to us as well. We want to help walk through this. And if we can
    help resolve these issues, we want to do this, because all of
    us have the dual responsibility with this to the individuals
    that are applying that are legitimately, clearly disabled,
    cannot work anywhere in the economy, to be able to get through
    the system. But those that are on the edges that are not
    disabled to also make sure they do not get into the system,
    because they are $300,000 each and they create a culture around
    our communities that is very, very destructive.
        So both of those are very important to us. So it is not
    just a matter of speed. And I know a lot of these cases you are
    talking about are overpayment cases that do resolve some of
    those issues, but it is very important that we deal with both
    the taxpayer interest and those individuals in the disability
    community.
        Senator Heitkamp. I guess you are going to hit the pause
    button so we have a chance here to kind of vet this further?
        Ms. Gruber. I think it is a very fair question. As you
    know, we have not implemented it yet. Part of what we are doing
    is vetting, and I think that this is a significant discussion,
    and I am very willing to engage in additional discussion.
        Senator Heitkamp. Yes, and thank you for that. And in no
    way do I want to even suggest that we should not be looking at
    creative ways to do this----
        Senator Lankford. Right.
        Senator Heitkamp [continuing]. That we do not appreciate
    the difficulty of your job, and that you really have presented
    very appropriate testimony here today. We just do not have a
    comfort level both legally and in terms of due process with the
    direction you are taking. And we do not have a comfort level
    that we have really explored all potential opportunities for
    going the traditional route.
        And so thank you for your testimony today. It has been very
    helpful.
        Senator Lankford. Judge Zahm, any final statements?
        Judge Zahm. Just that when Terrie mentioned that the
    position description for attorney examiners has been around a
    long time, that was accurate. However, adding the duty of
    holding hearings only appeared in the position description in
    February of this year. That had not been a part of the position
    description in the past.
        Also, in terms of is an attorney examiner the same as an
    administrative law judge or the same qualifications or are you
    getting the same benefits if you are a claimant, I would point
    to the fact that Mr. Kennedy has outlined just how rigorous a
    hiring process and vetting process it is, that it takes a year
    between the time someone applies and someone gets on a list.
    And the position application for these attorney examiner AAJ
    jobs had a 15-day application period, and they are already
    starting to hire. So you can see there is quite a bit of
    difference in terms of looking at candidates and evaluating
    their qualifications.
        Senator Lankford. We had a hearing not long ago on the
    Federal hiring process, period, and USAJOBS and all of the
    great joy that it really is in getting through the process.
    There is a tremendous amount of other issues that need to be
    resolved there with length of time. Often we get very qualified
    candidates that are not going to wait a year to get a job. They
    are going to go do something else in that year. And we are
    going to call them and say, ``OK, we are ready now,'' and they
    are going to say, ``Sorry. I have already taken a new job
    somewhere.'' So that is a whole different issue that you bring
    up there on that one.
        Mr. Kennedy, any final statements?
        Mr. Kennedy. Mr. Chairman, I just want to thank you for
    having the Office of Personnel Management at this hearing. As I
    was listening, all I could think about was those individuals
    out there waiting. There is probably a chance that everyone in
    this room probably knows someone who is waiting. And the Office
    of Personnel Management feels confident in the number of
    candidates that we have on the register, but we do recognize
    that the Social Security Administration has some concerns, and
    we want to work with them. We pledge to work with them, and we
    will work with them, and we will remedy this situation.
        Senator Lankford. OK. Ms. Gruber, any final statement?
        Ms. Gruber. No. Thank you for the opportunity, and I
    absolutely commit to work with you, Senator Lankford and
    Senator Heitkamp, to address all of the concerns as thoroughly
    as we can.
        Senator Lankford. OK. Thank you. And I would say only as a
    final statement, please do not hear from us we are interested
    in speed and not quality. We have done that before. We have
    seen the results. I think that is part of the reason we have so
    many people in the pipeline now, because since that was
    created, if you get in the pipeline, you get onto the system.
    So we want this to be done well and to be done right. So do not
    accelerate the process just to be able to get people through
    the pipeline. But at the end of the day, we have to have good
    legal justification. The individuals that are truly disabled
    need to be protected in the system, and people that just want
    to get a government check that may have legitimate pain but can
    work in the economy based on the definitions that have been
    provided in statute, they can work in the economy, still should
    work in the economy, as tough as that may be.
        So you have a lot of tough decisions on a day-to-day, all
    of you do, to be able to make those decisions, and I appreciate
    what you are doing on that.
        So, with that, let me make a quick closing statement. The
    hearing record will remain open for 15 days until the close of
    business on May 27 for the submission of statements and
    questions for the record. I thank all of you for being here.
        This hearing is adjourned.
        [Whereupon, at 10:20 a.m., the Subcommittee was adjourned.]

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