[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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