Social Security Administration: Paying Attorneys Who Represent Disability
Applicants (Testimony, 06/14/2000, GAO/T-HEHS/AIMD-00-166).

GAO discussed issues involving the Social Security Administration's
(SSA) process for paying attorneys representing applicants for
disability benefits, focusing on three areas of the attorney payment
process: (1) the process itself, including the costs of processing the
payments; (2) possible changes to the way the user fee is charged; and
(3) changes being considered for the attorney fee payment process
overall.

GAO noted that: (1) while SSA has been paying attorney fees from
beneficiaries' past-due benefits for over 30 years, the payment process
remains inefficient, and little historical data are available to help
GAO analyze proposed changes; (2) under the current procedures, the
inefficiencies in processing fee payments to attorneys result from using
a number of different staff in different units and various information
systems that are not linked, and are not designed to calculate and
process all aspects of the attorney fee payment, thus necessitating
manual calculations; (3) the Ticket to Work Act includes a provision
that requires SSA to charge an assessment, to recover the costs of this
service; (4) GAO has only begun to analyze the estimate that was used as
a basis for the user fee, and SSA does not know the actual cost it
incurs in processing attorney fees; (5) however, the agency is
developing a methodology to better capture these costs; (6) SSA has
trouble with making timely payments to attorneys, and some have
questioned the appropriateness of charging a user fee for a service that
takes so long; (7) a recent legislative proposal calls for eliminating
the user fee if SSA does not pay the attorney within 30 days; (8) in
many cases, it will be difficult for SSA to meet these timeframes; (9)
attorneys need to realize that, while it is possible for SSA to improve
the efficiency of the process it uses to pay them, some factors that
delay their payments are outside SSA's control and are unlikely to
change at this time; (10) three possible changes to the attorney fee
payment process include whether: (a) joint checks for past-due benefits
should be issued to the beneficiary and the attorney; (b) the dollar
limit on certain attorney fees should be raised; and (c) SSA's attorney
fee payment process should be expanded to the Supplemental Security
Income program; (11) these changes would have both policy and
administrative implications that need to be considered; (12) some of the
changes could increase attorney representation for disability
applicants, according to attorneys GAO spoke with; (13) however, not
everyone agrees with this premise; (14) moreover, there are some
drawbacks to these changes; and (15) SSA indicated it may need to make
significant modifications to its information systems to issue joint
checks or pay attorneys who represent SSI recipients.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS/AIMD-00-166
     TITLE:  Social Security Administration: Paying Attorneys Who
	     Represent Disability Applicants
      DATE:  06/14/2000
   SUBJECT:  Legal fees
	     Disability benefits
	     Social security benefits
	     Beneficiaries
	     Lawyers
IDENTIFIER:  Supplemental Security Income Program
	     SSI
	     Social Security Disability Insurance Program
	     SSA Modernized Claims System
	     SSA Modernized Supplemental Security Income Claims System

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Testimony.                                               **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO/T-HEHS/AIMD-00-166

   * For Release on Delivery
     Expected at 2:00 p.m.

Wednesday, June 14, 2000

GAO/T-HEHS/AIMD-00-166

SOCIAL SECURITY ADMINISTRATION

Paying Attorneys Who Represent Disability Applicants

        Statement of Barbara D. Bovbjerg, Associate Director

Education, Workforce, and Income Security Issues

Health, Education, and Human Services Division

Testimony

Before the Subcommittee on Social Security, Committee on Ways and Means,
House of Representatives

United States General Accounting Office

GAO

Social Security Administration: Paying Attorneys Who Represent Disability
Applicants

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss issues involving the Social
Security Administration's (SSA) process for paying attorneys representing
applicants for disability benefits. SSA operates the nation's two largest
programs providing benefits to people with severe long-term disabilities-the
Disability Insurance (DI) program and the Supplemental Security Income (SSI)
program-which together provide an important economic safety net for
individuals and families. At any point in the disability determination
process, applicants may seek help from an attorney or other individual as
they pursue their claim. In many instances, when applicants are found
eligible for DI benefits, SSA will pay the attorney directly from the
beneficiaries' past-due benefits. Complaints about the time it takes SSA to
pay attorneys coupled with recent legislative changes to the attorney
payment process-changes that include collecting a user fee for paying the
attorney-have raised questions about whether additional changes are needed
to the payment process.

As you requested, today I will discuss three areas of the attorney payment
process: the process itself, including the costs of processing the payments;
possible changes to the way the user fee is charged; and changes being
considered for the attorney fee payment process overall. My testimony is
based on our ongoing review of the attorney fee process, which was mandated
by the Ticket to Work and Work Incentives Improvement Act of 1999 (the
Ticket to Work Act). Our final report is due to the Congress by December
2000.

In summary, while SSA has been paying attorney fees from beneficiaries'
past-due benefits for over 30 years, the payment process remains
inefficient, and little historical data are available to help us analyze
proposed changes. Under the current procedures, the inefficiencies in
processing fee payments to attorneys result from using a number of different
staff in different units and various information systems that are not
linked, and are not designed to calculate and process all aspects of the
attorney fee payment, thus necessitating manual calculations. The Ticket to
Work Act includes a provision that requires SSA to charge an
assessment-referred to in my statement as a user fee-to recover the costs of
this service. We have only begun to analyze the estimate that was used as a
basis for the current user fee, and SSA does not know the actual cost it
incurs in processing attorney fees; however, the agency is currently
developing a methodology to better capture these costs.

SSA has trouble with making timely payments to attorneys, and some have
questioned the appropriateness of charging a user fee for a service that
takes so long. A recent legislative proposal calls for eliminating the user
fee if SSA does not pay the attorney within 30 days. In many cases, it will
be difficult for SSA to meet these timeframes. Attorneys need to realize
that, while it is possible for SSA to improve the efficiency of the process
it uses to pay them, some factors that delay their payments are outside
SSA's control and are unlikely to change at this time.

Three possible changes to the attorney fee payment process include whether
(1) joint checks for past-due benefits should be issued to the beneficiary
and the attorney, (2) the dollar limit on certain attorney fees should be
raised, and (3) SSA's attorney fee payment process should be expanded to the
SSI program. These changes would have both policy and administrative
implications that need to be considered. Some of the changes could increase
attorney representation for disability applicants, according to attorneys we
spoke with. However, not everyone agrees with this premise. Moreover, there
are some drawbacks to these changes. For example, issuing joint checks to
the beneficiary and the attorney might delay payments to the beneficiary and
might increase the chance that attorneys would short change beneficiaries.
Finally, SSA indicated it may need to make significant modifications to its
information systems to issue joint checks or pay attorneys who represent SSI
recipients.

Background

SSA's disability claims process is complex, multilayered, and lengthy.
Potential beneficiaries apply for benefits at any one of SSA's local field
offices, where applications are screened for nonmedical eligibility:
applicants for DI must meet certain work history requirements, and
applicants for SSI must meet financial eligibility requirements. If the
applicants meet the nonmedical eligibility requirements, their applications
are forwarded to a state disability determination service (DDS), which
gathers, develops, and reviews the medical evidence and prior work history
to determine the individual's medical eligibility; the DDS then issues an
initial determination on the case. Applicants who are dissatisfied with the
determination may request a reconsideration decision by the DDS. Those who
disagree with this decision may appeal to SSA's Office of Hearings and
Appeals (OHA) and have the right to a hearing before one of the
administrative law judges (ALJ) located in hearings offices across the
country. Individuals who disagree with the ALJ decision may pursue their
claim with SSA's Appeals Council and ultimately may appeal to a federal
district court.

This process can be both time-consuming and confusing for the applicants and
may compel many of them to seek help from an attorney. Obtaining
representation for a pending case has become increasingly popular because
disability representatives have been successful in obtaining favorable
decisions for their clients upon appeal. In fiscal year 1997, about 70
percent of all cases decided at the ALJ-hearing level involved
representatives.

The fees attorneys representing DI and SSI applicants can charge are limited
by law and must be approved by SSA. In order to be compensated, attorneys
must file either a fee agreement-a formal contract signed by the applicant
and the attorney setting the fee as a percentage of the applicant's past-due
benefits-or a fee petition that details the specific costs associated with
the case. Past-due benefits are calculated by multiplying the monthly
benefit amount by the total number of months from the month of entitlement
up to, but not including, the month SSA effectuates the favorable disability
decision. When fee agreements are filed, attorney fees are limited to 25
percent of the applicant's past-due benefits, up to $4,000 per case. In fee
petition cases, however, SSA can approve any fee amount as long as it does
not exceed 25 percent of the beneficiary's past-due benefits. For DI cases,
SSA usually withholds the amount of the fee from the beneficiaries' past-due
benefits and pays the attorneys directly, in effect guaranteeing payment for
the attorney. In SSI cases, however, SSA does not have the authority to pay
attorneys directly, and only calculates the amount an attorney is due.
Attorneys must instead collect their fees from the SSI recipients.

Effective February 1, 2000, the Ticket to Work Act imposed a 6.3 percent
user fee on attorneys for SSA's costs associated with "determining and
certifying" attorney fees on the basis of beneficiaries' past-due benefits.
This amount is deducted from the approved attorney's fee. The act also
directed us to study a number of issues related to the costs of determining
and certifying the attorney fees, "efficiencies" available to reduce these
costs, changes to the attorney fee requirements, and the new user fee.

The Process and Cost of Paying Attorneys

The Payment Process Involves Many Steps

Figure 1 shows the steps involved in processing attorney fee agreements.
First, officials in SSA's field offices or ALJs in OHA-depending on where
the case is being determined-review fee agreements for DI and SSI cases to
assess the reasonableness of the attorney fee charges. If a favorable
decision is made on the case and SSA approves the fee agreement, both
items-the applicant's case and the fee agreement-are forwarded to a
processing center for payment.

Figure 1: Key Steps for Processing Attorney Fee Agreements

Source: GAO analysis based on SSA information.

At the processing centers, SSA takes the steps necessary to effectuate
payment to the beneficiary and calculate the attorney fees. For both DI and
SSI cases, the processing center staff first place the beneficiary in
current-pay status so that he or she can begin receiving monthly benefits as
soon as possible. The processing center also calculates the attorney's
fee-25 percent of past-due benefits up to $4,000. The processing center then
sends the beneficiary an award notice, which states the amount of benefits
the beneficiary will receive and the amount of money that the beneficiary
agreed to pay the attorney as stipulated in the fee agreement. A copy of the
award notice is also sent to the attorney.

In some cases, however, SSA must obtain additional information to determine
the final amount of the beneficiary's benefits, which also affects the
amount the attorney receives. In these cases, the agency withholds past-due
benefits until this additional information is obtained, as the beneficiary's
past-due benefit amount may be reduced-or offset-by other payments that have
been made to the beneficiary, such as workers' compensation payments.
Additionally, in cases in which the applicant was determined eligible for
both DI and SSI, benefit amounts to be paid by the two programs need to be
adjusted before the final past-due benefit payment is made. These offset and
coordination activities involve manual steps-such as dealing with payers of
workers' compensation insurance-and can take as long as 6 months to
complete. When SSA has had to take extra steps to determine the final
past-due benefit amount and the amount the attorney should receive, the
agency prepares and mails another award notice to the beneficiary and the
attorney. At the time this award notice is sent, the beneficiary's past-due
benefits are also processed for payment on one of SSA's information systems.
These information systems-the Modernized Claims System (MCS) and the
Modernized Supplemental Security Income Claims System (MSSICS)-are designed
to process payments for beneficiaries or their representatives only-they are
not designed to effectuate payments for nonbeneficiaries, such as attorneys.

In DI cases only, after the award notice has been mailed, and if the
attorney has elected to have SSA withhold his or her fee from the past-due
benefits, SSA begins steps to have the Department of the Treasury issue a
check to the attorney. Staff must manually calculate the 6.3 percent user
fee and deduct it from the total fee amount. Then various information
systems and many manual steps are involved in communicating the attorney fee
information to Treasury. For example, data from one information system on
the amount of each attorney payment are copied by hand to form a list of
payees. Staff then deliver the list to another part of the processing center
where the payee data are then manually entered into another information
system for further processing. As soon as all the attorney fee information
has been verified, SSA sends the information to Treasury so that a check can
be issued.

For SSI fee agreement cases, the beneficiary and attorney receive an award
notice similar to the one for DI cases-that is, the amount of past-due
benefits is stated as well as the amount of money that the beneficiary
agreed to pay to pay the attorney. SSA is not authorized to withhold and to
direct payment for SSI cases. The attorney must obtain payment directly from
the beneficiary.

When a fee petition is involved, the attorney submits a statement detailing
his or her charges for the case following a favorable decision. The petition
is usually reviewed by an ALJ. If the ALJ approves the fee, the petition is
sent to the processing center, where it is processed in the same manner as
the fee agreements.

The Cost to SSA of Paying Attorneys Is Unclear

The actual costs of administering attorney fees are not yet known because
SSA was not required to capture these costs in its information systems and
did not have a methodology to do so. The 6.3 percent user fee found in the
law was based on an estimate prepared by the agency. Documentation SSA
provided us indicates that the percentage was computed by multiplying the
numbers of fee petitions and fee agreements the agency processed in 1994 by
the amount of time SSA determined it spent on various related activities.
When data were not available on the volume of activities or the time spent
on them, SSA used estimates. The agency's overall cost estimate included
both the time spent by the ALJs reviewing documentation to support the
attorney fees-that is, the fee petitions and fee agreements-as well as the
processing centers' costs associated with calculating the fees, choosing the
notice language, and preparing the notices. In addition, the agency included
the cost of administering the user fee itself. We recently received
information on the basis for SSA's 6.3 percent user fee calculation and have
only begun to analyze the assumptions the agency used to compute it.

In order to comply with the Ticket to Work Act, SSA is currently in the
process of developing a methodology to capture the current costs of
administering the attorney fee provisions. These costs could then provide
the foundation for the agency's decisions about what the rate should be to
achieve full recovery of costs. SSA has established a work group to identify
the components of administering attorney fees and to develop its new
methodology. Thus far, the work group has identified four components
associated with the cost of administering attorney fees: (1) the time that
SSA field office staff spend informing claimants that they are entitled to
legal representation when filing an appeal; (2) the time it takes an ALJ to
review and approve the fee; (3) the charges incurred by SSA's Office of
Systems to program systems to track attorney fee cases and related computing
time to generate a payment file/tape for Treasury to use to pay the
attorney; and (4) the process for calculating the attorney fee, entering
relevant attorney and other key data into SSA's information systems, and
certifying related amounts for payment.

In April and May of this year, SSA work group officials told us that they do
not plan to capture cost information from the first two components because
it would be time-consuming to do so, and the methods currently available to
SSA for capturing these two types of costs may not produce reliable results.
For the third component, SSA officials told us they can readily gather cost
information related to time spent on programming SSA's systems to track
attorney fees. However, SSA does not have a cost allocation methodology in
place to determine related computing time for processing attorney fees. SSA
officials indicated that computing time would constitute an insignificant
portion of SSA's total costs to administer attorney fees. To capture data on
the fourth component, SSA modified one of its information systems in
February 2000 to determine the number of attorney fee cases it administers.
Using the number of cases it processes, SSA is working on a methodology to
estimate the costs involved in this fourth component for paying attorneys.
SSA plans to have this cost data available by the end of fiscal year 2000.

However, in commenting on a draft of this statement, SSA officials told us
that they do plan to capture costs for the second component-the time it
takes the ALJ to review and approve the fee. In reviewing the law, the cost
of ALJ time spent reviewing and approving fees appears to be part of the
cost of "determining and certifying" fees and may represent a significant
portion of the total costs. As SSA determines the ALJ costs in its current
approach, it will need an allocation methodology that accurately allocates
the costs associated with DI cases for which SSA is paying an attorney
directly to those cases. Attorneys we talked with told us they are concerned
now that they are paying more than their fair share of the cost of the
process.

Possible Changes to the Way the User Fee Is Charged

Attorneys have expressed concern about the length of time it takes SSA to
process their fees and have questioned the appropriateness of charging a
user fee for a service that takes so long. In regard to the user fee, you
specifically asked us to look at issues surrounding (1) linking the amount
of the user fee to the timeliness of the payment to the attorney and (2)
expressing the user fee as a fixed amount instead of a percentage. When
considering one or both of these changes, certain policy and administrative
implications would need to be addressed.

Timeliness of Payments to Attorneys

Figure 2: Processing Time of Fee Agreement Cases From January 1995 to May
2000

Note: These data refer only to cases in which the beneficiary was eligible
for DI; they do not include cases in which beneficiaries were eligible for
both DI and SSI, which take longer to process.

Source: SSA.

This sometimes lengthy payment process can be attributed to a number of
factors-some within and some outside SSA's control. Factors within SSA's
control include the actual processing steps and systems used as well as the
relative priority attorney fee payments are given compared with other SSA
activities. As mentioned earlier, SSA's process for administering attorney
payments includes many manual steps. For instance, staff manually record
attorney fee information-names, addresses, and amount to be paid-on SSA
forms and then physically walk the information to different units for
processing. This manual intervention is needed because SSA's information
systems are not currently programmed to handle this work. Manual processes
leave room for human error and require additional work to check for
accuracy, which results in a longer fee processing time. Additionally, we
were told that it can take months for an ALJ to review and approve fee
petitions; during this time, the attorney waits for payment.

Competing work priorities can also contribute to payment delays. Processing
technicians have responsibilities other than their attorney fee workload.
When these other workloads grow, attorney fee payment processing may receive
less priority. For example, recently SSA had to redirect the work of a
substantial number of processing technicians to handle the temporary
workload increase that resulted from the new law eliminating the earnings
test for individuals who receive retirement benefits and continue to work.
In addition to work surges caused by legislation, some processing center
staff routinely answer SSA's 800 number during peak hours. These staffing
fluctuations may result in a temporary halt to attorney fee and other work
while the priority workload is completed.

Some payment delays are outside SSA's control, such as when SSA is waiting
for information from other agencies or individuals. After a favorable
decision, SSA processes the case for payment of past-due benefits and for
attorney fees. SSA refers to dealing with all outstanding issues as
"developing the case." This must be done before the amount of past-due
benefits are finalized and the attorney fees can be determined and payments
processed. Issues such as dealing with payers of state workers' compensation
insurance can substantially increase processing times. Further, in fee
petition cases, SSA has to wait until after the attorney files the petition
before beginning payment action for the attorney.

However, one recent change may actually speed up processing times for
attorney payments. The Ticket to Work Act eliminated a compulsory 15-day
waiting period that had been in place to permit the beneficiary, SSA, or the
attorney to protest the attorney fee amount. While these affected parties
still have the option to protest a fee, SSA is no longer required to wait to
process the attorney's fee. NOSSCR and some individual attorneys told us
that that it appears SSA's fee processing has been faster since February 1,
2000, when the agency began implementing this change; however, data are not
available to compare the current time frames with the ones shown in figure
2.

Linking the User Fee to the Timeliness of Attorney Fee Payments

To address timeliness concerns, a recent legislative proposal (H.R. 4633)
would permit the user fee to be assessed against attorneys only if SSA pays
attorneys within 30 days from the time of initial certification of benefits.
Figure 2 above shows that from 1995 to the present, SSA has only been able
to meet this timeframe in 10 percent of the cases. However, certain issues
related to this proposal should be clearly understood by both SSA and the
attorneys. All parties involved must clearly understand at what point in the
process the clock starts ticking, when it stops, and what activities are
performed during this period. When considering the current legislative
proposal or contemplating other options, concerned parties need to weigh the
attorneys' right to be paid in a timely manner with SSA's need to ensure the
accuracy of its payments.

While SSA's current process is inefficient and the agency can make some
improvements, not all factors are within SSA's control, such as awaiting fee
petition information from attorneys and coordinating workers' compensation
offsets. The current legislative proposal states that the clock starts
ticking with initial certification of benefits-also referred to as the point
when the beneficiary is put in current-pay status. At this point, SSA might
be developing the case for final calculation of past-due benefits and might
not have control over processing times. Attorneys need to realize that
because the proposal starts the clock with initial certification, and
additional work may still need to be done to develop the case, the total
elapsed time from favorable decision to attorney fee payment might not
actually be decreased. Information on these issues needs to be clearly
communicated or the frustration and complaints with the process are likely
to continue. In addition, having the clock start before SSA has complete
control over the process could create perverse incentives that may actually
delay payments to attorneys. Because SSA does not have control over all the
activities that occur following initial certification of benefits, it is
conceivable that some attorneys might view this as an opportunity to delay
providing needed information to SSA in hopes of avoiding the user fee.

Further Efficiencies Are Possible

Possible improvements to SSA's information systems may also help reduce
processing times. For instance, enhancements to SSA's information systems
could eliminate much of the manual workload involved in processing and
certifying attorney fees. As stated earlier, various information systems are
currently used to process SSA's attorney fee workload associated with DI
cases. These systems capture data on various aspects of the disability
claims process, but are not linked to one another and, thus, require some
manual intervention. As a result, without linked systems or a more
streamlined process it is difficult for SSA to capture the data required to
measure the timeliness of the total range of activities involved in paying
attorneys. To efficiently administer user fees that are based on timeliness
of fee payments to attorneys, SSA will need to develop new software code to
link these stand-alone information systems, or develop a new system to
process the entire attorney fee workload.

SSA currently has plans for systems enhancements to improve the attorney fee
process, which should help improve case processing time. According to SSA,
these enhancements would automate the steps in order for systems to
recognize attorney fee agreement cases, compute and withhold the 6.3 percent
user fee, pay the actual attorney fee, and release the remainder of the
past-due benefits immediately to the beneficiary. If SSA were to make the
proposed system enhancements to process attorney fees, it may be advisable
to revisit requirements for how quickly the agency could be expected to
process an attorney fee.

Expressing the User Fee as a Fixed Amount Instead of a Percentage

To adequately weigh the relative merits of both options, we need to further
study the cost estimate information SSA used to develop the 6.3 percent user
fee, the cost data that SSA is currently capturing, and the percentage of DI
versus SSI cases processed. This analysis will be included in our final
report, due to the Congress by the end of this year.

Changes Being Considered for Paying Attorney Fees

Joint Checks: Attorneys May Get Payments Sooner, but Policy and Practical
Issues Arise

Such a change could have serious policy implications, however. For instance,
SSA currently attempts to pay the beneficiary as soon as possible following
a favorable decision. Issuing joint checks might delay payment to the
beneficiary because the beneficiary would have to wait until after the
attorney deposited the money into an escrow account to receive benefits. In
addition, when SSA controls the payment, it is assured that no more than 25
percent is deducted from the past-due benefits. Sending joint checks to the
attorney would reduce SSA's ability to enforce attorney fee limits and could
increase the risk that attorneys would short change beneficiaries. In turn,
control over payment to the beneficiary would shift to the attorney, while
accountability for the payment would remain with SSA.

In addition, a number of administrative issues dealing with the
implementation of joint checks would need to be addressed. First, SSA needs
to know when the beneficiary receives his or her benefits. SSA is
responsible for sending out benefit statements, SSA-1099s, to beneficiaries
because sometimes Social Security benefits are taxable. With joint checks,
SSA might have difficulty tracking when beneficiaries received their
benefits. If attorneys were responsible for paying the past-due benefits
from their escrow accounts, SSA would need a system certifying when-in which
tax year-the beneficiary was paid. This reporting system would be needed to
ensure the accuracy of the SSA-1099s.

Another administrative consideration is that the current information system
used for processing DI cases-MCS-would need to be modified so that joint
payments could be issued. As noted earlier, this system is designed to
effectuate payments to the beneficiary or his or her representative payee
only.

Adjusting the $4,000 Cap on Attorney Fees in Fee Agreements

Debate on this issue centers around how legal representation for DI
applicants might be affected. Attorneys we spoke with told us that higher
fees would increase the attractiveness of DI claims. According to this
argument, attractive fees could result in more attorneys for DI cases, which
could increase the rate of representation for this population. Further, an
increased rate of representation might result in more favorable decisions
for DI applicants.

The opposing argument is that representation is readily available to DI
applicants. According to an SSA official, the agency has not raised the cap
because it determined that a higher cap was not needed to support
representation.

In either case, evaluating this issue is difficult in the absence of such
data as historical and current representation rates and without knowing the
proportion of applicants who could not secure representation and why.

Issues With Expanding Withholding of Attorney Fees to SSI Cases

A final change being discussed would be to expand withholding to the SSI
program. SSA currently calculates the amount of attorney fees due in SSI
cases but does not withhold the fee from beneficiaries' past-due benefits.
Current law explicitly differentiates between DI and SSI regarding attorney
fees, stating that withholding and paying attorney fees is only permissible
for DI cases.

Many believe that extending withholding to SSI is appropriate because it
would increase representation for SSI applicants and alleviate a perceived
equity imbalance for attorneys who represent both DI and SSI applicants.
Because there is no guarantee that attorneys will receive fees due to them
for SSI cases, some attorneys told us that they are reluctant to accept SSI
cases. The attorneys maintained that expanding withholding to SSI would
increase the attractiveness of the cases, and representation would increase.
In fact 1999 data show that at the hearing level, applicants for DI and
combined DI/SSI benefits were more likely to be represented by an attorney
than those applying for SSI only. Additionally, according to an official
from an association of ALJs, expanding withholding to SSI would be
beneficial to the applicants because cases with representation are better
presented and have a better chance of receiving a favorable decision than
nonrepresented cases.

Proponents of extending withholding to SSI also told us that the current
situation is unfair to attorneys representing SSI applicants. According to
this view, it is inequitable for attorneys to be guaranteed payment for DI
cases but not for SSI cases. As with the DI cases, the SSI recipient has an
obligation to pay for his or her legal services; however, in DI cases, SSA
ensures that this happens. For SSI cases, the attorney must obtain payment
directly from the beneficiary.

The opposing view of extending withholding to SSI is based on the relative
economic status of DI beneficiaries and SSI recipients. SSI recipients tend
to be poorer than DI beneficiaries, and some advocates have expressed
concern that taking money from a recipient's past-due benefits to pay
attorneys would be detrimental to the recipient's economic well-being. SSI
recipients often have many financial obligations, such as overdue rent and
utility bills that need to be paid. Advocates maintain that deducting the
attorney fee from the past-due benefits might make it impossible for
recipients to pay these bills. However, if an attorney successfully appeals
a case for an SSI recipient, the recipient should be in a better position
financially.

From an administrative standpoint, if SSA was required to withhold attorney
fees for SSI cases, it will need to develop new information systems or
significantly modify existing systems to process this new workload. However,
as with any system effort, SSA's ability to carry out this task will depend
on its available resources and the priority that it gives to this
initiative.

GAO Contact and Staff Acknowledgments

(207092)

        Orders by Internet

For information on how to access GAO reports on the Internet, send an e-mail
message with "info" in the body to:

[email protected]

or visit GAO's World Wide Web home page at:

http://www.gao.gov

        Web site: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: [email protected]

1-800-424-5454 (automated answering system)
  
*** End of document. ***