Hatch: Are judges helping jobless scam Social Security?

Rejected for federal disability benefits, unemployed workers who appealed to Judge David B. Daugherty in West Virginia last year had a change of luck: He approved every request he saw.

That record has spurred Utah Republican Sen. Orrin Hatch and Sen. Tom Coburn, R-Okla., ranking members of the Senate Finance Committee, to seek an investigation into whether unemployed Americans are cheating the system.

Lenient administrative judges may be viewing Social Security Disability Insurance payments "as an extension of unemployment benefits, rather than as a program to assist the truly disabled," they told Social Security Inspector General Patrick O'Carroll Jr.

Allowing the unemployed to "exploit SSDI," they wrote, would pass "enormous and crippling costs to taxpayers."

Such talk worries Ward Harper, a Salt Lake City attorney who specializes in helping clients through the often years-long application for SSDI benefits. "In the near future, there is going to be a concerted effort to attack the disability system," he predicts.

Since the recession began in 2007, an increasing number of unemployed Utahns have sought disability payments. And for the past year and a half, administrative judges have approved their payments at a rate higher than the rest of the nation, records show.

Applicants must prove they will be disabled for at least a year or have a terminal illness. In Utah and elsewhere, private contractors vet applications and initial appeals; further appeals go before administrative law judges who work for the Social Security Administration.

The agency is investigating Daugherty, who was suspended following a Wall Street Journal report last month that put a spotlight on the Huntington, W.Va.-based judge.

Hatch based his request for investigation on the newspaper's report that 100 administrative judges nationwide are approving 90 percent or more of their cases, his spokeswoman, Julia Lawless, said Friday.

"These [judges] are saying that the initial denials were wrong 90 percent of the time," she said. "That doesn't seem likely."

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Debating the costs • When applicants win disability payments, they receive an average of $1,067 a month, as of January 2011, according to a Social Security report.

Americans receiving disability payments get a lifetime average payout of $300,000, David Autor, a professor in the Massachusetts Institute of Technology economics department, estimated for the Wall Street Journal.

However, that figure includes Medicare coverage and Social Security payments all workers eventually receive.

Disability payments automatically convert to regular Social Security benefits at a person's full retirement age. And while Medicare kicks in two years after disability benefits are approved, that coverage is available to all Americans at age 65.

Autor told The Salt Lake Tribune that the SSDI benefit accounted for 60 percent of his estimated total, or $180,000.

Social Security spokesman Mark Lassiter was less certain about typical payouts, saying they are tricky to figure.

He offered a basic calculation based on a worker disabled at age 56 who starts drawing Social Security at age 66. At $1,000 per month, the worker would receive $120,000 in disability payments. But cost of living increases would mean more money, and if the disabled person has a child, the check is bigger.

"In the end there is no way to precisely quantify because of the variables involved," Lassiter said.

And contrary to the concerns raised by Hatch and Coburn, Social Security's 1,500 administrative judges are approving fewer payments — the overall "allowance rates" are declining, he said.

Nationwide, judges approved 67 percent of cases they heard in fiscal 2010, according to a Salt Lake Tribune analysis of data posted on the Social Security website. So far in fiscal 2011, it has reached 64 percent.

In Utah, seven judges regularly considered cases in 2010. Their approval rate ranged from 47 percent to 95 percent; two judges who heard four and five cases each approved all of those nine cases.

So far this year, the state's six judges have approval rates ranging from 58 to 93 percent.

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More seek help • In 2007, Utahns filed 9,881 new applications for disability payments. By last year, that number had grown to 12,138.

"I am seeing a rise in my caseload because it is so much harder for people to find work," said Jay Barnes, an attorney in St. George whose office has focused on SSDI for 30 years. "I have a lot of people who work who have disabilities. When things go south, those are the people who sometimes [lose jobs] first."

The population is aging, more people are out of work and those who have managed to get by despite qualifying disabilities are in trouble. "When you look at people who've done physical labor all their lives," Harper said, "when they reach 50, they are pretty broken down."

Payroll workers are taxed to pay for disability and retirement. "Then," Harper said, "when workers get disabled, they have to fight for their benefits. That's more the reality of this system than scamming."

For those denied benefits, it can take more than three years to get before a judge. Lawyers get a percentage of the back benefits paid if their clients are successful, but the attorneys' take is capped at $6,000 per case.

Dennis Pizzo of Washington, Utah, applied nearly three years ago and still doesn't have a hearing date.

Pizzo, a former construction worker who will be 51 in July, said he has bipolar disorder and failed-back syndrome following surgery, and had a heart attack in November. He has taken coursework to become a nurse, but can neither stand nor sit for long.

As a contractor, he said, "I was making a lot of money. ... I fell apart in the last two years."

Pizzo's wife is employed and has health benefits, he said. They modified their mortgage, but still come up short $200 to $300 per month.

"I'm tired of borrowing," Pizzo said. "I want to work."

As for his SSDI application, he said, "It's my money. I kicked into the kitty. I'm sick. I need it."

Jobless workers in southern Utah just got another bit of bad news: Due to budget cuts, Social Security plans to close 38 rural hearing sites around the nation. In St. George, attorneys have been told to expect hearings there only through August.

Instead, applicants — including those broke, homeless or mentally ill — must travel to Salt Lake City for the hearings they are entitled to.

"For many of my clients, this will be impossible," said Barnes, "because they are disabled and out of work."

Twitter: @sltrib.henetz —

Qualifying for Social Security disability payments

To be eligible for payments under Social Security Disability Insurance, workers must prove they are terminally ill or "permanently disabled," suffering from a condition that has lasted, or is expected to last, more than 12 months.

The condition must not only prevent claimants from performing their previous work duties, but also make it impossible to find a new line of work due to age, education, or impairment.

Even workers who qualify as disabled must have paid Social Security taxes on their wages long enough to qualify for benefits. Generally, this means that claimants must have a fairly consistent work history, and have worked a minimum of five of the 10 years prior to the onset of disability. The work credit requirement can be somewhat less for younger applicants.