Administrative Law and the Lottery

Steven Rosales is an attorney in the office and teaches administrative law at California State University Fullerton.  Steve had his class watch "Well-Founded Fear."  I pass the recommendation on to you.

The synopsis of the movie on the PBS website sets out the foundation of the movie.  People that that have left their homes in China, Russia, Rumania, Nigeria, and other places in the world end up in the United States seeking asylum for politics, religion, procreative rights, and others.  The lottery that is the administration of the asylum process is simply appalling and a reflection of what happens every day in the practice of Social Security disability. 

First, it is a lottery.  The luck of the draw determines the outcome of who will get asylum and who will not.  An asylum officer tells how his experience changed his apprhear theoach and made him more stingy in terms of granting asylum.  The luck of  the draw animates many administrative proceedings because the legal construct gives those officers and Administrative Law Judges tremendous discretion to make whatever credibility determination they wish to make.  If a claimant or applicant gets the officer or ALJ on a bad day or simply gets a bad officer or ALJ, that person is unlikely to get the relief that the statute promises.  One of the truly shocking recurrent themes is the stated bias of the officers depicted that rely on their own fund of knowledge, only to be grossly wrong. 

Second, the system is filled with incompetence.  The movie subtitles the non-English speaker.  We get to hear the professional interpreters butcher, edit, and change the words that were spoken by the applicant for asylum.  That is truly disturbing because neither the officer nor the applicant has the facility to know that the interpreter is making grave errors.  So much rides on the competence and accuracy of the interpretation.  I know from my own practice that interpreters do make mistakes.  My limited Spanish language facility permits me to catch truly egregious errors in translation.  Long-winded answers in a foreign tongue translated to a short sentence in English is a big clue that the interpreter has fouled the exchange.  Of course there are professionals that are bilingual and they then enjoy the biggest advantage to protect the applicant or claimant either as the officer-ALJ or the representative-attorney. 

Public confidence in any system of adminstrative decisions has to rest on the assumption that justice is meted out in a just manner.  Similar circumstances achieving similar results with the decision-maker carrying out carefully crafted rules and guidelines without letting unstated personal bias change he decision.  Of course some of the decision-making is just dishonest.  Not in a corrupt way but in failing to be honest with the person in front of them about the problems that the officer or ALJ had to give that person an opportunity to either explain why the assumptions are not worth a warm pitcher of spit.

Roberts v. Commissioner of SSA

Today the Ninth Circuit decided Roberts v. Commissioner.  Another disability claim by a person claiming disability that went before an Administrative Law Judge without the benefit of counsel.  Once a person gets to the hearing stage, the default should be to hire an attorney to handle the job.  See Why Hire and SSDI Attorney. 

The big deal is that the Social Security Administration tells its ALJs that they must get a waiver signed by the claimant for benefits if that person wants to proceed without an attorney.  The form is:

I understand my right to representation at the hearing. I voluntarily waive this right, and I request to proceed without a representative. I also acknowledge that I received a list of organizations that provide legal services prior to receiving the Notice of Hearing.

As the Court framed it:

ALJ “should ensure on the record” that an unrepresented claimant “has been properly advised of the right to representation and . . . is capable of making an informed choice about representation,” and goes on to list several questions that an ALJ may wish to ask the claimant in order to accomplish this. HALLEX I-2-6-52.

If the ALJ didn't do what SSA told the ALJ to do, why should the Court simply let the agency off the hook?  Reverse and send the case back for a hearing with the Roberts represented by an attorney. 

But this is why Lockwood was so important.  Either the agency is bound by its own rules and procedures or SSA can simply disregard what it tells the agency and the world how it handles the largest adjudicative body in the world.  The statute (42 USC sec. 406(c)) is pretty clear:

The Commissioner of Social Security shall notify each claimant in writing, together with the notice to such claimant of an adverse determination, of the options for obtaining attorneys to represent individuals in presenting their cases before the Commissioner of Social Security. Such notification shall also advise the claimant of the availability to qualifying claimants of legal services organizations which provide legal services free of charge.

The government assumes that we read every piece of paper that slides across the inbox of life.  More importantly, the government assumes that we understand every piece of paper.  Except SSA recognizes that this is not necessarily true.  SSA knows that claimants for disablity either do not read or do not understand every piece of paper that they are charged with reading.  Fusing together that recognition of reality with the literal words of the statute, the Court should have found that the ALJ in this case violated the spirit of the statutory text even if he complied with the letter of the law. 

That seems to have been lost on this generation.  The intent of the statute seems to have gone away to be replaced by the requirement that Congress imagine every consequence and every problem.  I won't hold my breath waiting for Congress to gain that kind of prescience.  The regulation (20 CFR sec. 404.1706) tells us that:

We will also tell you that a legal services organization may provide you with legal representation free of charge if you satisfy the qualifying requirements applicable to that organization.

And there it is.  A promise to tell us more than the written word contained in a notice with a raft of other papers.  What does "we will also tell you" mean?  According to HALLEX I-2-6-52, it means that an ALJ will tell "us" before starting an administrative hearing.

Some Judges Can't Say No, but Others Can't Say Yes

According to the Wall Street Journal, one administrative law judge in West Virginia just can't say no to disability claims that come before him.  The attack on ALJ David Daugherty is simply poor journalism.  Now that the gantlet is on the ground, let's take a look at the numbers that the WSJ reproduced from the Social Security Administration web site.  

Does Judge Daugherty hear too many cases?  Apparently not.  Frederick McGrath heard cases in 9 different hearing offices during the same period.  ALJ McGrath decided procedurally or on the merits 1,749 cases during half the fiscal year.  

Does hearing a lot of cases mean that the ALJ is giving away the farm?  Apparently no.  ALJ McGrath has an allowance rate the fluctuates from office to office and has an allowance rate of only 69.5%.  So this ALJ is the tops in getting cases decided and right in the middle of the pack for percentage of cases in which he granted benefits.

Thomas Bundy has also heard cases in a number of hearing offices.  As the second most prolific ALJ in the system, he decided 763 cases on the merits and granted the claim in 23.3% of the cases.  If we assume for the sake of argument that people do sustain serious injuries and illnesses and that the presence of a disability system as part of the social safety net is a good thing, then administrative law judges must grant some claims.  The average allowance rate for ALJ's in the past 5 years has hovered around the mid-60's of cases decided on the merits.  This excludes dismissals for procedural errors, withdrawals of claims by people that change their minds, and other cases disposed of but not on the merits.  Assume the number is 65%, not as it should be but as it is.

According to the implication in the WSJ, ALJ Daugherty pays 35% too many cases.  Applying the dust that the WSJ throws at this judge,  that is 255 people.  

Now let's be fair and apply the same analysis to ALJ McGrath.  With a 69.5% allowance rate, he has no problem saying "no" to claimants.  If we use strict numbers though, that is 60 too many people.  

On the other end of the spectrum, ALJ Bundy decided 23.3% of cases favorably to people stating that their injuries or illnesses prevented them from working for 12 or more months.  At 42% below the magic number, that is 320 people that should have gotten benefits but did not.  

You decide.  Would you prefer that people that don't deserve benefits get some or would you prefer that people that deserve benefits get none.  For many people applying for benefits that have to go before an ALJ, it is a crap shoot.  While I can't defend Daugherty's numbers and find that judge's with McGrath's numbers look fantastic, I ache for the human beings that get stuck with someone like Bundy's numbers.  And it isn't just that he grants benefits to so very few people.  No, it is also that he is so damn prolific at the process of denying claims.  

That is the problem.  Figures lie and liars figure.  Without knowing how well the state agency's are at sorting out the claims before they get to the ALJ level, it is impossible to gauge the fairness of an ALJ.  The Social Security Advisory Board publishes data on claims and the report for 2006 (chart 69 on page 91) is readily available.  The Appeals Council reviews ALJ decisions and finds over 25% of the nearly 90,000 cases faulty.   The federal courts review another 12,000 of the cases that the Appeals Council did not send back to an ALJ for another hearing and reverses SSA in about half of those cases.  People that have to take a claim for disability through SSA, to the courts, and back to SSA ... well those people 5 years or more before they get the benefits that are eventually awarded.  Imagine every financial problem from loss of home, vehicles, savings; all of that happens to people that are subject to ALJs that can't find a way to say "yes" when benefits really are due.  

Perhaps Daugherty is too trusting.  He believes that people and doctors are basically honest.  He probably is too.  When an ALJ is basically untrusting, he says that he believes that people and doctors are dishonest and would and do lie to get benefits.  I don't expect an ALJ to be naive, but so assume that  most people have no integrity constitutes a pretty dim view of humanity.  

Trust Fund Exhaustion One Year Sooner -- 2036 !!!

The bullet points taken from SSA's news report of the 2011 Annual Report to Congress:

• The Social Security trust funds will not meet expenditures in 2036 instead of 2037 and will then be able to pay 77% instead of 78% of expected benefits.  

• SSA's non-interest income could not meet program costs in 2010 and will not for the next 75 years.  

• The shortfall for the next 75 years is 2.22% of payroll, instead of 1.92% stated in the 2010 report to Congress.

• In the next 75 years, SSA would need an additional $6.5 trillion in funds today to meet all expected benefits.  

• SSA collected $637 billion in taxes on income; $117 billion in interest; $24 billion in taxes on SS benefits; and $2 billion in transfers from the general fund during 2010.  

• Against the $781 in income, SSA paid out from the old age trust fund $713 billion.  

• The OASDI trust funds had $2.6 trillion in assets, up by $69 billion from 2010.  

• 157 million people had taxable earnings covered by Social Security during 2010.

• 54 million people received $702 billion in benefits in 2010.
  
• SSA paid out $6.5 billion to administer the entire program in 2010, or 0.9% percent of all expenditures.

• The trust fund earned 4.6% interest on assets in 2010.

These statistics tell you and me that in order to continue the Social Security program through the next century, Congress can either increase taxes, decrease benefits, or change participation rules.  Increasing taxes during a recession and with the Republicans in control of the House is unlikely.  Decreasing benefits is political suicide with 54 million people getting benefits currently and knowing that the number will only increase.  

That leaves changing benefit participation.  I have advocated that increasing the age minimum for retirement is the easiest target.  (See my post of May 3, 2011).  Even if increasing the minimum age for retirement causes a shift in some of those individuals to the disability program, that is unlikely to be true to all or even most retirees.  Medical care advances should continue to keep us healthier and capable longer than our ancestors experienced.  

The Congressional Budget office should run the numbers.  The American people should not have loose rhetoric on which to make the decision.  The CBO should give the numbers on lifting the cap on taxable earnings, increasing the tax rates on earnings, decreasing benefits, and increasing the retirement age.  Only with concrete numbers can the American people make intelligent choices, choices that Congress seems unable or unwilling to make.  

NOSSCR Conference in Baltimore - May 2011

I will attend the NOSSCR conference this week in Baltimore, Maryland.  The conference should see circa 1000 attendees from across the country with a smattering of government lawyers and bureaucrats sprinkled into the mix.  The program features 41 breakout sessions plus the general session Thursday morning.

I am co-presenting with Jeffrey Baird and Tom Sutton on Friday morning:

Auer Watershed--What to Do about Agency Disregard of Published Policy

Jeffrey Baird, Esq.

Lawrence Rohlfing, Esq.

Thomas Sutton, Esq.

The Rulings, POMS, and HALLEX describe the how and why of the complex regulatory paradigm. Sometimes the agency violates its own policies, Hansen v. Schweiker says that POMS isn't enforceable. Auer calls for controlling deference. The session will focus on the differences between the deference, respect, and blind eye that precedent tells us applies.

Immediately following the Auer presentation, Tom and I will present again:

Post-Litigation Attorney Fees after Gisbrecht and Ratliff

Lawrence Rohlfing, Esq.

Thomas Sutton, Esq.

In this workshop, we will survey the landscape of 42 USC 406(b) fees in the years since the Supreme Court decided Gisbrecht, and EAJA fees in the months since it decided Ratliff. We will also discuss the interplay between these fees, as well as the role of 406(a) fees after litigation. The issues of reasonableness in 406(b) applications (especially in light of the Ninth Circuit's en banc Crawford opinion) and substantial justification in EAJA applications will be featured in our discussion.

SSA announces top baby names

Boys:	1) Jacob	Girls:	1) Isabella
	2) Ethan		2) Sophia
	3) Michael		3) Emma
	4) Jayden		4) Olivia
	5) William		5) Ava
	6) Alexander		6) Emily
	7) Noah		7) Abigail
	8) Daniel		8) Madison
	9) Aiden		9) Chloe
	10) Anthony		10) Mia

The list of top 10 baby names is here.  Some of us are old enough to remember when Social Security was not the repository for every child's name within the year of birth.  I got my Social Security card and number when I got ready to drive and work as a teenager.  Now, babies get their Social Security card and number immediately.  SSA says that getting a SSN is voluntary and necessary only to access the financial system, get medical insurance coverage, or get government services.  Also necessary to deduct the child dependent from the parent's taxes.  But taking SSA's word on its face, I am unaware of anyone that would forgo medical coverage for their children voluntarily.  Nor are many anxious to forfeit a legitimate tax deduction.

At least we know what names are popular before our children go kindergarten to find others similarly labeled. 

Retirement Program Broke in 2037

Well, not broke, just able to pay 78% of promised benefits.  So why be concerned about something that is 26 years away?  I will be 67 and full retirement age in 2037.  If the system cannot pay the promised benefit in 2037, then I and a lot of other late boomers need to start adjusting our retirement plans.

Raising taxes places additional strain on individuals and families.  Lowering benefits changes retirement savings plans for individuals at and over 50 mid-stream.  With the cost of the trust fund's operations already exceeding income for 2010, again next year, and permanently in 2015, the time to act is now.

The choices come in three flavors.

    1.  Raise FICA taxes on employees and employers without changing the benefit calculus.
    2.  Change the benefit calculus to lower benefits now to and extend the life of the program later.
    3.  Raise the retirement age.

Raising taxes has an immediate and adverse consequence on family budgets.  Changing the benefit calculations in  the long term means will cause a dramatic impact in catch-up savings impacting those closest to retirement age the most.  Raising the retirement age extends the work life of healthy individuals, decreases the payouts by eliminating months or years of payments in perpetuity, and increases the FICA payments during that extended work-life.

Wishing and hoping that Social Security will be around when we reach retirement age will not make it happen.  Congress needs to take leadership, swallow the bitter medicine, and explain the simple truth to the American people.  The concept of a system of providing benefits to aged Americans depended on a large base of contribution and a narrow peak of receipts.  That paradigm has shifted as median age of 36.5 has climbed 2 years in the past decade.  No smoke, no mirrors, just a plan.  We need another Moynihan with the gravitas to lead the charge and save the system.

Lockwood v. Astrue

My level of angst rose Friday and approaches crescendo this morning.  Under the Supreme Court's docketing procedures, Lockwood got distributed for conference on April 29, 2011.  The Court will post the order list this morning.  The order list for April 25 was 9 pages long of certiorari denied, habeas denied, mandamus denied, rehearing denied, attorney discipline, and a handful of orders in pending cases.  Most other order lists have 2 cases with certiorari granted.  Thousands of cases filed each year, less than 100 get granted and set for oral argument.  The Supremes have a pretty good idea of how many cases it wants to hear next hear and already has a calendar of oral argument days.

The advertised publication time is 10 AM Eastern Time. At 7:05 AM Pacific Time, I am still waiting.

There it is.  Certiorari denied.  Posted the news to my  brethren on a private list.  Truly disappointed for the simple reason that we should be able to trust that what the government says it means.  Maybe I am naive or yearn for a utopia that will never appear.  But when any agency clears away the haze of ambiguity of a regulation, we should demand the right to bank on it.  Litigation ensues when rights and results are unclear.  If we all know the result based on settled law, then litigation turns on factual disputes only.  When the law is not clear or when one side (the federal government) can run away from clarity, then the whole system fails.

It is an old adage for lawyers.  When the facts are one your side, argue the facts.  When the facts are not on your side, argue the law.  When the law is not on your side, confuse the issues.  I tip my hat to the lawyers that represent the Social Security Administration ... you certainly did confuse the issue on this one.

It isn't that there isn't blame to go around.  The lawyers for SSA blame the lawyers for the claimant for not raising the issue or not raising the issue properly.  Perhaps that is permissible in a truly adversarial position but the Social Security Act is different.  It is non adversarial.  Government lawyers are also different.  They have an obligation not only to a particular case but to the public at large.

More on this topic in the months to come.