Wall Street Journal and Binder & Binder

Beginning on December 21, 2011, the Wall Street Journal began a series of articles assailing the disability system and those that work in that system. The first article focuses on Binder & Binder.  Damian Paletta and Dionne Searcey has taken the task with relish to assault the system that functions as a safety net, claiming that unemployment fuels the uptick in disability applications.

The assault on representatives and on the system as a whole constitutes a pincer attack with the apparent intent to call for a dismantling of the current structure and placing in it something different.  What Paletta and Searcey appear to have missing from the quiver is a basic understanding of the disability program and how Congress intended it to function ab initio.

The basic structure of the Act calls for disability benefits to individuals that suffer from "severe" impairments that can no longer perform not only their past work but any other work that exists in significant numbers either in the region in which the person lives or in several other regions of the country.  42 USC §§ 423(d)(2)(A); 1382c(a)(3)(B).    So if a person cannot perform his past work and because of those impairments cannot perform any other work that actually exists in the economy, that person suffers from a disability.  Throw in the other statutory factors to consider age, education, and work experience and the pool of people that meet the statutory test expands.

We have several factors that implicate an increasing number of disability applicants.  Yes Damian and Dionne, the demographics of the United States are aging.  With the baby boomers aging and the average age creeping to over 36, the incidence of disability claims in a statutory construct will increase as a matter of design.  Second, the United States witnessed the exportation of unskilled labor to countries with cheaper sources of labor and more lenient laws about workplace and pay.  Without getting into an international economics discussion of whether the presence of jobs in Mexico, Malaysia, China, or Nigeria, everyone can agree that the numbers of unskilled labor jobs in the United States has dwindled.  If a statute places benefit entitlement on the ability to perform a significant number of jobs in the economy and a whole class of work no longer exists in the economy, then the incidence of disability claims in a statutory construct will increase as a matter of design. Third, the United States economy slid headfirst into a recession beginning in 2008 and although the government would like us to believe that the recession is over we can all take notice that the true unemployment rate, including those that have given up looking for work, remains high.  The number of people not in the labor force rose by almost 2 million in just 12 months.  Because the statute places benefit entitlement on the ability to perform a significant number of jobs in the economy and a work no longer exists in the economy, then the incidence of disability claims in a statutory construct will increase as a matter of design.

So I agree with Paletta and Searcey, the number of disability claims has risen and that rise is due in part to economic conditions.  The Modest Proposal then stands quite starkly in the wind.  We can tell people with severe impairments that although they can no longer perform their past work and there is nothing else for them to do in terms of work in the economy that they must whither on the vine or we can fulfill the intent of Congress and extend the lifeline to them.  Instead of calling for an overhaul of the disability system, Paletta and Searcey ought be calling on the agency to take a closer look at the world and ask the agency to make reasonable decisions based on the workplace as it exists.

Which takes this conversation back to where it started, Binder & Binder.  We have an aging population that lives longer and survives catastrophic illness and injury because of advances in modern medicine that does not necessarily return those people to function.  Binder & Binder see clearly an economic opportunity to give significant help to a class of people that the government frequently steamrolls.  We can label those people the "arguably disabled."  Binder & Binder also seek to help those that chose not to deal with the federal bureaucracy because companies make a living preparing short form tax returns.  The government across agencies has gotten so complex that many want a professional to handle the matter.  We can label those people the "bureaucracy challenged."  Enter Binder & Binder with a business model to address both.

Paletta and Searcey report that Charles Binder received over $22 million in fees in 2010.  If we assume an average fee for a successful case of $2,000, then the report in the WSJ means that Charles Binder successfully represented 11,000 people.  The agency processed 2.5 million claims in 2005.  Report of the SSAB, chart 69.  Quadruple the number of people represented by Binder & Binder just for giggles.  Assuming that Binder & Binder represented 50,000 people successfully, that is still less than 5% of all the claims handled by SSA in any fiscal year of recent report.

And that is the untold story.  Disability claims are rising because of demographics and economics, factors built into the statute.  People with impairments are more likely to use professional representation because their cases are difficult or nuanced, or they just don't want to deal with the government while trying to deal with life.   What Paletta and Searcey see and report is of no consequence.  The sky is not falling.  The nation needs economic reforms that will take decades to play out.  In the interim, we must take care of those that suffer from severe impairments that have robbed them not only of the ability to perform their past work but also of any other work that exists in the economy.